As many expected, Donald Trump has chosen former Verizon lawyer and current FCC Commissioner Ajit Pai to head the FCC, according to a report by Politico. According to two anonymous insiders "familiar with the decision," Pai, who met with Trump on Monday, should be formally announced as FCC boss in short order. Pai recently proclaimed that net neutrality's "days are numbered" under Trump, while stating that the reformed FCC would be taking a "weed whacker" to "unnecessary regulations" like the FCC's net neutrality rules and its new consumer broadband privacy protections.
Politico rather soft sells the controversy that Pai will represent to those who don't think technology policy should be dictated by Verizon, AT&T, Comcast and Charter Communications:
"Pai is already a familiar name in tech and telecom policy debates. He’s a fierce and vocal critic of many regulations passed by the commission's Democratic majority, including the 2015 net neutrality rules that require internet service providers to treat all web traffic equally and are opposed by the major broadband companies."
Let's be clear here. Pai has supported the incumbent duopoly providers on nearly every issue of substance. He has vilified net neutrality to an often-comic degree, falsely claiming the rules encouraged dictators in North Korea and Iran and led to a massive slowdown in industry investment. He has consistently refused to even admit the U.S. broadband market has a competition problem. He's made it abundantly clear he wants to eliminate every FCC consumer protection function, and, alongside fellow Commissioner Mike O'Rielly, has even repeatedly voted down holding AT&T accountable for outright fraud.
If you're looking for somebody who will rubber stamp every Comcast request shoveled in his general direction, Pai is certainly your man. If you're looking for an FCC leader who's going to care about consumer issues or the plight of the startup or small business in a word dominated by massive, ever-consolidating telecom conglomerates, you're about to get a master class in disappointment. The irony, of course, is that Pai is about as far from the "populist" rhetoric President Trump leaned on to get elected as one can get:
January 20th 2017, will be remembered as the day the people became the rulers of this nation again.
Yes, nothing quite says "man of the people" like a former Verizon lawyer who has fought tooth and nail against every single effort to hold large ISPs accountable to the public. On any given day, if the wind is right and with enough pressure, Pai may just be convinced to occasionally do the right thing. But as the leader of an agency tasked with keeping Comcast from viciously savaging both consumers and the competition, it's not really physically possible to make a more controversial and uninspired selection.
The FCC's unwillingness to clearly ban zero rating as part of the net neutrality rules is starting to bite the agency -- and consumers -- squarely on the ass. Zero rating -- or the practice of letting some content bypass an ISPs' usage caps -- is seen by many to be a major anti-competitive problem, given the act of giving some companies cap exempt status puts everybody else at a disadvantage. That's why Chile, Norway, Netherlands, Finland, Iceland, Estonia, Latvia, Lithuania, Malta and Japan have banned the practice.
But the FCC, in its infinite wisdom, decided that instead of banning zero rating, it would take a wait and see approach, addressing zero rating behavior on a case by case basis. And you can understand the logic; the FCC believes it's best to let ISPs experiment with what they insist are just creative new pricing models. The problem is one of precedent. Allow any form of zero rating, and you've already opened the door to the role of ISP as warden and gatekeeper. The other problem? The FCC's wait and see approach has so far involved doing absolutely nothing, even in the face of obvious anti-competitive behavior.
As a result, T-Mobile's now exempting both select video and audio streaming services from caps as part of its Music Freedom and Binge On programs. AT&T and Verizon's "Sponsored Data" programs charge companies a fee to have their content receive preferred, cap exempt status, putting any smaller companies that can't afford the fee at a disadvantage. Comcast has been slowly expanding its usage caps, then exempting its own content from them, giving it an unfair advantage against Netflix.
Though they vary in severity, all four of these companies are using their power as middlemen to potentially give some companies an advantage over others, the very thing our net neutrality rules were supposed to put an end to. Comcast's behavior is probably the most unapologetically anti-competitive of the bunch. Yet the FCC's response to most of these so far has ranged from total silence to outright praise.
Well, at least until last week, when the agency finally fired off letters to Comcast, AT&T and T-Mobile (pdf), asking them for more detail on zero rating plans that have been fully detailed for months (in AT&T's case, a few years). At an agency meeting last week FCC boss Tom Wheeler made it clear this was simply an inquiry, not an investigation, and the letter informs the companies the FCC's just looking to better understand what ISPs are doing (the agency was, apparently, in cryogenic storage all year):
"We want to ensure that we have all the facts to understand how this service relates to the Commission's goal of maintaining a free and open Internet while incentivizing innovation and investment from all sources. We would also like to hear from you any additional perspectives you'd like to share about changes in the Internet ecosystem as a whole. To assist us in this review, we request that Comcast make available relevant technical and business personnel for discussions about the service with FCC staff, no later than January 15, 2016."
While the FCC moves at a glacial pace, Comcast has spent much of the year using broadband usage caps and zero rating for unfair market advantage. Again, Comcast is imposing unnecessary broadband caps in uncompetitive markets to hinder Internet video, then exempting its own streaming service from usage caps to penalize competitors like Netflix. So far, Comcast has argued this couldn't possibly be a net neutrality violation because the service spends significantly more time traveling over Comcast's managed IP infrastructure instead of the public Internet. It's a tap dance, and the FCC's response is timid and underwhelming.
If the FCC had clearly prohibited zero rating, it wouldn't have opened the door to Comcast's latest logical lambada. As we worried when the rules were crafted, leaving zero rating enforcement ambiguous opens the door to all manner of net neutrality violations -- just as long as an ISP is wearing the right tap dancing shoes.
Less than a year ago, Comcast was sued over its WiFi hotspot program, which essentially turned residential customers into hotspots for other Comcast customers or hotspot subscribers. Comcast used this to make a great deal of money off of its own residential customers. The problem was that Comcast didn't see the need to have customers opt-in to this program and was perfectly happy using customers' electricity and, in some cases, bandwidth to power the service. That and the fact that the opt-out settings on the router controls were given to bouts of amnesia made the company look pretty crappy, but, hey, you know, Comcast.
Consequently, unsuspecting customers who used Cablevision as their internet service provider now had "outsiders" piggybacking off their home Wi-Fi networks once individuals were within the range of the signal emanating from their home. Jensen contends that Cablevision never asked for his consent to use his home network to create a Wi-Fi hotspot. Jensen also points out that Cablevision's customer contract never mentions the existence of the secondary network they are providing to the public when they leased a router to him.
Not only did Cablevision act without his authorization, Jenson further asserts the company's actions have compromised his internet speed, put him at greater security risk and increased his electricity costs.
Why any company thought it could get away with something like this without legal blowback is completely beyond me, but why Cablevision thought it could skate after Comcast already faced legal action is a complete mystery. Like many other ISPs, Cablevision makes good money in renting routers and modems to customers.(Update: as our always helpful and informative comment section has pointed out, Cablevision supplies their smart router for the hotspot service free to ISP customers, though that doesn't change the rest of the post). This sort of news should serve to do nothing other than compel anyone who wishes to remain a Cablevision customer to buy their own router and modem. All because Cablevision couldn't be bothered to properly inform customers of the plan and give them an option to opt-out?
Oh, and as for that opt-out ability:
This increased traffic also heightens the residential customer's security risk since strangers are connecting to the internet through the same wireless router, Jensen says. He says when he called Cablevision to request that they remedy the situation, he was told that the wireless router he paid Cablevision to use could not have the Optimum Wi-Fi Hotspot feature turned off.
"Cablevision configures the routers it leases to consumers so that the Optimum Wi-Fi Hotspot cannot be disabled. Thus, consumers wishing to opt out of broadcasting a secondary Wi-Fi network from their homes are left with no recourse other than to buy an entirely new wireless router, costing anywhere from $50 to $200." the complaint says.
Charging Giving customers for equipment that can't opt-out of a service that only enriches the seller, not the customer? That sounds more like a pyramid scheme than an ISP to me.
Ever since regulators blocked AT&T's acquisition of T-Mobile, T-Mobile has responded by lighting a fire under the wireless industry. With an amusing CEO and consumer-friendly policies, the company is currently adding more new subscribers per quarter than any of the other big four carriers, once again shockingly highlighting how not treating your customers like the enemy can pay notable dividends. But no matter how well T-Mobile has been doing, German owner Deutsche Telekom has made it repeatedly clear that it wants out of the U.S. market.
However, getting a sale done has proven harder than the company expected. After the AT&T deal was blocked by regulators, they also indicated they wouldn't approve a sale to Sprint, in order to keep four large, viable competitors in the market. Rumored for a while, indications now are that satellite TV provider Dish Network is in talks to acquire T-Mobile in a deal worth more than thirty billion:
"The two sides are in close agreement about what the combined company would look like, with Dish Chief Executive Charlie Ergen becoming the company’s chairman and his T-Mobile counterpart, John Legere, serving as the combined company’s CEO, the people said. Tougher questions about a purchase price and the mix of cash and stock that would be used to pay for a deal remain unresolved, the people said. One of the people characterized the talks as at “the formative stage,” and said an agreement might not ultimately be hammered out."
The deal would join a wave of consolidation in the telecom sector, including Frontier's acquisition of Verizon's California, Texas, and Florida fixed-line assets, Verizon's acquisition of AOL, Charter's acquisition of Time Warner Cable and Bright House Networks, and AT&T's acquisition of DirecTV. And while Dish is rumored to be a horrible place to work and boss Charlie Ergen has a reputation for being a pain in the ass to work with, the deal makes quite a bit of sense and should probably have no problems getting past regulators.
Whereas T-Mobile has been a thorn in the side of AT&T and Verizon, Dish has been similarly disruptive on the TV front, whether that's via its ad-skipping Hopper DVR, or the launch of its new Sling TV Internet video service. Dish has also been slowly accumulating a ton of spectrum over the last few years, insisting it was pondering a solo or joint wireless play. And while combined it's believed that the new T-Mobile under Dish would have even more spectrum than AT&T or Verizon, it wouldn't be enough to trip the FCC's "spectrum screen" used to determine competitive harm:
There had been some worry that Dish was just acquiring spectrum in order to sit on it, flipping it down the road for additional cash to AT&T and Verizon. Instead, a Dish buy could result in an even stronger T-Mobile with the spectrum and resources to shore up the one area where it still lags behind AT&T and Verizon: total network coverage. Telecom writers everywhere also win under this deal, as entertaining f-bomb dropping T-Mobile CEO John Legere is expected to remain at the helm of the new, tougher company. Should Sprint finally be able to get things together under new owner SoftBank, we might actually start seeing something vaguely resembling real, sustained price competition in the wireless sector.
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.
In June of last year, Comcast quietly announced that it was deploying a new "Xfinity Home Hotspot" initiative that would turn user home routers into publicly-accessible hotspots. Updated routers broadcast two signals: one being yours, and the other being an "Xfinitywifi" SSID offering free Wi-Fi to Comcast users in the area (prepaid Wi-Fi for non-Comcast customers). Comcast's FAQ attempts to minimize customer worries about the initiative by noting the public Wi-Fi doesn't count against the customer's usage caps, and the router delivers extra bandwidth (above your provisioned speeds) to counter any extra usage load.
There are a number of problems with the initiative. One, you're paying Comcast a monthly fee (up to $10 in many areas) to rent hardware that's using your bandwidth (and around $30 in electricity annually) to effectively advertise and sell Comcast services. Two, the service is being deployed market-by-market without prior consumer consent. It's also opt out not opt-in, and users complain the routers continuously and mysteriously reset this preference each time the hardware receives a firmware update. Three, Comcast's sending out misleading e-mails that may place an order for the new hardware without your consent.
Complaints have been growing about this initiative for a while, but they appear to have reached a fevered pitch this week with the news that Comcast is now facing a class action lawsuit over the Xfinity Home Hotspot program. Reading the complaint, lawyers don't appear to have noticed yet that the opt-out mechanism often doesn't actually work -- but from the looks of things the fact Comcast doesn't give advanced warning about the changes may be enough for a case:
"Grear claims that Comcast does not request customers' authorization to use their residential equipment and networks for public use. "Indeed, Comcast's contract with its customers is so vague that it is unclear as to whether Comcast even addresses this practice at all," the lawsuit claims. In using its customers' home networks to build a national network, Comcast "has externalized the costs of its national wi-fi network onto its customers," Grear says in the complaint. He claims that the new routers use much more electricity than regular routers, and that this is "a cost borne by the unwitting customer."
Fortunately, Comcast customers can skip the legal proceedings and take things into their own hands by buying their own compatible router and modems, thereby avoiding paying Comcast a $10 per month rental fee to help build Comcast's nationwide Wi-Fi network. Estimates suggest Comcast makes $300 million per quarter just off of these modem rental fees alone, and the monthly fee has steadily climbed sykward over the last several years.
While some progressive ISPs such as Speakeasy have allowed customers to "resell" their connections via WiFi, most broadband providers frown on the practice. They don't seem to mind the casual sharing between neighbors, but it's not too surprising to see Comcast sue a guy who tried to set up an entire wireless ISP business this way. It's almost creative... he subscribed to Comcast broadband at 35 different condos, and then advertised his own "connectivity" within each of those buildings. It's hard to believe his defense will work:
He said Comcast signals are often used to power wireless networks at places like Internet cafes and other businesses that charge users for access. "This is a practice that happens throughout any city," Clark said. "Unfortunately, we're one of the bigger guys in town - so, here we are."
I think he'll find that most businesses reselling access aren't using residential Comcast connections -- and even if they are, they're offering very short, temporary connections, rather than permanent service. While I actually think plans like the Speakeasy plan we discussed that allow subscribers to resell their connections is smart, that doesn't mean that this guy is going to get away with this "business."
Well, it's election day and apparently the FCC commissioners liked voting so much they took votes on just about everything. Amazingly, it looks like they even made some good decisions. The big one, of course, and the one that will get the most press, is the unanimous vote to free up television "white space" spectrum. While the NAB made a last ditch effort to stop this, the FCC made the right call here. This spectrum can be put to much better use, which can have a huge impact on increasing innovation and wireless technologies. This is a big win. The FCC also approved Sprint and Clearwire's deal to set up a joint venture for their WiMax operations, as well as allowing Verizon to buy Alltel. Both of those deals make sense as well, so it's good to see them approved.
Other than that, the FCC said that it's going to start looking into the pricing policies of cable companies... and Verizon. Who's missing? FCC boss Kevin Martin's best friends over at AT&T. To be honest, while it's quite likely that the cable companies and the telcos (yes, including AT&T) are abusing their oligopoly position, the answer shouldn't be having the FCC act as a watchdog over pricing policies, but for a better system to be set up that encourages real competition. In the meantime, though, can someone explain why AT&T was left out of the bunch?
A bunch of the worst kept secrets in the wireless broadband world have finally come together. No one ever really believed that Sprint and Clearwire would fully break off their WiMax agreement. It simply made too much sense for them to get back together. At the same time, everyone also knew that Comcast and Time Warner were talking to Sprint to help fund WiMax in order to get a wireless pipe with which to compete with the telcos. And... oh yeah, given how much money Intel had pumped into WiMax to make everyone think it just had to be the next generation wireless system, there was no way it was going to let Sprint and Clearwire's WiMax plans collapse. Finally, toss in the fact that Google was known to be interested in Sprint's WiMax plans, and it's not hard to figure out what is actually happening...
Yes, indeed, Intel, Google, Comcast and Time Warner are teaming up to pump $3.2 billion into a joint venture that would merge Sprint and Clearwire's WiMax operations under the Clearwire brand name. This is certainly no surprise given all the earlier stories, but given how many problems have surrounded WiMax as well as earlier attempts for the cable companies to offer wireless services, don't expect this new venture to go smoothly right from the beginning. That doesn't mean it's not the right thing to do. Most of the companies involved didn't really have much of a choice but to do this. Of course, in all this mess, Sprint and Clearwire squandered a portion of the lead they held over AT&T and Verizon. While it will still take a while for AT&T and Verizon to get LTE plans into motion, all this futzing by Sprint and Clearwire took away some of the huge lead it should have had.
Remember a couple years ago when all the big cable companies teamed up with Sprint with plenty of fanfare to provide mobile phone service and to compete against Verizon and AT&T? Whatever happened to that? Oh, right, it went nowhere. So, perhaps don't get too worked up over the news today that cable companies Comcast and Time Warner might be teaming up with Sprint and Clearwire to fund their troubled WiMax efforts. If you recall, Sprint and Clearwire had a huge deal (with hundreds of millions in backing from Intel) to WiMax the nation, and that deal also fell apart though everyone knows they've been seeing each other on the sly. They know they can't do it alone, so certainly having some support from Comcast and Time Warner could help move this project forward, but there have been so many false starts and stumbles that you can bet this isn't going to go as smoothly as all the players are about to suggest.