Verizon Claims Its Millennial Ad Pivot Has Been Slowed By Its Breathless Dedication To Consumer Privacy

from the okey-dokey dept

So we've noted repeatedly how Verizon really wants to pivot from stodgy, old protectionist telco to Millennial-focused media and advertising juggernaut. The company desperately wants in on Facebook and Google advertising cash, and apparently believes this is possible by ceasing network fiber upgrades and gobbling up failed 90s internet brands like Yahoo and AOL.

Except Verizon's brand revolution so far hasn't been much to write home about.

Verizon began its pivot with a short-lived website that imploded after writers revealed they couldn't talk about net neutrality or mass surveillance. The company's acquisition of Yahoo has also been plagued with issues, from Yahoo's mammoth, undisclosed hacking scandal to revelations of the company's wholesale spying on user e-mail accounts for the government (not that this latter issue bothered Verizon much). And Verizon's Go90 streaming video service, the cornerstone of Verizon's effort, has been derided as "a dud" by Verizon's own media partners.

Needless to say, a generation of being a government-pampered telecom monopoly left Verizon ill-prepared for its marketing and media gambit, and the company's own incompetence and lack of innovative DNA have made for rough sledding early on. Verizon, for its part, has been stuck trying to explain to investors and the media why things aren't going particularly well. Kind of amusingly, Verizon Executive Vice President Marni Walden last week tried to claim the problems were because Verizon is breathlessly dedicated to consumer privacy:

"For the first year, we’ve worked on bringing Verizon data into AOL. Candidly, that’s been slower than I’d like it to be, and you’ll see us accelerate that this year. The reason for that is around privacy and transparency for our customers."

"We’ve got to make sure we don’t ever compromise that relationship with consumers, so we’ll do that in a very responsible way,” Walden continued. “But what we do know is that when you bring that kind of data, that rich set of data from Verizon into the platform, the result you get on targeted advertising is significantly better."

Just so we're clear: Verizon was caught last year actively modifying wireless user data packets to track consumers around the internet. It was tracking users and building entire profiles of customers for two years before security researchers even discovered it. The company refused to inform consumers this was happening, and refused to provide working opt out tools. And while Verizon was fined $1.35 million by the FCC for this behavior, these so-called "stealth cookies" remain in use -- and have since been expanded across the AOL empire.

This comes of course as Verizon has worked tirelessly to fight consumer privacy protections on every front, most recently in the form of the FCC's broadband privacy protections, which simply require companies be transparent about what they're collecting. Verizon has long proclaimed that privacy protections aren't necessary because public shame would keep the company honest (again though, the public was never told this data collection was even happening). AOL CEO Tim Armstrong also proudly declared that "the market" would keep the Verizon empire on its best behavior as it pertains to user privacy. Yeah, maybe.

Of course the real reason Verizon's marketing ambitions have been slow to blossom isn't Verizon's love of privacy, it's Verizon's inexperience in media -- and actual competition. In broadband, Verizon has been consistently allowed to ignore privacy (and any other consumer complaint) courtesy of a lack of last-mile broadband competition. Now Verizon's the pesky upstart in a new, unfamiliar market, where annoyed users actually have a choice in search, e-mail, streaming video and other services. It's frankly entirely unclear if the company has the competence required for the transition.

Filed Under: advertising, broadband, go90, millenials, privacy
Companies: verizon

Report: Verizon Considering Comcast Merger In Supernova Of Dysfunction

from the bigger-is-always-better dept

Despite Trump's criticism of the AT&T Time Warner merger (largely believed to be due to negative CNN coverage), most Wall Street and telecom sector analysts expect the next few years will see an explosion in previously-unthinkable mega-mergers. Sprint is expected to make another bid to acquire T-Mobile after the deal was blocked by regulators back in 2014. Comcast or Charter are expected to make their own bid for T-Mobile if Sprint can't come up with the cash. Other rumored acquisition targets for giant telecom companies include Dish (and its hoarded spectrum) or any number of massive media empires.

But one of the more unlikely rumored M&As that keeps popping up is a Verizon acquisition of Comcast. The idea was floated by UBS analyst John Hodulik in a recent research note to investors, with Hodulik claiming the deal provides incredible "synergies" while propping up Verizon's fifth-generation wireless (5G) ambitions:

"Densification of wireless networks required to meet the needs of video-centric subscribers increases synergies of cable-wireless combinations and provides the springboard for 5G-based services," he proclaims. "A roll-back of Title II re-classification could further increase incentives for cable," he adds, casually citing the likely dismantling of net neutrality and the FCC under Trump.

He put forth a number of models that include Dish fusing with T-Mobile or other variations. But he noted that a Comcast or Charter merger with Verizon would create "significant synergies" and "integrated products" while being "accretive to revenue and EBITDA growth."

Adding to this speculation this week is a New York Post report claiming that Verizon is looking to acquire either Comcast or Charter:

"Verizon Chief Executive Lowell McAdam may be getting ready to answer rival AT&T’s moves to buy DirecTV and Time Warner. The New York wireless giant is weighing the acquisition of a cable company to help grow demand for its wireless data products, two well placed sources told The Post. The CEO told friends at the Consumer Electronics Show in Las Vegas earlier this month that he wants to buy into cable, one source said.

"They need it for 5G,” said a second source, confirming McAdam’s interest. The most likely targets would be “Charter or Comcast,” the source noted."

The problem is the deal doesn't make a whole lot of technical sense given the companies' dramatically different networks. Verizon has no shortage of core network transit capacity to fuel its own 5G ambitions. And while the cable industry's large network of WiFi hotspots could be used to offload 5G wireless users, Verizon has actively been trying to get out of the fixed-line broadband business. The company has largely frozen its FiOS fiber expansion, and has spent the last few years actively trying to drive away DSL customers it doesn't want to upgrade. Verizon's trying (with mixed results) to pivot to media and advertising.

While Verizon may be interested in NBC, would it saddle itself with tens of millions of new residential broadband customers just as it's trying to back away from the saturated residential broadband market? A more likely effort would involve the "smaller" acquisition of a pure media company like CBS to keep pace with AT&T's $100 billion Time Warner bid and Comcast NBC Universal. Verizon's own streaming service is being called a "dud" by the company's own advertising partners, and owning a richer catalog of original content would go a long way to prop up Verizon's goal of becoming a Millennial advertising juggernaut.

Much of the chatter could simply be Wall Street cashing in on rumor-triggered telecom stock movement. That said, the competitive repercussions of fusing two of the biggest broadband providers and reducing competition further would be monumental. Whether a Verizon Comcast superunion happens or not, it's becoming incredibly clear that Wall Street believes we're entering a new era of rubber stamp regulators, where no deal is too big, and the consumer impact and employment toll of these kinds of megadeals is only a distant, fleeting afterthought.

Filed Under: advertising, antitrust, broadband, content, mergers
Companies: comcast, verizon

Verizon Insists Higher Phone Upgrades Are Being Used To Enhance The Network Instead Of Make Up Revenue Decline

from the uh-huh dept

Within Karl Bode's post about Verizon's insistence that all of the people who continue to use grandfathered unlimited data plans don't actually exist was a brief note about the company's decision to increase the cost to upgrade the phones themselves. As mentioned in the post, Verizon claimed that the reason to push upgrade costs from $20 to $30 was due to increasing costs. Fleshing that out a tiny bit, a Verizon spokesman commented for Ars Technica.

When asked why the upgrade fee was raised, a Verizon spokesperson told Ars, "These fees help cover increased cost to provide customers with America’s largest and fastest 4G LTE network."

As both Karl's and the Ars post note, there's a bit of a problem with this statement. Verizon's earnings reports are publicly available, you see, and the company's own reporting details a fairly significant decline in operating costs compared with the previous year. So, what was sold as a need to make up for increased expense appears instead to be something else. Once the post went live, another Verizon spokesman reached out to Ars again.

After this story published, Verizon responded that it was referring to "ongoing costs to maintain and enhance the network," but did not provide any further details.

Making the additional comment rather useless, I would say. We still have source material in the form of Verizon's own financial statements that suggest lower expenses for the company, not higher. What you do find, in addition to that, is a slightly smaller decline in revenue. It would make some sense for the company to try to make up for a revenue decline by raising upgrade fees. If that were the case, however, why not just say so? Why instead invoke the expense and the spectre of the future without anything concrete to back that up? It's not like the telecom industry has some sterling reputation when it comes to how and when it deploys the cost of maintaining or upgrading their networks as the reason to take certain actions. And why on the one hand charge extra fees to burgeon the network while at the same time eliminate data plans that could take advantage of a beefed up service?

The only thing that's certain in this is that Verizon appears to be dipping ever-further into tactics that are designed not to provide its customers with additional value, but to instead merely prop up a decreasing revenue number.

Filed Under: costs, network, revenue, upgrades
Companies: verizon

Verizon Cracks Down On Unlimited Data Users, Claims Nobody Wants Unlimited Data Anyway

from the tell-us-what-we-want dept

Back in 2011, AT&T and Verizon eliminated their unlimited data plans, instead shoving users toward metered plans with limited data allotments. While the two companies did "grandfather" their existing unlimited data users at the time, they've been engaged in a quiet war to drive these users off the plans for years, ranging from AT&T's decision to block Facetime from working unless users signed up for metered plans, to throttling these users (and then in some instances lying about it). This is all of course accompanied by a constant barrage of rate hikes (AT&T imposed another $5 bump just last week).

Six years after first getting rid of the plans, Verizon shows no sign of backing off its crackdown of these unwanted users. The company this week confirmed that it was taking new aim at unlimited consumers, the company confirming that it's now telling any user that consumes more than 200 GB per month that they will be booted off the Verizon network:

"Because our network is a shared resource and we need to ensure all customers have a great mobile experience with Verizon, we are notifying a small group of customers on unlimited plans who use more than 200GB a month that they must move to a Verizon Plan by February 16, 2017," Verizon spokesperson Kelly Crummey told Ars today."

Of course, the biggest plan Verizon advertises is 30 GB for $130 per month. Users can call and get larger plans, but they'd best expect to take out a second mortgage to pay for them. While Verizon was busy tightening the noose on its dwindling and data hungry unlimited users, it was also busy bumping activation and phone upgrade fees from $20 to $30, citing "increased costs" that have actually declined as the company continues to set earnings records thanks to metered billing and the company's usage caps.

And while it's understandable that Verizon would want to crack down on users on older data plans that give them a better value, the company continues to insist that nobody wants unlimited data. Just last September, Verizon CFO Fran Shammo again proclaimed that nobody needs an unlimited data plan. The company went so far as to hire a consultant willing to pen a blog post in which he claimed the consumer desire for simpler, unlimited data plans was just a "gut feeling" detached from any reality:

"So, while unlimited data may sound attractive, there is no practical effect of data limits on the majority of users. Understanding this should bring rationality to a discussion that is often held on a “gut feeling” level. Keeping adequate speed and performance while allowing all users to share the limited commodity we call wireless data is the fair way to deal with wireless connectivity. And ultimately, that is what is beneficial for wireless consumers."

To be clear, small cells and WiFi offloading have made great inroads in helping carriers handle the video load. T-Mobile and Sprint have certainly found a way to offer users unlimited data, albeit with some net neutrality trampling caveats. Sprint, for example, now throttles all games, music and video for unlimited data users by default, then charges them a premium if they want these services to run at full speed. To try and combat these new plans Verizon briefly tried to market its metered data plans as "limitless" (as in, they don't throttle them like Sprint) but was soundly mocked for the effort.

All told, the industry still can't quite figure out that if you can't actually offer unlimited data, you shouldn't advertise unlimited data. They're still also struggling with the concept that in a truly competitive market, consumers tell you what they want (and hopefully, you provide it). In wireless, executives still apparently think it's the other way around.

Filed Under: data caps, grandfathering, unlimited data
Companies: verizon

AT&T, Verizon Laugh At The FCC's Last-Minute Attempt To Crack Down On Zero Rating

from the way-too-little,-way-too-late dept

So we've noted several times how the FCC's decision to avoid banning zero rating when crafting net neutrality rules was a bad idea, as it opened the door wide to all manner of net neutrality violations -- provided incumbent ISPs were just creative about it. And like clockwork, companies like AT&T, Verizon and Comcast quickly got to work exempting their own content from usage caps, while penalizing competitors (and non-profits or educational services). Meanwhile companies like Sprint and T-Mobile began charging users a steep premium unless they wanted games, video and music throttled by default.

Unlike many other countries (Japan, The Netherlands, Norway, India), the FCC decided to avoid banning these kinds of practices as part of neutrality rules, instead saying they'd step in and act on a "cases by case" basis should ISP behaviors prove anti-competitive. But as ISPs increasingly made it very clear they were using arbitrary usage caps as anti-competitive weapons against competing streaming video services, the FCC did nothing. That is, until the agency reached out to AT&T and Verizon last month, formally accusing both companies of violating net neutrality.

It's a strange, belated decision by an FCC that, by most analyst accounts, is about to be defunded and defanged. Both the GOP and incoming Trump administration have clear they see no role for the agency as a consumer or competition watchdog. With FCC boss Tom Wheeler having just stepped down, both AT&T and Verizon are well aware the current FCC is a lame duck. As such both companies responded to the FCC's inquiries this week with the legal equivalent of laughter.

As it stands, AT&T now zero rates its DirecTV Now streaming service so it doesn't count against AT&T user wireless caps. Verizon does the same thing with its Go90 streaming video service. In both instances, their wireless customers are giving every incentive to avoid using competing services. But as you might imagine, neither company is willing admit that they're using their control over the conduit to give their content an unfair market advantage. And both were quick to proclaim that if companies don't like it, they can be put on the same equal market footing if they're willing to pay AT&T and Verizon a premium:

"Other video providers can be expected to respond to [AT&T’s Data Free TV] either by sponsoring their own content with AT&T and/or other wireless providers or by finding different ways to improve and differentiate their offerings and generate consumer value,” (wrote AT&T executive Joan Marsh)."

And both AT&T and Verizon equally made it clear that they realize the emperor has no clothes, and will not be able to enforce this almost comically-belated attempt to actually protect net neutrality:

"Any doubts on that score were put to rest when two FCC Commissioners, both of whom will remain in office after the imminent change of administration, criticized this investigation and warned the Bureau against unlawfully usurping core policymaking powers that only the Commission may exercise," AT&T wrote. "Those Commissioners also observed that whatever judgment the Bureau purports to pass on this program before January 20 will very likely be reversed shortly thereafter."

So while it's nice that the FCC finally realized that usage caps and zero rating can be used as anti-competitive weapons, this all comes too little, too late for broadband consumers, startups, and other competitors that rely on a healthy, open internet. The ultimate irony being of course that if net neutrality is to be demolished (which will likely come in the form of a new bill professing to do the exact opposite), these concerns over zero rating will be the very least of net neutrality's problems in the new year.

Filed Under: fcc, net neutrality, tom wheeler, zero rating
Companies: at&t, verizon

Verizon Wants A Yahoo Price Cut After Company Reveals Another, Massive Hack Attack

from the this-is-not-going-well dept

Earlier this year Verizon was understandably irritated when it learned (just two days before the public) that Yahoo had failed to disclose a massive hack of the company's systems during the companies' $4.8 billion merger negotiations. Reports suggested that Verizon, who is attempting to pivot from broadband to ads and content, wanted a $1 billion reduction in the asking price and another $1 billion set aside for the inevitable lawsuits. Given its NSA ties, Verizon was likely much less concerned about reports revealing that Yahoo also went out of its way to help the government sniff through subscriber e-mail accounts en masse.

Fast forward to this week, and things just got notably more complicated for both companies. While the first Yahoo hack revealed the personal data of roughly 500,000 Yahoo subscribers, Yahoo just confirmed a second attack by the same party that the company says revealed the personal data of 1 billion Yahoo users. Yahoo says this second attack was only revealed once law enforcement reached out to Yahoo with snippets of the compromised data in hand. But in a website post by Yahoo’s chief information security officer Bob Lord, the company effectively admits it still doesn't actually know how the hackers got this information:

"As we previously disclosed in November, law enforcement provided us with data files that a third party claimed was Yahoo user data. We analyzed this data with the assistance of outside forensic experts and found that it appears to be Yahoo user data. Based on further analysis of this data by the forensic experts, we believe an unauthorized third party, in August 2013, stole data associated with more than one billion user accounts. We have not been able to identify the intrusion associated with this theft. We believe this incident is likely distinct from the incident we disclosed on September 22, 2016."

Not too surprisingly, Verizon continues to be frustrated by the revelations, while simultaneously using them to drive down the Yahoo asking price:

"A legal team led by Verizon General Counsel Craig Silliman is assessing the damage from the breaches and is working toward either killing the deal or renegotiating the Yahoo purchase at a lower price, the person said. One of the major objectives for Verizon is negotiating a separation from any future legal fallout from the breaches. Verizon is seeking to have Yahoo assume any lasting responsibility for the hack damage, the person said."

While some outlets continue to suggest the deal could be killed entirely, Yahoo is critical to Verizon executives' beliefs they can transform Verizon from stodgy old telco into a Millennial-focused media and advertising juggernaut. The problem is that Verizon's attempt to become the next Google or Facebook isn't going particularly well. Being a pampered telecom monopoly for a generation doesn't imbue you with the kind of DNA required to make such a disruptive transition, resulting in the company's Millennial-focused streaming service Go90 being a "dud" in the words of Verizon's own partners.

Verizon will likely continue undaunted in its plan to magically become Google by gobbling up failed 90s internet brands. And while it's far from certain that Verizon has the chops to successfully make this transition work, the least we can hope is that the telco brings something vaguely resembling security standards along for the ride as the deal stumbles its way toward its inevitable conclusion.

Filed Under: cybersecurity, hack, merger, privacy
Companies: verizon, yahoo

Samsung Issues Update To Brick Remaining, Spontaneously Combusting Galaxy Note 7 Phones, Verizon Refuses To Pass It On

from the bomb-in-your-pocket dept

If you hadn't been paying attention, Samsung hasn't been having a very good year. The company was forced to recall the original Galaxy Note 7 in early September after numerous reports of spontaneous combustion. That was followed by a formal recall by the US Consumer Product Safety Commission. Samsung then doubled down on its incompetence, releasing an "updated" version of the phone that suffered from the exact same problem. By October Samsung was engulfed in an honest-to-goodness PR disaster as it failed to explain how it could "fix" the initial problem by somehow making things worse.

Samsung says that 93% of US-sold Note 7 devices have now been returned, which still leaves around 133,000 phones unaccounted for despite the endless media coverage of the issue. So the company last week came up with a solution: an update to the phone's software that prevents the device from being charged (as in, ever again), effectively "bricking" the device. In a statement posted to Samsung's website, the company said this "bold" step will begin on December 19, as the company works with carriers to finally force the issue:

"To further increase participation, a software update will be released starting on December 19th and will be distributed within 30 days. This software update will prevent U.S. Galaxy Note7 devices from charging and will eliminate their ability to work as mobile devices. Together with our carrier partners, we will be notifying consumers through multiple touchpoints to encourage any remaining Galaxy Note7 owners to participate in the program and to take advantage of the financial incentives available."

T-Mobile has said it will release the device-crippling update on December 27. AT&T confirmed it planned to release it on January 5. Sprint said it will deploy the software update to its customers on January 8. Verizon, however, posted a statement to its website stating that it wouldn't be passing on the update to consumers for fear of ruining their holiday seasons:

"Verizon will not be taking part in this update because of the added risk this could pose to Galaxy Note7 users that do not have another device to switch to. We will not push a software upgrade that will eliminate the ability for the Note7 to work as a mobile device in the heart of the holiday travel season. We do not want to make it impossible to contact family, first responders or medical professionals in an emergency situation."

It's kind of a strange stand by Verizon, which has long been criticized for taking longer than is reasonable to pass on necessary Android security updates. One, because users can exchange the phone at any Verizon store for free. Two, the Verizon-cited risk of not being able to make a call kind of pales in comparison to the risk of carrying around a phone that doubles as a hand grenade. After all, given the FAA has banned the phone from being taken on planes, these users are putting themselves (and potentially those around them) at risk by ignoring the recall.

It's certainly possible that Verizon actually is being sincere here and doesn't want people without a phone for the holidays. But it's just as likely that Verizon's just tired of the entire PR fracas, and doesn't want its customers thinking that it was somehow responsible for their phones not working when the update is released. Regardless, the onus remains on customers who, for whatever reason, think it's nifty to ignore recalls and carry around a potential fire hazard during the holidays.

Update: It looks like Verizon has just as quickly reversed course without explanation, and now says it will deploy the device-bricking update on January 7.

Filed Under: galaxy note 7, updates
Companies: samsung, verizon

Wall Street Is Dreaming Of Megamergers Under Trump -- Including A Verizon-Comcast Super Union

from the ill-communication dept

We've been discussing how despite all of the "populist" rhetoric on the Trump campaign trail, the President Elect has nominated several cozy telecom industry insiders to guide his telecom policy and select a new FCC boss. Both Jeffrey Eisenach and Mark Jamison have lobbied and worked for large ISPs, spending most of the last decade vehemently fighting against any and every consumer reform in telecom. Both have made it abundantly clear they not only want to roll back net neutrality and new broadband privacy rules passed under current boss Tom Wheeler, but they want to dismantle the FCC entirely.

With every indication that the government will be significantly more friendly to telecom giants in the new year, Wall Street has quickly gotten to work giddily daydreaming about mergers that were previously unthinkable in the space. Most commonly that involves predictions that Sprint will finally merge with T-Mobile (blocked under the current FCC because it would have reduced overall wireless competitors), or that Comcast and Charter will try to buy either Sprint or T-Mobile as part of a broader cable industry attempt to push into wireless.

But in a research note to investors this week, UBS analyst John Hodulik dreamed notably larger, arguing that the incoming Trump administration could possibly even allow a merger between telecom giants Comcast and Verizon:

"Densification of wireless networks required to meet the needs of video-centric subscribers increases synergies of cable-wireless combinations and provides the springboard for 5G-based services," he proclaims. "A roll-back of Title II re-classification could further increase incentives for cable," he adds, casually citing the likely dismantling of net neutrality and the FCC under Trump.

He put forth a number of models that include Dish fusing with T-Mobile or other variations. But he noted that a Comcast or Charter merger with Verizon would create "significant synergies" and "integrated products" while being "accretive to revenue and EBITDA growth."

While a Comcast Verizon merger may create "significant synergies" in the eyes of Wall Street, it could be downright fatal for broadband consumers. Verizon FiOS is among the only real competition Comcast sees along the east coast; so much so that the region is the only part of the country Comcast is afraid to expand its unnecessary usage caps into for fear of competitive repercussions. Eliminating that competition not only would result in caps and higher prices, but less motivation than ever for Comcast to improve its abysmal customer service.

Now it's entirely possible that Verizon and Comcast don't want to merge, but it's clear that Wall Street sees a huge new wave of consolidation looming for the already uncompetitive broadband industry all the same. Since Trump's telecom advisors don't believe telecom monopolies exist, believe that regulatory oversight of said nonexistent monopolies should be virtually nonexistent, and can't even acknowledge that the sector's competitive shortcomings are real -- what could possibly go wrong?

Trump, of course raged, against megamergers on the campaign trail to drum up populist support, not only claiming he'd block AT&T's $100 billion acquisition of Time Warner, but claiming he'd somehow dismantle the already merged Comcast NBC Universal. Based on his telecom advisors' own words and policy positions, there's virtually no chance of either actually happening. In fact, Wall Street, Trump's own advisors, and most of the telecom sector clearly expect the exact opposite.

Between the Trump "populists" realizing they've been taken for a ride, and the net neutrality activists annoyed at the demolition of broadly-popular net neutrality rules and other broadband consumer protections, we're looking at quite a storm of megamerger dysfunction in the new year.

Filed Under: antitrust, broadband, competition, doj, megamergers, monopolies, wall street
Companies: comcast, ubs, verizon