Karl Bode is a freelance writer living in New York that has been babbling, jabbering and prattling about technology, politics and culture professionally for more than fifteen years. Follow me on Twitter @KarlBode
from the selling-everything-that-isn't-nailed-down dept
The FCC this week informed broadband ISPs that the agency is no longer going to be napping at the wheel when it comes to broadband-related privacy enforcement. In a new enforcement advisory posted to the FCC website (pdf), the FCC said that with ISPs now classified as common carriers under the new Title II based net neutrality rules, the FCC's going to be taking a long hard look at improving broadband privacy protections. While the actual rulemaking process is still being worked on, the FCC will be leaning on Section 222 of the Communications Act, historically used to protect Customer Proprietary Network Information (CPNI) on phone networks.
ISPs have already started complaining the FCC's imposing draconian, ancient regulations on the modern Internet, and such rules will saddle them with all manner of new costs. Of course it should be noted that most of these privacy protections are fundamental common sense -- and in some cases things most ISPs are already doing. They range from from requiring that ISPs keep private consumer data encrypted when being stored on servers, to not sharing consumer data with third parties without the explicit consent of consumers. The FCC shockingly found that absent such protections, things don't work out well for consumers:
"The Commission has found that absent privacy protections, a broadband provider’s use of personal and proprietary information could be at odds with its customers’ interests and that if consumers have concerns about the protection of their privacy, their demand for broadband may decrease."
Of course ISPs have grown pretty comfortable with regulators that couldn't care less about (or lacked the authority to police) broadband privacy abuses. One case in point is Verizon's recent decision to manipulate wireless traffic to create new, undeletable super cookies. Despite the fact it took security researchers two years to find Verizon's zombie cookie and another six months for Verizon to even seriously acknowledge a problem, the telco has historically tried to argue greater privacy protections aren't needed for broadband and wireless because "public shame" will keep the company honest.
Many users also might recall how ISPs have long sold user clickstream data to third parties, but have historically denied that they collect any of this data whatsoever. Similarly, AT&T has been charging its gigabit fiber users a $44-$66 fee if they want to opt out of having their traffic snooped on via deep packet inspection. In both instances regulators simply couldn't have cared less. Obviously having regulators do absolutely anything at all to protect broadband user privacy is a pretty unsettling change for a industry awash in regulatory capture.
While the FCC hasn't yet solidified the rules for modern broadband networks, it is telling ISPs that it can reach out to the FCC if they have any questions about how the FCC intends to interpret the rules in the snoopvertising age moving forward:
"Although no broadband provider is in any way required to consult with the Enforcement Bureau, the existence of such a request for guidance will tend to show that the broadband provider is acting in good faith. The application of Section 222 offers an opportunity for broadband customers to increase their demand for broadband by knowing that their privacy is well-protected. In that goal, the Enforcement Bureau believes its interests and those of the great majority of broadband providers are firmly aligned."
While I know there's an amazing amount of cognitive dissonance (my own head included) forged by the idea that a government so horrible on surveillance issues could possibly do anything good on the privacy front, the FCC's recent track record of actually giving a damn about consumer issues is encouraging. It's as if the FCC has awoken form a long, deep slumber, and after fifteen years of being an empty-headed bobble head doll, has suddenly started caring about issues like broadband competition, massive, billion-dollar telecom industry scams and state protectionist telecom laws.
None of this is to suggest FCC over-reach on privacy is impossible, but based on Wheeler's behaviors of late it seems likely the FCC's just looking to impose some common sense ground rules. Still, there will certainly be no limit of handwringing among ISPs how some basic broadband privacy protections will destroy the Internet. You know, just like the net neutrality rules are obviously doing.
What began as some squabbling over the definition of net neutrality in India has evolved into a global public relations shit show for Facebook. As we've been discussing, India's government has been trying to define net neutrality ahead of the creation of new neutrality rules. Consumers and content companies have been making it very clear they believe Facebook's Internet.org initiative violates net neutrality because it offers free, walled-garden access to only some Facebook approved content partners, instead of giving developing nations access to the entire Internet.
Internet.org partners began dropping out of the initiative, arguing they don't like any model where Facebook gets to decide which content is accessed for free -- and which content remains stuck outside of Internet.org. Facebook so far has responded by trying to claim that if you oppose Internet.org you're the one hurting the poor, because a walled garden is better than no Internet at all. Of course that's a false choice; Facebook could simply provide subsidized access to the entire Internet, but that wouldn't provide them with a coordinated leg-up in the developing nation ad markets of tomorrow.
So far Facebook's defense of Internet.org's zero rating of some content has only made criticism louder. A coalition of sixty-seven different digital activism groups from thirty-one different countries this week penned an open letter to Facebook on Facebook, arguing that Internet.org will actually hurt the poor by cordoning off meaningful parts of the actual Internet. The groups, many of which have been pushing for increased broadband deployment far longer than Facebook has, are quick to point out that Facebook's injection of itself between users and the Internet doesn't just raise net neutrality concerns, but privacy and security issues as well:
The censorship capability of Internet gateways is well established — some governments require ISPs to block access to sites or services. Facebook appears to be putting itself in a position whereby governments could apply pressure to block certain content, or even, if users must log in for access, block individual users. Facebook would find itself mediating the real surveillance and censorship threats to politically active users in restrictive environments. The company should not take on this added responsibility and risk by creating a single centralized checkpoint for the free flow of information.
Even if Facebook were able to figure out a way to support HTTPS proxying on feature phones, its position as Internet gatekeepers remains more broadly troublesome. By setting themselves up as gatekeepers for free access to (portions of) the global Internet, Facebook and its partners have issued an open invitation for governments and special interest groups to lobby, cajole or threaten them to withhold particular content from their service. In other words, Internet.org would be much easier to censor than a true global Internet.
Still, so far there's every indication that Facebook either doesn't understand, or doesn't want to understand, what critics are saying. The company recently posted a new myths versus facts release on the Internet.org site that somehow manages to talk over, under and around most of the points critics have been making. There's also this gem, in which Facebook actually denies that Internet.org has anything to do with making money:
MYTH: Facebook has launched Internet.org to help drive its own growth and revenue opportunities within developing countries.
FACT: There are no ads within the Facebook experience on Internet.org. If revenue were the goal, Facebook would have focused resources on markets where online advertising is already thriving."
This pretense on Facebook's part that Internet.org is solely about altruism is adorable, but it's not clear who, if anyone, actually believes that. To most, it's obvious Facebook wants in at the ground floor in order to dominate the ad markets of tomorrow, and what better way to do that than to position yourself as the walled-garden Compuserve of developing nations. Facebook could nip this entire problem in the bud in two simple steps. One, Facebook needs to stop acting like everyone is too stupid to see its real motives. And two, if Facebook is so very concerned about the poor, it should put its money where its mouth is and shift to a subsidized model that gets Facebook out of the way and provides access to the real Internet, free from obvious interference, censorship, privacy and neutrality concerns.
The FCC's net neutrality rules don't even go into effect until June 12, but they're already benefiting consumers. You'll recall that the last year or so has been filled with ugly squabbling over interconnection issues, with Level 3 accusing ISPs like Verizon of letting peering points congest to kill settlement-free peering and drive Netflix toward paying for direct interconnection. But with Level 3 and Cogent hinting they'd be using the FCC's new complaint process to file grievances about anti-competitive behavior, magically Verizon has now quickly struck deals with Level 3 and Cogent that everybody on board appears to be happy with.
That players in the transit and ISP space are suddenly getting along so wonderfully when ISPs insisted net neutrality rules would result in the destruction of the Internet is nothing short of miraculous. It's almost as if the FCC's new net neutrality rules are already benefiting consumers, companies and a healthy internet alike!
"Until now, a variety of voluntarily negotiated, individualized arrangements have been used to exchange traffic between networks. But, under the Order, these arrangements are now part of the “telecommunications service” that broadband Internet access providers offer their retail customers, and thus broadband providers—but not their interconnecting counter-parties—are subject to the requirements of Title II. Yet again, however, the FCC did not explain what that means or how broadband providers must act."
While the FCC's rules on interconnection are a bit vague, the agency has made it clear they'll be looking at complaints on a "case by case basis" to ensure deals are "just and reasonable." Since this is new territory, the FCC thought this would be wiser than penning draconian rules that either overreach or contain too many loopholes. This ambiguity obviously has ISPs erring on the side of caution when it comes to bad behavior, which is likely precisely what the FCC intended. Still, companies with a generation of history at being bullies complain this ambiguity lets others...bully them:
"Providers are thus left to negotiate contracts subject to sweeping statutory mandates without knowing what decisions could lead to enforcement action. Already, providers face demands for significant changes to interconnection agreements. The parties making those demands are threatening to file enforcement actions if their demands are not met. This distortion in what had been a well-functioning private negotiation process is irreparable harm."
And by "well functioning private negotiation process," the ISPs clearly mean one in which they were able to hold their massive customer bases hostage in order to strong arm companies like Netflix into paying direct interconnection fees. One in which regulators were seen but not heard, while giant monopolies and duopolies abused the lack of last mile competition. Yes, the FCC's actions have been so brutish and aggressive, they've resulted in a cease fire across the interconnection front to the benefit of video customers and internet users everywhere. Will the nightmare ever end?
While there's been no limit of hand-wringing over the new net neutrality rules, much of this has been either hyberbole by giant ISPs that don't like having their anti-competitive pipe dreams quashed, or by folks who don't actually understand what the rules actually do. There are a number of smaller ISPs, partisans and tech execs that exist in the second camp, assuming in kneejerk fashion that the FCC's new rules saddle them with all manner of burdensome regulations. In reality, as we've noted several times, not much changes under the new rules -- provided you don't intend to engage in anti-competitive behavior.
Former Verizon regulatory lawyer turned FCC Commissioner Ajit Pai voted down the rules, and has been waging a bizarre, facts-optional assault on neutrality supporters like Netflix ever since. Last week Pai managed to drum up a little extra hysteria on this front by proclaiming that the new rules were crushing small ISPs with all manner of new costs. Pai trots out several small ISPs that, in filings to the FCC, take a page out of the AT&T pouting playbook and say they're freezing investment in broadband because the rules are just too damn onerous:
"KWISP President Kenneth Hohhof told Ars that his two-person company makes revenue of $250,000 to $300,000 per year, and he estimates that he’ll have to pay $20,000 in legal costs because he intends to hire a lawyer to review his business practices. Hohhof admits that he “pulled that [number] out of the air,” but given the hourly rates charged by telecom lawyers, he expects the bill to be substantial for such a small company.
...Another wireless ISP Pai described is SCS Broadband in rural Virginia, which serves 800 customers and “has already stopped investing in new rural areas because of the FCC’s decision, and it won’t resume until it can ‘determine if the additional cost in legal fees warrant such investments,’” Pai said. “And investors have already told SCS Broadband that ‘projects that were viable investments under the regime that existed before the Order will no longer provide the necessary returns to justify the investment.’"
Yes, like with any regulations, investors will need to do due diligence, and businesses need to occasionally consult attorneys to understand the market landscape in which they operate. Also, shockingly, lawyers do indeed tend to take extra advantage of people who can't be bothered to understand when their services are or aren't needed. And while it's clear the FCC could do a better job communicating the rules' impact, these problems aren't the fault of the rules themselves.
Rather amusingly, Ars Technica then proceeds to dissect most of these concerns point by point, suggesting that most of the small ISPs engaged in hysterics over the rules appear to not understand them in the slightest. As Ars notes, most of the onerous portions of Title II (rate regulation, local loop unbundling) aren't included in the rules, and most smaller ISPs are exempted from new transparency requirements. Indeed, most of the non-blocking, non-throttling, and "reasonable network management" requirements are the same, relatively-generous ones these ISPs lived under with the original net neutrality rules, which they didn't need lawyers to understand and comply with.
The bottom line: a lot of confusion and fear on the part of hysterical anti-Title II folks could be eliminated by actually reading the rules (pdf), instead of listening to incumbent ISP lawyers, former incumbent ISP lawyers like Ajit Pai, or execs like Mark Cuban. Again, many folks who actually run ISPs for a living (like Sonic.net CEO Dane Jasper) note it's only ISPs that engage in anti-competitive behavior that should worry. That's not hard to realize if you've paid attention to the FCC's recent, totally out of character, shift toward notably more consumer and competition-friendly telecom policies that are already benefiting consumers and companies alike.
Even the major ISPs that hate the idea of having their anti-competitive shenanigans policed have repeatedly and quietly admitted the rules don't impact their day-to-day business operations much. While their lawyers and lobbyists have been busy predicting business Armageddon, dozens of ISP execs have gone on record in recent months to admit the rules don't change much of anything for them operationally. And indeed, small ISPs that have bothered to pay attention to this bizarre new about-face at the FCC (like Joshua Montgomery of Wicked Broadband in Kansas) appear to understand this:
"If you're behaving in your customers' best interests and operating above the board, I don't think you have anything to be concerned about,” he said. “If you're advertising a $19 rate and then jacking people's bills up to $125 with fees and other things after six months and claiming some kind of long-term deal, yeah you're probably going to have trouble. [The FCC] made it very clear that their goal is to encourage competition, and I don't think they have their eyes on small players."
At the heart of the net neutrality opposition are very wealthy companies immeasurably angry that somebody is finally trying to stop them from aggressively cashing in on the lack of competition over the broadband last mile. At the periphery are many satellite opponents who just oppose the new rules because (certainly not without some valid historic justification) they believe all regulation is always bad, and you don't need to have an intelligent, nuanced debate on the merits of individual proposals because the fact that regulation is always, automatically bad is always true and la la la I can't hear you. The former have a pretty easy time riling up the latter, but you can go a long way toward avoiding this kind of confusion by actually reading and understanding the regulations you're busy claiming will destroy the business universe as we know it.
We've long argued that one way to help improve broadband competition is to stop letting incumbent ISPs write protectionist state telecom law. For decades now, these laws have been rushed through campaign-contribution-soaked state legislatures. With ALEC's help, these laws usually encode restrictions that prevent towns and cities from improving their own broadband infrastructure, even if nobody in the private sector wants to (aka market failure). It's the epitome of protectionist drivel; in some cases even preventing towns and cities from striking public/private partnerships to improve telecom and municipal services.
So it was refreshing (and a little bit shocking) when the FCC earlier this year woke up from a fifteen-year slumber on this issue. The agency declared it would be using its authority under Section 706 of the Telecommunications Act to pre-empt the more idiotic portions of these laws. Responding to complaints from municipal broadband operators and utilities trying to get into the broadband business, the FCC initially took aim at just two of the worst states: North Carolina and Tennessee, where companies like AT&T have been literally writing laws ensuring their duopoly power remains unchallenged indefinitely.
It's hoped the success of the FCC's work in these two states will slowly expand to the eighteen other states that have passed similar mega-ISP-friendly laws.
Not too surprisingly, politicians loyal to incumbent ISPs cried foul, and immediately started working on drumming up partisan division. It's not working: most municipal broadband networks see broad, bi-partisan community support -- and most municipal networks have been built with Conservative approval in more Conservative-leaning cities and states (whether that's Lafayette, Louisiana, or Chattanooga, Tennessee). ISP-loyal politicians like Tennessee's Martha Blackburn have expressed outrage that the FCC would dare to trample local rights -- something that is, apparently, the sole responsibility of companies like AT&T, CenturyLink, Time Warner Cable and Comcast.
The pretense behind the opposition to municipal broadband has always been that these laws are necessary to protect taxpayers from themselves, since sometimes (like any business model) municipal broadband doesn't work out. Of course some projects have worked well and others haven't, but the decision to travel this path is something that should be left up to the towns and cities themselves, not AT&T lawyers. However, North Carolina has joined Tennessee in suing the FCC over its latest push, claiming the state has been "aggrieved" by the FCC's attempt to remove state barriers to broadband expansion:
"North Carolina Attorney General Roy Cooper has filed a lawsuit in federal court against the Federal Communications Commission seeking to overturn the FCC's decision to allow the City of Wilson to expand its community broadband network service known as Greenlight. The state has been "aggrieved," according to Cooper. But a broadband group labeled the suit a "waste" of taxpayer money. Cooper stated in the suit that the FCC "unlawfully inserted itself" between the state and "political subdivisions" such as communities."
The problem is the FCC is Congressionally mandated to ensure the "timely and reasonable" deployment of broadband services, and it's pretty hard to argue you're helping that goal by letting AT&T lawyers and lobbyists write state law that does the exact opposite. It's not like this influence resides in shadow, ALEC's draft legislation sits on the outfit's website for anyone to read. The irony of using taxpayer money under the pretense of protecting taxpayer money didn't escape municipal broadband groups commenting on the case:
"Attorney General Cooper must not realize the irony of using state taxpayer dollars to ensure less money is invested in rural broadband, but we certainly do," says Christopher Mitchell with the Institute for Local Self-Reliance. "State leaders should stand up for their citizens' interests and demand good broadband for them, rather than fighting alongside paid lobbyists to take away those opportunities."
It's worth reiterating that these towns and cities wouldn't be getting into the broadband business if they were happy with the service provided by regional monopolies and duopolies. The real absurdity of it is this: municipalities, companies and consumers alike benefit immeasurably from expanded broadband in a state, regardless of how it's provided. That Tennessee and North Carolina are willing to throw all of this potential growth away just to protect the campaign cash contributions of big telecom operators speaks volumes about the quality of Tennessee and North Carolina state legislators, and the stranglehold companies like AT&T, CenturyLink and Comcast have over the state legislative process.
That broadband investment will suffer because of net neutrality has been the rallying cry of the broadband industry for much of the last year, despite the fact that hard evidence and public executive statements repeatedly show this claim to be nonsense. You might recall that back when the President issued his surprise support of Title II-based net neutrality rules last November, AT&T responded in typical AT&T fashion: by pouting. The company quickly proclaimed it would be taking its ball and going home, "freezing" the company's plans to deploy fiber to the home to up to 100 cities nationwide:
"We can't go out and invest that kind of money deploying fiber to 100 cities not knowing under what rules those investments will be governed...We think it is prudent to just pause and make sure we have line of sight and understanding as to what those rules would look like," added the CEO."
Of course, as we noted at the time, this 100-city deployment claim was a ridiculous bluff to begin with; AT&T was simply offering gigabit speeds to a limited number of housing developments where fiber already exists, then dressing it up as a massive deployment to save face in the Google Fiber age (aka "fiber to the press release"). In reality, AT&T's been cutting fixed-line investment hand over fist for years, and had announced yet another $3 billion fixed-line CAPEX investment cut just three days before announcing its supposed "investment freeze." In other words, it was all political theater.
And it wasn't even good political theater. When the FCC pressed AT&T to show hard numbers, the company had to notably walk back its claims in a highly-redacted filing. AT&T effectively admitted the entire thing was basically a bluff, and the company's plans to offer gigabit service to a few high-end housing developments was absolutely unchanged by net neutrality.
"We have seen the way the rules came out, ... and as we read those rules we do believe they are subject to modification by the courts" or by Congress, Stephenson said on CNBC's "Squawk Box." "So we've said we're going to invest around $18 billion this year. That will allow us to deploy a wireless broadband solution to 13 million homes around the U.S.," he said. "That compares to about $22 billion last year."
Basically, Stephenson's pretending that the broadband industry's just so damn confident it will be victorious in court, AT&T's going to boldly shake off reservations and sally forth with network investment. Of course Stephenson knows the press won't notice or care he's conflating wireless and wired network investment (when his original freeze claim was clearly regarding wired), overall investment is still dropping, AT&T's actually hanging up on millions of DSL users it no longer wants all over the country, or the fact that AT&T already admitted in filings the entire argument was a fraud in the first place. With a press too lazy to fact check him, Stephenson still conveniently trots out the investment bogeyman when convenient, even after AT&T's admitted such worries are little more than factually-unsupported, politically useful phantoms.
Back in March, TiVo purchased Aereo's trademarks and customer rosters for around $1 million at auction, after Aereo's disruption efforts and clever legal arguments imploded spectacularly last November. Details are incredibly vague, but TiVo appears interested in resurrecting the Aereo service in some capacity, offering an improved -- and legal -- version of the controversial internet video service. Early details are spectacularly vague, but TiVo appears interested in marketing something to cable partners that will help them target cord cutters:
"It’s one helluva cheap way for cable operators to have an OTA/OTT device that says, ‘Satellite cord-cutter, I have a broadband package for you with a video component,'" (TiVo CEO Tom) Rogers said. "I think it allows them [the cable operator] to own the low-end and win over satellite subscribers."
The problem is that many cable operators don't want to make any truly disruptive over-the-top plays, since any value-oriented, disruptive internet video offering is going to cannibalize existing pay TV subscribers. That's why the cable and broadcast industry's Hulu has remained a dull, glorified ad for traditional cable TV. There has been some traction made on this front (Cablevision offering free antennas with broadband, for example), but by and large, cable execs remain terrified of upsetting the Apple cart. Rogers admits there's still a question as to how to make cable partnerships work:
"TiVo reasons that OTA, combined with broadband-fueled over-the-top services, presents an opportunity to help its cable partners target a small but growing number of cord cutters who are seeking less-expensive video and TV alternatives but who are also willing to create their own bundles. "The question is, how do you do that?” Tom Rogers, TiVo’s CEO and president, said during an interview last week at the INTX show in Chicago. “To us, the answer is pretty clear — it’s kind of the Aereo model, done legally and better."
The problem is, by the time TiVo's internet video offering arrives, it will be joining a crowded market saturated with services from the likes of Verizon, Dish (Sling TV), Sony and Apple. It's unclear how TiVo intends to truly differentiate itself from the pack, and the TiVo and Aereo brand may not be enough. Aereo's draw predominantly was its low $8 a month price tag, which was made possible because the company wasn't paying retransmission fees. Aereo's entire technical model of leasing customers micro-antennas and cloud DVR space was based on its legal efforts to tap dance around having to pay such fees. A legal version of Aereo couldn't offer the kind of disruption Aereo was capable of, because the courts have declared Aereo's particular brand of innovation to be illegal.
In other words, TiVo's version of Aereo will belatedly join a crowded field of over-the-top services, and while the brand name will provide some traction, the end product is likely to only share a passing resemblance to the Aereo people knew.
Facebook's been taking a lot of heat lately for failing to understand (or pretending to fail to understand) how its Internet.org initiative spells trouble for net neutrality. As noted previously, Facebook's vision has been to deploy a "free" walled-garden service like AOL to developing nations. Critics have been dropping out of Internet.org, stating they don't like Facebook picking which companies get included in the walled garden. Things have gotten particularly heated in India, where neutrality advocates have made it very clear they think Facebook's vision hurts the open Internet long term.
Zuckerberg's response so far? You're hurting the poor if you don't like the way we're doing things, because a walled garden is better than no Internet at all. Of course that's a false choice: Facebook could offer subsidized access to the real Internet, it just wouldn't get pole position in delivering ads to billions of new users in dozens of developing nations. It's a mammoth advertising play dressed up as utterly-selfless altruism, with a dash of indignant at suggestions there's a better way.
Mozilla recently decided to jump into the conversation with a series of blog posts offering a much more intelligent, nuanced take on the problem with zero rated apps. In one post, Mozilla notes how if you let Facebook create a new definition of the Internet today, you're setting the stage for notable problems down the road:
"We understand the temptation to say “some content is better than no content,” choosing a lesser degree of inclusion over openness and equality of opportunity. But it shouldn’t be a binary choice; technology and innovation can create a better way, even though these new models may take some time to develop. Furthermore, choosing limited inclusion today, even though it offers short-term benefits, poses significant risk to the emergence of an open, competitive platform that will ultimately stifle inclusion and economic development."
That mirrors concerns by folks like Stanford Professor Susan Crawford, who have lambasted such models for "entrenching and amplifying existing inequalities and contributing to poverty of imagination." Mozilla notes there's plenty of ways to help fund Internet access to developing nations that doesn't involve building walls and cherry picking program participants. For example the company has struck a partnership with Orange to provide $40 Firefox OS smartphones with 6 free months of voice, text, and up to 500 MB per month of data. Another effort offers a small allotment of free data for watching an ad.
In short, there are options that don't turn the Internet into a glorified version of CompuServe. But rushing toward walled gardens again isn't just about today, it's about what these ideas mutate into over the longer haul. Mozilla Foundation Chair Mitchell Baker took this idea further in a second blog post:
"Selective zero-rating is unquestionably bad for the long term opportunities and inclusion for the people it is designed to serve. It pre-selects what’s available, directing people to where others want them to go. It is bad for economic inclusion. It is bad for the ability of new entrepreneurs to grow onto the global scale. It is bad for the long term health of the Internet. Zero-rating as practiced today is “selective zero-rating for a few apps and websites; exclusion for the rest of the Internet."
The correct answer is that all data is transmitted at the same price, whether that price is "zero" or anything else. This way, consumers pick the content they choose to access based on the quality of that content, not the financial power and business partnerships of the provider. This way, new entrepreneurs can still reach any and all users on the Internet, even if they are a few people working in a co-working space with no ability to subsidize data charges."
In other words, if Facebook really wants to help the poor, it can do so by using Internet.org to fund access to the "real Internet," not some bastardized version of the Internet that lets Facebook and select ISP partners play god. The conversation in India mirrors the conversation we've been having about systems like AT&T's Sponsored Data here in the States; opposition to zero rating is simply about getting massive gatekeepers out of the way and ensuring equal access to the purest version of the 'Net possible.
When the entertainment and broadband industries' "six strikes" anti-piracy regime first launched a few years ago, most people (outside of Hollywood) realized it wouldn't work for a number of reasons. One, data has pretty consistently shown that such graduated response anti-piracy systems -- whether three "strikes" or six -- don't work, and in fact may actually make things worse. Two, even partner ISP execs I spoke to ahead of the program's launch made it clear they knew the program wouldn't do much, with most infringers simply hiding their behavior behind proxy servers of VPNs.
Publicly, the firm created to run the program (the Center for Copyright Information) has frequently tried to claim the program is a smashing success, often using unreliable, contradictory evidence to try and suggest pushing ISPs into the role of content nannies was a wonderful idea. But privately, Hollywood and the MPAA have acknowledged the program isn't doing much, though they're quick to argue that this is only because it hasn't yet been "brought up to scale."
Amusingly, some of the very same Hollywood voices that pushed so hard for six strikes and ignored warnings that it wouldn't work, are now calling the program an abject failure. The Internet Security Task Force, a coalition of smaller studios, which counts copyright troll Voltage Pictures among its members, has come out swinging this week against six strikes in a press release, calling the program a "sham":
"We’ve always known the Copyright Alert System was ineffective, as it allows people to steal six movies from us before they get an educational leaflet. But now we have the data to prove that it’s a sham," Gill comments. "On our film ‘Expendables 3,’ which has been illegally viewed more than 60 million times, the CAS only allowed 0.3% of our infringement notices through to their customers. The other 99.7% of the time, the notices went in the trash,” he adds."
One, ISTF doesn't appear to know how the program Hollywood pushed for actually works, since users receive an "educational leaflet" the first time they're found to infringe. Steps two through six then include "mitigation measures" that may involve having your connection throttled or finding your broadband access temporarily suspended until you've clearly acknowledged you've been naughty. Users then have the honor of paying a $35 fee if they'd like to fight the accusation. After the sixth strike nothing happens, and nobody tracks offenders between ISPs, something Hollywood is surely eager to "remedy" with program updates.
ISTF notes that the five major ISPs participating in six strikes (AT&T U-verse, Cablevision, Comcast, Time Warner Cable and Verizon FiOS), saw a 4.54% increase in infringements during the fourth quarter of last year. Two non-participating ISPs, Charter and Cox (the latter of which is being sued by BMG for allegedly ignoring piracy), saw a 25.47% decrease in infringements during that same period. Assuming you can trust Hollywood math here (never a wise bet), the ISTF claims this is proof of the fact that ISPs aren't taking piracy seriously:
"These alarming numbers show that the CAS is little more than talking point utilized to suggest these five ISPs are doing something to combat piracy when in actuality, their customers are free to continue pirating content with absolutely no consequences," said ISTF member Nicolas Chartier, CEO of Voltage. "As for its laughable six strikes policy, would any American retailer wait for someone to rob them six times before handing them an educational leaflet? Of course not, they call the cops the first time around."
Of course if non-participating ISPs are seeing infringement drop massively while participating ISPs are seeing a slight rise, that would seem to suggest that graduated response programs actually make things worse, which is what data Hollywood ignored said in the first place. The ISTF's solution for the States is to implement an uglier version of Canada's Copyright Modernization Act, which gives ISPs safe harbor only if they agree to pass on all infringement notices. While the Canadian law caps damages, it hasn't done much to thwart copyright trolls, who appear to just be making up for the income reduction by shaking down Canadian users on greater scale.
While these smaller studios are solely focused on greasing the rails for their "settlement-o-matic" shake downs, it's only a matter of time before the MPAA and the larger studios start pushing for "improvements" to six strikes as well, whether that's an organization that tracks offenders between ISPs, or a frontal assault on VPNs and proxy services. And that's just it, these studios consistently whine about the need for aggressive enforcement policies that have been proven not to work, and when they fail the answer isn't adaptation of the business models to the modern age, it's an expansion of already-bad ideas that clearly aren't working. It's a bottomless well of dysfunction. Unfortunately for Hollywood, any expansion of six strikes is going to have a steeper uphill climb in the post SOPA era, which may hinder the program from mutating into something truly monstrous.
Consumers have been clamoring for better cable TV pricing and more flexible channel options for the better part of the last decade, and for most of that time the broadcast and cable industry has been willfully -- almost gleefully -- ignoring them under the mistaken belief that the cable TV cash cow will live forever. With 2015 giving rise to a number of more flexible Internet video options, the conversation has heated up once again, leading to a very small number of companies (like Verizon) experimenting with modestly more flexible channel bundle packages where costly sports programming is broken out into its own tier.
However, the majority of cable TV executives remain with their heads planted squarely in the sand. When pressed on whether it would try to offer more consumer-friendly "skinny" channel bundles in response to consumer-driven industry trends, Time Warner Cable execs informed analysts recently that it would just be too confusing:
"There’s a lot of attraction in the press about skinny packages," echoed Dinesh C. Jain, chief operating officer of Time Warner Cable. “I think a lot of the times, customers don’t want to get bogged down in a lot of choices to make on those kinds of things. There’s a lot of value in our triple-play packaging right now and it’s a simpler sale."
Yes, you wouldn't want to confuse the consumer by offering them something more competitive than you do now. And when calculating "value," surely Time Warner Cable is including its excellent customer service, ranked worse than any other U.S. company in any industry? Time Warner Cable has been paying lip service to more flexible options since 2010 or before, yet they never seem to materialize. That's in part thanks to broadcasters, whose programming rates continue to sail skyward utterly untethered from reason. But cable companies aren't faultless; they raise rates wherever and whenever they can as well, whether that's for DVR rentals, extra fees just to pay your bill in person, or sneaky below the line charges to covertly drive up the advertised rate.
At the cable industry's Internet & Television Expo last week, cable executives again proclaimed they didn't see the need for more flexible, cost-conscious cable lineups, because customers already get way more value than they can possibly handle:
"People have always had choice in what they buy in their subscription package,” declared Charter Communications CEO Tom Rutledge. "The vast majority of customers tend to take the larger bundle, and the reason is, it’s a damn good value,” said Time Warner Cable CEO Rob Marcus after allowing that “More flexibility is better."
In other words, there's no need to offer greater choice or value because we're already really incredible at doing that. Except data across the board suggests that they aren't.
A Reuters/Ipsos poll released concurrently with these execs' comments found that 77% of U.S. adults say they'd prefer a la carte cable programming, a shift the industry has fought off for years by arguing it would kill niche channels (something that's happening anyway) and raise rates (something that's happening anyway). But it's not just a la carte the cable industry has been resistant to; it's any shift toward more compelling programming tiers. That same poll also found that 54% of consumers would like to be able to buy a core cable bundle that doesn't include ESPN, and 47% don't want cable news networks.
The cable and broadcast industry could work together to get out ahead of Internet video, but they're absolutely terrified of offering any products that would cannibalize their traditional cable TV subscriber bases. They're comforted by the fact that so many subscribers continue to pay an arm and a leg for bloated, expensive cable bundles, and believe that the giant pay TV fortress they've built will survive indefinitely. So like so many legacy industries, instead of meaningful, pre-emptive adaptation, the cable sector stands in the middle of the highway with a glassy eyed stare, confident in its resilience against the eighteen wheeler that bears down upon it.
For years, we've noted how regulators have paid empty lip service toward the problems with broadband usage caps, historically buying into the ISP narrative that they're just "creative pricing exploration." There are two problems with that: one, they can be (and have been) used to hurt internet video competitors and protect legacy TV revenues. Two, nobody is checking to ensure that meters are accurate, meaning there have been numerous instances where users are overcharged, or hit with usage overage fees when the power was out or their modems were off, with absolutely no repercussion.
"An operator the size of Comcast absolutely will draw scrutiny,” said our source. “If Comcast decides to impose its currently tested market trial plans on Comcast customers nationwide, the FCC will take a closer look. Under Title II, the agency is empowered to watch for attempts to circumvent Net Neutrality policies. Usage caps and charging additional fees to customers looking for an alternative to the cable television package will qualify, especially if Comcast continues to try to exempt itself."
Right now, Comcast only imposes usage caps in a key number of less competitive Southern markets, but has shown every indication it would like to expand caps and overages nationally. As more and more users drop cable TV for internet video, and drop internet voice service for wireless only, ISPs will inevitably look to extract their pound of flesh through broadband rate hikes. Those rate hikes are easier to impose when you claim they're necessary due to "fairness" or congestion (even though the cable industry itself admitted this was a bogus excuse back in 2013).
Of course, this is a nightmare scenario for ISPs, and they'll be quick to suggest the agency is scrambling down the slippery slope of rate regulation, despite repeatedly stating it wouldn't be using Title II in that capacity. Of course, preventing ISPs from using bogus congestion as a revenue generator is a key part of the agency's net neutrality policies, and the agency has already been warning wireless carriers about using throttling and network management to drive unlimited users to more expensive plans. The FCC can correctly argue that caps are more about competition and net neutrality than rate regulation, and it would be right.
Having an FCC that actually cares about these kinds of issues is entirely new territory, since the agency has turned a blind eye to competition problems (and all of the residual symptoms of that disease) for the better part of fifteen years. Of course, an anonymous source promising to "take a closer look" doesn't automatically equate to action, and even this new, more consumer-friendly FCC has remained largely mute on most pricing issues. Millions of DSL and cable customers currently face usage caps, per gigabyte overages and unreliable meters (not to mention obnoxious below-the-line stealth fees) every day thanks to no competition.
You can eliminate these symptoms by curing the disease that is a lack of competition, but with entrenched duopolies and regulatory capture making that a multi-decade effort, it might be nice if somebody, somewhere could protect broadband consumers from getting screwed in the interim.
Annoyance with the cable industry appears to have reached the tipping point, with consumers fed up with skyrocketing prices, inflexible programming options and some of the worst customer service in any U.S. industry. The cable industry's ingenious solution? Stop using the word cable. Last week, the cable industry held its annual trade conference, previously dubbed "The Cable Show." Trying to distance itself from the aging, negative associations with the word "cable," the industry has decided to rename the conference The Internet & Television Expo.
"I hate the name," Michael Powell, president of NCTA, the cable industry’s trade group, said Tuesday. "It doesn’t fairly capture what they do."...This year’s trade show was renamed to "be more centered around its future as it's associated with the Internet," Powell said on stage at the conference. The term "cable company," he said, "has a proud history, but it needs to be retired."
Of course when your entire business revolves around using coaxial cable to deliver Internet and television service, deciding to drop the word in the hopes of forcing a brand refresh might be an uphill climb. Most attendees of the show couldn't remember the new name, and just wound up calling the conference by the old name for simplicity's sake:
"It's called Internet something something something, right?” said Chris Gagliano, who works at Anvato Inc., which provides online video software. "I don’t even know what it stands for." Most people preferred to call it the “cable show,” even if that’s not the name anymore. "I'll probably call it that forever," said Brian Hanrahan, a regional sales manager at Optelian, which helps build broadband networks. "Until everyone else starts calling it 'INTX,' I’m going to call it the cable show."
Clearly, it's going to take a lot more than a simple word change to erase memories of waiting days for the cable man or spending four hours trying to get an answer from Comcast's kafka-esque phone support system. Atrocious customer service certainly isn't the word "cable's" fault. It's thanks to a lack of competition and the resulting apathy, which by proxy results in skimping on subcontractor and support quality. Eliminating the word cable in the hopes of fixing this industry chain of dysfunction is kind of like trying to put out a forest fire by proudly proclaiming it's a walnut -- it's just not going to get to the root of the problem.
You might recall that last October, Verizon tried its hand at getting into the media business with the launch of a tech blog by the name of Sugarstring. The bizarre foray into media didn't last long; editors quickly complained that Verizon was prohibiting them from talking about huge tech issues Verizon played a starring role in, ranging from net neutrality to domestic surveillance. After the media ridiculed the hell out of Verizon's ham-fisted disregard of editorial firewalls (or just common sense), the website was quietly shuttered, with the telco saying it was just a "pilot project" it was moving on from.
So what is Verizon's media plan 2.0 going to be? Apparently, it's a little something called AOL. Verizon this morning announced that the company would be buying AOL for around $4.4 billion, stating the acquisition would be supporting the telco's over the top video and Internet-of Things ambitions (read: they wanted AOL's ad empire):
"Verizon is a leader in mobile and OTT connected platforms, and the combination of Verizon and AOL creates a unique and scaled mobile and OTT media platform for creators, consumers and advertisers. The visions of Verizon and AOL are shared; the companies have existing successful partnerships, and we are excited to work with the team at Verizon to create the next generation of media through mobile and video."
Nobody on Earth flubbed the dial-up to broadband era transition quite as spectacularly as AOL did, so being acquired by a telecom operator ten years too late isn't without it's irony. Equally ironic is Verizon suddenly acquiring 2.2 million new dial-up subscribers at a time when it's desperately trying to back away from the fixed-line broadband business (how many DSL lines would $4.4 billion upgrade?). But AOL's a very different company these days, and the acquisition makes sense as a mobile advertising play, even if it just feels weird to see the two companies snuggle up in bed together.
Apparently, current AOL CEO Tim Armstrong will remain in command under the freshly-acquired AOL, which will operate as an independent Verizon subsidiary. There's no declaration of retained editorial independence anywhere, but that may not mean much. From a memo from Armstrong sent to all AOL employees this morning:
"The leadership at AOL is staying and I am staying – enthusiastically, and we made that part of the deal. We have the opportunity to build a unique and globally scaled media technology company with the scale and resources we need to make that happen. Verizon and AOL are very large partners today – in content, in ads, and in the technology. We know their team well and they know our team well. The cultures share very similar values and are both working on very similar ways to do good while doing well."
Do those "values" and "doing good" include propping up Verizon's role as one of the most vocal and obnoxious opponents to net neutrality on the Internet? Stay tuned. There's some chatter that Verizon may want to spin off or sell off the content companies, just using the remaining ad empire to fuel the telco's new wireless-focus Internet video subscription service expected to launch sometime later this year. If retained, you'd like to think Verizon will play it smart and not aggressively meddle in the daily dealings of websites like The Huffington Post, Engadget, or TechCrunch, but with the telco's generation-long history of aggressively bad ideas (most recently being a foray into undeletable super cookies), you just never know.
from the not-like-the-old-days-when-you-got-screwed-by-your-label dept
I've been a Pink Floyd fan for most of the time I've been alive, so it was rather disappointing to see band leader and professional misanthrope Roger Waters recently come down with a terrible case of "get the hell off of my lawn." Speaking to a reporter earlier this month, Waters, the man who once blasted oblivious, recording industry bean counters in "Have a Cigar," assailed Silicon Valley as a corrupt den of "rogues and thieves." Rogers also pined for a simpler age -- one when musicians and artists were screwed more directly by their music label:
"Most of all I feel enormously privileged to have been born in 1943 and not 1983, to have been around when there was a music business and the takeover of Silicon Valley hadn't happened and, in consequence, you could still make a living writing and recording songs and playing them to people,” the bass guitarist and singer said.
Right, because as this outlet has covered extensively, the Internet has destroyed the music industry, and it's simply impossible to make any money off of art in this day and age. The fact that the Internet and piracy effectively turned albums into promotional material to sell merchandise and concert tickets is a very difficult idea for older generations to grok, but it's still kind of painful to see a rock hero of my youth fall victim to aggressively rigid neurons.
Waters doesn't stop there, and proceeds to trot out a litany of well-tread conflations, distortions and other flimsy arguments, joining folks like U2 manager Paul McGuinness in no longer understanding how the music industry he's a part of (kind of, since he hasn't released a new album in 23 years) actually works:
"When this gallery of rogues and thieves had not yet interjected themselves between the people who aspire to be creative and their potential audience and steal every f***ing cent anybody ever made and put it in their pockets to buy f***ing huge mega-yachts and Gulfstream Fives with. These … thieves! It’s just stealing! And that they’re allowed to get away with it is just incredible."
Waters went on to say that music lovers must take some responsibility for this parlous situation. “I blame the punters as well to some extent, a whole generation that’s grown up who believe that music should be free,” he said.
"I mean why not make everything free? Then you could walk into a shop and say ‘I like that television’ and you walk out with it. No! Somebody made that and you have to buy it! 'Oh, I'll just pick up few apples.' No! Some farmer grew those and brought them here to be sold!"
And here you were foolishly thinking that the Internet managed to open a massive new universe of music distribution possibilities and business models, helping countless artists connect more directly with their fans. As we've noted probably more times than can be counted, "free" isn't the business model -- free is part of one potential business model, and when done right, resonates incredibly well with consumers.
It's certainly fine if you don't like that, but that doesn't really change reality in the age of broadband and piracy. Of course if it makes Roger feel any better, the same wolfish recording industry Roger used to mock is still there at the end of the gravy train, working tirelessly to prevent artists from seeing their just deserts in the Spotify age. There's certainly plenty to criticize about some specific new Internet-based business models where artists still get screwed; but Waters doesn't really do that -- he just shakes his cane at the general direction of the Internet and "pisses and moans," as my grandfather used to say.
I'll of course never stop loving Pink Floyd ("Animals" in particular), and Waters' lessons on critical thinking, empathy and alienation are pretty much bone-grafted to my personality. Sadly though, he's also now a perfect example of the dangers of letting your aging synapses get so rigid you can't see new forest growth for the trees -- since I'd like to believe, maybe foolishly, that's not an inevitable symptom of aging. Of course I was one of those deviant rogues who helped destroy the music industry by swapping free tapes like this one:
We've noted how AT&T and Verizon investors and executives have been terrified for some time that they would have to (gasp) compete on price as T-Mobile continues to disrupt the market with its consumer-friendly, faux-punk rock behavior. Ever since the AT&T deal was blocked by regulators, T-Mobile has been mercilessly (but entertainingly) mocking both companies, offering a bevy of promotions while eliminating a lot of "pain points" for consumers (like overage fees). It's working: T-Mobile's now signing up more subscribers each quarter than Sprint, AT&T or Verizon -- just by treating consumers well.
So far, outside of a few very time-limited promotions, Verizon's been unwilling to compete on price, insisting the company's high prices are justified by a "premium network experience." Verizon also recently tried to shoot down the appeal of T-Mobile's unlimited data offerings by insisting that nobody really wants unlimited data plans, they're just being driven by "gut feelings." With T-Mobile just having one of its most successful quarters ever, Verizon's increasingly under pressure to compete on price, yet the telco continues to proclaim it doesn't have to:
The company reported on Tuesday that it had lost 138,000 postpaid customers in the last three months. Francis Shammo, Verizon’s chief financial officer, apparently won't be missing customers who, he says, value price over quality. "If the customer who is just price-sensitive and does not care about the quality of the network—or is sufficient with just paying a lower price—that’s probably the customer we’re not going to be able to keep," he said in the company’s quarterly earnings call."
It shows you just what kind of competition Verizon's historically used to if the company honestly believes you have a choice of when you get to compete on price. And while the company is busy telling investors that it's not feeling any heat from T-Mobile, the growing, magenta-hued (TM) threat has Verizon simultaneously testing a number of new price promotions it hopes will help tip the subscriber scales back in its favor. Smelling blood, T-Mobile this week launched a new promotion that specifically takes aim at these "price sensitive" customers Verizon apparently doesn't want any more:
Of course Verizon's not entirely wrong. The company does come in first place pretty consistently in most customer service and network performance studies. Verizon's also well aware it enjoys an 80+% retail market share with AT&T, and an 85% market share of the special access (cell tower backhaul) market. The two companies also enjoy an estimated $171 billion in combined spectrum holdings, which certainly helps keep other competitors from market. Still, this belief that the company doesn't have to compete on price in the face of increased price competition seems like a pipe dream narrative they'll only be able to push for so long, especially if Sprint can manage to get out of its own way, fix its lagging network, and become a viable fourth wireless competitor.
from the We're-sorry-for-being-a-little-too-innovative dept
You'll recall how last year, Keurig Green Mountain created a surprising, negative public relations tsunami with the news it would be using a form of "coffee DRM" in its latest Keurig 2.0 coffee maker. The new technology basically prevented anyone from being able to use refill pods from competitors, or any of the more environmentally-friendly, more cost-effective refillable pods available online. Company CEO Brian Kelley and Keurig's marketing department then made matters dramatically worse when they tried to claim the ham-fisted market lockdown was "critical for performance and safety reasons."
The story got notably more amusing when "hackers" started defeating the company's DRM measures with rather low-brow hacks consisting of pieces of Scotch tape. Competitors similarly began either developing pods that quickly defeated the embedded technology, or gave away plastic clips that confused the system into accepting competitors' pods. In short, what Keurig thought was a clever way to lock down a market and make extra money, wound up making the company look like a tone-deaf, anti-competitive, mechanical dinosaur powered by over-caffeinated nitwits.
A little more than a year after the embarrassing saga began, Keurig appears to finally be beginning a not-entirely graceful about-face on the matter. After the company's stock took a notable nose dive and sales of brewers and accessories dropped 23% last quarter, Kelley claims he's now seen the error of his ways. Sort of.
Reading the actual transcript of Keurig's latest earnings call, Kelley still can't help but minimize the backlash as the concerns of a "small percentage" of "passionate" users. Meanwhile, while Keurig focuses heavily on the fact it was wrong for pulling the company's own, reusable "My K Cup" from the market, the fact Keurig tried to bulldoze its way to market domination via obnoxious, heavy-handed DRM is, as you might expect, downplayed dramatically:
"I would tell you the other thing we heard loud and clear from the consumer while very small percent of consumers, a very vocal and intense, passionate consumer who really wanted the my K-cup back, what we learned that it’s important the message and the signal that it sends, the ethos that it sends is that we want consumers to be able to brew every brand, any brand of coffee in their machine and bringing the my K-cup back allows that.
...My K-cup wasn’t going to work with a new system as the new system had to identify the pod versus a carafe, so we took the My K-cup away and quite honestly we’re wrong. We missed, we didn’t – we underestimated, it’s the easiest way to say, we underestimated the passion that consumer had for this. And when we did it, and we realized it, we’re bringing it back because it was we missed it. We shouldn’t have taken it away, we did. We are bringing it back.
So yes, while it's great to hear the company admit it was "wrong," Kelley only admits to being wrong for pulling Keurig's own reusable pod from the market, not necessarily for trying to block all competing products -- or for spending a year trying to argue that the ridiculous foray into DRM was necessary for the safety and security of Keurig's products. Meanwhile it's still apparently going to take Keurig until Christmas to re-introduce its own, refillable pod, and, contrary to media coverage, there's no clear statement here that the company's planning to back away from coffee DRM entirely. Still, it's at least a partial victory, and Keurig's sort-of-mea-culpa is the perfect way to belatedly celebrate this week's International Day Against DRM.
It's no secret that ISP support reps will consistently tell you whatever you'd like to hear when trying to sell you on more expensive packages, even if the claims are miles from reality. Sometimes that's just a support rep going rogue to meet numbers and try to make a sale, and sometimes it's part of a consistent, scripted effort to mislead the consumer. Frost and Sullivan analyst Dan Rayburn says he ran into the latter recently when he called to renegotiate his FiOS triple play bundle rate with the telco, and was informed, repeatedly, that he needed to upgrade his speed from 50 Mbps to 75 Mbps if he wanted Netflix to stream properly.
That wasn't the brightest move on Verizon's part, since Rayburn covers the streaming video sector for a living. Rayburn was quick to highlight that Ookla data shows that the average bitrate delivered to a Verizon customer last month was around 3.5 Mbps. Even in a household full of streaming video fanatics, there's really not much that 75 Mbps will provide that 50 Mbps won't. And while Rayburn warns that uninformed users can easily fall into Verizon's trap, it should only take the average consumer about five minutes of Google use to avoid this pitfall.
Netflix's website informs users the company's standard definition streaming service eats about 1 GB of data per hour per stream of standard def video, and Netflix recommends roughly 3 Mbps for standard def content. High definition video meanwhile consumes around 3 GB per hour, per stream, with Netflix recommending 5 Mbps for HD video. Even if you're part of the tiny number of people with a 4K set looking to stream Ultra HD, you'll only need a connection of around 25 Mbps, according to Netflix. Of course this requires the average consumer to know what a gigabyte is, which is no safe bet.
Rayburn proceeds to document that this wasn't just a one-off situation, but that Verizon lied about his need for 75 Mbps to obtain "smoother" Netflix streaming numerous times:
"While some might want to chalk this us to an isolated incident, or an over zealous sales rep, that’s not the case at all. I called in three times and spoke to three different reps, plus one online and got the same pitch. Clearly this sales tactic is being driven by those higher up in the company and isn’t something a sales rep made up on their own. And two years ago, Verizon tried to pitch me the exact same story, promising better quality Netflix streaming if I upgraded my Internet package."
The biggest irony here, unmentioned by Rayburn, is that he's consistently been one of only a few analysts on Verizon's side during the company's recent interconnection scuffle with Netflix, blaming Netflix, not giant ISPs, for most of the congestion issues that magically started popping up over the last year or so as ISPs like Verizon started pushing Netflix for direct interconnection fees. In other words, Verizon not only tried to bullshit someone who spends their life discussing streaming issues, but it managed to annoy one of the company's few allies on the net neutrality and interconnection front. That's quite a double play.
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.
from the when-smart-devices-get-a-little-TOO-smart dept
We've long talked about how companies are only just starting to figure out the litany of ways they can profit from your cell location, GPS and other collected data, with marketers, city planners, insurance companies and countless other groups and individuals now lining up to throw their money at cell carriers, auto makers or networking gear vendors. For just as long we've been told that users don't need to worry about the privacy and security of these efforts, and we definitely don't need new, modernized rules governing how this data is being collected, protected, or used, because, well, trust.
Automakers (and the cellular carriers that control the on-board infotainment systems) for example are collecting and sharing an ocean of data with only a casual glimpse toward security and transparency. No worry, however, as they promise that they're totally thinking about consumers as they use this data for a litany of new, utterly non-transparent purposes you hadn't even thought about. Like your automaker taking your car's GPS and performance data and selling it to insurance companies to potentially impact your insurance rates.
"Daniel Björkegren, an economist at Brown University in Providence, Rhode Island, is working with EFL to predict whether someone will pay back a loan based on their cellphone data. He combed through the phone records of 3000 people who had borrowed from a bank in Haiti, looking at when calls were made, how long they lasted and how much money people spent on their phones.
The algorithm looks at this metadata to get a sense of a person's character. Do they promptly return missed calls and pay their phone bills? That suggests they might be more responsible. Are most of their calls made in an area far away from the bank branch? Then it may be hard for the bank to keep tabs on their whereabouts.
Björkegren found that the bank could have reduced defaults by 43 per cent by using the algorithm to pick better people to give loans to. The results were presented at the NetMob conference in Cambridge, Massachusetts, earlier this month."
It's worth noting that despite the collected data being anonymized, researchers were able to identify people 90% of the time with just 4 pieces of information. That's yet another example of how anonymous data isn't really anonymous, and if the data gets into the wild -- the fact that it has been "anonymized" doesn't really mean all that much. And with the security on everything from "smart" TVs to home IOT devices usually being relatively flimsy, there's going to be an awful lot of new data on you out there floating around the ether to include in analysis.
And while such a system might be great for the banks, it's probably not so great for you if you didn't want your cell data used in this way. And as the article notes, should you protect your privacy and opt out of your cell data being used in tangential business relationships, customers in the not-so-distant future might find themselves labeled as "suspicious" by companies -- simply for not being in a sharing mood.
A little over a year ago, Level 3 was busy accusing Verizon of intentionally letting its peering points get congested in order to degrade Netflix streaming performance, by proxy forcing Netflix to pay Verizon for direct interconnection if it wanted to remedy the situation. According to arguments by Netflix, Level3 and Cogent, big ISPs like Verizon, Comcast and AT&T decided to move the net neutrality debate out to the edge of the network, obtaining their pound of flesh by eliminating settlement-free peering and demanding new charges just to access last mile customers.
To hear AT&T, Verizon, and Comcast tell it, the fight was all just a big misunderstanding, and what was occurring was just run of the mill peering disputes. Meanwhile, their army of fauxcademics, astroturfers, lobbyists, consultants and think tankers were busy telling anyone who'd listen that Netflix was trying to destroy the Internet.
But in a series of blog posts from last year, Level 3 content and media VP Mark Taylor continued to argue that there was a major anti-competitive cabal afoot, with only the biggest ISPs holding network performance (and their own users) for ransom in a quest for more revenue:
"All of the networks have ample capacity and congestion only occurs in a small number of locations, locations where networks interconnect with some last mile ISPs like Verizon. The cost of removing that congestion is absolutely trivial. It takes two parties to remove congestion at an interconnect point. I can confirm that Level 3 is not the party refusing to add that capacity. In fact, Level 3 has asked Verizon for a long time to add interconnection capacity and to deliver the traffic its customers are requesting from our customers, but Verizon refuses."
The problem, as we noted at the time, is that with peering arrangements entirely confidential, it was impossible for any researcher to fully prove incumbent ISPs were up to no good, even if the context of thirty years of anti-competitive behavior -- and scattered glimpses of limited data sets -- suggested the Netflix and Level 3 narrative might just be true. As such, the FCC announced it would begin collecting internal company data on interconnection to determine who, exactly, was telling the truth.
Even Cogent founder and CEO Dave Schaeffer, one of the most vocal executives in regards to these interconnection feuds, seems happy to have struck a no-payment deal with Verizon. According to Schaeffer, the FCC's new neutrality rules helped bring Verizon to the table, since Level 3 and Cogent had hinted they might complain to the FCC:
"Schaeffer told Ars that it did not have to pay Verizon to get the deal signed. "We have never paid for peering, and we continue to never pay for peering," he said today. Schaeffer said the FCC's rules "probably influenced the timing" of the agreement. He believes Verizon was also motivated to settle because Verizon's own EdgeCast content delivery network will benefit from distributing traffic through Cogent's network. But there is still work to do to make sure performance improves. "The degradation exists right now, the ports are massively oversubscribed and our initial fix is going to dramatically increase the connectivity," Schaeffer said. "The parties agreed to make sure this doesn’t become a problem going forward."
While the net neutrality rules don't technically take effect until June 13, apparently the mere threat of a regulator actually doing its job was enough to bring Verizon to the negotiations table. That's not to say there won't be problems going forward; there needs to be much more transparency surrounding interconnection agreements to protect consumers and competitors alike. Schaeffer is quick to highlight continued problems with AT&T, Time Warner Cable and CenturyLink (though he also points out that Comcast has suddenly become more amicable as well). Meanwhile, the FCC's neutrality rules obviously will need to withstand the full frontal legal assault of the entire broadband industry to remain useful.
Still, if you were paying attention, you might actually start to doubt the claims on several fronts that Title II will destroy the internet as we know it. Comcast's busy deploying two gigabit fiber to 18 million homes despite claiming Title II would demolish sector investment. Executives from Frontier, Cablevision, Sprint, Sonic and even Verizon have all publicly admitted Title II doesn't really hurt them in the slightest. And now Verizon, Level 3 and Cogent appear to have settled their differences thanks, in part, to the mere threat of actual FCC anti-competitive policing. Yeah, so far our new net neutrality rules seem like a real disaster for consumers and internet health alike.
>It needs to be addressed cable "packages" are sold as they are because distributors control the pricing, not the cable industry.
I dedicate a paragraph to that point.
Yes, broadcasters control programming prices, but don't fall into the trap of thinking cable operators are helpless little daisies when it comes to raising rates. Take a look at the fees that smack you with below the line, the fees imposed for paying your bill in person, or the steep per month hardware rental rates.
There's plenty of blame to go around. None of them want the cash cow to die.
"It's kind of a stretch to refer to Waters as their "band leader"
It's funny, because I actually paused on that word as I was writing it. I almost had just "bassist" in there.
But Animals through the Final Cut, I don't think there's really much debate that he lead the band, whether or not they wanted to be lead in that general direction -- and whether or not he was a huge ass about it.
Well one, I think telecom is fundamentally different from retail (Apple, Nike) in too many ways to list here.
Two, Verizon doesn't have to compete on price because of their domination of the special access market, which allows it control over the prices companies like Sprint and T-Mobile is charging. That just can't be ignored in suggesting they don't have to compete on price.
Three, I note at the end that I don't entirely disagree with Verizon's premise, give they really do have the best network coverage, performance, and customer service metrics. But what happens when T-Mobile and Sprint networks catch up? Last quarter showed they are now losing customers and the quality argument may not be enough.
Still though, I return to point two, and the fact Verizon enjoys regulatory capture and all but owns state legislatures. That tends to pollute free market analysis of their incentive toward real price competition.
They've pretty relentlessly raised rates on me since signing up. And whereas I used to be able to call in and negotiate better deals, in recent months they've basically told me "no, sorry" when asked if I can get a better rate.
After fifteen years writing about and being one of the few truly skeptical telecom beat reporters, I've been called a lot of things before, but never "naive," that's a new one, thanks.
No, while I think it's important AT&T is now only using throttling to manage congestion, I'm well aware of the new slippery slope of bullshit it can now employ to try and pretend its network is endlessly congested. Using congestion to defend anti-competitive behavior has been a thirty-year evolving practice, and it's certainly not ending here.
Yes it's now a slippery slope too where ISPs can consistently claim "congestion" and fiddle with the data to prove this point, so we've opened up a real pandora's box that requires consistent regulatory policing....
You understand that wanting ISPs to deploy ultra-fast networks, and not wanting ISPs to try and bullshit-upsell you to unnecessary speeds for your specific usage, are two entirely different conversations, yes?
"But if the customer already has 50 Mbps and streaming video isn't smooth, it's reasonably possible they're one of the few who actually need more.">
As Rayburn notes, he already had smooth performance, so he wasn't over-saturating the line. I get your point, but it doesn't apply here. I agree it's not the worst of Verizon's nonsensical claims ever seen on this green earth, the amusing part is they were trying to bullshit the very last person who'd fall for it.
To be fair, his time on the "other side" was spent working with smaller cable companies, and wireless companies BEFORE they were the giants of today. Many consumer advocates had made this point during his appointment, but I couldn't see through my cynical shades to acknowledge that was a good point. Of course I had to go back and put money on it, I probably would still probably not take those odds.