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.
Last week I was wondering why the various mobile operators couldn't just be honest to customers in explaining the limitations of various service plans. A report had come out saying that people were sick and tired of service providers lying about service and features -- and it seemed to me that a company that was honest would get a lot of customers as a result of that honesty. Of course, this also came only a few days after we were wondering why Comcast couldn't come out and give an honest explanation for why it was jamming certain types of packets. Blogger Tom Lee from the Manifest Density blog, has responded to both things (though, incorrectly refers to Techdirt as being anti-telco, which we're not at all -- we're anti-telco-stupidity, which is quite different), making a very perceptive point. He basically says that it's impossible for any of these service providers to be honest with customers because doing so would require them to first admit the truth to themselves: they're just commodity dumb pipe providers, and all their efforts at pretending to be something more are pretty much meaningless. Until they can admit that (and Lee's assertion is they won't admit that), they can't be honest with customers. There's definitely a large chunk of truth in there, and it explains part of what the problem is -- but I still don't think that precludes service providers from being a lot more honest, even as they try to provide additional value-added services that might not matter. Being honest and transparent with customers is a good marketing idea for these companies, especially as they're being challenged to be anything more than a commodity dumb pipe provider. Being honest can actually be a part of their differentiated appeal to customers.
Back in 2005, we noted that Verizon Wireless was following the tactics of others in advertising "unlimited" wireless broadband services, while the truth was they were quite limited. As people later worked out, despite the claim of "unlimited," VZW was cutting off anyone who used more than 5 gigs of data per month. That's pretty limited, actually. When confronted about this, the company tried to argue that by "unlimited" it really meant "It's unlimited amounts of data for certain types of data." And they followed it up with this gem: "It's very clear in all the legal materials we put out." Right, see, that's the legal materials -- the stuff you know no one reads. Yet in the marketing materials it's quite clear that you're claiming "unlimited" and that has a pretty clear meaning. After many such complaints, Verizon Wireless finally started to back down from the false claim of "unlimited" earlier this year. Turns out that it wasn't because of any realization that lying to your customers is a bad idea, but because NY State was investigating the practice. NY has now fined Verizon Wirelss $1 million to be given out to customers who had their service unfairly terminated for actually believing that "unlimited" meant "unlimited." Of course, Comcast might want to start paying attention right about now. While lawyers everywhere are rushing to file lawsuits over its decision to jam broadband user accounts, before that happened Comcast was famous for many, many years for being one of the biggest ISPs to lie about offering unlimited service. It's a story that comes up in the press every year or so, and every year Comcast gives its own doublespeak about how it only cuts off the worst "abusers." However, it's still false advertising to claim unlimited service when that's not what you supply -- and it's hardly "abuse" if people are merely doing what you told them they could do.