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
So we've talked a bit about the privacy implications of smart toys, and the fact that people aren't exactly thrilled that Barbie now tracks your childrens' behavior and then uploads that data to the cloud. Like most internet-of-not-so-smart things, these toys often come with flimsy security and only a passing interest in privacy. As such we've increasingly seen events like the Vtech hack, where hackers obtained the names, email addresses, passwords, and home addresses of 4,833,678 parents, and the first names, genders and birthdays of more than 200,000 kids.
Unsurprisingly, the collection of kids' babbling while in the company of smart toys continues to ruffle feathers. This week, a coalition of consumer advocates including the Consumer's Union filed suit against Genesis Toys, the maker of two such toys, the My Friend Cayla doll and the i-Que Intelligent Robot. According to the full lawsuit (pdf), the toy maker is violating COPPA (the Childrens’ Online Privacy Protection Act of 1998) by failing to adequately inform parents' that their kids conversations and personal data collected by the toys are being shipped off to servers and third-party companies.
With the toys being marketed to "ages 4 and up" and being mostly used by kids under age 18, the lawsuit states the companies selling and collecting this toy data are violating COPPA. Under COPPA, companies gathering kids data have to provide notice to, and obtain consent from parents regarding data collection. They also have to provide parents tools to access, review and delete this data if wanted, as well as the parental ability to dictate that the data can be collected, but not shared with third parties. The complaint suggests neither Nuance or Genesis Toys are doing any of this.
And again, privacy is just part of the equation. There's also the fact that these toys just aren't all that secure. A report by the Norwegian Consumer Council (pdf) found that a lot of the data being transmitted by these toys is done so via vanilla, unencrypted HTTP connections that could be subject to man in the middle attacks. Reconfiguring the devices to create in-home surveillance tools was also "very easy and requires little technical know-how," according to the report.So again, much like all internet of things devices, companies were so excited to integrate internet connectivity, they effectively forgot about user privacy and security. Are we perhaps noticing a ongoing theme yet?
Earlier this year, AT&T announced that it planned to shell out $100 billion to acquire Time Warner. That comes on the heels of the company spending $70 billion to acquire DirecTV. Why is AT&T spending countless billions on content and a legacy satellite TV provider when the lion's share of the company's broadband network desperately needs upgrading? Because fixed and wireless broadband subscriber growth has slowed, and telco executives believe they need to turn to content and advertising (read: slinging videos at Millennials) to please investors.
Under fire for the anti-competitive repercussions of its latest deal, AT&T testified this week before the Senate Judiciary Subcommittee on Antitrust, Competition Policy & Consumer Rights. As you might expect, AT&T and Time Warner both breathlessly insist that there are absolutely no downsides to the companies' merger, adding the deal would be an incredible boon to consumers and the video market alike:
"Together, AT&T and Time Warner will disrupt the entrenched pay-TV models giving customers more options, creating more competition for cable TV providers,” AT&T CEO Randall Stephenson said.
“By joining forces, we will accelerate the development and delivery of the next generation of video services that provide consumers with greater choice, convenience, value, and affordability,” Time Warner CEO Jeff Bewkes told lawmakers in prepared testimony.
The problem is that's not really true. Most streaming providers are worried that AT&T, which just launched its new "DirecTV Now" streaming service, will make it harder than ever for streaming competitors to license the content (HBO, etc.) they need to compete. Similarly, many (including the outgoing FCC) are concerned that AT&T's decision to zero rate this DirecTV Now content (exempting AT&T's content from usage caps while still penalizing competitors) twists and distorts the open market. AT&T already effectively eliminated a TV market competitor when it acquired DirecTV. Now it's tilting the playing field unfairly in its favor.
These concerns received fleeting lip service at this week's hearing. Instead, the committee spent a significant amount of time listening to folks like Mark Cuban, who attended the hearing to lavish praise on AT&T's latest mega-merger:
“We need more companies ... with the ability to compete with Apple, Google, Microsoft, Amazon and Facebook. Delivering content to consumers in this app-driven world is not easy, it is very expensive and difficult. ... Alone, it will be very difficult, if not impossible for either AT&T or Time Warner to compete with any of the companies I've mentioned. Together it will still be difficult, but a combined entity at least gives them a chance to battle the dominant players in the marketplace and increase consumer choice and competition for consumer attention."
So one, AT&T is a massive telecom conglomerate that not only owns its own core and last mammoth nationwide network, but also is already the biggest TV provider in the country after its DirecTV acquisition. This scale provides AT&T immeasurable benefits in content negotiations, and the idea that it was in any way difficult for AT&T to compete in this space is laughable. That's before you even mention AT&T's incredible and often comedic lobbying influence on state and federal telecom and media policy. A helpless little daisy, AT&T is not.
And while DirecTV Now might bring some added streaming competition to the space, it's not like Apple, YouTube, Hulu, Sling TV, Sony, HBO and countless other companies aren't flooding into the streaming video space as well. The competition is already coming to this market. Another mega-merger doesn't help this competition, it actively harms it. AT&T is a company with a long, rich history of anti-competitive behavior and defrauding its own customers on multiple occasions. That it will use this expanded size and power in an anti-competitive fashion isn't theoretical. This is what AT&T does.
But zero rating is complicated. Understanding the perils of vertical integration and the threat of one company owning the content and the conduit is difficult. Realizing that AT&T all but owns state and federal government is inconvenient. As such, Cuban tried to trot out a somewhat bizarre little story in which he argues that the AT&T merger would be really wonderful for joe, beer-drinkin' consumer, because, uh, algorithms:
"I would also like to point out one other important element of consumer choice that an AT&T and Time Warner merger would improve.
Each of the largest content companies I have mentioned so far, Facebook, Google, Amazon, Microsoft and Apple present much if not all of their content algorithmically. As a Facebook user I don’t get to pick what content I get to see in my newsfeed. I can try to influence it, but Facebook algorithms control what I see.
In the future, it won’t be algorithms that choose what we see, our choices will be driven by some form of Artificial Intelligence learning from trillions of disparate inputs.
Meanwhile, for those of us who still enjoy our TV the old-fashioned way, on our couch, cold beverage in one hand and remote in the other, there is a lot to be said for having a company that can afford to continue to offer us that choice. As much of a geek as I am, I like having the choice of searching through a programming guide to see what’s on rather than an algorithm telling me what I should watch. I think a lot of consumers would like to see that choice continue as well."
So one, that entire story makes no goddamned sense. Because Apple, Google and Facebook use algorithms in their news feeds, it's a good idea to let a company with a massive history of anti-competitive behavior grow immeasurably larger? AT&T somehow will provide us with purer access to programming guides free of the nefarious influence of Silicon Valley artificial intelligence? That's so illogical I can't even deconstruct the point Cuban's trying to make. It's like arguing that forest fires are good because pineapples exist.
Granted we've noted a few times that while Cuban has a solid grasp of a number of issues, net neutrality, telecom and media issues aren't among them. As such, he should probably be the last person testifying on the subject before Congress. In fact in writing this piece, I stumbled upon something I wrote for Techdirt back in 2014 when (again) trying to highlight that Cuban doesn't really understand net neutrality:
"Of course Cuban has already made his fortune. Were we to take 1995 Mark Cuban (who was busy building Broadcast.com) and transplant his business into the modern era under AT&T, Verizon and Comcast -- you can be damn sure he'd be taking a very different approach to these issues. Cuban has spent a decade making it abundantly clear he doesn't understand net neutrality, the telecom market or the potential pitfalls of these new cap exempt business models. Perhaps we should put Mark Cuban, Donald Trump and all the rest of the billionaires with plenty to say but little actual understanding in charge of the telecom industry. At least we'd get some entertainment value out of the equation while the Internet burns.
Clearly I opened a portal to another dystopian dimension, and for that I'm truly sorry.
In 2014 Sprint owner Softbank gave up on its planned merger with T-Mobile after regulators at the DOJ and FCC made it clear they planned to block the deal. And, just like the blocking of AT&T's attempted T-Mobile merger, this wound up being a good thing, as it protected what passes for competition in the wireless space, driving T-Mobile to compete even more intensely. That said, Softbank CEO Masayoshi Son hasn't given up on a Sprint T-Mobile merger, back in August making it abundantly clear he'd be trying again should the FCC see a shift in leadership:
"There’s a key figure who will determine if Son makes another run at T-Mobile: the yet-to-be named new head of the FCC. If Son feels that person is more amenable to a combination to take on market leaders AT&T Inc. and Verizon Communications Inc., he will probably try again, said the people, who asked to not be identified because the matter is private."
Fast forward to this week, and Son appears to have found a ray of hope named Donald Trump.
Trump and Son met this week at Trump Tower in Manhattan, shortly afterwards announcing a "new plan" to bring $50 billion in investment and 50,000 new jobs to the United States. Trump was quick to proclaim on Twitter that this investment and job growth was solely thanks to his existence:
Masa (SoftBank) of Japan has agreed to invest $50 billion in the U.S. toward businesses and 50,000 new jobs....
In short, the $50 billion investment and the 50,000 jobs are largely fairy tale numbers wholly unrelated to Donald Trump doing much of anything. It's also worth noting that when asked, Son himself wasn't actually willing to specifically credit Trump with any of it:
"...The contours of the deal Trump announced Tuesday appear in line with the company’s previous investment plans. In October, SoftBank announced it would create a $100 billion fund – with the backing of Saudi Arabia – in a bid to become the “biggest investor in the technology sector,” Son said at the time.
Son on Tuesday did not say whether the new investment pledge was a result of Trump's victory, but he did say he was celebrating Trump's White House win.
"I just came to celebrate his new job,” Son said. “I said, ‘This is great, the U.S. will become great again.’"
So in short, Softbank's investment pledges have absolutely nothing to do with Trump, and were announced before Trump even won the election. Not that you'd know that by reading 90% of the news coverage about the plan. Meanwhile, where these 50,000 jobs will be coming from -- and whether they'll actually materialize at all -- is anybody's guess. The job growth certainly isn't happening at Sprint, where the company under Softbank ownership has been consistently laying off thousands of employees as it tries to trim $2.5 billion in operation expenses annually after years of continued missteps.
It's relatively clear Masayoshi Son is pining for an FCC that will let the company finally fuse Sprint with T-Mobile. And there's every indication he'll be getting his wish from the new FCC. Trump's telecom advisors are a who's who of industry-tied think tankers and lobbyists, all of whom have publicly stated the FCC should be hamstrung and defunded. One of them doesn't even believe telecom monopolies are real. Their selection for FCC boss, whoever it is, is extremely unlikely to support using regulatory authority to block mega-mergers, regardless of Trump's campaign promises to stop such deals.
While massive job creation promises are routinely bandied about in the run up to telecom mega-mergers, those promises never actually materialize. In fact the opposite happens as redundant positions are eliminated and customer support and service corners are cut to accommodate the debt taken on from the deals. Meanwhile, eliminating a major player in the wireless space results in consistently worse service and higher prices. This is, despite ample historical precedent, a lesson we're culturally unwilling to intellectually digest. Rinse, wash, repeat.
That said, this little public relations fracas was still a win for Trump and Masayoshi Son. Trump gets to falsely take credit for a several-month-old plan he had nothing to do with, and Son gets to fill Trump's head with the idea that if he supports his looming merger -- money, jobs and miracles will rain from the sky.
You might recall that during the fight over net neutrality rules, giant legacy ISPs (and the armies of think tankers, lobbyists and consultants paid to support their often flimsy arguments) repeatedly insisted that if net neutrality rules were passed, tubes would clog, innovation would die, and investment in broadband networks would shrivel up completely. There was no subtlety to these claims; ISP-loyal politicians and hired economists time and time again breathlessly insisted that net neutrality would be a disaster because nobody would be willing to keep building broadband networks.
In the year plus since the rules were passed, we've noted repeatedly how the ISPs' own earnings reports indicate this was never really true. Investment (at least in more competitive) areas has clicked along happily, and you'd be hard pressed to find a single major ISP that has refused to upgrade its network because of "regulatory uncertainty" surrounding the FCC's net neutrality rules. Granted, there are still major market problems caused by cable's growing monopoly in the wake of telcos leaving the rural broadband market, but these problems have absolutely nothing to do with net neutrality.
In fact, in some areas, we're seeing more investment than ever. Wireless providers certainly aren't restricting their spending as they buy spectrum and prepare to deploy massive fifth generation (5G) wireless networks. French ISP Altice has also been spending billions to gobble up ISPs here in the US (Cablevision, Suddenlink), and last week it issued a surprise announcement indicating that it planned to bypass less expensive DOCSIS 3.1 cable broadband upgrades -- and instead deploy fiber to the home service to the lion's share of the company's new American footprint:
"The company’s five-year deployment schedule will begin in 2017, and the company expects to reach all of its Optimum footprint and most of its Suddenlink footprint during that timeframe. Initial rollout markets will be announced in the coming months. In addition to delivering a superior customer experience for the long term, the new architecture will result in a more efficient and robust network with a significant reduction in energy consumption. Altice expects to reinvest efficiency savings to support the buildout without a material change in its overall capital budget."
So again, if net neutrality had made the US broadband regulatory environment so damn unpalatable, why would a French ISP be investing billions to upgrade its network to fiber to the home? Why would Comcast be happily deploying gigabit broadband across its entire footprint? Why would Verizon be promising to deploy FiOS to Boston? Why would Google and Facebook be investing in all manner of alternate broadband delivery ranging from millimeter wireless to drone?
Because the ISPs and their loyal PR foot soldiers were lying through their teeth about net neutrality's impact on broadband investment. Granted this may all be a moot point thanks to an incoming Trump-controlled FCC that wants to gut net neutrality rules entirely, but these distortions and falsehoods are worth remembering the next time we inevitably find ourselves back here once again trying to defend basic rules of a fair and open internet.
While T-Mobile has certainly brought some welcome changes to the wireless industry (including a CEO with a rare sense of humor), the consumer-friendly brand they've established has consistently fallen short when it comes to one major subject: net neutrality. The company lobbied and fought consistently against the reclassification of ISPs as common carriers and the creation of net neutrality rules. The operator then pissed off much of the internet when CEO John Legere mocked the EFF for raising questions about the misleading nature of the company's zero rating and throttling practices.
This week, the company again made its opposition to net neutrality clear. Speaking at a media and telecom conference, T-Mobile CFO Braxton Carter applauded the incoming President-elect Donald Trump, whose telecom transition team members have all made it abundantly clear that eliminating net neutrality rules and gutting the FCC as a consumer watchdog will be among their top priorities. This is, T-Mobile claims, going to be a real "positive" for the industry:
"It’s hard to imagine, with the way the election turned out, that we’re not going to have an environment, from several aspects, that is not going to be more positive for my industry,” Carter said in comments this morning at the 44th Annual Global Media and Communications Conference. “I think that it’s very clear that there’s going to be less regulation. And less regulation—regulation often destroys innovation and value creation."
Except of course that net neutrality rules exist to protect innovation from entrenched telecom monopolies. But Carter doubles down, insisting specifically that the elimination of net neutrality rules should provide "opportunity" for "significant innovation":
"Carter also specifically addressed the issue of net neutrality, arguing that the reversal of the FCC’s Open Internet rules would pave the way for additional innovation in the space. “It would provide the opportunity for significant innovation and differentiation,” Carter said of a telecom industry without net neutrality rules. “You could do some very interesting things” without net neutrality."
Carter appears excited about "deregulation" because it might lower T-Mobile's tax burden and increase its chances of merging or being acquired. But his excitement is shortsighted and fairly typical for executives in the telecom sector.
The problem is that in telecom, "deregulation" (of the sort promised by folks like Trump advisor Jeff Eisenach) doesn't actually mean straight deregulation. What it means in practice is pay-to-play regulation, where the biggest and most politically powerful companies (usually AT&T or Comcast) get to literally write the law. That's why you'll often see these folks breathlessly proclaim they adore "open markets," yet turn a blind eye when AT&T or Comcast write protectionist state law that hamstrings local communities and keeps competitors at bay.
In telecom, "deregulation" is all-too-frequently code for "let's let AT&T and Comcast decide what's best." That was the preferred mantra of former FCC boss Michael Powell (now the cable industry's top lobbyist), who also shared Jeffrey Eisenach as a transition team member. The end result of that administration was "deregulation" that wound up empowering AT&T and Comcast, making broadband less competitive and customer service worse than ever. We've apparently decided to collectively forget that.
As such, when your biggest competitor is AT&T, cheering for the one regulator that has tried to ensure a level playing field for smaller competitors seems a bit myopic. Remember it was the FCC and DOJ that blocked AT&T's attempted acquisition of T-Mobile, which ultimately resulted in T-Mobile being a more innovative, fierce competitor than ever before. Again, every indication coming from Trump's telecom transition team and the GOP is that they hope to completely defund and defang the FCC. That means more mergers, less competition, less innovation, and more net neutrality violations than ever before.
T-Mobile has repeatedly tried to downplay its opposition to net neutrality by claiming that the company is on the "right side of history" as it fights neutrality rules with broad, bipartisan support among consumers. But the company's enthusiastic support for the gutting of nearly all consumer protections in the broadband space make it clear, once again, the brand's dedication to consumers and "innovation" is entirely and unsurprisingly superficial.
Last month, we noted how the FCC had finally woken up from a deep slumber to realize that zero rating (an ISP exempting its own or a partner company's content from usage caps) can be anti-competitive. The FCC's net neutrality rules don't specifically ban zero rating, but the agency had said it would act on a "case by case basis" should the practice be used anti-competitively. But a year came and went, and the FCC consistently failed to act as ISPs from Comcast to Verizon began giving their own content an unfair leg up in the market.
That was until last month, when the FCC sent AT&T a letter warning it that exempting its DirecTV Now content from AT&T wireless usage caps raised "serious concerns" about the open internet. Apparently unfazed by AT&T's defense of its behavior, the FCC last week sent an additional letter to AT&T (pdf) saying it believes that AT&T's implementation of usage caps hurts competition:
"...Your submission tends to confirm our initial view that the Sponsored Data program strongly favors AT&T's own video offerings while unreasonably discriminating against unaffiliated edge providers and limiting their ability to offer competing video services to AT&T's broadband subscribers on a level playing field. We have therefore reached the preliminary conclusion that these practices inhibit competition, harm consumers, and interfere with the "virtuous cycle" needed to assure the continuing benefits of the Open Internet."
Again, why it took the FCC the better part of a year to realize this isn't clear, but the agency sent a similar letter to Verizon (pdf). In that letter, the FCC criticizes Verizon's "Free Bee" sponsored data service that lets competing content companies enjoy the same cap-exempt status Verizon's own content enjoys -- if companies are willing to pay a steep premium:
"Under either option for competing with Verizon' s Go90 or other affiliated edge services, unaffiliated edge providers appear to confront significant disadvantages when trying to compete with Verizon from the combined impact of Verizon's FreeBee Data 360 fees and zero-rating of its own Go90 offerings. We are therefore concerned that this combination could present anti-competitive effects."
That's great, FCC, we're so glad you could join the rest of us in realizing the obvious. But while the FCC's letters urge both AT&T and Verizon to offer up further justifications before December 15, there's no indication any FCC enforcement or punishment for these violations will survive the Trump administration. We've noted how all of Trump's telecom advisors not only have deep ties to the broadband industry, but have actively stated they want to gut net neutrality rules entirely in addition to hamstringing and defunding the FCC.
In fact Ajit Pai, a current Commissioner in the running for new FCC boss issued a statement (pdf) reminding the FCC that whatever it does can (and likely will) be undone by the new administration:
"Chairman Wheeler launched yet another broadside against free data for consumers, notwithstanding the objections of Republican commissioners. This end-run around Congress’s clear instruction is sad—and pointless. For any unilateral action taken by the Wireless Telecommunications Bureau at the Chairman’s direction in the next 49 days can quickly be undone by that same bureau after January 20, 2017."
So again, it's great that the FCC finally realized that using caps to give your own content an unfair market advantage is anti-competitive, but the enforcement (if you can call it that) comes too little too late for consumers, given the incoming administration has made every indication it intends to either refuse to enforce the existing rules, or work to scrap net neutrality protections entirely.
Canada's attempt to force Canadian cable providers to deliver cheaper, more flexible cable TV bundles appears to be a comedy of errors. Last year, driven by user complaints, the CRTC passed rules requiring Canadian cable companies to provide a $25 so-called "skinny bundle" of discounted TV channels starting March 1 of this year, and the option to buy channels individually (a la carte) starting December 1 (aka this week). Companies responded by first pouting, then by offering new "discounted" TV bundles so layered with hidden fees, surcharges, and caveats as to be effectively useless.
This week's deadline to offer a la carte TV channels doesn't appear to be going much better. Companies like Rogers, Shaw, and Bell are now allowing users the option to buy TV channels individually -- but they've again priced each channel high enough to make the option completely pointless. Under this new pricing paradigm, buying individual channels can cost you anything from $6 to $20 per channel. After having a little time to crunch the numbers, consumers were quick to complain to the BBC about the absurdity of the entire effort:
"Turns out, to add CNN and CP24 individually, Spitz would pay $14 a month instead of $15. That's only a $1 savings, and her mother would lose a handful of extra channels included in the theme packs.
"That's ludicrous; that's ridiculous," said Spitz.
But some industry experts are not surprised by the pick and pay prices. That's because, they say, TV providers are for-profit companies, and their main objective is to protect the bottom line.
"What did you really expect?" says telecom expert Gerry Wall.
Incumbent Canadian TV providers, as you also might expect, insist that offering "discounted" service that really doesn't provide any discount is the height of value, and that the way they've always done things (read: offering you a bloated, expensive bundle of channels you don't actually watch) is the best way to continue to do things:
"Rogers told CBC News that adding individual channels to a plan won't benefit everyone and that most customers instead opt for its bigger TV packages "which offer great value."
It said the cable company's standalone channel pricing is "reasonable and competitive."
Part of the problem is that the CRTC doesn't really have the authority or willingness to fully regulate rates, so it's demanding less expensive options for consumers -- but isn't really willing (or in some instances able) to hold companies accountable when they tap dance around the requirements. In a March interview with The Globe and Mail, CRTC boss Jean-Pierre Blais tried to downplay public criticism of the effort (and the CRTC's unwillingness to follow through) by claiming the goal was never to lower soaring cable bills:
"People may have thought, mistakenly, that the CRTC was going to reduce everybody’s cable bills – that’s not what we promised. We said we’re going to give you more choice,” Jean-Pierre Blais, chairman of the Canadian Radio-television and Telecommunications Commission, said in an interview."
But what people actually got was the illusion of more choice under what appears to just be regulation theater. Given the fact that streaming video competition (and by proxy lower prices and more choices) will be arriving whether these cable companies like it or not, the CRTC's effort could just be a giant waste of time. A better tack for regulators would be to focus not on trying to drag legacy TV kicking and screaming into the modern era, but to focus on improving broadband competition and obstacles (usage caps) to the rise of cheaper, better, and more flexible streaming TV alternatives.
We've noted several times that the cable industry is somewhat shielded from the rise of cord cutting because of its growing monopoly over broadband. You see, as AT&T and Verizon give up on unwanted DSL customers they don't want to upgrade (as part of a pivot into content and ads), there are now huge swaths of the country where users really only have one option for broadband above 25 Mbps: cable. Users fleeing neglected DSL lines sign up for cable, and because TV bundled with broadband is cheaper than broadband alone, users sign up for TV service they may not even want.
As this cable monopoly grows, these cable companies have less incentive than ever to compete on price across more than half of their footprint. And with ISPs literally writing state laws preventing public/private or community broadband, no market forces exist to prevent them from expanding the application of entirely unnecessary usage caps and overage fees. Most analyses overlook this, instead focusing on the scattered rise of Google Fiber and other gigabit deployments in highly-select areas.
One Wall Street analyst this week highlighted just how cushioned a company like Comcast really is when it comes to cord cutting. MoffettNathanson analyst Craig Moffett crunched the numbers and found that once you account for the higher costs you'll have to pay for buying broadband standalone, Comcast only really loses about $5.50 per month when a user cuts the TV cord:
"When a Comcast customer drops video, the MSO loses about $38 in contribution margin, Moffett estimates. But that customer ends up paying an extra $25 a month more for broadband when their bundling discount goes away. "Now, further suppose that half of those customers opt to upgrade to a higher speed tier at an average premium of $15 per month (implying a probability-weighted $7.50 benefit per cord-cutter)." The difference comes to $5.50.
Moffett's analysis isn't perfect and Comcast's losses are likely higher. He comes to that $5.50 number by assuming the departing customer upgrades to a faster speed, which really isn't necessary just for streaming Netflix. And it's not clear he's included the revenues Comcast makes on households paying rental fees for numerous cable boxes, or the fees Comcast hides below the line (like the broadcast TV fee). Still, the point remains that Comcast is arguably shielded from cord cutting because of the high prices it charges for broadband -- only made possible by limited broadband competition.
And Moffett doesn't even touch on the fact that Comcast can further recoup any cord cutting losses via usage caps and overage fees, something Moffett and other investors have long embraced given it lets an ISP charge significantly more money for the exact same service. Nor does Moffett highlight how Comcast further benefits by counting all competitor streaming traffic against the cap, while it's own streaming video service remains cap exempt.
All told, cable providers are now adding 99% of the quarterly net additions for new broadband subcribers each quarter, at the same time that the sector is consolidating at an incredible rate. And these companies continue to have almost comical control over state legislatures, often allowing them to literally write wish-list legislation further insulating them from competitive harm. And time and time again the industry, and the policy folks it employs en masse to pollute public discourse, intentionally conflate enabling this protectionist dysfunction as the "deregulation of free markets" (often with no penalty from an unskeptical press).
So yes, if you live in a major, relatively-affluent city or upscale broadband development your broadband options may be improving, if you're lucky. But across more than half of the country, users are actually seeing less broadband competition than ever before. And with Trump listening to telecom advisors that don't believe monopolies exist and are keen on gutting net neutrality and all regulatory oversight of said non-existing monopolies, you're potentially talking about millions of consumers looking at higher prices and worse customer service than ever before.
The solution, again, is fighting for better broadband on the local level. If you want better broadband, you need to get behind the push to eliminate protectionist state laws that restrict towns and cities from making local broadband infrastructure decisions for themselves. These laws, passed in roughly 20 states, not only prohibit towns and cities from building their own networks (even in cases where nobody else will), but they often hinder the kind of public/private partnerships that are becoming necessary to shore up competitive gaps caused by the broadband market failure the industry will tell you doesn't exist.
You might recall that earlier this year there was a massive backlash against Facebook for its often clumsy attempts to try and dominate emerging developing nation ad markets through what many saw as bogus altruism. The entire fracas bubbled over in India, where regulators banned Facebook's attempt to create a sort of zero-rated, net neutrality-violating walled garden of Facebook-curated content under the pretense of helping the nation's farmers. Facebook didn't help itself by trying to drum up fake support for its initiatives while labeling those worried about the plan as extremists.
Under the original idea, low-income families got access to a limited crop of Facebook-approved content; sort of a glorified AOL for poor people. However, net neutrality advocates and critics like Mozilla were (justly) concerned with this giving Facebook too much power over content, so they consistently argued that if Facebook was so desperately interested in helping the poor -- the company and its Internet.org initiative should focus on providing actual broadband connectivity.
Fast forward to this week, and Facebook appears to have dusted off its trousers and is preparing to try again. The company's Internet.org website this week announced that it would be bringing something called "Express WiFi" to India. The website is almost hysterically short on details, only offering explanations like this:
"With Express Wifi, we’re working with carriers, internet service providers, and local entrepreneurs to help expand connectivity to underserved locations around the world. We’re currently live in India, and are expanding to other regions soon."
Facebook not only isn't really explaining what Express WiFi is, they're not saying how much it costs, where it's available, or giving even the slightest technical explanation of how the system and software works. It could actually be a good thing. Or it might be terrible. No one can actually say based on the little info provided. The end result has been oodles of articles with promotional photos like this one highlighting Facebook's incredible altruism and showcasing Zuck as a man of the people. But not a single one could be bothered to explain how this new initiative differs from Facebook's last, arguably bungled Free Basics effort.
It took a little digging, but the company provided this still relatively ambiguous statement on Express WiFi:
Currently we are working with ISP and operator partners to test Express Wi-Fi with public Wi-Fi deployments in multiple pilot sites. This solution empowers ISPs, operators, and local entrepreneur retailers to offer quality internet access to their village, town or region.
Express Wi-Fi customers can purchase fast, reliable and affordable data packs via digital vouchers to access the Internet on the Express Wi-Fi network.
We focus on building a sustainable economic model for all stakeholders involved, so that local retailer entrepreneurs, ISPs, operators, and Facebook can continue to invest in and operate lasting connectivity.
We believe a sustainable economic model is the one which can scale to bring all of India online.
That's still kind of murky, and Facebook's refusal to explain precisely how this system will work (and just what its software at the heart of the initiative does, collects or delivers) raises a few warning flags, since you'd think Facebook would want to clearly ease the minds of net neutrality activists in India. Still, at least on the surface, it appears that Facebook may have actually listened to its critics that pointed out the best way to bring the internet to the poor -- is to actually bring the internet to the poor. Quite a novel idea.
President-elect Donald Trump's promise to "drain the DC swamp" has become a bit of a running gag as his administration plugs a wide variety of lobbyists and cronies into key cabinet positions. Telecom is certainly no exception, with Trump appointing a number of telecom sector lobbyists and allies to guide telecom policy and help select a new FCC boss. One of these picks doesn't believe telecom monopolies exist. None of them can actually admit the broadband market isn't competitive. And all of them have made it abundantly clear that they intend to roll back net neutrality and effectively gut the FCC from the inside out.
Trump completed a telecom sector trifecta of anti-net neutrality advisors this week, with the selection of American Enterprise Institute think tanker Roslyn Layton. Layton joins Jeffrey Eisenach (a long-standing Verizon consultant) and Mark Jamison (a former Sprint lobbyist) to form a perfect circle of industry allies -- all of whom are on record opposing not only net neutrality, but nearly every FCC effort to make the broadband sector more competitive. All three have been visiting fellows over at the American Enterprise Institute, which takes money from large telecom providers in exchange for muddying the discourse waters.
Over at the AEI blog, Layton has consistently made her disdain for net neutrality very clear. Like so many broadband industry allies, Layton insists that net neutrality protections for consumers aren't necessary, and that the concept is all some kind of secretive cabal on the part of Netflix to ride incumbent ISP pipes for free:
"Using their own definitions, however, companies such as Netflix hijack the language of net neutrality to lobby for regulatory favors. They want the government to mandate that transit costs they pay for today become free. In the offline world, such a deal would mean that retailers could not negotiate agreements with their suppliers or even where products could be placed on shelves.
This idea that net neutrality is a phantom problem and mostly about somehow secretly giving Netflix free bandwidth is a ridiculous idea we've debunked time and time again. Current FCC Commissioner Ajit Pai, among the finalists to lead the next FCC, has tried to claim net neutrality is some kind of unholy Netflix cabal for years. Why the disdain and bizarre focus on Netflix? Incumbent cable companies loathe Netflix for its support of net neutrality, opposition to usage caps, and the erosion of their legacy TV subscriber base, so they work pretty tirelessly to smear the company as often as possible via proxy policy voices.
Blaming everything on Netflix helps incumbent broadband ISPs (and their allied think tankers, consultants, and lobbyists) avoid two glaring truths: one, that net neutrality is a symptom of the disease that is limited broadband competition, but if you admit the broadband market isn't competitive, then you have to actually do something about it; and two, that net neutrality has broad, bi-partisan support among the public. Pretending net neutrality is solely about giving Netflix "free stuff" is a handy narrative that obfuscates both truths.
Like net neutrality, these violations are just another symptom of the lack of broadband competition, and the bad behavior on the part of incumbent ISPs has been fully apparent to anybody paying attention. But according to Layton, these privacy rules were just "partisan" gamesmanship, and utterly unnecessary because ISPs weren't doing anything wrong:
"Chairman Wheeler’s three years at the FCC have broken records in partisanship, with more votes along party lines for rulemaking than previous commissions combined. Consider the recent online privacy rulemaking, which came about only because the FCC’s Open Internet rules reclassified Internet broadband under Title II, giving FCC new authority to regulate Internet privacy. Simply stated, the FCC rulemaking was not born out of any concluded necessity."
Yes, the FCC has long split along partisan lines, quite often on issues (like net neutrality) that shouldn't be partisan. Under Wheeler, that was largely thanks to Commissioners Ajit Pai and Mike O'Rielly, who voted down nearly every consumer-benefiting policy the FCC tried to enact. That includes the duo voting down every single attempt to hold AT&T accountable for outright fraud, whether that involved AT&T ripping off programs for low income families, turning a blind eye to abuse of IP Relay systems intended for the hearing imparied, or intentionally helping crammers rip off AT&T customers by making fraudulent charges on bills harder to detect.
Under the guidance of Layton, Eisenach and Jamison, you can expect every effort to hold incumbent ISPs accountable for bad behavior to evaporate. Gone will be the FCC's net neutrality rules. Gone will be the agency's new privacy protections. Gone will be efforts to shore up broadband competition. In addition to selecting an FCC boss that will be sure to avoid admitting any substantive faults on the part of incumbent ISPs, you can expect a rewrite of the Communications Act in 2017 with a full focus on hamstringing the FCC's ability to protect consumers while dramatically slashing its funding.
This tends to get lost among farmed think tank pie charts and misleading arguments from dollar-per-holler economists and fauxcademics, but boiled down to their purest essence, these positions are about one thing and one thing only: protecting giant incumbent ISP revenues. This isn't really about deregulation -- given that these same folks are generally ok with awful regulation, just as long as it's AT&T, Verizon and Comcast writing the law. And the ultimate irony remains that this gutting of all popular, bipartisan consumer protections will be conducted under the false banner of "populist reform."
We've been discussing how despite all of the "populist" rhetoric on the Trump campaign trail, the President Elect has nominated several cozy telecom industry insiders to guide his telecom policy and select a new FCC boss. Both Jeffrey Eisenach and Mark Jamison have lobbied and worked for large ISPs, spending most of the last decade vehemently fighting against any and every consumer reform in telecom. Both have made it abundantly clear they not only want to roll back net neutrality and new broadband privacy rules passed under current boss Tom Wheeler, but they want to dismantle the FCC entirely.
With every indication that the government will be significantly more friendly to telecom giants in the new year, Wall Street has quickly gotten to work giddily daydreaming about mergers that were previously unthinkable in the space. Most commonly that involves predictions that Sprint will finally merge with T-Mobile (blocked under the current FCC because it would have reduced overall wireless competitors), or that Comcast and Charter will try to buy either Sprint or T-Mobile as part of a broader cable industry attempt to push into wireless.
But in a research note to investors this week, UBS analyst John Hodulik dreamed notably larger, arguing that the incoming Trump administration could possibly even allow a merger between telecom giants Comcast and Verizon:
"Densification of wireless networks required to meet the needs of video-centric subscribers increases synergies of cable-wireless combinations and provides the springboard for 5G-based services," he proclaims. "A roll-back of Title II re-classification could further increase incentives for cable," he adds, casually citing the likely dismantling of net neutrality and the FCC under Trump.
He put forth a number of models that include Dish fusing with T-Mobile or other variations. But he noted that a Comcast or Charter merger with Verizon would create "significant synergies" and "integrated products" while being "accretive to revenue and EBITDA growth."
While a Comcast Verizon merger may create "significant synergies" in the eyes of Wall Street, it could be downright fatal for broadband consumers. Verizon FiOS is among the only real competition Comcast sees along the east coast; so much so that the region is the only part of the country Comcast is afraid to expand its unnecessary usage caps into for fear of competitive repercussions. Eliminating that competition not only would result in caps and higher prices, but less motivation than ever for Comcast to improve its abysmal customer service.
Now it's entirely possible that Verizon and Comcast don't want to merge, but it's clear that Wall Street sees a huge new wave of consolidation looming for the already uncompetitive broadband industry all the same. Since Trump's telecom advisors don't believe telecom monopolies exist, believe that regulatory oversight of said nonexistent monopolies should be virtually nonexistent, and can't even acknowledge that the sector's competitive shortcomings are real -- what could possibly go wrong?
Trump, of course raged, against megamergers on the campaign trail to drum up populist support, not only claiming he'd block AT&T's $100 billion acquisition of Time Warner, but claiming he'd somehow dismantle the already merged Comcast NBC Universal. Based on his telecom advisors' own words and policy positions, there's virtually no chance of either actually happening. In fact, Wall Street, Trump's own advisors, and most of the telecom sector clearly expect the exact opposite.
Between the Trump "populists" realizing they've been taken for a ride, and the net neutrality activists annoyed at the demolition of broadly-popular net neutrality rules and other broadband consumer protections, we're looking at quite a storm of megamerger dysfunction in the new year.
For some time now the trend du jour among many media outlets has been to ban news comments -- then insult reader intelligence by proclaiming this is being done out of a deep-rooted love of "conversation" and "relationships." You see, these websites aren't banning comments because they're too lazy or cheap to weed out spam and trolls, but because they love you. These sites aren't outsourcing all human interactivity to Facebook because bean counters can't monetize quality on-site discourse in a pie chart, they're doing it because they care so very deeply about their community.
Why, oh, why can't you people understand that giving the middle finger and a shiny new muzzle to your entire readership is an act of love?
With this being the intellectually-stunted direction of the entire online media sector, it's kind of refreshing to see websites that actually try to solve problems and give a flying damn about quality on-site community. Case in point: albeit overshadowed by some notable downsizing at the outlet, Canada's The Globe and Mail this week announced that the website will be trying something new: acknowledging that ye olde, maligned news comment section is worth saving, while building a new system that leans on the community itself to keep discourse spam-free and relatively civil:
"Our new platform asks users to review other comments made on the site before posting their own. Each comment is reviewed by the community for quality and civility. This peer-to-peer moderation process incentivizes users to be more respectful to each other regardless of how different their opinions may be.
The decision to adopt Civil Comments was made after an eight-week trial that ran on the Politics section of our website. We noticed that the number of comments for that section remained stable during the test period while the percentage of comments that were either rejected or flagged dropped significantly, pointing to an overall uplift in the quality of conversations."
Shockingly, during the Globe and Mail's trial, they found that the very same communities most of these sites claim are utterly irredeemable and untameable, actually participated in working to make the comment section better:
"We understand how passionate our users are and we welcome different views and opinions. But we also recognize that sometimes things can get out of hand.
We also believe that the vast majority of our community knows how to play fair. In fact, our trial showed that, with a few exceptions, our readers were willing to adopt this new approach in order to elevate the tone of the debate within comments. We were thrilled to see that."
That shouldn't really be surprising. We've noted time and time again that it doesn't really take much effort to improve comment discourse, and that the real problem was that websites weren't even god-damned trying. In fact, one study showed that just having someone from the website occasionally show up and treat commenters like human beings had a profound impact on the quality of the comment section. Imagine what you could actually accomplish if you threw even a modest amount of time and money at the issue?
But then again, many websites aren't giving up on comments because it's really all that hard to save them, they're giving up because it's just easier and cheaper to ignore these users completely, even if on-site conversation increases impressions and time spent on-site. The reality is that many editors and websites just really like the idea of returning to the bygone era of letters to the editor where they get to control the direction of public discourse, even if that ignores the very bidirectional nature of the internet itself. They also can't admit they like having corrections to story errors in not quite such a conspicuous location.
In reality, the push to kill news comments is largely thanks to laziness and a desire for less public transparency. Editors can't admit this, so instead we get obnoxious missives claiming that entire user bases are being gagged out of a deep-rooted love of engagement. Hopefully more sites will follow The Globe and Mail's lead and try a little something called actually giving a damn.
For some time now we've warned how the FCC's decision to not ban zero rating (exempting some content from usage caps) was going to come back and bite net neutrality on the posterior. Unlike India, Japan, The Netherlands, Norway, Chile, and other countries, the FCC crafted net neutrality rules that completely avoided tackling the issue of usage caps and zero rating. Then, despite ongoing promises that the agency was looking into the issue, the FCC did nothing as AT&T, Verizon and Comcast all began exempting their own content from usage caps while still penalizing competitors.
Fast forward to this week, and AT&T has delivered what may very well be the killing blow to net neutrality thanks predominantly to the FCC's failure to see the writing on the wall.
AT&T this week is launching its new "DirecTV Now" streaming video service. According to the full AT&T announcement, the service offers various packages of streamed TV content ranging from $35 to $70 per month. Thanks to AT&T's looming $100 billion acquisition of Time Warner, AT&T's even throwing in HBO for an additional $5 per month, the lowest price point in the industry. Though a bit hamstrung to upsell you to traditional DirecTV (two stream limit, no 4K content, no NFL Sunday Ticket, no DVR functionality), all told it's a fairly compelling package for cord cutters.
But somewhat buried in AT&T's announcement is the long-expected confirmation that this new service won't count against usage caps if you're an AT&T wireless subscriber:
"And, if you’re an AT&T Mobility customer, DIRECTV will pick up the tab for data to help you achieve all your binge-worthy goals. Data Free TV means you won’t use your AT&T mobile data for watching DIRECTV NOW or FreeVIEW in the App. Fullscreen will also cover your data for streaming in the Fullscreen App on the AT&T mobile network."
For consumers who have no idea what zero rating or net neutrality even is (read: most of them), this sounds like a great idea. Most don't know that usage caps are an entirely-arbitrary construct completely untethered from network or financial necessity. As such, they believe they're getting something for free. This collective illusion means fewer annoyed users, which means less political pressure on the FCC, which is why the FCC failed to act. The problem, as we've noted time and time again, is that AT&T is violently distorting the open market and giving its own content a distinct and decidedly unfair market advantage.
Because most consumers either aren't bright or informed enough to understand this doesn't mean it's not happening all the same.
In addition to existing offerings by Dish (Sling TV) and Sony (Playstation Vue), the "over the top" market is about to get flooded with an absolute torrent of live TV streaming competitors including Apple, YouTube, Hulu, and Amazon. Ideally, these services would all compete with DirecTV Now based on quality and pricing. But under AT&T's new zero rating umbrella, all of those services will count against AT&T's usage caps, while DirecTV Now won't. Owning the pipe and the content will protect AT&T from the full brunt of increased competition in the space.
This is precisely the sort of "new normal" AT&T has spent the last decade trying to build, and exactly the sort of future net neutrality rules were supposed to help us avoid. And while the current Wheeler-led FCC recently finally acknowledged that it now understands this sort of behavior is anti-competitive, it's too little, too late. There's every indication that Trump's new FCC intends to not only gut net neutrality, but the FCC entirely. Trump's telecom transition team is filled to the brim with telecom-sector cronies who can't even admit telecom monopolies are real. Large ISP executives and investors are thrilled.
With no (or unenforced) net neutrality rules and a toothless FCC, you can expect all of the incumbent broadband ISPs to follow AT&T's lead, while folks like Trump telecom advisor Jeffrey Eisenach regurgitate telecom sector think tank pieces trying to claim that zero rating is a huge boon to consumers. These are men and economists for hire who'll breathlessly inform you they adore "free markets" and open competition, while simultaneously working to thwart competition at every turn -- whether it's dismantling the level streaming playing field with zero rating, or letting telecom giants literally write abysmal telecom law.
Those who have actually paid attention to net neutrality realize this may very well be the beginning of the end for the idea -- or at best a very long, dark and unfortunate detour off of the path -- with the ultimate irony being that because zero rating is seen as little more than "free stuff" by many misinformed consumers, net neutrality's death knell will arrive to thunderous public applause.
Since around 2013 or so, Comcast has been injecting warning messages into user traffic streams. Sometimes these warnings are used to notify a customer that their computer may have been hacked and is part of a botnet. Other times, the warning messages inform users that they've (purportedly) downloaded copyrighted material as per Comcast's cooperation in the entertainment industry's "six strikes" Copyright Alert System (CAS), a program that pesters accused pirates until they acknowledge their villainy and receipt of "educational" materials on copyright.
More recently, Comcast has used the system to urge customers to upgrade to a newer modem, or to warn users in capped markets that they're about to reach their monthly usage allotment and will soon be paying overage fees:
While Comcast's efforts here may be well-intentioned, the act of fiddling with user traffic and injecting any content into the user data stream has long been controversial. Pretty much like clockwork over the last three years, you see stories popping up every few months or so explaining how letting such a fierce opponent of concepts like net neutrality fiddle with user traffic just isn't a particularly smart idea. Users have also consistently complained that there's no way to opt out of the warning messages.
But in addition to being annoying and a bad precedent, many think Comcast's efforts on this front open the door to privacy and security risks. iOS developer Chris Dzombak, for example, penned a blog post last week explaining how getting broadband users used to this level of
popup pestering by their ISP opens the door to hackers to abuse that expectation and trust via man-in-the-middle attacks:
"This might seem like a customer-friendly feature, but it’s extremely dangerous for Comcast’s users. This practice will train customers to expect that their ISP sends them critical messages by injecting them into random webpages as they browse. Moreover, these notifications can plausibly contain important calls to action which involve logging into the customer’s Comcast account and which might ask for financial information.
Any website could present its users an in-page dialog which looks similar to these Comcast alerts. The notification’s content could be entirely controlled by criminals hoping to harvest users’ Comcast account login information. This would give an attacker access to users’ email, which is a gateway to reset the user’s passwords on most other sites — remember, most password recovery mechanisms revolve around access to an email account.
Each time this subject pops up, Comcast's engineering folks are quick to point out that this is all perfectly ok because the company filed an informational RFC (6108) back in 2011 explaining what the company was up to. Usually this results in media outlets quieting down for a while until somebody new discovers the popups. But Dzombak is quick to correctly note that filing an RFC isn't some kind of get out of jail free card for dumb ideas:
"Comcast has submitted an informational RFC (6108) to the IETF documenting how this content injection system works. This appears to be a shady effort to capitalize on the perceived legitimacy that pointing to an RFC gives you.
First, let me point out that just publishing a memo that says you plan to do something, doesn’t mean that the thing you’re doing is acceptable.
Second, RFC6108 does not address this concern whatsoever. There’s a short section about security considerations, which largely boils down to this guidance: “…the notification must not ask for login credentials, and must not ask a user to follow a link in order to change their password, since these are common phishing techniques. Finally, care should be taken to provide confidence that the web notification is valid and from a trusted party, and/or that the user has an alternate method of checking the validity of the web notification. …"
In short, that puts the onus on customers to know that these popup notifications should not ask for login information. But most users simply aren't going to know that, and would be easily fooled by a phony popup that mirrors this dialogue but redirects users to a malicious third-party website asking for their user credentials. This is just a snippet of HTML on an unencrypted website; there's no magic bullet way of being sure the web notification you're viewing "is from a valid and trusted party." Comcast told Dzombak his points are fair on Twitter last month, but still hasn't seriously addressed the problem.
Comcast has your e-mail address for notifications. There's really no reason to fiddle with user traffic. It's a horrible precedent that's not only annoying, but a potential privacy risk. Fortunately the problem may self-resolve as Comcast can't inject the messages into encrypted streams -- and encryption use overall is on the rise. Still, it's still not a particularly great precedent to let a company with a long, proud history of fighting net neutrality fiddle with data streams, however purportedly noble the intention.
We've noted consistently how the medical industry has become a hotbed of ransomware attacks thanks to too many incompetent IT administrators, and too many hardware vendors for which security is a fleeting afterthought. In fact, hospitals are now seeing more than 20 ransomware attacks a day; attacks that in many instances have forced the cancellation of scheduled surgeries and wreaked havoc on the day-to-day operations of many in the healthcare sector.
But security incompetence isn't restricted just to the healthcare industry. Last week, the San Francisco mass transit system learned this the hard way when hackers effectively took over transit systems used by the San Francisco Municipal Transit Agency, infecting them with ransomware and refusing to return control unless the city was willing to pay $73,000 in bitcoin. The hack hasn't just disabled the city's transit systems, but apparently has crippled the SF MTA's payroll systems, email servers, Quickbooks, NextBus operations, various MySQL database servers, and staff training and personal computers for hundreds of employees.
All told, it's believed that hackers compromised about 2,112 of the 8,656 computers attached to the SF MTA's network. As a result, the city had to simply unlock all turnstiles and let riders ride the system for free as it tried to climb out from underneath the mess:
Like most ransomware attacks, the SF MTA is being told to make a payment to an anonymous bitcoin wallet if they want the key to decrypt compromised data on its hard drives:
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We just got done noting how despite all the hype surrounding Google Fiber and similar initiatives, the cable industry's monopoly over broadband service is growing larger than ever. Incumbent telcos don't want to upgrade their DSL customers across huge portions of their networks, effectively giving cable broadband less competition than ever. At the same time, we've noted how Trump's telecom transition team is thus far comprised of telecom sector cronies that not only can't admit the broadband market isn't competitive, but are eager to demolish all regulatory oversight of these anti-competitive carriers.
It doesn't take a whole lot of insight to see the problem with that scenario, yet here we are -- once again -- having this conversation anyway. Apparently, it's somehow hard to understand that giving incumbent ISPs control of the very agency tasked with regulating them doesn't end well for consumers, small businesses, or innovative new startups.
"Most of the original motivations for having an FCC have gone away. Telecommunications network providers and ISPs are rarely, if ever, monopolies. If there are instances where there are monopolies, it would seem overkill to have an entire federal agency dedicated to ex ante regulation of their services. A well-functioning Federal Trade Commission (FTC), in conjunction with state authorities, can handle consumer protection and anticompetitive conduct issues."
Again, so we're clear, that's a lobbyist tasked with deciding the future of the FCC declaring that telecom monopolies not only aren't real, but also that the FCC technically shouldn't exist. Most of our readers are well aware of the fact that most broadband markets suffer from a duopoly logjam, where their choices are overpriced cable broadband service, or DSL services that offer circa 2003 speeds and 2016 prices. And again, as we noted recently, cable's monopoly is only growing as companies like AT&T and Verizon give up on fixed line broadband and shift their attention to higher-growth advertising and content markets.
To deny these realities borders on outright delusion. But time and time again, we've seen how incumbent ISPs (and the loyal sycophants they use to bend government to their will) are utterly incapable of even admitting the U.S. broadband market isn't competitive. If you can't admit this lack of competition, you're certainly not going to be able to understand the steps necessary to fixing it. Gutting most regulatory oversight, demolishing net neutrality, and dismantling the FCC's new privacy rules won't somehow magically result in telecom utopia.
This is a line of fantasy the incumbent ISPs (and their various, well-funded policy tendrils) have been mainlining into the public discourse for the better part of the last twenty years despite a parade of evidence to the contrary. A major reason Comcast and AT&T are abysmal companies isn't because the FCC tries to protect consumers. It's because gentlemen just like Eisenach and Jamison spent the lion's share of the last twenty years denying there's a problem while actively trying to prevent the agency from doing its job. They then clap and dance like school children when the dysfunction they built by hand suddenly manifests.
None of this is to say the FCC doesn't do stupid things, shouldn't and couldn't be reformed, or in many instances pared back. And Jamison's certainly correct that partisan patty cake is a problem at the agency that can and does result in inconsistent progress (even though partisan infighting is often intentionally used by companies to sow division on non-partisan issues like net neutrality). But reform is a far cry from what Jamison is proposing. What Jamison wants is to dismantle the FCC completely and shovel any outstanding responsibilities to the states:
"What would we do without an FCC? Any legitimate universal service concerns could be handled by others: States can subsidize network access as they see fit, the Department of Health and Human Services can incorporate telecommunications and internet into its assistance to low-income households, and the FTC and states can handle consumer protection and ex post regulation."
Right, but if you know anything about the telecom market at all, you know that state legislatures are beholden to incumbent broadband providers to an even more comic degree. Incumbent ISPs, with the help of groups like ALEC and lobbyists like Jamison, quite literally write state telecom law. That's why twenty states have passed laws, written by ISP lawyers, hamstringing their citizens' ability to build their own networks or strike public/private partnerships in case of market failure. This corruption is why AT&T is able to try and sneak competition-killing measures into unrelated traffic laws. That's why states like West Virginia are an absolute telecom shit show dominated by broken monopolies Jamison pretends don't exist.
Many Trump supporters will try to point out that current FCC boss Tom Wheeler was a former wireless and cable lobbyist we all expected nothing from, but were pleasantly surprised by. But Wheeler was an enigma, and he isn't like Jamison or Eisenach. His lobbying for the wireless and cable sectors occurred when both industries were pesky upstarts. His documented positions were also vastly less extreme. He wasn't stumbling about proclaiming that the agency he was about to be employed by shouldn't exist, or denying fundamental realities like the existence of telecom monopolies. And Jamison and Eisenach are on record criticizing nearly all of Wheeler's policies, especially net neutrality.
Consumers tired of awful broadband should be bored to tears by the parade of ISP lobbyists, think tankers, lobbyists, consultants and other mouthpieces who endlessly insist government telecom oversight never works -- then set about spending millions of dollars and decades to ensure it can't. The FCC, under both parties, certainly has a long history of dysfunction that needs fixing. But anybody that actually thinks that dismantling regulatory oversight of the nation's broken broadband duopoly is a panacea has been fed a line of stale bullshit. When you put the foxes in charge of the hen house you don't get better eggs -- you get a bloodbath and a call to Comcast customer service. Why exactly is this such a difficult lesson for us to learn?
from the my-smart-toaster-just-destroyed-the-internet dept
For much of the last year, we've noted how the rush to connect everything from toasters to refrigerators to the internet -- without adequate (ok, any) security safeguards -- has resulted in a security, privacy and public safety crisis. At first, the fact that everything from Barbies to tea kettles were now hackable was kind of funny. But in the wake of the realization that these hacked devices are contributing to massive new DDoS botnet attacks (on top of just leaking your data or exposing you to hacks) the conversation has quickly turned serious.
Security researchers have been noting for a while that it's only a matter of time before the internet-of-not-so-smart-things contributes to human fatalities, potentially on a significant scale if necessary infrastructure is attacked. As such, the Department of Homeland Security recently released what they called "strategic principles" for securing the Internet of Things; an apparent attempt to get the conversation started with industry on how best to avoid a dumb device cyber apocalypse.
Most of the principles are simple common sense, such as recommending that companies, oh, actually think about security a little bit during the product design phase. Other principles are a bit ironic given the government's behavior on other fronts, including the recommendation that companies implement encryption at the processor level for devices like the iPhone:
"Use hardware that incorporates security features to strengthen the protection and integrity of the device. For example, use computer chips that integrate security at the transistor level, embedded in the processor, and provide encryption and anonymity."
Again though, most of the recommendations are painfully basic, including actually "understanding what consequences could flow from the failure of a device," ensuring devices are more quickly and automatically updated, and engaging in "red teaming exercises" where employees probe devices for vulnerabilities before launch. Still, just getting some of this stuff in writing isn't a bad idea, given that most of the new IoT DDoS malware relies on something as stupid as not changing default login credentials. So there is value in just establishing some kind of core best practices (apparently incompetent) companies can look to.
As such, the DHS is clear that this is just a "first step":
"These non-binding strategic principles are designed to enhance security of the IoT across a range of design, manufacturing, and deployment activities, and include relevant suggested practices for implementation. It is a first step to motivate and frame conversations about positive measures for IoT security among IoT developers, manufacturers, service providers, and the users who purchase and deploy the devices, services and systems. "
The problem of course is that voluntary guidelines are no guarantee that the companies involved will actually adhere to them. After all, these are companies (and IoT evangelists) that were so keen on selling hardware that they couldn't be bothered to do the bare minimum to secure their products or acknowledge this rising, obvious problem. As a result, you have hardware like the Jidetech 720p WiFi enabled security camera, which security researcher Rob Graham noted this week can be hijacked by malware and participate in a botnet in all of five minutes after being unboxed:
"An additional market failure illustrated by the Dyn attack is that neither the seller nor the buyer of those devices cares about fixing the vulnerability. The owners of those devices don't care. They wanted a webcam — or thermostat, or refrigerator — with nice features at a good price. Even after they were recruited into this botnet, they still work fine — you can't even tell they were used in the attack. The sellers of those devices don't care: They've already moved on to selling newer and better models. There is no market solution because the insecurity primarily affects other people. It's a form of invisible pollution."
That's certainly not going to be good news for the regulation phobic, but Schneier argues the alternative is, quite literally, chaos:
"Regardless of what you think about regulation vs. market solutions, I believe there is no choice. Governments will get involved in the IoT, because the risks are too great and the stakes are too high. Computers are now able to affect our world in a direct and physical manner."
One problem of course is that U.S. regulation certainly won't help deter the rest of the world from creating internet-connected devices that can wreak havoc on vital infrastructure. There's also the very real concern that federal regulations would be crafted poorly, restricting sector innovation or consumers' freedom to tinker with their own device. In fact, many of these devices have such abysmal interfaces and control systems that hacking and modifying them is in some instances the only path to actually securing them and controlling what traffic is being sent over the network.
As such, IoT regulation is going to be a debate that rages for several years, when it's not entirely clear we have several years to waste. In the interim, the only recourse left to consumers continues to be to establish smart security in your own home and business, and continue to name and shame IoT vendors that clearly prioritized profits over human lives and the health of the internet at large.
We've noted a few times that the whole net neutrality debate truly started back in 2005, when then AT&T CEO Ed Whitacre proudly proclaimed that he wasn't going to let Google "ride his pipes for free." While AT&T's rhetoric has mutated slightly over the years, its core objective has remained the same: use its monopoly over broadband to extract unnecessary "troll tolls" from competitors, giving its own services an unfair advantage. It's precisely this kind of behavior that triggered the creation of net neutrality rules in the first place; an effort that took more than a decade of fighting tooth and nail to come to fruition.
And yet here we are a decade later, with the entire concept of net neutrality in the United States about to implode in truly spectacular and depressing fashion (assuming you like markets that function properly).
We've been talking about how AT&T intends to exempt its upcoming "DirecTV Now" streaming service from the company's own, arbitrary usage caps -- while still penalizing competing services. In other words, if you use AT&T's TV service you won't run into caps, throttling, or surcharges. But use a competitor and you will be penalized, whether that's Netflix or instructional videos from a non-profit or educational institution. This is precisely why people urged the FCC to join countries like India, Japan, Norway and The Netherlands and ban zero rating entirely. The FCC didn't listen.
But last week the FCC appears to have woken briefly from its year-long slumber on the subject; long enough to pen a letter to AT&T informing them that the agency had finally realized that this sort of behavior was horrible for the streaming video market:
"In the letter to AT&T from the FCC's Jon Wilkins, the agency states that this behavior "may obstruct competition and harm consumers by constraining their ability to access existing and future mobile video services not affiliated with AT&T."
"It is not difficult to calculate usage scenarios in which an unaffiliated provider's Sponsored Data charges alone could render infeasible any third-party competitor's attempt to compete with the $35 per month retail price that AT&T has announced for DIRECTV Now," the letter said. "Unaffiliated video providers not purchasing Sponsored Data would likewise face a significant competitive disadvantage in trying to serve AT&T Mobility's customer base without zero-rating."
AT&T responded in a letter back to the FCC This week (pdf), claiming that giving its own content an unfair market advantage is going to be really wonderful for consumers:
"These initiatives are precisely the kind of pro-consumer challenges to cable that the Commission heralded in approving AT&T's acquisition of DIRECTV...DIRECTV’s sponsorship of that content through Data Free TV allows DIRECTV to better compete against the cable incumbents by ensuring that its subscribers receive the mobile video experience they increasingly demand in the most consumer-friendly manner possible.
Sure, unfairly distorting the market so your content and services get a leg up on competitors is great for AT&T, but it comes at the cost of dismantling the level streaming video playing field. Of course that has been AT&T's goal all along. All of the lawsuits, misleading rhetoric, and farmed studies have always been about one thing for AT&T: protecting its ability to abuse its stranglehold over the broadband last mile to unfair advantage. Calling this molestation of functional markets a consumer benefit only adds insult to obvious injury.
Amusingly, AT&T also tries to tell the FCC that it's not a big deal that it's giving its own content an unfair advantage, because other companies can get the same priority treatment -- if they're willing to pay AT&T for the privilege:
"The suggestion that Data Free TV creates “significant disadvantages” for online video distributors who wish to reach AT&T’s wireless subscribers is likewise off-base. Any unaffiliated content provider can participate in AT&T’s Sponsored Data program on the same terms and at the same rate as DIRECTV, and the sponsored data rate is as low as the market based rates AT&T currently offers even to wireless resellers who commit to significant purchase volumes."
That's AT&T intentionally pretending that it doesn't own DirecTV, if you're playing along at home. Sure, you can get the same exact deal as AT&T's own company gets, but you have to pay a premium to do so. But that again distorts the streaming video market, given that large companies are far more likely to be able to afford AT&T's troll toll than startups, non-profits, or other competitors. There's simply no planet where what AT&T's doing shouldn't be seen as anti-innovation and anti-competitive.
And while it's nice that the FCC at least woke up a little bit to the threat of usage caps and zero rating, this entire mess is, in large degree, thanks to the FCC's failure to craft tougher net neutrality rules. The agency ignored net neutrality advocates and didn't ban zero rating outright. And despite claiming it would take a "case by case" approach to anti-competitive behavior on this front, the FCC turned a blind eye while Comcast, Verizon and AT&T all began taking advantage of the omission to give their own content a leg up. Now, it's incredibly unlikely we'll see actual FCC enforcement on this subject anytime soon, if ever.
It seems possible the FCC expected it would have time to examine the issue further under a Clinton administration. But with Trump's surprise win of the Presidency, it's not only likely that anti-competitive abuses of zero rating will never be banned, Trump's FCC transition team is giving every indication that they intend to dismantle the net neutrality rules we do have, entirely. With no hyperbole intended, you're witnessing the death of net neutrality, and it's arriving not with a bang but with a whimper, some smug AT&T platitudes, and the thunderous applause of a misled populace that thinks it's getting something for free.
from the this-muzzle-shows-how-much-I-love-you dept
For a while now the trend du jour in online media is to not only block your readers from making news story comments, but to insult their intelligence by claiming this muzzling is driven by a deep-rooted love of community and conversation. NPR, for example, muted its entire readership because, it claimed, it "adored reader relationships." Reuters and Recode, in contrast, prevented their own users from speaking on site thanks to a never-ending dedication to "conversation." Motherboard similarly banned all on-site reader feedback because it greatly "values discussion."
There's a number of reasons to ban comments, but few if any have anything to do with giving a damn about your community. Most websites, writers and editors simply don't want to spend the time or money to moderate trolls or cultivate local community because it takes a little effort, and quality human discourse can't be monetized on a pie chart. Instead, it's easier and cheaper to simply outsource all public human interactivity to Facebook. In addition to being simpler, it avoids the added pitfalls of a public comment section where corrections to your story errors are posted a little too visibly.
Few outlets can actually admit any of this, so instead we get bizarre platitudes about how moving bi-directional website interactivity backward is some kind of ingenious media evolution. Case in point: IDG last week joined the fun and announced that all of its media outlets (Macworld, NetworkWorld, PCWorld, etc.) would be removing news comments moving forward. According to the company, this change is a reflection of IDG's ongoing commitment to feedback:
"At IDG, we’ve always valued and welcomed feedback from our readers, and that’s something that will never change. What is changing, however, is one facet of how we get your feedback.
Again, nothing quite says we "welcome feedback" like preventing all public, on-site feedback. Just like other news outlets, IDG insists that shoving interested community members over to social media is the same thing as retaining an on-site community:
"This change was made for a couple of important reasons. First, more and more of you are already communicating with us, and with one another, via social media, where our editors and reporters are posting content and interacting with readers throughout the day.
Second, while we’ve always valued comments, we’ve also had to deal with the reality of managing spam and policing inappropriate comments—comments that don’t reflect the professional nature of our audiences and diminish the value of community interaction. Moving the discussion to social media obviates those issues."
Well for one, this idea that managing spam and trolls is some kind of sisyphean impossibility is nonsense. You'll find countless websites (this one included) where spam and trolling is minimized and public interactivity is still protected (often by the community itself). In fact, some studies have suggested that just having website employees show up and give a damn can have a dramatic, positive impact on your local community. If you see consistent trolling and spamming in news comments it means somebody, somewhere doesn't give a shit. Pretending otherwise is a cop out your readership can see through.
This pretense that social media interactivity is the same as more niche on site conversation is also problematic. As feedback is offloaded to social media, we're seeing an overall reduction in transparency when it comes to news reader interaction. Many social media users exist in cordoned off areas where they only have a limited view of the conversation (protected Tweets, etc), which harms transparency. But that's the whole point for many editors: a return to the "letters to the editor" era where you get to control the conversation, even if it comes at the cost of users spending less time on your website.
All of that said, stand still so I can kick you repeatedly in the shin out of my deep-rooted love of your ability to walk.
Trump this week formally selected two staunch opponents of net neutrality to oversee the incoming President's FCC transition team. Economist Jeff Eisenach and former Sprint Corp lobbyist Mark Jamison both have deep-rooted ties to the broadband sector, and both played major roles in helping the industry fight passage of the U.S.'s net neutrality rules last year. We had already noted that incumbent ISPs like AT&T, Verizon and Comcast have been getting excited by the possibility of a hamstrung FCC and the roll back of numerous consumer-friendly policies made under the tenure of outgoing FCC boss Tom Wheeler.
Eisenach, formerly a consultant for Verizon and a think tanker over at the American Enterprise Institute, testified as an "objective" expert in a 2014 Senate Judiciary Committee hearing on net neutrality. There, Eisenach boldly declared that "net neutrality would not improve consumer welfare or protect the public interest." Similarly, in an AEI blog post last year, Eisenach again proclaimed that net neutrality doesn't help consumers, isn't necessary, and is little more than just "crony capitalism":
"Despite what you may have heard, net neutrality is not about protecting consumers from rapacious Internet Service Providers (ISPs). It would not make broadband more available in rural America, or lower prices for small businesses. And it has nothing to do with protecting free speech or dissenting voices. Net neutrality is crony capitalism pure and simple – an effort by one group of private interests to enrich itself at the expense of another group by using the power of the state."
For somebody who has supposedly made an entire living discussing the telecom sector, that's a staggering misrepresentation of the concept of net neutrality. As our readers know, the telecom market suffers painfully from limited competition, resulting in some of the highest broadband prices in the developed world (OECD data) and some of the worst customer service in any sector. Eisenach is of the vein of telecom-friendly allies that willfully ignore this fact in order to justify further sector deregulation.
And while deregulation can be a useful tool in healthy, functional markets that truly suffer from government over-reach, in the telecom sector (where incumbent ISP think tankers like Eisenach have polluted intelligent discourse) deregulation has an entirely different meaning. For most of these folks, deregulation quite literally means letting giant duopolists quite literally write telecom law. In telecom, we've discussed how this form of deregulation (time and time and time again) only makes the already broken telecom market worse for consumers and innovation.
Net neutrality, however imperfect the rules wind up being, is at least an attempt to create some layer of protection for consumers against incumbent ISPs looking to abuse their monopoly over the last mile. Both Eisenach and Jamison have made careers out of not only ignoring the lack of telecom sector competition, but the fact that net neutrality has broad, bipartisan support among consumers. It's worth noting that Eisenach isn't just tasked with spearheading Trump's telecom transition, he's in the running for the top FCC spot himself.
And it's not just net neutrality Eisenach would dismantle. Under Eisenach's outdated policies, gone too would be the FCC's recently passed privacy rules, which ensure consumers are clearly informed of what data is collected and who it's sold to, while ensuring ISPs provide users with working opt-out tools. In fact, the very FCC itself is likely at risk, as the GOP has made it abundantly clear that it plans to completely rewrite the Communications Act with an eye on one thing: ensuring the FCC lacks the funding and authority to effectively protect consumers from dominant, incumbent broadband providers.
Appointing two telecom-sector cronies to guide the FCC runs in stark contrast to Trump's claims that he'd "drain the swamp." Defanging the FCC so companies like Comcast grow even more powerful would be a crushing blow to consumer welfare. And the erosion of popular net neutrality rules would be a kick to the gut of the supposed "populist" rhetoric at the very heart of the Trump campaign.
"These things are connected due to TD's perceived pro Hillary bias. It might not be a lot but it is definitely there."
I wrote this article, don't like Hillary, don't support a huge swath of her positions, and didn't vote for her.
So if somebody is detecting "pro hillary bias" coming from me just because I'm pointing out the awful choices Donald Trump is making (running in viciously-stark contrast to his pre-election promises), that's entirely cognitive dissonance occurring in their own head.
I think we do a pretty good job here of looking beyond partisan patty cake and calling a spade a spade, regardless of what color-coded jumpsuit the person in question is wearing.
After 16 years of writing about telecom I have a real nose for this bullshit, as it gives off a very specific odor. This sort of disinformation works incredibly well. These tactics have done real damage in terms of ISPs being able to pass state laws that hamstring towns and cities' ability to make their own local broadband infrastructure decisions.
I think you'll start seeing a push this direction. In large part because many telcos are giving up on residential DSL, meaning that the incumbent cable providers are only going to get stronger and have a broader monopoly.
They really like to light up already buried fiber in a single housing development, then insist the entire market has "launched." There's a few areas (North Carolina, Austin) where they're really working because they've been forced to, but by and large these deployments are just cherry picking a few small locations.
Depends. Fiber has faster top speeds upwards of 1 to 10 Gbps, much faster than cable or DSL. It's also cheaper to maintain and more reliable that coax or DSL. But it also depends on how much speed you need. For many, 25 to 100 Mbps is more than enough (for now).
I've followed this industry for most of my adult life and I can't remember EVER seeing an ISP actually lower your bill in exchange for having data collected and monetized. It just doesn't happen, there's no competitive incentive.
Basic privacy rules is not "strict regulation." As it stands, the FCC is simply asking for clear transparency on what's collected and working opt out tools. They're also looking to ban privacy as a luxury option. Until we get real broadband competition, regulatory meddling is part of the game. It comes down to what kind of regulation you want in telecom: regulation serving YOU, or regulation written by AT&T and Comcast that kicks your ass.
Please note that when someone criticizes Russia, it is not automatically an endorsement of anything the United States does. That's phony logic. One can easily believe both countries have a strong genetic disposition to bullying and jackassery.
I find this amusing as well. Even Comcast has realized that offering half-hearted excuses only makes things worse, so they've been expanding caps without giving any justification at all (because there aren't any).
"I was right, still right, and going to continue being right until we are all dead of old age, still begging for regulation, any regulation, and have faith that the very organization causing this problem will somehow solve it?"
Right, like when the FCC blocked AT&T from acquiring T-Mobile, resulting in a huge burst of new competition from the surviving T-Mobile, ultimately revolutionizing S.O.P. in the wireless sector.
Speaking of old age, "all regulation is automatically bad" is an overly-simplistic mantra that's grown long in the tooth. In the real world, people have to actually stop, think, learn, and consider the merits or drawbacks of each instance of regulation separately.
I know that's fatiguing for those looking for intellectual shortcuts, but that doesn't make it any less true.