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Posted on Techdirt - 22 March 2019 @ 6:14am

Facebook Screws Up Again

from the please-make-it-stop dept

Another day, another Facebook privacy scandal.

This time around, a "senior Facebook employee" has informed security expert Brian Krebs that Facebook has been storing the passwords of "hundreds of millions" of Facebook (and Instagram) users in plain text (aka unencrypted). This is a fundamental security error that no company should ever make, yet it's been a pretty common occurrence for tech companies where security and privacy are commonly seen as an afterthought. According to Krebs, the passwords were accessible to around 20,000 Facebook employees for the better part of the last decade:

"The Facebook source said the investigation so far indicates between 200 million and 600 million Facebook users may have had their account passwords stored in plain text and searchable by more than 20,000 Facebook employees. The source said Facebook is still trying to determine how many passwords were exposed and for how long, but so far the inquiry has uncovered archives with plain text user passwords in them dating back to 2012.

My Facebook insider said access logs showed some 2,000 engineers or developers made approximately nine million internal queries for data elements that contained plain text user passwords."

On the "plus side," this latest scandal is slightly less terrible than past scandals like the Cambridge Analytica fracas. In those instances, the scandals made it clear Facebook routinely viewed consumer privacy as a distant afterthought as it looked to monetize every brain fart of its userbase. In this case, insiders told Motherboard that this does appear to have been a bug, and that the majority of Facebook passwords are usually encrypted:

"A current Facebook employee told Motherboard that "it sucks."

"Obviously we don’t store them in plaintext ‘normally,’" the employee, who has a technical role, told Motherboard. "Logged in plaintext in some unique weird cases we found and fixed and are talking about." Motherboard granted multiple sources in this story anonymity to speak more candidly about a security incident.

"It should’ve never happened," they said.

Still, given Facebook's resources and the volume of security talent they have on staff, the fact that it happened at all is grossly embarrassing. The scandal comes right on the heels of Facebook's other recent scandals -- like its cavalier sharing of user health and real estate data -- and is only compounding a scandal-ridden 2018 for the company. Krebs stated that as many as 600 million of the company's 2.7 billion users could be affected by the company's latest screw up, though, thus far, Facebook has yet to notify any of the impacted users.

Facebook was quick to issue a blog post amusingly entitled "keeping passwords secure," before confirming that Facebook failed to do precisely that. Throughout the post Facebook's Pedro Canahuati downplays the scope of the threat, while remaining somewhat murky on how many people were actually impacted:

"To be clear, these passwords were never visible to anyone outside of Facebook and we have found no evidence to date that anyone internally abused or improperly accessed them. We estimate that we will notify hundreds of millions of Facebook Lite users, tens of millions of other Facebook users, and tens of thousands of Instagram users. Facebook Lite is a version of Facebook predominantly used by people in regions with lower connectivity."

Given that this data was available to 20,000 employees over a period of roughly seven years, the claim that they've found "no evidence" of abuse should be of cold comfort. The company, meanwhile, continued to insist that consumer privacy is among its top priorities:

"In the course of our review, we have been looking at the ways we store certain other categories of information — like access tokens — and have fixed problems as we’ve discovered them. There is nothing more important to us than protecting people’s information, and we will continue making improvements as part of our ongoing security efforts at Facebook."

At this point it's fundamentally obvious that has never actually been true. And while that may be true now that the company is staring at looming regulation and mammoth fines all around the globe, at this point Facebook would need to be able to go a week without a major privacy scandal before any sentient being would take those claims at face value. In the interim, if you're not using a decent password manager and unique passwords on every website you visit, you might just want to get on that.

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Posted on Techdirt - 21 March 2019 @ 6:16am

Slow Broadband, Usage Caps Could Mar Google Stadia's Game Streaming Ambitions

from the ill-communication dept

I can remember being at E3 in 2000 and being pitched on the idea of a sort of "dumb terminal" for gaming. As in, you wouldn't need a computer or game console in your home, since all of the actual game processing would be accomplished in the cloud then streamed to your TV via broadband. Most of these early pitches never materialized. Initially because cloud computing simply wasn't fully baked yet, but also thanks to America' shoddy broadband.

Cloud-based game streaming is something the industry has continued to push for, though nobody has yet to truly crack the market. Onlive probably tried the hardest, though again a lack of real cloud horsepower and sketchy residential broadband prevented the service from truly taking off.

Undaunted, Google took to the stage at the Game Developers Conference to unveil Stadia, a looming game streaming platform that will let gamers play top-shelf games on any hardware with a Chrome browser. Google insists that the service, when it launches this summer, will be able to drive games at up to 4K resolution and 60 frames per second seamlessly between multiple devices with no need for game consoles, high-end PCs, loading times, or installs. The whole presentation is available here:

If anybody can make the idea work it's certainly Google, whose massive transit and cloud computing firepower should give it a leg up on past efforts. Unfortunately for Google, the service still faces a daunting foe. One Google has previously tried and failed to disrupt: the shoddy state of US broadband:

"Generally, streaming a game at 1080p requires latency of less than 20ms and downstream speeds of at least 25 Mbps. But raw throughput is just one of numerous factors that can impact the responsiveness of game streaming. Upstream speeds, the quality of your router, and even congestion at internet peering and interconnection points can impact game play.

Google hopes to sidestep some of this by having the lion’s share of the streaming traffic travel over its own datacenter and transit links. But that data still needs to make its way to your home via the “last mile,” or your ISP. And if your ISP is terrible, your Google Stadia experience is likely to mirror that reality."

In addition to slow speeds (thanks to countless US telcos that refuse to upgrade their networks), Google's new service will also need to contend with the bullshit, arbitrary usage caps and overage fees giants like Comcast have been imposing on their networks in the wake of little to no real competition. While there are not many services that can blow through Comcast's 1 terabyte cap ($10 per each additional 50 gigabytes thereafter), streaming games at 4K or 8K certainly will. Many ISPs, especially slower telcos, impose usage caps that are far less generous.

The other issue to keep an eye on will be net neutrality. ISPs like Verizon are working on their own game streaming services. Given that incumbent ISPs are already removing usage caps if you use their own video streaming service, there's really not much stopping an ISP from doing the same thing with gaming. It's the culmination of a vision telecom giants like Verizon, Comcast, and AT&T have had for years, where they impose arbitrary and unnecessary restrictions and caveats to simultaneously cash in on--and disadvantage--companies they want to directly compete with. If you can't win, cheat.

Given its cloud firepower Google can certainly pull the idea off. And if Google doesn't, somebody else will. Replacing high-end PCs and pricey game consoles with a simple cloud-based, multi-device game streaming subscription service seems like the obvious next step. But the process is going to once again shine a light on how the broken, monopoly-dominated telecom sector has some very real problems tech refuses to address and fix. Problems that harm not only the public, but countless attempts to innovate and disrupt other, existing sectors. Game streaming is going to shine a very bright light on this reality.

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Posted on Techdirt - 20 March 2019 @ 1:30pm

California Becomes 20th State To Push 'Right to Repair' Legislation

from the monopolized-repair dept

A few years back, frustration at John Deere's draconian tractor DRM culminated in a grassroots tech movement. The company's crackdown on "unauthorized repairs" turned countless ordinary citizens into technology policy activists, after DRM and the company's EULA prohibited the lion-share of repair or modification of tractors customers thought they owned. These restrictions only worked to drive up costs for owners, who faced either paying significantly more money for "authorized" repair, or toying around with pirated firmware just to ensure the products they owned actually worked.

The John Deere fiasco resulted in the push for a new "right to repair" law in Nebraska that not only proposed protecting the consumers' right to repair their own tech, but protected independent, third-party repair shops from efforts by many major companies to monopolize repair (Apple and game console vendors like Sony and Microsoft usually come first to mind). This push then quickly spread to multiple other states, driven by a groundswell of consumer annoyance.

Last week, California became the twentieth state in the country to support such a law. It's the second year in a row the legislation has been proposed, with the folks at iFixit explaining that this latest version eyes simply updating the state's existing lemon law:

Last year’s bill was proposed to California law at large, while this year’s bill is an amendment to California’s effective Lemon Law, a.k.a. the Song-Beverly Consumer Warranty Act. Unique to the state of California, this law requires companies to provide a repair option. It’s been effective at making sure that you can get your six-year-old MacBook Pro fixed by Apple in California—a service that Apple refuses to perform across the border in Arizona. But manufacturers found a loophole in the law allowing them to monopolize repair rather than providing parts to the repair provider of the consumer’s choice. This bill closes that loophole.

Granted the reason no bill has actually been passed yet is thanks to the extensive lobbying done by companies including Verizon, Microsoft, Apple, and Sony, who obviously don't want smaller independent shops (or smart consumers) eroding their repair revenues. More often than not, these companies have tried to scare folks away from such legislation by insisting it will create all manner of new and diabolical privacy and security problems. Apple in particular notoriously warned that the law in Nebraska would somehow make the state a "mecca for hackers."

The efforts proceed all the same. Of the 20 state laws proposed, Minnesota's effort (which has now passed through two state committees) has managed to proceed the furthest. For its part, iFixit notes that the legislation doesn't just aid consumer rights, it can help rein in waste made worse by companies like Apple which impose counterproductive restrictions on re-use and recycling:

"Consumers should have the right to choose their repair provider. Increasing independent repair options will encourage people to fix the electronics and appliances they already own, rather than toss their broken belongings and buy new ones. Independent and self-repair also help people save money, create local jobs, and prevent e-waste—which is now the fastest growing waste stream in the world."

And while numerous giants are working hand-in-hand to scuttle such legislation, it seems like 2019 is likely to see the first such bill finally passed, with many more clearly waiting in the wings as consumers grow increasingly annoyed by high costs and arbitrary restrictions.

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Posted on Free Speech - 20 March 2019 @ 6:34am

Terrified Of The Internet, Putin Signs Laws Making It Illegal To Criticize Government Leaders Online

from the freedom-is-slavery dept

Russia's efforts to clamp down on anything resembling free speech on the internet continues unabated. Putin's government has spent the last few years effectively making VPNs and private messenger apps illegal. While the government publicly insists the moves are necessary to protect national security, the actual motivators are the same old boring ones we've seen here in the States and elsewhere around the world for decades: fear and control. Russia doesn't want people privately organizing, discussing, or challenging the government's increasingly-authoritarian global impulses.

After taking aim at VPNs, Putin signed two new bills this week that dramatically hamper speech, especially online. One law specifically takes aim at the nebulous concept of "fake news," specifically punishing any online material that "exhibits blatant disrespect for the society, government, official government symbols, constitution or governmental bodies of Russia." In other words, Russia wants to ban criticism of Putin and his corrupt government, with experts telling the Washington Post that the updated law effectively removes the pesky legal system from what was already a fairly draconian system:

"Prosecutors can direct their complaints about online media to the state, which can block access to websites if the offending material isn’t taken down.

This, experts say, is new. “The Prosecutor’s office may now block such fake news sources prior to the judicial decision. It gives the Prosecutor’s office an extremely high authority and almost completely eliminates the Russian (albeit completely non-free) courts from the game,” Maria Snegovaya, an adjunct fellow at the Center for European Policy Analysis, wrote in an email.

“In other words, it significantly expands the repressive power of Russia’s repressive apparatus. This may be compared to the Stalin’s Troika, a commission of three for express judgment in the Soviet Union during the time of Joseph Stalin who issued sentences to people after simplified, speedy investigations and without a public and fair trial,” she added.

Websites that now spread "fake news" in Russia (defined as anything that criticizes Putin and his coalition of mobster oligarchs) now suddenly face fines of up to 1.5 million rubles ($22,900) for repeat offenses. Another companion law signed by Putin this week is equally problematic; it would update existing laws to make it a federal offense to insult the Russian government or political leaders. Repeat violators of that law face fines up to 300,000 rubles ($4,700) — and 15 days in jail:

"The bills amending existing information laws overwhelmingly passed both chambers of Russian parliament in less than two months. Observers and some lawmakers have criticized the legislation for its vague language and potential to stifle free speech. The legislation will establish punishments for spreading information that “exhibits blatant disrespect for the society, government, official government symbols, constitution or governmental bodies of Russia."

Both law updates quickly passed through the Russian Parliament in less than two months despite widespread condemnation and a petition of more than 100 journalists and academics lambasting the proposal as ham-fisted authoritarianism. It's an amusing and slightly terrifying escalation from a government busted for pushing buckets of hateful and idiotic disinformation online, yet simultaneously pretending to wage a war against inauthentic news coverage and critical thinking. It's clearly a model Putin hopes to export to numerous countries, not least of which being the already-factually-challenged United States.

Of course while Russia would frame this as a show of strength, it's really a show of fear. This, combined with Russia's efforts to disconnect itself from the internet makes it abundantly clear how afraid the government is of not only free speech, but its own people too. A Russian public that has not only been increasingly protesting these obnoxious internet restrictions, but also the underlying Russian economic problems Putin very clearly doesn't want highlighted online.

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Posted on Techdirt - 19 March 2019 @ 6:25am

US Huawei Blackballing Efforts Stall Due To Lack Of 'Actual Facts'

from the ill-communication dept

During the Trump era, the US government has dramatically ramped up claims that Chinese hardware vendor Huawei is a nefarious spy for the Chinese government, blackballing it from the U.S. telecom market. From pressuring U.S. carriers to drop plans to sell Huawei phones to the FCC's decision to ban companies from using Huawei gear if they want to receive federal subsidies, this effort hasn't been subtle.

While Huawei should never be confused with a saint (what telecom company would be?) there's several problems with the effort. The biggest being that despite a decade of hand-wringing and one eighteen month investigation by the US government, there's still no public evidence Huawei uses its network gear to spy on Americans. That's not sitting well with countries we've asked to join along in the fun.

The UK, for example, recently noted that while some Huawei products can pose risks by nature of simply being low quality, they've yet to see any threat posed by Huawei that necessitates a global ban. That position has since been repeated by other allies who have been pointing out how despite years of bluster on this subject, they've yet to see the US government release the slightest bit of evidence supporting the allegation:

"European and Asian officials have complained privately that recent American intelligence briefings for allies did not share any sort of classified information that clearly demonstrated how the Chinese government used Huawei to steal information, according to people familiar with the discussions. European officials have told counterparts that if the United States has evidence the Chinese government has used its companies to do so, they should disclose it.

One senior European telecommunications executive said that no American officials had presented “actual facts” about China’s abuse of Huawei networks.

Of course this is all hidden behind claims that this information is classified. But how hard is it to redact and provide at least some information proving your point? These allegations have also been bubbling up in fits and starts for over a decade now, and not a single security expert or any government official has been able to provide any evidence whatsoever to prove their point. While it's certainly not impossible that Huawei helps the Chinese government spy, evidence is important. Can you imagine the hysteria on countless fronts if a US company like AT&T was banned from other countries without any supporting data?

Unmentioned in coverage of this hand-wringing about Huawei has been the fact that much of the hysteria on this front has been drummed up by US networking companies, who simply don't want to compete with cheaper Chinese gear. With countless global gear makers rushing toward the trough as wireless carriers build next-generation 5G wireless networks, these efforts have only intensified. US gearmakers and their favorite lawmakers have a good schtick going: profess China must be banned from all global telecom markets based on claims of spying, then hide behind national security when anybody asks for proof.

Also ignored is that all of the hysteria about Huawei obfuscates a larger security threat (much of it originating in China): the lack of security in shitty internet of things gear. At this point you don't really need Huawei to spy on Americans, since we're connecting millions of poorly secured devices to our home and business networks annually voluntarily. Gear that often lacks any sensible security countermeasures whatsoever.

Similarly ignored is the fact that the US has engaged in most of the behavior we accuse Huawei of, including having broken into Huawei to spy on company executives. You'll often see stories like this one highlighting China's nefarious attempts to tap into undersea cables. But the press ignores that the US has been engaged in its own undersea cable and satellite communications wiretapping efforts for decades. Many of these efforts began decades ago (like Echelon), and were ridiculed as tin-foil-hat fantasy until the Snowden documents were revealed.

Again, none of this is to defend China's actual abuses, or to suggest that Huawei hasn't engaged in bad behavior. But imposing a global ban on a telecom giant for spying based on no actual evidence remains a shaky proposition, and it's something countless supporters of the blackballing effort would be screaming about incessantly were the shoe on the other foot.

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Posted on Techdirt Wireless - 18 March 2019 @ 6:14am

Verizon Confirms That Yes, 5G Will Cost You Extra

from the nothing's-shocking dept

By now we've established that while fifth-generation (5G) wireless will result in faster, more resilient networks, the technology has been over-hyped to an almost nauseating degree. Yes, faster, lower latency networks are a good thing, but 5G is not as paradigm-rattling as most wireless carriers and hardware vendors have led many in the press to believe. 5G is more of a useful evolution than a revolution, but it has become the equivalent of magic pixie dust in tech policy circles, wherein if you simply say "it will lead to faster deployment of 5G!" you'll immediately add gravitas to your otherwise underwhelming K Street policy pitch.

Throughout all of the hype, carriers have been really hesitant to discuss what's perhaps the most important question: how much will 5G cost? After all, next-generation connectivity is only going to help boost broadband competition if it's both ubiquitous and affordable, two things the US wireless industry has never really been known for. And now that the carrier lobbyists have effectively convinced the Pai FCC to neuter itself, that question has only become more important.

It's starting to become clear why carriers haven't wanted to much talk about price. AT&T's early offerings haven't been much to write home about. And this week Verizon took the wraps off the pricing for its mobile 5G offerings, noting that consumers will need to pay $10 extra per month across the board if they're interested in using it:

"Verizon has decided to treat its emerging mobile 5G network as a premium service that customers should pay more to access. The company is debuting its mobile 5G network next month at select locations in Chicago and Minneapolis, but customers wishing to use it will need a new phone and a new, costlier plan.

Verizon confirmed its new Mobile 5G service will require a new premium unlimited plan, starting at $85. That is $10 more than Verizon’s current GoUnlimited plan. Customers will also need a Motorola Moto Z3 phone — currently the only model compatible with Verizon’s 5G network, and a special 5G Moto Mod attachment, sold separately."

In other words, 5G will cost you extra. Which isn't surprising if you've watched Verizon at all over the last decade or two.

Granted some will try and claim that Verizon should charge more due to the high costs of 5G deployment. That ignores the fact that US consumers already pay some of the highest prices for 4G LTE mobile data in the developed world. That also ignores that Verizon just nabbed incalculable countless billions from the Trump tax cuts and a litany of policy favors from the FCC, money the company has already acknowledged won't be put back into the network. That money was, if you have a memory, supposed to go toward significant new jobs and network investment, according to Verizon.

Verizon's charging more because it doesn't believe it will be adequately punished by competitors for doing so. And it doesn't worry about competition because while the wireless sector (including T-Mobile) talks a good game, they still usually refuse to seriously compete on price. And with the looming Sprint and T-Mobile merger preparing to reduce the total number of major competitors in the space from four to three, that's not getting better anytime soon.

That brings us to the other major question users should be asking about 5G. In a post net neutrality landscape where the FCC no longer seriously has the authority to hold wireless carriers accountable, what kind of annoying restrictions will be placed on these lines? Verizon (who already charges some "unlimited" data customers more to stream video in HD) hasn't affixed any on these early 5G markets yet, but should the FCC win its looming lawsuit over the net neutrality repeal, all bets are off.

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Posted on Techdirt - 15 March 2019 @ 1:39pm

$900 Robot Commits Adorable Seppuku, Showing Again How In The Modern Era You Don't Own What You Buy

from the very-expensive-paperweight dept

Here at Techdirt we've talked a lot about how in the modern, internet-connected era, you don't really own the things you buy. For over a decade we've shown how your digital books, music, or films can simply and quickly disappear without much recourse. The game console you've bought can be suddenly and mysteriously downgraded via firmware update, leaving you with a product that actually does less than the one you bought. And more and more frequently, companies are going further and completely bricking products they no longer want to support, leaving consumers with a pricey paperweight.

The latest case in point: many consumers shelled out upwards of $900 for a twelve-inch tall "social" robot by the name of Jibo. Started as a research project at MIT, Jibo was crowdfunded then marketed as the "the first social robot for the home." First sold in 2017, the robot offered some basic interactive functionality much like similar products, promising to offer a digital home assistant with a little more personality. Reviewers were generally not all that impressed, saying the product had charm but lacked functionality:

Elbowed out by better products, Jibo was ultimately forced to scuttle the effort, and last year sold off all of its assets to a VC firm. And because Jibo's owners were forced to shut down the servers that powered much of the robot's functionality, owners of the $900 robot have since reported that Jibo has been informing them that it's dying just a few years after it was created, delivering one final pre-programmed message before the lights go dark and consumers are left with a useless relic:

Consumers get a cute song and dance, but no recourse for the fact they bought a $900 robot that's now utterly useless, barring some creative hacking. It's yet another example of how in the internet of things era, endless attention is given to marketing and hype, and little to real-world questions like "what happens when the servers go dark?" or "why does this product have paper mache grade security?" By the time those questions are seriously asked, companies that hype and sell these kinds of products have already moved on to the next great thing, leaving consumers (and in the case of security -- the entire internet) left holding the bag.

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Posted on Net Neutrality Special Edition - 15 March 2019 @ 6:45am

Hearing On New Net Neutrality Law Once Again Conjures Up A Greatest Hits Of Nonsense

from the round-and-round-we-go dept

As we previously noted, Democratic lawmakers recently just proposed a very simple, three page law. The Save The Internet Act would simply reverse the Ajit Pai repeal of net neutrality, and restore the FCC's 2015 net neutrality rules. It would again classify ISPs as common carriers under Title II of the Telecom Act, but, as an act of Congress, couldn't be repealed by the whims of future FCCs. It also locks the "forbearance" part of the original rules (which prevented the FCC from using Title II to regulate broadband rates) into permanent law.

Unfortunately at House Communications Subcommittee hearing for the new bill on Tuesday, all the stale tropes resurfaced, despite the countless years spent debunking them. Representative Bob Latta, for example, trotted out the longstanding claim that classifying ISPs as common carriers under Title II is some kind of fringe, extremist position:

"[I]nstead of engaging with us to try to solve the problem, my colleagues have retrenched back to the most extreme position in this debate. The idea that only Title II is a real net neutrality is dangerous and wrong," Latta said. "You have heard over and over again that we need to protect consumers from blocking, throttling and internet fast lanes. That sounds reasonable enough. Well, we can easily do all of this without giving the government free rein through the specter of Title II."

Except there's nothing "extreme" about Title II. As we've noted countless times ISPs have been classified this way on and off for many years, including the earliest part of the internet when broadband growth was the most intense. Many ISPs have actively sought this classification when it provides tax benefits or when it suits a specific legal agenda. It's yet another "debate" that isn't really a debate, exemplifying how no matter how long we bicker over net neutrality, the same debunked falsehoods simply won't die.

All the other claims against net neutrality made their obligatory appearance at the hearing, including the industry-repeated claim that Title II and net neutrality "stifled broadband industry investment." It's a claim easily disproved by SEC filings, ISP earnings reports, and even the public statements of more than a dozen telecom CEOs. Yet, like so many of these arguments, it somehow never dies, thanks to telecom lobbyists eager to mislead via repetition, and cultivate a general sense of futility and fatigue among debate observers.

We've long noted how framing net neutrality as a partisan thing is stupid. There should innately be nothing partisan about basic rules that prevent monopoly telecom operators from using their power as internet gatekeepers to harm competitors. And the FCC's 2015 rules were crafted after decades of hearings, countless debates, and numerous court battles already. But despite the bipartisan majority of Americans supporting the end result, ISP lobbyists have been very successful in framing the issue as partisan to stall consensus.

For their part, Congressional Republican opponents to net neutrality continued to insist that despite overwhelming public support, this bill isn't a good idea and a new "compromise" was needed:

"It's time for bipartisan legislation that could actually become law," Greg Walden, a Republican from Oregon, said at the hearing. "Unfortunately, my friends on the other side have decided not to work with us." Bob Latta, a Republican from Ohio and a ranking member on the committee, accused Democrats of retrenching "to the most extreme position in this debate."

One problem is that the FCC's 2015 rules, crafted over the better part of two decades, are the compromise. The other problem is that Walden's and others' preferred alternative "compromise" legislation has proven to be anything but. Most of these alternative proposed bills have been little more than bad faith gambits; net neutrality in name only. More often then not, these alternative bills have been industry-supported efforts packed with countless loopholes designed specifically to do one thing: prevent tougher, better state and federal laws from being passed.

As it stands, the Save the Internet Act has a solid chance of passing the House. It has an uphill climb in the Senate however, and would still need to somehow avoid a veto by Donald "Net neutrality is the fairness doctrine" (for the record it's not) Trump. Even if it fails to pass, it will serve another function: provide a handy scorecard ahead of the 2020 elections clearly highlighting lawmakers who think AT&T, Comcast, and Verizon's quest to behave anti-competitively is more important than the will of the public or the health of the internet.

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Posted on Techdirt - 14 March 2019 @ 6:32am

Why, Exactly, Do We Still Trust Telecom Megamerger 'Synergy' Promises?

from the expensive-groundhog-day dept

America has a very Charlie Brown and Lucy football approach to its relationship with megamergers, especially in telecom. Time after time, major tech and telecom companies promise consumers and employees the earth, sea, and sky if they're allowed to become bigger and more powerful. And time after time these promised "synergies," jobs, and expanded investment promises wind up being empty. In merger after merger (especially in telecom), it's been made repeatedly clear these megadeals only really benefit investors and executives. For everybody else, they're an expensive shitshow.

The primary culprit continues to be the country's waning interest in meaningful antitrust enforcement, Luddite Judges, and the steady lobbyist erosion of antitrust itself. That was proven loudly when the DOJ recently tried to prove the obvious when it challenged AT&T's $86 billion acquisition of Time Warner. The government repeatedly provided economic models showcasing that the megadeal would immediately result in higher prices for consumers and competitors alike. But a lobbyist-dictated narrowing of what constitutes a competitive threat often leaves government lawyers trapped within narrow corridors of economic theory to prove painfully obvious points.

Ultimately, the DOJ's arguments were rejected by US District Court Judge Richard Leon, whose ruling (allowing the merger to proceed without a single condition) has been widely ridiculed for missing the forrest for the trees. At no point did Leon's thinking stumble anywhere near AT&T's obvious plan to use both its domination of "must have" content (like HBO) and the death of net neutrality synergistically to disadvantage competitors. That's not a theory; it's already happening. The DOJ didn't help its case by failing to mention net neutrality even once on trial or appeal, likely because it didn't want to highlight how while it was trying to protect consumers (allegedly), the Trump FCC was busy giving them a giant middle finger.

It didn't take long for AT&T to prove the DOJ's case, not that it apparently mattered. Before the ink was even dry on the deal, AT&T had jacked up the carriage costs of HBO for competitors, forcing companies like Dish Network to drop the channel after arguing they could no longer afford it. AT&T was also quick to jack up prices for its DirecTV satellite customers, including hikes in a bevy of misleading fees. And this week, word leaked out that AT&T will soon be getting rid of its $40 base plan, and replacing it with two new $50 and $70 plans (read: hike prices):

"Current DIRECTV NOW customers will be able to keep their old packages but with a $10 a month price hike starting on their next bill. According to our sources as long as you stay subscribed, you will be able to keep your current DIRECTV NOW package. If you leave, you may not be able to resubscribe to the old DIRECTV NOW packages."

While AT&T tries to soften the blow by including HBO in both new tiers, it's still a price hike. This is technically the second price hike for AT&T's streaming service in the last year, and the price of AT&T's cheapest plan has now jumped $15 in just eight months. AT&T had previously sold HBO standalone to these customers for as little as $5, so given the $15 hike in just eight months, you can probably do the math.

This isn't surprising. And it's precisely what the DOJ and consumer groups predicted. AT&T saddled itself with so much debt from its 2015 DirecTV and 2018 Time Warner mergers that it's now forced to raise rates to claw out from under said debt. The problem (for AT&T): as AT&T jacks up prices it's simply driving more and customers to the exits, making its financial footing even more precarious. Of course, being umbilically tied our intelligence apparatus AT&T's too big to fail, so actual repercussions for AT&T's merger mania will be hard to come by. Customers, taxpayers, and employees are the ones footing the bill.

One of the "fun" things about US merger mania is that once a deal is done, few (including journalists) go back to see if the merger promises materialized. In this case, it's important to point how that AT&T court filings not only laughed off the DOJ's claims that the deal would raise rates, the company repeatedly proclaimed that the merger would result in lower prices for all as competition flourished:

"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 stated in a post-trial brief.

"There is no sound evidence from which the court could fairly conclude that retail pay-TV prices are likely to increase," AT&T said in the wake of the trial. The Dallas-based telecom giant insisted that "merger efficiencies will begin exerting downward pressure on consumer prices almost immediately" post merger.

Yet here we are. In telecom, the repetition of this same story is borderline purgatorial. American consumers witnessed the exact same problems in the wake of Comcast's 2011 merger with NBC, and Charter Spectrum's 2016 merger with Time Warner Cable. And we're now happily preparing to do the same thing with the merger of two of just four wireless giants: T-Mobile and Sprint. At some point it begins to feel less like reality and more like some purgatorial comedy where we stumble dumbly through the same exact minefields, gleaning little to no wisdom from either experience or history.

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Posted on Techdirt - 13 March 2019 @ 6:10am

John Oliver Robocalls Ajit Pai For Not Doing More To Thwart Robocalls

from the ill-communication dept

Despite endless government initiatives and countless promises from the telecom sector, our national robocall hell continues. Robocalls from telemarketers continue to be the subject the FCC receives the most complaints about (200,000 complaints annually, making up 60% of all FCC complaints), and recent data from the Robocall Index indicates that the problem is only getting worse. Consumers continue to be hammered by mortgage interest rate scams, credit card scams, student loan scams, business loan scams, and IRS scams. 4.9 billion such calls were placed in February alone:

You might recall that HBO's John Oliver caused Ajit Pai's FCC no shortage of trouble when his coverage of net neutrality drove millions of pissed off consumers to the FCC website to complain. The FCC then got into a bit of hot water (and remains under investigation by the GAO and others) after falsely claiming those angry website visitors were part of a malicious DDOS attack. In reality, emails confirmed FCC staffers were simply trying to craft an alternative explanation to try and downplay massive public opposition to the Trump FCC's policies.

Fast forward to last weekend, and Oliver again brought some much-needed attention to the FCC's apathy, this time on the subject of robocalls. The whole missive is well worth a watch if you haven't seen it already:

Oliver's bit (which involves robocalling all five FCC commissioners) does a stellar job highlighting that the previous FCC passed new rules to rein in the robocall threat. But those rules were struck down by the courts after a lawsuit by the Association of Credit and Collection Professionals, a group representing debt collectors (Pai celebrated the ruling at the time). To be clear, Pai has done a few notable things to try and crack down on the problem, ranging from slightly expanding (pdf) carrier abilities to try and block the calls, to issuing major fines against particularly-obvious scammers.

But as Oliver notes, there's a lot more Pai's FCC could do, like demanding big carriers offer their customers free robocall protection services, actually punishing those lagging behind at adopting anti-spoofing authentication tech, and narrowing the definition of robocalls to include debt collection and other purportedly "legit" but overwhelming callers. But that would require Pai actually standing up to major industries, something he's yet to do at any meaningful point during his appointment as FCC boss.

As it stands, predictions are that by next year, half of all calls made will be robocalls. And while companies like AT&T spent a few years trying to blame everybody else for its own failure to police the problem, it's one of several carriers finally on the cusp of deploying SHAKEN/STIR authentication technology that should dramatically put a damper on caller ID spoofing later this year. But evolving scammer tactics and lagging carriers means that to solve this problem, the FCC will need somebody willing to actually punish companies that refuse to do more.

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Posted on Net Neutrality Special Edition - 12 March 2019 @ 6:38am

Much Of The Broadband Growth Ajit Pai Credits To Killing Net Neutrality Was Actually Due To A Clerical Error

from the whoops-a-daisy dept

So a few weeks ago we noted how the Ajit Pai FCC has been trying to pretend that some modest recent broadband growth is directly thanks to its unpopular policies -- like killing net neutrality. Except a closer look at the report shows the data they used was only accurate up to the tail end of 2017, when net neutrality wasn't even formally repealed until June of 2018 (read: the growth couldn't have been due to killing net neutrality yet, because it hadn't technically happened yet). A lot of the "record fiber growth" Pai also tried to credit his policies for was actually courtesy of the fiber build-out conditions affixed to the AT&T DirecTV merger by the previous FCC.

In short, Pai's office has been falsely taking credit for some modest industry growth in broadband availability it had nothing to actually do with. And in a few instances, the FCC tried to claim that broadband growth was due to "deregulation," when market intervention (merger conditions) was actually to thank.

Now some deeper analysis shows that another huge chunk of Pai's supposed broadband growth was thanks to a... clerical error. A deeper analysis of the FCC's broadband growth numbers by consumer group Free Press showed that a company by the name of Barrier Communications Corporation appears to have dramatically overstated its broadband deployment during the period in question by a cool 1.5 million locations:

"When conducting our initial analysis of the December 2017 Form 477 Deployment data, we noticed that a new Form 477 filer, Barrier Communications Corporation (d/b/a BarrierFree), claimed deployment of fiber-to-the-home (“FTTH”) and fixed wireless services (each at downstream/upstream speeds of 940 Mbps/880 Mbps) to Census blocks containing nearly 62 million persons. This claimed level of deployment would make BarrierFree the fourth largest U.S. ISP in terms of population coverage – an implausible suggestion, to put it mildly.

This claimed level of deployment stood out to us for numerous reasons, including the impossibility of a new entrant going from serving zero Census blocks as of June 30, 2017, to serving nearly 1.5 million blocks containing nearly 20 percent of the U.S. population in just six months time. We further examined the underlying Form 477 data and discovered that BarrierFree appears to have simply submitted as its coverage area a list of every single Census block in each of eight states in which it claimed service: CT, DC, MD, NJ, NY, PA, RI, and VA.

When contacted by Ars Technica, the company in question acknowledged it had made an error when filing form 477 data with the FCC, saying the data was "parsed incorrectly in the upload process." The impact was notable, with roughly 1.5 million of the supposed 5.6 million "new" areas where 25Mbps/3Mbps speeds had been deployed never having actually existed. As noted previously, the growth Pai credits to his own "deregulatory" agenda was actually well in line with past, pre-Pai periods, and in some instances actually slower. Once you factor in all of these errors the claims get even less impressive.

Of course the formal study Pai's basing these numbers on hasn't been fully released yet. These were all just claims made in an initial FCC press release featuring very-carefully chosen statistics. Whether these and other errors are fixed in the final report (which should drop later this month or early next) should give you a good luck at just how much the current FCC actually values data integrity.

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Posted on Techdirt - 11 March 2019 @ 10:44am

It's Apparently Easy To Pretend To Be A Cop, Grab Location Data From Cellular Carriers

from the ill-communication dept

While Facebook tends to get the lion's share of (deserved) criticism, the telecom sector continues to make its case for being the absolute worst when it comes to protecting your private data. Scandal after scandal have highlighted how wireless carriers routinely collect and store your daily location data, then sell that data to a universe of shady middlemen with little to no oversight as to how the data is used. Users sign one overlong privacy policy with their wireless carrier, and that policy is being read to mean consumers sign off on the practice, which they certainly haven't.

This week journalist Joseph Cox again highlighted the problems on the location data front, reporting how many stalkers and debt collectors are able to get access to this data without paying for it. How? By pretending to be law enforcement officers:

"...bounty hunters and people with histories of domestic violence have managed to trick telecommunications companies into providing real-time location data by simply impersonating US officials over the phone and email, according to court records and multiple sources familiar with the technique. In some cases, these people abuse telecom company policies created to give law enforcement real-time location data without a court order in “exigent circumstances,” such as when there is the imminent threat of physical harm to a victim.

In addition to cellular tower location data, carriers were also recently busted selling A-GPS data, which is supposed to be protected by FCC data rules. Despite significant reporting on this subject and carrier promises to stop collecting and selling this data, this practice is still ongoing. Like Facebook, these are companies that are staring down the barrel of looming regulation -- and still somehow can't seem to find the motivation to behave. Regulators at the Ajit Pai FCC have also sat on their hands and have yet to issue so much as a warning to cellular carriers.

At least one skiptracer told Motherboard that wireless carriers remain several steps behind in trying to crack down on the practice:

"So many people are doing that and the telcos have been very stupid about it. They have not done due diligence and called the police [departments] directly to verify the case or vet the identity of the person calling,” Valerie McGilvrey, a skiptracer who said she has bought phone location data from those who obtained access to it, told Motherboard. A skiptracer is someone tasked with finding out where people, typically fugitives on the run or those who owe a debt, are located."

In many instances the third parties are exploiting telecom company procedures for "exigent circumstances," allowing them to request and receive real-time location data by fabricating law enforcement data request documents telecom operators aren't properly verifying. Of course as the New York Times noted more than a year ago, law enforcement officers have also been busted abusing this system to spy on judges and other law enforcement officers.

Like so many sectors, wireless carriers were so excited by the billions to be made selling your daily habits, they forgot to actually protect that data. As reporters like Cox continue to dig deeper, you have to think that many cellular carriers are scrambling hard to clean up their mess as inevitable class action lawsuits and regulatory investigations wait in the wings. This scandal is getting so ugly, even the carrier-cozy Trump FCC may, at some point, be forced to actually do something about it.

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Posted on Techdirt - 8 March 2019 @ 6:19am

Report Claims Trump Pushed For AT&T Time Warner DOJ Lawsuit To Hurt CNN, Help Rupert Murdoch

from the old-boys-club dept

The late 2017 DOJ announcement that it would be suing to stop AT&T's $86 billion merger with Time Warner turned more than a few heads. While the DOJ insisted that the move was driven entirely by an interest in protecting consumers, the decision was utterly discordant with the Trump administration's often facts-optional assault on consumer protections with bipartisan support, ranging from net neutrality to basic environmental protections. And the DOJ's sudden concern about the impact of media consolidation was in stark contrast to Trump's FCC, where demolishing decades-old media consolidation rules has been a top priority.

At the time of the lawsuit, many wondered if some other motivations were really at play. After all, Rupert Murdoch had been pushing Trump for more than a year to scuttle the deal for anti-competitive reasons. Time Warner rejected a News Corp. acquisition offer in 2014, and more recently AT&T rebuffed the company's attempt to buy CNN... twice. Time Warner employees quoted at the time believed Murdoch was the driving motivation for the political pressure to quash the deal:

"According to executives I spoke with, the theory is that Murdoch privately encouraged Trump to scuttle the deal as revenge for Time Warner rejecting Murdoch’s $80 billion takeover offer in 2014. “A direct competitor, who was spurned from buying us, perhaps is trying to influence the judicial process? That’s corruption on top of corruption,” one Time Warner executive told me."

No hard evidence has proven any such connection, though if it were true, it's hard to think anybody involved in such an effort would put of of it in writing.

Another unproven theory generally gained more widespread public acceptance: that Trump had pressured the DOJ to intervene in the deal because of Time Warner-owned CNN's critical coverage of Trump. That obviously raised a lot of First Amendment questions about whether the President was pressing a government agency to help hamstring or otherwise silence a critic.

Trump and the DOJ repeatedly stated that Trump played no role in the the pressure for the suit. And Trump himself repeatedly stated he was "not going to get involved" in the case. Yet a New Yorker piece this week quotes sources who say that promise was never actually adhered to:

"...in the late summer of 2017, a few months before the Justice Department filed suit, Trump ordered Gary Cohn, then the director of the National Economic Council, to pressure the Justice Department to intervene. According to a well-informed source, Trump called Cohn into the Oval Office along with John Kelly, who had just become the chief of staff, and said in exasperation to Kelly, “I’ve been telling Cohn to get this lawsuit filed and nothing’s happened! I’ve mentioned it fifty times. And nothing’s happened. I want to make sure it’s filed. I want that deal blocked!"

Cohn, a former president of Goldman Sachs, evidently understood that it would be highly improper for a President to use the Justice Department to undermine two of the most powerful companies in the country as punishment for unfavorable news coverage, and as a reward for a competing news organization that boosted him. According to the source, as Cohn walked out of the meeting he told Kelly, “Don’t you fucking dare call the Justice Department. We are not going to do business that way."

Whether that was the end of it isn't clear. I'll note that many consumer advocates I've spoken to over the last few years believe that the DOJ under Makan Delrahim genuinely believed it was doing the right thing in challenging the suit. That of course doesn't mean Trump and Murdoch didn't try hard all the same. The piece also quotes former government insiders like Blair Levin, who ponders whether Murdoch was an architect of Trump's ire toward the deal:

"Blair Levin, the former F.C.C. official, told me, “There may be innocent explanations.” But, he adds, “Trump famously said you’re going to get sick and tired of winning, and that may not be true for the rest of America, but it sure is true of Murdoch.” He says of Murdoch, “He’s an incredibly cunning political player. He leaves no fingerprints. He’s been in the game of influencing government behavior to his benefit longer than most of us have been alive."

Of course hunches, theories, and anonymous sources aren't proof. And it remains possible that the DOJ under Makan Delrahim was just suddenly and genuinely concerned about vertical integration. Still, that flies in the face of everything the Trump administration (and particularly his friend Ajit Pai at the FCC) has stood for as they've worked tirelessly to make it easier for giant companies and broadcasters to merge. And it seems entirely possible that having been rebuffed by AT&T twice, Murdoch hoped the DOJ would win its case and force AT&T to sell off CNN to News Corporation. All under the guise of consumer protection.

If this all really was Murdoch gamesmanship, it ended in a remarkable face plant. The DOJ not only lost its initial case challenging the merger, it recently lost on appeal. In part because decades of lobbying have weakened antitrust, making it harder than ever for DOJ lawyers to make even the most obvious of points (in this case that AT&T would quickly raise its competitors prices for must have content, something that occurred before the ink deal was even dry).

The DOJ also failed because it refused to draw attention to net neutrality. The elimination of net neutrality by the Trump FCC opened the door wide to AT&T abusing its role as network operator to hamstring its competitors, most notably by only applying usage caps and overage fees on users that use competing streaming services. But the DOJ didn't mention net neutrality once during the trial, likely in part because it would have only highlighted the FCC's culpability in making this megamerger even more problematic than it already was.

Congress is still investigating whether politics and personal gain played a starring role in the Trump administration's sudden, uncharacteristic concern about monopoly power. One gets the sneaking suspicion there will be more details forthcoming.

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Posted on Techdirt - 7 March 2019 @ 8:24pm

T-Mobile Still Pretending That Staying At Trump's DC Hotel Isn't An Obvious Ploy To Gain Merger Approval

from the nothing-to-see-here dept

In a letter responding to Congressional inquiry, T-Mobile has confirmed that the company dramatically ramped up its patronage of Trump's hotel in DC as it sought regulatory approval of its $26 billion merger with Sprint. A copy of the letter, obtained by the Washington Post, makes it clear that the company spent upwards of $195,000 at the property since it originally announced the telecom industry's latest megadeal last April. That was a dramatic shift from the period of time before the deal was announced:

"T-Mobile’s patronage of President Trump’s Washington hotel increased sharply after the announcement of its merger with its Sprint last April, with executives spending about $195,000 at the property since then, the company told congressional Democrats in a letter last month. Before news of the megadeal between rival companies broke on April 29, 2018, the company said, only two top officials from T-Mobile had ever stayed at Trump’s hotel, with one overnight stay each in August 2017.

T-Mobile has also hired former Trump ally Corey Lewandowski and former FCC Commissioners Robert McDowell and Mignon Clyburn to "consult" on the deal and grease the wheels of approval. T-Mobile CEO John Legere has consistently tried to play this obvious attempt at pandering to Trump as just unrelated happenstance:

Amusingly, Legere built his entire brand on being a "no bullshit" alternative to AT&T and Verizon. Yet here we are.

As Legere has attempted to sell the press, public, and regulators on the deal, he's adopted many of his competitors' worst habits. It's been clearly documented in countries like Canada or Ireland that when you reduce the total number of major wireless competitors from four to three, it results in dramatically higher rates as the incentive to compete on price is proportionally reduced. Such telecom mergers almost always result in significant layoffs as redundant positions are eliminated. Wall Street predicts T-Mobile's merger will be no different, eliminating anywhere between 10,000 and 30,000 jobs.

This is not alien territory. In US telecom, these megadeals almost uniformly make the sector worse, as your wallet can attest. Yet both Sprint and T-Mobile execs have engaged in the same old game of Charlie Brown and Lucy football, breathlessly insisting that this deal will somehow be different. At the same time, execs continue to pretend that kissing Trump's ass by staying at his DC hotel isn't an obvious lobbying strategy for the company:

"While we understand that staying at Trump properties might be viewed positively by some and negatively by others, we are confident that the relevant agencies address the questions before them on the merits," (T-Mobile) wrote.

That makes one of you. The Trump FCC has been a glorified rubber stamp for absolutely every pipe dream telecom lobbyists can cook up, be it killing popular net neutrality rules (something Legere supported) or literally weakening the definition of the word "competitive" to make life easier on the sector's biggest players. While the DOJ is less certain (though still sounding likely from what I've heard), there's zero doubt that the FCC will rubber stamp this merger, likely piggybacking on T-Mobile's (false) tailor-made claims that the deal is essential if the United States doesn't want to "fall behind" in the "race to 5G."

Once Legere gets done bullshitting his way to merger approval, he'll have to quickly pivot back again to pretending he's the "no bullshit" alternative to the other major wireless carriers. But of course as just one of three remaining competitors, history has shown us time and time again how T-Mobile will have less incentive than ever to seriously compete on price, and will, sooner or later, come to resemble AT&T and Verizon in all the wrong ways.

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Posted on Techdirt - 7 March 2019 @ 6:38am

New Bill Would Enshrine The FCC's Net Neutrality Rules Into Standalone Federal Law

from the ill-communication dept

This week House and Senate Democrats introduced new legislation that would formally enshrine net neutrality into law. The bill itself is only three pages long because it simply enshrines the FCC's 2015 net neutrality rules into federal legislation, providing formal Congressional approval for the FCC's 2015 effort to declare ISPs as common carriers under Title II of the Telecom Act:

At a lengthy press conference (video here), unified Democrats made it very clear that net neutrality was going to be a cornerstone of the party's platform through the foreseeable future and likely through the next Presidential election. They also noted that a full markup and hearings on the dual companion bills could be expected sometime in the next few weeks. FCC Commissioner Jessica Rosenworcel lauded the new Congressional effort, rightly noting all the state and federal legal chaos the Pai FCC created in the wake of their factually-specious repeal:

"The FCC was on the wrong side of the law, the wrong side of history, and the wrong side of the American public when it rolled back net neutrality. The FCC’s deeply unpopular decision is being challenged in the courts, in statehouses, and in Congress. I applaud the effort announced today to reinstate open internet rules at the FCC. I’ll keep raising a ruckus to support net neutrality and I’m glad so many others are too."

The problem for the Democrats, of course, is the immense success the telecom lobby has had at falsely framing net neutrality as a partisan issue. As a result, the bill may likely pass the House, but could very easily stall in the Senate. Even if it passes both houses, it would need to avoid a veto from Donald Trump, who has routinely opposed net neutrality despite pretty clearly not having the slightest idea what it actually is.

Survey after survey has shown that a bipartisan majority of Americans supported the rules and opposed the repeal. But ISP lobbyists work hard to encourage and inflame a partisan divide that shouldn't exist on this subject (the quest for a healthier, competitive internet free of monopoly abuse). This results in a stupid partisan split in Congress with Democrats generally in favor of the idea, and Republicans staunchly opposed --usually under the (false) idea that net neutrality is draconian government over-reach.

In reality, net neutrality violations are just a symptom of monopoly power and the limited competition in broadband, subjects both parties have done a piss-poor job of addressing thanks to lobbying. In the absence of real competition, net neutrality rules are at least some basic safeguards to prevent giants like AT&T and Comcast from using their broadband monopolies to unfairly saddle and disadvantage competitors (despite industry claims this is a theoretical concern, it's something that's already happening).

Unsurprisingly, the Pai FCC was quick to issue a statement lambasting the proposal. The statement itself is a greatest hits of false Pai FCC claims to date, including the ongoing suggestion that the internet is seeing incredible growth thanks to their extremely unpopular decision to gut broadband consumer protections:

"The FCC’s return in 2017 to the bipartisan, light-touch approach to Internet regulation has been a success. This time-tested framework has preserved the free and open Internet. It has promoted transparency in order to better inform consumer choice. It has unleashed private investment, resulting in more fiber being deployed in 2018 than any year before and download speeds increasing by an astounding 36%. And it has proven wrong the many hysterical predictions of doom from 2017, most notably the fantasy that market-based regulation would bring about ‘the end of the Internet as we know it.’ The Internet in America today is free and vibrant, and the main thing it needs to be saved from is heavy-handed regulation from the 1930s."

We've already discussed at length how these claims are bunk. One, the "record" fiber growth Pai's FCC tries to credit for killing net neutrality was actually courtesy of fiber build-out requirements affixed to the AT&T DirecTV merger by the previous FCC (rather the opposite of less regulation). Two, the speed data the FCC uses was only current as of the end of 2017. Net neutrality rules weren't repealed until June of 2018, meaning this growth occurred while net neutrality was technically active. It's stuff like this that showcases why so many have a hard time taking the Pai FCC seriously.

Should this latest legislative gambit fail in the Senate or face Trump veto, the rules still have a shot at being restored via the ongoing lawsuit against the FCC. Should both fail, it will fall on the shoulders of voters to eject Luddite or cash-compromised lawmakers from both parties who prioritize protecting monopoly revenues over consumer welfare and the heath of the internet. At the very least, this looming vote should provide voters with a pretty clear 2020 scorecard as to which lawmakers actually have their backs when it comes to protecting an open and competitive internet.

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Posted on Techdirt - 6 March 2019 @ 6:28am

Momo Hoax Shows America's Susceptibility To Bullshit Goes Well Beyond Social Media

from the demonic-chicken-lady-told-me-to dept

Social media outlets like Twitter have been rightly criticized for being comically inept when it comes to handling hate, hoaxes, and propaganda. But when conversations bubble up on how best to actually solve these issues, social media tends to get the lion's share of the blame for Americans' aggressive susceptibility to bullshit. In many of these conversations, Americans' susceptibility to bullshit is somehow seen as a new phenomenon, and Twitter and Facebook are exclusively to blame for American heads getting filled with gravel and disinformation.

In reality, America's gullibility problem goes much deeper, and it's going to take a lot more than some Facebook wrist slaps to actually address it. Case in point: you've probably seen something about the "Momo challenge" hoax that's everywhere. The short version: the hoax claims there's a viral game making the rounds on services like WhatsApp that involves a demonic-looking chicken lady goading young children into acts of violence or even suicide. In the game, images of said bird lady supposedly press kids harder and harder until they engage in violence like some Japanese horror flick.

Except there's nothing to the claims; and the photo being used as the cornerstone of the hoax was just an art gallery piece that first bubbled up back in 2016:

And while social media certainly played its part in circulating the hoax, the cornerstone of the spread was more traditional, brick and mortar institutions. Local news outlets, gutted over the last few decades thanks to media consolidation and budget cuts, played a huge role in the origins of the Momo hoax -- with only a fraction of the criticism faced by social media outlets. Many of the earliest reports first popped up on local media outlets in Argentina; reports that were then parroted by outlets like Fox News without much in the way of original reporting or skepticism.

Ultimately the hoax spread to major news outlets that perpetuated it via "bothsideism" news coverage that failed to adequately explain that neither the game nor Momo were actually real. Take The Washington Post, for example:

"The game, which many are calling the “Momo Challenge,” requires players to complete escalating tasks that are usually dangerous and involve self-harm. But, given the challenge’s mysterious origins and the unreliability of news reports linking it to actual harm, some question whether it’s simply another one of the many hoaxes that breed on the Internet."

Yes! If only there were, say, journalists who were resourced to investigate this and actually make the truth clear to their giant audiences, one way or another! In the clickbait era, the truth is often dull, and therefore doesn't sell. So a lot of outlets engage in "both sides" reporting because the chance there's a demonic chicken lady telling kids to kill themselves makes a lot more money than debunking nonsense does.

The dysfunction was global, and was often aided with the help of celebrities, schools, and law enforcement officials. In the UK, schools warned parents that the Momo game was being "spliced" into YouTube Fortnite videos. In Ireland, the police warned the public that the game was not only real and diabolical, it was being run by hackers who are looking for personal info. And when celebrities like Kim Kardashian decided to "help," they directed their fans' ire toward YouTube:

"Parents please be aware and very cautious of what your child watches on YouTube and KIDS YOUTUBE. There is a thing called ‘Momo’ that’s instructing kids to kill themselves, turn stoves on while everyone is sleep and even threatening to kill the children if they tell their parents,” read one of the two posts Kardashian West, 38, shared along with a plea asking YouTube to “Please help!”

Of course, YouTube certainly has other problems related to kids and perpetuating bullshit like flateartherism, but a demonic chicken goddess trying to convince kids to off themselves isn't among them.

Yes, the internet does make it easier than ever to spread bullshit at unprecedented scale; but any notion that this is something new or exclusively the fault of social media misses the point. Hoaxes wouldn't work if we cultivated stronger critical thinking skills (read: improved education) and focused on finding ways to finance and reward quality reporting. Human susceptibility to bullshit is not some new phenomenon, and many of the same worries about the expedited threat of disinformation plagued the early newspaper industry.

Social media isn't blameless, but it's also in many ways just a window into our existing dysfunction, not the exclusive origins of the dysfunction itself. Fixating exclusively on social networking lets the press, police, and the general public off the hook for our multi-generational susceptibility to a bottomless well of bullshit, be it delivered via social media, the police, educators, or your hometown newspaper.

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Posted on Techdirt - 5 March 2019 @ 1:32pm

VPNs Are No Privacy Panacea, And Finding An Ethical Operator Is A Comical Shitshow

from the ain't-no-magic-bullet dept

Given the seemingly endless privacy scandals that now engulf the tech and telecom sectors on a near-daily basis, many consumers have flocked to virtual private networks (VPN) to protect and encrypt their data. One study found that VPN use quadrupled between 2016 and 2018 as consumers rushed to protect data in the wake of scandals, breaches, and hacks that historically, neither industry nor government seem particularly interested in seriously addressing.

Usually, consumers are flocking to VPNs under the mistaken belief that such tools are a near-mystical panacea, acting as a sort of bullet-proof shield that protects them from any potential privacy violations on the internet. Not only is that not true (ISPs, for example, have a universe of ways to track you anyway), many VPN providers are even less ethical than privacy-scandal-plagued companies or ISPs they're trying to flee from:

Facebook, for example, spent the last year marketing a "privacy protecting VPN" that was little more than spyware in its own right. Verizon was so eager to cash in on the trend it launched a VPN but forgot to even include a privacy policy. Most existing VPNs promise not to store your data, then go right ahead and do so anyway. And studies perpetually find that a huge array of such offerings are little more than scams, hoovering up your money and private data while promising you the moon, sea, and sky.

Case in point: Will Oremus wrote a really wonderful piece for Slate about trying to find a respected VPN and discovered that the market is, for lack of a more technical term, a complete and total shitshow:

"The search for a VPN I could rely on led me on a convoluted journey through accusations and counteraccusations, companies with shadowy leadership and those with conflicts of interest, and VPN ratings sites that might be even shadier than the companies they’re reviewing. Many VPNs appear to be outright scams. Others make internet browsing sluggish. Free versions bombard you with ads. It’s a world so thicketed that the leading firms and experts can’t agree on the basic criteria for what counts as “reputable,” let alone which companies best meet that description."

The article does provide some very useful tips for finding a decent VPN, and is well worth a read. That said, it also makes it abundantly clear that VPN review sites are often inconsistent, downright terrible, or financially conflicted. And even many well-reviewed VPN operators can raise flags if they try to hide the identity of who actually owns them:

"ExpressVPN, for its part, nearly won the coveted recommendation of Wirecutter in its extensive, highly detailed VPN review. There are hints throughout Wirecutter’s report that ExpressVPN would have taken the top spot if not for one pesky concern: its refusal to publicly disclose who owns it. Wirecutter editor Mark Smirniotis notes near the end of his review that ExpressVPN offered to arrange a confidential call with its owners, but he decided that wouldn’t be enough to change his recommendation and declined."

The terribleness of the VPN sector is decidedly ironic, given that giant broadband providers, who routinely hoover up your data in an ocean of creative and non-transparent ways, have long tried to claim that the United States doesn't need meaningful privacy guidelines because users can always use a VPN. That was one of the cornerstones of the telecom lobby logic as the successfully convinced Congress to eliminate modest FCC privacy rules in 2017 that could have prevented many of the location data scandals currently plaguing the sector.

But if it's not clear yet, a VPN is not a magic bullet to the problems that are plaguing the modern internet. Users are running from one platform to the next, dribbling their private data in a long trail behind them thanks to shoddy and nonexistent standards. Meanwhile a lack of competition leaves them stuck on the network of giant ISPs that not only refuse to respect their privacy, but routinely lobby against any and every legislative solution, no matter how well crafted. Several ISPs have then tried to charge users a surcharge to opt out of data collection and monetization, effectively making privacy a luxury option.

Something has to break in this broken and idiotic equation, and "just go use a VPN" is not an adequate answer to the problem.

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Posted on Techdirt - 5 March 2019 @ 6:30am

AT&T Begins Trying To Screw Up HBO In Earnest

from the ill-communication dept

If you haven't noticed by now, big telecom companies aren't particularly good at wandering outside of their core competencies. They've been government-pampered monopolies so long, innovation, creativity, and competition are concepts that are utterly foreign to their underlying genetics.

Nowhere has that been more apparent than big telecom's attempt to pivot to streaming and online advertising. Verizon's first foray into media, you'll recall, was a short-lived "tech news" website called Sugarstring, which was quickly shuttered after the telco banned its reporters from discussing subjects like net neutrality or government surveillance. That was followed by a botched joint venture with RedBox. And Verizon's failed Go90 and Oath efforts, which involved mashing together two failed nineties brands (AOL & Yahoo), then pretending that would be enough to do serious battle in the space.

AT&T is now following closely in Verizon's footsteps in the wake of its $86 billion merger with Time Warner (and HBO). The company this week made more than a few headlines when news broke that longtime HBO CEO Richard Plepler, responsible for the lion's share of HBO's success over the last 29 years, would be stepping down. The reason? While most news outlets beat around the bush, it's because he had a hard time getting along with hard-headed AT&T executives:

According to people familiar with the matter, this is an issue of autonomy. Plepler wanted to run HBO, and new WarnerMedia CEO John Stankey, an AT&T veteran, was effectively running HBO. Plepler had ideas about technology and international expansion that didn't jibe with Stankey's vision, according to a person familiar with the matter. The two are also "different people" and didn't have the closest relationship, another person said. So after six years of running HBO autonomously, Plepler told Stankey earlier this month he wanted to leave, two of the people said.

If you've been watching this saga unfold, that shouldn't be surprising. Hints of trouble in the new union emerged last summer during an all hands on deck meeting, where AT&T executives effectively told HBO executives they should stop focusing on this whole quality thing, and begin thinking about quantity and user data monetization:

(AT&T's John) 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.”

Except creatives do their best work with a healthy degree of autonomy from left-brained bean counters. They don't want the god-damned phone company, for which creativity and innovation is an foreign construct, meddling too heavily in their production decisions. And not too surprisingly, a number of HBO and Time Warner employees have groused to Recode's Peter Kafka that AT&T doesn't really have any idea what they're doing (a point kind of downplayed in his piece):

More recently, when I called an HBO source to get their perspective on AT&T’s plans for WarnerMedia, that person described the plans as “inchoate,” an adjective that has rattled in my head ever since. If they’re willing to say that to a reporter, imagine how they really feel.

I've studied AT&T for twenty years of my adult life. This is a company whose leadership is really very good at a long list of things. They're good at running networks (usually), lobbying the government to hamstring competition, and finding creative ways to rip off its own customers, taxpayers, and even the disabled. What they're not so good at is creativity, innovation, and actual competition, since their near-total domination over state and federal regulators--and the lack of competition in their broadband businesses--means those particular attributes have rarely been exercised.

Like Verizon, AT&T has spent the better part of the last two decades getting millions in taxpayer subsidies for fiber networks that were never fully deployed. Also like Verizon, AT&T executives have a bone-grafted jealousy of Silicon Valley's domination of online advertising and video. But both companies have no earthly idea how to get there without cheating. As a result, their efforts quite often wind up looking like a doddering grandpa who is simply trying too hard to fit in:

AT&T first thought it would be a good idea to pay $67 billion for satellite TV provider DirecTV on the eve of the cord-cutting revolution, seemingly oblivious to the fact that satellite TV was just about to become irrelevant. That fact was quickly made obvious by the massive video subscriber losses AT&T and DirecTV have witnessed as users quickly cut the cord for streaming alternatives. While the deal's initial subscriber growth provided some benefit in terms of greater leverage in programming negotiations, they've been bleeding subscribers ever since. It was the first big hint that AT&T didn't actually know what it was doing.

AT&T then spent another $86 billion to acquire Time Warner, hoping that control over this must-have content would somehow magically cement its supremacy in video in concert with the DirecTV deal. But the mammoth debt from both mergers quickly drove AT&T toward nickel-and-diming both customers and competitors alike in a bid to get its financial head above water. This resulted in competitors like Dish dropping HBO from their lineups entirely due to cost, and even its newfound streaming customers have been fleeing for the exits in record numbers due to price hikes.

A lot of AT&T's thinking is typical of big telecom, where growth for growth's sake is encouraged and executives think you can merge your way to success. And while that might work in the competitively-addled broadband sector, the tight-margin, ultra-competitive streaming space is an entirely different animal. AT&T allegedly now wants to fuse HBO with Turner Media with an eye on churning out shorter-form, quickly-monetizable schlock at scale. It's the precise opposite of why HBO, one of several companies they just spent billions on, has long been so successful.

AT&T is a company for which ethics, quality, and creativity are alien phrenology, and if you've spent more than five minutes watching AT&T do business, it's apparent in everything it touches. Plepler smelled the odor on the wind and got out while the getting was good. Other talent is going to follow, and the brain and talent drain is going to create entirely new issues. While it's likely HBO will continue trucking along semi-functionally for a few years on the backs of projects already in the pipeline, it's hard to think AT&T's influence won't have a decidedly negative impact on the pioneering channel over the long term.

Even AT&T's knack for cheating and lobbying aren't likely to save AT&T from its own bad impulses, or secure supremacy in the face of something entirely foreign to the Dallas-based telecom giant: actual, meaningful competition.

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Posted on Techdirt - 4 March 2019 @ 12:12pm

Steven Spielberg Demands Netflix Get Off His Damn Lawn

from the swimming-upstream dept

We've noted for years that there's a certain segment of the media and entertainment industry that despises Netflix. Some of this is based on a disdain for Netflix coming to town and throwing oodles of cash around, but a larger chunk is driven by those who simply don't like change but can't admit as much. A good example of that later motivator has been the Cannes film festival, which recently banned Netflix from participating in the awards.

When asked to explain why, festival head Thierry Fremaux couldn't really provide a solid answer, but did infer that what Netflix does can't be considered good because it doesn't adhere to traditional and often counterproductive business tactics (like antiquated release windows):

"The Netflix people loved the red carpet and would like to be present with other films. But they understand that the intransigence of their own model is now the opposite of ours,” Thierry Fremaux said."

This idea that Netflix is "demolishing tradition" runs deep in many entertainment industry circles. There's this pervasive belief that if you (gasp) allow longstanding entertainment and film industry models to change, you'll kill tradition and the inherent nobility of traditional film. Again, you usually won't see a whole lot in terms of hard data in these arguments; just these vague, nebulous charges that Netflix and other streaming services -- despite increasingly winning their own awards for programming -- are somehow disrupting the sanctity of traditional business models.

This disorder flared up again last week when reports emerged that Steven Spielberg planned to pressure the Academy to ban streaming services like Netflix from receiving any future awards:

"Spielberg, a current governor of the Academy’s directors branch, plans to propose changes to Oscars eligibility rules, arguing films that debut on streaming services or get a short theatrical run should qualify for the Emmys instead of the Oscars, according to IndieWire.

“Steven feels strongly about the difference between the streaming and theatrical situation,” an Amblin spokesperson told IndieWire. “He’ll be happy if the others will join [his campaign] when that comes up [at the Academy Board of Governors meeting]. He will see what happens."

Again, you'll notice in the stories covering this subject that little to no actual effort is made to explain why this should happen, just a vague, meandering argument that these services somehow upset the sanctity of the traditional film industry and the brick and mortar "theater experience." Often you'll see claims that streaming services are killing traditional theaters, but data usually doesn't support that claim. A recent study found that young viewers who stream a lot of content at home are more likely to go see films at the traditional, brick and mortar theaters Spielberg claims Netflix is somehow destroying.

Meanwhile, many of the things Netflix has disrupted needed disrupting, like dated release windows that no longer serve a functional purpose, and the elimination of geographical viewing restrictions that wind up annoying paying customers. Among Spielberg's concerns is, apparently, the idea that Netflix just produces "TV movies" that shouldn't be considered high-brow enough to win an Oscar:

"Once you commit to a television format, you’re a TV movie,” he continued. “The good show deserves an Emmy, but not an Oscar."

But Roma's performance at the Oscars rather quickly obliterated that argument, as have a number of high-profile Netflix successes over the last few years. What Spielberg's really engaged in is just vanilla protectionism driven by a fear of change.

Many were, understandably, quick to urge the Academy to open its mind to diverse opinions on this subject:

Netflix also offered a fairly pointed response to Spielberg's attempt to blackball the company from awards consideration:

Does Netflix produce a lot of crap? Yes. Does the company use cash to throw its weight around? Sure. So do traditional Hollywood studios (don't tell anybody). But the laundry-list of awards that Netflix has already won make it clear Netflix isn't just some parasite. It's just a disruptive presence to yet another legacy industry that's nervous about change. If Netflix is legitimately doing stupid things then focus on those. But this idea that it shouldn't qualify for awards because it doesn't adhere to dated technological norms is just more grumbly ranting from grandpa's front porch.

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Posted on Techdirt - 4 March 2019 @ 6:26am

US Telcos Teeter Toward Bankruptcy As Comcast's Broadband Monopoly Grows

from the dysfunction-junction dept

We've noted time and time again how the US broadband industry's biggest problem is a lack of healthy competition. In countless markets consumers either have the choice of a terrible phone company or a cable giant. The nation's phone companies have spent the last decade refusing to upgrade (or in some cases even repair) their aging DSL lines, because they don't see residential broadband as worth their while. That in turn is giving giants like Comcast and Spectrum an ever greater monopoly in many markets, reducing the already muted incentive to compete on price or shore up historically terrible customer service.

It's a weird problem that's widely ignored by both parties, and it just keeps getting worse. This week, US telco Windstream filed for bankruptcy protection, partially thanks to a dispute with one of the company's creditors, netting a $310 million settlement Windstream couldn't swallow. More specifically, hedge fund Aurelius Capital Management had argued that a two-year-old spinoff of the company's fiber-optic cable network violated the covenants on one of its bonds, prohibiting "sale-leaseback transactions." The court agreed.

Windstream, for its part, issued a statement insisting that none of this was the company's fault, and that the bankruptcy protection wouldn't impact customers:

"Windstream did not arrive in Chapter 11 due to operational failures and currently does not anticipate the need to restructure material operations,” Thomas said. “While it is unfortunate that Aurelius engaged in these tactics to advance its returns at the expense of Windstream, we look forward to working through the financial restructuring process to secure a sustainable capital structure so we can maintain our strong operational performance and continue serving our customers for many years to come."

But Windstream's inability to swallow the court ruling comes directly from the company's already shaky footing.

Windstream was already $5.6 billion in debt and, like many US telcos, stuck in a cycle of dysfunction. Customers continue to flee to cable competitors at an alarming rate, because the telco often refuses to seriously upgrade its DSL lines to fiber at any real scale. And it can't upgrade its DSL lines to fiber at any scale because customers are leaving at an alarming rate, draining their coffers. Watching these companies (and a few oddly bullish investors) pretend this ends well for anybody involved has often been a comedy of errors.

Windstream isn't alone; telco giant Frontier has also been perched precariously on this cliff for the last few years. Our collective bipartisan reaction to this has been to throw a few million in subsidies at the problem and hope the regulatory capture and other obvious sector problems just magically fix themselves. The problem is so bad, many towns and cities have been forced to build their own broadband networks, something that's immediately vilified as "socialistic" by the same industry whose greed, apathy, and incompetence caused the problem in the first place.

None of this stuff sees much interest in the broader tech sector, but it should.

As vertically-integrated cable giants like Comcast and Spectrum enjoy even greater monopolies over internet access at modern speeds, it has a trickle down impact on the internet ecosystem as a whole, especially in the wake of the death of net neutrality. Comcast's growing power opens the door to broader anti-competitive behavior unchecked by neither regulatory oversight nor healthy competition, impacting all of the smaller businesses hoping to compete for mindshare. Some like to claim that 5G will be some magical panacea that comes in and provides a competitive counterbalance to this dysfunction, but we've noted how that's not likely for a wide variety of reasons.

Natural monopolies dominating the on ramp to the internet and much of the content doesn't end well for anybody in the ecosystem, especially given America's comic inability to enforce antitrust. The broadband industry's issues are a problem that exponentially impacts everything on the internet, yet it's a problem we continue to turn a blind eye to in the hopes it will all just magically sort itself out.

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