The Ad Industry Is Really Excited About Plans To Gut Broadband Privacy Protections

from the an-informed,-empowered-consumer-costs-us-money dept

The broadband, advertising and marketing industries are absolutely thrilled about plans to kill the FCC's new broadband privacy protections for consumers. Passed last year, the rules simply require that ISPs provide working opt-out tools, go to reasonable lengths to protect data and notify users of hack attacks, and be transparent about what data they collect and who they sell to. The rules also require that ISPs obtain opt-in consent (public enemy number one for marketing folks) for the collection and sale of more personal data like financial details or browsing histories.

Given that empowered, informed consumers cost the marketing and broadband industry billions, they've been waging a massive campaign to have the rules killed -- and they're about to succeed. New FCC boss Ajit Pai quickly and covertly set about killing the rules' hacking-related requirements. Meanwhile Senator Jeff Flake and Rep. Marsha Blackburn have gotten quickly to work introducing Congressional Review Act resolutions that would kill the rest of the new rules before they're even allowed to take effect.

Needless to say, the marketing industry is pretty excited. In a joint statement by numerous ad policy and lobbying groups including the Association of National Advertisers and American Advertising Federation, the ad industry went so far as to try and claim that protecting consumer privacy was somehow "anti-consumer":

"Without prompt action in Congress or at the FCC, the FCC's regulations would break with well-accepted and functioning industry practices, chilling innovation and hurting the consumers the regulation was supposed to protect. The Congressional Review Act was designed as a common-sense check on anti-consumer regulations like this, and we are pleased that Senator Flake, Congressman Blackburn, and their colleagues are using it to such positive effect. We strongly urge Congress to support and quickly act on these Joint Resolutions."

Granted the ad and broadband industries would have you forget why the FCC crafted these "anti-consumer" rules in the first place. They were only pushed after Verizon was caught covertly modifying user wireless packets in order to track users around the internet without telling them. The FCC was similarly motivated by the fact that AT&T and Comcast were starting to show interest in charging users a premium for privacy, and the fact that companies like CableONE were proudly crowing about how they use financial data to provide worse customer service to bad credit customers.

The lack of last mile competition ensures that these companies face no organic, market-based punishment for these behaviors. And now regulatory oversight will be hamstrung as well, much to the joy of large ISPs looking to jump more heavily into the Millennial advertising business.

ISP-loyal lawmakers are selling the push by claiming that eliminating FCC oversight -- and leaving privacy in the hands of the FTC only -- will result in "more efficient" and "symmetrical" regulations in line with what Google and Facebook face (ignoring the vast, obvious differences in the internet content and broadband industries). That's something former FCC boss (and dingo) Tom Wheeler called a "fraud," specifically designed to saddle the already overextended FTC with work ISPs know will fall through the cracks. The EFF was also quick to recently debunk this and other claims over at its website:

"Unfortunately, recent court decisions have limited the FTC’s ability to enforce privacy rules on ISPs. Plus, relying on each state to enforce its own laws to protect privacy would create a terrible patchwork of mismatched regulations. You’d think with all the uncertainty and bureaucracy that would create, the ISPs would actually prefer clear, bright-line rules at the national level. But you’d be wrong: at this point, they’ll say anything to block the FCC’s privacy-protective rules."

The EFF has penned a second post discussing all of the fun things ISPs have done -- and will do -- with neither regulators nor free market competition keeping them in line. These efforts are being rushed through under the belief that bigger debates (like the Affordable Care Act) will overshadow how quickly Congress mindlessly rushed to do the bidding of companies like AT&T, Comcast, Verizon and Charter. A vote on the repeal of the rules is expected to happen as soon as Thursday, and consumer advocacy groups like Public Knowledge and the EFF are urging concerned citizens to contact their representatives.

Filed Under: ads, ajit pai, broadband, fcc, net neutrality, privacy

Charter Tries To Tap Dance Out Of Lawsuit Over Substandard Broadband

from the we-don't-have-to-care----we're-the-cable-company dept

Last month, we noted how New York Attorney General Eric Schneiderman sued Charter Communications for knowingly providing broadband service well below advertised speeds. After an initial first read I didn't think much of the lawsuit (pdf), but upon closer inspection it provides some pretty damning evidence that Charter not only knowingly failed to provide decent service (and just didn't care, since this is the uncompetitive broadband industry), but in some instances actively made connections worse for its own competitive advantage.

The AG's suit highlights how Charter manipulated data for a program run by the FCC to monitor consumer connection speeds. This program, co-operated by a UK outfit dubbed SamKnows, gives volunteers custom-firmware embedded routers to monitor connection quality and speed. The FCC was then using this data to name and shame ISPs that failed to deliver advertised speeds. The lawsuit highlights how Charter executives worked to intentionally deliver faster speeds to just these customers in order to trick the FCC into believing its network was performing better than it actually was.

The suit also seemed to confirm something that content and transit operators have been complaining about for a few years -- namely that large incumbent ISPs were intentionally letting interconnection points get saturated to extract additional fees from backbone and content providers like Netflix. This behavior quickly ended thanks in large part to the FCC's new net neutrality rules, which currently protect such interconnection relationships from abuse by incumbent telecom mono/duopolies. With these rules possibly dying this year, it's a problem you can be sure will re-emerge.

Not too surprisingly, Charter is trying to have this case thrown out. Recent court filings (pdf) indicate that the company successfully had the case moved from state to federal court, with Charter lawyers arguing that the Communications Act completely preempted claims under state law. Charter lawyers even went so far as to justify this position using the exact same 2015 FCC net neutrality rules ISPs lobbied, repeatedly, to destroy:

"Charter even went so far as quoting language from the FCC's 2015 Open Internet Order (aka the net neutrality regulations) to support the proposition that states are precluded from imposing obligations inconsistent with the FCC's regulatory regime.

According to defendants' court papers providing notice of removal, "Given the State’s distortion of the speed tests approved by the FCC and its reliance on other tests that the FCC does not require or endorse, if the 'state court vindicate[s] [the State’s claim], the relief granted would necessarily force [Defendants] to do more than required by the FCC.' The State is, in effect, 'trying to invalidate' disclosures made pursuant to the FCC’s reporting regime; its claim thus is necessarily federal."

With the new Trump FCC making it very clear that incumbent ISPs are going to get a free pass on the consumer protection front, the states (with an even more inconsistent track record on consumer protection than the federal government) may wind up being the only thing standing between you and the dubious ethics of companies like AT&T, Charter and Comcast:

"On Monday, the NY AG's office filed a motion to remand the case back to state court. The forthcoming decision could be an important one if other top legal officials in states across the nation attempt to fill the void of whatever the FCC is not doing....Schneiderman's attorneys argue that the lawsuit is "rooted entirely in the kind of consumer deception that is within the traditional purview of state law and is historically subject to enforcement in state court."

Charter's in a somewhat unique position due to conditions attached to the company's recent acquisition of Time Warner Cable and Bright House Networks. Those conditions banned the company from not only imposing usage caps, but also require it to continue to adhere to the FCC's net neutrality rules (including the interconnection provisions) for seven years -- even if they're dismantled by ISPs and loyal politicians this year. Other ISPs face no such restrictions, and depending on Charter's success here, incumbent ISPs may soon find themselves in a new golden era for anti-competitive behavior.

Filed Under: broadband, eric schneiderman, false advertising, fcc, jurisdiction, net neutrality, new york, speed tests

Move Over, Series Of Tubes, The Internet Is Now A Bridge Over A Creek For A Dozen People?

from the senators-say-the-darnest-things dept

What is it about Senators and their awful internet analogies around net neutrality? It's been just over a decade since the late Senator Ted Stevens gave his infamous "series of tubes" analogy in which he tried to explain the internet and net neutrality. Remember?

"I just the other day got, an internet was sent by my staff at 10 o'clock in the morning on Friday and I just got it yesterday. Why? Because it got tangled up with all these things going on the internet commercially... They want to deliver vast amounts of information over the internet. And again, the internet is not something you just dump something on. It's not a truck. It's a series of tubes. And if you don't understand those tubes can be filled and if they are filled, when you put your message in, it gets in line and its going to be delayed by anyone that puts into that tube enormous amounts of material, enormous amounts of material."

Given how viral that went, and how widely mocked Stevens was, you'd think that any competent Senate staffer would prepare their bosses not to make a similarly idiotic statement. But, no. Not the staffers of Senator Ron Johnson. They sent him out to a hearing with the current FCC commissioners... and had him say that the internet is like a bridge between neighbors. Or something. I've watched this clip over and over again and I'm still trying to figure this one out:

Let's break this down, because the level of wackiness is hard to comprehend without exploring each and every beautiful inane thing said. First, the transcript of Johnson's key "analogy":

We all agree that we want greater innovation. We want expansion and greater access to high speed broadband. I think one of the things that inhibits that is all the rhetoric and slogans and buzzwords and I want to cut through a little bit. I know net neutrality sounds great. And in trying to convey why that harms investment and innovation, I've come up with analogy. I kinda want to run this by you and see if this is pretty accurate.

Let's say a group of neighbors want to build a bridge over a creek so they can cross over and talk to each other a lot, so it's really for a neighborhood, maybe a dozen people. But then they find out that the local government is going to require that that bridge is open to the entire community of a million people, no prioritization whatsoever. They don't get to cross first to go see their neighbor. A million people can come onto their property, ruin their lawns, and walk over that bridge.

Isn't that kind of a similar analogy, is that a pretty good analogy in terms of what net neutrality is all about, not allowing for example a company that is going to invest billions of dollars in the pipeline, not allow them to sell a prioritized lane, for, oh, I don't know, doctors who want to prioritize distant diagnostics? They're going to have to share that same pipeline, no prioritization, with for example people streaming illegal content or pornography? Tell me where that analogy is maybe not accurate.

Whoo boy. For someone who wants to "cut through" the "rhetoric and slogans and buzzwords" he sure chose to come up with what may be the dumbest analogy for the internet so far. It actively makes people less informed on the issues. It's that bad. Literally nothing about the analogy is even remotely accurate. This isn't a situation where a small community is building a tiny community bridge and is suddenly overwhelmed with millions of people "ruining their lawns" without allowing the little community over the bridge. None of that makes any sense at all.

Net neutrality is about how massive, giant internet access providing monopolists and duopolists want to double dip and double charge for the value provided at the endpoints, rather than being satisfied with getting paid for the value they provide in connecting the end points. The issue has nothing to do with millions of people rushing through a "pipeline" that was built for "maybe a dozen people" and somehow "ruining lawns" (?!?) while doing so. Nothing in net neutrality has anything to do with over-clogging local pipes. In fact, it allows for standard network management. And again, going back years and years and years, internet backbone experts have pointed out that there's capacity to spare. There are no ruined lawns. There are no distraught home owners wishing to "talk a lot" to their 11 closest neighbors, dismayed that a million people are trampling their lawns.

A more correct analogy is that the government granted some private companies land and rights of way and massive subsidies in terms of grants and tax rebates to build giant highways. And to pay for those roads, they could charge tolls to get on the road. So far, so good. But then, after the highways were built, the corporate owners of these highways saw that others were using the roads themselves to make money. They saw lots of UPS trucks and FedEx trucks. And they decided that it "wasn't fair" that UPS and FedEx got to make money by delivering stuff, even though each UPS and FedEx truck was paying the proper toll to enter the road. So they decided that from now on they'd cut deals. Maybe, FedEx would have to pay double. Or maybe FedEx would have to cough up a piece of the cost of every package delivered to the road company -- let's call it the American Road and Runway company (AR&R for short). Or, maybe, AR&R would decide to just buy up one of those companies, like UPS, and allow it to travel on the roads for free, while telling FedEx, it couldn't travel along those roads at all. Or maybe it wouldn't let FedEx off the road at prime locations where most of its deliveries were targeted. Or maybe it would let UPS use faster lanes while telling FedEx it could only ride on the shoulder.

All net neutrality did was say, "hey, you can't do that." If you're building a road, especially, with all this government support, you have to provide it equally to everyone. You can't pick and choose which companies to favor. And you can't block some companies from getting on the road because they compete with some other business you have.

As for the whole telemedicine vs. pornography thing, that's just pure bullshit. Someone fed Senator Johnson that line and him repeating it is basically proof he has absolutely no clue what he's talking about. Because the very FCC net neutrality rules that he's attacking, explicitly say he's wrong. As Jon Brodkin over at Ars Technica points out:

there is a way for telemedicine offerings to get paid prioritization under the FCC’s existing rules. The FCC distinguishes between “Broadband Internet Access Service (BIAS),” the usual type in which all Internet content shares the same network capacity and “Non-BIAS data services,” which are given isolated capacity to ensure greater speed and reliability. VoIP phone offerings, heart monitors, and energy consumption sensors qualify for this category, which is exempt from net neutrality rules. Telemedicine (another word for remote medical diagnosis) can also be exempt if it’s delivered over the network in the same way.

“We note that telemedicine services might alternatively be structured as ‘non-BIAS data services,’ which are beyond the reach of the open Internet rules,” the FCC’s net neutrality order said. The FCC reserved the right to scrutinize non-BIAS services to ensure that they don't harm competition, but the specific reference to telemedicine indicates that the FCC would not oppose isolated network capacity for remote medical diagnosis. The FCC did not provide any similar allowance for pornography.

Isn't this the kind of thing that a sitting Senator discussing net neutrality is supposed to know? Or is quoting from the actual FCC order that "rhetoric, slogans and buzzwords" Johnson was talking about?

Now, here, was a point in which FCC Chair Ajit Pai had the chance to show some intellectual honesty. I know that we've criticized Pai a lot in the past, but I genuinely think that he's a smart and knowledgeable guy who isn't some clueless drone. I've met him a few times and always found the conversations thoughtful and enlightening. But he blew it here. Big time. He could have, and should have, noted that while he dislikes the current net neutrality rules, the analogy presented is not an accurate description of the issue at all. Instead, he says:

I think you put your finger on one of the core concerns...

But, uh, he didn't. He made up a silly analogy that has nothing, whatsoever, to do with the debate at hand. But, okay, go on...

... which is that all of us favor a free and open internet, where consumers can access lawful content of their choice.

And what does that have to do with the inane analogy that Johnson put forth? Absolutely nothing. Yes, I know, Pai is being political here and it's not a good idea to tell a sitting Senator who has oversight powers that his analogy may be the dumbest thing you've ever heard about net neutrality. But, we're not done yet. Pai jumps to his easily debunked talking points about net neutrality decreasing investment:

We also want to incentive the construction of these networks, which requires massive capital expenditures -- especially as we go into the future with 5G networks and the like. How to balance those concerns is something I think people of goodwill can disagree on. But our goal is obviously, to make sure -- to use your analogy -- that those bridges continue to be built. That they continue to be maintained and upgraded as traffic modernizes over time.

Except that wasn't Johnson's analogy. In Johnsonland, twelve neighbors get together to build a bridge, and net neutrality brings a horde of millions to trample their lawn. That's not about getting more bridges built or maintaining them. These things have nothing to do with one another.

But Johnson's not done yet:

Yeah, in my example, I don't think too many neighbors would chip in to build that bridge, when they realize, we're not ever going to be able to use it, or certainly not get priority on it.

(That last half of the sentence didn't make it into the video clip above, but that's what he said). But, that's... just wrong. Again. First of all, nothing about net neutrality says that the people building the network can't use it. What the hell does that even mean? I mean, you could just as easily turn much of this analogy around on Johnson and argue that it's him expressing strong support for municipal broadband -- something I'd almost guarantee he's against. Indeed, Johnson signed a letter slamming municipal broadband not too long ago. And that's even though it's basically what he's describing: a group of neighbors getting together to build their own bridges to the internet.

But getting back to the net neutrality argument, Johnson's statements are ludicrous. The "bridges" he's discussing aren't being built among neighbors. What's happening is that the giant companies (AR&R from above) have already built the bridges, and are telling the neighbors that FedEx won't be able to deliver to them any more in a convenient, timely or cost effective way... unless FedEx agrees to pay up (meaning that the community will have to pay more since the costs will be passed on). And, again, his claim that investment would go down under his analogy that has nothing to do with net neutrality is just... factually wrong because all of the big broadband providers are public companies where their capital expenditure data is public. And it shows that they've increased spending on their networks with the open internet rules, rather than the opposite.

How is it that a sitting Senator can make statements so ridiculously wrong and no one calls him on it?

Filed Under: ajit pai, congress, fcc, net neutrality, ron johnson, series of tubes, ted stevens

Senator Thune Begins Pushing A 'Net Neutrality' Bill That's Likely To Kill Net Neutrality

from the with-friends-like-these dept

While Trump, the GOP and new FCC boss Ajit Pai really want to kill net neutrality protections for AT&T, Comcast and Verizon, it likely won't happen at the FCC. As it stands, rolling back the rules via the same FCC process that birthed them would require showing the courts that things have dramatically changed since the FCC's major court win last year. Such a process would also involve another lengthy public comment period, during which the record-setting four million public comments filed during the rule creation could appear diminutive.

So if you're an ISP lobbyist looking to kill net neutrality rules, how do you accomplish this without causing a massive public shitstorm? Why you table ghost write (corrected, thanks commenters) a bill that pretends to save and protect net neutrality, while wording it to do the exact opposite, of course!

It's widely believed that the GOP intends to table a net neutrality bill sometime this year, either as a standalone bill or part of a Communications Act rewrite (with a heavy emphasis on killing the FCC's consumer-protection authority). The man likely to lead that effort is Senator John Thune, who last week took to the op-ed pages of Ars Technica to begin making his public case for such a proposal. Thune begins his sales pitch with, unfortunately, a lie:

"I am quite confident that the online experience for the overwhelming majority of users has not really changed for better or worse because of the new regulations. The Internet’s future, however, is uncertain because of ideological bureaucrats at the FCC who adopted a misguided regulatory approach that has chilled investment and offers no protections against excessive bureaucratic interference in the years ahead.

...These regulations are already having a negative impact on Internet infrastructure. While not a problem in places like Silicon Valley or New York City, 34 million Americans today lack access to broadband services at home, and there is evidence that the FCC’s onerous regulations have chilled the capital investments that are needed to deploy broadband throughout the country."

As we just got done saying, the claim that net neutrality "chilled investment" simply isn't true, no matter how many times large ISPs (and the politicians that love them) claim otherwise. Data showing growing CAPEX and earnings are all public, so it's not really particularly debatable (The Consumerist just got done doing a fantastic job once again debunking this canard). After starting with a repeatedly-debunked lie, Thune proceeds to his real goal, selling people on the idea of a new net neutrality law built by Congress:

"While the FCC’s 2015 rules may soon be consigned to the dustbin of history, the last few months have shown us all that political winds can and often do shift suddenly. The only way to truly provide certainty for open Internet protections is for Congress to pass bipartisan legislation. Rather than heavy-handed and open-ended regulations that stifle the Internet, we need a statute offering clear and enduring rules that balance innovation and investment for all parts of the Internet ecosystem."

So yes... in a perfect world, Congress would simply pass a net neutrality bill and enshrine the concept into law, avoiding the partisan pattycake that plagues the FCC with every administrative shift. But this world not being ideal, and one where companies like Comcast, AT&T and Verizon have incredible power over lawmakers, the chance of Congress passing useful net neutrality protections is virtually non-existent. Thune, as a major recipient of telecom industry cash, of course knows this. But Thune dismisses this reality to insist he's nobly prepared to spearhead a legislative effort to save neutrality once and for all:

"The certainty of bipartisan law transcends administrations. Over the past few months, many of my Democrat colleagues have grown to appreciate this more. Regardless of what happens at the FCC with the 2015 rules, I again stand ready to work on legislation protecting the open Internet that sets forth clear digital rules of the road for both the Internet community and government regulators."

You shouldn't buy it. Thune previously tried to kill the FCC's tougher rules with a similar proposal last year -- one that professed to "enshrine net neutrality into law," but which was so intentionally saddled with loopholes as to be useless. In fact such proposals are worse than useless in that they pre-empt the existing, more effective rules, cover only some net neutrality violations (outright blocking of entire websites, something no ISP intends or wants to do anyway), while ignoring the myriad of fronts where the real neutrality fights are happening now (zero rating, interconnection, usage caps and overage fees).

The plan is to introduce a new net neutrality law that kills net neutrality while professing to save it. When lawmakers point out that the bill does more harm than good, they'll likely be derided for refusing to "compromise." Granted with the ACA and other Congressional kerfuffles currently taking priority, this bill may take some time before large ISP lobbyists and lawmakers can finally table such legislation. But those of you that care about net neutrality need to understand one thing: net neutrality's death will come disguised as a 2017 bill pretending to save it. Likely with Thune leading the parade.

Filed Under: ajit pai, congress, fcc, john thune, net neutrality

FCC Boss Calls Net Neutrality A 'Mistake,' Repeats Debunked Claim It Stifled Broadband Investment

from the truth-is-whatever-I-say-it-is dept

So for several years now, the broadband industry (and the politicians, think tankers, and policy folk paid to love them) has desperately tried to claim that the FCC's net neutrality rules killed investment in broadband networks, clouding the entire telecom market in a dark shroud of "regulatory uncertainty." And it doesn't matter how many times we (and others) debunk this claim, it just keeps popping up like an undead groundhog. The reality is this: net neutrality had zero negative impact on the CAPEX, growth, or financials of major broadband providers. It simply isn't true.

And yet this narrative was front and center in a speech given this week by FCC boss Ajit Pai at the Mobile World Congress in Barcelona. At the event, Pai reiterated his disdain for net neutrality, claiming the rules were a "mistake" that caused, you guessed it, a massive network investment decline:

"Two years later, it has become evident that the FCC made a mistake. Our new approach injected tremendous uncertainty into the broadband market. And uncertainty is the enemy of growth. After the FCC embraced utility-style regulation, the United States experienced the first-ever decline in broadband investment outside of a recession. In fact, broadband investment remains lower today than it was when the FCC changed course in 2015. And we have seen much concern about whether the FCC would permit or ban service plans."

It's nonsense. And repetition doesn't magically forge reality. Pai has made this claim numerous times, but based his claims on broadband industry-tied think tank data from the likes of Hal Singer, who cherry picked and massaged data. If you look at actual SEC filings, earnings reports, stock trajectories and other public data, it's painfully obvious this dead duck of a talking point still isn't true. Consumerist's Chris Morran did a phenomenal job doing just that this week, first noting that this lack of growth due to "uncertainty" is a bogus canard:

"Since Feb. 26, 2015, the day that the FCC voted to approve the neutrality rules, AT&T’s share price has increased by more than 20%, Comcast’s is up 26%. Verizon’s stock price is at the same level as it was, though it has fluctuated as much as 15% in either direction since then. Charter’s share price is up 40%, after the FCC allowed it to acquire Time Warner Cable and Bright House in 2016. The only major broadband provider whose stock has fallen dramatically in the last two years is CenturyLink, whose share price has sunk around 50% in that time."

So yes, if you're going to claim that "uncertainty is the enemy of growth," and there's a hell of a lot of growth, you should be able to do the rest of the logical math. Morran also looked at CAPEX at most of these ISPs, and found that too is soaring (in large part due to ongoing investment in business services and wireless broadband):

"Likewise, AT&T said it its most recent earnings that it spent $22.9 billion on capital investment in 2016, up from $20.7 billion in 2015. Granted, the 2015 number was slightly down from the $21.4 billion spent in 2014, but it’s higher than the $19.7 billion or $20.2 billion spent in 2012 or 2011, respectively, seeming to undercut Pai’s claims of historic low levels of investment.

Because of the massive merger with Time Warner Cable, there’s no apples-to-apples comparison to be made. However, Charter did spend $7.5 billion on capital expenditures in 2016, 85% of that on expanding and building out its network. That appears to more than the combined investment by Charter and TWC in capital expenditures during the pre-merger years.

Even Verizon, which has not seen the same growth as the other companies is spending more on capital expenditures than it did before the neutrality rules were put in place. In 2015, the year where Pai contends investment sunk to levels unseen outside of a recession, Verizon spent $17.8 billion on capital investments, more than in any other year since the U.S. came out of the recession."

In other words growth is up, CAPEX is up, and these companies are all hugely profitable. It's not a debate. So where is Pai getting his contradictory data from? ISP lobbyists, of course:

"So what is Pai’s justification for this claim? According to a rep at the FCC, the Chairman’s comment was based on data provided by USTelecom, the industry’s lobbying arm that is actively pushing for the FCC and Congress to roll back net neutrality and privacy regulations on broadband providers. The FCC has not responded to our query as to why Chairman Pai would use data provided by industry lobbyists over the actual numbers these companies are providing publicly."

I'd recommend not holding your breath while you wait. Of course, Morran's takedown of Pai's bogus claim is just one of countless similar stories published every few months eviscerating this idea that net neutrality was an innovation, investment and growth killer. Yet this being the post-truth era, where truth is apparently defined not by hard data but by bluster and bullshit, there's apparently zero repercussions for repeatedly lying.

And it's probably about to get worse. Pai and the FCC know that rolling back net neutrality via FCC process is difficult if not impossible. It would require convincing the courts that things have changed substantially since the recent FCC court win, and involve another lengthy public comment period. Given a record 4 million consumers spoke out the last go round (largely in favor of the rules), that's not something the GOP, Pai and Trump want to repeat. As such, their plan will be to pass new legislation (possibly a Communications Act rewrite) that kills FCC authority generally and the rules specifically.

At the heart of the sales pitch for this "modernization" of the FCC and killing of net neutrality rules? An ocean of farmed industry data insisting that net neutrality protections stifle broadband investment, damage the self-esteem of children, harm puppies, and threaten to rip the Earth off of its orbital axis. All magically fixed, of course, if we free some of the least-liked and most anti-competitive companies in America from regulatory oversight and public accountability.

Filed Under: ajit pai, broadband, competition, fcc, investment, net neutrality

FCC Boss Falsely Claims His Attacks On Net Neutrality Have Already Made The Wireless Sector More Competitive

from the up-is-down-black-is-white dept

Last week we watched as Verizon, a company that spent years telling users they didn't want or need unlimited data, was forced to bring back unlimited data. AT&T quickly followed suit with similar plans of its own, despite having spent years waging a not so subtle war on grandfathered unlimited connection customers. The reason for this sudden collective about-face? The continued rise of T-Mobile, which has increasingly brought something vaguely resembling competition to the wireless sector (even if non-price, often superficial competition remains the predominant law of the land).

While this was happening, we've been noting how new FCC boss Ajit Pai has been taking an axe to consumer protections, moving to gut broadband privacy rules, making it easier for prison telco monopolies to rip off inmate families, and killing efforts to bring competition to the cable box. Pai also recently killed off the FCC's inquiry into zero rating, after the former FCC stated Verizon and AT&T were using usage caps to give their own content an unfair market advantage.

If you ask industry lobbyists, this behavior makes Pai an incredible consumer champion. Apparently that narrative is very much alive in Pai's head as well. In a speech this week at the Mobile World Congress in Barcelona, Pai was quick to proclaim that he's simply returning to an era of "light-touch" regulation of telecom, one that will result in massive, unspecified benefits to all:

"We are confident in the decades-long, cross-party consensus on light-touch Internet regulation—one that helped America’s digital economy thrive. And we are on track to returning to that successful approach.

In telecom, "light-touch regulation" is code for letting AT&T, Verizon, Comcast and Charter do whatever the hell they'd like. The narrative usually goes something like this: if you free giant ISPs from the burdens of "onerous federal regulation" (like net neutrality), Utopia magically springs from the sidewalks. But as we saw during Michael Powell's tenure, this narrative is flimsy, and the blind federal deregulation of telecom only makes things worse. Why? When you let revolving door regulators like Pai and Powell run the show, their breathless dedication to industry means they intentionally overlook the lack of competition in the sector.

Eliminate functional regulatory oversight and refuse to address limited competition? The end result is... Comcast Corporation and its record-shatteringly-bad customer service, high prices, and usage caps.

But Pai took things further in his speech, actually claiming that his refusal to enforce the agency's net neutrality rules somehow resulted in a flurry of competition and a return to unlimited data:

"Earlier this month, for example, we ended the FCC’s investigation into so-called “zero-rating,” or free-data offerings. Free-data plans have proven to be popular among consumers, particularly those with low incomes, because they allow consumers to enjoy content without data limits or charges. They have also enhanced competition. Nonetheless, the FCC had put these plans under the regulatory microscope. It claimed that they were anticompetitive, would lead to the end of unlimited data plans, or otherwise limit online access. But the truth is that consumers like getting something for free, and they want their providers to compete by introducing innovative offerings. Our recent decision simply respected consumers’ preference.

The best evidence of the wisdom of our new approach is what happened afterward. In the days following our decision, all four national wireless providers in the United States announced new unlimited data plans or expanded their existing ones. Consumers are now benefiting from these offers—offers made possible by a competitive marketplace. And remember: Preemptive government regulation did not produce that result. The free market did.

That's an incredible load of nonsense. T-Mobile only still exists because federal regulators blocked AT&T from acquiring it. So in reality, it was government intervention that allowed T-Mobile to continue to exist, with the resulting competition driving AT&T and Verizon to adopt all manner of more consumer-friendly positions. It's hard work, but one needs to weigh each instance of government regulation on its merits. Insisting all regulation is good or bad is just lazy thinking, and the idea that gutting all consumer protections magically results in the telecom equivalent of Smurf village is utterly nonsensical given the industry's history.

We've also noted how zero rating has nothing to do with giving consumers "free data," though carriers have certainly conditioned consumers to think as much. Usage caps are entirely arbitrary, and are completely untethered to real-world network congestion or financial necessity. Caps and overage fees are simply glorified price hikes, and they exist as a symptom of limited competition. As competition increased, it became untenable for AT&T and Verizon to continue ignoring consumer demands, especially once T-Mobile began adding significantly more mobile subscribers than any other carrier every quarter.

The irony, of course, is that Pai was in favor of the AT&T and T-Mobile merger, which would have killed off T-Mobile's disruption entirely. He's also never seen an incumbent ISP policy idea he didn't like, and his voting history suggests he'll happily vote to approve what many expect is a looming Sprint acquisition of T-Mobile. When the resulting diminished competition from that deal results in higher prices, what's the over/under on Pai blaming himself or his love of a "light touch?"

Filed Under: ajit pai, data caps, fcc, net neutrality, unlimited data, zero rating

Tom Wheeler: Trump, GOP Plan To 'Modernize' The FCC A 'Fraud'

from the in-Comcast-we-trust dept

So we've noted a few times how former FCC boss Tom Wheeler surprised many of us (myself included) simply for basing his telecom policy decisions on actual facts. That doesn't sound like much, but for more than fifteen years, both parties had stocked the agency with a rotating crop of either sector apologists like Michael Powell (now the cable industry's top lobbyist) -- utterly incapable of even admitting the broadband industry had competition problems -- or wishy-washy folks like Julius Genachowski, who basically just told everybody what they wanted to hear, and just hoped things worked out for the best.

Wheeler wound up being a notably different animal for the FCC. He based many of his policy decisions on real-world data collected from actual customers (shocking!), repeatedly highlighted the lack of real broadband competition in many markets (blasphemy!), and, as evident on his shift toward Title II reclassification and net neutrality, actually changed his mind when confronted with evidence that challenged his world view (what insolence!).

Now that Wheeler's back in the private sector, he's unshackled himself somewhat, last week providing an interesting interview with Harvard Law Professor Susan Crawford. In it, Wheeler takes particular aim at Trump's new FCC pick Ajit Pai, noting the new FCC boss (who repeatedly complained that Wheeler left him out of key policy decisions) refused to even meet with him during the last year. Wheeler also chimes in on the subject of net neutrality, municipal broadband, and how ISPs like Comcast and AT&T have an almost nauseating amount of influence over state legislatures.

But the most important part has to do with Wheeler's take on the Trump administration's increasingly obvious plan to defund and defang the FCC as broadband watchdog. Because the industry and our new FCC boss lack the courage to just come out and say this, telecom sector lobbyists (and the various PR flacks, consultants, think tankers, and politicians paid to love them) have concocted a new narrative in which they claim they're simply "streamlining" or "modernizing" government by eliminating the FCC from the equation, and dumping all oversight of megacarriers like AT&T, Comcast and Verizon into the lap of the FTC.

Wheeler, however, was quick to point out the real goal of such a shift:

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.

Again, so it's clear, broadband ISPs want all oversight shifted to the FTC because they know the underfunded and overworked agency won't have the ability to actually enforce the rules currently on the books, much less craft new ones should they become necessary. With companies like Comcast facing less organic broadband market pressure than ever, less federal regulatory oversight than ever, and the ability to literally write state protectionist laws keeping your town and city from having any say over this dysfunction, you've got a disaster brewing for consumers and numerous business sectors alike.

To be clear, deregulation does help some industries -- especially those that naturally enjoy healthy competition. But with the amount of control large ISPs have over state legislatures, and the lack of competition in the last mile, the telecom sector is far from a free market. Undaunted by historical evidence of the folly of blind telecom deregulation, ISPs have long argued that if you just leave the industry completely alone, gigabit connections will miraculously sprout from sidewalk cracks and we'll all be living in a telecom utopia in no time. History has proven repeatedly this antiquated belief system is pure folly.

Just when it seemed like we were finally putting this dated fantasy in the rear-view mirror, in comes a brand new plan to effectively neuter the only regulatory agency to stand up to AT&T and Comcast in the last decade. Again, it will go something like this: first Pai and the new FCC will simply refuse to enforce the rules already on the books (net neutrality). From there, you can expect Comcast, AT&T and Verizon's Congressional allies to push for a new Communications Act rewrite that rolls back all of Wheeler's policy proposals and fits the FCC with a shiny new collar and chain.

Said Act will breathlessly profess to create jobs, increase broadband deployment, close the digital divide and finally solve net neutrality, but will do nothing of the sort. What it will actually do is contain ample loopholes ensuring that the FCC can never again actually hold massive broadband and media empires accountable to the public by cutting the agency off at the knees, in part by rolling back Wheeler's Title II classification, but also by shoveling consumer protection off to an FTC whose purview will be similarly constrained over the coming months and years.

The end result of this "modernization"? Less oversight than ever for industry giants AT&T, Comcast, Verizon and Charter. Given these companies' growing size, long and undeniable track record of anti-competitive behavior and outright fraud, what could possibly go wrong?

Filed Under: ajit pai, fcc, net neutrality, susan crawford, tom wheeler