Biden FCC Makes Some Empty Noise About Cracking Down On Bullshit Cable & Broadband Fees

(Mis)Uses of Technology

from the consumer-protection-theater dept

The broadband and cable industry has long perfected the use of bullshit fees to jack up subscriber bills. Countless cable and broadband companies tack on a myriad of completely bogus fees below the line, letting them advertise one rate — then sock you with a higher rate once your bill actually arrives. They’ll then pretend they haven’t actually raised rates because the advertised rate remains inaccurately low.

Enter the FCC, which last week announced that it might take a closer look at the problem (at least by cable TV providers) by demanding that they provide consumers an “all in” price that includes fees both in advertising and on subscriber bills:

“We’re working to make it so the advertised price for a service is the price you pay when your bill arrives and isn’t littered with anything that resembles junk fees. Not only will this reduce cost confusion and make it easier for consumers to compare services, but this proposal will also increase competition among cable and broadcast satellite providers through improved price transparency.”

But there are a few problems.

One, the FCC may lack the voting majority to actually implement this thanks to the telecom industry’s successful derailment of the Gigi Sohn nomination, which, by industry design, has left the agency mired in partisan gridlock at a 2-2 commissioner split after a year-long smear campaign against Sohn.

The FCC’s Democratic leader, Jessica Rosenworcel, couldn’t be bothered to provide meaningful messaging support for Sohn during the industry smear campaign. Now her FCC lacks the majority to do much of anything deemed “controversial” by industry, without the approval of the agency’s two Republican commissioners, who generally, with the occasional exception, tend to side with industry.

The Biden administration shares plenty of blame for Sohn’s scuttled nomination. It nominated Sohn 9 months late — the largest appointment delay in FCC history — allowing the industry ample runway to solidify its attack campaign. Biden’s team also failed utterly to apply any meaningful pressure on the three key Democratic Senators (Kelly, Manchin, Masto) who ultimately doomed Sohn’s nomination.

Even when properly staffed, the FCC generally lacks the courage to actually stop cable and broadband giants from engaging in bad behavior. They’re terrified of being accused of dipping even a single, sad, solitary toe into the concept of “rate regulation.” So instead the focus is usually on mandating transparency into how exactly you’re getting ripped off, without actually stopping it.

You can see this over in the FCC’s long-stalled efforts to require a broadband “nutrition label” documenting hidden service charges, which proposes mandating transparency labels for service quality and cost, but don’t actually stop predatory broadband monopolies from ripping you off.

You also see it more broadly with the government’s Affordable Connectivity Program, which pays regional monopolies to temporarily lower prices for poor people — ignoring that consumer prices are only made high by these companies’ monopolistic behaviors in the first place.

A 2019 Consumer Reports study found that about 24% of consumer bills are comprised of bullshit fees, generating cable giants $28 billion in additional revenue annually. The problem is just as bad over in broadband (see CenturyLink’s utterly nonsensical “Internet Cost Recovery” fee), where ISPs routinely rip users off (unless they live in a state with an AG interested in broadband consumer protection).

While it’s nice to see the FCC occasionally acknowledge that the problem exists, this is an agency long-ago defanged by industry. The FCC’s political animals are generally terrified of standing up to cable and broadband giants consistently. Even Democratic FCC commissioners, often slightly better on telecom policy, are generally afraid to even acknowledge broadband monopolies exist in public statements.

You wouldn’t want to upset campaign contributors, intelligence gathering allies, or future revolving door employers. So instead you get a sort of consumer protection theater, where the agency talks a big game about protecting consumers from harm, but isn’t particularly interested in stopping the actual harm, or meaningfully penalizing companies that have spent decades ripping U.S. consumer off.

The end result are “transparency” efforts that shift the onus of responsibility to the consumer, but don’t genuinely stop the underlying behavior by industry or hold industry accountable. That’s not to say greater transparency can’t help, but it’s still generally been a substitute in the U.S. for regulators with the backbone needed to competently police billing fraud and false advertising.

Filed Under: broadband, false advertising, fcc, fees, monopoly power, nickel and dime, regulatory capture, regulatory recovery fee, telecom, truth in advertising

Broadband Giant Frontier Dinged Yet Again For Lying About Crappy Broadband Speeds

Broadband

from the if-you-get-caught,-just-lie-lie-again dept

We’ve long discussed how if you really want to understand how the highly monopolistic U.S. broadband industry really works, you should look at regional phone monopoly Frontier Communications. Especially in states like West Virginia, where the company has spent decades lagging on fiber upgrades and DSL and phone repairs under a regime of regulatory capture that rarely holds them accountable for fiber under-investment, outright ripping off taxpayers, or failing to adhere to even basic quality standards.

After more than a decade of this dysfunction — including a completely bungled acquisition of some unwanted Verizon phone, DSL, and fiber customers — the company went bankrupt in 2020.

Since then, Frontier has been engaged in a kind of image reclamation effort, in which it admits that under-investing in fiber was a big part of its downfall, and claims that it will stop doing all of the things that brought it to this point. Yet if there’s no real competition in many of the markets the company services (83 million Americans live under a monopoly), there’s no organic incentive to truly improve.

Enter telecom regulators, who, in functioning economies and democracies, step in to nudge things along when the market fails, even if that is largely little more than a few belated wrist slaps. For example the FTC last week announced it would be taking action against Frontier because the company routinely advertised broadband speeds its aging DSL network couldn’t actually provide:

“Frontier lied about its speeds and ripped off customers by charging high-speed prices for slow service,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Today’s proposed order requires Frontier to back up its high-speed claims. It also arms customers lured in by Frontier’s lies with free, easy options for dropping their slow service.”

The FTC’s original complaint and lawsuit against Frontier, filed just about a year ago, was jointly filed with the AGs of Arizona, Indiana, Michigan, North Carolina, and Wisconsin, and the district attorneys’ offices of LA County and Riverside County, California. All pointing out that the company routinely, for years, advertised DSL speeds it knew its network wasn’t delivering.

As a result of the deal Frontier needs to adopt more transparency in its pricing. But most of the benefits are exclusive to users in California. Frontier has to dole out $8.5 million in civil penalties and costs to the Los Angeles County and Riverside County District Attorneys’ offices on behalf of California consumers. But it also has to upgrade 60,000 California customers on crappy DSL to fiber at a cost of $50 to $60 million.

Granted the FTC’s authority here is limited. It can only act when something is very clearly “unfair and deceptive” under the FTC Act. And the FCC’s ability to police a lot of this stuff was curtailed courtesy of the Trump FCC’s net neutrality repeal.

A telecom giant simply has to engage in a small bit of creativity in order to rip off captive U.S. subscribers with relative impunity (see: various surcharges with bullshit names affixed to your cable and broadband bills, or technically unnecessary monthly usage caps). Still, accountability usually finds its way through the haze of lobbying-induced apathy.

The Minnesota AG blasted the company for routinely failing to upgrade or repair its aging network. Washington State’s AG fined Frontier for ripping off subscribers with bogus fees. These efforts have a positive impact overall, but they’re often too scattered to meaningfully derail such practices industry wide. And again, notice that Frontier customers in West Virginia (or other states) see no accountability.

The financial penalties Frontier will face are nothing compared to the money made off the back of captive customers without any competitive alternatives to flee to. Policymakers could avoid these outcomes by tackling the real source of the problem: monopolization and the corruption that protects it. But given that creates political risk, the U.S. instead likes to apply band-aids after the fact, and consider the case closed.

Filed Under: broadband, digital divide, dsl, false advertising, fiber, ftc, high speed internet
Companies: frontier

It’s 2022 And Bullshit Cable TV Fees Are Somehow Still A Thing

(Mis)Uses of Technology

from the fees-fees-and-more-fees dept

For years we’ve talked about how the broadband and cable industry has perfected the use of utterly bogus fees to jack up subscriber bills — a dash of financial creativity it adopted from the banking and airline industries. Countless cable and broadband companies tack on a myriad of completely bogus fees below the line, letting them advertise one rate — then sock you with a higher rate once your bill actually arrives. These companies will then falsely claim they haven’t raised rates.

A 2019 Consumer Reports study found that about 24% of consumer bills are comprised of bullshit fees, generating cable giants $28 billion in additional revenue annually. The problem is just as bad over in broadband (see Centurylink’s utterly nonsensical “Internet Cost Recovery” fee).

Often cable and broadband companies will try to give such fees official sounding names like “regulatory recovery” so that consumers falsely blame government for being nickel-and-dimed. But between TV fees, hardware fees, usage fees, and other surcharges, bundled customers dole out a small fortune every year for absolutely nothing.

It’s fraud and false advertising, but fraud and false advertising that has somehow been normalized over decades in the United States.

One particularly annoying fee is the “broadcast TV fee” cable providers tack onto your bill. It’s basically just a portion of the cost of programming, again broken out and hidden below the line so they can falsely advertise a lower rate. Charter (Spectrum) this week informed customers that the broadcast TV fee on their bills will soon be jumping to $21 a month:

Effective March 18, Spectrum’s “Broadcast TV Fee” will increase by $3. Customers will have to pay $21 per month just to be able to watch their favorite local, over-the-air television stations.

The Broadcast TV Fee has been raised each of the last two summers; most recently, it was increased to $17.99 per month in June 2021. This means that Spectrum’s average surcharge for local, OTA stations is rising an average of $36 per year.

Competition really hasn’t hampered this behavior, in part, because many users still feel like they must subscribe to traditional cable to watch the full array of live sports options that aren’t consistently available on streaming. And again, regulators have generally chosen to turn a blind eye to this practice, much as they have in the airline, hotel, banking, and countless other industries.

The closest we’ve got to meaningful action has been the Biden FCC’s decision to revisit “nutrition labels” for broadband. But that doesn’t apply to television bundles, and while it’s helpful to bring more transparency to precisely how you’re being ripped off, it doesn’t actually stop it from occurring.

Filed Under: broadcast tv fee, false advertising, fcc, fees, hidden fees
Companies: charter, charter spectrum

Report: US ISPs Aren't Transparent About Prices And Speeds, And Regulators Generally Don't Care

Broadband

from the do-not-pass-go,-do-not-collect-$200 dept

By now we’ve well established that regional monopolization, limited competition, and the (state and federal) corruption that enables both (aka regulatory capture) are why US broadband is spotty, expensive, and slow. With neither competent regulatory oversight nor meaningful competition to drive improvements, regional dominant broadband providers simply… don’t bother. The end result goes beyond high prices to substandard customer service, privacy violations, net neutrality violations, and unnecessary surcharges, usage caps, and fees they often don’t clearly disclose.

A recent report from the Institute For Local Self Reliance took a look at how transparent U.S. ISPs are about broadband prices, line restrictions, and hidden surcharges. And the results are about what you’d expect. As in, most U.S. ISPs do a fairly terrible job (quite intentionally) of making it clear how much you’ll pay for broadband, what your upstream and downstream speeds are, and whether there’s any hidden restrictions or fees you’ll face once you sign up.

Why? For one, big ISPs don’t like making it easy to do direct price comparisons, lest people clearly understand the real impact of limited competition and regional market failure. They also routinely engage in false advertising where they advertise one lower price, then hit you with a bunch of bullshit fees. Big ISPs also tend to hide anything that doesn’t make them look good or could showcase their network underinvestment, such as pathetic upload speeds:

This is, the report notes, much less of a problem with local community broadband networks. Previous studies out of Harvard had noted community broadband generally offers lower, more transparent prices than large ISPs, and that’s showcased again here:

Again, this isn’t just a failure of competition, but a failure of regulatory oversight and telecom policy. The FCC’s 2015 net neutrality rules included a provision requiring that ISPs be transparent about pricing and line restrictions. And while the net neutrality aspect of their 2015 order was repealed by the Trump FCC, the transparency component was not. Still, despite the transparency rule having now existed for six years under two different political parties, the report notes how nobody at the FCC has bothered to enforce it:

“The Transparency Rule, however, is largely unenforced. It is commonly accepted that without effective government regulation or competitive market pressure, ISPs are in a position to abuse their power. The Internet access industry is governed neither by regulation nor market pressure in most communities. Because providers don?t have to answer to regulation or worry about their customers switching providers if they offer less than satisfactory service, providers are rarely held accountable for information that is missing or hard to find. Were providers held accountable for making accessible disclosures, customers could less easily be exploited.

The broadband component of the recently-passed infrastructure bill added some additional language requiring that ISPs provide a sort of “nutrition label” for their connections clearly disclosing all restrictions and sneaky fees. But again, rules are only useful if they’re enforced, and the FCC historically under both parties… just hasn’t bothered doing so. Big ISPs like AT&T aren’t just politically powerful campaign contributors, they’re effectively tethered to law enforcement and intelligence systems, reducing any incentive to hold them accountable for pretty much anything of note.

Filed Under: competition, false advertising, fcc, prices, speeds, transparency

Cable Giant Charter Fined $19 Million For Lying About Competitors Going Out Of Business

Broadband

from the just-another-day-in-US-telecom dept

When last we checked in on cable giant Charter Communications (Spectrum), the company was busy using the Boys and Girl’s Club of America as a prop to try and kill helpful conditions affixed to its megamerger with Time Warner Cable. This week, the company’s under fire after it circulated advertising telling customers (falsely) that one of its competitors (Windstream Communications) was going out of business. While Windstream had filed for Chapter 11 bankruptcy protection, it very much remains in business. Yet Charter’s advertising to customers informed them the company would likely be shuttering its doors soon.

This week Judge Robert Drain of US Bankruptcy Court for the Southern District of New York ruled (pdf) that Charter must now pay Windstream $19 million for spreading false claims about the company:

“Charter’s goal with the mailings “was to induce the Debtors’ customers to terminate their contracts and switch to Charter by sending them literally false and intentionally misleading information about the Debtors’ bankruptcy cases and financial wherewithal,” the ruling said. Charter premised its ad campaign “on false assertions regarding the Debtors’ bankruptcy cases,” the ruling said.”

Charter’s lawyers had, as they do every time they’re in court, tried to argue that lying about a competitor was protected speech, something the Judge didn’t look to kindly on:

“Charter claimed that punishment for its “literally false and intentionally misleading advertising campaign would violate their First Amendment right to free speech,” the judge wrote. But First Amendment rights are not absolute and do not protect Charter’s false statements about Windstream’s bankruptcy proceedings and financial wherewithal, he wrote. “Such commercial speech is properly curtailed by precluding such wrongful conduct,” he wrote.”

All of that said, Charter, hand in hand with Comcast, is securing itself an ever larger monopoly over broadband access in countless US markets, especially at faster speeds. Cable giants now enjoy a 70% market share and growing over fixed broadband access, thanks in large part to regional phone companies that were too lazy, cheap, or heavily indebted (usually from “growth for growth’s sake” megamergers) to actually upgrade aging DSL lines. In fact, many of these companies are literally just letting their networks fall apart and refusing to repair customer lines on a timely basis.

As such the irony is that Charter didn’t really even need to lie, since most frustrated telco DSL subscribers likely would have eventually headed their direction anyway. But when you’re a natural monopoly in a market that’s neither competitive nor competently or consistently regulated, you tend to operate as if there’s no repercussions for your actions — because there usually aren’t.

Filed Under: broadband, competition, false advertising, truth in advertising
Companies: charter communications, charter spectrum, windstream

Zoom Gets An FTC Wrist Slap For Misleading Users On Security, Encryption

Legal Issues

from the not-really-encrypted dept

In many ways, Zoom is an incredible success story. A relative unknown before the pandemic, the company’s userbase exploded from 10 million pre-pandemic to 300 million users worldwide as of last April. One problem: like so many modern tech companies, its security and privacy practices weren’t up to snuff. Researchers found that the company’s “end-to-end encryption” didn’t actually exist. The company also came under fire for features that let employers track employees’ attention levels, and for sharing data with Facebook that wasn’t revealed in the company’s privacy policies.

While the company has taken great strides to improve most of these problems, the company received a bit of a wrist slap by the FTC this week for misleading marketing and “a series of deceptive and unfair practices that undermined the security of its users.” A settlement (pdf) and related announcement make it clear that the company repeatedly misled consumers with its marketing, particularly on the issue of end-to-end encryption:

“In reality, Zoom maintained the cryptographic keys that could allow Zoom to access the content of its customers? meetings, and secured its Zoom Meetings, in part, with a lower level of encryption than promised. Zoom?s misleading claims gave users a false sense of security, especially for those who used the company?s platform to discuss sensitive topics such as health and financial information.

The FTC also criticized Zoom for storing some meeting recordings unencrypted in the cloud for up to two months, despite marketing claims that meetings would be encrypted immediately following session completion. The agency also criticized Zoom for bypassing Safari malware detection when it installed ZoomOpener web server software as part of a Mac desktop application update in July 2018:

“Without the ZoomOpener web server, the Safari browser would have provided users with a warning box, prior to launching the Zoom app, that asked users if they wanted to launch the app. The complaint alleges that Zoom did not implement any offsetting measures to protect users? security, and increased users? risk of remote video surveillance by strangers. The software remained on users? computers even after they deleted the Zoom app, and would automatically reinstall the Zoom app?without any user action?in certain circumstances.”

The settlement itself isn’t much of one. As part of it, Zoom simply has to “establish and implement a comprehensive security program” and adhere to “a prohibition on privacy and security misrepresentations,” stuff the company insists it has already done. The settlement doesn’t come with any meaningful financial penalties or consumer compensation of any kind, resulting in some dissenting Democratic Commissioners (like commissioner Rebecca Kelly Slaughter) arguing it wasn’t really much of a settlement at all:

“Zoom is not required to offer redress, refunds, or even notice to its customers that material claims regarding the security of its services were false. This failure of the proposed settlement does a disservice to Zoom?s customers, and substantially limits the deterrence value of the case.”

Again, Zoom should be applauded for the fact that the company has taken many concrete steps to improve things sense reports first surfaced that its privacy and security standards weren’t up to snuff. But it’s not clear that the FTC, arriving late to the party and “requiring” the company do a bunch of things it had already accomplished, really acts as much of a deterrent for the long line of companies that phone in their privacy and security standards. Especially when most of them get far less (if any) attention for similar behavior, in part because the FTC routinely lacks the resources to seriously police privacy at any real scale.

Filed Under: end-to-end encryption, false advertising, ftc, video conferencing
Companies: zoom

'Smart' Home Platform Wink Changes The Deal, Suddenly Imposes Subscription Fees

(Mis)Uses of Technology

from the nickel-and-dime dept

Time and time again we’ve highlighted how in the modern era you don’t really own the hardware you buy. In the broadband connected era, firmware updates can often eliminate functionality promised to you at launch, as we saw with the Sony Playstation 3. And with everything now relying on internet connectivity, companies can often give up on supporting devices entirely, often leaving users with very expensive paperweights as we saw after Google acquired Revolv.

And with the world shifting toward a “service as a subscription” model for everything, the products you buy can also suddenly cost you far more than the original value proposition suggested. Users who spent money to outfit their home with hardware from Wink learned this the hard way, when the company suddenly announced users would need to start paying a $5 per month subscription fee if they wanted the company’s “smart” home products to keep working.

According to a company blog post, users who don’t pay the fee will “no longer be able to access your Wink devices from the app, with voice control or through the API,” and all automations will be disabled on May 13. The blog post also attempts to explain that because the company doesn’t rampantly monetize your personal data (something it’s routinely hard for consumers to verify), the fee is necessary to keep the lights on:

“Wink has taken many steps in an effort to keep your Hub?s blue light on, however, long term costs and recent economic events have caused additional strain on our business. Unlike companies that sell user data to offset costs associated with offering free services, we do not. Data privacy is one of Wink?s core values, and we believe that user data should never be sold for marketing or any purpose.”

Granted until late last week, “mo monthly fees” was part of the company’s marketing pitch:

Users who spent significant money on the Wink smart home platform under the promise of “no monthly fees” were given just seven days to decide if they wanted to pay the subscription, or deal with the headache of finding an entirely new smart home platform (during a pandemic, no less). Given they’re not seeing refunds in the face of this head fake, many aren’t particularly amused or impressed:

Reports had suggested that the company had been having trouble paying its employees since last fall. Given the added economic strain from the pandemic, it’s possible that the company might not be operational down the road, meaning users will get bilked first by added fees, then potentially lose functionality anyway should the company fall apart completely. It’s yet another shining example of how dumber technology often remains the smarter option in a world where your IOT product value equation and functionality can pivot on a dime, often for the worse.

Filed Under: based, false advertising, iot, no monthly fees, ownership, smart devices, subscription
Companies: wink

Amazon Sued For Saying You've 'Bought' Movies That It Can Take Away From You

Legal Issues

from the this-could-be-interesting dept

For well over a decade we’ve talked about the many problems that arise when copyright is compared to “property” — and people try to simply move over concepts from physical, tangible property into the world of digital. A key aspect of this: when you “purchase” something digital online, is it really a “purchase” or is it a “license” (especially a license that could be revoked)? If it was a true “purchase” then you should own it and the seller shouldn’t be able to take it back. But in practice, over and over and over again, we’ve seen stories of people having things they supposedly “bought” disappear. The situation is so crazy that we’ve referred to it as Schrödinger’s Download, in that many copyright holders and retailers would like the very same thing to be a “sale” some of the time, and a “license” some of the time (the “times” for each tend to be when it hurts the consumers the most). This has, at times, seeped into physical goods, where they’ve tried to add “license agreements” to physical products. Or, worse, when some copyright folks claimed that buying a DVD means you don’t actually own what you bought, but rather are merely “purchasing access” to the content, and that could be revoked.

Anyway, I’m amazed that we don’t see more lawsuits about this kind of thing — but one was recently filed in California. Someone named Amanda Caudel is suing Amazon for saying that you’ve “purchased” a video download, which Amazon might disappear from your library whenever it wants. As the lawsuit makes clear, Amazon directly says that you are buying the movie (as opposed to renting it). From the lawsuit filing itself:

And, they point out, in your account there’s a listing of “Your Video Purchases & Rentals.” But, the lawsuit claims, what you purchase doesn’t seem to behave like a real purchase:

Reasonable consumers will expect that the use of a ?Buy? button and the representation that their Video Content is a ?Purchase? means that the consumer has paid for full access to the Video Content and, like any bought product, that access cannot be revoked.

Unfortunately for consumers who chose the ?Buy? option, this is deceptive and untrue. Rather, the ugly truth is that Defendant secretly reserves the right to terminate the consumers? access and use of the Video Content at any time, and has done so on numerous occasions, leaving the consumer without the ability to enjoy their already-bought Video Content.

Defendant?s representations are misleading because they give the impression that the Video Content is purchased ? i.e. the person owns it – when in fact that is not true because Defendant or others may revoke access to the Video Content at any time and for any reason.

In so representing the ?Purchase? of Video Content as true ownership of the content, Defendant took advantage of the (1) cognitive shortcuts made at the point-of-sale, e.g. Rent v. Buy and (2) price of the Video Content, which is akin to an outright purchase versus a rental.

Though some consumers may get lucky and never lose access to any of their paid-for media, others may one day find that their Video Content is now completely inaccessible. Regardless, all consumers have overpaid for the Video Content because they are not in fact owners of the Video Content, despite have paid extra money to ?Buy? the product.

The plaintiff (or rather, her lawyers) are trying to make this a class action lawsuit, and are arguing that (among other things) this is false advertising. I am, not surprisingly, sympathetic to the plaintiff — and remain disappointed at how copyright and similar restrictions are being used to chip away at ownership and actual property rights. That said… I’m not that optimistic the case will get very far. In the past, companies have been able to wiggle out of similar claims, and I’m pretty sure that Amazon tries to push disputes like this to binding arbitration, meaning that the lawsuit may be dead on arrival.

Still, it’s yet another reminder of how copyright is chipping away at real property.

Filed Under: amanda caudel, buy, class action, copyright, digital goods, end of ownership, false advertising, ownership, property, property rights, purchase, rent
Companies: amazon