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Posted on Techdirt - 18 May 2018 @ 6:26am

The 'Race To 5G' Is Largely Just Marketing Nonsense

from the double-hype dept

By now you've probably been informed that the next-generation of wireless broadband technology is going to revolutionize everything. Much like they did with 3G and 4G, wireless carriers like AT&T, Verizon, Sprint and T-Mobile have repeatedly hyped the fifth-generation (5G) wireless standard, insisting that the technology will somehow usher forth a "societal transformation" that's going to have a magical, cascading impact on every sector in technology, from the internet of (broken) things to the smart cities and self-driving car technologies of tomorrow.

The idea that we're in a "race to 5G" with other nations has been a cornerstone of the Trump administration's factually-dubious protectionism aimed at blacklisting Chinese hardware vendors. And hoping to pander to this sentiment, both T-Mobile and Sprint have played up this rhetoric in public statements as they seek approval of their job and competition killing megamerger:

"Ubiquitous high-speed 5G service and Internet of Things (“IoT”) capabilities will ignite innovation across industries and create the conditions for U.S. firms and innovators to lead the globe in the 5G era.

“Going from 4G to 5G is like going from black and white to color TV,” added Claure. “It’s a seismic shift – one that only the combined company can unlock nationwide to fuel the next wave of mobile innovation."

Time and time again, the two companies insist that 5G will somehow create a world of innovation and new technology (though only if the government agrees to reduce competition and approve their $23 billion merger):

"5G for All will unleash incredible benefits and capabilities for consumers and businesses. Imagine, for example, augmented reality heads-up displays that see everything you do, and provide real-time cloud-driven information about the people and objects around you. Imagine never losing anything again because low-cost sensors with decade long battery life are embedded in everything you own. Imagine an earpiece providing real-time translation as a friend speaks to you in another language. Imagine environmental sensors in infrastructure and for agriculture having a profound impact on productivity."

How exciting! The problem: none of those ideas really require "5G" to function, and can be easily developed on existing 4G infrastructure and technologies. 5G might modestly help make data delivery a little faster and more resilient, but 5G technology is not the technology equivalent of Doctor Strange.

You'll find the same rhetoric over at the website of the CTIA, the lobbying arm for major wireless companies. There, you'll find the "race to 5G" prominently hyped alongside all manner of breathless claims about how America must win said race or people could lose their jobs:

"The next generation of wireless is coming. The race to lead the world in 5G is underway and countries like China, South Korea, and Japan are doing everything they can to win. The competition carries real stakes. Today, the wireless industry supports over 4.7 million jobs and contributes roughly $475 billion annually to the American economy. 5G will be even more transformative—making our lives better, our communities safer, and our nation more prosperous. It’s important the United States do everything we can to maintain our wireless leadership. Because when we win the race to 5G, we all win."

It's simply not a race. Yes, companies like Cisco may see it as a race in terms of selling more routers than their overseas competitors, but deployment of 5G networks and handsets (which won't even truly take off until 2020 or thereafter) isn't like a 100 meter dash. It's a lengthy, convoluted process that's going to take years to define, test and implement.

The reality, which simply doesn't sound as sexy in company press releases, is that 5G is less a seismic shift, and more of a modest, natural evolution. Yes, 5G technology will involve all manner of new core network, virtualization, and antenna technologies that should make existing wireless networks faster, more resilient, with lower latency. But the standard is not going to magically eliminate all of the problems that make American wireless networks some of the slowest (we're ranked somewhere around 62 in 4G LTE speeds) and most expensive (40th) among all developed nations.

The reasons we're lagging behind in wireless price, speed and innovation isn't because of software and hardware standards. It's because the entire broadband sector suffers from regulatory capture, where entrenched, wealthy players dictate nearly all meaningful spectrum and competition policy with state and federal lawmakers and regulators. It's also because just a few companies (AT&T, Verizon), enjoy a government protected monopoly over the business data service market that feeds everything from cellular tower backhaul to ATMs.

So will 5G be an improvement over 4G? Sure. But unless we address the underlying problems that keep the U.S. wireless notably broken (spectrum policy, regulatory capture, our fascination with mindless, competition and job killing megamergers), we're not going to be "winning" much of anything beyond higher mobile data bills.

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Posted on Techdirt - 17 May 2018 @ 6:20am

Charter Uses Net Neutrality Repeal To Claim States Can't Hold It Accountable For Shoddy Service, Failed Promises

from the zero-accountability dept

While people remain exclusively fixated on the telecom industry's attacks on net neutrality, the reality is companies like Comcast, Charter, AT&T and Verizon are busy trying to eliminate nearly all federal and state oversight of their businesses. And while deregulation has its uses in healthy markets as part of an effort to protect innovation, you may have noticed that the telecom market isn't particularly healthy. As such, the end result of eliminating most meaningful regulatory oversight without organic market pressure in place is only likely to make existing problems worse.

This battle is getting particularly heated on the state level. After the Trump administration dismantled net neutrality and consumer privacy protections, states began flexing their muscle and attempting to pass their own privacy and net neutrality rules. ISP lobbyists, in turn, tried to head those efforts off at the pass by lobbying the FCC to include (legally untested) language in its net neutrality repeal "pre-empting" states from being able to protect broadband consumers in the wake of federal apathy.

And in the wake of the net neutrality repeal, companies like Charter (Spectrum) are trying to claim that states have no legal authority to hold them accountable for failed promises, slow speeds, or much of anything else.

For example, Charter is already trying to use the FCC net neutrality language to wiggle out of a lawsuit accusing it of failing to deliver advertised speeds. And the New York Public Service Commission also recently stated it found that Charter has been effectively lying to regulators about meeting conditions affixed to its $89 billion acquisition of Time Warner Cable and Bright House Networks. As part of the deal, Charter was supposed to deploy broadband to a set number of additional homes and businesses, but regulators found (pdf) several instances where Charter actively misled regulators.

Last week Charter replied to these allegations by again claiming that states have no authority over them. As part of that effort the company is already citing the FCC's pre-emption language buried in its net neutrality repeal:

"The Commission does not have the authority to compel broadband providers to offer service to particular customers at particular speeds or at particular locations, or to establish any other obligations in a cable television and telecommunications service merger related to the provision of broadband services. Indeed, it has been established for years that Internet access services are interstate, and accordingly subject to exclusive federal jurisdiction.

The FCC has made abundantly clear that states may not impose “any so-called ‘economic’ or ‘public utility-type’ regulation[]” on broadband services and that federal law flatly preempts such requirements. Requiring a provider to expand the geographical range in which it offers broadband services and to offer it at specific speeds—as the Expansion Condition does—is a quintessential public utility obligation that could never lawfully be imposed by a state, as such a requirement would blatantly violate federal law.

There's several things wrong with this claim. One, NY State and the NY PSC absolutely does have authority over Charter -- because this is a merger agreement signed off on by the company that also currently holds a franchise agreement in the state. Two, the FCC's pre-emption effort was already on shaky and untested legal ground. But as Stanford Law School Professor Barbara van Schewick recently pointed out, ironically when the Ajit Pai's FCC rolled back Title II classification of ISPs, it also abdicated its own authority allowing it to tell states what they can do:

"While the FCC’s 2017 Order explicitly bans states from adopting their own net neutrality laws, that preemption is invalid. According to case law, an agency that does not have the power to regulate does not have the power to preempt. That means the FCC can only prevent the states from adopting net neutrality protections if the FCC has authority to adopt net neutrality protections itself.

But by re-classifying ISPs as information services under Title I of the Communications Act and re-interpreting Section 706 of the Telecommunications Act as a mission statement rather than an independent grant of authority, the FCC has deliberately removed all of its sources of authority that would allow it to adopt net neutrality protections. The FCC’s Order is explicit on this point. Since the FCC’s 2017 Order removed the agency’s authority to adopt net neutrality protections, it doesn’t have authority to prevent the states from doing so, either."

Still, it will take years to hammer this all out in the courts, and in the interim efforts to erode oversight on numerous other fronts (as we saw on net neutrality and privacy) has so far been a smashing success. As we've already noted several times, cable operators like Charter are enjoying larger broadband monopolies than ever before thanks to telcos that have no interest in upgrading aging DSL lines at scale. If you really enjoy the high prices and comical shitshow that passes for cable customer service, by all means let's make sure nobody on the state or federal level can ever hold them accountable.

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Posted on Net Neutrality Special Edition - 16 May 2018 @ 1:30pm

Senate Approves First Step In Uphill Effort To Restore Net Neutrality

from the try-and-try-again dept

Today the Senate voted 52 to 47 to reverse the FCC's attack on net neutrality, setting up a tougher showdown in the House.

As noted previously, net neutrality advocates managed to convince Congress to try and use the Congressional Review Act (CRA) to reverse the FCC's misleadingly-named "Restoring Internet Freedom Order."

That order, approved by a 3-2 FCC vote last December, not only kills net neutrality (as of June 11), but eliminates much of the FCC's authority to police monopoly ISPs. Since many still don't seem to understand this, it's worth reiterating that the attack on net neutrality is just one part of a much broader plan to severely hamstring FTC, FCC, and state oversight of giant broadband monopolies that face little to no organic market competition.

Today's hearing before the Senate included all of the favorite hits culled from a decade of net neutrality debates, including ISP-loyal lawmakers like John Thune repeating the entirely false claim that net neutrality rules somehow devastated sector investment (SEC filings, earnings reports, and countless CEO statements disprove this). Claims that U.S. net neutrality rules were "heavy handed government regulation of the internet" were also frequently repeated (that's also not true, and the U.S. rules are arguably modest by international standards).

Net neutrality activists had been trying to secure additional Senate votes for months, something made arguably difficult by ISP lobbyist success at stupidly framing net neutrality as a partisan issue, despite widespread bipartisan support. But activists managed to get three key Republicans to join their ranks: Maine Senator Susan Collins, Alaska Senator Lisa Murkowski, and Louisiana Senator John Kennedy. Kennedy's yes vote was a notable surprise, given he'd been supporting ISP efforts to pass a bogus net neutrality law with an eye toward pre-empting tougher state or federal rules.

But at the last moment he came along for the ride, his justification being notably amusing:

From here, the fight gets notably more difficult. The House also has to vote in favor of the CRA reversal, a tall order given the large number of breathleesly-loyal telecom industry House allies like Marsha Blackburn. And should it pass the House, it also needs to avoid a veto by President Trump. Activists hope to appeal to Trump's tendency to float wherever the populist winds may lead, but that's certainly still no sure thing, in part because there's zero evidence the President has any idea what net neutrality is.

That said, even if the effort fails, it should do a wonderful job clearly illustrating who you should avoid voting for in the midterms and thereafter -- especially if having a healthy, open and competitive internet is something that's important to you.

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Posted on Techdirt - 16 May 2018 @ 6:30am

Comcast Still Makes A Killing, Even When You Cut The Cord

from the damned-if-you-do dept

While the rate of cord cutting is expected to double for Comcast this year, the phenomenon isn't having as dire an impact on the company's bottom line as you might expect. That's thanks to Comcast's growing monopoly over broadband in countless markets where the nation's phone companies are simply refusing to upgrade their networks at any real scale. That lack of competition lets the company not only jack up the standalone price of broadband (starting at $75 in many markets), but it allows the company to implement punitive and unnecessary usage caps and overage fees to drive up your bill should you embrace streaming alternatives.

Speaking at a telecom conference in New York this week, Comcast cable CEO Dave Watson very quietly acknowledged the fact that when a customer cuts the cord, the fact that Comcast doesn't have to pay content licensing costs for that user -- combined with the fact that they simply drive up the cost of broadband for that user -- means that the company comes out ahead anyway:

"Watson added that while Comcast tries to keep customers through a variety of programming and broadband packages, but added that when a customer leaves as a result of price, the impact is actually favorable to the company. "We segment the marketplace,” Watson said, adding that when a low-end customer drops video service over price, but keeps their broadband service – at a higher monthly charge – the company makes out better.

"It’s actually accretive when that happens,” Watson said. “It’s a manageable transition."

Of course that wouldn't be the case if Comcast actually had to compete on the broadband front, a problem we don't seem particularly intent on solving anytime soon. Wall Street of course knows this and is very excited about the prospect, with many analysts cheering Comcast toward boosting the cost of standalone broadband from $75 (after a recent hike) upwards of $90 per month or higher:

"We have argued that broadband is underpriced, given that pricing has barely increased over the past decade while broadband utility has exploded,” New Street said. “Our analysis suggested a ‘utility-adjusted’ ARPU target of ~$90. Comcast recently increased standalone broadband to $90 (including modem), paving the way for faster ARPU growth as the mix shifts in favor of broadband-only households. Charter will likely follow, once they are through the integration of Time Warner Cable."

New Street added that “broadband pricing could double from current levels."

How exciting. Of course while this firm tries to argue that broadband pricing has "barely increased" over the last decade, it's important to understand he's talking about the advertised price. Comcast has provided a master class in the tactic of using hidden, sneaky, and/or entirely bogus fees to covertly jack up the cost of service post sale, something both Comcast and Charter are facing numerous lawsuits for. Then there's Comcast usage caps and overage fees, which Comcast can also slowly but surely squeeze with zero organic market or (for now) regulatory repercussions.

Of course Comcast still values the cash cow that is traditional television, and in an added wrinkle has started only doling out the latest speed upgrades to users that bundle television. But thanks to our refusal to actually address limited competition in the broadband space, Comcast will manage to grab its pound of flesh -- one way or another. That's why a growing number of towns and cities see building their own broadband networks as the only path forward out of this cycle of monopoly dysfunction.

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Posted on Net Neutrality Special Edition - 15 May 2018 @ 6:20am

Senate Will Vote Wednesday To Try And Save Net Neutrality

from the if-at-first-you-don't-succeed dept

While U.S. net neutrality protections technically end on June 11, efforts to restore the rules continue. On Wednesday the Senate is now formally scheduled to hold a vote to try and use the Congressional Review Act (CRA) to reverse the FCC repeal. The CRA can reverse a regulatory action with a majority vote in the House and Senate; it's what the GOP and Trump administration used to kill popular broadband privacy rules before they could take effect last year.

In a Statement, Senator Ed Markey called the May 16 vote the "most important vote for the internet in the history of the Senate":

"By passing my CRA resolution to put net neutrality back on the books, we can send a clear message to American families that we support them, not the special interest agenda of President Trump and his broadband baron allies. May 16 will be the most important vote for the internet in the history of the Senate, and I call on my Republicans colleagues to join this movement and stand on the right side of digital history."

It's believed that net neutrality supporters should have the votes they need to get the CRA effort through the Senate. Getting time and the necessary votes in the House, where ISP influence is more pervasive, is likely to be a taller order. And even if the measure makes its way through the House, Trump still has the ability to veto it. Net neutrality supporters believe that if they get that far they may be able to pander to Trump's "populist" side given the immense public support for net neutrality.

While stranger things have happened, that seems like a tall order for a President who has routinely indicated he has absolutely no earthly idea what net neutrality even is. And when Trump does talk about it, he clings tightly to the misleading narratives that have been pushed for years in certain media echo chambers thanks to the help of ISP lobbyists:

Still, the CRA route does have the benefit of forcing net neutrality opponents to put their disdain for the internet and the will of the public down on paper ahead of the looming midterms. Given that 82% of Republicans and 90% of Democrats oppose the FCC's obnoxiously-named "restoring internet freedom" repeal, naming and shaming does serve a tactical purpose. After all, as we've routinely noted, there's absolutely nothing partisan about keeping the internet healthy, competitive, and free from arbitrary barriers anti-competitively erected by giant telecom monopolies.

That said, the best bet to reverse the FCC's attack on net neutrality rests with the courts. Or as Tim Wu, the man who coined the term net neutrality, recently put it:

"The problem for Mr. Pai is that government agencies are not free to abruptly reverse longstanding rules on which many have relied without a good reason, such as a change in factual circumstances. A mere change in F.C.C. ideology isn’t enough. As the Supreme Court has said, a federal agency must “examine the relevant data and articulate a satisfactory explanation for its action.” Given that net neutrality rules have been a huge success by most measures, the justification for killing them would have to be very strong.

It isn’t. In fact, it’s very weak."

Numerous lawsuits should heat up over the next few months highlighting how the FCC ignored the public and engaged in all manner of dodgy behavior to rush the repeal through. Should that fail, the best recourse for angry consumers is voting out lawmakers that prioritize monopoly profits over the health of the internet, and the welfare of consumers, startups, and small businesses. And the looming CRA vote, even if it fails, should make it much easier to clearly target those lawmakers in the voting booth during the midterms and beyond.

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Posted on Techdirt - 14 May 2018 @ 10:44am

Prison Phone Monopoly Securus Under Fire Again, This Time For Doling Out Everybody's Private Phone Location Data

from the don't-pass-go,-don't-collect-$200 dept

For years now we've noted how a company by the name of Securus has managed to obtain a pretty cozy, government-supported monopoly over prison phone and teleconferencing services. Like any monopoly, this prison monopoly has pretty traditionally resulted in not only sky high rates upwards of $14 per minute for phone calls, but comically poor service as well. It's something advocates (like outgoing FCC staffer Mignon Clyburn) have been trying to rectify for years, only to have Trump FCC boss Ajit Pai completely deflate those efforts last year.

But Securus' monopoly -- and the government pampering and cronyism that helped create it -- has other additional costs as well. Interstate inmate calling service (ICS) companies effectively buy their privileged positions from local governments, who then expect some favors in return. For example, Securus was recently accused of routinely spying on privileged inmate attorney communications, information that was only revealed after Securus was hacked in late 2015. Given the generalized 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.

Meanwhile, the problems caused by these government-sanctioned monopolies continue to pile up. A recent court case has also exposed how some law enforcement officials also make routine use of a Securus service that helps track people’s cellphones without court orders. While the service is marketed to government as a way for law enforcement to track fleeing drug treatment or even Alzheimer's patients, zero oversight means it's routinely abused. In this case, the law enforcement official used the Securus service to not only track members of the general public, but Judges and other law enforcement officials as well:

"The service can find the whereabouts of almost any cellphone in the country within seconds. It does this by going through a system typically used by marketers and other companies to get location data from major cellphone carriers, including AT&T, Sprint, T-Mobile and Verizon, documents show.

Between 2014 and 2017, the sheriff, Cory Hutcheson, used the service at least 11 times, prosecutors said. His alleged targets included a judge and members of the State Highway Patrol. Mr. Hutcheson, who was dismissed last year in an unrelated matter, has pleaded not guilty in the surveillance cases."

In addition to being another warning about the threat of government-pampered monopolies, the scandal again highlights how our nonexistent to lax consumer privacy laws (especially for wireless carriers) routinely come back to bite us. In this instance, Securus was easily able to buy cell carrier location data, then upload it to a company portal. Law enforcement officials can then easily plug in a cell phone number to track its location, provided they supply an "official document giving permission." Overview of the validity of these documents appears to be half-assed at best.

We've long noted that wireless carriers routinely sell browsing, location and other data to absolutely everyone, and while these companies insist that "anonymizing" the data protects user identities (it doesn't), the rules governing the use of such data are laughable at best. Efforts to then pass more meaningful privacy protections then get quickly and repeatedly scuttled by influential lobbyists, as companies fight tooth and nail against any measures that could possibly hamstring user data monetization efforts.

As you might expect, Securus took no ownsership of the scandal or the routine abuse of private data:

"Securus requires documentation and reasonably relies on the professionalism and integrity of our law enforcement customers and their counsel. Securus is neither a judge nor a district attorney, and the responsibility of ensuring the legal adequacy of supporting documentation lies with our law enforcement customers and their counsel."

Senator Ron Wyden, meanwhile, has fired off a letter to FCC boss Ajit Pai (pdf), lamenting the fact that the oversight of this entire process is the glorified equivalent of a "pinky promise":

"I recently learned that Securus Technologies, a major provider of correctional-facility telephone services, purchases real-time location information from major wireless carriers and provides that information, via a self-service web portal, to the government for nothing more than the legal equivalent of a pinky promise. This practice skirts wireless carrier's legal obligation to be the sole conduit by which the government conducts surveillance of Americans' phone records, and needlessly exposes millions of Americans to potential abuse and surveillance by the government."

Securus is the perfect storm created by lax privacy rules, rampant cronyism, the government's tendency to pamper and embolden monopolies, and the routine skirting of wiretap and privacy law by corporations and law enforcement alike.

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Posted on Techdirt - 11 May 2018 @ 10:41am

AT&T Cans Exec Over Cohen Payment Kerfuffle, Pretends This Kind Of Influence Peddling Isn't Perfectly Routine

from the whoops-a-daisy dept

As you've probably seen, AT&T was recently exposed for paying $600,000 into a shady shell LLC operated by President Trump's "fixer" Michael Cohen. Initially, AT&T tried to claim that the company had simply hired Cohen for "insight" into President Trump. Given AT&T could easily gain said insight into Trump from any number of its lawyers, lobbyists, and above-board consultants (not to mention the ocean of politicians and regulators in its back pocket), the idea they'd pay a dubious NYC "fixer" for such insight never really carried much weight.

It seems fairly obvious at this point that AT&T was probably paying Cohen for additional access to the President. A leaked document provided to the Washington Post makes it clear that AT&T hoped to gain some advantage in its business before the FCC (net neutrality, privacy, protectionism, protecting its monopoly power), and its efforts to gain regulatory approval for the company's $86 billion Time Warner merger:

"A “scope of work” describing Cohen’s contract in an internal AT&T document shows that he was hired to “focus on specific long-term planning initiatives as well as the immediate issue of corporate tax reform and the acquisition of Time Warner.”

He was also directed to “creatively address political and communications issues” facing the company and advise the company on matters before the Federal Communications Commission."

There's every indication that this additional attention may have paid monumental dividends.

While the Trump DOJ did sue to block AT&T's merger (DOJ antitrust chief Makan Delrahim wandering off script to actually defend antitrust law), the repeal of net neutrality and broadband privacy rules was a smashing success. AT&T has also had great success in its efforts to force NAFTA "reform" making it easier for AT&T to expand into the Mexican wireless market. And AT&T's luck has been stellar at the FCC, where the Commission majority (the makeup of which was dictated by AT&T lobbying) has rubber stamped AT&T's every desire, including the protection of its business broadband monopoly.

As the scandal has grown, AT&T CEO Randall Stephenson was forced to admit the error of his ways in an e-mail to AT&T employees. Stephenson admitted the payments to Cohen were a mistake, but tried his best to pretend that this wasn't routine behavior for AT&T:

"To be clear, everything we did was done according to the law and entirely legitimate. But the fact is, our past association with Cohen was a serious misjudgment. In this instance, our Washington D.C. team’s vetting process clearly failed, and I take responsibility for that.

As somebody who has covered AT&T for decades now, I can assure you this Cohen payment is just a tiny portion of the greasy influence peddling AT&T engages in on a daily basis. The idea that this behavior wasn't perfectly in line with AT&T's "values" is laughable. And in a country where flimsy lobbying disclosure requirements are routinely tap danced around, trying to claim that this was all above board because you didn't violate any laws is akin to claiming you're an expert high jumper because you cleared a bar one inch off the damn ground.

And despite the payment being well in line with AT&T's behavior, the company decided to throw top lobbying and policy man Bob Quinn under the bus as penance for its sins:

"For the foreseeable future, the External & Legislative Affairs (E&LA) group will report to our General Counsel David McAtee. Bob Quinn, Senior Executive Vice President – E&LA, will be retiring. David’s number one priority is to ensure every one of the individuals and firms we use in the political arena are people who share our high standards and who we would be proud to have associated with AT&T."

Bob Quinn had been on the job for less than two years after the retirement of former top lobbying and policy man Bob Cicconi. You may recall Quinn from such hits as AT&T's laughable efforts to pretend it supports net neutrality while simultaneously spending millions to dismantle popular federal net neutrality protections. And again, while paying Cohen to gain access to the President is certainly shady, it's well in line with AT&T's behavior over the last several decades. The question then becomes: will anybody actually do anything about any of it?

AT&T's a shining example of how "creative" influence peddling has infected this country down to its marrow. From co-opting minority groups and creating fake consumer groups to undermine productive proposals, to using think tanks, hired consultants and academics to spread disinformation, testify as "objective" experts and write Op-Eds where financial ties are rarely disclosed, there's a universe of influence peddling and lobbying AT&T routinely engages in that existing U.S. laws don't even operate in the same dimension on.

America has, time and time again, made it abundantly clear that this kind of influence peddling, lobbying and disinformation is not just perfectly legal, it's the norm. So whether this latest scandal results in substantive change or is just brushed aside as a one-off instance of bad judgement by just a few otherwise innocent companies will be interesting to see.

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Posted on Techdirt - 11 May 2018 @ 6:26am

T-Mobile Hires Ex-FCC Commissioner To Claim Its Competition-Killing Merger Will Be Really Great For...Farmers

from the synergies,-yo dept

As we've discussed, the looming Sprint T-Mobile merger is going to be decidedly ugly for American consumers. Global history has shown repeatedly that when you reduce the number of total competitors from four to three, you proportionally reduce any incentive to truly compete on price. Analysts have also predicted that anywhere between 10,000 and 30,000 retail, management, and administrative employees will lose their jobs as the bigger company inevitably eliminates redundant positions. Of course like any American merger, the two companies' CEOs have spent much of the last week trying to claim the exact opposite.

Still, it's going to be an uphill climb for Sprint and T-Mobile to sell regulators on the deal, even for an administration that seems to take pride in undermining consumers and small businesses. To try and sell it, Sprint and T-Mobile have been trying to make the claim that the only way to ensure we have the fifth-generation (5G) networks of tomorrow is if we sign off on their competition-eroding megamerger:

"It is critically important that America and American companies lead in the 5G era. Early U.S. leadership in 4G fueled a wave of American innovation and entrepreneurship that gave rise to today’s global mobile Internet leaders, creating billions in economic value and job growth. America’s early 4G leadership is credited with creating 1.5 million jobs and adding billions to the U.S. GDP. With 5G, the stakes are even higher – because 5G will be even more transformational."

This plays in handily to the Trump administrations protectionist efforts to ban Chinese companies from the American market in order to "win the 5G race." The problem is that 5G isn't some magic wand. While it will provide us with faster, lower latency and more resilient wireless networks, it's not going to magically cure the fact that American broadband is ranked somewhere around 62nd in speed, and consumers pay some of the highest rates for mobile data in the developed world thanks to a telco monopoly over the fiber lines that feed cellular towers.

Both T-Mobile and Sprint had been making it clear for months that they could deploy 5G easily and independently of each other. Suddenly we're being told that these next-gen networks are only made possible if we sign off on a deal history tells us will be arguably terrible for anybody other than AT&T, Verizon and SprinT-Mobile, who'll all have less motivation to engage in real price competition post merger.

To try and sell this "only merging can deliver next-gen networks" argument, T-Mobile this week hired former FCC Commissioner Robert McDowell to make the same point in an op/ed over at Fortune:

"The T-Mobile-Sprint merger will benefit our country and all Americans. From a farmer in Nebraska using 5G technology to better track crop conditions, to a small business owner in New Hampshire looking to sell products in the global marketplace, to a smart city with autonomous vehicles, all of us will depend on 5G. We can’t afford to lose the global race to develop this remarkable technology."

In the piece's fine print you'll find that McDowell is now a paid T-Mobile advisor, which is a nice shift from outlets that can't be bothered to highlight op/ed author financial ties to industry. Again though, there's nothing "magical" about 5G that helps create smart cities, next-gen agricultural tools, and the automated cars of tomorrow. Those technologies can still thrive on 4G networks, and again, while 5G is going to provide some notable evolutionary improvements, it's not some kind of mystical panacea, and its impacts on our overall economy are being absurdly over-hyped by companies eager to sell networking hardware.

There's numerous problems in the wireless sector that will persist throughout the "5G revolution," none of which get magically eliminated by reducing competition and killing tens of thousands of jobs. The merger doesn't magically fix AT&T and Verizon's backhaul monopoly. It doesn't address the fact that Americans pay more for wireless data that countless other developed nations. And it certainly doesn't solve the problem of regulatory capture, which is why American broadband (fixed or wireless) tends to be such a comical shitshow in the first place.

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Posted on Net Neutrality Special Edition - 10 May 2018 @ 12:01pm

FCC Boss Celebrates As Net Neutrality Gets An End Date: June 11

from the Comcastic dept

Nearly six months after the Trump FCC voted to kill net neutrality protections, we finally have an official date for the formal elimination of the rules. According to an FCC announcement, (pdf) the FCC's comically and misleadingly-named "Restoring Internet Freedom" order will formally take effect on June 11, eliminating rules that have the bipartisan support of a huge majority of Americans (not to mention many of the people that built the damn internet).

In a statement patting himself on the back for a job well done, FCC boss Ajit Pai simply doubles down on all of the routinely-debunked falsehoods his agency has used to justify the repeal up to this point, including the claim that killing consumer protections and pandering to Comcast somehow lowers prices and protects "free expression":

"On June 11, we will have a framework in place that encourages innovation and investment in our nation’s networks so that all Americans, no matter where they live, can have access to better, cheaper, and faster Internet access and the jobs, opportunities, and platform for free expression that it provides."

Of course if you've been following the net neutrality fight this claim is laughable. Giving telecom monopolies operating in a broken market unchecked authority to abuse a lack of competition will raise rates and stifle free expression in a myriad of ways. From bogus usage caps and zero rating to interconnection shenanigans (where ISPs use their power to drive up costs for transit and content competitors), these costs and unfair restrictions, sooner or later, will be dropped in the lap of consumers, startups and smaller competitors across the entire internet ecosystem.

Meanwhile, Pai also tries to double down on the claim that next-generation networks are only made possible by gutting oversight of some of the least-liked and least-competitive companies in America. He also tries to float the idea that "special interests" (not an overwhelming, bipartisan majority of Americans) are to blame for the massive backlash to his repeal:

"And we will embrace a modern, forward-looking approach that will help the United States lead the world in 5G, the next generation of wireless connectivity. For months, many politicians and special interests have tried to mislead the American people about the Restoring Internet Freedom Order. Now everyone will be able to see the truth for themselves."

Yes, yes we will.

Unfortunately, starting in late June, ISPs, the Pai FCC, and the industry's dollar-per-hollar consultants are going to try to argue that because the Earth didn't immediately shatter into a million pieces on June 12 it must mean that the net neutrality rules weren't important. But anybody expecting ISPs like Comcast to immediately begin behaving badly in the wake of the repeal doesn't understand how this is going to work.

While there's certain to be some providers that just can't help themselves, most large ISPs are going to try and be on their best behavior for a while, even after the rules are repealed.

Why? They're wisely concerned that the FCC may lose in court, thanks to all of the procedural missteps, half truths and flimsy data belched forth from Pai's office during the repeal. ISPs are also worried about the fact that more than half the states in the nation are now pursuing their own net neutrality rules (something they maybe should have considered before rushing to kill modest federal rules).

Of course there's also the looming threat of a future less cash-compromised Congress or FCC coming in and just re-instating the rules during future administrations. There's also an ongoing effort to reverse the FCC repeal via the Congressional Review Act.

This is why ISPs have been advocating (so far unsuccessfully) for a bogus net neutrality law in Congress.

Pushed by Marsha Blackburn in the House and John Kennedy in the Senate, these bills are being promoted as a "solution" to the longstanding net neutrality debate. But their real intention is far more nefarious: to pass a flimsy, loophole-ridden law designed specifically to pre-empt tougher federal or state laws (and block the FCC from restoring the 2015 rules should they lose in court). In short: they want to make a lack of net neutrality permanent via legislation that...pretends to protect net neutrality (AT&T, Verizon and Comcast lobbyists are nothing if not clever).

As ISP lobbyists nervously try to prevent a return to real net neutrality rules, ISPs will try to be on their best behavior for a while to try to suggest all of the concerns about the repeal were breathless hyperbole. But it's important to understand, killing net neutrality is just one part of a much broader plan that involves effectively gutting nearly all FTC and FCC oversight of the broken telecom sector. Should that come to pass (and they're having a hell of a lot of success at the moment), the end result is not going to be subtle.

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Posted on Techdirt - 10 May 2018 @ 10:42am

Actors Hired To Play Consumers In Bid To Thwart Renewable Energy in New Orleans

from the fake-it-'til-you-make-it dept

The nation's largest, incumbent utilities continue to engage in some pretty shady behavior to try and stop the unstoppable renewable energy (r)evolution. In Florida, for example, we noted how one utility created an entirely bogus consumer group with one purpose: to hamstring solar competition. The group, "Consumers For Smart Solar," was built specifically by utilities to try and push legislation that claimed to support solar energy, but actually applied all manner of backward and obnoxious restrictions to the alternative energy industry.

As these companies work to craft legislation that makes it harder on renewable competitors, they've ramped up the use of astroturfing to provide the illusion of broad consumer support for their efforts. Not to be outdone by their colleagues in Florida, one Louisiana utility appears to have hired a bunch of actors to express their enthusiastic support for the construction of a gas-based power plant that had been struggling with public approval. Locals had opposed the construction, arguing that claims that the plant was needed to shore up lagging capacity didn't hold up, and the utility should instead focus on modernization of existing lines.

Local utilities didn't like that, so they hired a bunch of actors to cheer the plant's construction, and jeer any conversation about renewable energy alternatives at a meeting in New Orleans:

"At least four of the people in orange shirts were professional actors. One actor said he recognized 10 to 15 others who work in the local film industry. They were paid $60 each time they wore the orange shirts to meetings in October and February. Some got $200 for a “speaking role,” which required them to deliver a prewritten speech, according to interviews with the actors and screenshots of Facebook messages provided to The Lens.

“They paid us to sit through the meeting and clap every time someone said something against wind and solar power,” said Keith Keough, who heard about the opportunity through a friend.

"Astroturfing," or the act of generating bogus grass roots public support for arguably unpopular policies, was a concept perfected by the broadband industry years ago. Whether it was paying people to attend meetings or the creation of bogus consumer groups to attack net neutrality, creating the illusion of support is a longstanding American tradition. It tends to be confusing to the general public, so by and large it's something traditional press outlets don't deem worthy of covering. But it routinely pollutes public discourse, and directly and routinely results in crap policy and law that doesn't reflect the will of the (actual) public.

In this case, locals believe the actors were likely hired by a utility company by the name of Entergy through a company creatively named Crowds on Demand (there's a long list of companies that do this, though most like to operate under the radar). But Entergy denies the claim, and promises it will look into it and take "appropriate action if warranted":

"“While we reiterate that Entergy did not pay, nor did we authorize any other person or entity to pay supporters to attend or speak at Council meetings, we recognize that our interactions with our stakeholders must always be based on honesty and integrity,” the company said. The company said it’s finalizing an investigation “to determine if anyone retained by the company has acted in any way inconsistent with these values. We will take swift and appropriate action if warranted."

Because it's not illegal for companies to hire actors to actively mislead the public and corrupt the democratic process, nothing much comes of these revelations. And while these kinds of efforts obviously can't stop natural market evolutions like the shift toward renewable, lower-pollution alternative energy options, they certainly do a great job making meaningful evolutionary progress that much slower and cumbersome.

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Posted on Techdirt - 10 May 2018 @ 6:29am

AT&T Continues Fight To Gut FTC Authority Over Broadband Monopolies

from the have-your-cake-and-eat-it-too dept

For years, massive broadband providers (and the lawmakers and think tankers paid to love them) have repeatedly stated that gutting net neutrality and FCC oversight of ISPs is no big deal because the FTC will rush in and protect consumers. When ISPs like Comcast convinced the Trump FCC to kill net neutrality, they repeatedly proclaimed that the FTC would step in and ensure that nothing bad would happen. When ISPs lobbied Congress to kill off some modest consumer privacy protections, again they proclaimed that this was no big deal because the FTC would ride in and keep consumers safe from monopoly bad behavior.

But while ISP lobbyists are claiming that neutering the FCC is a great idea because the FTC will fill the void, they consistently "forget" to mention that AT&T has been busy in court trying to gut FTC authority over ISPs entirely. You'd think that's kind of important to mention, but large ISP mouthpieces are understandably busy these days, so perhaps it just got lost in the lobbyist paperwork shuffle.

AT&T's legal gambit began when the FTC sued AT&T back in 2014 for lying to customers about the company's throttling practices. You'll recall that AT&T had been waging a not-so-subtle war on unlimited data users as it tried to drive them to more expensive, metered plans. Amusingly, AT&T lawyers tried to argue in court that the company's "common carrier" status -- the same status it has fought viciously against on the net neutrality front -- exempted it from FTC authority almost entirely under Section 5 of the FTC Act. As we noted at the time, it was a very clever Schrodinger-esque tap dance.

At the time, the FTC issued a warning stating that should AT&T lawyers be successful, any company with a common carrier component (from Google to oil conglomerates) could tap dance around FTC oversight. Those without such components could simply buy or merge with a small company with a common carrier component to nab the same benefit. This, the FTC warned, would create a massive accountability and enforcement gap regarding corporate America.

Fortunately for consumers, AT&T's legal efforts have seen mixed results. AT&T won a major ruling in the case back in August of 2016, but the FTC won the most recent federal appeals court decision. Undaunted, AT&T made it clear this week that this is a battle it intends to take to the Supreme Court:

"AT&T intends to file a petition for certiorari in the Supreme Court" by the deadline of May 29, according to a joint case management update filed last week. An AT&T victory could leave many ISPs in a regulation-free zone. The Federal Communications Commission in December 2017 voted to eliminate net neutrality rules and relinquish its authority to regulate ISPs as common carriers. One of the FCC's justifications for deregulating the broadband market was that the Federal Trade Commission can force ISPs to uphold their net neutrality promises."

The goal remains little to no oversight of some of the least-competitive and most anti-competitive American companies in any industry. What could possibly go wrong?

It's worth reiterating that even if the FTC wins this case, the agency remains a pale echo of the FCC when it comes to holding giant ISPs accountable. The FTC lacks rule-making authority, is already over-extended, and can only hold an ISP accountable if it can clearly prove the ISP engaged in "unfair or deceptive" behavior. That's something that's particularly problematic on the net neutrality front when anti-competitive behavior is routinely hidden behind bogus claims of routine network management.

Granted if you really like growing monopolies running amok, this plan should be right up your alley. But if you realize that removing already pretty tepid oversight of an uncompetitive and broken telecom industry could cause vast irreparable harm to consumers and smaller businesses alike, then this is a case you most certainly should be keeping an eye on.

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Posted on Techdirt - 9 May 2018 @ 10:40am

AT&T Stumbles As It Tries To Explain Why It Paid $200K To Cohen's Shady Shell Company

from the dysfunction-junction dept

Stormy Daniels lawyer Michael Avenatti yesterday dropped a bit of a bombshell on DC in the form of this document (pdf), which alleges that Trump lawyer and "fixer" Michael Cohen was engaged in far deeper, shadier financial shenanigans than had so far been reported. Numerous allegations are made in the document, including claims that Cohen may have violated banking laws in setting up and funneling money through a front company by the name of Essential Consultants, including payments made by Columbus Nova, a U.S.-based affiliate of a company controlled by a Russian millionaire, Victor Vekselberg.

But buried within the document also sits allegations that numerous companies were also paying into Cohen's shell company, which had no employees and claimed to have been focused on real estate ventures. Korean Aerospace Industries, Novartis, and AT&T all managed to pay Cohen for ambiguous services, and all have been providing some comically murky explanations as to why they'd be dumping money into a shell company operated by the President's arguably-shady fixer:

"Korean Aerospace Industries confirmed to The Washington Post that it paid $150,000 to Cohen’s company, but spokesman Oh Sung-keon said that it was not aware of its connection to Trump. The company said that it paid Cohen’s firm “to inform reorganization of our internal accounting system.” The company is in contention for a multibillion joint U.S. contract with Lockheed Martin for jet trainers."

Yeah that doesn't sound suspect at all. The documents allege that AT&T also made four $50,000 payments to Cohen's shell LLC from October 2017 to January of this year (though Reuters now says that those payments could have been as high as $600,000). A statement issued to the press by AT&T attempts to claim that the company was simply seeking "insights" into the administration, which by this point had been in office for nearly a year:

"Essential Consulting was one of several firms we engaged in early 2017 to provide insights into understanding the new administration. They did no legal or lobbying work for us, and the contract ended in December 2017."

It's worth noting that while it was nice of AT&T to confirm the validity of many of the documents' claims, the company's rushed public statement not only got the timeframe of the payments wrong, but the name of the company wrong as well.

One of the theories du jour is that AT&T was trying to secure the repeal of net neutrality, the vote for which (December 14) occurred just as the payments were wrapping up. But given that the Trump FCC had already proven itself to be a mindless rubber stamp when it comes to catering to the telecom sector's biggest companies, such additional payments likely weren't necessary to ensure the vote went AT&T's way.

Granted AT&T's also been pressuring the Trump administration to "reform" NAFTA to make it easier on AT&T's telecom ambitions in Mexico. AT&T was also trying to secure the administration's blessing for its $86 billion acquisition of Time Warner. But given the Trump DOJ proceeded to sue to block that deal for anti-competitive reasons (or hey, just good old cronyism), if the payments were to grease the M&A skids AT&T certainly didn't get their money's worth.

The most likely reason is that AT&T, for some idiotic reason, thought paying a shady NYC fixer's dubious front company would help curry general favor with the Trump administration. That's certainly not out of character. AT&T is a company with pretty greasy track record, whether we're talking about the time it turned a blind eye to drug dealers running a directory assistance scam on its own users, the time it was caught helping scammers rip off telecom systems for the hearing impaired, or that time it was caught making bills harder to understand just to help crammers rip off AT&T customers.

Unless there's some legitimate reason for these payments (which seems hard to fathom), this looks like good old American graft exposed to the light. Still, there's a lot of unsolved questions here, and while AT&T's claim that it was just looking for "insight" might work with revolving door regulators like Ajit Pai, it isn't likely to hold up under deeper federal scrutiny.

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Posted on Techdirt - 9 May 2018 @ 6:34am

Comcast Prepares To Get Even Larger With Sky, Fox Acquisitions

from the what-could-go-wrong dept

The cable company Americans love to hate is about to go supernova. Comcast acquired NBC Universal back in 2011, giving the company unprecedented control of not only the conduit into the house, but also the information and news being sent over those wires. And while regulators affixed some flimsy conditions to the deal, Comcast managed to ignore many of them, a major reason why regulators moved to block Comcast's acquisition of Time Warner Cable a few years ago.

Because we're unwilling to learn much of anything from history, Comcast's now on the verge of growing significantly larger. The company recently unveiled a $30 billion plan to acquire European pay TV giant Sky. And this week, reports began to bubble up indicating that if regulators approve AT&T's $86 billion acquisition of Time Warner, Comcast plans to make its own, massive $60 billion bid for the lion's share of 21st Century Fox assets:

"Comcast Chief Executive Brian Roberts only plans to proceed with the bid if a federal judge allows AT&T Inc’s planned $85 billion acquisition of Time Warner Inc to proceed, the sources said. The U.S. Department of Justice has opposed the AT&T-Time Warner deal over antitrust concerns, and a decision from U.S. District Court Judge Richard Leon is expected in June."

By all accounts, AT&T is likely to defeat the DOJ in court, meaning Comcast's latest megamerger is likely to move forward. The bid is an effort to undermine a similar bid for Fox from Disney, a company Comcast has had an adversarial relationship with ever since executives rebuffed Comcast's $54 billion Disney acquisition offer back in 2004. And while this deal wouldn't include the Fox broadcast network or Fox News, it would include Fox's 30% ownership stake in Hulu (Comcast also owns 30%), it would include numerous U.S. and global operations as well as the lion's share of Fox's film properties.

That said, there's still cause for worry here. Comcast's conditions affixed to its NBC Universal merger just expired, giving it newfound freedom to do things like meddle with Hulu's competitive potential. Should Comcast also nab Disney's 30% stake in Hulu, the company will have full authority to try and hamstring Hulu's ability to disrupt Comcast's own streaming or traditional video services, which is a shame given that Hulu just figured out that it should aspire to something greater than being a glorified ad for traditional cable TV.

Comcast's explosive growth spurt comes as the company has not only successfully lobbied to kill net neutrality and consumer privacy protections, but is quietly securing a massive monopoly over broadband in many markets. At the same time, industry BFF Ajit Pai at the FCC is happily gutting decades-old media consolidation rules designed to protect smaller media outlets from exactly this type of rampant consolidation. For good measure, we're also watching as lobbyists dismantle both the FCC's and FTC's ability to hold Comcast accountable when it engages in anti-competitive behavior.

This provides the cable giant with ample leeway to use its combined domination of both content and broadband to hamstring competitors in an absolute ocean of creative new ways. If you thought the country was having any real conversation about the possible anti-competitive implications of this perfect storm of consolidation, monopoly dysfunction, and dismantled government oversight of telecom monopolies, you'd be wrong.

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Posted on Techdirt - 8 May 2018 @ 10:40am

Following Facebook, Verizon Quietly Backs Off Opposition To Modest California Privacy Rules

from the sunlight-is-the-best-disinfectant dept

If you missed it, large ISPs like Verizon, with the help of the Trump administration and GOP, worked to quickly kill FCC privacy protections before they could take effect last year. Those rules were arguably modest by any measure, simply requiring that ISPs transparently disclose what data is being collected and who it's being sold to, while providing users working opt out tools (or opt in tools if dealing with sensitive consumer financial data). Those rules, you'll recall, were only proposed after ISPs repeatedly made it clear they were utterly unwilling and unable to self-regulate on the privacy front.

ISPs like Verizon, AT&T and Comcast were given ample leeway on privacy for years. Our reward was covert efforts to track users around the internet without telling them, and repeated efforts to charge users more if they wanted to protect their own privacy. Large ISPs had every opportunity to avoid regulation and self-regulate. They showed us repeatedly this was beyond their capabilities. Limited broadband competition routinely protected them from any repercussions, and revolving-door regulators have now completed the circle of dysfunction.

Much like we're seeing on net neutrality, this hostility to real consumer privacy protections on the federal level resulted in multiple states devising their own consumer protections. Like in California, where lawmakers attempted to push a privacy law that largely mirrored the FCC's effort. And while Google, Facebook, Comcast, AT&T and Verizon will all breathlessly tell you they support meaningful privacy reform, the EFF documented in great detail how they worked together last year to quietly scuttle the initiative. Largely by lying about what it actually did:

"One of the most offensive aspects of the misinformation campaign was the claim that pretending to restore our privacy rights, which have been on the books for communications providers for years, would help extremism...In materials like this advertisement, the opposition lobby claimed that A.B. 375 would result in a deluge of pop-ups that consumers would have to click through, and that in turn this inundation would create a sort of privacy fatigue. Consumers would stop caring, and cybersecurity would suffer.

Comcast, Facebook, Verizon and Google all donated $200,000 each to help hamstring the effort. And while successful, they're now facing another push for a new, very similar initiative that should show up on California voter ballots this November. Again, despite industry face-fanning and pearl clutching there's not much that's controversial about it (you can read more about the act here), with the primary goal being transparency and ensuring consumers have the ability to opt out.

But when the Cambridge Analytica story broke, and actually caring about privacy became en vogue for a brief moment, the public spotlight forced Facebook to quietly slink away away from its opposition to the effort in California. Now Verizon, who is trying to make inroads in marketing via its Oath subsidiary (the combination of AOL and Yahoo), has also been forced to quietly back off opposition in the wake of media attention. A Verizon spokesperson makes it clear that, much like the net neutrality fight, the company's goal is to lobby for weak federal protections that pre-empt tougher state ones:

"Verizon has decided not to continue with the coalition so that we can focus our efforts on creating a national framework for privacy and related issues -- and not a state-by-state approach," a spokesman says."

Again, all of these giant companies will breathlessly tell you they support meaningful privacy protections for consumers. But the reality is that any effort to empower and inform consumers erodes revenues, since it will increase the chance that users opt out of data collection and monetization efforts. That's why no matter how frequently you'll see companies like Verizon and Facebook insist they're interested in "solutions" to the wild west that is currently consumer privacy, it remains routinely difficult to take them seriously in any meaningful capacity.

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Posted on Techdirt - 7 May 2018 @ 6:22am

Cord Cutting Is The Obvious Result Of A 70% Spike In Cable TV Prices Since 2000

from the duh dept

We've discussed time and time again how, when faced with an evolving video market, the broadcast and cable industry repeatedly decided to double down on bad ideas. While consumers increasingly lamented having to pay $130 per month for a massive channel bundles filled with sub-par content, the industry refused to offer serious a la carte options and then jacked up prices even further. When consumers began to complain about high costs and annoying ads, cable and broadcast executives responded by trying to stuff more ads into every viewing hour by speeding up or editing down programs.

So for anybody paying attention, the fact that cord cutting is expected to set records in 2018 shouldn't be particularly surprising. And it's equally unsurprising that a recent study by Kagan highlights how soaring cable TV prices are contributing to the cord cutting trend. The firm was quick to note how the average cable bill has increased in price by 74% since 2000, even adjusted for inflation. All while the average income saw either tepid growth or remained flat, as this Kagan chart highlights:

The firm noted how prices for multichannel packages have steadily risen from just below $60 a month in 2000 to close to $100 in the peak year of 2016, and that's not including the added costs these companies hide below the line via obnoxious hidden fees. Or the fact that most cable companies now charge you for everything from modem rental to the honor of being able to pay your bill in person or over the phone, resulting in compounded annual gross revenue for cable, satellite and telco pay TV platforms increasing at at a rate of 5.5% every year from 2000 to 2017.

It's only now that streaming has begun to reach critical mass that some cable giants have actually buckled to the call for cheaper, better options (AT&T's DirecTV Now, Dish's Sling TV). But there's still countless cable operators soldiering forth with rate hikes and a refusal to improve historically awful customer service -- as if the traditional cable TV cash cow is going to live forever. Many industry execs still honestly see cord cutting as a trend that will magically end once Millennials come to their senses, which is a painful misreading of the scenario.

Part of this confidence is because they have a fairly obnoxious plan b. Given the cable industry's growing monopoly over broadband, most of these companies will simply counter these losses with even bigger price hikes for broadband. Most of those are going to come in the form of arbitrary and unnecessary usage caps and overage fees. These are just glorified rate hikes on uncompetitive markets, but they have the added benefit of making it more expensive to stream for those looking to escape the stranglehold of their traditional cable provider.

And with the looming death of net neutrality, there will soon be an ocean of new "creative" tricks these companies will use to ensure that you remain tightly constrained inside their own massive media landscapes (be that Comcast NBC Universal, or AT&T Time Warner), and punished should you actually try to wander into greener, cheaper pastures.

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Posted on Net Neutrality Special Edition - 4 May 2018 @ 6:29am

Facebook Quietly Backs Away From Its Net Neutrality Killing 'Free Basics' Program Overseas

from the the-AOLification-of-the-internet dept

While Facebook professes to be a net neutrality advocate here in the States, their silence as Comcast, Verizon and AT&T have dismantled the open internet has long proven otherwise.

And overseas, Facebook has routinely undermined net neutrality -- at times under the banner of altruism. Thinking it could corner the ad market in developing nations, Facebook has been pushing for years something known as "Free Basics" under its Internet.org initiative. Under Free Basics, Facebook delivers users a free, AOL-esque walled garden version of the internet featuring content from Facebook-approved partners. But the program quickly came under fire by content partners who didn't like Facebook being the curator of what gets viewed. Others criticized the program for at one point banning encrypted content.

Countries like India ultimately wound up banning Free Basics as a violation of net neutrality, viewing the program as little more than glorified collusion -- since a cornerstone of the project involved Facebook determining which services users will be able to access. Users in these nations, meanwhile, began conflating "the internet" with Facebook itself, which is what Facebook obviously wanted, but which presented a whole host of new problems.

As Facebook saw heated opposition from Indian net neutrality activists, its response to the PR kerfuffle was pretty terrible. While it was abundantly clear the program held cornering developing ad markets as its primary agenda, Mark Zuckerberg proclaimed that net neutrality supporters worried about Facebook's plans were simply extremists who were hurting the poor. And at one point, the company launched a campaign that attempted to trick Indian citizens into rooting against their own best interests on this subject by spamming the government in opposition to real net neutrality.

Opposition to Facebook's version of the future has since spread to additional countries, and reports indicate that Facebook is slowly walking away from its Free Basics in a number of developing nations:

"Myanmar is not the only place where Free Basics has quietly ended. The program has been abruptly called off in more than half a dozen nations and territories in the recent months, according to an analysis by The Outline. People in Bolivia, Papua New Guinea, Trinidad and Tobago, Republic of Congo, Anguilla, El Salvador, and Saint Lucia have also lost access to Facebook’s free internet program. Additionally, Facebook was testing Free Basics service in Zimbabwe in mid-2016 in partnership with local telecom operator Telecel. The test program has yet to materialize into a wider roll-out."

The company continues to expand the program in some areas, but more and more frequently countries aren't appreciating that Facebook's effort to "help the poor" involves dramatically reshaping what the "internet" looks like, while putting Facebook in the unappreciated position of gatekeeper of acceptable internet content:

"The most concerning issue with Internet.org has been its unpreparedness to serve and protect the people it is helping come online for the first time. Nikhil Pahwa, a New Delhi-based activist who revolted against the Free Basics program in India, says part of the problem with Internet.org is that it is increasingly becoming a substitute for internet for people in countries such as Myanmar."

Effectively, Facebook’s Free Basics is shaping the internet experience of users — i.e., the services they can access, the services they cannot access,” Pahwa told The Outline, adding that this creates a filter bubble for users that influences their worldview. “You can see problems crop up in nations where Free Basics is operational and Facebook is dominant."

None of this is to say that Facebook's broader Internet.org initiative hasn't done some good work around the world. But as groups like Mozilla have long argued, if Facebook is so damn concerned about connecting poor people to the internet, it can always simply fund efforts to connect poor people to the actual internet.

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Posted on Techdirt - 3 May 2018 @ 6:25am

T-Mobile CEO Hallucinates Competitors In Bid To Sell Competition-Killing Sprint Merger

from the learning-from-history dept

Time and time and time again, U.S. telecom companies have promised us that better customer service, lower prices, and more competition is only possible if the latest industry mega merger is approved. But time and time again those promises not only don't materialize, but the deals wind up making an already broken market worse. As a result, the telecom sector sees historically awful customer service, higher prices, and all manner of additional problems ranging from broadband coverage gaps to net neutrality and privacy violations (both symptoms of limited competition).

Everybody's favorite villain, Comcast, is a direct result of mindless M&A mania where upgrades, customer service, and genuine innovation took a repeated back seat to growth for growth's sake. So is AT&T, who we've allowed to slowly but surely re-assemble itself in the wake of Ma Bell's 1982 breakup. And despite history being very fucking clear on the negative impact of telecom consolidation, here we are again bearing witness to the same, age old idiotic "synergy" claims as T-Mobile tries to sell the press and public on its planned $26 billion acquisition of Sprint.

As we noted previously this deal simply isn't necessary. Those pushing this merger like to pretend that Sprint was on the brink of collapse and simply couldn't survive without this merger. And while Sprint does have a heavy debt load and has been arguably incompetent on the branding and PR front, the company just announced what it's calling the "best financial results in company history."

There were numerous partnership and funding options that wouldn't have involved killing one of just four major competitors, and eliminating jobs for anywhere between 10,000 and 30,000 human beings. Eliminating one-fourth of the industry's major competitors simply reduces the incentive to genuinely compete on price. It's simply not debatable ( industry-funded think tanks are already busy trying to muddy the logic waters, though you'll note that even here the farmed enthusiasm is a bit more tepid than normal).

Trying to sell the deal, T-Mobile CEO John Legere spent much of this week trying to insist that reducing competitors somehow increases competition. To do so, the company tried to claim in an announcement that the public shouldn't worry, because somehow the combined Sprint T-Mobile would still have "7 to 8" big competitors to keep them in line:

"This isn’t a case of going from 4 to 3 wireless companies – there are now at least 7 or 8 big competitors in this converging market. And in 5G, we’ll go from 0 to 1. Only the New T-Mobile will have the capacity to deliver real, nationwide 5G,” added Legere. “We’re confident that, once regulators see the compelling benefits, they’ll agree this is the right move at the right time for consumers and the country."

That is, for lack of a more technical term, bullshit. Both companies are on record stating they don't need a merger to deploy 5G. And while there certainly are a number of scattered regional players and wireless MVNOs that offer tepid competition in several areas, they're far too small to apply any real downward pricing pressure on giants like AT&T, Verizon and SprinT-Mobile. AT&T and Verizon enjoy a monopoly over the business data service market that feeds tower backhaul, and AT&T, Verizon and T-Mobile collectively dominate the nation's limited spectrum holdings, the spectrum auction process, and all but own many state and federal regulators and lawmakers.

And while Comcast and Charter are both considering getting into the wireless sector, those WiFi-centric efforts lean heavily on Verizon Wireless' network, and none of the companies involved in those relationships want to encourage a real price war. It's also worth remembering that Legere spent most of last year mocking those efforts as "irrelevant" and destined for failure:

"Comcast’s Xfinity Mobile is “very irrelevant, and I assume that [Charter’s soon-to-launch mobile service] will be irrelevant squared,” Legere said. “The furthest thing from my mind is any concern about the impact of cable."

Now, with a mega merger to sell, Legere is nimbly pivoting on a dime to claim these "irrelevant" competitors will somehow keep the combined T-Mobile and Sprint on its best behavior. That's not how any of this works. As sectors consolidate and competition wanes the remaining companies always do their best to avoid genuine price competition, which is why the United States (and Canada) see some of the highest prices for mobile data in the developed world (OECD data). That we have to keep having this conversation is puerile and insulting.

Curiously, there's some rumblings out of the DOJ that Trump antitrust officials don't see as many problems with this merger as they do AT&T's $86 billion merger with Time Warner, which they're suing to block in court (and losing, by most accounts):

DOJ officials who believe that eliminating competitors somehow creates competition should probably go back and take a closer look at the DOJ's arguments when it blocked AT&T from acquiring T-Mobile back in 2011. The central tenet of their argument was that a reduction of genuine, large competitors by a fourth would dramatically harm consumers, and that logic remains historically justified. Blocking that deal encouraged T-Mobile to compete more intensely. And while price competition in wireless still tends to be somewhat theatrical in nature, T-Mobile went on to dramatically impact the industry for the better, helping drive the elimination of things like long-term contracts and annoying early termination fees, and encouraging a return to unlimited data.

As Canadians can attest, there's simply no good reason for letting an already marginally-competitive sector consolidate any further. Combining Sprint and T-Mobile won't create a stronger, more viable competitor for AT&T and Verizon, it will create an environment where the remaining carriers have less incentive to compete on price than ever before. Despite decades of evidence on this front, when it comes to mindless M&As we seem intent on ignoring the lessons of history.

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Posted on Techdirt - 2 May 2018 @ 11:54am

While Facebook Gets All The Hate, Verizon Continues To Show It's No Better, And Potentially Much Worse For Privacy

from the broader-context-please dept

Facebook certainly deserves ample criticism for its lax privacy standards and its decision to threaten news outlets that exposed them. That said, we've noted a few times now that the uneven press fixation on Facebook obscures the fact that numerous industries routinely engage in much worse behavior. That's particularly true of broadband providers (and especially wireless carriers), who routinely treat consumer privacy as a distant afterthought, with only a fraction of the total volume of media hyperventilation we saw during the Facebook kerfuffle.

Facebook's casual treatment of your data isn't some errant tech industry exception, it's the norm, making #quitFacebook an arguably pointless gesture if you still own a stock mobile phone. In the telecom industry, a disdain for consumer privacy is a cornerstone of their entire business model(s). Companies like AT&T and Verizon aren't just bone grafted to our government's domestic surveillance apparatus, they collect and sell everything from browsing to location data to absolutely anyone and everyone--with little to no real oversight, and opt out tools that may or may not actually work.

Verizon has been particularly busy on the anti-privacy front. You'll recall that the company was fined by the FCC for modifying wireless user data packets to track users around the internet without telling them. The company was engaging in this behavior for two years before security researchers even discovered it, and it took another six months of media criticism for Verizon to offer a simple opt out. Despite the wrist slap, a more powerful variant of this technology is still very much in play at Oath (AOL & Yahoo), Verizon's effort to compete with Google and Facebook in the media advertising wars.

Not long after that, Verizon played a starring role in gutting modest FCC privacy rules protecting consumers (spurred in part by Verizon's tracking tech). Those rules, which Verizon lobbyists dismantled last year, simply required that ISPs be transparent with what data they're collecting and who they're selling it to. When California tried to mirror the FCC's discarded privacy policies, Verizon, Facebook and Comcast lied to lawmakers, falsely claiming that modest privacy protections would harm children, increase internet popups, and embolden extremism. None of it was true.

More recently, Verizon has been facing numerous lawsuits over Yahoo hacks that exposed the data of roughly three billion consumers. And while this was before Verizon's ownership (Verizon wasn't informed of the hacks during negotiations, netting it a $350 billion discount), the company has since been actively trying to prevent customers from suing Oath (Yahoo) or Verizon over future breaches by using fine print to mandate binding arbitration:

"The new Oath terms of service "contain a binding arbitration agreement and class action and jury trial waiver clauses..., which are applicable to all US users," the terms say.

Congress has considered legislation to ban many mandatory arbitration clauses, but it hasn't followed through yet and the practice remains legal.

The AOL terms already contained a binding arbitration clause and class-action waiver before Verizon bought that company. But the Yahoo terms didn't previously contain such clauses."

Thanks to AT&T's Supreme Court victory in 2011 using contract fine print to erode consumer legal rights is now something we view as the norm. And while everybody can agree that the class action system has numerous problems, the system of binding arbitration is a terrible solution. Under binding arbitration, the arbiter rules for the company they work for the vast majority of the time, leaving consumers shit out of luck. While class actions often only net lawyers a nice new boat, they at least occasionally result in substantive change. Arbitration, in turn, is often more like consumer theater than justice.

The reality is that informed and empowered consumers are more likely to opt out of efforts to monetize their online behavior. And however breathlessly companies like Verizon and Facebook pretend to be dedicated to consumer privacy or policy solutions, they're going to fight tooth and nail against any policies -- even reasonable ones -- that could potentially hamstring that revenue. But however bad Facebook is and has been on privacy, Verizon routinely offers a master class when it comes to undermining efforts at anything even vaguely resembling a solution.

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Posted on Techdirt - 2 May 2018 @ 6:22am

Some Comcast Customers Won't Get The Latest Broadband Upgrades Without Buying Cable TV

from the utterly-Comcastic dept

As we've often noted, Comcast has been shielded from the cord cutting trend somewhat thanks to its growing monopoly over broadband. As users on slow DSL lines flee telcos that are unwilling to upgrade their damn networks, they're increasingly flocking to cable operators for faster speeds. When they get there, they often bundle TV services; not necessarily because they want it, but because it's intentionally cheaper than buying broadband standalone.

And while Comcast's broadband monopoly has protected it from TV cord cutting somewhat, the rise in streaming competition has slowly eroded that advantage, and Comcast is expected to see see double its usual rate of cord cutting this year according to Wall Street analysts.

Comcast being Comcast, the company has a semi-nefarious plan B. Part of that plan is to abuse its monopoly over broadband to deploy arbitrary and unnecessary usage caps and overage fees. These restrictions are glorified rate hikes applied to non competitive markets, with the added advantage of making streaming video more expensive. It's a punishment for choosing to leave Comcast's walled garden.

But Comcast appears to have discovered another handy trick that involves using its broadband monopoly to hamstring cord cutters. Reports emerged this week that the company is upgrading the speeds of customers in Houston and parts of the Pacific Northwest, but only if they continue to subscribe to traditional cable television. The company's press release casually floats over the fact that only Comcast video customers will see these upgrades for now:

"Speed increases will vary based on the Xfinity Internet customers' current speed subscriptions. Those receiving the speed boost will benefit from an increase of 30 to 40 percent in their download speeds. Existing Xfinity Internet and X1 video customers subscribing to certain packages can expect to experience enhanced speeds this month."

As is usually the case, Comcast simply acted as if this was all just routine promotional experimentation (an argument that only works if you're unfamiliar with Comcast's other efforts to constrain emerging video competition):

"We asked Comcast a few questions, including whether it will make speed increases in other cities contingent on TV subscribership. A Comcast spokesperson didn't answer, but noted, "we test and introduce new bundles all the time." The spokesperson also said that the speed increase for Houston is the second in 2018, after one in January. The Oregon/SW Washington speed increase is apparently the first one this year."

In a healthy market with healthy regulatory oversight, either competition or adult regulatory supervision would prevent Comcast from using its broadband monopoly to constrain consumer video choices. But if you hadn't noticed, the telecom and TV sector and the current crop of regulators overseeing it aren't particularly healthy, and with the looming death of net neutrality you're going to see a whole lot more behavior like this designed to erect artificial barriers to genuine consumer choice and competition.

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Posted on Techdirt - 1 May 2018 @ 7:50pm

Princeton Project Aims To Secure The Internet Of Broken, Shitty Things

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

Year after year, we're installing millions upon millions of "internet of things" devices on home and business networks that have only a fleeting regard for security or privacy. The width and depth of manufacturer incompetence on display can't be understated. Thermostats that prevent you from actually heating your home. Smart door locks that make you less secure. Refrigerators that leak Gmail credentials. Children's toys that listen to your kids' prattle, then (poorly) secure said prattle in the cloud. Cars that could, potentially, result in your death.

The list goes on and on, and it grows exponentially by the week, especially as such devices are quickly compromised and integrated into massive new botnets. And as several security experts have noted, nobody in this chain of dysfunction has the slightest interest in doing much about this massive rise in "invisible pollution":

"The market can't fix this because neither the buyer nor the seller cares. Think of all the CCTV cameras and DVRs used in the attack against Brian Krebs. The owners of those devices don't care. Their devices were cheap to buy, they still work, and they don't even know Brian. The sellers of those devices don't care: they're now selling newer and better models, and the original buyers only cared about price and features. There is no market solution because the insecurity is what economists call an externality: it's an effect of the purchasing decision that affects other people. Think of it kind of like invisible pollution."

One core part of the problem is that IOT device makers refuse to provide much control or transparency over what their internet-connected devices actually do once online. Often the tools and device interfaces provided to the end user are comically simple, providing you with virtually no data on how much bandwidth your devices are consuming, or what data they're transferring back to the cloud (frequently unencrypted). As a result, many normal people are participating in historically massive DDOS attacks or having their every behavior monitored without having the slightest idea it's actually occurring.

To that end Princeton's computer science department has launched a research program called the IOT Inspector they hope will provide users with a little more insight into what IOT devices are actually up to. The researchers behind the project say they spent some time analyzing fifty different common IOT devices, and like previous studies found that security and privacy in these devices was a total shitshow. Sending private user data unencrypted back to the cloud was common:

Unfortunately, many of the devices we have examined lack even these basic security or privacy features. For example, the Withings Smart Blood Pressure Monitor included the brand of the device and the string “blood pressure” in unencrypted HTTP GET request headers. This allows a network eavesdropper to (1) learn that someone in a household owns a blood pressure monitor and (2) determine how frequently the monitor is used based on the frequency of requests. It would be simple to hide this information with SSL."

As were devices that immediately began chatting with all manner of partner services whether the user wants them to or not:

Samsung Smart TV: During the first minute after power-on, the TV talks to Google Play, Double Click, Netflix, FandangoNOW, Spotify, CBS, MSNBC, NFL, Deezer, and Facebook—even though we did not sign in or create accounts with any of them.

Again, user control and transparency is almost always an afterthought. Obviously, the creation of some unified standards is one solution. As is creating routers and hardware that alert users to when their devices have been compromised. Smarter networks and hardware are going to need to be a cornerstone of any proposed solution, the researchers note:

We are experimenting with machine learning-based DDoS detection using features using IoT-specific network behaviors (e.g., limited number of endpoints and regular time intervals between packets). Preliminary results indicate that home gateway routers or other network middleboxes could automatically detect local IoT device sources of DDoS attacks with high accuracy using low-cost machine learning algorithms.

Of course better standards are going to need to be built on the backs of a joint collaboration between governments, companies, consumers and researchers. And while we've seen mixed results on that front so far, efforts like this (and the Consumer Reports' open source attempt to make privacy and security an integral part of product reviews) are definitely a step in the right direction.

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