T-Mobile Cares So Much About Consumer Privacy, It's Fighting The FCC's Flimsy Fine For Location Data Sharing

from the light-wrist-slaps dept

T-Mobile, like many mobile carriers, insists in highly values consumer privacy. But that hasn't really been reflected in the company's response to ongoing SIM hijacking scandals. Nor was that dedication particularly apparent when T-Mobile (along with AT&T, Verizon, and Sprint) were all caught selling access to user location and 911 data to pretty much any nitwith with a nickel.

Last week, after a year of stonewalling, the Trump FCC announced it would be doling out some light wrist slaps to companies that were caught selling access to this data. For most of the companies, the fines they received were a tiny, tiny fraction of not only their annual revenues, but the billions made over the last decade selling access to this data to law enforcement, people pretending to be law enforcement, and even stalkers. All four of the companies also just received tens of billions on dollars from the Trump tax cuts in exchange for promises they completely flaked out on.

It would be a pittance to pay off the fine and move on, especially given this particular FCC is unlikely to engage in much follow up to either confirm data collection has actually stopped, or police access to the mountains of data already collected. But T-Mobile says it's intending to fight the fine anyway, because, you know, it cares just that much about consumer privacy and accountability:

"While we strongly support the FCC’s commitment to consumer protection, we fully intend to dispute the conclusions of this NAL and the associated fine," the company said."

So yeah, T-Mobile will "support" the FCC's "commitment to consumer protection" (which barely exists in the first place) by...(checks notes)...fighting the already feeble end result. This is, again, apparently a reflection of T-Mobile taking "consumer privacy seriously":

"We take the privacy and security of our customers’ data very seriously," said T-Mobile. "When we learned that our location aggregator program was being abused by bad actor third parties, we took quick action. We were the first wireless provider to commit to ending the program and terminated it in February 2019 after first ensuring that valid and important services were not adversely impacted."

Again, there's little chance these companies will actually leave billions in location data revenues on the table. While all four major carriers say they've stopped the practice, it's far more likely they've simply tweaked their privacy policies, renamed the collection systems, and buried them deep in some subsidiary somewhere. After all, who is going to do the legwork required to audit the entire industry's privacy and data collection practices, Ajit Pai?

Filed Under: competition, consumers, fcc, fines, privacy
Companies: t-mobile

Right On Cue, Post-Merger T-Mobile Layoffs Begin

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

US courts and regulators recently rubber stamped the T-Mobile Sprint merger, ignoring forty years of history showing how US telecom megamergers almost always result in less competition, higher prices, and fewer jobs. Eliminating one of just four US wireless carriers is likely to result in higher prices (see: Canada or Ireland). Wall Street analysts and unions alike predict the deal could eliminate anywhere between 10,000 and 30,000 jobs, and data suggests the consolidation could result in employees across the sector making less money even if they work at other companies.

Like most mergers, T-Mobile and Sprint executives have spent a year telling people none of this will actually happen and critics were being hyperbolic. Executives like John Legere (whose leaving in April and thus won't have to bear witness to his own handiwork) insisted repeatedly that the competition-eroding deal would somehow increase competition and create thousands of new, high paying jobs. Real world analysis from numerous experts never supported that, and early returns on those promises aren't looking so hot.

Light Reading late last week reported that with the ink not even dry on the merger, the company was already starting to trim jobs at one of its prepaid phone divisions, Metro:

"According to three people familiar with the company, T-Mobile has laid off a number of employees within its Metro by T-Mobile prepaid business. The extent of the layoffs is unclear. The company couldn't immediately provide a response to questions from Light Reading on the topic.

T-Mobile did not respond to repeated requests from me for comment on the nature of the layoffs. Neither would the company respond to inquiries made by other outlets like Ars Technica or Fierce Wireless. That suggests to me these layoffs were indeed merger related, since T-Mobile could have simply stated that the departures were scheduled pre-merger, assuming that was true.

Peter Adderton, founder of prepaid wireless provider Boost Mobile, was backing the deal just a few months ago. His tone has now completely shifted, and he noted that a lot of these laid off employees were informed of the layoffs during an impersonal conference call:

Like most US telecom mergers, around 4% of the journalists that uncritically hyped this merger's "synergies" will go back in a few years and scrutinize the company's pre-merger promises. And all of the think tankers and analysts that rubber stamped the deal uncritically will go mute in a few years when the price hikes and additional retail and middle management layoffs arrive, pretending they had some other, mysterious origins. This is, apparently, just how we do things in America, a country that seems habitually incapable of learning much of anything from history or experience.

Filed Under: competition, jobs, layoffs, mergers
Companies: sprint, t-mobile

FCC To Dole Out Some Dainty Wrist Slaps For Wireless Carrier Location Data Scandals

from the ill-communication dept

As you know by now, all four major wireless carriers have been selling access to user location data for the better part of the last decade to pretty much any nitwit with a nickel. Journalists subsequently exposed how nobody was really policing the use of this data, resulting in it being abused by law enforcement, people pretending to be law enforcement, and even stalkers. Worse perhaps, wireless carriers were even selling access to even more sensitive 911 emergency location data, something that's very clearly prohibited.

It's that last bit that probably finally forced the hand of Ajit "what broadband competition problem" Pai, who after a year of doing nothing is poised to announced that AT&T, Verizon, T-Mobile, and Sprint are likely to soon face a collective $200 million fine (warning: WSJ paywall):

"The Federal Communications Commission (FCC) will propose fines for the nation's largest telecom companies for selling the location data of their customers without consent. In all, the FCC says the carriers should pay around $200 million, according to a person familiar with the matter. The Wall Street Journal first reported the fines, and said the action includes AT&T, T-Mobile, Sprint, and Verizon."

Assuming wireless carriers don't win an appeal and the FCC follows up on the fine, that's around $50 million per company, which isn't likely to be much of a deterrent. AT&T's revenues last year topped $180 billion, and these four companies have received tens of billions in Trump tax cuts, regulatory favors (killing net neutrality, broadband privacy rules), and other perks during the last three years of the Trump administration. AT&T alone scored an estimated $42 billion from the Trump tax cuts in exchange for promises the company completely lied about delivering. Accountability has been nonexistent.

In total, $50 million is a pretty great deal given these companies likely made countless billions over the course of a decade selling access to this data. Needless to say, lawmakers like Ron Wyden released statements to journalists making it clear he wasn't particularly impressed by this regulatory theater:

"Based on today’s news reports, it seems clear Chairman Pai has failed to protect American consumers at every stage of the game – this issue only came to light after my office and dedicated journalists discovered how wireless companies shared Americans’ locations willy nilly. He only investigated after public pressure mounted. And now his response is a set of comically inadequate fines that won’t stop phone companies from abusing Americans’ privacy the next time they can make a quick buck.

"Time and again, from Facebook to Equifax, massive companies take reckless disregard for Americans’ personal information, knowing they can write off comparatively tiny fines as the cost of doing business. The only way to truly protect Americans’ personal information is to pass strong privacy legislation like my Mind Your Own Business Act to put teeth into privacy laws and hold CEOs personally responsible for lying about protecting Americans’ privacy.”

The FCC is expected to offer more details at its Friday meeting. Of particular note will be what the FCC requires carriers do with the decade-plus of consumer location records already collected, and how diligent the agency will be to ensure this doesn't continue. Knowing AT&T and Verizon pretty well, it would be unlike them to leave tens of billions in location data revenues on the table, especially given the feckless nature of this FCC. It wouldn't be all that hard to revamp and rename these programs, purge 911 data specifically from collection, then bury these new projects under layers of subsidiary deniability and obfuscation.

After all, who's really going to make sure they've learned the error of their ways? Ajit Pai? The former Verizon lawyer that has rubber stamped every fleeting desire of some of the most anti-competitive and scandal prone companies in American history?

Filed Under: ajit pai, fcc, fines, location data, privacy
Companies: at&t, sprint, t-mobile, verizon

US Antitrust Enforcement Clearly Broken As Court Rubber Stamps T-Mobile Merger

from the ill-communication dept

When AT&T was busy trying to gain regulatory approval of its $86 billion merger with Time Warner, economists, consumer groups, antitrust experts, and opponents of the deal warned it should be blocked because a bigger AT&T would only act anti-competitively to raise rates and hamstring competitors. AT&T and the FCC denied those claims, only to have them all come true a short while later.

Fast forward to this week and we're repeating history all over again. This morning U.S. District Judge Victor Marrero approved (pdf) T-Mobile's controversial $26 billion merger with Sprint, shutting down a multi-state AG lawsuit aimed at stopping the deal. Citing ample evidence that the reduction of four major carriers to three would dull any incentive to compete on price, a coalition of AGs tried to stop the deal after it was rubber stamped by both the FCC and FTC. But in his decision, Marrero tied himself into bizarre, esoteric knots in a bid to try and justify approval of the deal:

"How the future manifests itself and brings to pass what it holds is a multifaceted phenomenon that is not necessarily guided by theoretical forces or mathematical models,” Marreno wrote. “Instead, causal agents that engender knowing and purposeful human behavior, individual, and collective, fundamentally shape that narrative."

That's deep, bro.

Marreno at one point goes on at great length to suggest that it's "unlikely" that U.S. telecom giants, among the least competitive companies on the planet, would ever possibly act anti-competitively in the wake of the deal:

"In this court's view, in the intensely competitive and rapidly changing environment in which complex and dynamic markets operate, the anticompetitive business strategies and market effects Plaintiff States predict are unlikely. It is not likely, perhaps improbably or even not rational, that a major new or reinforced market participant, rather than vying aggressively to entire additional customers from competitor by introducing innovations, and investing more to protect and expand market share, would do the exact opposite, thereby risking har to its customer base.

Here in reality, there's ample evidence from around the globe that such 4 to 3 market shifts result in higher prices and significant layoffs. From Canada to Ireland, this kind of consolidation almost never ends well for consumers, competition, or the market. Hell, you only need look at Comcast, whose legendary status as one of the most despised companies in America is a direct byproduct of mindless M&A and a patent refusal to scale customer service alongside its relentless growth. US telecom consolidation has not been a good thing, no matter how many telecom-linked think tanks spin themselves into butter insisting otherwise.

American antitrust enforcement and consumer protection has turned into a running joke. The Trump administration uses antitrust to pursue weird, petty and pointless vendettas, while deals that create obvious market harm (AT&T Time Warner, T-Mobile Sprint) are allowed to proceed. The FCC rubber stamped the T-Mobile merger before staffers had even read the full proposal. The DOJ approved the deal against the advice of its own staffers.

The grotesqueness of the T-Mobile approval process couldn't have been any more blatant. Former FCC Commissioners from both parties, ranging from Mignon Clyburn to Robert McDowell, lobbied to help gain regulatory approval, often without identifying themselves (in Op/Eds and elsewhere) as being on T-Mobile's payroll. T-Mobile also hired Trump ally Corey Lewandowski (just days after he mocked a kid with Down Syndrome on national TV), and made a point of ramping up executive stays at Trump's DC hotel to further grease the wheels. It clearly worked.

To justify its approval of the deal, the DOJ created an absurd proposal that involves shoveling some spectrum off to Dish Network, which will then be tasked with building up a new fourth replacement carrier over a period of seven years. Economists pointed out repeatedly the plan isn't likely to work.

Dish (whose history of flaky promises in wireless was even previously mocked by T-Mobile) will spend much of that time as little more than a rebranded T-Mobile MVNO, and may never become fully viable. The effort is also likely to be undermined by AT&T and Verizon, which have every incentive to make sure Dish never becomes a viable fourth competitor. Who is supposed to prevent AT&T and Verizon from scuttling the effort? Who makes sure T-Mobile and Dish live up to their promises? Ajit Pai? The guy who mindlessly rubber stamps every fever dream the telecom sector has?

US consumers already pay some of the highest prices in the developed world thanks to regulatory capture and muted competition. A laundry list of economists have made it abundantly clear that further consolidation in wireless will only make the problem worse. There's literally forty years of documented history showing how these kinds of deals drive up prices, erode jobs, and result in worse overall service. While DC policy experts freak out about the perils of "big tech," we're giving big telecom a free pass to build something that could be arguably far worse.

Filed Under: antitrust, competition, consolidation, judge, state ags, victor marrero, wireless
Companies: sprint, t-mobile

1 Year Later, FCC Finally Admits Wireless Carriers Broke The Law On Location Data

from the took-ya-long-enough dept

It only took a year of stonewalling, feet dragging, and dodging journalists' questions, but the FCC has finally acknowledged that one or more wireless providers broke the law by collecting user location data--then selling access to that data to any nitwith with a nickel. In a letter (pdf) sent to Representative Frank Pallone last Friday, FCC boss Ajit Pai acknowledged for the first time that a year-long investigation into the wireless industry that the FCC has completed, concluding that yeah, one or several companies likely broke the law:

"I am writing to follow up on my letter of December 3, 2019 regarding the status of the FCC’s investigation into the disclosure of consumers’ real-time location data. Fulfilling the commitment I made in that letter, I wish to inform you that the FCC’s Enforcement Bureau has completed its extensive investigation and that it has concluded that one or more wireless carriers apparently violated federal law."

There had been some previous concerns among lawmakers that Pai had been trying to run out the clock to ensure carriers couldn't be held accountable, but some dogged reporting from Joseph Cox appears to have thrown a wrench into the works. Pai also proceeded to note that fines are likely coming for one of several of the unnamed companies:

"in the coming days, I intend to circulate to my fellow Commissioners for their consideration one or more Notice(s) of Apparent Liability for Forfeiture in connection with the apparent violation(s)."

If you didn't know, wireless carriers spent the last decade tracking your every movement, then selling access to that data to pretty much anybody. Not too surprisingly, the folks who bought that data -- ranging from law enforcement to stalkers -- abused the data in a universe of ways. Thanks in part to our brilliant decision to have absolutely no meaningful privacy laws for the internet era, and endless lobbying to ensure that companies -- especially the telecom sector -- face absolutely no penalty whatsoever for abusing the public trust for financial gain.

As a result, collecting your every waking online and offline movement and selling it to folks with few meaningful safeguards in place is considered acceptable and sexy, becoming the pastime of social media companies, app makers, and the telecom industry alike. But telecom specifically screwed up here by also selling access to even more accurate user 911 data, something more clearly in violation of the law and FCC policy. When the punishment drops, I'm guessing that 911 data collection winds up being the centerpiece of the FCC's complaint, since it's public safety related and harder to sweep under the rug.

The questions now are: who confirms wireless carriers actually stopped collecting this data? What happens to the data these carriers collected over the last decade? And how do we prevent this from simply happening again? Whatever FCC punishment gets doled out, I'd wager it probably fails to answer at one or several of these questions. It's also a pretty solid bet based on US regulatory history that whatever fines are levied, even if deemed "historic" by the FCC and a dutiful press, wind up being a tiny, tiny fraction of what these companies made selling access to this data for a decade.

And while AT&T, Verizon, and T-Mobile all claim they've stopped selling this data, I'd wager a toe that's not actually, technically true. One, they know full well nobody in this government will actually do the kind of deep audit required to actually check. Two, it would be fairly easy to just stop using the 911 data, rename all of your other location data projects, then bury them in layers of subsidiary and third-party deniability. There's very little chance that these companies left billions of dollars on the table just because of some bad press and a belated, half-hearted inquiry by former Verizon lawyer Ajit Pai.

Filed Under: ajit pai, data sales, fcc, frank pallone, location data, privacy
Companies: at&t, t-mobile, verizon

Merger Lawsuit Docs Reveal T-Mobile Eyed Merging With Comcast

from the Meet-the-new-boss dept

We've long noted that T-Mobile's brand reputation as a feisty consumer-friendly disruptor is only really skin deep. While the T-Mobile of 2012 or so certainly added some much needed competition to the wireless sector (killing ETFs, eliminating long-term contracts, and eroding international roaming costs), more recently the company has started to look a lot like the bigger competitors (AT&T, Verizon) it pretends to be superior to. From mocking groups like the EFF to opposing net neutrality, the company isn't all that different from the companies its brash CEO John Legere likes to make fun of.

Case in point: during the ongoing multi-state AG lawsuit attempting to stop the merger, documents were released showing that one of T-Mobile's master plans was to first buy Sprint then merge with Comcast. Yes that Comcast; one of the least liked companies on the planet, frequently mocked by Legere as a clear example of industry dysfunction. The presentation, assembled at the request of T-Mobile board member Thorsten Langheim in December 2015, highlights how T-Mobile owner Deutsche Telekom was eager to use T-Mobile to exploit the poorly regulated and marginally competitive US telecom market:

"The report, which is labeled as “confidential” throughout, suggests T-Mobile owner Deutsche Telecom had bet heavily on the US wireless market, where the company saw less regulation and higher average revenue per customer than in Europe. Analysts also predicted that, as the company reached the limits of its organic growth, it would have to rely on industry-wide consolidation to continue its growth after 2018. The report also cautions the company against pricing too aggressively in order to maintain those profits and the attendant merger potential. As the final slide puts it, “don’t trigger a price war in the US market (stable ARPUs base drives attractiveness & valuation.)”

We'd long noted that despite a lot of breathless press hype, T-Mobile's impact on American US wireless pricing (some of the highest in the developed world) was not all that. And with the 4-3 consolidation presented by T-Mobile's $26 billion merger with Sprint, most objective analysts say even higher prices are the likely result. T-Mobile, hipster Millennial pro-consumer branding schtick in tow, knows this very well. The docs show the company also knows that the DOJ's flimsy fix to have Dish step in and try to fix the problem the deal creates aren't realistic:

"The documents also cast doubt on one of the central claims of T-Mobile’s merger, which has sought to prop up Dish as a competitive wireless provider, backed by an MVNO deal with T-Mobile in advance of its own network buildout. But the document, which was prepared before the Dish deal was even considered, sees it as unlikely that any MVNO could provide meaningful competition to T-Mobile."

Yes, early T-Mobile (created ironically from the government's decision to block a merger with AT&T in 2011) was marginally disruptive. But modern T-Mobile is more of a stage play; designed to look disruptive without trying too hard to kill the captive cash cow. Like any corporation, T-Mobile's primary objective is to drive shareholder growth, something they feel is only actually possible via an endless series of merger and acquisitions resulting in fewer jobs, higher prices, and progressively worse service.

Normally that's where a functioning government would step in and protect the market, competitors, and consumers from antitrust violations. But in the Trump era, when corruption and regulatory capture are barely even hidden and even applauded, that's obviously not happening. As a result, a coalition of state AGs is the last line of defense between you and a significantly higher wireless bill courtesy of our mindless obsession with "growth for growth's sake."

Filed Under: cable, competition, merger, mobile
Companies: comcast, sprint, t-mobile

DOJ Antitrust Boss Delrahim Ignored Hard Data As He Rubber Stamped T-Mobile Merger

from the dysfunction-junction dept

Technically, the head of the DOJ's antitrust division, Makan Delrahim, is supposed to enforce antitrust law and derail harmful monopolies when they arise. But that's certainly not what's happening with the DOJ review of T-Mobile's $26 billion merger with Sprint, which antitrust experts (and even the DOJ's own economists) have repeatedly warned will indisputably reduce competition, raise rates, and result in thousands of layoffs as duplicative positions are eliminated.

As state AGs continue their lawsuit to stop the merger, details were revealed last week in court showing that Delrahim did everything in his power to help shovel the deal through the merger approval process, including providing T-Mobile tips (via both personal and business accounts) on which officials they should focus their lobbying attention on in order to get the deal across the finish line:

"As the $26 billion blockbuster merger between T-Mobile and Sprint teetered this summer, Makan Delrahim, the head of the Justice Department’s antitrust division, labored to rescue it behind the scenes, according to text messages revealed this week in a lawsuit to block the deal.

Mr. Delrahim connected company executives with the F.C.C. and members of Congress. And he gave executives insight into the thinking of Ajit Pai, the chairman of the F.C.C. who would also have to approve the merger.

He is “open and willing” to discussions about the deal, Mr. Delrahim said in one text message in June, a month before regulators blessed the transaction."

Delrahim's job is to look at the evidence and protect markets where necessary, not help companies push deals that erode competition, harm workers, and hurt markets. Keep in mind, past deals just like this one (AT&T/T-Mobile 2011, T-Mobile/Sprint 2014) were blocked because the harm was so obvious there was simply no way to justify it. This latest merger is no different, yet government officials have stopped even pretending to care. They're intent on shoveling this turd of a deal across the finish line at all costs at the behest of T-Mobile, Sprint, and Japan's Softbank.

The FCC rubber stamped the merger before Commissioners had even seen their own staff's full economic analysis. FCC staffers privately met with T-Mobile numerous times to massage their underlying and fragile arguments. Former FCC officials (Clyburn, McDowell) have happily lobbied on T-Mobile's behalf, and T-Mobile executives ramped up patronage of Trump's DC hotels to curry favor with the administration. That's all capped off by Delrahim all but putting out runway lights for T-Mobile in a bid to shine up a deal that, again, is going to be indisputably bad for consumers and the market.

Former FCC staffers like Gigi Sohn were not what you'd call impressed:

To justify its mindless rubber stamp of the deal, the DOJ has pushed forth a shaky plan that involves giving Dish Network some spectrum (and prepaid brand Boost Mobile), then just hoping the company can build a replacement fourth wireless carrier over the next 7 years. But with T-Mobile, Verizon, and AT&T all heavily incentivized to make sure a strong fourth competitor never emerges, Dish having a reputation for empty promises and bluster, and regulators largely captured by industry players (who again, want less competition to boost revenues) few serious analysts actually think the plan's going to work.

This is, of course, the same DOJ that folks seriously hope will come in and "fix big tech" via an ocean of new antitrust inquiries. But it's pretty damn clear this DOJ doesn't actually give a damn about those responsibilities, and has been largely captured by the telecom industry under former Verizon lawyer Bill Barr. And while US corruption is nothing new, we seem to be entering a new era where we can't even be bothered with the faintest pretense to the contrary.

Filed Under: antitrust, assistance, competition, doj, fcc, lobbying, makan delrahim
Companies: sprint, t-mobile

As Trial Begins, Evidence Shows Sprint, T-Mobile Know Merger Will Raise Prices

from the history-keeps-repeating-itself dept

With the DOJ (run by former Verizon lawyer William Barr) and the FCC (run by former Verizon lawyer Ajit Pai) eager to rubber stamp Sprint's $26 billion, competition-eroding merger with T-Mobile, a lawsuit from a bipartisan coalition of states is now all that stands in the way in the deal.

That lawsuit began Monday, with state AGs making it very clear that every meaningful economic metric indicates the deal will erode competition, raise rates, and result in thousands of layoffs as redundant employees are inevitably eliminated. While Sprint and T-Mobile (and the army of consultants, lobbyists, think tankers, and government officials paid to love them) insist the deal will be wonderful for America, financially independent economists paint a decidedly different picture. One in which ongoing consolidation in the space only drives up wireless data pricing for American consumers who already pay some of the highest prices in the world for what's routinely ranked as mediocre service (whether we're talking about speeds or overall video quality).

But underneath the deal's marketing veneer, industry giants know very well the reduction in competition will let them charge higher rates. You'll notice that AT&T and Verizon haven't lifted a finger to thwart the deal, suggesting they're perfectly fine with its impact (something that wouldn't be happening if they actually thought the end result would be a more competitive sector). And at the trial this week, AG lawyers highlighted that Sprint executive emails make it perfectly clear they know the deal will raise rates:

"Roger Sole, Sprint’s chief marketing officer, said in a text message in 2017 to Marcelo Claure, the carrier’s chief executive officer at the time, that the deal could mean an increase of $5 a month in average revenue per subscriber. Industry leaders AT&T and Verizon Communications would also benefit with fewer players in the market, he said.

“And they DO NOT pay anything for this,” Sole wrote to Claure. “The benefit of a consolidated market.”

The goal of the deal is less competition, providing a green light for even higher prices, which is effectively the same outcome we've seen from every major telecom union over the last 30 years. Three decades of data also makes it abundantly clear that pre-merger promises are worthless. But if the state AGs lose this case, the federal government is going to ignore that data -- and history -- and rubber stamp the deal anyway. You know, just because.

Filed Under: competition, consumer harms, merger, mobile, prices, wireless
Companies: at&t, sprint, t-mobile, verizon