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Posted on Techdirt - 13 July 2018 @ 1:33pm

After AT&T Jacks Up Prices Post Merger, DOJ Decides To Appeal Court Loss

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

AT&T recently defeated the DOJ's challenge to their $86 billion merger with Time Warner thanks to a comically narrow reading of the markets by U.S. District Court Judge Richard Leon. At no point in his 172-page ruling (which approved the deal without a single condition) did Leon show the faintest understanding that AT&T intends to use vertical integration synergistically with the death of net neutrality to dominate smaller competitors. In fact, net neutrality was never even mentioned at the multi-week trial.

The trial did a wonderful job showing how modern antitrust law does a dismal job policing companies that dominate both the conduit to the home (wireless, wired connection) and the content running over it. And shortly after Leon signed off on the deal, AT&T got right work... being AT&T.

The company had made repeated promises before, during and after the trial that the merger would only result in price reductions and other wonderful things for consumers. But with the ink barely dry on the deal, AT&T quickly began raising rates on its streaming video services, eliminating promo offers providing free HBO to its wireless customers, jacking up the price of the company's unlimited data wireless plans, and imposing bogus new fees on those same subscribers. Most of these moves were expected as AT&T tries to recoup some of the monumental debt incurred by its endless quest to grow ever larger.

Initially, the DOJ stated it wouldn't appeal its court loss, even though Leon's myopic ruling opened the door to the idea. But the DOJ clearly sees something in AT&T's recent moves that gives it additional ammunition for another shot at the merger, so it's appealing the judge's ruling to the United States Court of Appeals for the District of Columbia Circuit according to a DOJ filing (pdf).

AT&T, for its part, doesn't seem particularly worried and believes the merger is a done deal:

"We think the likelihood of this thing being reversed or overturned is really remote,” Mr. Stephenson told CNBC Friday in an interview at Allen & Co.’s annual Sun Valley, Idaho, media conference. “The merger is closed. We own Time Warner."

That may or may not be true. Antitrust law has been so weakened over decades that the DOJ spent most of the first trial narrowly confined to strict corridors of economic theory as it tried to prove the obvious: AT&T's ownership of Time Warner will result in AT&T jacking up licensing costs for must-have content like CNN and HBO for its video (traditional cable and streaming) competitors. Patchy antitrust laws ill-suited for the mega-Comcast era aren't magically being fixed before the next legal battle, meaning it's pretty likely the next round won't go much better for the DOJ than the first.

That said, AT&T's price hikes do provide some additional ammunition. The DOJ might also want to actually mention net neutrality this go round. The agency likely avoided the concept the first time around because it didn't want to emphasize that while it was suing AT&T to "protect consumers" (though Trump's disdain for CNN and Rupert Murdoch's opposition to the deal for competitive reasons are just as likely motivators), another arm of the government (Ajit Pai's FCC) was busy eroding net neutrality rules making it easier than ever for AT&T to behave anti-competitively.

If you've watched AT&T do business for any more than five seconds, it's obvious the death of net neutrality is the lynch pin for AT&T's anti-competitive ambitions moving forward. While certainly a bit off the traditional antitrust track, at least mentioning that fact at some point during the trial might just be a good idea for the DOJ during the next round.

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Posted on Techdirt - 13 July 2018 @ 6:21am

The Cable TV & Broadband Sector Has A Nasty Billing Fraud Problem

from the sleazy-surcharges dept

As we've well discussed, the broadband and TV sector not only has some of the worst satisfaction scores in modern history. A lack of real competition has long allowed the industry to double down on all manner of bad behavior, whether that's net neutrality and privacy violations, or just unprecedentedly-awful customer service. But in recent years the industry has developed another nasty habit: billing fraud involving everything from falsely signing customers up for services they never ordered to entirely bogus fees designed to let companies falsely advertise lower rates.

T-Mobile was accused last year of signing users up for services they neither wanted nor ordered. Centurylink has similarly found itself in hot water for the same thing on a larger scale, the company now facing lawsuits in more than a dozen states for the practice. Washington State also recently sued Comcast, noting that the company not only routinely signs its customers up for a "Service Protection Plan" they never ordered, but consistently misrepresents what the plan actually does. You may or may not notice a pattern here.

Now Cox Communications, the nation's third-largest cable provider, is being accused of the same thing. A company whistleblower has accused company employees of repeatedly... you guessed it... fraudulently signing customers up for services they never ordered to nab bonuses they didn't actually earn:

Speaking only to the I-Team, two whistleblowers are convinced some Cox Communications sales reps in Northern Virginia are cashing in by signing up customers for services they didn't authorize. Why? To reach monthly bonuses of $12,000 or more.

"How far they're going for a commission payout, to affect thousands of people, it's a heinous, greedy act," said former Cox Communications employee Anna Wilkinson.

Wilkinson, a former sales rep, claims to have notified her bosses at Cox but says nothing changed.

That last bit, where the employee informs management and nothing changes, is par for the course in such stories. In the CenturyLink example above, a whistleblower states she brought the fraudulent behavior to company leadership and was promptly fired for it. The company then launched an investigation into itself and found, miraculously, that it had done absolutely nothing wrong. Lawsuits in numerous states, however, continue.

Also a recurring theme: complaints are routinely made to the FTC but pretty rarely result in action, especially if the company in question is a larger, deeper-pocketed or politically-powerful potential litigant. That is, you'll recall, the same FTC that's supposed to protect us all from net neutrality violations in the wake of the neutering of federal net neutrality law and FCC authority over such companies by the Trump administration.

Of course ripping off customers via erroneous subscriptions to never-ordered services is just part of the problem. The TV and telecom sector also has a nasty habit of imposing all manner of bogus fees to customer bills. Fees that are completely made up and buried below the line for one misleading purpose: to falsely advertise a lower rate at the point of sale, then jack up your monthly bill once you've already had services installed. And again, you'd be pretty hard pressed to find a regulator or lawmaker from either party willing to do much about it.

On the TV side of the equation, this is likely only to result in greater cord cutting as users flock to cheaper, less dysfunctional streaming competitors. But given the rise of regulatory capture and waning competition in the broadband sector, it's a problem that's pretty clearly not going away anytime soon.

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Posted on Techdirt - 12 July 2018 @ 10:44am

The FCC's Sneaky Plan To Make It Easier To Ignore ISP Complaints

from the nothing-to-see-here dept

From real news to fake news then back again. The FCC this week was slated to vote on some seemingly insubstantial changes to the way the agency fields consumer complaints, but journalists and consumer advocates appear to have derailed the plan. It began when a few Senators expressed concern that the agency was subtly changing the wording to its consumer complaint process, potentially making it easier for the agency to ignore them entirely:

"As the chief communications regulator, the FCC plays a critical role in ensuring consumers -- including families, small businesses and struggling Americans -- get fair and honest treatment from their service providers. We worry that the proposed change signals that the FCC no longer intends to play this role, and will instead simply tell consumers with limited means and time that they need to start an expensive and complicated formal legal process."

As it stands, consumers have two options if they want to file a complaint about their ISP or cable company with the FCC. They can either file an informal complaint, which is free, or they can file a formal complaint, which requires a $225 fee and begins a long, court-like process that involves oodles of paperwork and numerous hearings. For obvious reasons most consumers don't select the latter. In fact, during the net neutrality repeal fight only one consumer actually bothered to even file a truly formal complaint, though that complaint does a pretty stellar job explaining why the net neutrality repeal was terrible (pdf).

In short, subtle wording changes by the agency reduced the likelihood that the FCC would have to take informal complaints seriously, forcing consumers toward a formal filing and the costly $225 fee to begin any meaningful process. When initial news outlets reported on the story, they incorrectly implied that the $225 for a formal complaint was new. Pai's staff was quick to pounce on those incorrect headlines to insist numerous media reports were "fake news":

Berry's denial quickly got outlets like the Washington Post to issue stories "debunking" the previous stories, parroting Berry's claim that nothing was actually changing (though it's worth noting that the Post had to later walk back the headline below claiming such). Berry, as you can imagine, really liked that:

The problem: consumer advocates like Free Press then clearly spelled out precisely what language was being changed, and why the Post was wrong to believe the FCC's claims at face value:

While minor (for example the term "disposition" is fiddled with in footnotes), many of the changes did indeed reduce the FCC's obligation to take consumer complaints seriously and intervene:

As the day wore on, tech journalists were again reporting that yes, the FCC did appear to be subtly tinkering with rules surrounding complaint handling to make it easier to ignore your complaints (again, unless you're willing to pay $225, file lots of paperwork and attend hearings). By day's end, the Washington Post received leaked word from the agency that it would be scrapping the change-that-supposedly-wasn't-a-change after "political backlash":

"The Federal Communications Commission has dropped the parts of its proposal dealing with informal complaints, according to multiple people familiar with the matter. The move comes after Democratic FCC Commissioner Jessica Rosenworcel requested the provisions be struck. Several officials cited the political backlash over the issue as a reason the FCC will not vote on those provisions Thursday, with one official saying the proposal on informal complaints was never a “conservative plot” intended to harm consumers. The officials spoke on the condition of anonymity to discuss internal agency deliberations."

But this morning, the Post was then told that the agency might be including the language after all:

Whatever the outcome, it highlights how paying attention to often wonky policy really does matter. Pai, a telecom policy wonk since his days working at Verizon, has spent the last year building the agency he envisions: namely one that sits on its hands while giant ISPs dictate most major policies, leading us down the miraculous path to supposed telecom Utopia. Pai's Title II repeal already gutted much of the FCC's authority over ISPs, and it's unclear how many other revisions and rule changes he's shoveled through for similar effect. Whoever winds up replacing Pai will have their work cut out identifying and reversing many of these changes, if they're reversed at all.

Meanwhile, it should probably go without saying that an agency that has completely made up supporting data for its net neutrality repeal, and made up a DDOS attack in an incredibly bizarre attempt to downplay the "John Oliver effect," probably shouldn't be giving lectures on "fake news" (whatever the hell that means) anytime soon.

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Posted on Techdirt - 12 July 2018 @ 6:26am

Ajit Pai's Cure For The 'Digital Divide' Looks Suspiciously Like A Giant Middle Finger

from the ill-communication dept

FCC boss Ajit Pai likes to repeatedly proclaim that one of his top priorities while chair of the FCC is to "close the digital divide." Pai, who clearly harbors post-FCC political aspirations, can often be found touring the nation's least-connected states proclaiming that he's working tirelessly to shore up broadband connectivity and competition nationwide. More often than not, Pai can be found somewhere in flyover country "highlighting how expanding high-speed internet access and closing the digital divide can create jobs and increase digital opportunity."

And that would be great... if he was doing anything to actually accomplish that goal.

While Pai's best known for ignoring the public and making shit up to dismantle net neutrality, his other policies have proven to be less sexy but just as terrible. From neutering plans to improve cable box competition to a wide variety of what are often senseless attacks on smaller competitors, most of Pai's policies are driving up costs for the rural Americans he so breathlessly pledges fealty to.

For example, a guy that's actually trying to improve competition wouldn't be taking steps to hide that lack of competition by weakening broadband availability standards. Similarly, a politician actually focused on improving broadband connectivity to rural areas wouldn't be actively dismantling programs specifically designed to accomplish that goal.

One of Pai's biggest targets has been the FCC's Lifeline program, an effort started by Reagan and expanded by Bush that long enjoyed bipartisan support until the post-truth era rolled into town. Lifeline doles out a measly $9.25 per month subsidy that low-income homes can use to help pay a tiny fraction of their wireless, phone, or broadband bills (enrolled participants have to chose one). The FCC under former FCC boss Tom Wheeler had voted to expand the service to cover broadband connections, something Pai (ever a champion to the poor) voted down.

Some of the most-frequently ignored in the battle for better connectivity are native populations and tribal areas. Under Chairman Ajit Pai's "leadership," the FCC voted 3-2 last November to eliminate a $25 additional Lifeline subsidy for low-income native populations on tribal land. As part of Pai's effort he also banned smaller mobile carriers from participating in the Lifeline program, a move opposed by even the larger companies (Verizon, AT&T) that stand to benefit.

Small wireless carriers and several tribal organizations subsequently sued the FCC (pdf) in the United States Court of Appeals for the DC Circuit, noting the FCC "failed to engage affected tribal governments" ahead of the rule changes. Tribal leaders also filed a petition (pdf) claiming Pai's multi-pronged attack on Lifeline would only make it harder to connect tribal lands to the internet:

"The Order on review adopted new restrictions on the provision of enhanced support that threaten the fundamental viability of the Lifeline program in many tribal areas. As relevant to Crow Creek’s petition, the Order would limit the availability of enhanced support to facilities-based carriers only, thereby excluding MVNOs from the tribal Lifeline program. Once the rule takes effect, MVNOs will be eligible to receive only $9.25 in support for service provided on tribal lands, an amount that the Commission already determined is woefully insufficient to ensure that low-income American Indians have access to telecommunications."

And while tribal leaders had petitioned the FCC to stay its decision pending the appeal, the FCC last week unsurprisingly rejected that request. Much like opponents of Pai's net neutrality repeal, tribal leaders say the FCC violated laws like the Administrative Procedures Act by reversing existing policy without truly consulting those impacted and without basing the decision on, you know, hard, substantive data:

"The Commission failed to engage affected tribal governments prior to adopting the MVNO exclusion as required by its own policies, the Administrative Procedure Act (“APA”), and laws governing the relationship between the federal government and federally recognized American Indian tribes."

That's curious for a guy that tries so hard to portray himself as a bosom buddy to marginalized communities trying to obtain affordable internet in the Comcast era. But again, it's not surprising if you watched Pai ignore the fact that a massive, bipartisan coalition of Americans telling him his net neutrality repeal was a terrible, counter-productive policy.

While the telecom industry is certainly no stranger to subsidy fraud and waste, the Lifeline program -- which you generally only qualify for if you're living near the poverty line -- has generally been agreed upon as the very least we can do to help the downtrodden get connected to the internet. Pai prattles on ad nauseum about his dedication to closing the digital divide, and so far has faced few repercussions for the fact his policies will actively make the problem worse. Especially since it couldn't be any clearer that Pai intends to do absolutely nothing about the lack of competition that sits at the heart of this dysfunction.

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Posted on Techdirt Wireless - 11 July 2018 @ 6:21am

Charter Spectrum's New 'Unlimited' Wireless Service Bans HD Video Entirely

from the just-the-beginning dept

Last week we noted how Comcast had imposed new limits on its shiny new "unlimited" wireless plans. The company informed users of its Xfinity Wireless service that moving forward, all video on the service would be throttled back to 480p, with plans to begin charging you more if you want to watch your video in full HD quality. As we noted then, this was just a continuation of a theme already established by wireless carriers like T-Mobile and Sprint, which involved imposing arbitrary throttling thresholds for games, music and video, then charging you additional money to get around those bogus limitations.

It shouldn't be particularly hard to see how imposing arbitrary limits that impede your ability to experience content as the originators intended sets a terrible precedent. And should the FCC's net neutrality repeal survive its looming legal challenge, you're going to see wireless carriers and ISPs slowly embrace more and more of this sort of thing, at least once they know for sure that the government has zero interest in actually policing such "creative" abuse of a broken market. What we're seeing now is just the orchestra getting warmed up.

Following on the heels of Comcast, Charter has launched its own wireless service offering that also promises users "unlimited" connectivity. But like Comcast's offering, Charter's service will also throttle all video to 480p. The company's Spectrum Mobile website explains how the industry's definition of "unlimited data" still leaves a little something to be desired:

"After 20 GB per line, you may experience reduced speeds for the rest of the bill cycle.

There are no additional fees for using your phone as a mobile hotspot. After 5 GB of mobile hotspot data use in the bill cycle, mobile hotspot speeds are reduced to a maximum of 600 kbps for the rest of the bill cycle. Mobile hotspot data counts toward your 20 GB high-speed data allowance. Remember, your laptop may consume more data than your phone would for similar activities.

DVD-quality video streaming is supported. Video typically streams at 480p."

As Sprint and T-Mobile try to sell regulators on their job and competition-eroding megamerger, one of their core justifications for the deal is that the reduction in total overall competitors from four to three is no big deal because cable operators are tinkering with wireless mitigating any real fallout. But that ignores a few things. Like the fact that T-Mobile's CEO previously laughed off these services as irrelevant and destined to fail. Or that Comcast and Charter lean on Verizon Wireless' network for backup, reducing their incentive to disrupt Verizon. And they've struck a deal that involves agreeing not to compete with each other.

As a result, Charter and Comcast's wireless plans are almost mirror images of one another, including the middle finger at net neutrality (aka your right to enjoy content as intended by the service you're subscribing to without your ISP injecting itself in the process to make an additional buck).

For now, Charter isn't charging you more to watch videos in actual HD, but you can be pretty certain that's coming down the road. With ISPs wary of the looming net neutrality court challenge, they're trying desperately to remain on their best behavior. As such, you're going to see very glacial moves toward tighter restrictions as these companies try to cash in on the one-two punch of limited competition and napping regulators like Ajit Pai. Initially -- like being unable to watch HD video on your phone -- they won't seem like the end of the world, but cumulatively and over time, you can be damn well assured it's going to hurt.

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Posted on Techdirt - 10 July 2018 @ 10:46am

SCOTUS Nominee Kavanaugh Bought Verizon's Silly Argument That Breaking Net Neutrality Is A 1st Amendment Right

from the not-a-good-sign dept

Back when Verizon sued to overturn the FCC's fairly tepid 2010 net neutrality rules, the telco's lawyers threw every legal argument at the wall they could find, no matter how ridiculous they might be. One of those claims was that the FCC's rules somehow violated the company's First Amendment rights, a claim that Mike (and numerous other reporters at the time) properly eviscerated:

"Verizon is effectively arguing that if it chooses not to allow a certain service to exist online that is a form of expression. Think of it this way: say Verizon decided to block Skype, because Skype is eating into its local telephone business. According to Verizon, that decision is a form of expression and the government can't block that, since that "expression" is protected. The "newspaper" analogy that Verizon offers is completely specious, because the internet isn't a newspaper where there's a single publisher who chooses what goes in. The whole argument is ludicrous."

Telling Verizon that it can't abuse a lack of broadband competition to hinder certain services from working online is not a free speech issue, full stop. That said, painting Verizon as the victim when it's the company's own anti-competitive actions that were threatening small businesses and legitimate expression gives you a pretty solid grasp of the hubris of large, incumbent telecom operators.

Ultimately Verizon won the 2010 fight and had the rules scuttled due to FCC over reach (which is why Wheeler ultimately embraced Title II in 2015), but it had absolutely nothing to do with the ISP's First Amendment argument. Still, that argument played a starring role when ISPs again sued to overturn the FCC's tougher, 2015 rules. Comcast, AT&T, Verizon, and other major ISPs all again clung tightly to the flimsy First Amendment claim, despite even they knowing it was absurd and fundamentally unsound.

And again that didn't work out well for ISPs, with the U.S. Court of Appeals for the D.C. Circuit fully upholding the FCC's rules in 2016, the majority once again shooting down ISP claims that net neutrality protections violated ISPs' First Amendment rights. From the ruling (pdf):

"Because a broadband provider does not— and is not understood by users to—"speak" when providing neutral access to internet content as common carriage, the First Amendment poses no bar to the open internet rules."

ISPs lost again during their en banc appeal of the rules, where the same argument was shot down yet again by the majority. Again, because ISPs, which provide connectivity between the end user and the sites and content they want to access, are not speaking or exercising editorial control when they transmit data.

It should be reiterated that even ISPs like Comcast don't actually believe their argument that net neutrality tramples their First Amendment rights; the entire effort was just a "let's try everything and see what works" sort of affair. All ISPs have ever cared about in this argument is their ability to fatten revenues by further abusing an obvious lack of competition in broadband in creative new ways.

But it's worth noting at least one judge bought into the ISPs' flimsy claims that their First Amendment rights had been trampled, and that man was a certain Brett Kavanaugh (pdf), who Trump just nominated for the Supreme Court. In his dissent (pdf), Kavanaugh displays an absolutely stunning lack of fundamental common sense in parroting large ISP claims on the subject:

"Absent a showing of market power, the Government must keep its hands off the editorial decisions of Internet service providers. Absent a showing of market power, the Government may not tell Internet service providers how to exercise their editorial discretion about what content to carry or favor any more than the Government can tell Amazon or Politics & Prose what books to promote; or tell The Washington Post or the Drudge Report what columns to carry; or tell ESPN or the NFL Network what games to show; or tell How Appealing or Bench Memos what articles to feature; or tell Twitter or YouTube what videos to post; or tell Facebook or Google what content to favor."

Again, that's not just wrong it's aggressively incorrect. Something his fellow judges again made clear in their majority ruling:

"[N]o Supreme Court decision supports the counterintuitive notion that the First Amendment entitles an ISP to engage in the kind of conduct barred by the net neutrality rule—i.e., to hold itself out to potential customers as offering them an unfiltered pathway to any web content of their own choosing, but then, once they have subscribed, to turn around and limit their access to certain web content based on the ISP's own commercial preferences."

To be more explicit about the problems here, you can tell that Kavanaugh went wrong in the way he constantly refers to Verizon blocking services as "editorial" decisions, as if Verizon curates what internet you can and cannot see. That completely misunderstands the nature of an end-to-end internet, where access providers, such as Verizon, are merely connecting you to the wider network, not "editorializing" over what you get access to. All of the comparisons that Kavanaugh trots out -- Amazon, book stores, YouTube, etc. -- are entirely different. Those are all platforms in which those sites are literally hosting the content and thus have the right to allow or refuse how it is used. Verzion, on the other hand, is merely connecting people and not making "editorial" choices.

Kavanaugh's dissent was cribbed nearly word for word from large ISP lobbying efforts, including his proclamation that the rules weren't necessary thanks to "vibrant competition” in the broadband sector. And while few will focus much on net neutrality as the debate over Kavanaugh's nomination heats up, his willingness to mindlessly parrot false claims from one of the most-disliked and anti-competitive industries in America does speak well to overall character and likely future voting patterns.

And should Kavanaugh be officially confirmed, that obviously spells some serious trouble for all future efforts to restore net neutrality.

The Trump FCC's ham-fisted repeal is facing some legitimate looming legal challenges from small companies, consumer groups, and numerous state attorneys general, and given the FCC's bizarre and unethical behavior during the repeal, the legal assault has a good chance of succeeding. Granted that also means it has a non-insubstantial chance of this or other net neutrality fights landing before the Supreme Court, where it should be pretty obvious that Kavanaugh is likely to side with giant ISPs, the overwhelming, bipartisan public support for the rules be damned.

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Posted on Techdirt - 10 July 2018 @ 6:21am

AT&T Is Very Excited To Try And Ruin HBO

from the ill-communication dept

Ma bell isn't much fun at parties. While traditional telcos desperately want to pivot from broadband and cable to video and online advertising, that transition has been challenging. Especially for a sector that has spent the last 30 years as government-pampered regional mono/duopolies. Many of these companies are good at running a network or lobbying government to stifle competition, but they're simply not very good at things like creativity, innovation, or disruption. That was recently made abundantly clear by Verizon's face plant after it tried to launch a sexy new Millennial-focused video platform dubbed Go90.

AT&T suffers from the same disease, and it may soon manifest in abundance.

You'll recall that AT&T's $86 billion acquisition of Time Warner was allowed to proceed after a comically narrow reading of the market by U.S. District Court Judge Richard Leon. At absolutely no point in his 172-page ruling, did Leon show the faintest awareness that AT&T wants to use the gutting of the FCC, the elimination of net neutrality rules, and vertical integration synergistically to behave anti-competitively in the broadband and streaming video space, something that's obvious to anybody that has spent thirty seconds watching AT&T do business.

Leon took AT&T lawyers' arguments completely at face value, resulting in him failing to even apply a single meaningful condition to AT&T's latest megamerger.

And while the death of net neutrality, regulatory capture and rubber-stamped merger mania are all wonderful things for AT&T, there's still one little problem AT&T needs to overcome in order to capitalize on its wide, open anti-competitive runway: it's just not very good at this whole creativity or innovation thing. While it's clear that AT&T executives think they're really good at innovation, there are growing concerns that the company is going to meddle with HBO and erode many of the things that made the channel a standout over the last twenty years.

AT&T execs initially stated they'd be leaving HBO alone to do what the company does best. But that promise quickly evaporated this week at a town hall meeting at the network’s headquarters in Midtown Manhattan, where AT&T execs like John Stankey proclaimed that AT&T intends to dramatically reshape HBO to effectively focus on quantity and ad impressions over quality:

Mr. Stankey described a future in which HBO would substantially increase its subscriber base and the number of hours that viewers spend watching its shows. To pull it off, the network will have to come up with more content, transforming itself from a boutique operation, with a focus on its signature Sunday night lineup, into something bigger and broader.

“I want more hours of engagement. Why are more hours of engagement important? Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising as well as subscriptions, which I think is very important to play in tomorrow’s world.”

Of course Netflix has been taking heat for focusing on quantity over quality, resulting in a string of high-profile duds. And AT&T's version of "monetization" has historically involved things like charging broadband users more money if they want to protect their own privacy. If you're an HBO exec and alarm bells aren't ringing in your ears, you likely haven't paid enough attention to AT&T's scattershot efforts to dominate media pre-merger. Stankey then tried to equate the experience HBO was about to go through under AT&T management to child birth:

“You will work very hard, and this next year will — my wife hates it when I say this — feel like childbirth,” he said. “You’ll look back on it and be very fond of it, but it’s not going to feel great while you’re in the middle of it. She says, ‘What do you know about this?’ I just observe, ‘Honey. We love our kids.’”

On the plus side, it's clear that AT&T wants to spend billions on original content to help the new AT&T-owned HBO to match Netflix blow for blow in the streaming wars. On the flip side, AT&T's corporate culture (indisputably anti-consumer, viciously anti-competitive and historically hostile) is inevitably going to clash with HBO management. HBO has creatively crafted some of the best television in the last decade. AT&T, in turn, has expertise in things like killing net neutrality and finding new, creative ways to rip off taxpayers and its own customers.

That there are going to be tensions between the two companies likely isn't debatable. And, while success is certainly possible, whether AT&T can shake off some of its own worst habits and "improve" HBO -- without eliminating all of its finest traits in the process -- is going to prove interesting to watch.

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Posted on Techdirt - 9 July 2018 @ 12:05pm

Streaming Video Sees Wave Of Price Hikes In Apparent Bid To Mimic Cable & Embolden Piracy

from the history-repeats-itself dept

One of the major benefits of cutting the traditional TV cord and switching to streaming video services was supposed to be the lower cost of service. But because broadcasters dictate the licensing cost of content for both services, it was inevitable that the sector would increasingly mimic its traditional cable counterparts. As a result, numerous streaming video services used the July 4th holiday to obfuscate an industry wide price hike, driving up the monthly subscription costs of services like AT&T's DirecTV Now, Sony's Playstation Vue, and Dish Network's Sling TV.

AT&T's price hike, a $5 bump for all of the company's DirecTV Now streaming TV tiers, is likely getting the most attention because it's the precise type of hike AT&T repeatedly stated wouldn't be happening if regulators signed off on the company's $86 billion merger with Time Warner. AT&T lawyers repeatedly claimed during the recent court battle with the DOJ that the deal would lower prices, not raise them:

"The evidence overwhelmingly showed that this merger is likely to enhance competition substantially, because it will enable the merged company to reduce prices, offer innovative video products, and compete more effectively against the increasingly powerful, vertically integrated 'FAANG' [Facebook, Apple, Amazon, Netflix, and Google] companies," AT&T told US District Judge Richard Leon in the brief...Price benefits should flow to consumers quickly, AT&T's filing said. "[C]ertain merger efficiencies will begin exerting downward pressure on consumer prices almost immediately [after the merger]" AT&T wrote.

As with most megamerger promises of synergies and consumer benefits, that obviously didn't happen. AT&T took on such a massive debt hit from the deal, it's now looking to raise rates wherever and however possible, whether that means a price hike for TV streaming, or obnoxious and misleading fees that can help quickly and covertly pad AT&T's bottom line.

As we've long seen with traditional cable, streaming ops are imposing the rates in quiet unison, engaging in what I've affectionately long referred to as "wink wink, nudge nudge" competition. In addition to price hikes at AT&T, Dish and Sony, Netflix says it's also experimenting with a higher-priced tier specifically targeting customers with 4K and HDR capable sets. It's a tricky balancing act; these services want to pass on higher programming rates demanded by broadcasters, but don't want to undermine the entire reason that customers cut the cord and head to cheaper streaming alternatives in the first place.

On a positive note, many correctly point out that streaming is still generally seen as a real value when compared to traditional cable, something that should remain true for the forseeable future:

"Even after the current wave of price hikes, live TV streaming services are generally much cheaper than the average traditional TV bill. For packages that include major broadcast networks, regional and national sports coverage, and major news networks, the price for live TV streaming still floats around $40 to $50 per month. That's less than half the average $106 that U.S. homes spent on traditional TV service last year, according to Leichtman Research Group."

But that value could quickly be eroded if streaming operators continue to mimic their legacy counterparts, something that's less of a strain for streaming operators that are vertically integrated broadcasters themselves (Comcast, AT&T); yet another advantage compounded by the repeal of net neutrality. Streaming operators have numerous other pitfalls awaiting them as the streaming video wars truly get underway, including the rise of exclusive content deals that could force customers back to piracy if they're forced to hunt and peck between too many pricey exclusivity silos.

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Posted on Techdirt - 9 July 2018 @ 6:14am

Sprint, T-Mobile Execs Bullshit Congress On The Benefits Of Merger Mania

from the less-competition-means-more-competition dept

Sprint and T-Mobile last week went before Congress to literally argue that fewer competitors in the wireless space will magically result in... more competition in the wireless space. The two companies are trying to gain regulatory approval for their latest $23 billion merger attempt, the second time in four years this particular deal has been attempted.

The companies' previous merger attempt was blocked in 2014 after regulators noted that removing one of just four major carriers would result in a proportionally-lower incentive to actually compete on price, something that's really not debatable if you've paid attention to telecom and broadband industry history. That's especially true in Canada, where consolidation to just three players has resulted in some of the highest mobile data prices in the developed world. AT&T's attempt to acquire T-Mobile in 2011 was blocked for the same reason, a move that many forget resulted in T-mobile being more competitive than ever.

But while speaking before a Senate Judiciary subcommittee investigating the deal, T-Mobile and Sprint executives told Congress a decidedly different story. One in which the rules of competition, and mathematics, no longer apparently apply:

"This consolidation will lead to lower prices,” T-Mobile CEO John Legere told hearing attendees. "This is actually moving from two to three,” Legere claimed, insisting that joining forces with Sprint will make a more “viable competitor” for AT&T and Verizon.

But history has repeatedly shown in telecom that claims of competitive "synergies" never actually materialize. A major reason most ISPs are so hated is because they've spent decades prioritizing growth for growth's sake over anything else, and, more often than not, fail to scale things like customer service and support proportionally because that kind of growth erodes revenues. As a result you get an endless string of telecom mergers that, like Charter's recent acquisition of Time Warner Cable, simply result in higher prices and worse service than ever before.

Sprint and T-Mobile's central thesis in selling the merger (this time around) is that Sprint can't possibly survive without merging with T-Mobile. In fact, one of Sprint's recent filings with the FCC (pdf) comically tries to go out of its way to argue just how terrible the company currently is, in stark contrast to everything the company had been saying the last few years:

"Sprint’s standalone future will not be one that allows it to be an effective competitor to Verizon and AT&T on a nationwide basis. And though Sprint’s massive cost reductions have stabilized the company’s finances and yielded positive free cash flow for the first time in many years, the company achieved that result only by shrinking the company and reducing network investment to historically low levels."

But while Sprint does have a heavy debt load (which is not uncommon in the merger-obsessed telecom sector) and has struggled to find a real brand identity (which says more about leadership than finances), the threat of its imminent demise is being amplified for strategic effect. The company's balance sheet has been improving, with the company routinely propped up by deep-pocketed Japanese owner Softbank. Meanwhile there are numerous potential partners interested in the wireless industry that could have provided a meaningful partnership (Dish, Charter, Comcast) that wouldn't have reduced competition.

Of course claiming "fewer competitors improves competition and lowers prices" isn't the only falsehood being perpetuated by the company. They're also promising that the merger will be a boon for job creation, despite numerous Wall Street analyst estimates that the deal could eliminate up to 30,000 jobs as redundant positions (especially in retail and middle management) are inevitably eliminated.

For some reason, like Charlie Brown and his damn football, America doesn't seem to ever really learn any lessons from its love affair with mindless merger mania and our love of growth for growth's sake. These deals almost always exclusively only benefit shareholders and executives, a lesson we apparently love to ignore time and time again.

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Posted on Free Speech - 6 July 2018 @ 6:31am

Uganda Bans VPNs To Prevent Users From Dodging Its Absurd New Social Media Tax

from the kick-'em-when-they're-down dept

Countries around the world continue to wage their not so subtle war on the use of virtual private networks (VPNs) and encryption. In Russia, the government has all but banned the use of VPNs by layering all manner of obnoxious restrictions and caveats on VPN operators. The goal, as we've seen in China and countless other countries, is to ban VPN use without making it explicitly clear you're banning VPN use. The deeper goal is always the same: less privacy and online freedom for users who use such tools to dodge surveillance or other, even dumber government policies.

Case in point: Uganda recently decided it would be a great idea to impose a new 200 Uganda shilling ($0.05) tax on the use of social networking websites. President Yoweri Museveni pushed for the changes to combat what he calls "gossip," and now users have to pay the 200 shilling fee each day just to access websites and services like Facebook, Whatsapp, and Twitter. $20 more per year is not an insubstantial sum in a country where the average income is around $600, and the average Ugandan survives on usually less than a dollar per day.

The tax is, not surprisingly, not being received well:

The nation's wireless carriers were quick to comply, informing users they should use mobile payment services to pay the government tax:

Shockingly, VPN use has soared in the country as users try to dodge the new tax. Predicting this, Uganda's government has doubled down on bad ideas, and has been pressuring ISPs to ban VPN use. In a statement posted at Facebook (200 Uganda shillings, please), the Ugandan government tries to deter VPN use by trying to claim using VPNs will cost more than the cost of bandwidth and the social media tax, since VPN encryption utilizes slightly more bandwidth and most user connections have caps and overage fees:

"...if you think it is cheaper to use VPN than paying Shs 200/day, I think it is very unwise to think that because the data consumption under VPN is very high, I think you’re aware of that. We have technology that will block the VPN services so that no one dodges the taxes. Different VPN systems continue to come with more advanced features to circumvent government crackdowns but governments around the world have continued to block them."

Let the game of Whac-a-Mole commence.

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Posted on Net Neutrality Special Edition - 5 July 2018 @ 1:35pm

After Backlash To AT&T Chicanery, California Salvages Tough Net Neutrality Law

from the turnabout dept

As we recently noted, California was on the cusp of passing the toughest net neutrality law in the nation, a bill the EFF declared to be the "gold standard" for state-level rules. But late last month AT&T and Comcast lobbyists descended on California to scuttle the effort, convincing California Assemblyman Miguel Santiago to neuter the most important portions of the proposal. Santiago, no stranger to AT&T campaign cash, rushed through a series of last-minute amendments behind closed doors without providing the bill's backer or the public a chance to chime in.

But Santiago quickly felt the ire of net neutrality activists and internet users, including a new crowdfunded billboard intended to shame Santiago. Lo and behold, lawmakers including Santiago and the original bill's backer (State Senator Scott Wiener) held a press conference today to announce that they'd come to an agreement, and would be largely restoring the bill to its original form.

Originally, Santiago managed to successfully kill language policing zero rating, or ISP efforts to impose arbitrary usage caps then exempt their own content while still penalizing competitors. The previous FCC had found AT&T and Verizon's use of such limits to be anti-competitive.

Santiago also heeded ISP lobbyist calls to eliminate language policing interconnection. You'll recall a few years ago Netflix traffic slowed to a crawl after ISPs began intentionally letting peering points congest -- allegedly in a bid to kill things like settlement-free peering and drive up costs for transit and content competitors. Those behaviors magically ceased when the FCC passed rules policing this behavior, but with the federal rules now dead, it's left to states to try and keep ISPs on their best behavior.

According to state leaders, all of those provisions (plus a component blocking ISPs from "double dipping" via erroneous "access charges") have been restored to the bill in the wake of public pressure. From a fact sheet I received today from legislators:

"Under this agreement, SB 822 will contain strong net neutrality protections and prohibit blocking websites, speeding up or slowing down websites or whole classes of applications such as video, and charging websites for access to an ISP's subscribers or for fast lanes to those subscribers. ISPs will also be prohibited from circumventing these protections at the point where data enters their networks and from charging access fees to reach ISP customers. SB 822 will also ban ISPs from violating net neutrality by not counting the content and websites they own against subscribers' data caps. This kind of abusive and anti-competitive "zero rating," which leads to lower data caps for everyone, would be prohibited, while "zero-rating" plans that don't harm consumers are not banned."

At the moment this is the policy equivalent of a pinky swear, since state officials tell me the full text of the bill won't be released until sometime in early August. The California legislature will then have until August 31 to pass the bill and send it to Governor Jerry Brown for signing. If passed with the bill's most important measures intact, that would mean the entire west coast would be protected by state-level rules in the wake of previous bills passed in both Washington State and Oregon. That's obviously not the sort of end result ISPs were hoping for when they successfully killed federal rules.

ISPs have threatened to sue any states that try to pass net neutrality rules after convincing the FCC to include some legally-dubious language in the repeal that attempts to thwart states from protecting consumers. And while the restoration of the original bill is promising, AT&T, Comcast and Verizon lobbying influence runs deep, and they have another month to try to stop California from respecting public opinion and standing up to entrenched telecom monopolies with rules preventing them from abusing the obvious lack of real competition in most broadband markets.

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Posted on Techdirt - 5 July 2018 @ 6:25am

Comcast's Wireless Service Will Charge You More To Stream HD Video

from the arbitrary-constructs dept

A few years back, wireless carriers began flirting with a new idea: throttling all video by default, then charging you additional money if you wanted to view video as actually intended. You'll probably recall that T-Mobile spearheaded this effort, and wasn't particularly honest about what it was doing. You might also recall that Sprint began throttling all video to 1.5 Mbps, all games to speeds "up to 2 Mbps" and all music streams to speeds "up to 500 Kbps." Fortunately for you, you could avoid dealing with this arbitrary restrictions if you were willing to pay Sprint an additional $25 per month:

"This plan provides a premium quality mobile streaming experience with HD streaming videos at up to 1080p+, HD music streaming at up to 1.5 Mbps and streaming gaming at up to 8 Mbps."

Reddit users note that Comcast is now following suit for its own Xfinity Mobile wireless service. The service leans primarily on Comcast's network of WiFi hotspots and Verizon's cellular network, promising users "unlimited" data for $45 per line (plus various fees). As is usually the case in wireless, Comcast's definition of "unlimited" means around 20 GB, after which your connection is throttled to 1.5 Mbps download and 750 Kbps upload. Now, according to Reddit users, the company has also started throttling video on this service back to 480p, with plans to begin charging you more if you want actual HD:

"To help you conserve data, we've established 480p as the standard resolution for streaming video through cellular data. This can help you save money if you pay By the Gig and take longer to reach the 20 GB threshold if you have the Unlimited data option. Later this year, 720p video over cellular data will be available as a fee-based option with your service. In the meantime, you can request it on an interim basis at no charge.

In other words, by "unlimited" Comcast really means 20 GB on a connection incapable of delivering HD video unless you pay more money. As an added, new restriction, Comcast is also now throttling all tethered hotspots on these "unlimited" connections to 600 kbps--unless you sign up for the company's pay per gigabyte option at a whopping $12 per gigabyte. This is, apparently, Comcast's version of what it looks like when you try and disrupt and compete with the broader wireless industry.

On its face this isn't the end of the world. On a small mobile phone screen, the difference between 480p and 720p will likely be unnoticable to many users. It's the precedent that's being set that's more troubling. For one, this continues to be a bastardization of the term "unlimited," a word the telecom sector has abused for the better part of the last decade without learning any real lessons. And with net neutrality rules now on the cutting room floor, throttling video, music and games (unless you pay more) isn't too far of a leap from theoretical scenarios like this one:

Again, with a net neutrality court challenge looming, ISPs are going to try and be on their best behavior to avoid providing any ammunition to the opposition. But with anti-competitiveness in their marrow, they're going to find it irresistible to try and push the envelope when it comes to creative new ways to raise rates on the end user. On the surface many of these efforts may not seem all that terrible, but like the boiling frog metaphor these baby steps will all cumulatively result in a decidedly-unpleasant online experience, and which arbitrary limits and caveats we're willing to accept is going to matter over the longer haul.

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Posted on Techdirt - 3 July 2018 @ 3:27pm

This Shouldn't Need Saying: Threatening To Kill Anyone Over Net Neutrality Is Idiotic

from the bring-back-civility dept

It's indisputable that Ajit Pai's attack on net neutrality was a facts-optional hatchet job of historical proportions. Pai ignored the public, the experts, ethical boundaries, and FCC guidelines as he rushed to give a sloppy wet kiss to some of the most disliked and anti-competitive companies in any American industry. Making matters worse, Pai repeatedly rubbed salt in the wound by behaving like a tone-deaf ass at numerous points during the bizarre and amateurish gambit.

That said, however terrible Ajit Pai has been (and he has been historically terrible), it should go without saying that threatening the FCC boss or his family is both idiotic and counterproductive.

You'll recall that Pai was forced to cancel his appearance at CES back in January due to death threats. And late last week, the Department of Justice announced that it had arrested a 33-year old California man for sending e-mails that threatened both Pai's and his family's lives:

"The first email accused Chairman Pai of being responsible for a child who allegedly had committed suicide because of the repeal of net neutrality regulations. The second email listed three locations in or around Arlington, and threatened to kill the Chairman’s family members. The third email had no message in its body, but included an image depicting Chairman Pai and, in the foreground and slightly out of focus, a framed photograph of Chairman Pai and his family."

The full affadavit offers a little more detail, noting that the FBI didn't have to work very hard to identify the man behind the STUBBLEMANLINESS@GMAIL.COM address, from which the threats were made:

"The next day, on or about December 20, 2017, at approximately 3:47 p.m. EST, an email was sent from STUBBLEMANLINESS@GMAIL.COM to Federal Official 1 's government and personal email addresses. The subject line of the email was "Cheers" and the body of the email listed the names and addresses of three preschools located in or around Arlington, Virginia, followed by the following sentence: "I will find your children and I will kill them."

Again, it really shouldn't need saying that threatening any government official or their family over tech policy (net neutrality or anything else) is obviously utterly terrible, obnoxious and disgusting. It's also utterly counterproductive and self-defeating. In reality, this kind of behavior comprises a tiny, tiny fraction of the massive number of folks angry about the repeal. But Pai's staff has enjoyed singling out and highlighting these folks whenever possible to try and imply that opponents to Pai's ISP-cuddly policies are generally unhinged and unreasonable.

Besides, Pai has made it easy to dismantle his policy positions in an entirely civil manner without resorting to boorish behavior. This is an agency boss who not only turned a blind eye to fraud and identity theft during the public comment period, but also apparently helped make up a DDOS attack just to try and downplay the massive, bipartisan opposition to his policies. Pai doesn't have much of a leg to stand on when it comes to the facts -- so just stick to them.

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Posted on Techdirt - 3 July 2018 @ 6:22am

Fresh Off Its Merger, AT&T Jacks Up Price Of Streaming Video Service

from the history-repeats-itself dept

It didn't take long for AT&T's promises of merger synergies to magically evaporate. During the company's sales pitch for its $86 billion acquisition of Time Warner, AT&T repeatedly stated how the merger would result in all manner of "synergies" and savings that would be passed on to the consumer. In reality, the massive debt load acquired in the wake of the deal has AT&T doing everything in its power to try and trim its M&A-bloated balance sheet... to the immediate detriment of the company's customers.

Last week we noted how AT&T had begun flexing its muscles in the wake of a Judge's comically-myopic ruling in the Time Warner case. First, AT&T raised the price of some of its "unlimited" data plans, then axed a deal that provided HBO for free to some wireless customers. Then the company set to work raising a misleading, nonsensical and unnecessary "administrative fee" from $0.76 to $1.99, effectively providing AT&T with roughly $800 million in additional revenue every year. Such garbage fees are routinely used to help broadband providers falsely advertise a lower rate.

Not to be outdone, AT&T is also now informing the company's DirecTV Now streaming video customers that they can look forward to a new $5 price hike starting in August. The hike is necessary, AT&T claims, in order to bring "the cost of this service in line with the market":

"In the 18 months since our launch, we have continued to evolve our DIRECTV NOW products to serve this new customer set and compare favorably with our competitors. To continue delivering the best possible streaming experience for both new and existing customers, we’re bringing the cost of this service in line with the market—which starts at a $40 price point."

You're to forget, apparently, that one of AT&T's core selling points during the merger approval process was that owning "must have" content like HBO was going to make it easier for AT&T to provide users cheaper, better TV service. From an AT&T brief (pdf) filed at the tail end of arguments during company's recent merger skirmish with the DOJ:

"The evidence overwhelmingly showed that this merger is likely to enhance competition substantially, because it will enable the merged company to reduce prices, offer innovative video products, and compete more effectively against the increasingly powerful, vertically integrated 'FAANG' [Facebook, Apple, Amazon, Netflix, and Google] companies."

Yeah, or, you know, not. AT&T also forgot, apparently, that the whole reason users cut the cord and head to streaming services in the first place is because they're tired of often bi-annual rate hikes on traditional TV service (Dish Network's Sling TV is also issuing a $5 price hike to its own Sling TV service in perfect symmetry).

Again, none of this is new. Time and time again, Americans are promised a world of synergies and savings that can only be provided if already-massive companies are allowed to grow even larger without much oversight. And time and time again, we quickly learn that the lion's share of those promises are horse shit. We then fail utterly to actually learn anything from the experience. Meanwhile, with net neutrality on the chopping block, you can be damn sure that sneaky fees and vanilla price hikes are going to be the least of our problems in the face of a reconstituted Ma Bell.

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Posted on Techdirt - 2 July 2018 @ 6:23am

Verizon's Sad Attempt To Woo Millennials Falls Flat On Its Face

from the hipster-grandpa dept

We've noted repeatedly how Verizon really wants to pivot from stodgy, old protectionist telco to Millennial-focused media and advertising juggernaut as it makes a broader push for a greater slice of online advertising markets. Company executives apparently believe this is accomplished by ceasing network fiber upgrades, attacking popular consumer protections, repeatedly violating consumer privacy, and gobbling up failed 90's internet brands like Yahoo and AOL.

Except Verizon's hip new brand revolution hasn't been much to write home about.

It technically began with the launch of a doomed "news" website named Sugarstring that imploded after writers revealed they couldn't talk about net neutrality or mass surveillance. The company's acquisition of Yahoo was also plagued with issues, from Yahoo's mammoth, undisclosed hacking scandal to revelations of the company's wholesale spying on user e-mail accounts for the government (not that this latter issue bothered Verizon much).

At the heart of the effort was Verizon's Go90 streaming video service. Launched in 2015 alongside mountains of hype, the Millennial-focused effort avoided using Verizon's brand name for obvious reasons. Unfortunately for Verizon, the service was quickly and repeatedly derided as "a dud" by Verizon's own media partners. In just a few years the effort saw repeated layoffs, and despite several efforts to bring in top talent and relaunch the service, the company this week finally acknowledged that the service will be headed out to pasture:

"Following the creation of Oath, go90 will be discontinued,” a company spokeswoman said in an email. “Verizon will focus on building its digital-first brands at scale in sports, finance, news and entertainment for today’s mobile consumers and tomorrow’s 5G applications.”

Representatives of go90 have begun informing content providers about plans to end both the go90 brand and the video streaming app by July 31, online magazine Digiday reported earlier on Thursday citing four sources familiar with the situation. It said go90 will return shows and content rights back to its production partners. Verizon has spent about $1.2 billion on Go90 since its 2015 launch, Digiday reported, citing two sources.

That $1.2 billion would have gone a long way in upgrading those aging, taxpayer-subsidized DSL lines Verizon refuses to upgrade across numerous states. Meanwhile, Verizon's other video efforts have hit some roadblocks as well. The company recently quietly backed away from plans to launch its own live streaming platform, hinting it would likely now be partnering with an existing, unnamed industry player instead of trying to actually be creative, innovative and disruptive itself. This whole actual competition thing is hard.

Needless to say, a generation of being a government-pampered telecom monopoly left Verizon ill-prepared for its marketing and media gambit, and the company's own incompetence and lack of innovative DNA have made for rough sledding early on. The company's history is now littered with failed efforts to actually be innovative and disruptive, including the Verizon app store, its video joint venture with RedBox, and numerous other "me too" initiatives under the discontinued VCAST brand.

Verizon's struggles with head to head competition explains why the company consistently feels the need to tilt the playing field unfairly in its favor, as the company's decade-long attack on net neutrality makes painfully clear.

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Posted on Net Neutrality Special Edition - 29 June 2018 @ 6:22am

AT&T Begins Testing Its Power In The Wake Of Merger Mania & The Death Of Net Neutrality

from the boiling-frog dept

So as we've long noted, the death of net neutrality and the latest round of M&A mania isn't going to result in an immediate internet apocalypse. ISPs are nervous about looming court challenges which, thanks to all manner of ridiculous behavior at the FCC, have a good chance of succeeding. They also know that unless they can get a phony, pre-emptive law on the books, the next FCC or future, less-cash-compromised Congress could just come in and restore the rules. As such, they're going to be testing their newfound freedoms very slowly, much like the boiling frog metaphor (you are the frog in this equation).

Case in point: on the heels of the company's $86 billion merger with Time Warner, AT&T introduced a new $15 per month streaming video service dubbed "AT&T Watch." Watch is a bare-bones skinny bundle that competes with services like Philo, a $16 per month offering from several major broadcasters. But AT&T's ownership of the pipes this content flows over gives the telecom giant a very notable advantage. In this case, that has resulted in AT&T offering the service for free to the company's wireless customers, an advantage smaller streaming operators may find hard to overcome:

"Not that it matters anymore since the Federal Communications Commission, headed by telecommunications shill Ajit Pai, successfully killed net neutrality protections earlier this year, but AT&T’s tiered unlimited plans that are strapped with limitations and its decision to offer access to properties it owns for free to its subscribers are cardinal sins against the bright line rules of net neutrality."

Of course that's just the start. With no hard net neutrality rules on the books and the FCC stripped of its authority to police ISPs, there will ultimately be nothing stopping AT&T from disadvantaging its competitors further in more aggressive ways, whether that includes counting a competitors' content against usage caps while exempting AT&T's own services (zero rating), or engaging in gamesmanship at interconnection points in a bid to drive up costs of would be competitors (as we saw with the ISPs' battle with Netflix a few years ago).

Meanwhile, AT&T continues to engage in very AT&T-like behaviors beyond just net neutrality. For example, AT&T began offering its wireless customers free access to HBO last year as it tried to sell regulators on the idea the Time Warner merger would be wonderful for everyone. But it didn't take long for that perk to quickly disappear this week as the company began fiddling with (and raising the prices on) its unlimited data tiers:

"But AT&T revamped its two unlimited mobile plans this week, and in the process it raised the price for the entry-level plan by $5 a month while removing the free HBO perk. The entry-level unlimited plan now starts at $70 instead of $65. Existing customers can keep their old plan and the free HBO, but new customers or those who switch plans will have to buy the more expensive unlimited plan to get HBO at no added cost."

Synergies, yo! Again, like the boiling frog metaphor, these companies make these changes at a somewhat glacial pace, hoping that consumers won't notice as they are gradually squeezed. For example, AT&T this week also leaned in on a long-standing, misleading practice in the telecom and cable TV sectors: bullshit fees. The company quietly announced it would be jacking up its "administrative fee" for all customers from $0.76 to $1.99, effectively providing AT&T with roughly $800 million in additional revenue every year.

The fee, as with most similar fees, simply involves taking some errant cost of doing business and then shoveling it below the line. This serves two real purposes: it lets companies falsely advertise a lower rate, and it allows a company to quietly raise prices while claiming it isn't -- by pointing to the unchanged advertised price. And for years, we've let companies like AT&T provide flimsy justifications like this one:

"When reached for comment, an AT&T spokesperson confirmed the existence of the fee increase. “This is a standard administrative fee across the wireless industry, which helps cover costs we incur for items like cell site maintenance and interconnection between carriers,” the spokesperson said in a statement."

Right. But "cell site maintenance" and "interconnection between carriers" are just the cost of doing business. There's no reason to break these out below the line outside of trying to falsely advertise a lower rate. This behavior has become an obnoxious standard of the telecom and cable TV industries, and you'd be pretty hard pressed to find a regulator or politician from either party that cares. Meanwhile, numerous lawsuits over these kinds of practices haven't done much to limit the behavior.

Again, it's important to remember that the FCC's net neutrality repeal didn't just kill net neutrality. It also dismantled state and FCC oversight of ISPs, intentionally throwing any fleeting, remaining oversight back to the FTC -- an overhwhelmed agency with such limited authority over telecom these kinds of concerns will fall through the cracks (the entire point of the ISP policy gambit). The one-two-three punch of limited competition, crippled regulatory oversight, and unchecked vertical integration power is going to reverberate internet-wide for the next decade.

To keep public and press outrage muted as they cash in on this newfound lack of any real checks and balances, ISPs are going to slowly-but-surely impose an endless array of new restrictions and caveats that seen alone aren't earth-shattering. But if you pay attention over time, you'll note that the temperature of the pot we're all currently sitting in will slowly but surely start to feel decidedly uncomfortable.

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Posted on Net Neutrality Special Edition - 28 June 2018 @ 6:28am

Effort To Save Net Neutrality Via Congressional Review Act Appears Stuck In Neutral

from the sisyphean-endeavor dept

Efforts to reverse the FCC's historically unpopular attack on net neutrality using the Congressional Review Act (CRA) appear stuck in neutral.

The CRA lets Congress reverse a regulatory action with a simply majority vote in the Senate and the House (which is how the GOP successfully killed FCC privacy protections last year). And while the Senate voted 52 to 47 back in May to reverse the FCC's attack on net neutrality, companion efforts to set up a similar vote in the House don't appear to be gaining much traction as the clock continues to tick. A discharge petition needs 218 votes to even see floor time, and another 218 votes to pass the measure.

But so far, the petition only currently has 172 likely votes, all Democrats:

Again, not a single Republican in the House has signaled any interest in saving net neutrality. As we've long noted, the quest for a healthy internet free from anti-competitive meddling by telecom monopolies has long been idiotically framed as a partisan issue despite broad, bipartisan consumer support. ISPs and their numerous political proxy organizations have long enjoyed using rhetoric that only further fuels these divisions (derailing real consensus) by conflating meaningful consumer protections with a "government takeover of the internet," ideas that are happily parroted by many ISP cash-loving DC lawmakers.

Undaunted, net neutrality activists held an advocacy day yesterday trying to drum up some additional support among lawmakers among a clearly debate-fatigued public. Another net neutrality group, Fight for the Future, has constructed this page to track which lawmakers haven't signed on, while making it easy to contact those that haven't.

That said, this effort was always an uphill climb. Even if the CRA vote succeeded in the House, it would have to avoid a veto by Trump. Many activists I've spoken to believe a vote in both Houses would appeal to Trump's "populist" streak forcing him to bend to the whims of public consensus. But given Trump's version of populism tends to be as authentic as a Hollywood Wild West set and as consistent as a brush fire, that prediction always seemed a tad optimistic. Still, stranger things have happened, so maintaining hope in the face of this level of corruption isn't entirely outrageous.

That said, the best path forward for reversing the repeal is two fold. One, there remains a notable chance that the courts see the FCC's fraud-riddled net neutrality repeal as the blatant, facts-optional nonsense it actually is, and reverses it for being an "arbitrary and capricious" abuse of procedural norms and the FCC's obligation to represent the public. If that doesn't work, there's always voting in the the midterms and thereafter for a new breed of lawmakers that don't mindlessly place ISP campaign contributions above the welfare of the public, the internet, and genuine, healthy competition.

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Posted on Techdirt - 27 June 2018 @ 3:10pm

Lobbyists Descend On California To Shape A Rushed New Privacy Law

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

Last year, the GOP and Trump administration used the Congressional Review Act to dismantle FCC consumer broadband privacy protections before they could take effect last March. While AT&T and Comcast whined incessantly about the rules, the FCC's guidelines were relatively modest; they required that ISPs and mobile carriers be transparent about what data is being collected and sold, and get express consumer opt-in consent before ISPs can share more private financial or location data. Such rules could have gone a long way in protecting consumers in the wake of the recent Securus and Locationsmart location data scandals.

Following the ISP-funded attack on FCC authority and consumer protections, states have begun exploring their own privacy protections (mirroring what we're also seeing on the net neutrality front). For example, California last year considered passing a state-level copy of the FCC's gutted privacy rules. But those efforts hit a political brick wall thanks to the collective lobbying muscle of Comcast, Verizon, AT&T, Google and Facebook, which killed that effort by lying repeatedly about what the proposal actually did, including claims the proposal would "aid extremism."

Verizon and Facebook both pretended to back away from those attacks once their efforts gained press exposure, but those promises don't appear to be worth much.

In the wake of the successful attack on FCC privacy rules, California privacy advocates have been pushing a new ballot initiative, this time dubbed the California Consumer Privacy Act of 2018. The initiative would require that companies be fully transparent about what data is being collected and sold (and to whom), as well as mandating mandatory opt-out tools. The proposal goes further than the FCC's discarded rules, in that it would ban ISPs from trying to charge consumers more for privacy, something that has already been previously implemented by AT&T and considered by Comcast.

The new initiative is scheduled to appear on this November's ballot, and Google, Facebook, and large ISPs are once again working in concert to ensure that doesn't happen ahead of a looming Thursday afternoon deadline. They're collectively now pushing for quickly-hacked together "compromise legislation," AB 375, they're hoping will be significantly weaker than the looming November ballot initiative.

"In addition to Facebook, Google, AT&T, Microsoft, Amazon, Verizon, and the California New Car Dealers Association have each contributed six figure donations to the Chamber account set up to defeat CCPA. Uber, the Data & Marketing Association, Cox Communications, and the Interactive Advertising Bureau have each contributed $50,000 to the account, according to disclosures."

Recall, Facebook recently made a big show earlier this year about how it wouldn't be working to undermine such privacy proposals in the wake of the Cambridge scandal:

"The inclusion of a Facebook representative is notable, given the company’s well-publicized announcement earlier this year that it would end its opposition to the initiative. In February, the company provided $200,000 to an account set up by the California Chamber of Commerce designed to defeat the CCPA initiative. But in April, following revelations about the extent to which British consulting firm Cambridge Analytica provided the Donald Trump campaign with illicit access to Facebook user data, Facebook announced that it would withdraw its opposition to CCPA and not provide additional funding to the Chamber account."

As the GDPR clearly illustrates, there's some real peril in pushing through solutions before ironing out all of the potential pitfalls. Both the scotch-taped together AB 375 and the California Consumer Privacy Act (a pet side project of San Francisco real estate developer Alastair Mactaggart) have some notable problems that would have been aided by a longer, more transparent and inclusive discussion. Though the problems with AB 375 (which, again, if passed would eliminate the latter from contention) are notably worse, in large part because the bill was quickly cobbled together in just under a week behind closed doors:

"By tomorrow, the California legislature likely will pass a sweeping, lengthy, overly-complicated, and poorly-constructed privacy law that will have ripple effects throughout the world. While not quite as comprehensive as the GDPR, it copies some aspects of the GDPR and will squarely impact every Internet service in California (some of whom may be not currently be complying GDPR due to their US-only operations). The GDPR took 4 years to develop; in contrast, the California legislature will spend a grand total of 7 days working on this major bill."

Not only was AB 375 a rush job, the bill has been steadily eroded since introduction by this super group of telecom and Silicon Valley lobbying giants. AB 375 just passed out of the out of the Senate Judiciary Committee, meaning it's most likely going to be the California privacy proposal of choice. And the fact that it's a rush job is not apparently of much concern to the bill's backer:

"Assemblyman Ed Chau, an Arcadia Democrat and the chief bill author, said he doesn't like the rushed process forced by the ballot measure deadline, but he stressed that his bill gives Californians important privacy protections."

With that mindset, it's easy to wind up with a privacy law that sounds good ("look ma, I "fixed" privacy!") but doesn't actually do anything. And when you've got lobbyists from AT&T, Comcast, Verizon, Facebook, Google, Amazon and Microsoft disproportionally dictating the overall trajectory of the law, the chances that you're going to end up with weak-kneed "privacy rules" in name only is pretty monumental. Adding speed for speed's sake -- combined with an overall lack of transparency -- only adds to the potential that the rules you end up with are toothless or packed with unintended consequences.

That said, doing nothing isn't an option. This isn't a problem that magically fixes itself.

Modern consumer privacy oversight in the internet-era currently consists of little more than pinky swears and winks, a point driven home repeatedly by the Cambridge, LocationSmart and Securus scandals. We need to have a lengthy, transparent, adult conversation about what a potential solution might look like. The problem is that the larger companies dictating the conversation have an absolutely abysmal track record on these issues, so while they may have valuable insight on the complicated scope of a particular proposal's impact, they've managed, repeatedly, to shoot their credibility squarely in the foot on this subject.

And while ISPs and Silicon Valley giants like to go on at length about how they're "open to having a conversation" about more meaningful privacy guidelines, the reality is that most of these larger companies simply aren't. Any rules worth their salt will cost them money, since an informed, empowered consumer is more likely to opt-out of data monetization schemes, whatever they look like. As a result, you'll be hard-pressed to find many large ISPs or Silicon Valley giants willing to back truly tough consumer protections, especially rules than mandate express, opt-in consumer consent for things like location or financial data.

Eventually, after we've suffered through a few more hacks, breaches and major scandals, some of these companies may shift their thinking toward the idea that compliance with quality, even-handed rules is more profitable than chaos. But as the ham fisted repeal of the FCC privacy rules makes clear, we're nowhere near that point yet. Meanwhile, on the federal level, the Trump administration is rumored to be considering a broad new privacy plan. And if the administration's equally heavy-handed net neutrality repeal is any indication, objectivity, hard data and transparency aren't likely to have much of a seat at the table there, either.

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Posted on Techdirt - 27 June 2018 @ 6:34am

California's Quest For Tough Net Neutrality Not Dead Yet

from the try-and-try-again dept

Last week, AT&T won another major victory for itself by scuttling California's attempt to pass tough new net neutrality rules. The proposed law, pushed by State Senator Scott Wiener, was heralded by the EFF as a good state-level proposal that eliminated a lot of the loopholes in the FCC's now-discarded 2015 rules. But AT&T and Comcast lobbyists convinced California Assemblyman Miguel Santiago to introduce a series of last-minute secretive Tuesday night amendments gutting numerous, essential components of the bill. Those amendments were then quickly rushed through a vote without any debate.

Wiener initially pulled his bill, arguing it no longer protected consumers. But he has since indicated that he plans to spend this week working with Santiago to see if they can resolve their differences:

"We've agreed to make a good faith effort to make amendments to the bill in order to pass strong net neutrality," he said in an interview. "But as I've made clear in the past, there are some protections that must be in the bill. Without them, this would not be real net neutrality."

Needless to say, Santiago, a consistent recipient of AT&T campaign cash, has since been widely vilified by net neutrality activists. And for good reason; not only did Santiago help circulate misleading, AT&T-backed studies ahead of the vote (one tried to claim that AT&T's anti-competitive abuse of usage caps would somehow aid minority communities), he tried to railroad the bill changes through without any meaningful dialogue, while hiding from numerous reporters trying to shine some light on his proposed changes the evening before the vote.

After taking a press beating for much of last week, Santiago issued a statement that tried to spin what happened, claiming he was just following procedure in a quest for a "serious policy conversation":

"I laud the Senator's passion, his drive, and the integrity of his work. As Chair of the Committee, I wanted to engage in a serious policy conversation and deliver a bill that could withstand legal challenges from the telecommunications industry – an industry that sued to block implementation of the 2015 FCC Order implemented under President Obama; most definitely an industry that will sue to block implementation of landmark net neutrality protections in California."

So one, the bill in question was already resilient to ISP lawsuit, that was the whole reason the EFF backed this version and not a weaker, earlier incarnation. And again, by "serious policy conversation" Santiago means rushing through numerous terrible amendments (amendments only the ISP industry had been asking for) without any conversation whatsoever. For his part, Santiago then spent some time complaining that he and his family received death threats from net neutrality advocates angry at his attempt to neuter the bill without any substantive dialogue:

"All through this time, the flash messaging on this measure has been easy. It’s sensational, and anger-inducing. “He gutted the bill!” “SB 822 was eviscerated!” “Santiago killed net neutrality!” But none of those things are true. That level of rhetoric has created a firestorm. I have received threats and my wife has been harassed. My personal family pictures have been stolen from my social media platforms and used to create memes. Really? Using pictures of my kids? This is a new low. Progressives don’t behave that way. We expect this type of disrespect, fake news, and insults from Trump -- not those who support dignity and progressive values."

So one, it should go without saying that threatening a lawmaker or his family for tech policy is just stupid. It's something we also saw with Ajit Pai, and it's not helping anyone. In fact, it simply makes the problem worse by shifting the conversation away from policy, cronyism, regulatory capture and corruption, and toward the idea that these lawmakers are the unfair victims of entirely-unreasonable hordes of mean activists.

That said, those lobbing these kinds of threats are in the vast, vast minority. And lawmakers bear some responsibility for the backlash by engaging in the tech policy equivalent of a giant middle finger aimed squarely at already-angry consumers. Survey after survey shows massive, overwhelming bipartisan support for net neutrality, yet time and time again lawmakers tasked with representing the people keep siding with some of the most-hated, least-competitive companies in America on issues that will shape the internet for decades. Downplaying that anger only adds insult to injury.

For what it's worth, Wiener seems hopeful that his bill isn't dead, and debate should be occurring as of this writing. That said, Wiener's also well aware that if he can't get the bill past Santiago with important restrictions on things like zero rating and interconnection intact, he'll likely have to try again post midterms:

"...if a deal still can't be hammered out, Wiener said net neutrality will have to wait until next year. But he said Californians need those protections now, especially since the FCC's rules have officially come off the books and AT&T has completed its megamerger with Time Warner.

"We are in the danger zone," he said. "If I am forced to pull the bill and try again next year I will. But we don't have time. We need to pass a strong net neutrality bill this year."

Since net neutrality violations are just a symptom of limited competition (a problem most in government refuse to acknowledge even exists, much less want to fix) this isn't a fight that's going to end anytime soon. In fact, by the railroading of federal rules and consumer opinion, ISPs have only really galvanized the opposition, ensuring a tougher fight ahead and a backlash that's going to reverberate in tech policy circles for the better part of the next decade. Should voters dramatically reshape the political field in the midterm and thereafter, AT&T, Verizon, Comcast and Charter aren't going to enjoy the end result.

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Posted on Free Speech - 26 June 2018 @ 10:44am

China Censors John Oliver Because President Xi Looks A Bit Like Winnie The Pooh

from the thin-skinned dept

Whatever you do, don't point out that some people think China's President Xi Jinping vaguely resembles Winnie the Pooh.

HBO Comedian John Oliver recently learned this the hard way when Chinese users of popular social networking website Weibo found they weren't able to mention Oliver by name without receiving an error message stating such comments violated "rules and regulations." After that, censorship monitor GreatFire.org indicated that HBO’s website was blocked entirely for the lion's share of the country since last weekend.

The cause of China's efforts to remove Oliver from the internet? This recent twenty minute segment took a semi-deep dive into China's political leadership, noting their abolition of term limits, ongoing censorship, the routine murder and/or imprisonment of political dissidents, the country's rather terrifying implementation of "citizen scores," and oh -- the fact that some people think that Chinese President Xi has a semi-decent resemblance to a rotund, honey-adoring cartoon:

"Apparently, Xi Jinping is very sensitive about his perceived resemblance to Winnie the Pooh,” Mr. Oliver said on the show. “And I’m not even sure it’s that strong a resemblance, to be honest. But the fact he’s annoyed about it means people will never stop bringing it up."

Like most Chinese internet censorship, more technical users can get around the attempt to remove Oliver from the Chinese internet by using a VPN. That said, like Russia and other countries, China has been busy saddling VPN vendors with all manner of cumbersome restrictions as part of an effort to effectively ban the technology from widespread use. Last year, China's Ministry of Industry and Information Technology declared that all VPN providers now needed prior government approval to operate, imposing fines up to $2000 on companies offering "unsanctioned" VPNs (read: nearly all of them).

Of course the censorship only proves Oliver's point: that the country remains entirely intolerant to free speech, Xi has arguably thin skin, and the Chinese leader does, in fact, strike a fleeting resemblance to a certain pantless bear with self-esteem issues and an eating disorder:

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