Congress Just Voted To Kill Consumer Broadband Privacy Protections

from the the-almighty-dollar dept

Despite a last-ditch effort by the EFF and other consumer and privacy groups, Congress today voted to dismantle privacy protections for broadband subscribers in a 50-48 vote. The rules, passed last October by the FCC, simply required that ISPs clearly disclose what subscriber data is being collected and sold by ISPs. It also required that ISPs provide working opt out tools, and required that consumers had to opt in (the dirtiest phrase imaginable to the ad industry) to the collection of more sensitive data like financial info or browsing histories.

Another part of the rules, which simply required that ISPs were transparent about hacking intrusions and data theft, had already been killed off quietly by new FCC boss Ajit Pai.

The rules were seen as important in the face of greater consolidation in an already uncompetitive broadband market, where said lack of competition eliminates any organic market punishment for bad behavior on the privacy front (unlike the content or other industries). Now, with neither broadband competition -- nor meaningful regulatory oversight -- privacy advocates are justifiably worried about the repercussions to come.

The rules were killed by using the Congressional Review Act, which allows Congress to dismantle recently approved regulations with a simple majority vote. While the rules really were relatively straightforward, telecom lobbyists spent months deriding the rules as "onerous regulations" that would be "too confusing" for consumers, potentially stifling sector "innovation." Industry lobbyists also consistently pushed "studies" proclaiming that ISPs really don't collect much consumer data, in stark contrast to, you know, the truth.

One of the proposals sponsors, Arizona Senator Jeff Flake, went so far in a speech Wednesday night to suggest that the rules somehow "restricted constitutional rights" (of giant ISPs like Comcast, apparently):

"In a speech on the Senate floor Wednesday night, Sen. Jeff Flake (R-Ariz.), who introduced the bill, said the FCC regulations were an example of a “bureaucratic power grab.” "Passing this CRA will send a powerful message that federal agencies can’t unilaterally restrict constitutional rights and expect to get away with it,” Flake said."

ISP lobbyists had spent countless hours trying to convince lawmakers that FCC oversight of privacy was unnecessary, and that the FTC alone was well-equipped to handle consumer privacy complaints in the broadband sector. But in a recent interview, former FCC boss Tom Wheeler made it abundantly clear that this was largely bullshit -- and the goal is to shovel off privacy oversight to an FTC without rule making abilities, already overloaded by other enforcement obligations:

"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."

In other words, the goal is quite simply to gut oversight of one of the least competitive (and most anti-competitive) sectors in American industry. First by hamstringing the FCC's oversight of the sector, then by inevitably pushing bills that hinder the FTC's oversight as well. All told, today's vote is one of the more embarrassing examples of our broken, cash-compromised legislative process in recent memory.

Update: Here's the roll call breakdown of who voted for or against the measure, in case you're the type that actually likes accountability.

Filed Under: broadband, congress, fcc, isps, privacy

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

Despite Gigabit Hype, Comcast Is Facing Less Broadband Competition Than Ever

from the ma-bell,-ill-communication dept

Despite the rise of heavily-hyped-but-highly-scattered gigabit deployments, the broadband industry is actually seeing less competition than ever before across huge swaths of the country. Once upon a time, broadband "competition" consisted of an equally matched telco going head to head with the incumbent cable provider (if you were lucky). These days, most phone companies lack the finances or competitive motivation to improve lagging DSL speeds across their footprints -- speeds that don't even meet the FCC's base definition of broadband (25 mbps).

That's resulting in a growing monopoly for the nation's cable broadband providers, who have quietly been absolutely butchering phone companies over the last several years. Just take a look at the latest data from Leichtman Research, which notes that while cable broadband providers collectively added 2.7 million net additional high-speed Internet subscribers last year, phone companies collectively shed roughly 600,000 broadband users.

That's the most net additions the cable sector has seen in any year since 2007. And the 122% 2016 net additions are a notable bump up from the 106% of net additions seen by cable providers in 2015, and 89% of net additions seen in 2014. It paints a rather clear picture of a broadband industry that, frankly, is even less competitive than public wisdom dictates (and most of us already knew it's one of the least competitive sectors in technology):

In countless markets, phone companies like AT&T and Verizon are simply giving up on unwanted DSL users, quite happily driving them to cable via the one-two punch of price hikes or apathy (their focus now is more expensive wireless, and gobbling up various media companies). Elsewhere, smaller telcos (Windstream, Centurylink, Frontier) have saddled themselves with so much debt by gobbling up AT&T and Verizon's aging copper customers, they're incapable (or unwilling) to invest in necessary broadband upgrades en masse.

Many of these companies quite simply don't even want to be in the residential broadband business, resulting in a palpable, active disdain by many of these phone companies for their own paying customers. The residential broadband industry simply isn't profitable enough, quickly enough for modern investors, so most of these companies have shifted their entire focus elsewhere. For smaller telcos like Windstream, it's gobbling up companies like Earthlink to expand a focus on enterprise customers. For AT&T and Verizon, it's gobbling up media empires in the quest to be millennial ad juggernauts.

All of this is wonderful news for companies like Charter and Comcast. This reduction in overall competition is eroding the resistance to the rise of completely unnecessary and arbitrary usage caps, meaning broadband (and competing streaming) services are getting more expensive than ever before. And remember, most of these companies have written and successfully lobbied for state bills preventing your town or city from doing much about it. As icing on the cable cake, new Ajit Pai-run FCC has made it clear that nibbling these companies' earlobes is going to pass for regulatory policy for the foreseeable future.

All of this tends to get overshadowed each time an ISP proudly announces the expansion of expensive gigabit broadband lines in highly-selective areas. But for the countless markets in the States, phone companies have effectively given up -- resigning consumers to at least a decade of higher prices and the cable industry's particular knack for atrocious customer service.

Filed Under: broadband, competition, gigabit fiber, monopoly
Companies: at&t, comcast, verizon

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

Google Fiber's About-Face Provides Useful Lessons For A Broken Broadband Industry

from the don't-build-your-house-on-a-swamp dept

Last fall, Alphabet/Google announced that the company would be notably scaling back its Google Fiber ambitions. The company axed its CEO, laid off a small number of employees, and froze a number of anticipated fiber builds (in Portland and a few other locations). Numerous reports indicated that there were growing concerns among many executives about the high costs and slow pace of deploying fiber, so the company was considering an overall pivot to next-generation gigabit wireless while it continued building out most already-announced markets.

While it's hard to call this pivot a failure until we see a real wireless product, ISPs like AT&T were of course quick to suggest Google Fiber was little more than folly (ignoring that AT&T's anti-competitive behavior played a starring role in Google Fiber's struggles in many cities). This has contributed to an overall air of "we told you so" smugness emanating from numerous quadrants of the telecom status quo.

That take, however, is short-sighted. One, the launch of Google Fiber put an unrelenting spotlight on the lack of broadband competition in countless markets, driving many large ISPs (like AT&T) to deploy gigabit broadband service that had previously been unheard of. Google Fiber also managed to shine a bright spotlight on the way many large ISPs use our broken legislative and regulatory systems to keep things broken, whether that's by using utility pole beaurocracy to slow competitors' installs, or writing awful state protectionist law hamstringing what your local town and city can do about it.

Over at Backchannel, long-standing duopoly critic and Harvard Law Professor Susan Crawford notes that there are a lot of useful lessons from Google Fiber, most notably that the system Google Fiber is operating in is effectively rotten to the core:

"The fundamental lesson of Google Fiber is that, in the end, its business model was just like that of another cable actor. It was playing within the existing sandbox, using the right technology but the wrong business model.

That sandbox has been left to the vagaries of the marketplace, in which existing monopolies have built moats around their businesses in the form of rights to programming, rights of way, bundled products, relationships with credulous legislators, and a million other barriers to entry that make competing — even for Google — just too expensive for shareholders looking for immediate, media company-like returns, quarter after quarter."

The solution, Crawford insists, is a shift toward local, municipal, open access networks via which ISPs come in and compete:

"The only business model for fiber that will work to produce the competition, low prices, and world-class data transport we need — certainly in urban areas — is to get local governments involved in overseeing basic, street grid-like “dark” (passive, unlit with electronics) fiber available at a set, wholesale price to a zillion retail providers of access and services. There’s plenty of patient capital sloshing around the US that would be attracted to the steady, reliable returns this kind of investment will return. That investment could be made in the form of private lending or government bonds; the important element is that the resulting basic network be a wholesale facility that any retail actor can use at a reasonable, fair cost.

The result: Instead of different wires competing side by side with one another, there would be one great basic facility available neutrally to every form of business. Your ISP could use that fiber in competition with 10 others; your traffic lights could use it to govern congestion; your energy grid could use it to measure and regulate consumption and use of renewables. (Here comes the much-touted Internet of Things, which, without fiber everywhere, is being built on sand.) At the same time, the government would stay out of providing and inventing retail services itself."

Data, including data from the FCC (promptly ignored by the agency) does support the argument that such open access networks result in better broadband, better customer service, and lower prices thanks to real competition. In fact, Google Fiber initially insisted it would support the open access model -- before promptly backing away from it. And some areas, like Huntsville, Alabama, are following through on building an open network, then inviting multiple ISPs (including Google Fiber) to come in and compete.

More competition means organic punishment for high prices, bad service, and net neutrality violations -- which in turn means fewer attempts to fix this issue using often ham-fisted attempts at regulating a moving train.

The problem: incumbent ISPs effectively run massive chunks of our government, to the point where they quite-literally write telecom law (usually via ALEC or some other third-party, legislation ghostwriting apparatus). That includes the twenty-some odd state laws preventing towns and cities from making telecom infrastructure decisions for themselves, lest they might upset somebody at AT&T, Verizon, Charter or Comcast.

Like so many sectors, you can't really fix what ails the broadband industry until you fix the underlying legislative rot that lets companies use campaign contributions and disinformation to dictate garbage technology policy in the first place. So sure, open access networks should absolutely be pursued where possible, but voting out politicians whose entire function appears to be to protect broken mono/duopoly markets (looking at you, Marsha Blackburn) would need to be the very first step in what's an achievable but Sisyphean climb toward better broadband.

Filed Under: broadband, competition, google fiber, muni broadband, susan crawford
Companies: google

USAToday Latest News Outlet To Completely Miss The Point Of Cord Cutting

from the if-I-buy-ALL-the-things-I-have-less-money...news-at-11 dept

So we've noted a few times now how every month or so there's a media report proclaiming that you can't save any money via cord cutting. The logic in these reports almost always goes something like this: "Once I got done signing up for every damn streaming video service under the sun, I found that I wasn't really saving much money over traditional cable."

Authors leaning on this lazy take almost always tend to forget a few things. One, the same people dictating cable TV rates dictate streaming video rates. Two, adding a dozen streaming services to exactly match your bloated, 300 channel cable subscription misses the entire point of cord cutting. The benefit of streaming is you can pick and choose the content you prefer. And yes, if you prefer a massive bundle of religious programming, horrible reality television, and infomercials, then yes -- you may want to stick to paying an arm and a leg for cable.

Just like clockwork, USAToday rushed to meet this month's invisible quota for "cord cutting doesn't save me money" stories. In their version, the author desperately tries to include the cost of broadband service just to try and make an inaccurate point:

"Sure, if we only pared ourselves down to free TV with an antenna and Netflix, then we’d be in great shape, at $10 a month.

I would argue that we'd also have to add in the high-speed Internet charge to watch the stuff, and that would add another $40-$50.

(Serious cord-cutters disagree with me on this—they say we'd all be paying for the Internet anyway, and the charge shouldn't be counted.)

Yeah, they're telling you that because they're right. Your broadband connection would be a cost whether you cut the cord or not. Now, ISPs use usage caps to exempt their own content while driving up the cost of using streaming services, but that would be the fault of cable companies (and a lack of competition in the broadband sector) -- not the fault of cord cutting or streaming services. In fact: how a lack of broadband competition allows this abuse of the last mile is actually a more worthy story for this type of -- regurgitation and repetition.

Undaunted, the USAToday author continues:

"In a debate Thursday on Facebook Live, Luke Bouma, the owner of Cordcutternews.com, argued that the average person who ditched their cable was saving $100 monthly on their bill. I don't disagree. But looking into the future, my point is, if you add many new streaming services, your bill could get just as high as cable.

On the entertainment front, is Netflix really enough? With Hulu, you get access to the latest network TV shows from NBC, ABC and Fox, for $12 monthly, without commercials. And many of us love the idea of HBO Now on-demand, with access to the entire library of HBO shows, from the Sopranos to Games of Thrones.

Add another $15 monthly for HBO.

So now we’re just at $90 a month. Which is about on par with what we currently pay for cable."

So yes, when you buy all the toys in the store window things do tend to get expensive. But when you actually bother to talk to real people you'll find that time and time again they'll tell you that cord cutting saved them considerable money from the $130 or so (more depending on fees and packages) most people pay for traditional cable. If their bill gets too high, cord cutters can always trim back a service or buy a service elsewhere (AT&T sells HBO streaming as part of DirecTV Now for $5). There's also piracy, which for some reason writers at major outlets like to refuse to admit is an option because it's naughty.

This kind of competition and choice flexibility puts the onus on you to find -- and get -- the better deal. That this kind of flexibility on price and options has long been lacking from traditional cable is the entire damn point. If you're missing that, you're not really understanding the cord cutting phenomenon at all.

Filed Under: broadband, cord cutting, savings, usatoday

New York City Sues Verizon For Fiber Optic Bait And Switch

from the a-sucker-born-every-minute dept

For years now, we've highlighted Verizon's tendency to grab all manner of tax breaks and subsidies from a town or city -- in exchange for fiber optic upgrades that are often never delivered. All up and down the eastern seaboard, Verizon was given the keys to the kingdom in franchise and other agreements filled with loopholes that let the telco, time and time again, promise one thing, then deliver another. And because the company enjoys immense lobbying power over regional regulators and state legislatures, Verizon has never really been held accountable for this behavior.

New York City has been a particular point of contention. In 2008, former mayor Mike Bloomberg and Verizon signed (behind closed doors) a new franchise agreement promising "100% coverage" of FiOS across the city by 2014. As some local reporters had warned at the time (and were promptly ignored), the city's deal with Verizon contained all manner of loopholes allowing Verizon to wiggle over, under and around its obligations. And wiggle Verizon did; a 2015 city report found huge gaps in deployment coverage -- particularly in many of the less affluent, outer city boroughs.

New York City had long promised to sue Verizon over its failures, and this week made good on that promise. A lawsuit filed by the city (pdf) says that Verizon only ultimately reached 2.2 million out of the city's 3.3 million residences with FiOS. The city is seeking a declaration that Verizon is in breach of its deployment obligations, as well as an order to complete the project as promised. The contract required that Verizon "pass" nearby apartments and buildings with fiber. But according to the city, Verizon's definition of "pass" meant "getting the fiber line somewhere close to the building, maybe":

"Verizon's current position, as stated in correspondence and meetings with the City, is that fulfilling the "premises passed" obligation does not, with respect to a given premises, necessarily involve running fiber immediately in front of or behind the premises. Rather, Verizon has asserted, it should be deemed to have'þassed" an individual building if it has run fiber to a nearby intersection and could access the building with further deployment of fiber."

This is pretty much the standard MO for Verizon, and any city surprised by it hasn't been paying attention. In addition to the flaky definition of "passed" (long a fluctuating, morphing determination in telecom for just this purpose), Verizon's agreement contained numerous provisions allowing it to buy or wiggle its way out of deployment obligations if certain television adoption metrics weren't met. All told, countless cities have signed contracts just like this one without really reading them. They then turn around in a few years feeling swindled (like Philadelphia just did).

As such, it's not entirely clear how much luck New York City will have in the courts, but Mayor Bill De Blasio's office has apparently had enough of playing deployment patty cake with the company:

"Verizon must face the consequences for breaking the trust of 8.5 million New Yorkers. Verizon promised that every household in the city would have access to its fiber-optic FiOS service by 2014. It's 2017 and we're done waiting. No corporation - no matter how large or powerful - can break a promise to New Yorkers and get away with it."

The problem is Verizon has "gotten away with it" pretty much constantly -- across a wide swath of its territory -- with zero repercussions, for the better part of a generation. In town after town, state after state, the most "punishment" Verizon tends to see is belated, toothless public hearings that serve little purpose other than to let swindled residents vent. That's because while Verizon's known for building networks, its expertise is really legacy turf protection and lobbying, and those campaign contributions go a very, very long way.

Ideally, cities could avoid all of this by actually reading contracts before they sign them (and making negotiations public and transparent, which didn't happen in New York). On a "positive" note, now that Verizon's busy gobbling up failed 90s internet brands in an apparent quest to pivot to slinging ads at Millennials -- it has largely given up on fixed-line broadband entirely, meaning that its bunk FiOS deployment promises are also taking an extended hiatus.

Filed Under: broadband, broken promises, fiber, fiber optic, fios, new york city, nyc
Companies: verizon

FCC Partially Kills Rules Requiring ISPs Be Clear About Usage Caps, Hidden Fees

from the all-about-helping-the-little-guy dept

FCC boss Ajit Pai made it clear that overturning net neutrality would be the new FCC's top priority (apparently right behind paying lip service to the poor), and his behavior is making it very clear that wasn't an empty promise. Pai recently killed the FCC's inquiry into Verizon and AT&T's zero rating, which lets both companies use arbitrary usage caps to give their own content an unfair market advantage. The previous FCC argued both ISPs were violating net neutrality and engaged in anti-competitive behavior. The new FCC, in contrast, now says zero rating "enhances competition in the wireless marketplace."

Now Pai's chipping away at the transparency portion of the FCC's net neutrality rules as well, insisting they're little more than "excessive reporting obligations." The transparency requirements, originally passed in 2010, required that ISPs make the following items perfectly clear when selling service to consumers:

Price -- the full monthly service charge. Any promotional rates should be clearly noted as such, specify the duration of the promotional period, and note the full monthly service charge the consumer will incur after the expiration of the promotional period.

Other fees -- all additional one-time and/or recurring fees and/or surcharges the consumer may incur either to initiate, maintain, or discontinue service, including the name, definition, and cost of each additional fee. These may include modem rental fees, installation fees, service charges, and early termination fees, among others.

Data caps and allowances -- any data caps or allowances that are a part of the plan the consumer is purchasing, as well as the consequences of exceeding the cap or allowance (e.g., additional charges, loss of service for the remainder of the billing cycle)."

The FCC estimated that it should take ISPs about 6.8 hours per year to adhere to these requirements, which have an obvious benefit to consumers. But because some ISPs repeatedly complained that the requirements were "too onerous" (without ever really supporting that claim with data), the FCC temporarily exempted ISPs with fewer than 100,000 subscribers from the rules. But last week, the FCC not only extended the rules, but expanded them claiming this would let ISPs "allocate scarce resources toward expanding modern networks that bring economic opportunity, job creation and civic engagement to all Americans."

But lone dissenting FCC commissioner Mignon Clyburn was quick to point out that under the surface, this had little to do with helping small ISPs (again, given the small burden of 6.8 hours in extra work per year), and everything to do with slowly-but-surely rolling back oversight of larger companies utilizing smaller holding companies:

"Many of the nation’s largest broadband providers are actually holding companies, comprised of many smaller operating companies," Clyburn said. "So what today’s Order does is exempt these companies’ affiliates that have under 250,000 connections by declining to aggregate the connection count at the holding company level."

The original exemption for ISPs with 100,000 or fewer subscribers was applied to the aggregated total of subscribers "across all affiliates," so that small ISPs owned by big holding companies wouldn't be exempt. That changed today, according to Clyburn.

Consumer group Public Knowledge quickly issued a statement questioning the wisdom of making often convoluted and misleading broadband bills more difficult to understand:

"Yet again, Chairman Pai has acted to weaken consumer protections at the FCC. Today’s action means that more ISPs could withhold essential information about their broadband pricing and service, making it harder for many more subscribers to make informed decisions and hold their providers accountable. How can it be good for consumers if companies conceal anything about the price, speed, and data caps for their broadband service?"

If you hadn't noticed already, easing government and public oversight of one of the least popular and least competitive markets in America -- then pretending it's either for the poor or for "modernization's" sake is new FCC boss Pai's modus operandi. It doesn't matter whether we're talking about Pai's decision to help prison telco monopolies overcharge inmate families, his decision to kill plans for more cable box competition, or the recent efforts to dismantle net neutrality piecemeal, this is all being set to the backdrop of bogus empathy for the little guy. And this is just his first month in office.

As we noted previously, Pai won't repeal net neutrality via FCC process because it would open the door to a public-comment period during which his decision would be quite-justly lambasted. Instead, the plan is to chip away at the rules bit by bit until the GOP pushes either a Communications Act rewrite or other legislation that puts net neutrality -- and likely the FCC's entire authority over broadband ISPs -- to bed permanently. If you really like the end result of having large ISPs and revolving door regulators dictate internet policy (read: Comcast), you should be pretty excited about what the future has in store.

Filed Under: ajit pai, broadband, fcc, hidden fees, usage caps

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 Moves To Kill Broadband Privacy Protections. You Know, To Help The Little Guy.

from the Comcastic dept

New FCC boss Ajit Pai, apparently taking a break from paying empty lip service to the poor, has quietly announced the FCC will be killing consumer broadband privacy protections before they even have a chance to take root. Hoping the news would get lost in the pre-weekend hustle, the FCC quietly circulated an e-mail on Friday stating that the agency would be moving to kill the rules before they arrive March 2, just as large ISPs had demanded.

The FCC statement starts by implying that eliminating FCC oversight of broadband privacy (leaving the FTC as the lone cop on the beat) is more consistent and efficient:

"Chairman Pai believes that the best way to protect the online privacy of American consumers is through a comprehensive and uniform regulatory framework. All actors in the online space should be subject to the same rules, and the federal government shouldn’t favor one set of companies over another. Therefore, he has advocated returning to a technology-neutral privacy framework for the online world and harmonizing the FCC’s privacy rules for broadband providers with the FTC’s standards for others in the digital economy. Unfortunately, one of the previous administration’s privacy rules that is scheduled to take effect on March 2 is not consistent with the FTC’s privacy standards. Therefore, Chairman Pai is seeking to act on a request to stay this rule before it takes effect on March 2."

This idea that the FTC should be the only regulator overseeing ISP privacy comes from the telecom industry itself, which has repeatedly tried to claim it's unfair to "burden" ISPs (many of which are trying to get into the ad and media industry) with FCC regulations not faced by the likes of Google and Facebook. The problem: they're ignoring the fact that while users can switch search engines or services if they're unhappy with Google or Facebook's privacy practices, a lack of competition often means users have no such luxury when it comes to broadband ISPs. Thus, specific rules large ISPs pretend they don't see the reasoning for.

Meanwhile, the big push to have the FTC alone oversee broadband privacy is rooted in the knowledge that the FTC is (a) overworked and underfunded, and (b) has no rule-making authority. Now ex-FCC boss Tom Wheeler had this to say about this GOP and Trump FCC "modernization" effort in a recent, candid interview:

"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."

In other words, the pretense for Pai and friends is "efficiency," when the reality, as has long been the FCC's overarching MO, is to protect large ISPs like Comcast, Verizon and AT&T from real accountability and oversight. That's a problem when it comes to an uncompetitive industry where the nation's biggest carriers have no organic checks and balances on their increasingly unethical privacy practices. You need either real competition or reasonable regulators, and as these ISPs' historical behavior makes clear, you run into problems when revolving-door regulators want neither.

The FCC rules themselves were passed last year and are relatively simple; ISPs must disclose what data they're gathering and who they're selling it to. In a few instances, users need to opt in if ISPs want to share more personal financial data. The telecom and ad industries whined about the rules, but the FCC only acted to create the rules after Verizon was caught covertly modifying user packets in order to track user behavior (without informing them or providing working opt-out tools), and AT&T and Comcast began making it clear they wanted to charge users a premium for privacy.

The telecom industry had its chance to self-regulate on the privacy front, and showed repeatedly it wasn't capable of actually doing so. Repeal the FCC's privacy rules, and there's literally nothing standing between you and Comcast when it comes to privacy except an overworked (and likely to be similarly and intentionally hamstrung) FTC incapable of picking up the slack. That's certainly great for Comcast. It's less great if you're a broadband consumer actually looking to have some amount of control over how your personal data is collected and shared in the gigabit era.

Filed Under: ajit pai, broadband, fcc, ftc, privacy