Sinclair Pays Tribune $60 Million To Settle Lawsuit Over Dodgy Merger

from the shell-games dept

Last year when Sinclair attempted acquire Tribune Broadcasting for a cool $3.9 billion, you might recall the company was accused of some highly unethical behavior in order to get the deal done. Despite the FCC doing its best to neuter most media consolidation protections to help move the deal forward, the union would have still resulted in the merged company violating media ownership limits and dominating local broadcasting in a huge number of new markets.

To get around those limits, Sinclair allegedly got, uh, creative. Consumer groups accused Sinclair of trying to offload several of its companies to Sinclair-owned shell companies to pretend the deal would remain under the government's ownership cap. The company also tried something similar in trying to offload some stations to friends and other partner companies at highly discounted rates, allowing it to technically not "own" -- but still control -- those stations.

It was all so dodgy that even the Ajit Pai FCC, which had initially been doing cartwheels to clear the way for the merger, had to back away from its support of the deal, shoveling deal approval off to an administrative law judge for review (aka the "kiss of death"). Tribune was then forced to kill the merger, and quickly thereafter filed a lawsuit against Sinclair for monumentally flubbing the deal.

Fast forward to this week. A Sinclair filing with the SEC indicates the company has paid Nexstar (which bought Tribune last year) a cool $60 million and a few local broadcast stations to "avoid the costs, distraction, and uncertainties of continued litigation" with neither company admitting they ever did anything wrong:

"Neither party has admitted any liability or wrongdoing in connection with the terminated merger; both parties have settled the lawsuit to avoid the costs, distraction, and uncertainties of continued litigation."

Granted so far, nobody at the FCC (or anywhere else) has actually punished Sinclair for allegedly misleading regulators. And all of the FCC's efforts to effectively obliterate decades-old media consolidation restrictions (you know, the ones keeping giant monopolies from crushing local, diverse news and media outlets) remain intact, paving the way for the next massive consolidation push in the sector nobody really asked for.

Filed Under: fcc, media ownership, merger
Companies: nexstar, sinclair broadcasting, tribune company

Oh Look, More Giant ISPs Taking Taxpayer Money For Unfinished Networks

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

For more than a decade we've highlighted how the U.S. simply adores throwing taxpayer money at giant telecom companies in exchange for networks they then only half deploy. Whether it's on the city, state, or federal level, we've thrown untold billions at mono/duopolies which in turn dodge their obligations under these agreements with little to no real penalty. While sometimes this money winds up being used as intended, just as often this money winds up being pocketed by executives and shareholders with little discernible impact on America's broken and uncompetitive broadband markets.

The latest case in point: both Centurylink and Frontier have informed the FCC they've failed to meet FCC required broadband milestones after receiving millions in taxpayer subsidies:

"CenturyLink notified the Federal Communications Commission that it "may not have reached the deployment milestone" in 23 states and that it hit the latest deadline in only 10 states. Frontier similarly notified the FCC that it "may not have met" the requirements in 13 states. Frontier met or exceeded the requirement in 16 other states. Under program rules, the ISPs were required to bring Internet access to 80 percent of funded locations by the end of 2019 and must hit 100 percent by the end of 2020."

Keep in mind, these deployment goals aren't exactly what you'd call difficult. Under the terms of the FCC's 2015 Connect America Fund Auction, the two ISPs agreed to expand access to DSL at speeds of 10 Mbps down and 1 Mbps (1 Mbps!) up in exchange for big taxpayer payouts. In CenturyLink's case, the company is slated to net $505.7 million annually for six years to deploy service to 1,174,142 homes and businesses in 33 states. For Frontier, the company received $283.4 million annually for six years to bring access to 774,000 locations in 29 states.

Keep in mind these customers aren't even really getting broadband, which is defined as at least 25 Mbps by the FCC. What these territories are getting is overpriced, slow DSL, belched up from somewhere around 2003 or so from two companies that have a long, sordid history of atrocious customer service and a failure to upgrade or repair their aging networks. In most markets that's giving giants like Comcast and Spectrum an even bigger monopoly, resulting in higher rates for all broadband users as competition wanes.

Unsurprisingly, throwing billions at companies for antiquated broadband service (that's never fully deployed anyway) doesn't really fix things. In large part because we don't fully understand the problem we're trying to fix. Despite a lot of claims to the contrary, we don't actually know where broadband is deployed. US broadband maps are notorious garbage, and the telecom lobby has fought tooth and nail against efforts to fix them. Why? It's two-pronged: better maps would only highlight a lack of competition (potentially prompting somebody to actually fix it), and it helps them obscure the waste and fraud on the subsidy end.

Ideally, the FCC would step in here and punish both companies for failing to meet arguably modest goals or not being honest about where broadband is available. But there's little real indication that's actually going to happen. Just ask Verizon, which was given billions in subsidies and tax breaks by countless states and cities in exchange for fiber it never fully deployed. Or AT&T, which routinely receives billions in tax breaks, subsidies, and regulatory favors in exchange for jobs and broadband deployment that somehow never fully materialize. The penalties for both companies have been utterly nonexistent.

There's a chorus of telecom sector sycophants and Trump FCC officials that throw face-fanning tantrums every time some podunk town in Nebraska decides to spend a million bucks to build a better alternative to Comcast. But you'll notice those same folks never have a single sour word to say about the multi-decade tendency to throw billions of dollars at unaccountable monopolies in exchange for networks they never fully deploy. These folks are usually pretty easy to spot: like Pai, just look for the folks going comically out of their way to even acknowledge the limited competition and high prices that plague the US broadband sector.

Were you to do a proper audit of the telecom sector over the last 30 years, I'd all but guarantee the amount of money thrown at the sector could have funded a fiber optic line to every home in America several times over. Instead, thanks in large part to revolving door regulators and cronyism, we've built a system that throws unaccountable billions at giants like AT&T and Comcast, in exchange for substandard broadband, terrible customer service, and an eternal fountain of empty promises.

Filed Under: broadband, competition, dsl, failed obligations, fcc, subsidies, taxpayer funds
Companies: centurylink, frontier

Study Shows The Internet Is Hugely Vulnerable To SIM Hijacking Attacks

from the ill-communication dept

U.S. Wireless carriers are coming under heavy fire for failing to protect their users from the practice of SIM hijacking. The practice usually involves conning or bribing a wireless employee to port a victim's cell phone number right out from underneath them, letting the attacker then pose as the customer to potentially devastating effect. Carriers are facing numerous lawsuits from victims who say attackers used the trick to first steal their identity, then millions in cryptocurrency, or even popular social media accounts.

Last week, six lawmakers, including Ron Wyden, wrote to the FCC to complain the agency isn't doing enough (read: anything) to pressure carriers into shoring up their flimsy security. This week, a group of Princeton researchers released a study showcasing how both traditional and prepaid wireless carriers remain incredibly vulnerable to such attacks despite several years worth of headlines. In the full study (pdf, hat tip ZDNet), the researchers showed how it was relatively easy to trick wireless company support employees into turning over far more private data than they should, helping to facilitate the illicit SIM swap:

"When providing incorrect answers to personal questions such as date of birth or billing ZIP code, [research assistants] would explain that they had been careless at signup, possibly having provided incorrect information, and could not recall the information they had used," researchers said, explaining the motives they provided to call center staff."

After failing the first two steps in confirming a caller's identity, wireless carriers then move on to a third confirmation option -- verifying the last two numbers called from the account. But researchers note that was easy to game as well:

"The research team says that an attacker could trick a victim into placing calls to specific numbers. For example, a scenario of "you won a prize; call here; sorry, wrong number; call here instead." After the attacker has tricked the SIM card owner into placing those two calls, they can use these details to call the telco's call center and carry out a SIM swap. Princeton researchers said they were able to trick all five US prepaid wireless carriers using this scenario."

Despite warning all five of the carriers they tested this trick on, four of the five still hadn't fixed their security gaps as of the study's publication. After showcasing how vulnerable mobile carriers are, the researchers took a closer look at what could be done once they had taken over a user's wireless accounts. As such they tested the multi-factor-authentication practices of 140 of the most popular services and sites, and found that 17 of those services had no systems in place to protect users from SIM hijacking (such as emailing users a one time password to confirm identity and verify the changes were actually requested).

Here's where, in a functional market with a functioning government, regulators would step in to pressure carriers to do more to actually protect consumers. Instead, the Trump FCC has spent the last three years rubber stamping every fleeting whim of the sector, including gutting most meaningful oversight of the sector, and rubber stamping massive mergers the majority of objective experts say will harm the market.

Filed Under: ajit pai, fcc, ron wyden, scams, sim hijacking, sim swap, social engineering, wireless carriers

Some FCC Subsidized Low Income Phones Are A Chinese Malware Shitshow

from the ill-communication dept

We've long talked about the problems with the FCC's Lifeline program, which was created by Reagan and expanded by Bush Junior (yet somehow earned the nickname "Obamaphone"). The $2 billion program doles out a measly $9.25 per month subsidy that low-income homes can use to help pay a tiny fraction of their wireless, phone, or broadband bills (enrolled participants have to choose one). But for years, the FCC has struggled to police fraud within the program, with big and small carriers alike frequently caught "accidentally" getting millions in taxpayer dollars they didn't deserve.

Late last week another issue popped up with the government program, albeit of a different variety. Researchers over at MalwareBytes discovered that one-such government-subsidized low income wireless carrier, Assurance Wireless by Virgin Mobile, has been selling devices to low-income customers that are riddled with malware. One of the questionable apps pre-loaded on the device is dubbed "wireless update," and opens the door to malicious apps being installed without user awareness or consent:

"Thus, we detect this app as Android/PUP.Riskware.Autoins.Fota.fbcvd, a detection name that should sound familiar to Malwarebytes for Android customers. That’s because the app is actually a variant of Adups, a China-based company caught collecting user data, creating backdoors for mobile devices and, yes, developing auto-installers."

Neat! Another malware app actually poses as the device's settings app, and can't be removed at all:

"It’s with great frustration that I must write about another unremovable pre-installed app found on the UMX U683CL phone: the mobile device’s own Settings app functions as a heavily-obfuscated malware we detect as Android/Trojan.Dropper.Agent.UMX. Because the app serves as the dashboard from which settings are changed, removing it would leave the device unusable."

When notified by journalists and lawmakers (Wyden) of the problem, the Ajit Pai FCC did what it's now infamous for, nothing:

Sure, Lifeline doesn't fund handsets, but it does fund this particular carrier, which would quickly take action if it meant losing taxpayer money. This is technically part of a broader problem the FCC/FTC don't seem too concerned about: the market, left to its own devices, is slowly turning things like privacy and security into luxury features exclusive to those who can afford it. A recent study by Privacy International found that the low-income budget phones we throw at the poor with pride routinely come with outdated OS', malware, and other issues we don't seem to care much about.

Filed Under: fcc, lifeline, malware, subsidies
Companies: assurance wireless

New Law Bans ISPs From Charging You A 'Rental' Fee For Hardware You Already Own

from the ill-communication dept

For much of this year, broadband customers have been complaining that Frontier Communications, the nation's third-biggest telco, had been charging its customers a rental fee for modems they already owned. Normally, you're supposed to be able to buy your own modem instead of paying your ISP a rental fee upwards of $10 per month. To nab some extra dough from captive customers, Frontier basically decided to charge its customers a rental fee anyway, giving them a polite, though giant, middle finger when they complained.

And because the FCC's net neutrality repeal effectively neutered the agency's ability to police this sort of behavior (not that the Pai FCC would anyway), consumers who complained to the agency were met with a glassy-eyed stare:

"Son filed a complaint with the Federal Communications Commission; Frontier responded to the complaint but stuck to its position that he has to pay the fee. A voicemail that Frontier left with Son and his wife said the company informed the FCC that "the router monthly charge is an applicable fee, and it will continue to be billed.

The FCC complaints team told Son in an email, "We reviewed the provider's response and based on the information submitted, we believe your provider has responded to your concerns." With FCC Chairman Ajit Pai having deregulated the broadband industry, there's little to no chance of the commission taking action to stop fees like the one charged by Frontier."

Fast forward to last month when the problem was fixed, shockingly enough, by the US Congress. A massive US government spending bill approved by Congress and signed by President Trump last month not only included some updates to the Communications Act cracking down slightly on bullshit cable TV fees, but a little noticed provision that formally bans the nonsense Frontier has been engaged in:

"A new "consumer right to accurate equipment charges" prohibits the companies from charging customers for "covered equipment provided by the consumer." Covered equipment is defined as "equipment (such as a router) employed on the premises of a person... to provide [TV service] or to provide fixed broadband Internet access service."

The companies may not charge rental or lease fees in cases when "the provider has not provided the equipment to the consumer; or the consumer has returned the equipment to the provider."

The new law is an update to the Communications Act and is scheduled to apply six months after passage, which would be June 20. The law gives the Federal Communications Commission an option to extend the deadline by six months if the FCC "finds that good cause exists for such an additional extension." As we've previously written, the FCC hasn't done much of anything to protect customers from bogus rental fees.

The telecom and media sector usually lobbies tooth and nail (usually successfully) to kill these kinds of protections, but the sheer size of the bill apparently let the provision sneak through. Granted the law only matters if somebody's willing to enforce it, and with an FTC and FCC that have repeatedly shown they're a rubber stamp for their BFFs in the telecom sector, that's not going to come easy.

Filed Under: broadband, congress, fcc, fees, isps, rentals

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

The FCC Helped AT&T Hide Its Crappy Broadband Speeds

from the revolving-door-whiplash dept

Unless you're in fairly stark denial, it's clear the Trump Federal Communications Commision has been a rubber stamp for the every fleeting whim of the telecom sector, be it the agency's decision to effectively neuter itself at telecom lobbyist behest, or the attack on net neutrality rules with widespread bipartisan support. But such revolving door regulation has more subtle casualties, as well. The Wall Street Journal this week for example offered up an interesting deep dive into how ISPs successfully pressure the FCC to ignore slower broadband speed test data when analyzing whether ISPs are delivering the speeds they promise:

"AT&T Inc. was dismayed at its report card from a government test measuring internet speeds. So the telecom giant sought to change its grade.

The company pushed the Federal Communications Commission to omit unflattering data on its DSL internet service from the report, which assesses whether providers are delivering the speeds they advertise. AT&T also didn’t provide information the FCC needed to validate speeds on those customers, the test officials confirmed.

In the end, the DSL data was left out of the report released late last year, to the chagrin of some agency officials. AT&T’s remaining speed tiers notched high marks.

The Journal is quick to highlight how this kind of gamesmanship results in FCC studies and data that doesn't accurately reflect reality, something that obviously excites incumbent broadband executives all too eager to obscure incomplete deployments and a lack of competition in the sector:

"Companies wield tremendous influence over the study and often employ tactics to boost their scores, according to interviews with more than two dozen industry executives, engineers and government officials. As a result, the FCC’s report likely gives consumers an unreliable measure of internet providers’ performances by overstating speeds."

Hoping to use real world data to inform policy decisions (crazy, I know), just about a decade ago the previous FCC struck a deal with UK measuring firm SamKnows to measure real world broadband speeds under the creatively named Measuring Broadband America program. The firm in turn began using volunteers and custom-firmware embedded routers to obtain an objective, third party analysis of just what kind of speeds users see in the wild. Not too surprisingly the Pai FCC has been trying to discontinue the program, and AT&T says it will no longer cooperate with the FCC on the effort anyway (apparently with no penalty from the FCC).

Meanwhile, AT&T tries to claim to the Journal that the reason it wanted its slower DSL speed ratings removed from the study is because it no longer markets the service:

"AT&T said that in its case, the company asked the FCC to remove DSL data from the report because it no longer markets that older technology, which relies on copper phone lines, used by a small percentage of its customer base. The company said the commission’s own policies should have excluded the “obsolete” internet plans. AT&T also said that it did validate the DSL accounts for the FCC."

But we've noted for years that AT&T has been a cheapskate when it comes to finishing fiber deployments the company has received billions in taxpayer dollars for, leaving vast swaths of the country with the choice of either a cable monopoly or sluggish, capped DSL. AT&T would prefer it if government reports just floated the fuck over that fact, and the Pai FCC seems more than happy to oblige, with zero to no penalty for big ISPs that mislead the agency or refuse to take part in projects that give consumers an accurate view of the market.

This of course isn't the first time this problem has been brought up. FCC reports are routinely assailed as being rose-colored-glasses affairs designed not to inform, but to avoid upsetting deep pocketed telecom campaign contributors. The FCC's $350 million broadband map, which all but hallucinates competitors and speeds, and omits pricing data, is a perfect example of the end result of this dysfunction. The end goal is government reports that again hide the country's mediocre and expensive broadband shortcomings, lest somebody get the crazy idea to try and do something about it.

The Journal's report likely won't get much attention, since exclusively hating on big tech while forgetting big telecom is just as bad is all the rage right now. But uncharacteristically for a major US paper, the Journal does a nice job highlighting how a captured FCC is now a full throated apologist for the broken US broadband industry and its half-built, expensive, taxpayer-funded networks.

Filed Under: broadband, broadband speeds, competition, data, fcc, influence, lies
Companies: at&t