FCC Report Clearly Says AT&T & Verizon Are Violating Net Neutrality — And Nobody Is Going To Do A Damn Thing About It

from the unpopular-populist-reform! dept

When the FCC was crafting net neutrality rules, it refused to ban zero rating — or the practice of giving an ISP’s own content an unfair advantage by exempting it from usage caps. At the time we noted how this would open the door to all manner of anti-competitive shenanigans, and that’s precisely what happened. Before we knew it, AT&T, Verizon and Comcast were all zero rating their own content while still penalizing streaming competitors, documenting how companies can abuse the lack of broadband competition to impose unnecessary and arbitrary caps — then use those caps as an anti-competitive weapon.

This is not “free market competition.” It’s duopolists using their domination over the broadband last mile to hamstring emerging new markets and competitive threats. Caps aren’t necessary. They don’t actually even help manage congestion. Caps and overage fees are glorified, confusing and arbitrary price hikes that let incumbent broadband mono/duopolists extract additional revenues from captive customers, with the added bonus of hamstringing streaming market competitors.

While the FCC didn’t ban zero rating (unlike India, Japan, The Netherlands, Norway and Chile), it did say it would take a “case by case look” at zero rating to see if it hurt competition. And after a clumsy, glacial, year-long review, the FCC has concluded precisely that. In a series of letters and full FCC report (pdf) released by the agency, the FCC makes it abundantly clear that AT&T and Verizon’s zero rating plans are clearly anti-competitive, and clearly violate net neutrality:

AT&T?s Sponsored Data program is designed to enable third party edge providers to deliver streaming edge content on a zero-rated basis to AT&T?s mobile broadband subscribers. Unlike the two sponsored data programs discussed above, we have serious concerns that AT&T Mobility?s Sponsored Data program presents competitive problems and, to date, nothing in AT&T responses to the Bureau?s requests for information has addressed our concerns. Based on the information gathered to date, we believe there is a substantial possibility that some of AT&T?s practices may violate the General Conduct Rule.

AT&T and Verizon have breathlessly insisted that they can’t possibly be acting anti-competitively, because companies can pay them a completely unnecessary troll toll to have their content placed on equal, cap-exempt footing. But the FCC clearly notes that AT&T’s charging competitors notably more for this “favor” than it charges itself (DirecTV):

The limited information we have obtained to date, however, tends to support a conclusion opposite from AT&T?s contentions – namely, that AT&T offers Sponsored Data to third party content providers at terms and conditions that are effectively less favorable than those it offers to its affiliate, DIRECTV. Such arrangements likely obstruct competition for video programming services delivered over mobile Internet platforms and harm consumers by inhibiting unaffiliated edge providers? ability to provide such service to AT&T?s wireless subscribers.

And while it’s all good and lovely that the FCC finally woke up from its nap to realize that broadband caps and zero rating can be (ab)used anti-competitively, the timing of the FCC’s effort is comical. Trump and his incoming telecom advisors have made it abundantly clear they intend to not only gut net neutrality, but defund and defang the FCC itself. As such the FCC’s “enforcement action” here is too little, too late. Ajit Pai, on the shortlist to be the next boss of the agency, issued a statement to the FCC website (pdf) making that abundantly clear:

It is disappointing that the FCC?s current leadership has yet again chosen to spend its last days in office the same way it spent the last few years—cutting corners on process, keeping fellow Commissioners in the dark, and pursuing partisan, political agendas that only harm investment and innovation.

This time the midnight regulations come in the form of a Bureau-level report casting doubt on the legality of free data offerings—offerings that are popular among consumers precisely because they allow more access to online music, videos, and other content free of charge. This report, which I only saw after the FCC released the document, does not reflect the views of the majority of Commissioners. Fortunately, I am confident that this latest regulatory spasm will not have any impact on the Commission?s policymaking or enforcement activities following next week?s inauguration.

Pai, a former Verizon lawyer, has long had a bizarre, distorted, and inaccurate view of what net neutrality actually is. When crafted properly, net neutrality rules protect innovators from last-mile broadband monopolies. Pai and friends, in contrast, have made it abundantly clear their top priority is to gut, hinder and hamstring any regulator that would dare stand up to companies like AT&T, Verizon, Comcast or Charter. That dismantling some of the only rules protecting consumers from these behemoths in telecom market dysfunction is being passed off as populist reform is the ultimate insult and irony, the closing whimpering footnote to a zero rating saga that, moving forward, will wind up being the very least of the open internet’s problems.

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Companies: at&t, verizon

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Comments on “FCC Report Clearly Says AT&T & Verizon Are Violating Net Neutrality — And Nobody Is Going To Do A Damn Thing About It”

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Anonymous Coward says:

Re: Re: Follow the money

Seems pretty fucking expensive to me!

Keep in mind that one bill affecting only one Telecom provider gave them 12 billion tax dollars for doing literally nothing at all. That’s a return on investment of 18,000 percent.

It’s actually a pretty bogus number because we don’t know how much total a single provider gave and I counted all known funds from all providers as the seed money.

I also see a number of small communities and subdivisions having their copper network removed. If you want dial tone (for luxuries like calling 911 for police, fire or an ambulance) then you’ll need to get a cell phone because there’s no other option. Yet there are billions and billions of tax dollars being given to the telcos to maintain the copper system they just removed.

Andy says:

Re: Follow the money

These caps and net neutrality grabs will ensure that most American businesses will have no option but to move elsewhere, just imagine amazon and google and other big businesses moving from the US to the EU or Asia. I can see it happening and trump saying “so be it we will just not do business with them or we will tax them to death”, which will result in those businesses not doing business with America at all or downsizing to such an extent that they will not be paying taxes at all.

DannyB (profile) says:

This "free data" isn't free

Just because you can get all this “zero rated” content without paying for bandwidth doesn’t mean it is free.

I’ll use Netflix as the example.

In order for Netflix to get zero-rated, it has to make a smoke filled, back room deal with AT&T. So now Netflix is paying AT&T to be zero-rated. Netflix is passing that cost on to its customers. All its customers. Even those customers not on AT&T.

What if Netflix makes a different corrupt back room deal with Verizon to be zero-rated on Verizon’s network? Now Netflix’s customers on AT&T are subsidizing the Verizon customers who use Netflix. And vice versa. But which corrupt back room deal was the better deal? Will Netflix start charging different subscription rates based on which local ISP services your home? Probably one day, yes.

Do you still think all that zero-rated content is free?

It should be simple. I pay for the bandwidth I use. AT&T should charge me enough to build and operate its network. If I’m using Netflix, it is I, not Netflix that is using that bandwidth. Charge me for that bandwidth I’m using. It doesn’t matter whether I’m watching Netflix or HBO or Starz or Hulu or anything else.

There shouldn’t be zero rating. Give me a data plan that allows me to use Netflix, at a price that allows you to build and operate your network. No shady back room deals needed.

Anonymous Coward says:

Other important aspects.

For anything to be “zero rated” it must be tracked and catalogued. This is the ISP’s pushing further into the facebook/google spy-bussiness model, except more subtle and sinister.

Use a vpn so they can’t spy on you?
No zero rated anything for you…

I’d hazard a reasoned guess that most if not all of these zero rating deals will include data sharing on one or both sides- After all, why involve cash when you have valuable (and infinitely reproducible) assets to trade? Probably provides loop-holes around privacy laws, and makes a good story for the tax man as well.

…once they’ve zero rated all the stuff the unthinking masses want- they’re going to drop those caps down and jack up the price. The people who care about privacy and resist corporate spying, will pay through the nose, or be forced to use other services.

Andy says:

Re: Re: Re:

What are you mad or just crazy illogical and incompetent.

There are few countries that have caps on there hard wired internet connections as there is no need for them. The only congestion is that created by the isp nothing more. And you accept paying extra for something that is intrinsicly free is just wrong. Just imagine if you had to pay for every cup of water you used after the first 100 gallons, you would quickly end up paying thousands a month extra for something that cost pennies to supply.
But we are talking about America here where corruption and bribery is allowed by law.

That One Guy (profile) says:

That takes skill

"It is disappointing that the FCC’s current leadership has yet again chosen to spend its last days in office the same way it spent the last few years—cutting corners on process, keeping fellow Commissioners in the dark, and pursuing partisan, political agendas that only harm investment and innovation.

I’m actually impressed that he was able to say that with a straight face. It’s got to take significant practice to be able to make a statement that fits you perfectly and then claim that the other person is guilty of it.

A complete and utter lack of shame and integrity probably helps too.

Anonymous Coward says:

Re: That takes skill

Actually, it takes very little skill. People generally suspect others of the type of morally reprehensible behavior that they conduct themselves. They fail to see the bad behavior that they would not do themselves, if given the chance to do it without being caught/called out.

Since Pai is already being called out for it, he has nothing to lose and everything to gain.

Sean says:

It's time to sue!

A class action suit against AT&T and Verizon is what US citizens need. Now that Trump has broken the glass wall that has protected globalist controlled At&T as well as globalist controlled Verizon from this kind of activity and allowed them to commit crimes — there are massive opportunities for a litany of high profile cases against these monopolistic practices of large globalist controlled companies.

This is why the globalists are terrified. It’s because all their large companies are making shitloads of money from crimes they commit. They ignore the law because they believe they have control of government so buttoned down that they cannot be stopped with civil or criminal suits.

Unfortunately for them that is no longer true. Soon there actually will be an unprecedented explosion of large, very large, class actions suits against these corporations for committing treason against the American people.

They have betrayed us knowingly, intentionally, and with massive budgets. Their only intention being to take as much of our money as possible by destroying legitimate competition and by enabling our government to attack us by illegally spying on us in our homes.

It is time we become emboldened by the courage of our new Commander In Chief and press forward to find top notch class action attorneys to handle these massive class action suits we need to launch. This will be unprecedented but the wonderful news is that all the evidence is out there in the public domain. We all know it’s crime that we could not do anything about because they owned the courts. Now we can begin to succeed at bringing these companies to serve the public good by serving the people for profit instead of deceiving the people for profit.

Anonymous Coward says:

If the government's not going to do anything

then who will?

Wait a minute. Look, up in the sky. It’s a bird–it’s a plane–no it’s a…customer??? No, it’s a bunch of customers, and they’re…leaving???

We love to complain (to each other especially) about high prices and no competition, and yet we’re funding the same companies who have bought the laws that facilitate high prices and no competition. Revolutions are painful, but sometimes they’re necessary.
Boycott or bend over.

That One Guy (profile) says:

Re: Re: Re: If the government's not going to do anything

This again?

Tell you what, why don’t you go completely without the internet for an entire month, then come back and tell us how easy it was and maybe people will take your calls to do without the internet long enough for a company to care seriously.

It’s not like you need the internet or anything, and think of how much your example would inspire people to do the same, showing them that it can be done. Lead by example, show people that you can do without the internet at all for extended periods of time, it’s only a minor sacrifice after all and think of how much weight your calls for a boycott will gain after the hardship.

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