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Posted on Techdirt - 17 November 2017 @ 6:23am

Wireless Industry Lobbies To Ban States From Protecting Your Privacy, Net Neutrality

from the zero-accountability dept

In the wake of the Trump administration's decision to gut modest FCC consumer privacy protections and net neutrality rules, telecom lobbyists are working overtime trying to stop states from filling the void. In the wake of the FCC's wholesale dismantling of consumer protections, states like California have tried to pass their own laws protecting your broadband privacy rights online, only to find the efforts scuttled by AT&T, Verizon and Comcast lobbyists, who've been more than happy to spread all manner of disinformation as to what the rules did or didn't do.

Worried that states might actually stand up for consumers in the wake of the looming attack on net neutrality, both Verizon and Comcast have been lobbying the FCC to ban states from protecting your privacy and net neutrality. The two companies were also joined this week by the wireless industry's biggest lobbying and policy organization, the CTIA. In an ex parte filing (pdf) with the FCC, wireless carriers whine about how unfair it is that states attempted to protect user privacy after the federal government made it clear it had no such interest:

"Earlier this year, legislators in various states attempted to countermand Congressional action on broadband privacy regulations. When states and localities are provided a wide berth to test the boundaries of what is or is not consistent with Congressional objectives, the Commission and the courts are forced to evaluate regulations case-by-case, with broadband providers subject to a patchwork of mandates at issue during the review."

Like Comcast and Verizon, the wireless industry would have you forget that states wouldn't be running to create discordant privacy protections if these same lobbyists hadn't just successfully killed modest federal rules. This is a problem caused entirely by lobbyists for some of the least competitive companies in America. Said lobbyists would also have you ignore the fact that when California presented a fairly modest EFF approved replacement that could be used as a template for other states -- they made up a whole bunch of bullshit to scuttle the effort.

Most importantly these folks would have you ignore that they're perfectly fine with states writing shitty, protectionist regulations designed solely to protect uncompetitive duopolists, but state legislation that actually attempts to protect consumers is just a bridge too far. When critics suggest that maybe giant ISPs shouldn't get to write awful state laws, said ISPs will often lament an "attack on states rights." But here you'll notice the hypocrisy in having no problem dictating what local states can and can't do.

Further in, the wireless industry makes it clear it's worried that states will also try to protect net neutrality after lobbyists and the FCC vote to gut net neutrality rules on December 15:

"The Commission therefore should preempt any state or local broadband-specific regulation, irrespective of whether the state or locality claims that its regulation promotes or supplements federal goals. Thus, for example, state “network neutrality” regulations addressing the treatment of traffic on the network would be preempted, as would state broadband-specific privacy requirements."

The end goal is virtually no oversight for an industry that has proven repeatedly that it's incapable of regulating itself within the boundaries of good taste. From AT&T charging broadband users hundreds of dollars annually just to opt out of snoopvertising, to Verizon covertly modifying user packets to track users around the internet, these companies have repeatedly shown that there's no end to the privacy-eroding concepts they'd love to implement. Without any meaningful guard rails on the state or federal level, and only modest market pressure to behave due to limited competition, you can expect this kind of behavior to get immeasurably worse.

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Posted on Techdirt - 16 November 2017 @ 3:50pm

New Study Finds Poorly Secured Smart Toys Lets Attackers Listen In On Your Kids

from the barbie-needs-a-better-firewall dept

We've long noted how the painful lack of security and privacy standards in the internet of (broken) things is also very well-represented in the world of connected toys. Like IOT vendors, toymakers were so eager to make money, they left even basic privacy and security standards stranded in the rear view mirror as they rush to connect everything to the internet. As a result, we've seen repeated instances where your kids' conversations and interests are being hoovered up without consent, with the data frequently left unencrypted and openly accessible in the cloud.

With Luddites everywhere failing to realize that modern Barbie needs a better firewall, this is increasingly becoming a bigger problem. The latest case in point: new research by Which? and the German consumer group Stiftung Warentest found yet more flaws in Bluetooth and wifi-enabled toys that allow a total stranger to listen in on or chat up your toddler:

"The investigation found that four out of seven of the tested toys could be used to communicate with the children playing with them. Security failures were discovered in the Furby Connect, i-Que Intelligent Robot, Toy-Fi Teddy and CloudPets.

With each of these toys, the Bluetooth connection had not been secured, meaning the researcher did not need a password, pin or any other authentication to gain access. Little technical knowhow was needed to hack into the toys to start sharing messages with a child.

Again, the problem isn't just bad security, it's the total lack of security:

"With the i-Que Intelligent Robot, available from Argos and Hamleys, the investigation discovered that anyone could download the app, find an i-Que within their Bluetooth range and start using the robot’s voice by typing into a text field. The toy is made by Genesis, which also manufactures the My Friend Cayla doll, recently banned in Germany owing to security and hacking concerns. Both toys are distributed in the UK by Vivid."

Genesis was already facing a lawsuit here in the States accusing it of violating COPPA (the Childrens’ Online Privacy Protection Act of 1998) by failing to adequately inform parents' that their kids conversations and personal data collected by the toys are being shipped off to servers and third-party companies. Said lawsuit also points out how the privacy policies governing the collection of kids' data aren't clear, aren't prominently displayed, and often change without notice. Overseas the reaction has been notably more hysterical, with German regulators urging parents to destroy these not-so-smart dolls or pay massive fines.

As is usually the case, the companies responsible for this total privacy and security failure like to portray these flaws as limited in scope and unlikely to be exploited:

"The British Toy and Hobby Association, of which Vivid and Hasbro are members, said: “The industry takes its responsibilities incredibly seriously when making products for children, with BTHA members investing heavily in everything from toy safety to data privacy and online security.

"We are aware of the Which? report, but understand the circumstances in which these investigations have taken place rely on a perfect set of circumstances and manipulation of the toys and the software that make the outcome highly unlikely in reality."

Again though, this is often not just vulnerabilities we're talking about, but no security or privacy standards whatsoever. The idea that this isn't being exploited, however infrequent, seems unlikely -- especially as the media highlights more and more similar flaws. And again, with the internet of broken things introducing millions of new attack vectors into homes and businesses worldwide every day, the impact from this sort of privacy and security apathy will be cumulative.

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Posted on Techdirt - 16 November 2017 @ 9:35am

FCC Moves To Gut Rules Protecting Broadband Users Telcos No Longer Want

from the ill-communication dept

As AT&T and Verizon shift their focus from fixed-line broadband to the more sexy world of Millennial advertising (often quite poorly), they've effectively decided to hang up on millions of unwanted DSL users they refuse to upgrade and no longer want. This has often involved imposing relentless rate hikes on service speeds straight out of 2003, or in many cases simply refusing to repair these lines. They've also convinced state after state that if they gut consumer protections keeping these lines intact, better, faster broadband connections will miraculously spring from the sidewalks.

AT&T and Verizon argue that state and federal guidelines on this front are just outdated regulations preventing them from building the next-generation networks of tomorrow. Fiber is more reliable and wireless is more flexible, they argue, making older lines irrelevant. That, however, ignores these companies' refusal to actually fully deploy fiber, the fact that pricey & capped wireless isn't a suitable replacement for unlimited DSL, that these lines were taxpayer subsidized, or that many of these DSL and POTS (plain old telephone service) services are still very much in use by the elderly and under-served.

In reality, this "IP transition" (as AT&T execs like to call it) is having a very real, very negative impact on broadband markets. The biggest impact being that with telcos refusing to upgrade their DSL networks at any scale, cable companies are running away with a growing fixed-line broadband monopoly in many parts of the country. That means higher prices, worse customer service, and the kind of punitive and arbitrary usage caps only made possible by a lack of competition.

Again though, if you ask AT&T and Verizon, none of this is a big deal because existing wireless services are perfectly suitable replacement for these fixed-line connections. But as people found out when Verizon refused to upgrade DSL lines in the wake of Hurricane Sandy, that's simply not the case. Wireless is often significantly more expensive, frequently capped (especially in rural areas), and often hard to get in many rural, tree-happy markets. Fifth-gen wireless may someday be a suitable replacement depending on cost, but for rural markets that future is a decade or more away.

So a few years back the FCC under Tom Wheeler crafted a set of fairly basic "functional tests" (pdf) intended to prevent telcos from pulling copper-based phone and broadband service without ensuring there's a comparable replacement. The goal: to ensure that services that rely on traditional DSL and POTS still work, and that competitors that service customers over these lines could still access them. Not too surprisingly, telcos have been lobbying the government to gut this guidance. Also unsurprisingly, current FCC boss Ajit Pai has been quick to help them do just that:

"The Federal Communications Commission will vote Thursday on a plan that, according to Chairman Ajit Pai, will strip away regulations that prevent telcos from upgrading their networks.

But in doing so, the Republican-controlled FCC plans to eliminate a requirement that telcos provide Americans with service at least as good as the old copper networks that provide phone service and DSL Internet. The requirement relates to phone service but has an impact on broadband because the two services use the same networks.

While it should be fairly clear that this is yet another gift to the nation's telecom duopolies, as with its net neutrality, media consolidation, and other recent policy 180s, the FCC is engaging in some tap-dance hyperbole to try and deny this is what they're doing:

More concisely, the FCC's existing "functional test" for carriers seeking to abandon DSL networks requires they prove that any replacement service is just as good as the services they're eliminating. Since these carriers know wireless is often more expensive and often unavailable, and really don't want to extend fiber into these areas (despite receiving countless billions to do so) they want those restrictions eliminated. It doesn't matter if these lines were paid by taxpayers and are very much still in use; they're focused on making money in mobile advertising.

To tap dance around these issues, Pai's proposal, misleadingly-titled "Accelerating Wireline Broadband Deployment (pdf)," doesn't technically get rid of the guidance, but weakens it to the point of being effectively useless, as consumer groups like Public Knowledge and the NAACP make clear:

"Under current rules, an incumbent carrier cannot discontinue, reduce, or impair service unless there is a replacement service that is as good as the discontinued service. This is called the Functional Test. The FCC's order will now interpret "service" to include a carrier's tariff. A tariff is a very basic description of what a carrier offers and at what rate. This means the Commission's remaining notice requirements will only apply to basic services, but will not include 911 services, ensure network reliability, or interconnection with devices consumers use such as medical monitors, alarm systems, fax and credit card machines, and equipment for people who are hearing impaired. In some cases, the sound of a dial tone may constitute service under the tariff test and therefore not even trigger a public comment and review."

Again this is all very wonky, but a transition away from these taxpayer-subsidized fixed copper lines without ensuring there are reliable (or frankly any) alternatives will have a profound negative impact on your current cable broadband bill and service, while making it harder for less sexy markets to get quality broadband connections (already a significant problem we seem intent on ignoring). And again, Trump's FCC is pushing a telco wishlist policy they know full well will hurt consumers and the health of the nation's telecom infrastructure, while professing they're doing the exact opposite.

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Posted on Techdirt - 16 November 2017 @ 6:29am

AT&T Lawyers Investigating Whether Trump Had Undue Influence On DOJ Merger Review

from the cronyism-vs-cronyism dept

Given the Trump administration's rubber stamping of every mono/duopolist desire (killing net neutrality, broadband privacy rules, media consolidation limits), most expected the AT&T Time Warner merger to see approval without much fuss. After all, while the problems caused by vertical integration deals like Comcast NBC Universal are very real, it didn't seem likely that an administration running rough shod over consumer protections would give much of a damn. Especially given that Trump DOJ antitrust boss Makan Delrahim had already been on record stating he saw no problems whatsoever with the deal.

That's why leaked reports that the DOJ was suddenly considering blocking the deal came as such a surprise. Said reports indicated that the DOJ was considering a lawsuit to thwart the deal unless AT&T was willing to divest either CNN-owner Turner broadcasting, or DirecTV -- which AT&T acquired last year.

There are two generally-accepted theories as to what motivated the Trump administration to hamstring the deal, neither of which (unless you're immensely gullible) involve actually caring about the very real negative repercussions the deal will have on telecom/media markets and consumers. One is that the Trump administration is simply getting vindictive revenge against CNN for its critical coverage of the president, a path one Trump administration official said was definitely on the table in a July report in the New York Times:

"White House advisers have discussed a potential point of leverage over their adversary, a senior administration official said: a pending merger between CNN’s parent company, Time Warner, and AT&T. Mr. Trump’s Justice Department will decide whether to approve the merger, and while analysts say there is little to stop the deal from moving forward, the president’s animus toward CNN remains a wild card."

But there's another motivation here for the Trump administration: doing a favor for Rupert Murdoch. Reports have indicated that Murdoch has been pressuring the Trump administration to block the deal since at least January, since the combined company would pose a greater competitive threat to his News Corp. empire. Reports more recently indicate that Murdoch approached AT&T at least twice in the last six months looking to convince AT&T to sell CNN, an idea AT&T isn't interested in. In short, it's very possible that Trump may be using the DOJ to force AT&T to make a deal with Murdoch.

AT&T lawyers clearly smell something fishy here, and the company quickly indicated it will be asking a court for any and all communications between the DOJ and the Trump administration. Not too surprisingly, AT&T's inquiry will focus, in part, on the role Rupert Murdoch is playing in scuttling the deal:

"In the event of a trial over the $85.4 billion deal, AT&T intends to seek court permission for access to communications between the White House and the Justice Department about the takeover, said the people, who asked not to be named because the deliberations are private...AT&T will also try to get any evidence about whether Rupert Murdoch tried to influence the review, according to one of the people. Murdoch, a Trump confidant, controls 21st Century Fox Inc., the parent of Fox News. The president has praised Fox News’s coverage of his administration."

The entire affair is just another indication that 2017 is simply too weird for words. Blocking the deal on antitrust grounds is the right thing to do to protect streaming markets from AT&T's long, documented history of anti-competitive behavior. But is it still the right thing to do if the only real goal is to silence critical media voices while aiding a Trump ally's own business ventures? Pick your poison.

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Posted on Techdirt - 15 November 2017 @ 12:06pm

Covert Cryptocurrency Miners Quickly Become A Major Problem

from the lessons-unlearned dept

As websites increasingly struggle to keep the lights on in the age of ad blockers, a growing number of sites have increasingly turned to bitcoin miners like Coinhive. Such miners covertly use visitor CPU cycles to mind cryptocurrency while a user is visiting a website, and actively market themselves as a creative alternative to the traditional advertising model. And while this is certainly a creative revenue generator, these miners are increasingly being foisted upon consumers without informing them or providing an opt out. Given the miners consume user CPU cycles and a modest amount of power -- that's a problem.

The Pirate Bay was forced to disable its bitcoin miner back in September, after users complained it was eating up to 90% of their available CPU cycles. Showtime was similarly caught using a bitcoin miner on two of its domains, and has yet to provide any detail on why it launched the miners or refused to inform visitors they were running. More recently, Trend Micro unveiled that at least two Android apps -- downloaded up to 50,000 times from the Google Play store -- were covertly putting crypto miners inside a hidden browser window:

Recently, we found that apps with malicious cryptocurrency mining capabilities on Google Play. These apps used dynamic JavaScript loading and native code injection to avoid detection. We detect these apps as ANDROIDOS_JSMINER and ANDROIDOS_CPUMINER

[...]

This JavaScript code runs within the app’s webview, but this is not visible to the user because the webview is set to run in invisible mode by default. When the malicious JavaScript code is running, the CPU usage will be exceptionally high.

The explosion in bitcoin miners is both above and below board. There's indication that the bitcoin miners running on Showtime's domains were the result of a website hack. More recently, researchers from security firm Sucuri discovered that at least 500 websites running WordPress had been hacked, and that other publishing platforms including Magento, Joomla, and Drupal were also being consistently abused. Reddit users this week documented how Choice Hotels (owner of Comfort Inn) websites have also been compromised with cryptocurrency miners the company itself seems oblivious to.

Political fact-checking website PolitiFact also recently acknowledged it was hacked by intruders who installed bitcoin miners that quickly gobbled up visitors' CPU cycles without permission:

Not too surprisingly, security firms like Malwarebytes have started blocking the miners:

The reason we block Coinhive is because there are site owners who do not ask for their users' permission to start running CPU-gorging applications on their systems. A regular Bitcoin miner could be incredibly simple or a powerhouse, depending on how much computing the user running the miner wants to use. The JavaScript version of a miner allows customization of how much mining to do, per user system, but leaves that up to the site owner, who may want to slow down your computer experience to a crawl.

And while these tools help some with malicious installs and hacks, plenty of websites still appear to think it's a good idea to run the miners without notifying users or providing a functioning opt out. Which means there are plenty of folks busy trying to combat the rise of ad blockers -- by engaging in the exact same behavior that caused the rise of ad blockers in the first place.

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Posted on Techdirt - 15 November 2017 @ 6:28am

AT&T Promises Your Broadband Will Suck Less...But Only If It Gets Another Massive Tax Cut

from the Charlie-Brown-and-the-football dept

One of the reasons for the U.S.' pricey and mediocre broadband is our historical habit of throwing oodles of tax breaks and subsidies for fiber optic networks at giant ISPs, then letting them tap dance over and around those obligations when it comes time to deliver. Verizon, for example, has gobbled up millions in subsidies and tax breaks from cities and states up and down the Eastern seaboard for fiber optic networks it fails to fully deploy. Given the stranglehold large ISPs have on federal and state regulators and lawmakers, efforts to hold these companies accountable for any of this have been decidedly mixed.

AT&T has similarly spent decades demanding all manner of regulatory concessions, tax breaks or subsidies in exchange for broadband upgrades that seem perpetually just around the next corner. Whether it's gunning for tax cuts and subsidies, or looking for approval of its latest megamerger, AT&T's an absolute master of the regulatory carrot and a stick game. Even if the carrot is entirely hallucinated, as we saw when AT&T threatened to curtail its already modest fiber optic deployment unless net neutrality was killed.

Ignoring the fact that AT&T has been making the same empty broadband deployment promises for the better part of the last decade, the company popped up this week to throw its support behind Trump's latest attempt at "tax reform." According to an AT&T statement, the company insisted that reducing the company's tax burden will result in all manner of new broadband investment:

"By immediately lowering the corporate tax rate to 20%, this bill will stimulate investment, job creation and economic growth in the United States,” said Randall Stephenson, AT&T Chairman and CEO.

"With a rate of 20% combined with provisions for full expensing of capital expenditures for the next five years, we’re prepared to increase our investment in the United States. If the House bill is signed into law, we’d commit to increase our domestic investment by $1 billion in the first year in which the new rates are in place. And research tells us that every $1 billion in capital invested in telecom creates about 7,000 good jobs for the middle class."

The problem, again, is that AT&T simply has no credibility when it comes to broadband deployment promises. The company has a long-standing history of promising greater broadband investment if it gets "X" (the death of net neutrality rules, the death of privacy rules, more subsidies), then either ignoring those promises outright, or fiddling with its deployment numbers to make it appear that it adhered to its own promises. Meanwhile, in the real world, AT&T remains under fire for failing to upgrade broadband in numerous urban areas that should have been upgraded to fiber decades ago.

AT&T has whined fairly incessantly about the U.S. tax rate being among the highest in the developed world. And while technically true, telecom providers in particular use all manner of loopholes to ensure they often pay a pittance in taxes. That includes using Reverse Morris Trusts to dodge all tax obligations as they sell off chunks of their networks they refuse to upgrade, efforts that have resulted in a few bankruptcies for smaller ISPs on the receiving end of this creative bookkeeping. The end result is often an effective tax rate of 0% for companies like Verizon.

History generally indicates that any additional tax cuts will be pocketed by telecom sector executives, not put back into the network. That's because we've built a system where we not only refuse to do anything about a lack of competition in the broadband sector, but actively reward companies that falsely promise the broadband we truly want is just around the next corner, but only if we're willing to give these companies everything under the sun.

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Posted on Techdirt - 14 November 2017 @ 6:29am

Is Trump's AT&T Merger Roadblock A Return To Sensible Antitrust, Or Just More Cronyism?

from the raised-eyebrow dept

Given that the Trump administration has been tripping over itself to obliterate popular consumer protections (net neutrality, broadband privacy) and most media consolidation rules (largely to benefit Sinclair broadcasting), many analysts assumed that the administration would see absolutely no problem with AT&T's latest $86 billion acquisition of Time Warner. After all, such vertical integration mergers -- while they can cause very serious market harms -- are often more difficult to make a case for than mergers where direct competitors are eliminated.

Supporting that position was the fact that Makan Delrahim, Trump's new antitrust boss at the DOJ, had been on record previously stating that he saw no serious problems with the deal. That's why it was a bit of a surprise last week when reports emerged that Trump's DOJ was considering a lawsuit to block the megamerger, and may not approve the deal unless AT&T either sold off DirecTV (acquired last year) or Turner Broadcasting, owner of channels like Cartoon Network, TBS, and CNN.

Given Trump's disdain for CNN's coverage of his Presidency, many began to immediately speculate that Trump was using the merger for leverage. After all, that's what one administration official told the New York Times was on the table in a story back in July:

"White House advisers have discussed a potential point of leverage over their adversary, a senior administration official said: a pending merger between CNN’s parent company, Time Warner, and AT&T. Mr. Trump’s Justice Department will decide whether to approve the merger, and while analysts say there is little to stop the deal from moving forward, the president’s animus toward CNN remains a wild card."

So the idea that Trump would use the merger as leverage to take aim at CNN was clearly something that was on the table. But when asked about the decision while on Air Force One last week, Trump insisted that the decision wasn't his, but was made by "a very respected person," presumably Delrahim:

"Speaking to reporters on Air Force One, Trump said he “didn’t make that decision — it was made by a man who’s a very respected person, a very, very respected person..."I did make a comment as to what I think,” Trump also acknowledged. Previously, the president has blasted AT&T and Time Warner’s merger plans — and during the 2016 election, he threatened to block the companies from combining under his watch.

"I do feel you should have as many news outlets as you can — especially since so many are fake," Trump continued, according to a pool report. Then, he concluded: “I didn't make a statement, but I did make a statement long before. So we’ll see — that probably ends up being litigation, maybe not, we’ll see how it all plays out."

Granted, forcing AT&T to divest either DirecTV or Turner Broadcasting makes sense from a regulatory perspective. Consumer advocates worry that AT&T's greater size, leverage, and control over broadcast content (particularly HBO) will make it harder for streaming providers to license the content they need to compete. They're also worried that AT&T will leverage this advantage -- in concert with its monopoly in broadband and stranglehold over tower backhaul -- to engage in more of the anti-competitive behavior it's well known for (zero rating, etc.).

But it's hard to square this return to sensible antitrust enforcement with an administration that has been taking a mindless hatchet to media consolidation and consumer protection rules. What kind of thought process involves seeing no problem with gutting media consolidation rules (which devastates smaller news outlets and media diversity), yet suddenly having a strong disdain for the often more-murky negative impact of vertical integration? One possible explanation for the policy asymmetry may reside with Rupert Murdoch, who has apparently been trying to get AT&T to offload CNN to News Corporation for much of the year:

"Rupert Murdoch telephoned AT&T Chief Executive Randall Stephenson twice in the last six months and talked about cable network CNN, sources briefed on the matter told Reuters on Friday. According to one of the sources, the 86-year-old executive chairman of Twenty-First Century Fox Inc offered to buy CNN in both conversations.

And again, if you head back to media reports from January, Murdoch had been pressuring the Trump administration to make life harder on AT&T Time Warner, a News Corp. competitor:

"If Fox News’ politics ultimately solidify as more pro-Trump than they were during the campaign, that might be to the benefit of Murdoch’s business interests. According to a well-placed source, Trump has asked Murdoch to submit names for FCC Chairman. Murdoch, another source said, also wants conditions put on the AT&T-Time Warner merger, and he could lobby Trump to make that happen."

Again, it's entirely within the realm of possibility that an administration that has been protecting monoplists and gutting consolidation protections is having an uncharacterstic flirtation with sensible antitrust enforcement under Delrahim. But it's also entirely possible, especially when looking at the administration's behavior in full context, that Trump's DOJ is giving AT&T a hard time simply to aid a political ally and to quash a critical media outlet.

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Posted on Techdirt - 10 November 2017 @ 6:11am

Dear Al Franken: Net Neutrality Is Not A Magic Wand You Can Wave At Any Company

from the apples-and-oranges dept

By now, most Techdirt readers are well aware that net neutrality violations are just a symptom of the lack of competition specifically in the broadband industry. If we had lawmakers that were genuinely interested in policies that improve competition, we wouldn't need net neutrality rules protecting consumers from often-unchecked duopoly power. In the absence of said competition -- or lawmakers willing to stand up to AT&T, Verizon and Comcast -- the FCC's current net neutrality rules, however imperfect, are the next best thing.

And to be clear, net neutrality is something specific to the uncompetitive telecom industry. Yet we've watched for years as people have tried to take the concept and apply it to other, competitive sectors. AT&T, for example, has tried to foist regulations on Google by insisting the company violates "search neutrality." Other folks, like Blackberry CEO John Chen, have similarly tried to push regulation on Google and Apple by trying to insist we need protections for "app neutrality." Usually, these folks are only interested in saddling their own competitors with additional regulation, not actually improving the internet.

These folks consistently ignore the fact that this is an apples to oranges comparison. You don't need search or app store neutrality rules because those markets are actually competitive. While there are certainly some exceptions, users offended by Google or Apple's app store policies, privacy practices, or search engine behaviors have the choice of using a myriad of other services. The same can't be said of the broadband industry, where 75% of the public technically only has one choice for broadband (as defined by the FCC at 25 Mbps). These problems aren't directly comparable.

And while Al Franken has been a welcome and outspoken defender of net neutrality, he too fell into this trap this week during a speech given at the Open Markets Institute, a think tank devoted to fighting monopoly power. While engaged in a well-intentioned rant warning of the perils of unchecked social media power at the likes of Facebook, Franken conflated net neutrality with, well, something else entirely:

As tech giants become a new kind of internet gatekeeper, I believe the same basic principles of net neutrality should apply here: no one company should have the power to pick and choose which content reaches consumers and which doesn’t. And Facebook, Google, and Amazon – like ISPs – should be “neutral” in their treatment of the flow of lawful information and commerce on their platforms.

Following years of hard work and dedication, we found in the Open Internet Order a strong and time-tested framework to protect net neutrality. While we fight to preserve the Order, we must now begin a thorough examination of big tech’s practices in order to secure the free flow of information on the internet.

Again though, net neutrality isn't this universal concept you can just pick up and apply to other markets to try and make a point. And conflating the uncompetitive duopoly shitshow that is the telecom market with more competitive social media markets just doesn't work. Users can and should choose to not visit Facebook if they find the company's ethics troubling. You can use Duck Duck Go if you're understandably wary about Google's schnoz up in your business. There are options. There is competition in these markets.

Net neutrality is about ensuring duopolists can't interfere in the free flow of information. What Franken's proposing here is the advocation of interference, and urging government to dictate "search neutrality" or "website neutrality" could prove to be a muddy free speech rabbit hole, as Wired was quick to point out:

As with much of the backlash against big tech, Franken’s suggestions contain their own contradictions. Applying net neutrality rules to Google or Facebook, for example, could make them obligated to distribute content from political extremists and even foreign propaganda under some circumstances. Unfortunately for Silicon Valley, lack of solutions never stopped a congressional hearing.

Again, it's fine to want to pressure Facebook, Twitter, and Google to better handle disinformation and propaganda (though it's hard to "legislate away" a problem we don't fully understand yet). It's also perfectly reasonable to be concerned about the growing power these companies hold, particularly as it pertains to privacy. But these are very complicated and very different problems that require different solutions and different conversations. Conflating net neutrality here only aids companies like AT&T, which have long wanted to distort the concept of net neutrality to heavily regulate their Silicon Valley nemeses to ill effect.

We went down said rabbit hole once with the fairness doctrine, believing government was competent and incorruptible enough to be trusted to dictate "acceptable" speech. It would be a shame if we used the entirely different fight for net neutrality to justify making that mistake again.

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Posted on Techdirt - 9 November 2017 @ 1:28pm

Logitech Once Again Shows That In The Modern Era, You Don't Really Own What You Buy

from the sorry,-I-can't-do-that-Dave 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.

The latest example of this phenomenon is courtesy of Logitech, which annoyed consumers this week by announcing that it would be shutting down all support for the company's Harmony Link hub. Released in 2011, the Link hub provided smartphone and tablet owners the ability to use these devices as universal remotes for thousands of devices. But users over at the Logitech forums say they've been receiving e-mails informing them these devices will be effectively bricked in the new year:

"This is an important update regarding your Harmony Link. On March 16, 2018, Logitech will discontinue service and support for Harmony Link. Your Harmony Link will no longer function after this date...There is a technology certificate license that will expire next March. The certificate will not be renewed as we are focusing resources on our current app-based remote, the Harmony Hub."

Again there's no monthly subscription fee for the service, and Logitech is compounding the problem by not really clearly communicating why it's deciding to completely brick Link units. On the plus side, Logitech says it's giving Link owners under warranty a Logitech Hub for free, and providing out-of-warranty Link owners a one-time, 35-percent discount on the Hub. But many users in the company's forums and over at Reddit are questioning why the hardware needs to be crippled entirely (instead of just, say, ending formal support):

"This exact situation right here is why Ive always said “if it requires a cloud service to function, I dont want it” hosting things locally on my own network is where its at.

Indeed. While this entire fracas was unfolding, several Reddit users discovered that the company was banning users from using the phrase "class action lawsuit," which unsurprisingly is only making frustrated Link owners more annoyed.

Update: After some notable backlash, Logitech has announced that all existing Harmony Link owners will be upgraded to the company's Harmony Hub, for free. Which is nice, but doesn't really change the reality that you no longer actually own what you buy.

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Posted on Techdirt - 9 November 2017 @ 6:26am

Colorado Voters Shoot Down Comcast's Shitty, Protectionist State Broadband Law

from the Comcast-knows-what's-best-for-you dept

For years we've noted how large ISPs like Comcast quite literally write and buy protectionist state laws preventing towns and cities from building their own broadband networks (or striking public/private partnerships). These ISPs don't want to spend money to improve or expand service into lower ROI areas, but they don't want towns and cities to either -- since many of these networks operate on an open access model encouraging a little something known as competition. As such it's much cheaper to buy a state law and a lawmaker who'll support it -- than to actually try and give a damn.

And while roughly twenty three states have passed such laws, Colorado's SB 152, co-crafted by Comcast and Centurylink in 2005, was notably unique in that it let local towns and cities hold local referendums on whether they'd like to ignore it. And over the last few years, an overwhelming number of Colorado towns and cities have voted to do so, preferring to decide local infrastructure issues for themselves instead of having lobbyists for Comcast dictate what they can or can't do in their own communities, with their own tax dollars.

Yet another vote on this front was held this week in Colorado Springs. Note that the vote only opened the door to letting city voters consider building such a network, yet Comcast and Centurylink broke local spending records in their attempts to scuttle the ballot initiative. That included numerous misleading videos trying to convince locals that if they voted yes on ignoring the protectionist state laws, the city would struggle to pave roads and develop affordable housing.

According to the Coloradoan, none of these efforts worked:

"Voters on Tuesday approved a city proposal that would permit the City Council to establish a telecommunications utility to provide broadband services. Unofficial, partial returns as of 12:42 a.m. showed the measure passing with 57.15 percent of the vote. Ballot Question 2B does not require the council to create the utility. It gives council flexibility in setting up a business model for providing high-speed internet, including entering into a partnership with a private company."

Again, this doesn't mean Fort Collins will build a network. But it should be obvious why large duopolies like Comcast (which is actually seeing a growing monopoly in more regions than ever) want to prevent towns from even discussing the idea. Actual competition would put an end to Comcast's long-standing ability to charge more and more money (including usage caps and overage fees) for what's quite literally the worst customer service in America. And as telcos in countless markets refuse to upgrade aging DSL lines, Comcast's power is only growing.

Like net neutrality, for years Comcast successfully framed municipal broadband as a partisan debate to sow discord and stall these efforts. But disdain for Comcast's abysmal service obliterates such partisan divides, and over time people have realized that more creative, government-involved approaches are necessary if we want to compensate for a broken market and improve the country's mediocre broadband. If Comcast doesn't like the idea of towns and cities getting into the broadband business, there remains an ingenious solution to the "problem": provide better, cheaper, and faster service.

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Posted on Techdirt - 7 November 2017 @ 6:31am

Comcast Tries To Stop Colorado City From Even Talking About Building Its Own Broadband Network

from the Comcast-knows-what's-best-for-you dept

We've noted for years how giant ISPs have literally written and purchased protectionist laws in more than twenty states restricting towns and cities from building their own broadband networks. Many of these laws even go so far as to restrict these towns from striking public/private partnerships with companies like Google Fiber, often one of the only options for areas incumbent ISPs have declared not-profitable enough to serve. In this way giant ISPs get their cake and eat it too: they don't have to expand service, but make sure nobody else can either.

Colorado's SB 152 is one such law. SB 152 was a 2005 product of lobbying from Comcast and CenturyLink, and required communities jump through numerous hoops should they want to simply make decisions regarding their own, local infrastructure. Like all such laws the ISP pretense was that they were simply looking to protect taxpayers from financial irresponsibility (an idea often lacking in ISPs' daily business efforts), though it's abundantly clear the real goal was to prop up and protect the dysfunctional broadband duopoly status quo from anything vaguely resembling change or competition.

However, over the last few years ballot initiatives have allowed several Colorado communities like Boulder, Montrose, and Centennial to take back their right to determine their infrastructure needs for themselves and ignore the restrictions SB 152 imposes. Rather unsurprisingly, residents angry at substandard service from the likes of Comcast have been overwhelmingly opting out of the restrictive state law. Again -- not because they think building a network will be fun -- but because they're so disgusted by incumbent service they feel they have no other option.

Fort Collins is the latest city to this week vote on opting out of SB 152. To be clear: opting out of the law's restrictions only opens the door to the possibility of building a network or striking public/private partnerships. But the incumbent ISPs like Comcast that bought the law have spent more than $200,000 to prevent that conversation from even happening:

"Politics is an expensive game, but when an oligopoly is at stake, there's no price tag too high for Big Telecom. In Fort Collins, Colorado—a town of about 150,000 north of Denver—Big Telecom has contributed more than $200,000 to a campaign opposing a ballot measure to simply consider a city-run broadband network. It's the latest example of how far Big Telecom is willing to go to prevent communities from building their own internet and competing with the status quo.

"It's been wild," said Glen Akins, a Fort Collins advocate for municipal broadband. "We're overwhelmed by the amount of money the opposition is spending."

That spending, which is breaking local records, has included TV spots -- funded by an ISP policy front group -- that make numerous, misleading arguments about what locals are actually voting on. The ads try to conflate being allowed to have a conversation about the idea with actually moving forward with a plan. The ads also falsely claim that if the city of 150,000 moves forward with such a project, road repair, affordable housing, and other priorities in the city would suffer (also not true since the project would be funded by service revenues and utility bonds that couldn't be used for these other services):

What's Comcast so afraid of? The idea of city-owned or public/private partnerships have opened the door to open access networks in many cities, where ISPs come in and actually compete over core infrastructure. Like Ammon, Idaho, for example, where users can switch between multiple ISPs in seconds if they're not getting the speeds, prices or customer service they'd prefer. Actual competition obviously would mean a notable erosion in Comcast revenues:

"Evidence from other cities suggests that a real choice in broadband services could reduce Comcast's revenues by millions of dollars per month," the group, which advocates for municipal broadband projects, wrote in a policy brief. "Competition in Fort Collins would cost Comcast between $5.4 million and $22.8 million per year. In Seattle, robust competition would cost between $20 million and $84 million per year."

It's worth repeating that Comcast could prevent towns and cities from going this route by simply offering better service and lower prices. But in a country where incumbent telecom companies all but own state legislatures (as we just saw in Michigan), it's often much less expensive to write and purchase a law. Or in this case, spend half a million dollars to mislead consumers, preventing them from even having a conversation about creative paths toward better, faster, cheaper broadband.

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Posted on Techdirt - 6 November 2017 @ 10:44am

Competition Dodges A Bullet As T-Mobile, Sprint Merger Dies

from the phew dept

In the end it wasn't regulators, but giant international egos that derailed Sprint's latest attempt to acquire T-Mobile. As last week's rumors had suggested, T-Mobile owner Deustche Telecom and Sprint majority owner Softbank couldn't agree on terms of the latest attempted megamerger, formally calling off the deal over the weekend. At issue, apparently, was the fact that T-Mobile wanted greater control over the merged company in the wake of the deal. Company executives wanted to keep T-Mobile's momentum, which has resulted in bigger net subscriber gains per quarter than any other U.S. carrier, intact.

The failure is good news for consumers, employees, and business customers alike. Wall Street had estimated that the deal would have killed between 10,00 and 30,000 jobs -- potentially more positions that Sprint currently even has. Telecom history suggests that the reduction of major competitors from four to three would have also had a profoundly-negative impact on overall competition (go ask a Canadian). As a result users not only likely would have seen higher rates, but the end of the recent resurgence in unlimited data plans -- only made possible by T-Mobile's competitive disruption of the market.

In a joint statement, the two companies pay a little empty lip service to the supposed "consumer benefits" of the deal, before promising to get back to upgrading their networks and competing:

"The prospect of combining with Sprint has been compelling for a variety of reasons, including the potential to create significant benefits for consumers and value for shareholders. However, we have been clear all along that a deal with anyone will have to result in superior long-term value for T-Mobile’s shareholders compared to our outstanding stand-alone performance and track record,” said John Legere, President and CEO of T-Mobile US, Inc. “Going forward, T-Mobile will continue disrupting this industry and bringing our proven Un-carrier strategy to more customers and new categories – ultimately redefining the mobile Internet as we know it. We’ve been out-growing this industry for the last 15 quarters, delivering outstanding value for shareholders, and driving significant change across wireless. We won’t stop now.”

The death of the deal is perhaps extra good news for T-Mobile CEO John Legere. Legere has spent the last few years fashioning himself as a massive consumer ally (except for that whole opposing net neutrality and mocking the EFF thing), dropping F-bombs, and making fun of AT&T and Verizon. Selling consumers on a deal all-but guaranteed to devastate sector jobs and price competition would have required some PR acrobatics that challenge the laws of physics.

The death of the deal is ironic, given that Sprint will not likely have a better chance at getting regulatory approval. Softbank and Sprint spent the better part of the year buttering up the Trump administration, going so far as to let Trump take credit for Softbank job promises he not only had absolutely nothing to do with, but which were announced months before Trump even became President. Given the rubber stamp nature of the current FCC, the chances of regulators doing the right thing and stopping the job and competition-killing deal were far from certain.

Fortunately for consumers, fussy international egos derailed the deal before regulators had a chance to downplay how bad a deal it actually was. Sprint can now turn its focus toward striking deals with other companies like Altice and Charter; deals that won't erode the overall level of competition in the wireless sector.

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Posted on Techdirt - 6 November 2017 @ 6:27am

Comcast Urges FCC To Ban States From Protecting Broadband Privacy, Net Neutrality

from the zero-accountability dept

If you're playing along at home, you might have noticed that the Trump administration has so far been little more than a glorified rubber stamp for the whims of major broadband mono/duopolies like Comcast. But while ISPs have had great luck convincing the federal government to weaken broadband deployment standards, protect uncompetitive business broadband monopolies, kill broadband privacy protections, defend price-gouging prison phone monopolies and axe net neutrality -- a growing number of states have proven less susceptible to Comcast lobbying charms.

When the government gutted broadband privacy rules earlier this year, more than thirty states rushed to create their own guidelines for privacy in the modern era. And while having disparate, disjointed state-by-state protections isn't always ideal, it wouldn't have occurred if ISP lobbyists hadn't successfully gutted modest federal protections. With federal lawmakers all but in their back pockets, ISPs like Verizon have shifted their focus to these uncooperative states. Like California, where ISP lobbyists scuttled a new EFF-supported broadband privacy law by claiming it would aid extremists, increase popups, and harm consumers.

But these major ISPs have since been lobbying the FCC, urging it to ban states from passing any consumer protections in the wake of the federal government's apathy-for-hire. Verizon has been telling the FCC that letting states impose their own consumer protections would be a disaster:

"Allowing every State and locality to chart its own course for regulating broadband is a recipe for disaster. It would impose localized and likely inconsistent burdens on an inherently interstate service, would drive up costs, and would frustrate federal efforts to encourage investment and deployment by restoring the free market that long characterized Internet access service."

Verizon lobbyists forget to mention that this is a problem they created when they took aim at popular federal protections. Verizon also forgets to mention that the only reason the FCC crafted privacy rules in the first place is because Verizon has repeatedly shown it couldn't self regulate, having been busted covertly modifying user packets to track users around the internet -- without informing anybody or providing working opt out tools. Verizon also really tap dances around its real goal here: zero oversight whatsoever for what historically has been one of the most anti-competitive companies in American industry.

But it's not just states passing new privacy rules ISP lobbyists and executives are worried about. They're also worried that as the federal government rubber stamps their request to kill net neutrality, that states will pass individualized net neutrality protections as well. As a result, FCC filings indicate that Comcast has also been meeting with the FCC (pdf) urging it to ban states from protecting consumers:

"(Comcast) emphasized that the Commission’s order in this proceeding should include a clear, affirmative ruling that expressly confirms the primacy of federal law with respect to BIAS as an interstate information service, and that preempts state and local efforts to regulate BIAS either directly or indirectly."

ISPs have repeatedly insisted that any attempts to stop states from passing ISP-written protectionist state laws is an assault on "states rights." When those same states actually try to do something that aids consumers, said rights don't receive a moment's consideration. Again, the surface narrative here is that all regulation of telecom duopolies is always uniformly bad, but the end goal here truly is to ensure little to no oversight of some of the least competitive, least liked companies in America (which is frankly truly saying something). Anybody that has witnessed Comcast's behavior and thinks zero regulatory oversight is good idea simply hasn't been paying attention.

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Posted on Techdirt - 3 November 2017 @ 6:34am

AT&T Backs Off Nuisance Lawsuit Intended To Hamstring Broadband Competitors Like Google Fiber

from the we-hate-regulation----unless-it-hurts-the-other-guy dept

The boring old utility pole has long been at the heart of this country's broadband dysfunction. As it stands now, competing ISPs looking to deploy fiber need to contact each individual ISP -- and wait for them to finalize layers of paperwork and move their own gear -- before the competitor can attach fiber to the pole. Needless to say, ISPs have often abused this bureaucracy to stall competitors' arrival to market. So over the last few years Google Fiber has convinced several cities to pass "one touch make ready" utility pole reform rules that dramatically streamline this process.

Under these reforms, one licensed, insured contractor (often the same company ISPs already use) is allowed to move any ISPs' gear -- provided they inform the ISP ahead of time and pay for any potential damages. The regulatory change can dramatically speed up fiber deployment, saving numerous months in project delays. That's why Google Fiber convinced cities like Nashville and Louisville to pass these one touch rules a few years ago.

But Nashville and Louisville were subsequently sued by Comcast, Charter and AT&T. The ISPs' lawyers threw out every legal argument they could, including claims that the cities had exceeded their legal authority, that the reforms would dramatically increase service outages, and even that the reforms violated their first amendment rights. Of course the ISPs' real problem is that such reform speeds up the arrival of a concept regional duopolies loathe: actual, genuine competition.

In this case, AT&T's gambit didn't work all that well. Back in August, a Judge killed off AT&T's lawsuit against Louisville, stating the city was well within its legal authority to manage the city's own rights of way (even though AT&T owns 40% of the poles in the city). AT&T appears to have gotten the message, as the telco told news outlets there this week they wouldn't be appealing the ruling:

"AT&T will not appeal a federal judge’s ruling upholding a local law Louisville Metro passed last year to make it easier for new Internet providers like Google Fiber to access utility poles in the city. AT&T spokesman Joe Burgan confirmed the company decided not to appeal U.S. District Judge David Hale’s August 16 ruling upholding the so-called “One Touch Make Ready” ordinance.

The lawsuit still had its intended effect in delaying Google Fiber in Louisville while AT&T worked to lock existing customers there into long-term contracts. Google Fiber meanwhile has been forced to pivot from fiber to wireless/fiber hybrid deployments in part to get around these lawsuits. But the company also managed to use techniques like microtrenching (which involves using machines that bury fiber just a few inches below the road's surface) instead of having to rely on access to utility poles. It's worth noting that a similar Charter lawsuit against Louisville, and AT&T and Comcast lawsuits against Nashville are still pending.

Instead of offering better, faster, cheaper service, these companies' first instinct is almost always to either file nuisance lawsuits, or to quite literally buy state laws that make life harder on would-be competitors. And while you'll often see incumbent broadband duopolies and their policy cronies crying incessantly about "burdensome regulation" while pushing for blind deregulation, the reality is these companies adore regulation -- just as long as it hurts the other guy and slows any attempt to bring competition to bear on a broken market.

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Posted on Techdirt - 2 November 2017 @ 12:08pm

FCC Boss Demolishes Media Ownership Rules In Massive Gift To Sinclair Broadcasting

from the the-big-get-bigger dept

FCC boss Ajit Pai has been busy ignoring the public while he kills popular net neutrality rules. But he's also been working hard to weaken broadband deployment standards to obfuscate a lack of broadband competition, to gut programs that provide broadband to the poor, killing previous FCC efforts to improve cable box competition, to protect prison telco monopolies from oversight, and to make it easier for business broadband monopolies to rip off smaller competitors. All while proclaiming to be a stalwart defender of the little guy and a champion for bridging the digital divide.

But Pai has also been taking heat for his pursuit of another pet project: gutting media consolidation and ownership rules solely for the benefit of Sinclair Broadcasting, which is seeking approval for its $3.9 billion bid for Tribune. In the last few months, Pai has, as promised, been "taking a weed whacker" to rules intended to protect local reporting, media competition, and opinion diversity. That has included killing an 80 year rule intended to protect local competitors and journalism from unchecked monopoly control of a market, and taking an axe to some protections but bringing back others solely to Sinclair's benefit:

"On Tuesday, the FCC eliminated a requirement for broadcasters to keep a local studio. A day later, Pai called for easing ownership restrictions, potentially taking pressure off Sinclair’s $3.9 billion deal for Tribune Media Co.’s TV stations. Earlier, he had restored an obsolete rule, making the deal possible. On Thursday, the agency moved toward blessing a new broadcasting standard that may enrich Sinclair as it offers viewers sharper pictures."

As he prepares to axe yet more media consolidation protections over the coming months, Pai has trotted out the growing power of Google and Facebook as partial justification for eliminating rules he declares no longer necessary:

"The marketplace today is nothing like it was in 1975. Newspapers are shutting down. Many radio and TV stations are struggling, especially in smaller and rural markets. Online competition for the collection and distribution of news is even greater than it ever was. And just two Internet companies [Google and Facebook] claimed 100 percent of recent online advertising growth. Indeed, their digital ad revenue alone this year will be greater than the market cap of the entire broadcasting industry. And yet the FCC's rules still presume that the market is defined entirely by pulp and rabbit ears."

Obviously the argument that "Google and Facebook are big" and therefore media consolidation rules are unnecessary doesn't hold a whole lot of water. And while it's true that many newspapers and local news outlets are "struggling," that's more a failure of adaptation than a justification for gutting media consolidation restrictions that still aid smaller, regional news outlets. Unsurprisingly, fellow FCC Commissioners like Jessica Rosenworcel have called for an investigation into Pai's giant, sloppy kiss to Sinclair:

"It has reached a point where all of our media policy decisions seem to be custom-built for this one company," Jessica Rosenworcel, a Democratic FCC member, said Wednesday at a congressional hearing. "It’s something that merits investigation.”

This mindless obsession with mergers and consolidation (with little thought as to the impact on markets or competition) has been a hallmark of the Trump administration. But opposition to this growth-for-growth's sake has been increasingly bipartisan in nature, with many smaller Conservative outlets worried they'll be unable to compete with giants like Comcast NBC Universal, Sinclair/Tribune, and soon AT&T Time Warner. Smaller organizations like the American Cable Association (ACA) applauded and supported Pai's rise to power, now seem surprised as his policies focus almost exclusively on aiding the biggest and wealthiest companies:

"ACA urges the Federal Communications Commission to deny the Sinclair-Tribune transaction because it would violate existing FCC rules while at the same timing failing to meet the obligation to demonstrate it would serve the public interest. Even if the transaction were not per se unlawful, it would create a broadcasting behemoth with unprecedented control over both the national and local television markets,” ACA President and CEO Matthew M. Polka said."

Whether it's gutting net neutrality solely for the benefit of a few giant ISPs, or gutting media consolidation rules exclusively to aid one giant media empire, Pai's legacy at the FCC will be one of brutal myopia, obfuscated by tall tales about his relentless dedication to the little guys he seems blatantly intent on ignoring.

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Posted on Techdirt - 2 November 2017 @ 6:24am

Giant International Egos May Derail The Sprint T-Mobile Merger

from the synergies,-yo dept

We've been discussing how Sprint's plan to merger with T-Mobile would be notably awful for the wireless industry. Not only do Wall Street analysts predict it would kill anywhere from 10,000 to 30,000 jobs (potentially more people than Sprint even currently employs), but it would reduce the number of major competitors in the space from four to three -- dramatically reducing the industry's incentive to compete on price and service. The resulting competitive lull could derail many of the good things a resurgent T-Mobile has encouraged in the sector (like the death of long-term contracts and the return of unlimited data plans).

Given the giant industry rubber stamp that is Trump FCC boss Ajit Pai, many analysts believed the administration would approve the deal anyway. Sprint and its Japanese owner Softbank have spent the better part of the year buttering up the Trump administration in preparation for regulatory approval, going so far as to custom craft some job creation bullshit synergies Donald could easily use to justify approval of the arguably-awful deal.

Unfortunately for Sprint lobbyists, they may never get the chance. This week reports out of Japan indicated that Softbank Chair Masayoshi Son had walked away from the negotiations table after a dispute over who should have the most control over the freshly-merged company:

"SoftBank Group plans to break off negotiations toward a merger between subsidiary Sprint and T-Mobile US amid a failure to come to terms on ownership of the combined entity, dashing the Japanese technology giant's hopes of reshaping the American wireless business. SoftBank is expected to approach T-Mobile owner Deutsche Telekom as early as Tuesday to propose ending the talks. They had reached a broad agreement to integrate T-Mobile and Sprint -- the third- and fourth-largest carriers in the U.S. -- and were ironing out such details as the ownership ratio."

T-Mobile and its owner Deutsche Telekom obviously want to retain control of the brand identity of T-Mobile in the wake of the deal, since the company has been immensely successful thanks to actually listening to customers (mostly). Sprint in contrast has stumbled through the last several years loaded with debt, and hasn't been able to craft a brand identity (or a working network) that truly resonates with consumers. It's not particularly surprising that T-Mobile and cheeky CEO John Legere want more control over the merged company than Sprint and Softbank may be willing to give.

The problem for Sprint at this point is that the only thing holding up the company's stock price for most of this year has been merger rumor and speculation. As such, some Wall Street analysts think Sprint might want need to go private if it's to survive fallout from the deal's collapse, while other analysts say failure to finalize the deal could erode up to $50 billion in theoretical value between the two companies:

"(I)f these management teams fail to get this deal across the goal line, they have failed to do their job,” New Street wrote. “They will be walking away from close to $50 billion in value. Regardless of what either side things their asset is worth on its own, adding $50 billion to that starting value would be a big enough increase in value that they ought to have found a way to get the deal done.”

A scuttled deal would be good news for T-Mobile's Legere, who might find synchronizing his consumer-friendly brand with the competition-killing deal a tall order. That said, it remains entirely possible that Sprint's leaked decision to walk away from the negotiations table is a bluff. Since Sprint needs the deal much more than T-Mobile does -- it's more than possible the two sides will still find a way to get the deal done. Should that occur, we can look forward to a winter filled with entirely bogus "synergy" promises as investors wait to see just how big of a mindless rubber stamp the Trump administration truly is.

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Posted on Techdirt - 1 November 2017 @ 11:55am

Verizon Lobbies FCC To Block States From Protecting Broadband Privacy, Net Neutrality

from the states-rights...when-convenient dept

Earlier this year, the Trump administration and GOP handed a giant gift to the nation's telecom duopolies when they dismantled FCC broadband privacy protections. While ISPs whined incessantly about the rules, the protections were relatively modest -- simply requiring that large ISPs be transparent about what personal data is being collected and sold, who it's being sold to, and that working opt out tools be provided to consumers. The FCC's rules were only created after Verizon was caught modifying packets to covertly track users around the internet and AT&T tried to make consumer privacy a luxury add on.

But in the wake of the GOP's myopic dismantling of the rules, more than 30 states began considering their own disparate privacy protections for consumers. The EFF threw its support behind one such bill in California, arguing that it could provide a good template for other states to follow in order to gain some uniformity. But Google, Comcast, AT&T and Verizon collectively lobbied to scuttle that law last month, leaked documents showing how they lied to California lawmakers by claiming the rules would have emboldened extremists, boosted annoying popups, and somehow harmed consumers.

On the heels of that victory, Verizon is now lobbying the FCC to ban states from trying to protect consumer privacy. FCC Commissioner Mike O'Rielly had already hinted at this path in recent speeches to industry-backed think tanks, but what this effort would look like isn't yet clear. In a recent letter and white paper submitted to the FCC (pdf), Verizon urges the FCC to use its authority to block these state laws, and warned of the perils of states trying to actually protect consumers from unchecked broadband duopolists:

"Allowing every State and locality to chart its own course for regulating broadband is a recipe for disaster. It would impose localized and likely inconsistent burdens on an inherently interstate service, would drive up costs, and would frustrate federal efforts to encourage investment and deployment by restoring the free market that long characterized Internet access service."

There's a few things Verizon's ignoring. One, states wouldn't be rushing to create a patchwork quilt of consumer protections if Verizon lobbyists hadn't successfully convinced former Verizon lawyer turned FCC boss Ajit Pai to kill existing, modest federal protections. This is entirely a problem of ISP lobbyists' making.

It's also worth noting that ISPs like Verizon have spent decades writing and buying protectionist, competition-killing state laws in order to protect their regional broadband mono/duopolies. When folks have pointed out that maybe giant ISPs shouldn't be writing shitty state law, ISPs (and the lawmakers paid to love them) have cried about the trampling of "states rights." Yet when those same states actually try to do something good for the end user, trampling those same rights appears to be a non-issue. That's an obvious double standard by any measure.

Further on in the white paper Verizon makes it clear that it's also worried that states will rush to protect net neutrality after the FCC votes to kill existing net neutrality rules later this year:

"States and localities have given strong indications that they are prepared to take a similar approach to net neutrality laws if they are dissatisfied with the result of the Restoring Internet Freedom proceeding. Notably, the New York State Attorney General claims that “the role of the states in protecting consumers and competition on the Internet remains critical and necessary.”

Yes, the absolute unbridled horror of states protecting consumers and small businesses after the federal government has become a glorified rubber stamp for broadband duopolies! Again -- if Verizon doesn't want states creating broadband-focused consumer protections, it should stop trying to dismantle every federal consumer protection in existence. That includes the extremely popular (and again, relatively modest by international standards) net neutrality protections currently on the books.

Verizon believes it should be completely free of anything even vaguely resembling oversight as it shifts its focus, rather clumsily, toward being a Millennial advertising engine. But while Verizon has argued for years it can self-regulate without adequate oversight, the lack of competition in most Verizon markets highlights how that's simply not practical. From the company's covert tracking of users using "zombie cookies," to its ongoing efforts to sell your personal data without informing you or letting you opt out, Verizon continues to make it perfectly clear that privacy and transparency are a distant afterthought, a problem they won't be fixing voluntarily.

That leaves us with two choices: improving market competition to increase organic pressure until Verizon behaves, or leaning on some fairly basic regulatory oversight to ensure consumer privacy is protected by some basic rules of the road. Verizon would obviously prefer it if the country did neither, and so far we seem more than happy to accommodate.

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Posted on Net Neutrality Special Edition - 1 November 2017 @ 6:22am

Dead People Mysteriously Support The FCC's Attack On Net Neutrality

from the something-shady-goin'-on dept

We've noted for months how an unknown party has been using bots to bombard the FCC website with entirely bogus support for the agency's planned attack on net neutrality. Inquiries so far have indicated that whatever group or individual is behind the fake support used a bot that automatically pulled names -- in alphabetical order -- from a compromised database of some kind. Earlier this year one reporter actually managed to track down some of these folks -- who say they never filed such comments or in many instances had no idea what net neutrality even is.

Earlier this year, some reporters discovered that some of the biggest fans of the FCC's myopic assault on net neutrality appear to be dead:

"As the war over the fate of America's free and open internet lumbers on, it appears that opponents of net neutrality will do anything in their power to turn control of the internet over to massive telecom companies—including committing fraud. As detailed in a letter sent to the FCC Thursday morning, people are pissed that their personal information was used without their knowledge to post anti-net neutrality comments to the FCC's website, which includes at least two people who are recently deceased.

Others have since continued to dig through the names used to support Ajit Pai's attack on net neutrality -- and continue to find that many of them had never visited the FCC website, had no idea what net neutrality is, or were no longer breathing. Like John Skalski of Sharpsburg, Georgia -- who back in May purportedly submitted this (factually incorrect) comment to the FCC comment proceeding. Note its content is different from the bot-generated comments that had been methodically submitted already:

Which is interesting because John is, well, dead:

"However, if you go to his house on 11 Tee Pee Row, you will unfortunately speak to a kind person who will tell you that John has been passed away since 2016 and no one else there has the same name. Unfortunately, that is a fake public comment. I found Mr. Skalski’s obituary later:

This is where we'll remind you that the FCC has shown no interest whatsoever in investigating any of this. Similarly, when I contacted the agency to tell them someone else had written a fraudulent comment in my name supporting the attack on net neutrality, I was told there was simply nothing that could be done. Combined with the agency's apparently fabricated DDoS attack, there's more than a few indicators that the agency is eager to malign the integrity of the public feedback period in order to try and downplay the massive public backlash to its handout to the telecom industry.

Since the FCC is expected to unveil its full plan ahead of Thanksgiving for what will likely be a vote right before Christmas, contacting your lawmakers on this subject remains of utmost importance. Should the FCC decide to ignore the public and dismantle the protections anyway, it seems more than likely that this recent necromancy will play a starring role in the inevitable lawsuits to come.

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Posted on Net Neutrality Special Edition - 31 October 2017 @ 6:30am

Portugal Shows The Internet Why Net Neutrality Is Important

from the sorry,-freedom-is-extra dept

So if you've followed the debate over net neutrality for much of the last decade, you probably remember images like these, purporting to show what the internet might look like if we let broadband duopolies like AT&T or Comcast dictate internet access pricing structure:

And while these mock ups were tongue in cheek, large ISPs have given every indication that this idea of freedom costing extra isn't too far from their ideal. And abusing a lack of broadband competition to force users to shell out additional funds to access to the content and services of their choice isn't too far off of what has already happened, whether we're talking about AT&T's decision to block Facetime from working unless users shelled out for more expensive plans, or Verizon's recent decision to charge users $10 more just to avoid arbitrary video throttling.

While the EU does have some fairly decent net neutrality rules, countries do have some leeway in terms of enforcement -- especially when it comes to "zero rating" (or the act of imposing usage caps, then exempting your own or a partner's content). So ISPs in Portugal have already started taking advantage of it in a way that eerily echoes the warnings net neutrality advocates have been making for years. Lisbon-based mobile and fixed broadband provider MEO has been selling broadband service tiers for some time that cap your internet data usage, after which they're happy to sell you additional buckets of data depending on which types of services you traditionally use:

It's important to note that capping usage then doling out additional data based on types of content isn't the same idea as blocking users from accessing parts of the internet unless they pay up. Several news outlets have conflated MEO's pricing above with the outright blocking of certain services, which simply isn't the case. Most ISPs realize that outright blocking of content is a PR disaster that's more trouble than its worth.

That said, what MEO is doing is still detrimental to the health of the internet. As we saw with T-Mobile's Binge On program -- which exempted certain video and music services from the carrier's caps, these "zero rating" and usage caps plans are designed to create the illusion of a bargain. But these types of plans not only raise questions about ISP power to dictate which companies and services are whitelisted, but they're based on a fundamentally incorrect premise that these usage restrictions are necessary in the first place.

Usage caps and overage fees aren't based on network or economic realities. They aren't useful to manage congestion. Their entire function is to creatively drive up costs via arbitrary and artificial barriers to entry, after which ISPs convince consumers they're somehow getting a deal by providing additional data "for free" or "at a discount." ISPs have often falsely tried to equate this as the same thing as 1-800 numbers or free shipping, which is bullshit. All that's really happening is that internet access is being artificially limited, and users are being forced to pay more money to access the internet as intended.

While people often like to focus on the threat of ISPs blocking access to content, ISPs know that's a surefire way to earn public scorn. That's why ISPs around the world have long since developed a myriad of more creative ways to (ab)use the lack of competition in the space to ill effect, whether that's imposing arbitrary and unnecessary usage caps and overage fees, exempting an ISPs own services from said caps, or hamstringing competitors elsewhere in the network, as we saw when ISPs began intentionally clogging peering points to drive up costs for streaming competitors and transit operators (interconnection).

With the Trump administration rushing forward with its plan to kill net neutrality here in the States, and a rise in cable's monopoly over fixed-line broadband, you can expect a whole lot more U.S. broadband pricing and package "creativity" in the not so distant future. That may not involve outright blocking your access to content, but it's more than likely to involve entirely arbitrary, uncompetitive and harmful limits you'll be told are somehow necessary and for your own good.

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Posted on Techdirt - 27 October 2017 @ 10:46am

Charter CEO Tries To Blame Netflix Password 'Piracy' For Company's Failure To Adapt To Cord Cutting

from the blame-everything-but-yourself dept

Like most pay TV providers, Charter Communications (Spectrum) continues to bleed pay TV subscribers tired of paying an arm and a leg for giant, bloated channel bundles. Also like most pay TV providers, the company isn't willing to really own the fact that their only real "solution" to this problem has been to double down on the same, bad ideas. Charter just got done gobbling up Time Warner Cable and Bright House Networks subscribers in a $79 billion deal that resulted in rate hikes as high as 40% and somehow even worse customer service than the historically-awful customer service the sector is known for.

That said, it shouldn't be particularly surprising that Charter lost another 104,000 traditional video subscribers last quarter. Those losses came after losing 90,000 TV subscribers during the second quarter, and another 100,000 during the first quarter of the year. While skyrocketing prices, horrible customer service, and the rise of streaming video competition are the obvious culprits here, Charter CEO tried lay the blame elsewhere. Namely, those troublesome rabblerousers who share streaming service passwords:

“There’s a lot of pressure on the video business,” Rutledge said. “The biggest pressure is price. But the second biggest pressure is that many programmers are distributors, whether they know it or now. And because of password sharing and multiple-stream products … You have 35 million one-person households in the U.S. The multiscreen products sold to those households also them to purchase one product and share it with multiple users.”

This isn't the first time Rutledge has complained about the practice of password sharing. While companies like Netflix and HBO have made it clear they see password sharing as a form of creative marketing, Rutledge has long stated he sees the practice as some sort of nefarious menace:

"The lack of control over the content by content companies and authentication processes has reduced the demand for video because you don’t have to pay for it,” Mr. Rutledge said on the earnings call. “That’s going on in the college market."

That's a pretty stellar misunderstanding of the evolving video market for the highest paid executive in America last year. Netflix and HBO have both stated that such password sharing has no meaningful impact on the industry, and if anything helps sell new subscriptions once users (especially Millennials riding on their parents subscriptions) get hooked on the value proposition. Compare that business plan to Charter, a company that's currently being sued for using hidden fees to jack up rates and for intentionally shortchanging subscribers at every conceivable opportunity.

Cable providers could easily combat streaming video competition by lowering rates and offering more flexible channel bundles, an idea they pay a lot of lip service to, but rarely implement. Instead, execs like Rutledge have tried to downplay the threat of cord cutting in the belief they can nurse the traditional cable TV cash cow indefinitely. They're afraid to offer a cheaper, better product for fear of accelerating the trend. What they often don't seem to understand is this isn't going to be a choice. The days of cable TV wink-wink, nod nod non-price competition are over, and if these companies want to remain in the TV business -- they're going to have to (gasp) seriously compete on price.

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