Back when AT&T stopped offering unlimited wireless data, it grandfathered many of the unlimited users it had at the time. Unfortunately for those users, AT&T immediately started waging a quiet war on these customers as part of a concerted effort to drive them like cattle to more expensive plans. That included at one point blocking Facetime from working at all unless users switched to metered plans (but net neutrality is a "solution in search of a problem," am I right?) and throttling these "unlimited" LTE users after they'd consumed as little as three gigabytes of data.
Then, just about a year ago, the FCC (like it has on a number of consumer telecom issues like telco accounting fraud or municipal broadband) miraculously awoke from a deep, fifteen-year slumber and decided to do something about this kind of behavior. FCC boss Tom Wheeler started warning telcos that they can't use congestion as a bogeyman to justify cash grabs, and that network management should be used to actually manage network congestion -- not as a weapon to herd users to more expensive options. The FTC also filed suit against AT&T for false advertising over its "unlimited" claims.
"As a result of the AT&T network management process, customers on a 3G or 4G smartphone with an unlimited data plan who have exceeded 3 gigabytes of data in a billing period may experience reduced speeds when using data services at times and in areas that are experiencing network congestion. Customers on a 4G LTE smartphone will experience reduced speeds once their usage in a billing cycle exceeds 5 gigabytes of data. All such customers can still use unlimited data without incurring overage charges, and their speeds will be restored with the start of the next billing cycle."
As of this week, the policy now looks like this:
"As a result of AT&T’s network management process, customers on a 3G or 4G smartphone or on a 4G LTE smartphone with an unlimited data plan who have exceeded 3 gigabytes (3G/4G) or 5 gigabytes (4G LTE) of data in a billing period may experience reduced speeds when using data services at times and in areas that are experiencing network congestion. All such customers can still use unlimited data without incurring overage charges, and their speeds will be restored with the start of the next billing cycle."
In other words, gone are the references to throttling unlimited LTE users just because they hit a totally arbitrary threshold, and the company is now using network management to manage the damn network, not to make an extra buck. AT&T will of course find other, clever ways to annoy these users until they switch to more expensive plans, but it's at least good to see that the network congestion bogeyman (fear the exaflood!) isn't quite as effective as it used to be when it comes to justifying high rates, misleading consumers or conning regulators.
Having written about the FCC for most of my adult life, I've grown cynically accustomed to an agency that pays empty lip service to things like consumer welfare and the painful lack of broadband competition. It doesn't matter which party is in power; the FCC has, by and large, spent the lion's share of an entire generation ignoring last mile competitive problems and the resulting symptoms of that greater disease. When the agency could be bothered to actually address these issues, the policies were so tainted by the fear of upsetting campaign contributors (read: regulatory capture) they were often worse than doing nothing at all (see our $300 million broadband map that hallucinates speeds and ignores prices or 2010's loophole-filled net neutrality rules co-crafted by Verizon and Google).
Whether it was former FCC boss turned cable lobbyist Michael Powell's claims that massively deregulating the sector would magically result in telecom Utopia (tip: that didn't happen) or Julius Genachowski being utterly terrified of taking any meaningful stand whatsoever, the broadband industry has spent decades governed by an agency that, at its best, is too timid to do its job, and, at its worst, is an obvious revolving-door lap dog to an industry it's supposed to regulate.
So in 2013 when it was announced that a former lobbyist for both the wireless and cable industries would be the next FCC boss, the collective, audible sighs of disgust unsurprisingly rattled the Internet. I, like many others, believed we were bearing witness to a twisted culmination of decades of regulatory capture, a giant, living, breathing middle finger to a public hungry for a more consumer and innovator-friendly FCC. John Oliver even put Wheeler's name in lights when he infamously compared hiring the former cable lobbyist to employing a dingo as a babysitter:
Most people (with a few notable industry exceptions) believed Wheeler was the final nail in a grotesque, campaign-cash stuffed telecom coffin long under construction. We were painfully, ridiculously wrong.
In fact, if you read profiles on Wheeler, he's turned out to be a complete 180 from the thinking of a traditional revolving-door regulator, basing his decisions on all available information -- even if that data conflicts with previously-held beliefs (a unique alien indeed in 2015). And while it's true that massive grass roots advocacy helped shift Wheeler's thinking on issues like Title II, his embrace of issues like municipal broadband required little to no shoving, since the lion's share of the public had no idea the issue existed. One of the biggest reasons Wheeler's willing to stand up to the broadband industry? He's 69, and no longer biting his tongue and biding his time for the next cushy lobbyist or think tank gig. Perhaps we should make a rule that all future FCC bosses must be on the brink of retirement to avoid what we'll henceforth call Michael Powell syndrome.
Still, watching Wheeler fills me with cognitive dissonance, as if my frequently-disappointed brain isn't quite sure what to do with an FCC Commissioner capable of objective thought free of AT&T, Comcast and Verizon lobbyist detritus. As a sure sign of the looming apocalypse, last week I watched an FCC Commissioner issue a statement about protecting competition -- and actually mean it:
"Comcast and Time Warner Cable’s decision to end Comcast’s proposed acquisition of Time Warner Cable is in the best interests of consumers. The proposed transaction would have created a company with the most broadband and video subscribers in the nation alongside the ownership of significant programming interests. Today, an online video market is emerging that offers new business models and greater consumer choice. The proposed merger would have posed an unacceptable risk to competition and innovation especially given the growing importance of high-speed broadband to online video and innovative new services."
Though his tenure's unfinished, it may not be a stretch to say that a man most of us believed would be the epitome of revolving door dysfunction has proven to be one of the most consumer- and startup-friendly FCC Commissioners in the agency's history. Granted that may not be saying much; caring more about consumers than Martin, Powell and Genachowski is like getting an award for beating a handful of lobotomized ducklings at a hundred yard dash. And none of this is to classify Wheeler as a saint -- the agency's net neutrality rules have some very concerning loopholes and the FCC still refuses to talk much about pricing, whether that's the problems inherent in usage caps, unreliable meters, or sneaky below the line fees.
Still, it's a lesson learned in letting your mind run on cynicism autopilot, and it's a reminder that even our very broken, campaign-cashed soaked government can still occasionally manage to give birth to consumer-friendly policies. So in short, the tl;dr version is this: I apologize to you, Tom Wheeler, for believing you were a mindless cable shill. I was wrong.
Back in 2010, AT&T eliminated the company's unlimited data plans and began offering users only plans with usage caps and overage fees. While AT&T did "grandfather" existing unlimited wireless users at the time, it has been waging a not-so-subtle war on those users ever since in the attempt to get them to switch to more expensive plans. That has included at one point blocking video services from working unless users switched to metered plans (one of several examples worth remembering the next time someone tells you net neutrality is a "solution in search of a problem").
AT&T also switched some unlimited users to its metered plans without user consent, something the carrier received a whopping $700,000 FCC fine for in 2012. But the telco's primary weapon against these users has been to throttle these users to speeds of 128 to 528 kilobits per second should they use more than a few gigabytes of data in the hopes they'd switch to metered but unthrottled plans. AT&T was sued for the practice by the FTC in October of last year, the agency claiming AT&T violated the FTC Act by changing the terms of customers’ unlimited data plans while those customers were still under contract, and by "failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans."
As we noted previously, AT&T tried a rather amusing defense to try and tap dance away from the lawsuit. It claimed that because the FCC was now classifying ISPs as common carriers under Title II, the FTC no longer had the authority to police AT&T actions under the FTC Act. In other words, AT&T hates Title II -- except when it allows them to skirt lawsuits for bad behavior. In a twenty-three page ruling (pdf), Judge Edward Chen says the law is "unambiguously clear" that only AT&T wireless voice, not wireless data, was classified as common carrier when the lawsuit was filed last fall:
"Contrary to what AT&T argues, the common carrier exception applies only where the entity has the status of common carrier and is actually engaging in common carrier activity."
In other words, no, AT&T can't have its cake (claim to loathe Title II with every shred of its being) and eat it too (run to Title II and common carrier protections when it suits it).
One of the very first things new FCC boss Tom Wheeler did when he entered office was to get wireless carriers to agree to a list of voluntary cell phone unlocking guidelines. The six "demands" are largely common sense and uncontroversial, and include requiring that carriers offer unlocked devices to active overseas service members, make their postpaid and prepaid unlocking policies as clear as possible, respond to unlocking requests within two business days, and automatically notify customers when their contract period ends and their phone can be unlocked.
I'd heard that carrier lobbyists balked at this last request fearing it would "advertise" unlocking, but ultimately acquiesced out of fear of tougher, non-voluntary rules coming down the pike. Note this is entirely separate from the fight over keeping cell phone unlocking legal and the need for DMCA exemption process reform. The rules also don't require that carriers simply sell unlocked phones outright, since that would probably make a little too much sense. After agreeing to the rules, carriers had more than a year to adhere to all six requirements, and the final deadline arrived last Wednesday.
Interestingly it's Verizon and AT&T, arguably the worst of the major carriers when it comes to attempts to stifle openness over the years, that come out ahead in adhering to all six guidelines (though your mileage may vary, and since the rules don't require much, this may not mean much). For Verizon, that's in part thanks to the Carterfone conditions placed on its 700 MHz spectrum, though that hasn't stopped the company from fighting openness in general tooth and nail in other ways. As I've noted previously the conditions have plenty of loopholes -- and anti-competitive behavior is allowed just as long as companies ambiguously insist that what they're doing (like blocking Google Wallet, or locking bootloaders) is for the "safety and security of the network."
Similarly interesting is the fact that T-Mobile, despite a recent reputation for being a fierce consumer advocate, sits right alongside Sprint when it comes to failing to adhere to the fairly simple requirements after a year's head start. Khanifar notes T-Mobile saddles prepaid and postpaid users with a number of strange restrictions, including the fact that users can't unlock more than 2 devices per line of service in a 12 month period. Between this, the company's opposition to Title II and its failure to understand the problems with zero rated apps, T-Mobile's showing it still needs to actually earn that ultra-consumer-friendly reputation.
Khanifar proceeds to note that despite carrier struggles this is at least a step in the right direction, even if we still need DCMA reform to ensure unlocking remains perfectly legal. That said, he quite justly highlights how cell locking no longer makes any coherent sense, for anybody:
"It's worth taking a step back and examining the absurdity of these locks. If you've paid for your AT&T phone, committed to a 2-year contract, and agreed to an "early termination fee," what purpose does a lock really serve? If you've paid cash to purchase a prepaid device, why should it come locked to just one carrier? There's plenty of evidence that locks serve little real commercial purpose. Verizon's business hasn't suffered since they stopped locking their phones. Countries like China and Israel have made locking devices outright illegal with no harm to their wireless industries and plenty of gain for consumers. But unfortunately it's unlikely that Congress or the FCC will take action to implement a similar policy here in the US."
Of course unlocked, open devices widens the competitive door, and with the kind of lobbying power AT&T, Verizon and the entertainment industry wield over Congress, getting real DMCA reform or mandated unlock-at-sale rules in play will likely be nothing short of a miracle.
After hinting about such a project for some time, you might recall that AT&T introduced "Sponsored Data" at the company's developer summit around this time last year. It works like this: if companies pay AT&T a fee their content is specifically allowed to bypass AT&T's already entirely arbitrary (as in, not tied to any real world costs or network conditions) usage caps. To hear AT&T pitch it at the time, this would be akin to "free shipping" or a 1-800 number for data, and an incredible boon for consumers who want to conserve their pricey data allotments.
While some consumers seemed quick to applaud the idea, they weren't understanding the awful precedent AT&T was setting. If you allow AT&T to set arbitrary caps then charge companies to bypass them, you're injecting a company with a rich history of anti-competitive behavior into a content and service ecosystem that works much better with it out of the way. Also, as VC Fred Wilson correctly noted at the time, such a model puts smaller companies and developers at a distinct disadvantage to their deeper-pocketed counterparts. What AT&T pitches as a great creative boon to industry is actually AT&T just desperately trying to retain gatekeeper power.
While AT&T executives have spent two years claiming that interest in this idea is through the roof -- one year later, just ten (mostly smaller) companies have signed up for AT&T's pilot. While Sponsored Data played a starring role at last year's AT&T Developer Summit, executives didn't mention the project once during this year's event. To hear AT&T tell it, there's still tremendous interest in the idea -- despite the fact there's clearly not tremendous interest in the idea:
"Nonetheless, AT&T CMO David Christopher told FierceWireless that the carrier is still "very bullish" on the program...What we said last year, and what we've continued to say, is Sponsored Data is a really unique, interesting capability that is going to take time for it to evolve into various business models," Christopher said in an interview. "We are seeing interest from a variety of developers and content owners in Sponsored Data."
While some companies aren't eager to court net neutrality controversy, others seem entirely oblivious to the threat such a model poses to innovation and smaller developers. Beyond just the obvious neutrality implications, the idea doesn't appear to be gaining traction with companies because new wireless shared data plans have most people signing up for significantly much more data than they need in order to avoid costly overages. In other words, when you have more cellular data than you need, and you're spending a lot of additional time using Wi-Fi, having a few apps or ads that don't impact your data allotment doesn't mean all that much in practice.
As such, it seems like only a matter of time before AT&T mutates the Sponsored Data idea into something notably more awful with a better sales pitch. As I've noted previously, while most of the net neutrality discussion focuses on outright blocking of websites or throttling of connections, the real danger zone is these kinds of "creative" pricing efforts where carriers try to use their gatekeeper power to desperately avoid being dumb pipe providers. It's here, under a glossy coat of PR paint where the real neutrality violations are going to occur, but as we've seen, it's difficult to craft neutrality rules that protect consumers from obnoxious shenanigans -- while allowing for real pricing and service experimentation (should that actually happen in the broadband sector someday).
In this case, we appear to be just lucky in that AT&T's implementation was just so bad most companies were bright enough to steer clear. That's not always going to be the case. As we've seen with the positive reaction to T-Mobile's decision to let the biggest music streaming services bypass its cap (which of course hinders smaller companies or nonprofits not big enough to get whitelisted), it's very clear it's possible to create new business models that tilt the playing field and screw smaller companies and consumers -- all while receiving thunderous applause for the effort.
from the your-privacy-preferences-now-mean-absolutely-nothing dept
A few months ago, we noted how Verizon and AT&T were at the bleeding edge of the use of new "stealth" supercookies that can track a subscriber's web activity and location, and can't be disabled via browser settings. Despite having been doing this for two years, security researchers only just noticed that Verizon was actively modifying its wireless users' traffic to embed a unique identifier traffic header, or X-UIDH. This identifier effectively broadcasts user details to any website they visit, and the opt-out settings for the technology only stopped users from receiving customized ads -- not the traffic modification and tracking.
AT&T responded to the fracas by claiming it was only conducting a trial, one AT&T has since claimed to have terminated. Verizon responded by insisting that the unique identifier was rotated on a weekly basis (something researchers found wasn't true) and that the data was perfectly anonymous (though as we've long noted anonymous data sets are never really anonymous). While security researchers noted that third-party websites could use this identifier to build profiles without their consent, Verizon's website insisted that "it is unlikely that sites and ad entities will attempt to build customer profiles" using these identifiers.
As such, you'll surely be shocked to learn that sites and ad entities are building customer profiles using these identifiers.
Not only that, they're using the system to resurrect deleted tracking cookies and share them with advertising partners, making consumer opt-out preferences moot. According to security researcher Jonathan Mayer (and tested and confirmed by ProPublica), an online advertising clearinghouse by the name of Turn has been using Verizon's modifications when auctioning ad placement to websites like Google, Facebook and Yahoo for some time. When asked, Verizon pretends this is news to the company:
"When asked about Turn's use of the Verizon number to respawn tracking cookies, a Verizon spokeswoman said, "We're reviewing the information you shared and will evaluate and take appropriate measures to address." Turn privacy officer Ochoa said that his company had conversations with Verizon about Turn's use of the Verizon tracking number and said "they were quite satisfied."
Like Verizon's implementation of the program, Turn lets users opt out of receiving targeted ads, but users have no way of really opting out of being tracked or having their packets manipulated without prior consent. As the EFF notes, your only option is to use a VPN for all your traffic, or to use a browser add-on like AdBlock, which doesn't fully address the issues with the use of a UIDH header. Amusingly, Turn tries to claim to ProPublica that it's actually using Verizon's UIDH to respect user behavioral ad opt out preferences, but the website found that repeatedly wasn't working:
"Initially, Turn officials also told ProPublica that its zombie cookie had a benefit for users: They said they were using the Verizon number to keep track of people who installed the Turn opt-out cookie, so that if they mistakenly deleted it, Turn could continue to honor their decisions to opt out. But when ProPublica tested that claim on the industry's opt-out system, we found that it did not show Verizon users as opted out. Turn subsequently contacted us to say it had fixed what it said was a glitch, but our tests did not show it had been fixed."
Even if Turn's being honest, there are plenty of companies that aren't going to bother being ethical. Verizon, which in 2008 insisted that consumer privacy protections weren't necessary because public shame would keep them honest, pretty clearly isn't interested in stopping the practice without legal or regulatory intervention. So yeah, again, we've got a new type of supercookie that tracks everything you do, can't be opted out of, and is turning consumer privacy completely on its ear, but there's absolutely nothing here you need to worry your pretty little head about.
While any respectable company can be good at PR and legal bullshitting, cable and phone companies, having navigated and built their pampered duopoly empire over a generation of regulatory capture, are exceptionally good at it. And among broadband and cable operators, nobody is better at bullshit (or worse at it, depending on where your interests lie) than AT&T. Whether it's AT&T's claim that gutting all state consumer protections will result in magic networks of tomorrow, or claiming that acquiring T-Mobile would create jobs and magically improve competition, AT&T's a master at trying to convince the government (and press and public) that up is down and that snow is piping hot.
The latest gem from AT&T comes as the company is under fire by the FTC for throttling the company's "unlimited" data after customers reach 5 GB of usage (regardless of whether the network is even congested). AT&T has been waging a quiet war on these unlimited customers for years in the hopes of getting them on capped plans, at one point going so far as to block Apple FaceTime from working unless users give up unlimited data. In a motion to dismiss (pdf) an FTC lawsuit over the practice, AT&T tries to argue that because only wireless voice has common carrier status under Section 201(b) of the Communications Act of 1934 (aka Title II), the FTC can't technically tell AT&T what to do when it comes to throttling data:
"AT&T plainly qualifies as a ‘common carrier’ for purposes of Section 5 because it provides mobile voice services subject to common-carrier regulation under Title II of the Communications Act. The fact that AT&T’s mobile data services are not regulated as common-carrier services under the Communications Act is irrelevant. The text, structure, history, and purpose of Section 5 leave no doubt that its common-carrier exemption turns on an entity’s ‘status as a common carrier subject to [an Act to regulate commerce],’ not its ‘activities subject to regulation under that Act.’"..."The FTC cannot rewrite the statute to expand its own jurisdiction."
In short, AT&T is arguing that because it's classified as a common carrier under the Communications Act, the company is exempt from FTC jurisdiction according to Section 5 of the FTC Act. Or even more to the point, AT&T is using the same Title II classification it breathlessly claims to loathe as a way to dodge a lawsuit for being misleading. Except, as we've highlighted recently, the FTC just got done imposing the biggest fine the government has ever given out for AT&T's aiding and protecting of crammers and scammers, using authority granted under Title II. AT&T didn't make a single peep about the FTC's authority in that instance.
AT&T doesn't seem too interested in expanding on its logic here. Jon Brodkin at Ars Technica asked AT&T about its position, and the telco absolutely refused to clarify on the record:
"We’ve asked AT&T why it accepted the FTC’s jurisdiction in the text messaging case but not the data one, and the company said it would provide a response today. (The FCC was also involved in that case and invoked its authority over common carriers despite never classifying text messaging as a common carrier service—AT&T did not object to that, either, TechDirt wrote at the time.)...AT&T did not directly answer our question but pointed to a statement the company made on the day of its cramming settlement."
The statement AT&T points to offers no further illumination of the company's logic. What's AT&T thinking? With legal pressure mounting, the jig was up in the case of cramming, and after a decade in which AT&T likely made billions off of the scams, even a record $105 million fine was small potatoes. Throttling and manipulating data to make an extra buck though? There's still potentially billions to be made being sneaky and obnoxious there, which is why AT&T's changing its tune and putting on its very best tap dancing shoes to flit between, over and under common carrier law and FCC/FTC jurisdictional distinctions.
AT&T lawyers likely want FCC jurisdiction here so the company can fight the throttling charges under the larger umbrella of the net neutrality fight alongside Comcast and Verizon. Back in October 2014, the FCC sent AT&T a Letter of Inquiry investigating AT&T's throttling of "unlimited" users, and the agency is contemplating a Notice of Apparent Liability (read: fine) for violating FCC transparency rules. But at the same time AT&T is telling the FTC only the FCC has authority over the company, AT&T lawyers are telling the FCC mobile data can't be treated as a common carrier service. Sweet dance moves, dude.
In short, that's an awful lot of legal tap dancing just so AT&T can pretend limited user connections are "unlimited," but again, with billions in potential revenues at stake, AT&T's going to do whatever's necessary to thwart Title II classification, where solid neutrality rules could hamstring the company's "creativity." As we've noted previously, Title II rules are only going to be a problem for ISPs that are doing something wrong, and AT&T's a master at concocting an endless stream of awful, anti-consumer ideas, then out-maneuvering regulators when they finally wake up from their naps to realize broadband consumers are getting the shaft.
We've noted more than a few times how T-Mobile has been slowly improving the wireless industry by doing something outrageous: giving customers things they actually want. So far that's included unlimited data options at a time when the bigger carriers have embraced caps and steep overages -- and a move away from the old subsidized handset model, where users can now often buy handsets outright or subsidize them over payment plans. While some of the actual pricing promotions have been cosmetic in nature, there's no doubt that T-Mobile's consumer-friendly policies and wise ass CEO have been a great thing for the industry.
The latest example of T-Mobile disruption is its recent introduction of roll over data, a common sense approach that lets users store their unused monthly data allotments for future use in what T-Mobile calls a "Data Stash." It's certainly not a revolutionary idea, and it's not even original in the last month (a Southern wireless provider named C Spire offered the option a week or two before T-Mobile), but in a wireless industry dominated by just two players, we're at the point where god-damned common sense is the very height of innovative disruption.
Enter AT&T, bloated and groggy from decades of regulatory capture and unfamiliar with real competition (despite what groups like the CTIA claim). AT&T's been quietly admitting it's starting to feel the pinch from T-Mobile's shenanigans, which is of course precisely why AT&T tried to acquire and eliminate T-Mobile several years ago, and why regulators stepped in to block it.
Now forced to at least pretend to compete, AT&T this week introduced its own roll over data program, though in traditional ham-fisted AT&T fashion it has more than a little fine print. Unlike T-Mobile's plan that lets you store unused data bytes and bits for up to a year, AT&T lets you store your roll over data for all of one month. Worse perhaps, before you can even use your rolled-over data you have to first burn through your primary data allotment. Meanwhile, much like it did when AT&T pretended its very limited 1 Gbps offerings in Austin wasn't an obvious response to Google Fiber, AT&T is busy telling some reporters that this me-too effort (a poor one at that) has nothing whatsoever to do with T-Mobile.
It's another example of AT&T trying to fake and head bob its way past competition, in the process walking face first into T-Mobile's attempts to make the company look stupid. Amusingly, in an end of 2014 prediction blog post, T-Mobile CEO John Legere found it pretty easy to predict AT&T's behavior:
"AT&T will find new ways to cause their customers pain - especially those still on grandfathered unlimited plans. Just to squeeze more money out of them. (Meanwhile, we’ll keep embracing unlimited.) I’m also betting AT&T will introduce a weak Data Stash™ knock off – but the fine print will be massive, and they’ll miss the first and most important step in the process – which is to stop punishing their customers with domestic overages and instead get rid of them."
Again making AT&T look bad isn't hard, since AT&T is the one doing most of the heavy lifting. Legere quickly took to Twitter to mock AT&T for its efforts, in turn scoring even more PR points among consumers annoyed by AT&T and Verizon:
Only day 7 of 2015 and my predictions are coming true! Want to bet they won't give you 10GB to start or end overages? http://t.co/MyTQvGDU5l
It's perpetually entertaining to watch T-Mobile dismantle a giant by doing little more than treating consumers well and then just sitting back and waiting for AT&T to do something stupid. Of course with AT&T and Verizon's bottomless lobbying pockets, stranglehold on spectrum reserves, dominance of 80% of the wireless retail market and an even greater dominant share of the special access (cell tower backhaul) market, being a pain in the ass can only get T-Mobile so far. Still, it's progress for an industry that has spent ten years pantomiming what competition actually looks like. As T-Mobile and Sprint (not to mention the ocean of smaller MVNOs) gain their footing, pretending to compete is simply not going to be good enough for the nation's dopey duopoly.
from the I-have-three-degrees-and-can't-understand-my-Verizon-bill dept
I've written about the telecom industry for going on fifteen years now, and even I have to spend an inordinate amount of time trying to decipher many of the industry's new pricing offerings and promotions when they first hit the newswires. Of course, this confusion is often by design; the more complicated moving parts in play when choosing a plan and device (should I enroll in early phone upgrade programs? Will I have enough pooled data? Do I really need device insurance?), the more difficult it is for the average consumer to understand what it really is they're buying and make direct comparisons.
While T-Mobile's recent competitive assault on Sprint, AT&T and Verizon has helped encourage some positive changes in the sector (the shift away from device subsidies and contracts in particular), many of the competitive responses and promotions have been largely cosmetic in nature with even the carriers admitting they're still not all that interested in really competing on price. As a result, despite progress, a lot of the industry's problems remain, including intentionally-confusing bills that require several advanced degrees to truly fully understand. Even T-Mobile, which is cultivating a reputation as a consumer hero, acknowledges that consumers will never be able to understand what it is they're buying:
"Industry insiders acknowledge that, short of creating a spreadsheet to sort out the pitches, expecting consumers to navigate all of these offers is unrealistic. "We’re in a state of the industry where the carriers have sown a massive amount of confusion," Mike Sievert, the chief marketing officer for T-Mobile USA, said in a telephone interview. "Can you even decipher what’s going on with the carriers anymore?"
Of course T-Mobile laughs this off as a sort of "gosh, that's just how it is" affair, when again, this confusion is by design. AT&T, the company that has so far been hit the hardest by T-Mobile's often hilarious attacks on industry compatriots, takes the opportunity to imply that this confusion is the fault of increased T-Mobile competition, not the carriers themselves:
"I think we’re propagating some confusion in the marketplace — us as an industry," Glenn Lurie, the new chief executive of AT&T Mobility, said in a recent interview. "There’s been so much noise that customers are getting confused." Criticizing his competitors’ limited-time discounts, Mr. Lurie of AT&T said his company’s reputation was built around being respectful and transparent to customers. "Deal of the day is not necessarily how you get there."
Of course that's the same AT&T that has been at the vanguard of making wireless plans headache-inducing for years. It's also the same AT&T that just settled an investigation by the government into not only turning a blind eye to cramming and spamming, but for intentionally making bills more confusing so such scams would be harder to detect. While the press loves to make a lot out of the wireless industry's current price war, there's still a long, long way to go in terms of generating enough competitive pressure to force carriers to offer truly lower prices and a product people can understand. Of course, when the majority of consumers don't even know what a gigabyte is, that may be easier said than done.
from the we-don't-appear-to-be-learning-anything dept
Time and time again we're told by incumbent ISPs that if lawmakers give them "X," we'll soon be awash in all manner of miraculous network investment and job creation. Sometimes "X" is an acquisition, as when AT&T promised to magically increase competition if it was allowed to remove T-Mobile from the marketplace. Often "X" is broad deregulation. Other times it's significant regulation of they other guy. Sometimes it's just subsidies. Lately we've been told that if we only don't apply net neutrality rules, we'll be awash in amazing network investment and next-generation broadband in no time.
Of course, if you stop and actually pay attention, time and time again you'll shockingly find that these repeated telecom Utopias never arrive, and by giving your favorite lumbering telecom duopolist everything it wants, things generally only get worse. Deregulate AT&T broadly in California under promise that you'll see lower rates and greater competition, for example, and watch miraculously how things actually get worse (and nobody wants to talk about it). AT&T's currently telling state lawmakers that if they gut all regulations requiring it maintain DSL and POTS networks (so AT&T can hang up on users it doesn't want to upgrade) we'll soon be awash in the technology miracles of tomorrow. Downgrades are upgrades, you see.
"X" is also all-too-frequently tax breaks and incentives. You might recall that Verizon promised the States of New Jersey and Pennsylvania it would deliver fiber broadband to every home in exchange for billions in tax cuts. After getting the incentives Verizon simply threw money at the States, and a decade later both States were willing to forget Verizon's obligations entirely.
Similarly, the Wall Street Journal recently dug through the history books, and found that bonus depreciation -- imposed as part of the 2008 Stimulus Act and pushed for by the telcos to spur job creation and investment -- also never delivered the goods. Essentially an interest-free loan that lets companies defer tax obligations, the Journal notes that, once again, the promised job growth and investment spikes never actually happened:
"But that isn’t how it has worked, at least at AT&T and Verizon, whose vast networks of towers and cables make them two of the country’s biggest investors in infrastructure. AT&T estimated its federal tax bill last year at $3 billion, down from about $5.9 billion in 2007, before the tax relief was enacted. Verizon estimated that it would get $197 million back last year, compared with a 2007 bill of $2.6 billion. Meanwhile, the companies have kept their capital spending relatively flat since the stimulus was adopted, and their employee count has dropped by more than 100,000 people, a fifth of their combined work forces."
This was, the Journal notes, despite studies years earlier clearly illustrating that bonus depreciation didn't really work, though AT&T (as it does with everything) is threatening reduced investment if the policies aren't extended. While wireless spending remains strong, the Journal fails to note that AT&T's fixed-line investment has actually been dropping significantly -- even while the company pretends to be expanding gigabit fiber to get its DirecTV acquisition approved by regulators. It's a never-ending cycle of bluffing and bullshit, and at some point you'd think we'd stop and realize that maybe just giving lumbering, pampered duopolists absolutely everything they want may not be the quickest path to telecom nirvana.