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
In February of last year, Frontier Communications announced it would be buying Verizon's unwanted fiber (FiOS), DSL, and phone customers in Florida, Texas, and California for $10.5 billion. The deal was yet another chapter in Verizon's effort to give up on fixed-line networks it no longer wanted to upgrade, as it focused on more profitable (read: usage capped) wireless service. The deal was, as Frontier's CEO stated at the time, a "natural evolution for our company and leverages our proven skills and established track record from previous integrations."
As it turns out, that "established track record" didn't mean all that much.
Shortly after Frontier began attempting to integrate 3.7 million customers in the three states starting April 1, things began to unravel. Numerous customers complained they couldn't use phone, broadband or cable TV services -- at all -- for weeks. Company apps no longer worked. Some DNS servers stopped responding. Voicemail services no longer functioned. Customers left without service for weeks say they called customer service lines only to be yelled at or ignored by Frontier support representatives.
"The ones that are most disturbing to me are our senior complaints that only have a hardline and they can’t call 9-1-1 if they need too. Many people, they’re internet is down so their alarm systems aren’t working,” she said. “This is unacceptable that this has happened. We’ve told them that, first of all people who have been out cable service, should not have to request a refund; they should automatically be given a refund."
Frontier's also now under fire in California, where lawmakers recently held a hearing to press Frontier on its incompetence. At the hearing, Frontier blamed "corrupt Verizon data" and a particularly dysfunctional overseas support center obtained by Verizon for the problems:
"Another key issue was the temporary use of a Philippines-based call center. Frontier used that call center because it was the same one Verizon used to handle customer issues and the company assumed those customer service representatives worked with California customers before."
Except "corrupt data" doesn't explain the depth of the problems (like broken DNS servers), and most of these issues should have been prepared for during the fifteen months between the deal's announcement and the customer integration.
The real problem is that Verizon (who no longer wanted these customers) sold them to a company focused on growing for growth's sake -- but unmotivated to seriously invest in customer support because there's just not enough competition to warrant it. And this isn't the first time this has happened; both Fairpoint Communications and Hawaiian Telcom went bankrupt when they bought massive swaths of unwanted Verizon territory. In the Fairpoint deal, the ISP acquired Verizon's customers in Maine, Vermont and New Hampshire, but then imploded from the support strain -- and the debt from the deal.
In short, regulators keep seeing how these lose/lose deals go south quickly, but keep signing off on them anyway. Usually that's because they figure that an utterly incompetent company is better than an utterly apathetic company when it comes to delivering barely adequate service. It's just par for the course for an industry where abysmal service is the norm -- because there's little to no real competitive pressure holding any of them to a higher standard.
We've noted a few times now that ever since the FCC passed net neutrality rules, loyal ISP politicians in the House and Senate have been engaged in a full-court press to punish the agency for daring to stand up to big broadband ISPs. That has involved an endless parade of taxpayer-funded hearings pretending to be about agency transparency and accountability -- but are really just about publicly shaming the agency. It has also involved a laundry list of bills that attempt to thoroughly gut FCC funding and authority under the pretense of saving the country from a power-mad FCC.
This not-so-subtle ballet continued this week, when the House passed a new budget bill that would gut the FCC's 2017 budget by $69 million, stall the FCC's attempt to bring competition to the cable box, and prevent the FCC from enforcing net neutrality violations until the industry's lawsuit is settled. In fact, like previous bills, this new budget bill uses an absurdly broad definition of "rate regulation" to effectively prevent the FCC from doing anything:
"The GOP proposals define rate regulation so broadly that Wheeler says they would prevent the FCC from enforcing key net neutrality provisions and disrupt its process for reviewing mergers. The budget bill again uses a definition of rate regulation that goes far beyond the utility rate-setting traditionally imposed on landline phone providers. The proposal would prevent the FCC from using its net neutrality rules to act against discriminatory data cap policies, among other things."
Note that this latest push comes -- not coincidentally -- as ISPs like AT&T and Comcast have started pushing usage caps harder, and the FCC has started dropping hints that it might just do something about it.
"The job of this bill is two-fold: to make wise investments with taxpayer dollars in the programs and agencies that we need to grow our economy and enforce our laws, and to tightly hold the reins on the over-spending and overreach within federal bureaucracies. This bill makes great strides on all accounts – carefully investing taxpayer dollars in programs that promote opportunity, while keeping these agencies accountable to the American people."
For years now Verizon has made it clear that it no longer wants to be in the fixed-line broadband business. Despite countless billions in taxpayer subsidies and numerous unfinished obligations, the company has all-but frozen serious fiber deployments. It has also been either selling off unwanted DSL customers to smaller, ill-equipped telcos (which which almost always ends poorly for everybody except Verizon accountants and lawyers) or has quite literally tried to drive unwanted users away with both rate hikes and apathy.
Instead, Verizon executives decided to try and transform the stodgy old telco into a sexy new Millennial-focused advertising juggernaut. So far that has involved launching the company's Millennial-targeted "Go90" streaming video service, spending $4.4 billion on acquiring AOL, trying to acquire the drifting wreckage that is Yahoo, and developing controversial stealth ad tracking technology to build covert profiles of customer behavior as they wander around the Internet.
Despite the company heavily marketing Go90, zero rating the service so it doesn't count against usage caps, and even giving away data to users that try the service, it has seen extremely limited adoption among Verizon's target demographic. Verizon has refused to release subscriber numbers for the service, and the Go90 app is slowly falling down both the Apple App Store and Google Play rankings. Things have been so underwhelming, Verizon CEO Lowell McAdam was forced to admit to attendees of an investor conference this week that the company may have "over-hyped" the platform:
"It did get a little bit overhyped, and we contributed to that to some extent," McAdam said in a keynote appearance at the 44th Annual J.P. Morgan Conference. McAdam explained that Verizon's strength is in building networks, not necessarily developing popular content. "It's not exactly our strong suit," McAdam conceded.
Granted everybody not at Verizon knew that the company's attempt to magically make an old telco sexy for millennials would be a hard sell, especially given Verizon's long history of trying and failing to be content innovators. The company has long tried and failed when leaning outside of its core competency, whether that's operating its own app store, running a streaming venture with Red Box, or briefly operating a news website where authors were prohibited from talking about things like surveillance or net neutrality. Phone companies, after a generation of regulatory capture and "yes men" boardroom culture -- simply aren't genetically built for real disruption and innovation outside their core competency, no matter how many executives seem to believe otherwise.
McAdam then tried to walk back his comments a little, and tried to argue that Go90 isn't a failure, it's just a vision that's going to take a lot of time, and a lot of money (which won't be spent on networks), to execute:
"We've seen enough success to make us excited about continuing to work it... "Go90 is in a good spot from our perspective, we're going to continue to pursue it. But our expectations are realistic."
As a writer I generally love telecom investor conferences for the simple fact that for whatever reason, phone and cable executives still haven't figured out that the public can hear what's being said at them. What usually happens is a telecom executive will say something uncharacteristically candid, then the company's marketing department will jump in to try and spin the comments a few weeks later. As such it shouldn't be long before Verizon unveils a new marketing barrage that spins McAdam's comments and claims Verizon's quest to become sexy in the eyes of Millennials is going better than ever.
For a company that just spent $69 billion on DirecTV to unlock "amazing synergies" across the TV, wireless and broadband sectors, AT&T's latest quarterly earnings subscriber tallies landed with a bit of a thud. The company actually posted a net loss of 54,000 video subscribers, a net loss of 363,000 postpaid phone subscribers, and a net gain of just 5,000 broadband customers during the quarter -- suggesting that any "synergies" AT&T envisioned are going to be somewhat slow in coming, if they arrive at all.
That AT&T spent $69 billion on a satellite TV provider on the eve of the cord cutting revolution -- especially given its fixed broadband network lags cable speeds and is in desperate need of upgrade -- turned numerous heads on Wall Street. But skeptics haven't yet really keyed in to the cornerstone of AT&T's plans or its ultimate secret weapon in the war on evolving markets: usage caps.
We've long noted how usage caps are little more than anti-competitive weapons and glorified price hikes levied on uncompetitive broadband markets. And this week, AT&T formally took aim at millions of you with the launch of usage caps on all of the company's broadband customers. Starting this week, U-Verse customers now face caps ranging from 300 GB to 1 terabyte depending on speed -- caps that users can avoid if they're willing to pay an extra $30 per month. Things are worse for DSL customers, who face a fixed cap of 150 GB and need to pay $10 for each additional 50 GB of data consumed.
But usage caps don't just have the benefit of letting duoplists like AT&T and Comcast charge customers more money for the same exact product. In addition to using caps to punish cord cutters, AT&T hopes to (ab)use usage caps to prevent cord cutting altogether. The company has announced it's eliminating caps entirely for customers who subscribe to DirecTV service. In other words, you can avoid aggressive price hikes on your broadband line -- if you pay even more money for a TV service you may not even want. AT&T's doing something similar in wireless, where customers can now only get unlimited data -- if they subscribe to DirecTV.
So while the merger may not have provided notable "synergies" yet, the long play is that it gives AT&T the ability to effectively abuse the lack of fixed-line competition -- to drive captive, capped customers toward AT&T TV services. And as the justification for usage caps has been increasingly debunked, ISPs have stopped really justifying the moves at all. AT&T's statement on the matter barely even tries to give a reason for the new limits:
"We want to continue providing a great experience for our Internet customers so we’re giving U-verse® Internet customers more choices and more data, including an unlimited data option available to any U-verse Internet customer."
And here's the thing: AT&T's only just getting started. Leveraging its NFL Sunday Ticket platform acquired in the merger, AT&T says it wants to launch not one -- but three nationwide streaming services later this year in a bid to become the streaming video provider across the United States. And should the FCC's net neutrality rules fail to stand up in court (and perhaps even if they do), guess who's streaming video service won't count against any of these usage restrictions?
Back in 2012, Netflix and Disney struck a deal wherein Netflix would be the exclusive online provider of Disney content starting in 2016. And while we knew that the deal had been struck, it was only this week that Netflix announced on its blog that the exclusive arrangement would formally begin in September. As of September 1, if you want to stream the latest Disney (and by proxy Marvel, Lucasfilm and Pixar) films -- you need to do it via Netflix.
Given the popularity of the Marvel films and the now-annual release of new "Star Wars" titles, that deal has become bigger and more important than ever, making it a pretty large coup for Netflix. Especially if you consider that Disney is co-owner of Hulu, which is planning to dramatically scale up its own subscription streaming video service later this year or early next. In fact, while Hulu for years was little more than an uninteresting ad for traditional cable, data suggests that Hulu's catalog is now much larger, thanks in large part to Netflix's tight focus on original content.
And while this is good news if you already subscribe to Netflix, this ongoing quest to lock down content in exclusive arrangements has a notable downside as the practice expands. As Hulu, Netflix, and Amazon have tried to each lock down their own exclusives, finding your favorite movie or TV series has become a frustrating game of hunting and pecking to ferret out which provider has the exclusive rights. It's also becoming increasingly confusing for consumers to understand when these deals expire; something that's not effectively communicated by most streaming companies.
And, ironically, while many streaming video customers cut the cable cord due to high prices, exclusive arrangements are now forcing those customers to pay for countless streaming services if they actually want to access all of their favorite shows and movies. There's a certain danger in replacing the cable industry's long-standing walled gardens with newer, different walled gardens, and it's pretty clear most of these companies either don't see the potential pitfalls or, in a rush for eyeballs, just don't care.
And as broadcasters increasingly realize they can cut out the middlemen and launch their own streaming services, it seems inevitable that the exclusivity wars will only get worse. For example, if you want to watch the new "Star Trek" TV series from CBS when it launches in January 2017, you'll need to subscribe to CBS's $7 a month, All Access streaming platform. There's likely going to be a lot more where that came from, especially as Comcast takes a bigger role in managing Hulu (NBC Universal merger conditions preventing it from fiddling with Hulu to prevent anti-competitive shenanigans expire next year).
So while the streaming industry and broadcasters are intent on following the exclusivity concept deep down the rabbit hole, few if any seem to notice that while these kinds of exclusive deals may be good for one company over the short term, they're not going to be great for the broader streaming industry over the long haul. There's a lot of potential here to fracture content availability, confuse paying customers, and drive frustrated customers back to piracy after all of the work done to get them on legitimate platforms in the first place.
In Russia, we've talked about how Vladimir Putin employs a massive army of Internet trolls to ridicule and shout down political opponents and critics. In China, the government's tactics are notably different. According to a new study out of Harvard (pdf), the Chinese government posts about 488 million fake social media comments -- or roughly one day of Twitter's total global volume -- each year. In China, these propagandists have historically been dubbed the "50 Cent Party," because it was generally believed they were paid 50 Chinese cents for every social media post.
It's the first study of its kind, only made possible after a blogger by the name of "Xiaolan" leaked an archive of all 2013 and 2014 emails to and from the Zhanggong district's Internet Propaganda Office. Journalists had previously written news articles about the leaks, but the researchers in this case crafted custom code to thoroughly dissect and identify the posts across a wide variety of formats and track them to verified government accounts, leading researchers to conclude that an amazing one out of every 178 posts to Chinese social media was government propaganda.
But unlike Russia's tendency to pay ordinary citizens to parrot propaganda (which is ultimately what wound up exposing the practice), the study found that many of China's social media propagandists are government workers, for whom propaganda was just part of their overall job duties at existing agencies:
"Although those who post comments are often rumored to be ordinary citizens, the researchers were surprised to find that nearly all the posts were written by workers at government agencies including tax and human resource departments, and at courts. The researchers said they found no evidence that people were paid for the posts, adding the work was probably part of the employees’ job responsibilities. Fifty Cent Party is a derogatory term since it implies people are bought off cheaply."
And whereas Russia's online propaganda efforts tend to involve personally attacking critics, Chinese propaganda takes a notably different tack -- focusing more on feel-good nationalism and reminders of the Communist Party’s revolutionary past. Like any government, the study highlights that China's biggest fear isn't from abroad -- but the country's own people -- a threat best handled with distraction, not direct confrontation:
"The main threat perceived by the Chinese regime in the modern era is not military attacks from foreign enemies but rather uprisings from their own people,” they said. Revealing a paternalistic approach, the guiding policy of China’s Fifty Cent Party appears to be that distraction is better than conflict. “Letting an argument die, or changing the subject, usually works much better than picking an argument and getting someone’s back up (as new parents recognize fast),” they wrote.
Granted, distraction certainly isn't a new concept, and it only takes about five minutes watching U.S. cable news to realize we're pretty damn good at it here in the States. In fact, we're so good at distracting ourselves from issues of substance that it seems unlikely that the United States government would even need to spend money on an institutional-grade social media disinformation effort. Then again, maybe I was just paid fifty cents to say that.
We've noted how the FCC's latest net neutrality rules do a lot of things right, but they failed to seriously address zero rating or broadband usage caps, opening the door to ISPs violently abusing net neutrality -- just as long as they're relatively clever about it. And plenty of companies have been walking right through that open door. Both Verizon and Comcast for example now exempt their own streaming services from these caps, giving them an unfair leg up in the marketplace. AT&T meanwhile is now using usage caps to force customers to subscribe to TV services if they want to enjoy unlimited data.
In each instance you've got companies using usage caps for clear anti-competitive advantage, while industry-associated think tanks push misleading studies and news outlet editorials claiming that zero rating's a great boon to consumers and innovation alike.
The FCC's net neutrality rules don't ban usage caps or zero rating, unlike rules in Chile, Slovenia, Japan, India, Norway and The Netherlands. The FCC did however state that the agency would examine such practices on a "case by case" basis under the "general conduct" portion of the rules. But so far, that has consisted of closed door meetings and a casual, informal letter sent to a handful of carriers as part of what the FCC says is an "information exercise," not a formal inquiry.
But in a letter sent to FCC Commissioners (pdf) this week, a coalition of companies including Yelp, Vimeo, Foursquare, Kickstarter, Medium, Mozilla and Reddit have urged the agency to launch a more formal -- but also transparent -- probe of ISP behavior on this front:
"Zero rating profoundly affects Internet users' choices. Giving ISPs the power to favor some sites or services over others would let ISPs pick winners and losers online—precisely what the Open Internet rules exist to prevent...Given how many stakeholders participated in the process to make these rules, including nearly 4 million members of the public, it would be unacceptable not to seek and incorporate broad input and expertise at this critical stage."
Given the FCC's decision to ban usage caps at Charter as a merger condition, the agency is clearly aware of the threat zero rating and caps pose to a healthy Internet. It's possible the FCC is waiting for the courts to settle the broadband industry's lawsuit against the FCC, which could gut some or all of the net neutrality rules. But it's also entirely possible that the FCC does nothing. Usage caps are a glorified price hike, and even in its latest more consumer friendly iteration, the FCC has historically been afraid to so much as even acknowledge high prices are a problem in the sector.
Things have been muddied further by T-Mobile's Binge On program, which gives users the illusion of "free data" by setting arbitrary usage caps, then exempting the biggest video services from usage caps. And while many consumers applaud the idea, even T-Mobile's implementation sets a potentially dangerous precedent in that it fails to whitelist smaller video providers and non-profits -- most of which have no idea they're even being discriminated against. There's a contingent at the FCC and elsewhere that believes efforts like this are a positive example of "creative pricing experimentation."
Either way it's increasingly clear that the FCC needs to take some public position on the subject as ISPs continue to test the agency's murky boundaries to the detriment of users and small companies alike. Should the FCC win its court case, pressure will grow exponentially for the FCC to actually put its money where its mouth is -- and put the rules so many people fought for to actual use.
Facebook's Oculus Rift was originally expected to lead the virtual reality charge and become a shining example of "VR done right," but a bungled launch and a series of sloppy public relations missteps have ensured that won't be happening any time soon.
The company generated a tidal wave of ill will after production issues delayed Oculus pre-order ship dates by two months or more. That was compounded by some overly broad terms of service language, and an Oculus decision to sell some headsets at Best Buy before pre-order customers had received their own headsets. Combined with a lack of "room scale" support (the ability to move freely in space using handheld controllers) out of the gate and a general nervousness about Facebook's snooping tendencies, Oculus has effectively given the HTC Vive a huge PR advantage as VR begins to slowly claw its way towards mainstream adoption.
Oculus isn't helping matters much this week with moves that indicate Facebook and Oculus are very much keen on embracing walled gardens, DRM, and closed ecosystems at a time when VR very much needs the exact opposite to thrive.
As it stands, Oculus Rift owners can play non-roomscale games designed for the Rift via the SteamVR store. In contrast, HTC Vive customers can't play games designed for the Oculus Rift, since Oculus and Facebook have decided to lean heavily on exclusives out of the gate. To play Oculus games, many Vive customers had taken to using third-party software known as Revive. But in a recent post to Reddit, Revive developers say Oculus and Facebook have deployed an update that stops the workaround in its tracks:
"From my preliminary research it seems that Oculus has also added a check whether the Oculus Rift headset is connected to their Oculus Platform DRM. And while Revive fools the application in thinking the Rift is connected, it does nothing to make the actual Oculus Platform think the headset is connected. Because only the Oculus Platform DRM has been changed this means that none of the Steam or standalone games were affected. Only games published on the Oculus Store that use the Oculus Platform SDK are affected"
Oculus is denying that the software update was specifically targeting Revive, only telling a number of different news outlets that the update was necessary to help curb piracy. Most of the comments to the media imply that shucks -- hacks like Revive just occasionally break during the course of software updates:
"We take the security, functionality and integrity of our system software very seriously and people should expect that hacked games won’t work indefinitely as regular updates to content, apps and our platform may break the hacks."
However, Revive developers say the update isn't checking to see whether or not software was legitimately purchased, but whether or not the Oculus headset itself is connected and being used to experience that content. To get around Oculus' update, the Revive developers have been forced to issue their own update that bypasses all DRM and ownership checks in order to work, something the developers say isn't the path they wanted to take and makes piracy easier than before:
"LibreVR has some concerns about hacking into purchase-protecting DRM in order to get around the Rift's hardware exclusivity. "I am worried about whether I'm helping piracy by implementing this workaround," he said. "When possible I'd like my workaround to help developers generate more revenue, not hurt that revenue." On the other hand, LibreVR also added that "pirates will always find a way to work around DRM, [so] I don't think my effort significantly contributed to that."
So at the end of the day, Oculus' latest decision to lock down its ecosystem not only pissed off the userbase, it contributed to a cat and mouse arms race that may actually ramp up the potential for piracy. Where's the benefit again?
"If customers buy a game from us, I don't care if they mod it to run on whatever they want. Our goal is not to profit by locking people to only our hardware—if it was, why in the world would we be supporting GearVR and talking with other headset makers? The software we create through Oculus Studios (using a mix of internal and external developers) are exclusive to the Oculus platform, not the Rift itself."
Except the company's behavior has focused on the exact opposite: Oculus and Facebook (or predominantly Facebook) pretty clearly believe that a closed door, walled garden approach to VR development is the path forward. The problem is that with a high cost of entry, the VR development community is already struggling for mainstream adoption; VR is very much in the 1.0 era and very much in a period of experimentation, and many (including Valve) believe that more open, cross platform development will help ensure a broader, happier overall userbase. From the overall negative timbre of the VR community right now, Oculus appears intent on learning this the hard way.
from the ignoring-the-bigger-picture-to-make-a-point dept
For years we've noted how the cable industry (and companies that feed off of it like Nielsen) have been in stark, often comic denial about the changes happening in the legacy cable sector. But every few months or so, a select rotation of news outlets also feel compelled to pooh pooh the entire notion of cord cutting, broadly declaring that the idea is a "myth" perpetuated by a select cadre of mean bloggers hellbent on confusing the public for some unfathomable reason. More often than not it's the editors trotting out the "myth" headline to gain hits, despite the story itself doing a piss poor job actually debunking the concept.
"The thin trickle of households that have dropped pay TV in recent years is barely enough to make a dent in the industry. Just under 100 million households have some form of pay TV according to Nielsen surveys, whether it comes via cable, satellite, or alternatives like Verizon Fios and AT&T U-Verse. That’s lower than it was a few years ago, when 105 million households had pay TV, but it’s hardly a revolution and there’s no sign of an accelerating trend."
A five million user drop hardly constitutes a "myth," but there's another problem with that analysis: just looking at pay TV subscriber totals doesn't tell the full story. One, several cable companies have started including their own $15-$40 standalone streaming service customers in with those totals, meaning the total tally of "pay TV subscribers" now includes -- ironically -- customers that have cut the cord. For example, Dish Network last quarter proclaimed it saw a net gain of 35,000 pay TV customers. But the company is now including its Sling TV streaming video customers in that total. Subtract those, and Dish actually lost an estimated 215,000 traditional TV customers.
Comcast has now quietly started doing something similar after launching its $15, creatively-named "Stream" service in several beta markets. And while yes, these are technically still "paying TV customers," the difference is more than just semantics if you're analyzing which customers still subscribe to traditional television -- and paying upwards of $120 a month -- and which customers have flocked to much, much cheaper standalone streaming platforms (still a rarity among cable companies that don't want to cannibalize their own TV rolls like Dish appears willing to do).
The Globe continues:
"A separate survey by the Leichtman Research Group found that about 83 percent of households had pay TV subscriptions in 2015. That's down from the 87 percent with pay TV in 2010, but actually higher than the 81 percent in 2005. Bottom line, pay TV remains a staple of the American diet.
Again though, just looking solely at total TV subscriptions doesn't illustrate what's actually happening. Another trick cable companies have used for years is to offer broadband and TV service bundled at a promotional price point significantly cheaper than just getting broadband alone. As a result, you've got millions of households that sign up for TV only because it's the better deal. In many cases these users, especially Millennials, aren't even using -- and didn't want -- the traditional TV service they signed up for. And, given they're on short-term promotions, it's far from certain they'll be sticking around. That's a short-term "solution" that makes investors feel cozy looking at the raw numbers, but it doesn't solve cable's real problem, and it doesn't somehow prove cord cutting isn't real.
To really understand shifting viewing behaviors, analysts have to look at how many customers are actually using the TV subscriptions they're signed up for. That's why traditional subscriber totals have remained static or in slight decline, but broadcast and cable ratings have been in free fall. As ESPN has painfully realized, this is also thanks to "cord trimming," or the act of reducing overall programming packages in an attempt to avoid relentless rate hikes -- more common than severing the cord completely. None of this is mythical, just a little more complicated than claiming the cord cutting is akin to yeti and unicorn.
Analysts also tend to forget to factor in the fact that traditional cable TV subscriptions are either flat or in decline as the housing market recovers and grows. In short, that means millions of new houses and apartments aren't signing up for traditional cable, something that's also left out by just looking at subscriber rolls. Sanford C. Bernstein analyst Todd Juenger penned a research note this week pointing out that once people are faced with re-subscribing to cable after moving, many aren't bothering. In many instances, people aren't cutting the TV cord, they're refusing to connect it in the first place. That's especially true of Millennials heading out into the wild for the first time.
Like the Boston Globe, Techcrunch also recently penned a missive declaring cord cutting a "myth," but like most other articles of this type failed to factor in the above details. It also makes a few odd logical leaps, like declaring that cord cutting isn't a thing because consumers have "their own definition of TV":
The story goes, "Cord-cutters are canceling their cable services and going over-the-top, therefore it's the demise of the television business as we know it." This premise is wrong. Here’s why: The consumer has their own definition of TV. To start, we should clarify that consumers now perceive “TV” as content, not as content delivered through a linear hardware box in their living room. HBO, Netflix, Amazon, Hulu, Buzzfeed — consumers don’t care about where content derives, they only care that it’s quality.
In short, Verizon-owned Techcrunch had to redefine television to try and make the point that "cord cutting" as a concept somehow isn't real. But nobody is arguing that TV as a concept will die; it will just mutate. Traditional cable operators will eventually realize they need to compete on price, and they'll ultimately adapt. Right now though, the name of the game is fiddling with subscriber TV totals to calm investors, while generating the illusion among consumers that they're competing on price and flexibility. The result is so-called "skinny bundles" that are intentionally underwhelming and saddled with post-sale charges and fees, while the cable and broadcasters happily push bi-annual rate hikes on the majority of their legacy TV customers.
So no, the traditional cable industry isn't "beating cord cutting," it's just fiddling with subscriber totals and forcing millions of customers to take TV service they may not want. And cord cutting isn't a "myth," many analysts just aren't yet seeing the full picture.
The reality is that cord cutting is a very real, but very slow phenomenon. Slow in part because many TV subscribers are intimidated by new technology, something that will shift as these services get better and easier to use (and, to be blunt, old cable users die off). It's also slow in part because broadcasters were afraid of killing the legacy cash cow and licensing their content to potential disruptors like Apple. But the flood gates are slowly opening, and 2016 and 2017 are slated to be packed with new, cheaper streaming TV options that should accelerate the trend to the point where denial will no longer be an option.
Claiming cord cutting is a manufactured fantasy certainly helps cable companies and the research firms making a living telling myopic cable executives precisely what they want to hear. And right now, what these executives want to hear is that cord cutting and cord trimming are just a small blip on the radar, easily conquered without seriously competing on price. These executives also want to be told that all of these problems will magically evaporate once Millennials start procreating. Once that happens, the theory goes, Millennials will suddenly realize that they really love traditional cable, high prices, and utterly atrocious customer service. So really, at the end of the day, who's telling myths, exactly?
from the nobody-believes-the-words-coming-out-of-your-mouth dept
Given the fact that the FCC has recently bumped the standard definition of broadband to 25 Mbps to highlight competition gaps; reclassified ISPs as common carriers; passed real net neutrality rules for the first time ever; taken aim at the industry's use of protectionist state law to keep the duopoly intact; pushed for improved broadband privacy rules, and is now taking aim at the cable industry's monopoly over cable set top hardware, it's not really surprising that the cable industry isn't happy right now.
One could argue (especially if you've studied regulations across the pond) that this is just what it looks like when a telecom regulator is doing its job after falling asleep for arguably fifteen years. But former FCC boss turned top cable lobbyist Michael Powell sees things differently. Powell took the opportunity at the cable industry's annual INTX trade show in Boston to throw a bit of a hissy fit, complaining repeatedly that the industry was under "relentless" and unprovoked "regulatory assault":
"We find ourselves the target of a relentless regulatory assault,” Powell told attendees. “The policy blows we are weathering are not modest regulatory corrections. They have been thundering, tectonic shifts that have crumbled decades of settled law and policy."...What has been so distressing is that much of this regulatory ordinance has been launched without provocation," said the NCTA head. "We increasingly are saddled with heavy rules without any compelling evidence of harm to consumers or competitors."
Who says telecom lobbyists can't be comedic geniuses? Of course the cable industry enjoys some of the worst customer satisfaction ratings of any industry in America thanks to generations of regulatory capture and little real competition in broadband. After a generation of treating captive consumers poorly there's really not a more hated sector than cable, and the industry's reputation is only getting worse as it rushes to take advantage of limited competition and impose usage caps. As a result, complaints to the FCC have been skyrocketing.
"Compelling harm" should be apparent to everyone just by looking at their cable and broadband bill, and every time they call Comcast customer support.
And despite a lot of cable sector chirping about "innovation," as AT&T and Verizon back away from unwanted DSL markets, cable broadband's monopoly is only growing in the face of less competition, meaning less incentive than ever to compete on price or improve customer service across huge swaths of territory.
And you really can't find a man more responsible for keeping this status quo intact than Powell, who ran the FCC from 2001 to 2005. Powell was a vibrant example of sector dysfunction and revolving door regulators; completely incapable of even admitting the TV or broadband sectors had or has problems. His tenure was just one chapter of a more-than-fifteen-year, bipartisan stretch during which the FCC was little more than a lapdog to the sector it was supposed to be policing. As such, cable enjoyed decades of almost total local, state and federal regulatory capture, all while crowing about the immense benefits of "free markets."
The result of this aggressive dysfunction forged the cable industry we all know and love today.
Powell is best remembered for his decision to try and push broadband over powerline as a major third avenue of sector competition, thereby justifying regulatory inaction on other fronts. But Powell intentionally ignored something everybody in telecom had known for years: the technology would never actually work due to the massive radio interference it caused. But by braying about broadband over powerline being the "great broadband hope," Powell managed to deflect criticism that he was busy actually making the sector substantially worse through total inaction and ineptitude. Other FCC bosses like Kevin Martin and Julius Genachowski carried on that proud tradition.
Fast forward a decade and Powell's now lobbying for the very companies he once "regulated," complaining about unfair persecution of an industry that has been begging for a kick in the teeth for the better part of most of our adult lives. And while there are certainly plenty of sectors that deserve a hands-off regulatory approach to protect fledgling organic market evolution, the cable sector is a unique, braying beast built on the back of apathy, revolving door regulation, and an utter disdain for the captive consumers the sector serves. As such, Powell won't find too many people crying themselves to sleep just because the FCC finally decided to do something about it.
While larger cable companies have the scale and leverage necessary to negotiate better programming, smaller cable companies are finding themselves facing tighter and tighter margins as broadcasters push for relentless programming increases. As such, many have begun candidly talking about exiting the pay TV sector entirely and focusing on broadband service only. When approached by broadcasters like Viacom about major hikes, some cable operators have simply culled the channels from their lineup permanently and refused to look back.
Not too surprisingly, the narratives being told by these smaller cable companies vary differently from larger cable operators, many of which deny that pay TV is caught in an unsustainable death spiral thanks in part to relentless broadcaster demands. CableOne CEO Thomas Might, for example, candidly declared last week that the traditional cable sector is a "tragedy of the commons" that's going to end badly for everyone involved:
"The actions of content owners is easily explained by the concept of tragedy of the commons. Once one programmer started taking double-digit rate increases, even in the face of falling ratings, each of the other programming groups felt compelled to do the same. The reason the theory is named "tragedy" is because it is guaranteed to end badly for all in the long run. It appears that long run is finally arriving."
And again, while large cable operators and broadcasters have denied cord cutting's very existence -- and downplay "cord shaving" (reducing your cable packages or opting for a skinny bundle) at every opportunity, Might states the obvious in noting the kids just aren't watching regular TV anymore:
"Linear video ratings are plummeting for several reasons. The lower end of the market can no longer afford the big bundle; the number of disruptive OTT technologies and vendors are now multiplying rapidly; and the millennial generation has very limited interest in traditional TV viewing. These patterns will inevitably bring an end to the ubiquitous fat bundle, but only slowly and painfully."
As we've long noted, cable operators could pretty easily defeat cord cutting by competing on price and value. But instead their solution so far has been to raise rates on broadband and TV like it's going out of style, to impose usage caps to punish cord cutting, and to offer "skinny bundle" packages that give the illusion of value, but saddle users with misleading fees post sale. Only when cord cutting shifts from a trickle to a steady roar will most major cable executives finally change tack, at which point they'll be surrounded by an ocean of hungrier, leaner companies all doing what cable refused to do for a generation: offer a cheaper, more flexible pay TV product.
Verizon's modus operandi has been fairly well established by now: convince state or local leaders to dole out millions in tax breaks and subsidies -- in exchange for fiber that's either only partially delivered, or not delivered at all. Given this story has repeated itself in New Jersey, Massachusetts, New York City and countless other locations, there's now a parade of communities asking somebody, anybody, to actually hold Verizon's feet to the fire. Given Verizon's political power (especially on the state level) those calls go unheeded, with Verizon lawyers consistently able to wiggle around attempts to hold the telco to account.
In Pennsylvania, the story is much the same as elsewhere. Verizon was able to convince state leaders in the '90s to dole out billions in handouts for state-wide symmetrical 45 Mbps fiber broadband. But a decade later when people finally noticed fiber was nowhere to be found, Verizon managed to convince state leaders to effectively forget about the obligation entirely. Fast forward another decade and, after striking a 2009 franchise deal with the city of Philadelphia (again promising full city deployment of its FiOS fiber broadband service) you'll be shocked to discover what happened:
"Philadelphia government officials are investigating whether Verizon has met an obligation to bring FiOS service to all residents of the city. Verizon obtained a cable franchise agreement from the city in February 2009, and the deadline to wire up all of Philadelphia passed on February 26 of this year...Philadelphia seems skeptical about whether Verizon actually met its obligation, but it is still looking for proof. The city set up a webpage asking residents to fill out a form to "tell us whether you have tried to order Verizon service but have been told by the company that service is not yet available in your neighborhood."
Traditionally, ISPs can get away with this not only because they effectively own state legislatures, but because nobody in any part of government actually bothers to audit company deployment promises. What passes as an audit generally involves the ISP submitting its own claims that regulators fail to fact check. That's why Philadelphia leaders are being forced to crowdsource whether or not Verizon met its promises. Meanwhile, Verizon tells Philly city council leaders that they're unable to offer statistics right now on their FiOS deployment because, uh, unions:
"Philadelphia should learn from New York's experience, Philadelphia City Council member Bobby Henon said during a hearing two weeks ago. “We do not want this to happen in Philadelphia,” Henon said, according to an article published by Technical.ly Philly. Henon wanted good data, but Verizon said it couldn't provide it yet because of the ongoing Verizon workers' strike. Verizon also said, “Any claims made at the hearing that we haven’t completed our obligations of our franchise agreement are untrue," according to the article."
At this point there's plenty of blame to go around for the fact that history just keeps repeating itself without getting fixed. For one thing, just like in New York City, city leaders keep signing sweetheart deals with endless loopholes designed by Verizon lawyers, then acting shocked when Verizon actually uses those loopholes. For example, several city agreements let Verizon simply pass a set total of homes with fiber (anywhere up to several blocks away), instead of technically "serving" them. Other contracts contain language letting Verizon dodge or buy their way out of deployment obligations if certain TV uptake metrics aren't met.
These are clauses cities have been warned repeatedly about but choose to ignore. Bad deals are struck behind closed doors by one administration, with subsequent city leaders left holding the bag. By that point Verizon can successfully argue that they technically met the terms of such deals, because the terms of such deals were designed to be malleable. Granted that doesn't excuse Verizon's proclivity for ripping off taxpayers on an industrial scale, but this dance of dysfunction wouldn't be quite so embarrassingly uncoordinated if cities would stop signing deals that promise the moon, but deliver stinky cheese.
The FCC recently voted 4-1 to approve Charter's $79 billion acquisition of Time Warner Cable and Bright House Networks. The agency just released its full order (pdf) pertaining to the deal, outlining the various conditions the FCC hopes to enforce to keep Charter from simply becoming another Comcast. Among them are a seven-year ban on usage caps, a seven-year ban on charging for direct interconnection (the heart of the telecom industry's battle with Netflix last year), and a ban on any attempt to pressure broadcasters into refusing deals with streaming video providers.
But the FCC says the merger conditions also require Charter to deploy broadband service to an additional 2 million locations, one million of which need to already be served by another competing provider. The faint threat of competition was enough to upset the American Cable Association (ACA), the lobbying organization for smaller cable providers. According to ACA CEO Matthew Polka, the added competition will actually be a horrible thing for consumers, because, uh, well, just because:
"The requirement on Charter to overbuild competitors will harm consumers in two ways...First, it will harm Charter's customers by preventing Charter from investing its resources most efficiently, such as by upgrading its networks to higher speeds. Second, it will harm customers of local, small providers when these customers are satisfied with their existing service."
And here you were thinking competition was a good thing. Of course, if these smaller cable operators don't want Charter coming to town and taking their milk money, they could simply offer cheaper, faster service themselves. Granted that's a totally foreign concept in the cable industry, where large and small cable operators alike have grown comfortable with not only local regulatory capture, but a lack of competition in the broadband space entirely.
Any disruption of this paradigm, no matter how minor, results in all manner of histrionics -- and a quick onset of amnesia regarding the fact that nobody likes cable companies after a generation of poor service and apathy, and therefore will never, ever feel bad for them.
If history is any indication the ACA really doesn't need to worry all that much. Traditionally in telecom, FCC conditions requiring that an ISP "expand to X number of additional homes" are usually conditions that the merging companies volunteer themselves. Why? It's most frequently because that expansion either already happened (and the paperwork hasn't been filed yet) -- or was slated to happen as a matter of course. Or it may not happen at all; such expansion promises are usually never really independently audited by the FCC, which lets companies string the FCC along with an endless flood of expansion promises that more often than not aren't even real.
In other words, the ACA's decision to insult the intelligence of an already annoyed customer base by pretending competition would be bad for them -- only adds insult to injury. Instead of whining about competition, how about just competing? Better yet, how about competing with Charter using a strange, outdated idea known as better customer service?
The apocalypse for those who like to tinker with their router firmware may be postponed.
Last year we noted how the FCC updated router and RF device rules for safety reasons, stating that some illegally modified router radios operating in the unlicensed bands were interfering with terminal doppler weather radar (TDWR) at airports. The rule changes prohibited tinkering with the just the RF capabilities of devices. But some sloppy FCC language worried tinker advocates and custom-firmware developers, who feared that because many routers have systems-on-a-chip (SOC) where the radio isn't fully distinguishable from other hardware -- vendors would take the lazy route and block third-party firmware entirely.
And, at least with some companies, that's exactly what happened. TP-Link for example stated that it would be preventing custom router firmware installations with gear built after June 2016, blaming the FCC for the decision while giving a half-assed statement about respecting the hobbyist community's "creativity." Again: the rules don't mandate anything of the kind; TP-Link just decided to take the laziest, most economical route.
Fortunately, not all hardware vendors are following TP-Link's lead. Linksys has announced that while it will lock down modifications on some router models, the company will continue to let enthusiasts tinker with its WRT lineup of hardware, which has been a hobbyist favorite for years. From its comments the company is well aware that while custom firmware flashers may comprise a minority of overall customers, they're a vocal minority that companies really don't want to piss off. As such, a company spokesman was quick to breathlessly praise third party custom firmware options:
"The real benefit of open source is not breaking the rules and doing something with malicious intent, the value of open source is being able to customize your router, to be able to do privacy browsing through Tor, being able to build an OpenVPN client, being able to strip down the firmware to do super lean, low-latency gaming,” La Duca said. “It's not about ‘I'm going to go get OpenWrt to go and piss off the FCC.' It's about what you can do in expanding the capabilities of what we ship with."
While it would be nice to see more models supported, it's certainly a step in the right direction. It should be noted that (now Belkin-owned) Linksys said it wasn't a very big deal to lock down the radio specifically, contrary to what some vendors have claimed:
"The hardware design of the WRT platform allows us to isolate the RF parameter data and secure it outside of the host firmware separately," Linksys said in a written statement given to Ars. La Duca declined to get more specific about Linksys's exact method. Even though this is about enabling open source, Linksys’s method is proprietary and provides a competitive advantage over other router makers that aren’t supporting open source, La Duca said."
So while one vendor used the FCC rule change as an opportunity to be lazy and cheap, others are using the news as an opportunity to embrace an important part of their community. And from the looks of thinks Linksys won't be alone in the effort; representatives from Asus have been telling some hardware enthusiasts that they plan to continue supporting third-party open source firmware as a point of pride as well:
"As you may know, FCC requires all manufactures to prevent users from changing RF parameters. Not only manufactures' firmware but 3rd party firmware need to follow this instruction. Some manufactures' strategy is blocking all 3rd party firmware, and ASUS's idea is still following GNU, opening the source code, and welcome 3rd party firmware. ASUS are co-working with developers such as Merlin and DDWRT to make sure 3rd party firmware's power are the same as ASUS firmware and obey the regulations."
None of this is to say these companies can't go back on their word down the line (concerned users should keep the pressure up), but it's refreshing to see at least a few vendors actually standing behind their communities' right to tinker.
We've talked a lot about how the FCC is trying to open up the set top box market to additional competition, breaking open cable's monopoly control of the hardware, while driving down set top prices and improving gear quality. Given this would kill $21 billion in annual set top rental fee revenue and expose customers to more streaming options than ever before, the cable industry has been engaged in raging histrionics to try and shut down the effort and protect the status quo.
So far, this plan has involved whining, urging lawmakers (most of them about as well-liked as the cable industry) to also whine, while pushing an endless ocean of incredibly misleading editorials in news outlets nationwide claiming the FCC's plan is going to hurt puppies and rip gigantic holes in the space-time continuum.
"We discussed that Comcast’s set-top boxes and Xfinity TV apps (like other MVPD apps) include software code that manages requests for programing and communications between the box/app and where the programming is cached on the network to ensure the programming is delivered, and done so efficiently. In addition, this network code minimizes the risks of degradation to the service due to bandwidth shortages and congestion, and also enables Comcast to support rapidly evolving entertainment technologies, such as accessibility features and advanced video technologies.
...In response to questions from Commission staff, we explained that running our network code directly on third-party devices without our application was not feasible for a variety of reasons, including, among other things, that MVPDs deploy very different network infrastructures so that the code that one MVPD develops for interacting with its network differs from the code that other MVPDs would develop; MVPD network code is regularly updated to accommodate network and service changes, and corresponding changes would be required in the third-party device (or app); and that programmers and content owners require a trusted execution environment as a key element of a strong content security and content presentation regimen."
In layman's terms, that's Comcast using convoluted technical jargon to argue that its code, ad tracking systems, and apps are so damned important, things will fall apart if they're not included alongside Comcast content on third-party boxes. The problem with that narrative is that the FCC has been eyeing set top box reform for the better part of a decade, and countless cable companies -- as well as companies that build set top boxes (ranging from TiVo to telecom-industry nemesis Google) -- have informed the agency that it's perfectly plausible to have cable companies deliver just the programming.
Comcast just doesn't want to, because the shift the FCC is proposing would demolish a cornerstone of the cable industry's walled garden and accelerate the inevitable shift away from legacy cable systems.
The cable giant recently unveiled a new proposal that would deliver Comcast's cable content to third-party set top and smart TV vendors in the form of apps, a project Comcast argues makes the FCC's plan unnecessary:
"In light of the success of the apps-based model in the marketplace, the far-reaching government technical mandate being currently proposed by the FCC is unnecessary. The FCC’s proposed set-top box mandate threatens to undermine this highly-dynamic marketplace, create substantial costs and consumer harms, and will take years to develop -- only to be likely outdated by the time it reaches the marketplace – all in an effort to achieve what apps are already delivering for consumers."
But the FCC doesn't envision a future where third-party set tops are delivered to streaming devices, because that future's already here and has done nothing to loosen cable's monopoly over the traditional set top itself. What the FCC envisions are set top boxes that cleanly integrate cable industry programming directly, uniformly managed by the set top box's software, not the cable industry or their apps. In response, FCC boss Tom Wheeler stated that Comcast's effort simply "proves our point that you can take a third-party device, put set-top box functionality into it, and protect copyright and the economic ecosystem."
In other words, the FCC knows what it's proposing is technically possible. It also knows that nervous Comcast executives are just trying to retain something vaguely resembling control as the specter of real TV (and now set top box) competition finally looms just over the horizon.
If you've ever had the pleasure of simply asking one medical outfit to transfer your records to another company or organization, you've probably become aware of the sorry state of medical IT. Billions are spent on medical hardware and software, yet this is a sector for which the fax machine remains the pinnacle of innovation and a cornerstone of daily business life. Meanwhile, getting systems to actually communicate with each other appears to be a bridge too far. And this hodge podge of discordant and often incompatible systems can very often have very real and troubling implications for patients.
For example, one patient recently undergoing a heart transfer had the procedure interrupted for five full minutes after a PC connected to an essential piece of monitoring equipment began a scheduled anti-virus scan:
"According to one such report filed by Merge Healthcare in February, Merge Hemo suffered a mysterious crash right in the middle of a heart procedure when the screen went black and doctors had to reboot their computer. Fortunately, the patient was sedated, and the doctors had five minutes at their disposal to wait for the computer to finish rebooting, start the Merge Hemo application again, and complete their procedure without any health risks for the patient."
Fortunate, since "death by shitty hospital IT support" doesn't sound like a particularly fun way to go. The filing with the FDA by the company in question (Merge) notes that the blame was the fault of the hospital's IT support, who ignored software instructions that state the folders being used by Merge's software should always be whitelisted from any anti-virus platforms:
"Merge investigated the issue and later reported to the FDA that the problem occurred because of the antivirus software running on the doctors' computer. The antivirus was configured to scan for viruses every hour, and the scan started right in the middle of the procedure. Merge says the antivirus froze access to crucial data acquired during the heart catheterization. Unable to access real-time data, the app crashed spectacularly."
Here's the thing: aging systems and shoddy medical IT support are the least of the medical industry's problems. The biggest problem continues to be that medical technology security remains little more than an afterthought, leaving underfunded IT support frequently outgunned. That has resulted in a major wave of ransomware attacks that in some instances have actually forced hospitals to revert to using paper only while they get sorted out (underfunded school systems have been having a dramatic uptick in similar attacks).
And as Internet of Things companies push hospitals to embrace even more sophisticated technologies, you can expect things to get worse. After all, this is a sector that can't even secure doorbells, refrigerators, thermostats or even tea kettles. What could possible go wrong as these technologies are introduced into an already marginally-competent medical IT sector?
We've noted time and time again how broadband usage caps on fixed-line networks are arbitrary, unnecessary, and harm innovation. They're also a useful weapon against streaming video competitors, and the natural evolution of TV competition. Caps can be used to either punish users who try and cut the cord with higher prices, but they also allow ISPs to exempt their own streaming services from said caps (something currently being done by both Verizon and Comcast), thereby giving these services a distinct and unfair advantage in the market.
But broadband ISPs are now coming up with a new way of attacking cord cutters: forcing them to subscribe to television if they want to avoid usage caps.
Back in January, AT&T announced that the company would be happy to remove usage caps on its wireless network, but only if you subscribe to DirecTV or U-verse TV service. Then last month, AT&T carried this idea over to its fixed-line broadband network, announcing that it would be imposing new usage caps on its broadband users starting May 23. While AT&T says it will generously allow users to pay $30 more per month to avoid usage caps entirely, it also announced that users who subscribe to its TV services will be able to avoid usage caps entirely.
"The continued migration of Netflix usage from mailed DVD to Internet streaming/download, as well as other data intensive uses of the Internet, are impacting all providers of high-speed Internet service. While we certainly acknowledge and appreciate that content rich services like Netflix make our high-speed offering more valuable to the end user, the volume of data associated with this content drives significant incremental investment in the network and the need to purchase more bandwidth in order to maintain the user experience and this must be funded."
Right, but that's bullshit. U.S. residents already pay some of the highest prices for broadband in the developed world; money that any earnings report will clearly illustrate is more than enough to offset what at this point is only modest network upgrades. As one cable CEO recently noted, most of the heavy investment is over, and the name of the game now is milking these uncompetitive markets for all they're worth until either broadband competition magically sprouts from the ether, or regulators wake up from a deep slumber and shut down the price gouging party.
Usage caps on fixed-line networks are nothing more than rate hikes on uncompetitive markets, and anybody claiming otherwise either has been swindled by a good salesman, or is selling you something themselves.
There's absolutely nothing good about this trend. ISPs are using a lack of competition in the broadband space to impose usage caps. They're then using caps to force subscribers to sign up for TV services they may or may not actually want. It's a mammoth, misleading and anti-competitive abuse of two markets simultaneously, all sold to consumers under the lie that ISPs need even more revenue to keep funding unprecedented investment and innovation. In reality, the entire push may just be one of the largest cons ever perpetrated on consumers in the modern communications era.
We've noted a few times how interstate inmate calling service (ICS) companies have a disturbingly cozy relationship with government, striking (technically buying) monopoly deals that let them charge inmate families $14 per minute. Worse, some ICS companies like Securus Technologies have been under fire for helping the government spy on privileged inmate attorney communications, information that was only revealed after Securus was hacked late last year. Given the apathy for prison inmates and their families ("Iff'n ya don't like high prices, don't go to prison son!") reform on this front has been glacial at best.
As such, ripping off inmate families and delivering sub-par services continues unabated. As many prisons eliminate personal visits, these ICS firms have expanded revenues by pretending to offer next-generation teleconferencing services. But while slightly more economical ($10 for 20 minutes), apparently companies like Securus with no competitors, a captive audience, and no repercussions for sloppy technology haven't quite figured out how to make this whole video chat thing work yet. As a result, inmates who use the services say their experiences are repeatedly abysmal:
"Johnson logged into the Securus Technologies website — a Skype-like communication system used by the Travis County jail — on her PC laptop. But the video player didn't have the latest version of Java. When Johnson installed it, the system insisted she had not. So Johnson tried another laptop — a MacBook this time. Java was working this time, Flash was not.
Thinking the browser might be the problem, Johnson tried launching the video player in Chrome, then switched to Safari before giving up and using the Securus Android app on her phone.
Finally, Coleman's face appeared on screen — barely. For the entire call, a glitch in the system caused Coleman's image to look like a tangle of window blinds. Johnson wanted to talk to Coleman about her case, but through most of the call, she simply repeated, "Hello — can you hear me now?" Johnson was charged $10 for the video visit, even after cutting it a few minutes short of the 20-minute maximum."
In short, Securus is the Comcast of the industrial incarceration sector, and as a result customer support and service is about what you'd expect. 600 prisons in 46 states now have video visitation, and more prisons are doing away with in site visitations monthly, creating yet more revenue opportunities for ICS outfits. Reformers have been arguing that cutting off in-person visitation increases on-site violence by frustrated inmates, and hindering an inmate's ability to maintain outside connections (kind of hard when your wife and child look like pixelated Godzilla) increases the risk of repeat incarceration:
"County officials across the country claim video visitation is good for security. When Renaud got ahold of prison records, they showed that incidences of inmate-on-inmate violence, disciplinary infractions and possession of contraband all rose after Travis County did away with in-person visitation. Because visitation is so new, these statistics are the earliest indication that the pro-security pitch for video visitation is all snake oil.
The past decade in research shows consistently (pdf) that maintaining the relationships the incarcerated will inevitably return to for support once they're released is a powerful agent in keeping them from repeat offenses. One study of over 16,000 incarcerated people found that any visitation at all, even just once, reduced the risk of recidivism by 13% for felony reconvictions."
The problem is that the dysfunction of prison telecom goes bone deep, and reform efforts remain superficial at best. After decades of inaction, the FCC recently tried to impose new price caps of twenty-two cents per minute on ICS companies, but those rules are on hold thanks to a lawsuit from prison telecom operators like Securus that claim prisons face riots if companies can't keep charging consistent rates.
But the core problem remains that such companies get to pay "concession fees" or "site commissions" (read: kickbacks) to prisons for monopoly control over prison inmate communications services. Prisons are paid $460 million annually in such concession fees, and Los Angeles makes $15 million annually off of such fees alone. Obviously that kind of cash quickly kills any attempt at real reform, so not unlike the outside world, prison telecom services remain an ouroboros of profitable dysfunction; a government-sanctioned monopoly with very real human costs, one nobody in the supply chain wants to even examine, much less actually fix.
We've noted several times how one of the sleaziest lobbying tactics in telecom is the co-opting of minority or "diversity" groups to support policies that actually hurt these groups' constituents. Such theater benefits large telecom companies by presenting the illusion of broad support for what usually are extremely anti-consumer (or anti-small business and startup) policies. And it's not just minority groups being used in such fashion; telecom lobbyists have long used "retired seniors," hearing impaired groups and cattle rancher associations to push bad policy.
But telecom lobbyists have long been masters at this particular game. It works something like this: an ISP like Comcast (or some other telecom-affiliated lobbying group) will help fund a group's new event center. In exchange, these groups parrot any policy Comcast puts forth, be it opposition to net neutrality or support for the latest merger. Quid pro quo obligations are never put in writing, letting these groups claim their positions only coincidentally mirror that of their donors.
One of the key groups being used in this fashion in telecom is the "Multicultural Media, Telecom and Internet Council," or MMTC. A few years ago the Center for Public Integrity called out the group as being a cornerstone of cable industry "astroturf" (phony grass roots). Organization documents show the group takes money from Time Warner Cable, Comcast, and Verizon, and Comcast political operative Joe Waz just so happens to be on the group's board of directors (surely a coincidence). The group came under fire in 2014 for forcing one website to pull critical coverage of the group's extremely dubious behavior.
And as the FCC pushes to open the set top box market to competition, the MMTC has once again surfaced to happily mirror the cable industry's absurd claims that more set top box competition will somehow mean less diversity in programming. MMTC, alongside similar telecom-affiliated groups, recently fired off a letter (pdf) to the FCC urging the agency to pause its set top efforts to first further study diversity. Another widely circulated announcement (pdf) parrots cable industry claims that additional set top box competition will somehow demolish the pay TV sector:
"However, the approach the Commission has chosen to ensure consumer choice in their navigation devices causes collateral damage to the entire TV network ecosystem, with the greatest harm falling upon diverse content creators on multichannel video programming distributor platforms (MVPDs, such as cable and satellite). In essence, the NPRM requires MVPDs to hand over TV Network content to online video distributors (OVDs) and third-party device manufacturers who would then be able to do what they want with the content, without negotiation, and without compensation to the creators or programmers."
For one thing, increased set top box competition benefits everybody by bringing cheaper, better hardware to market, and putting an end to the $21 billion in captive set top rental fees the cable industry enjoys annually -- the only thing really driving cable's opposition. But increased set top box competition also puts an end to the cable walled garden, exposing all consumers to a broader and more diverse array of online streaming content than ever before. As such the argument that the FCC's effort will somehow harm diversity simply holds absolutely no water, yet it's useful in bogging the regulator down in diversity concerns that are driven by incumbent money, not an actual interest in bridging the digital divide.
Using bogus diversity concerns to hamstring pro-consumer regulatory reform has been such a successful lobbying tactic for Comcast, the company changed the title of top lobbyist David Cohen to "chief diversity officer." That's not to say that nothing Comcast or Cohen does ever benefits diversity, but it's hard to suggest you're helping minorities when you've been actively pitting minority and diversity groups against the interest of their own constituents on an industrial scale for the better part of the last decade.
The FCC's quest to "unlock the cable box" is only one such area where these groups have been employed to great effect. The MMTC has also been at the heart of cable, phone and wireless industry efforts to derail net neutrality rules. In fact the MMTC surfaced again last week when it released a "study" claiming that zero rating of content (letting select content bypass user caps) is an incredible boon to consumers and minorities everywhere (pdf):
"Zero-rating is also poised to play a key role in helping to close the digital divide by addressing cost concerns and strengthening the value proposition offered to skeptical non-users, two key considerations for the millions of Americans who remain offline. The actual contours of the free data plans are fluid, responsive to consumer demand, optional, and, unlike many other online offerings, they do not rely on targeted ads to pay for the data. Accordingly, policymakers should
not categorically ignore the very real benefits of free data and should instead allow this kind of innovation and experimentation to continue without unnecessary interference.
But zero rating has the potential to do the exact opposite, something the MMTC can't be bothered to mention. The big criticism of zero rating has been that if you give some content, companies or services cap-exempt status, you're immediately putting other companies and organizations at a disadvantage. That's particularly problematic for startups, educational institutions, or other non-profits (like MMTC itself) that may not even be aware their services are being discriminated against.
All told, the MMTC opposes net neutrality, opposes set top box competition, and even supported AT&T's failed acquisition of T-Mobile, which would have lessened competition in the wireless space, driving up costs for everyone. Yet when pressed, the group continues to claim these kinds of anti-consumer positions are entirely coincidental, and in no way tied to contributions from major telecom incumbents. With friends like these...
One reason for the continued success of this kind of pay-to-play policy regurgitation is that neither regulators nor the press can be bothered to call this behavior what it is: marketing and lobbying. While DC insiders certainly are aware of what the groups are doing, they very rarely can be bothered to point out the puppetry (though reports suggest Comcast's use of such tactics played some role in scuttling its last merger attempt). In the last fifteen years FCC Commissioner Mignon Clyburn is one of the only regulators to even comment on the MMTC not actually reflecting its constituents' best self interests, though even then her comments were more passing observation than serious criticism.
But the press continues to take the lion's share of the blame when it comes to perpetuating such astroturf efforts. When the press talks about groups like the MMTC, you'd be hard pressed to notice any mention about the organization's documented ties to telecom industry coffers, its repeated history of opposing pro-consumer policies, or the group's relationships to what has become a very deep web of underhanded efforts to negatively influence Internet discourse. In fact of the half dozen news outlets commenting on the MMTC's zero rating study, the very worst the group is called is a "leading civil rights non-profit." Outlets are also all too happy to publish editorials from "diversity advocates" without disclosing what should be obvious ties to telecom cash.
Ultimately it's up to these groups' constituents to refuse to fund organizations actively working against their best self interests, and for similar groups with integrity to continue to inform the public about this kind of behavior. In the interim it might be nice if the media could stop playing obedient lapdog to a deep and destructive network of what can only be called pay-to-play propaganda.
A Florida man has been charged with felony criminal hacking charges after disclosing vulnerabilities in the voting systems used in Lee County, Florida. Security analyst David Levin was arrested 3 months after reporting un-patched SQL injection vulnerabilities in the county's election systems. Levin was charged with three counts of unauthorized access to a computer, network, or electronic device and released on $15,000 bond. Levin's first and biggest mistake was to post a video of himself on YouTube logging into the Lee County Elections Office network using the credentials of Sharon Harrington, the Lee County Supervisor of Elections.
That gave prosecutors the ammo they needed to arrest Levin, even if he believed he was doing locals a favor:
"Based on the evidence obtained regarding the SQL injections attack Levin performed against the Lee County Office of Elections on December 19, 2015, probable cause does exist to charge Levin with unauthorized access of any computer, computer system, computer network, or electronic device, a violation of Florida Statute 815.06(2)(a), a third degree felony."
But at least a portion of Levin's crime may be of the political variety. In the video posted to YouTube Levin detailed the SQL injection alongside a man by the name of Dan Sinclair, who just so happens to be running against Harrington for the Elections Supervisor position. In the video, Levin details the relatively simple method of using a SQL injection attack to obtain login names and plain-text passwords belonging to Harrington and at least 10 other account holders:
"The server that was vulnerable to Levin's SQL injection attack, they said, had been retired in October. At the time of Levin's attack, at least two months later, it no longer stored sensitive data and had been replaced by a new server that wasn't vulnerable to the attack, they said. Similarly, the CMS Levin logged into had also been retired and replaced with one that ran WordPress. While the older CMS was allowed to continue running during a transition period, its functionality was limited to storing only historical data, the officials said. People logging into it didn't have the ability to post new pages to the site or to access voter data or tabulation systems, they said."
Granted it's not clear if the data, usernames and passwords used in the attack were also potentially useful in compromising any of the county's other systems, and Levin's currently too busy in the court system to offer additional insight.
At the end of the day there's plenty of fault and lessons to go around. The county obviously shouldn't keep systems with easily-exploitable vulnerabilities online, as such lower-level systems could open the door for attacks on higher-level operations. Levin meanwhile could have taken any number of steps to reveal the flaws without risking prosecution, and step one to not getting arrested for computer crimes usually involves you avoiding posting videos of you breaking the law on YouTube. Following Dan Kaminsky's guide on how to disclose vulnerabilities without getting arrested is a good starting point for anybody that may someday find themselves in Levin's shoes.
"The really sad part is that these fees are primarily paid for not by the prisoners, but by their families and loved ones, and those families often have the choice between bankrupting themselves or cutting off communication to their loved ones."
Silly, that's where the predatory payday loan system comes in and "helps!"
I find claims that "X" is always bad really boring.
Regulation is more complicated than it ALWAYS being bad, or always being the first solution to a problem. You have to actually stop and weigh each instance of regulation on its own merits, which is clearly too fatiguing for many.
"The Federal Communications Commission's recently proposed rules on the Competitive Availability of Navigation Devices, if adopted, will jeopardize the incredible evolution of video distribution services enabled by generally reasonable regulation."
Solid point except for that entire sentence being total bullshit.
"To all you "Pro Regulation" people. This is how regulation ALWAYS goes. There is no exception, there is no "other outcome". Regulation only provides one stop shopping for government corruption where businesses can show up and buy what they need to screw the little guy."
Like when the FCC and DOJ blocked the AT&T and T-Mobile merger, resulting in T-Mobile becoming more competitive than ever before, resulting in huge, cross industry benefits for consumers on all wireless carriers?
They never take action on broadband pricing or false advertising. Which is why you'll see ISPs consistently crow about how this sort of thing should be left to the FCC. But as the FCC has noted they do have some rate regulation authority under Title II.
Correct. On a per household level (streaming, patches, steam game downloads) we're not talking a huge allotment.
And one also needs to ask if ISPs will grow those caps alongside usage, or if they'll squeeze to make more profit from more people. As companies that need improved quarterly earnings bumps, I think the answer to that should be pretty obvious.
Brain fart, sorry. Was thinking "former Verizon regulatory lawyer" and wrote former commissioner instead. Or maybe it's wishful thinking, since I think the guy's an absolute revolving door regulation embarrassment.
With a few exceptions where their hand has been forced by muni or other operations (parts of North Carolina), they're primarily offering gigabit speeds to places where fiber was already in the ground and no real cost or work is involved. Read: housing developments, campus condos.
I think they'll probably hang on to these customers for a while, but by and large they're just cherry picking the places where there's minimal effort and expense involved.
They want the public to believe they're engaging in full city builds, they're just not.