The FTC Probably Doesn't Need A New 'Big Tech' Task Force. It Just Needs To Do Its Job

from the dog-and-pony-show dept

This week the FTC turned a few heads by announcing that the agency would be creating a new "task force" designed specifically to monitor large technology companies. According to the agency's announcement, this new task force will feature approximately 17 staff attorneys whose mandate will be to more closely examine the competitive tech landscape, and take action if necessary. According to the FTC, this includes taking a closer look at both pending mergers, and large technology mergers that have already happened.

"In addition to examining industry practices and conducting law enforcement investigations, the Technology Task Force will, among other things, coordinate and consult with staff throughout the FTC on technology-related matters, including prospective merger reviews in the technology sector and reviews of consummated technology mergers."

Some, like former Chief FTC technologist Ashkan Soltani, took the announcement to mean that the FTC might just start taking antitrust more seriously in the wake of numerous embarrassing enforcement face plants on this front (like the government's comedic inability to address the glaringly obvious anticompetitive impact of AT&T's latest merger):

Others were justly more skeptical. After all, examining the health of the tech market, contemplating the impact of mergers, and taking actions to address market imbalance and fraud is the FTC's entire job to begin with. And, given the FTC often fails utterly to do that job (especially in the telecom sector), a lot of folks were quick to wonder if this task force was a bit of a show pony:

"I’m scornful of the new seating arrangements, because the FTC has consistently proven they do not want to wield power,” says Matt Stoller, a fellow at the Open Markets Institute, an antimonopoly think tank that has called for a breakup of Facebook. “They want to hold hearings. They want to get their friend economists and antitrust lawyers to fly into DC and talk to each other. They don’t want to do their No. 1 job, which is to police markets for unfair and anticompetitive behavior.”

While I'm not sold on the need to break up Facebook, it's a solid point that the FTC should maybe focus on doing the job it already has, and layering additional bureaucracy on a broken apparatus may not be the best path forward. The FTC routinely does nothing to address problematic sectors like telecom, where anti-competitive megamergers and ripping off customers is an almost daily occurrence. For example, the FTC could easily crack down on the bogus fees companies like Comcast use to jack up your advertised rate using its power under the FTC Act, yet I've never seen the agency so much as fart in the direction of the problem when bigger companies are involved.

While there's certainly a lot of solid complaints to be made about "big tech" giants like Facebook and Google (especially on the privacy front), it's also pretty obvious that a lot of the recent criticisms of "big tech" aren't being made in good faith. Claims of "censorship" of conservatives, for example, usually don't hold up under scrutiny, and are often driven by folks who wouldn't be facing these problems if they didn't behave like legendary assholes on the internet in the first place.

Similarly a lot of the recent criticism of big tech is coming from telecom giants eager to saddle Silicon Valley giants with unnecessary regulation in a bid to hoover up a bigger slice of the online advertising pie. On the one hand, telecom giants like AT&T and Verizon just got done convincing the FCC to effectively neuter itself, leaving any remaining oversight in the lap of an FTC they know won't (and often can't) hold them accountable. At the same time, telecom lobbyists like Mike Powell have spent the last few years drumming up frothy calls to regulate "big tech," intentionally ignoring their own anticompetitive ambitions:

"Our governmental authorities need to get a handle on what kind of market power and harm flow from companies that have an unassailable hold on large pools of big data, which serve as barriers to entry, allowing them to dominate industries throughout the economy. For years, big tech companies have been extinguishing competitive threats by buying or crushing promising new technologies just as they were emerging. They dominate their core business, and rarely have to foreclose competition by buying their peers. Competition policy must scrutinize more rigorously deals that allow dominant platforms to kill competitive technologies in the cradle."

You're to ignore that telecom monopolies engage in all of this exact behavior, yet government regulators from both parties routinely turn a blind eye to it. And while Comcast desperately wants to be seen as in line with tech giants like Apple, you'll notice that here, telecom has somehow mystically excused itself from the table of accountability, despite being arguably the most problematic sectors in all of "tech" thanks to their actual, growing monopoly over internet access.

Yes, if the task force genuinely results in the FTC finally taking its mandate seriously, enforcing antitrust, and policing terrible behavior, all the better. But given the recent climate, it's probably wise to be wary of this effort being little more than a show pony scripted by sectors and individuals not entirely arguing in good faith.

Filed Under: antitrust, competition, consumer protection, ftc, monopolies, oversight, tech, telcos

Consumer Groups Say FCC Weakening Oversight Of Cell Carriers Under Pretense Of Battling Text Message Spam

from the ill-communication dept

Consumer groups say that the Ajit Pai FCC is once again being misleading as he continues his ongoing quest to eliminate most meaningful oversight of cell carriers and broadband providers.

Last week, the FCC announced several major initiatives the agency claimed were intended to help fight text message spam. One of them involves the creation of a reassigned number database, which would help marketers market more efficiently by ensuring that a target of marketing calls and text messages are receiving the messages they either opted in to, or opted out of. But another effort, only vaguely hinted at in the announcement, would further weaken the FCC's consumer protection authority over wireless cell providers, already greatly eroded after the assault on net neutrality.

So some background: a little more than a decade ago, Verizon decided to ban a pro-choice group named NARAL Pro-Choice America from sending text messages to Verizon Wireless customers that had opted in to receiving them. Verizon justified the ban by declaring the text messages "controversial or unsavory"; a curious move for an industry that often cuddles up to marketing spammers and crammers when it's profitable. Ever since then consumer groups, worried that cellular carriers would use their power as gatekeepers to stifle certain voices, have been urging the FCC to declare text messages a “telecommunications service," making it illegal for carriers to ban such select SMS services.

Last week, the Ajit Pai FCC unsurprisingly rejected the request. An accompanying Ajit Pai blog post tries to claim that the FCC's refusal of he request (lobbied for by cellular carriers) was somehow necessary to "protect successful consumer protections," the sort of up is down and cold is hot rhetoric that has come to be one of the trademarks of Pai's legacy:

"In 2015, a mass-texting company named Twilio petitioned the FCC, arguing that wireless messaging should be classified as a “telecommunications service.” This may not seem like a big deal, but such a classification would dramatically curb the ability of wireless providers to use robotext-blocking, anti-spoofing, and other anti-spam features. So I’m circulating a Declaratory Ruling that would instead classify wireless messaging as an “information service.” Aside from being a more legally sound approach, this decision would keep the floodgates to a torrent of spam texts closed, remove regulatory uncertainty, and empower providers to continue finding innovative ways to protect consumers from unwanted text messages.

But consumer groups were quick to point out that there's nothing about the request that would prevent wireless cellular carriers from policing text message spam, and that Pai was (again) being misleading about what his latest policy order actually does:

"It wouldn’t be the holiday season without Chairman Pai giving a great big gift basket to corporate special interests at the expense of American consumers. Chairman Pai proposes to grant the wireless industry’s request to classify text messages as Title I ‘information services,’ stripping away vital consumer protections. Worse, Chairman Pai’s action would give carriers unlimited freedom to censor any speech they consider ‘controversial,’ as Verizon did in 2007 when it blocked NARAL and prompted the Public Knowledge 2007 Petition."

By now Ajit Pai has developed a fairly impressive skill: take something that cellular carriers lobbied for, and justify it by insisting it's essential for overall efficiency and effective consumer protection. Public Knowledge notes that happened again here:

"Chairman Pai supports this outrageous action by claiming the Title II ‘telecommunications service’ classification undermines spam filtering. As the FCC made clear in 2016 (over then-Commissioner Pai’s dissent), text messages and robocalls are both ‘calls’ under the anti-robocall statute, and this Title II designation does not prevent filtering or other technological means to block unwanted robocalls or spam texts. Indeed, Chairman Pai undermines his own argument by pointing out that email, which has always been an information service, has a 50 percent spam rate whereas text messaging, which the FCC treats as a ‘phone call,’ has a 2.5 percent spam rate."

The net neutrality repeal dramatically weakened the FCC's authority over ISPs by rolling back the classification of ISPs from "telecommunications providers" to "information services" under the telecom act. The goal of the giant telecom companies that lobbied for the rollback was fairly obvious: with a weakened FCC, most telecom oversight gets passed to an FTC that generally lacks the authority or resources to do much of anything about bad ISP behavior. As a result, ISPs will be clear to abuse a lack of competition in broadband to harm consumers and nickel-and-dime consumers -- provided they're somewhat subtle about it.

The same logic applies here. With text messages now declared "information services" free from FCC oversight, cellular carriers are free to not only block any SMS services they deem "controversial," but it opens the door to "creative" restrictions that protect a cellular carriers' own services. Fellow FCC Commissioner Jessica Rosenworcel went so far as to call the policy decision "bogus doublespeak," but most media outlets appeared to buy into the Pai FCC's claims that mindlessly doing whatever the biggest cellular companies want is somehow a massive boon to consumer protection.

Filed Under: ajit pai, consumer protection, fcc, information service, oversight, telecommunications service, text message spam
Companies: twilio, verizon

You Don't Own What You've Bought: Apple Disappears Purchased Movies

from the bad-apple dept

Once again, copyright and the digitization of everything means you no longer "own" what you've "bought." I thought we'd covered all this a decade ago when Kindle owners discovered that, even though they'd "purchased" copies of the ebook of George Orwell's 1984, their books had been memory holed, thanks to Amazon losing a license. After there was an uproar, Amazon changed its system and promised such things would never happen again. You would think that other online stores selling digital items would remember this and design their systems not to do this -- especially some of the largest.

Enter Apple and its infamous iTunes store. On Twitter, Anders G da Silva has posted a thread detailing how three of the movies he "purchased" have now disappeared and how little Apple seems to care about this:

My guess is that with this tweet getting lots and lots of attention, Apple will eventually back down and "fix" the situation. But it shouldn't take going viral for you to not have the stuff you bought disappear thanks to a change in licensing. Indeed, it does seem like Apple telling users that they are "buying" content that might later disappear due to changes in licensing agreements could potentially be a deceptive practice that could lead to FTC or possibly state consumer protection claims:

Last year we had a podcast about a new book by two copyright professors about the "end of ownership" due to excessive copyright usage, and this is just yet another unfortunate example of what has happened when we lock everything up. You don't own what you've bought.

And, yes, it is not endorsing or advocating for piracy to note that this is one of the reasons why people pirate. Content that people pirate doesn't magically disappear when licenses change and giant multinational companies decide to reach into your library and memory hole your purchases. Don't want people to pirate so much? Stop doing this kind of anti-consumer bullshit.

Filed Under: buy button, consumer protection, copyright, deceptive practices, disappearing content, itunes, licenses, movies
Companies: apple

Comcast Is Trying To Ban States From Protecting Broadband & TV Consumers

from the this-will-surely-end-well dept

We've repeatedly tried to make it clear that while everybody tends to focus on the death of net neutrality itself, the Pai FCC's "Restoring Internet Freedom" order killing net neutrality had a far broader impact than just killing net neutrality rules. As part of the repeal, Comcast, Verizon and AT&T also convinced FCC boss Ajit Pai to effectively neuter FCC authority over ISPs entirely, making it harder for the agency to hold giant ISPs accountable on a wide variety of issues ranging from privacy to transparency (the recent fire fighter kerfuffle being a prime example).

The order also attempts to ban individual states from holding giant ISPs accountable as well, though early ISP efforts to take advantage of this legal language haven't gone very well. In an effort to double down on weakening state oversight of natural telecom monopolies, Comcast lobbyists at the NCTA (the cable industry's biggest lobbying and policy organization) have also started petitioning the FTC, urging it to similarly "pre-empt" (read: ban or ignore) state-level efforts to protect consumers:

"The FTC should ensure that the Internet is subject to uniform, consistent federal regulations, including by issuing guidance explicitly setting forth that inconsistent state and local requirements are preempted," the NCTA wrote.

The FCC is already trying to preempt state net neutrality laws at the urging of industry groups, and courts might ultimately have to decide whether federal agencies can preempt such rules.

"The FTC should endorse and reinforce the FCC's ruling by issuing guidance to state attorneys general and consumer protection authorities reaffirming that they are bound by FCC and FTC precedent in this arena," NCTA argued."

The shorter version: the FCC's Restoring Internet Freedom order effectively cripples the FCC's ability to protect consumers, then shovels any remaining enforcement authority over to the FTC, which is ill-equipped to actually police the telecom market. Predicting that states would then try to jump in and fill the oversight accountability vacuum (which is precisely what started happening on both net neutrality and privacy), ISPs have also been urging both the FCC and the FTC to ban states from doing so.

This is all being done under the pretense that blind deregulation of the telecom sector magically results in greater industry investment and broader deployment. But as we've explained countless times, that's not how the U.S. telecom sector works. With neither competition nor reasonable government oversight to constrain it, natural monopolies like Comcast are simply free to double down on all their worst behaviors. To ignore this historical fact, one is required to pretend that the broadband industry is actually competitive, something Comcast again leans on in its filing with the FTC:

"ISPs claim they face so much competition that market forces will prevent bad behavior. Cable TV faces competition from online video services like Netflix, YouTube, and Amazon, NCTA noted. But notably, the NCTA filing includes a graphic listing "competitors" that doesn't include any broadband providers."

None of this logic is new. It was the same argument used by former FCC head Mike Powell (now the top lobbyist of the cable industry), who happily deregulated the broadband sector in the early aughts promising a cornucopia of investment and competition (consumers instead got a bigger Comcast monopoly, skyrocketing prices, usage caps, and virtually no competition at faster speeds). Oddly, giving giant telecom monopolies the precise regulatory landscape they want (no oversight, no concern about monopoly power) doesn't end well for consumers, innovation, or competition.

That this is still debated speaks to how lost in the woods on these issues we've become. And like Charlie Brown and his football, we never seem to learn, so nothing changes. And our reward for this collective gullibility is expensive broadband, comically-terrible customer service, and a bigger, meaner Comcast.

Filed Under: broadband, consumer protection, fcc, pre-emption, privacy, states, tv
Companies: comcast

Senator Mark Warner Lays Out Ideas For Regulating Internet Platforms

from the be-careful dept

For over a year now, Senator Mark Warner has been among the most vocal in saying that it's looking like Congress may need to regulate internet platforms. So it came as little surprise on Monday when he released a draft white paper listing out "potential police proposals for [the] regulation of social media and technology firms." Unlike much of what comes out of Congress, it does appear that whoever put together this paper spent a fair bit of time thinking through a wide variety of ideas, recognizing that every option has potential consequences -- both positive and negative. That is, while there's a lot in the paper I don't agree with, it is (mostly) not in the hysterical moral panic nature found around such debates as FOSTA/SESTA.

The paper lays out three major issues that it hopes to deal with:

1. Disinformation that undermines trust in our institutions, democracy, free press, and markets.
2. Consumer protection in the digital age
3. Antitrust issues around large platforms and the impact it may have on competition and innovation.

All of these are issues worth discussing and thinking about carefully, though I fear that bad policy-making around any of them could actually serve to make other problems even worse. Indeed, it seems that most ideas around solving the first problem might create problems for the other two. Or solving the third problem could create problems for the first one. And so on. That is not to say that we should throw up our hands and automatically say "do nothing." But, we should tread carefully, because there are also an awful lot of special interests (a la FOSTA, and Articles 11 and 13 in the EU) who are looking at any regulation of the internet as an opportunity to remake the internet in a way that brings back gatekeeper power.

On a related note, we should also think carefully about how much of a problem each of the three items listed above are. I know that there are good reasons to be concerned about all three, and there are clear examples of how each one is a problem. But just how big a problem they are, and whether or not that will remain the case is important to examine. Mike Godwin has been writing an important series for us over the last few months (part 1, part 2 and part 3) which makes a compelling case that many of the problems that everyone is focused on may be the result of a bit of moral panic, overreacting to a smaller problem and not realizing how small it is.

We'll likely take more time to analyze the various policy proposals in the white paper over time, but let's focus in on the big one that everyone is talking about: the idea of opening up Section 230 again.

Make platforms liable for state-law torts (defamation, false light, public disclosure of private facts) for failure to take down deep fake or other manipulated audio/video content -- Due to Section 230 of the Communications Decency Act, internet intermediaries like social media platforms are immunized from state tort and criminal liability. However, the rise of technology like DeepFakes -- sophisticated image and audio tools that cart generate fake audio or video files falsely depicting someone saying or doing something -- is poised to usher in an unprecedented wave of false and defamatory content, with state law-based torts (dignitary torts) potentially offering the only effective redress to victims. Dignitary torts such as defamation, invasion of privacy, false light, and public disclosure of private facts represent key mechanisms for victims to enjoin and deter sharing of this kind of content.

Currently the onus is on victims to exhaustively search for, and report, this content to platforms who frequently take months to respond and who are under no obligation thereafter to proactively prevent the same content from being re-uploaded in the future. Many victims describe a "whack-a-mole" situation. Even if a victim has successfully secured a judgment against the user who created the offending content, the content in question in many cases will be re-uploaded by other users. In economic terms, platforms represent "least-cost avoiders" of these harms; they are in the best place to identify and prevent this kind of content from being propagated on their platforms. Thus, a revision to Section 230 could provide the ability for users who have successfully proved that sharing of particular content by another user constituted a dignitary tort to give notice of this judgement to a platform; with this notice, platforms would be liable in instances where they did not prevent the content in question from being re-uploaded in the future a process made possible by existing perceptual hashing technology (e.g. the technology they use to identify and automatically take down child pornography). Any effort on this front would need to address the challenge of distinguishing true DeepFakes aimed at spreading disinformation from satire or other legitimate forms of entertainment and parody.

So this seems very carefully worded and structured. Specifically, it would appear to require first a judicial ruling on the legality of the content itself, and then would require platforms to avoid having that content re-uploaded, or face liability if it were. The good part of this proposal is the requirement that the content go through a full legal adjudication before a takedown would actually happen.

That said, there are some serious concerns about this. First of all, as we've documented many times here on Techdirt, there have been many, many examples of either sketchy lawsuits that were filed solely to get a ruling on the books to try to take down perfectly legitimate content. If you don't remember the details, there were a few different variants on this, but the standard one was to file a John Doe lawsuit, then (almost immediately) claim to have identified the "John Doe" who admits to everything and agrees to a "settlement" admitting defamation. The "plaintiff" then sends this to the platforms as "proof" that the content should be taken down. If Warner's proposal goes through as is, you could see how that could become a lot more common, and you could see a series of similar tricks as well. Separately, it could potentially increase the number of sketchy and problematic defamation lawsuits filed in the hopes of getting content deleted.

One would hope that if Warner did push down this road, he would only do so in combination with a very strong federal anti-SLAPP law that would help deal with the inevitable flood of questionable defamation lawsuits that would come with it.

To his credit, Warner's white paper acknowledges at least some of the concerns that would come with this proposal:

Reforms to Section 230 are bound to elicit vigorous opposition, including from digital liberties groups and online technology providers. Opponents of revisions to Section 230 have claimed that the threat of liability will encourage online service providers to err on the side of content takedown, even in non-meritorious instances. Attempting to distinguish between true disinformation and legitimate satire could prove difficult. However, the requirement that plaintiffs successfully obtain court judgements that the content in question constitutes a dignitary tort which provides significantly more process than something like the Digital Millennium Copyright Act (DMCA) notice and takedown regime for copyright-infringing works may limit the potential for frivolous or adversarial reporting. Further, courts already must make distinctions between satire and defamation/libel.

This is all true, but it does not take into account how these bogus defamation cases may come into play. It also fails to recognize that some of this stuff is extremely context specific. The paper points to hashing technology like those used in spotting child pornography. But such content involves a strict liability -- where there are no circumstances under which it is considered legal. Broader speech is not like that. As the paper acknowledges in determining whether or not a "deepfake" is satire, much of this is likely to be context specific. And so, even if certain content may represent a tort in one context, it might not in others. Yet under this hashing proposal, the content would be barred in all contexts.

As a separate concern, this might also make it that much harder to study content like deepfakes in ways that might prove useful in recognizing and identifying faked content.

Again, this paper is not presented in the hysterical manner found in other attempts to regulate internet platforms, but it also does very little beyond a perfunctory "digital liberties groups might not like it" to explore the potential harms, risks and downsides to this kind of approach. One hopes that if Warner and others continue to pursue such a regulatory path, that much more caution would go into the process.

Filed Under: antitrust, cda 230, consumer protection, deepfakes, disinformation, free speech, intermediary liability, intermediary liability protection, mark warner, regulating social media, section 230
Companies: facebook, google, twitter

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

from the nothing-to-see-here dept

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

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

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

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

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

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

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

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

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

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

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

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

Filed Under: ajit pai, complaints, consumer protection, fcc, isps, matthew berry, oversight

Charter Claims NY Lawsuit Over Crappy Broadband Speeds Just An Evil, Netflix 'Cabal'

from the everybody's-to-blame-but-me dept

Early last year, Charter Spectrum was sued by New York State for selling broadband speeds the company knew it couldn't deliver. According to the original complaint (pdf), Charter routinely advertised broadband speeds executives knew weren't attainable -- while simultaneously refusing to upgrade their network to handle added consumer demand (a problem that only got worse in the wake of its merger with Time Warner Cable and Bright House Networks).

Buried in the suit were all manner of interesting allegations, including claims that Charter executives discussed via e-mail how they hoped to manipulate congestion to drive up costs for companies like Netflix (you'll recall this was part of the whole interconnection slowdowns Netflix and companies like Level3 complained about a few years ago). The suit also highlights how Charter gamed the results of a program the FCC has traditionally used to measure real-world broadband speeds using custom-firmware embedded routers in consumer volunteer homes.

Charter has since been trying to tap dance out of the suit by flinging pretty much every legal argument against the wall to see what sticks. Most recently, the company tried to claim that the FCC's recent net neutrality repeal contains language banning states from trying to protect consumers. And while that was certainly the hope of Ajit Pai's FCC, legal experts have argued that the agency's claims don't hold water. More specifically, when the FCC rolled back its Title II authority over ISPs, it also ironically dismantled its legal authority to tell states what to do.

Amusingly, Charter has now shifted its argument to the claim that the entire lawsuiit is somehow part of an unholy cabal orchestrated by Google and Netflix. You might recall that ISPs (and Ajit Pai) have long tried to claim that the entrenched telecom monopolies are innocent daisies, and that net neutrality is simply a conspiracy concocted by Google and Netflix to ruin AT&T, Verizon, Comcast and Charter's livlihood. This narrative has been routinely driven by ISP policy folks despite the fact net neutrality is very much a bipartisan, grassroots consumer welfare issue.

New York State brought in Tim Wu, the Columbia Law Professor who coined the term "net neutrality," to consult on the case. And because Wu had at points talked to both Google and Netflix (who were concerned that Charter was abusing its last-mile monopoly to drive up costs), Charter hopes to use this "unclean hands defense" to try and scuttle the lawsuit by claiming it was a vast conspiracy against Charter:

"Charter's unclean-hands defense is that Plaintiff actively conspired with private parties through Tim Wu (a leading critic of ISP business practices) to investigate and sue Time Warner Cable Inc.," he wrote. "Thus, Plaintiff delegated what should have been an objective law enforcement investigation to third parties whose pecuniary and political interests are adverse to TWC's, and who had preconceived notions of how and why to penalize TWC."

The letter then goes on to talk about documents produced by the other side that allegedly show how Wu and third parties "manufacture[d] fraud claims" and how his "co-conspirators boasted of having orchestrated Mr. Wu's work."

The names of the individuals who allegedly were in cahoots with Wu include Google's Meredith Whittaker, who in a 2015 email to a colleague, discussed having gotten off the phone with Wu about the NY AG consumer protection complaint and how it would frame interconnection as a consumer harm issue."

Of course since interconnection was a consumer harm issue that's not really substantive or damaging. Charter, a company that routinely uses its own funded think tanks to pollute public discourse and erode accountability is also upset that Wu happened to (gasp) talk to a think tank partially funded by Google:

"Charter is taking the notion of a "cabal" seriously, also pointing to communications with several individuals at the New America Foundation, a Washington, D.C.-based think tank."

Ironically, both Google and Netflix's interest in standing up for consumers on this subject has waned proportionally with their growing power over the years. Still, Netflix and Google had every right to be concerned about what Charter and other ISPs were up to, since they were effectively trying to use their last-mile broadband monopoly to unfairly jack up costs for consumers, content creators, and transit operators alike. That Wu corresponded with companies with legitimate anti-competitive concerns over what broadband monopolies are up to isn't likely to scuttle the case and has the faint whiff of desperation.

Charter's other legal efforts to derail the case haven't gone well so far, and it's unclear whether this latest gambit will work. But it's abundantly clear that Charter is particularly worried about the ramifications of this case, given they appear to have been caught on e-mail routinely lying to the public and regulators. As we've been noting, uncompetitive monopolies like Charter are working together to demolish FTC, FCC, and state authority over their businesses, and they're using every trick in the book to do so.

Filed Under: broadband speeds, cabal, consumer protection, new york, tim wu
Companies: charter, google, netflix

No, The FTC Is Not Going To Do A Good Job Policing Net Neutrality

from the this-does-not-end-well dept

We've noted repeatedly how broadband ISPs aren't just trying to kill net neutrality, they're trying to kill nearly all state and federal oversight over giant telecom monopolies entirely. From language buried in the net neutrality repeal aimed at preventing states from protecting consumers, to attempts to neuter the FCC and shovel all remaining oversight to an FTC ill-suited to police telecom operators, the end goal really is little to no real oversight of some of the least liked, least competitive companies in any industry.

While this is all being portrayed as "regulatory modernization" by ISPs and their armies of consultants and allies, former FCC Boss Tom Wheeler has gone so far as to call the effort a "fraud." Wheeler was quick to note that not only does the FTC lack rule-making authority, it can only act against an ISP if it can be very clearly shown that the ISP's actions were "unfair or deceptive." That's tricky to do in the net neutrality era where anti-competitive behavior is often disguised as "reasonable network management."

The ISP narrative being parroted about is that the FTC is somehow better suited to police net neutrality than an FCC custom-built by Congress for the purpose. But that's patently false, and as Wheeler noted in an interview last year, ISPs know that shifting oversight authority from the FCC to FTC will leave ISPs lost in the regulatory wash (which is the entire purpose of their gambit):

"In the Trump administration, people are talking about stripping regulatory power from the FCC, and essentially taking the agency apart (including moving jurisdiction over internet access to the Federal Trade Commission [FTC]). “Modernizing” the FCC is the lingo being used. What’s your thought about that?

It’s a fraud. The FTC doesn’t have rule-making authority. They’ve got enforcement authority and their enforcement authority is whether or not something is unfair or deceptive. And the FTC has to worry about everything from computer chips to bleach labeling. Of course, carriers want [telecom issues] to get lost in that morass. This was the strategy all along.

So it doesn’t surprise me that the Trump transition team — who were with the American Enterprise Institute and basically longtime supporters of this concept — comes in and says, “Oh, we oughta do away with this.” It makes no sense to get rid of an expert agency and to throw these issues to an agency with no rule-making power that has to compete with everything else that’s going on in the economy, and can only deal with unfair or deceptive practices.

Wheeler's warning was ignored and as of June 11 (net neutrality's formal death date, for now), this is the agency that's going to be tasked with holding AT&T, Comcast, Charter and Verizon accountable to the public. Meanwhile Andrew M. Smith, the man being appointed to head the FTC consumer protection division tasked with enforcing what's left of net neutrality (read: nothing) isn't exactly instilling confidence:

"The new director of the Federal Trade Commission’s consumer protection unit, a watchdog with broad investigative powers over private companies, stands out even in an administration prone to turning over regulatory authority to pro-industry players...in 2012, Mr. Smith was also part of the legal team that defended AMG Services, the payday lender founded by the convicted racketeer Scott Tucker, whose predatory practices against impoverished borrowers eventually led to a $1.3 billion court-ordered settlement, the biggest in the commission’s history.

“It’s outrageous the F.T.C. would pick the lawyer for a criminally convicted racketeer’s payday loan company as consumer protection chief,” said Senator Elizabeth Warren, Democrat of Massachusetts, who opposed Mr. Smith’s selection. “The agency should pick someone with a track record of protecting consumers, not companies that cheat people."

And while it's true that a lawyer isn't defined by who he or she represents, it also remains pretty clear that Smith has zero experience protecting consumers or startups, making him a dubious selection for the job. And given his laundry list of past employment for companies ranging from Uber and Equifax (who he defended during their recent privacy kerfuffle), he's going to have to recuse himself from a long list of decisions at the FTC, which also doesn't make him a particularly compelling hire.

It shouldn't take a doctoral degree to understand how this massive regulatory paradigm shift ends badly for consumers, startups, and the health of the internet. And this is all before you realize that AT&T is currently in court trying to argue that the FTC has no authority over monopoly ISPs whatsoever, something ISPs (and their list of pay to play allies) just kind of conveniently omit when talking about how the FTC is perfectly suited to help protect the open internet and the would-be competitors of tomorrow.

Filed Under: andrew smith, broadband, consumer protection, fcc, ftc, regulation

Charter Spectrum Fails To Wiggle Out From Under State Lawsuit For Crappy Service

from the fat-lady-has-yet-to-sing dept

Early last year, Charter Spectrum was sued by New York Attorney Eric Schneiderman for selling broadband speeds the company knew it couldn't deliver. According to the original complaint (pdf), Charter routinely advertised broadband speeds executives knew weren't attainable -- while simultaneously refusing to upgrade their network to handle added consumer demand (a problem that only got worse in the wake of its merger with Time Warner Cable and Bright House Networks despite promises of ample "synergies"):

"The AG’s investigation also found that Spectrum-TWC executives knew that the company’s hardware and network were incapable of achieving the speeds promised to subscribers, but nevertheless continued to make false representations about speed and reliability. The investigation further revealed that while Spectrum-TWC earned billions of dollars in profits from selling its high-margin Internet service to millions of New York subscribers, it repeatedly declined to make capital investments necessary to improve its network or provide subscribers with the necessary hardware."

But the lawsuit also exposed how Charter was gaming an FCC program that uses routers with custom firmware to track real-world ISP performance. The lawsuit also hints at the fact that Charter executives toyed with intentionally creating congestion at peering points in order to extract additional money out of content and transit companies, something you'll recall was at the heart of an industry battle with Netflix a few years ago. Those problems miraculously disappeared with the passage of net neutrality rules that governed interconnection (read: expect this problem to resurface with the elimination of the rules).

Charter, unsurprisingly, has argued that the lawsuit is without merit. It also tried to have the lawsuit dismissed, claiming that the FCC's recent repeal of net neutrality includes a provision (lobbied for by ISPs) that prohibits states from trying to hold ISPs accountable for service shortcomings, be they privacy infractions or net neutrality violations. Fortunately for broadband users stuck under cable's growing U.S. broadband monopoly, New York State's Supreme Court last week shot down that argument (pdf) in a ruling.

The court argued repeatedly that despite the FCC attempts to pre-empt state authority over broadband ISPs, both the FCC repeal and existing federal law make it clear states still have a role to play in holding ISPs accountable for consumer protection:

"Spectrum-TWC fails to identify any provision of the FCA (Federal Communications Act) that preempts state anti-fraud or consumer-protection claims, or reflects any intention by Congress to make federal law the exclusive source of law protecting consumers from broadband providers' deceptive conduct."

Schneiderman's office was quick to applaud the ruling in a statement:

"This decision ensures that our office can continue to hold Charter-Spectrum to account for its failure to deliver the reliable internet speeds it promised consumers. The allegations in our lawsuit confirm what millions of New Yorkers have long suspected — Charter-Spectrum has been ripping you off, promising internet speeds it simply could not deliver."

As we've been noting, Charter, Comcast, AT&T and Verizon lobbyists have been busy trying to gut all state and federal oversight of broadband ISPs in an effort that goes well beyond just killing net neutrality. That should be an obvious problem, given that the combination of limited competition and regulatory capture tends to not end particularly well for American consumers historically (Comcast being exhibit A). But with this ruling and the 26 states busy passing their own net neutrality rules in the wake of the federal repeal, that's going to be a steeper and more expensive uphill climb than many ISP lobbyists anticipated.

Filed Under: broadband, competition, consumer protection, eric schneiderman, false claims, new york
Companies: charter spectrum