After Exploiting Covid Broadband Program, Verizon Faces Unsurprising Opposition To Tracfone Merger

from the surely-they'll-behave-THIS-time dept

When last we checked in with Verizon, the company had just been caught exploiting the government's Covid broadband relief program to upsell struggling Americans to more expensive plans. Now, as Verizon tries to gain regulatory approval for its $6.2 billion acquisition of Tracfone, consumer groups and a small cadre of Senators are wondering if a company that thinks nothing of exploiting struggling Americans in need is a good steward for a discount phone company whose client base is predominantly comprised of low-income Americans.

Five U.S. Senators recently wrote the FCC, rather timidly wondering if Verizon would use the acquisition to simply upsell these lower-income Americans to more expensive plans (spoiler: yes):

"Senators Richard Blumenthal, Sheldon Whitehouse, Dianne Feinstein, Ron Wyden and Ed Markey said in a letter "Verizon would have significant incentives and opportunities to push subscribers from Lifeline and inexpensive prepaid services to higher revenue plans."

The amusing part here is that there's 40 years of documented history showing how Verizon and AT&T's overall strategy is to acquire everyone, then use that consolidation and reduced competition to relentlessly nickel and dime their subscribers. This is just a factual reality and the way publicly-traded companies are structured to take full tactical advantage of the market and weak regulatory environments to the benefit of investors. It's not some errant opinion that this will happen again in the wake of yet another industry merger, it's the likely outcome based on decades of history.

Yet the concern that they'd do so again here (spoiler: they will) is framed as some kind of radical theoretical or -- as is the preference of the DC Beltway "he said, she said" reporting set -- purely a partisan concern expressed only by Democrats. But the fact Congress could only cobble together five Democratic Senators interested in giving a shit shows you pretty clearly that apathy to this kind of mindless consolidation is very much a bipartisan sport.

1.7 million of Tracfone's customers currently enroll in the FCC's Lifeline program. Started under Reagan and expanded by Bush, the program doles out a measly $9.25 monthly credit that struggling Americans can use to get a discount off of their phone, wireless, or broadband bill (they have to choose one). It's literally the very least the government can do to help poor people afford telecom services, but it's been endlessly demonized by folks like Trump FCC boss Ajit Pai, who think even this half-assed effort is a bridge too far.

If this telecom merger follows the pattern of other U.S. telecom mergers, a bipartisan coagulation of lawmakers will trip over themselves to ignore warnings and approve the deal. They'll then sign off on a bunch of flimsy conditions -- most likely crafted by Verizon -- that not only won't really do all that much, but won't be enforced or adhered to. Meanwhile, Verizon gets way with rather nebulous claims that this deal creates amazing synergies and benefits that you just can't get without greater industry consolidation:

"The company said the proposed deal "will bring value and benefits to value-conscious consumers in a myriad of ways."

Then in two to three years, when policymakers and the press have forgotten all about the deal, Verizon will exploit the consolidation to steadily raise rates. The very same policymakers who signed off on yet more consolidation in the space will then stand around with their hands on their hips and a dumb look on their face wondering how we got here. Right before signing off on yet another "growth for growth's sake" telecom megamerger that benefits absolutely nobody outside of the Hamptons set. Rinse, wash, and repeat, with absolutely nobody learning anything from the experience.

Filed Under: acquisitions, consolidation, fcc, lifeline, mergers, raising rates
Companies: tracfone, verizon

ISPs Abuse FCC Covid Broadband Discount Program, Showing It's A Band Aid On A Much Bigger Problem

from the band-aids dept

For more than a year the Covid crisis has showcased the essential nature of broadband and the high prices Americans pay due to limited telecom competition. While fixing this competitive logjam has long been a work in progress, the pandemic has culminated in renewed efforts to ensure affordable broadband access is a top priority.

At the forefront of these efforts was the creation of the Emergency Broadband Benefit (EBB) program, which doles out a $50 per month subsidy to those struggling economically during the pandemic (it jumps to $75 per month for those living on tribal lands). The program ends when funds run dry or the pandemic ends, whichever comes first.

Over 825 participating ISPs enrolled a million users in discounted broadband plans in just the first week alone. The EBB is now providing essential, immediate aid to the nation’s marginalized and minority populations, routinely hit the hardest by the lack of affordable broadband. But while the majority of internet service providers (ISPs) are participating in good faith, several of the biggest industry players have exploited the program in a quest to generate additional revenue.

Last May, the Washington Post reported that Verizon was exploiting the program to force broadband customers to sign up for more expensive broadband tiers than they currently subscribed to (defeating the point of the whole program):

"Annie Styles from Arlington, Va., who pays $79 per month for her Internet, says Verizon told her she would have to switch to a plan that would cost her closer to $95. “I stopped pursuing it with them after the math didn’t work out,” she says.

Sharon from Harrisburg, Pa., who asked to be identified only by her first name, said she was told by two customer service representatives that she could receive the EBB discount only if she increased her current Internet speed and reconfigured her TV package, too. She said the ultimate price would have depended on what video package she was forced to switch to, as well as new equipment with fees — but she dropped her EBB application out of frustration before she got that far."

Verizon also refused to apply the discount on the company’s older DSL lines, often the only option for users in long neglected markets. Only once the strategy began making headlines did the company shift its trajectory, insisting in a statement that it was always the company’s intent to provide its customers “a wide range of choices to best fit their needs.”

"Verizon's behavior as an EBB provider demonstrates its disdain towards serving low-income consumers, such as TracFone's Lifeline subscribers," consumer group Public Knowledge wrote in a May filing opposing Verizon’s planned acquisition of the prepaid phone provider.

Other broadband providers, including Charter, T-Mobile, and AT&T, restricted which tiers of service qualified for the government discount. Frontier Communications was last week found to be only approving users if they signed up for the company's fastest service tiers. While this did not violate agency rules (left intentionally broad to encourage ISP participation), it limited applicant choice and often shoveled struggling families toward options they can't really afford.

In a bid to protect low-income consumers from bill shock when the program ends, the FCC required that ISPs give qualifying users clear notice that the program was ending, then get their explicit opt-in consent before subscribing them to a more expensive broadband plan.

But several broadband providers, including Charter, have been criticized for requiring that low-income Americans sign up for a more expensive tier of service upon their initial application. If they refuse, they are rejected from participation entirely, something news outlets say wasn’t initially made clear to users in the company’s FAQ. That runs counter to the point of the EBB program, which was to protect consumers from expensive broadband during an economic crisis -- not leave them saddled with even higher bills once the program ended.

A recent study by consumer group Free Press found that the average U.S. household expenditure on broadband jumped 19 percent in the first three years of the Trump era. The study also found that standalone cable broadband prices jumped 34 percent between 2015 and 2020, nearly four times the rate of inflation.

But many applicants to the EBB program say they’re struggling to even make it through the approval process. One report indicates that Charter and Comcast customers are being rejected at no fault of their own. One Comcast customer on Medicaid with a disabled daughter told Protocol they’d been rejected by the ISP four times, despite being approved by the FCC:

"Over the last several weeks, Corsaro said he's reapplied and been rejected by Comcast another three times. He's followed the circuitous trails of automated FCC phone lines that all lead to dead ends and appealed to the kindness of mystified Comcast agents, who have told him again and again that he needs to finish the FCC's verification process. "I keep telling them, 'I've been approved. There's nothing to finish,'" Corsaro said."

While the EBB program is providing welcome aid to many struggling Americans stuck on the wrong side of the digital divide, significant improvements and tougher, clearer guard rails for ISPs may be required if it’s to be made permanent. If carriers continue to exploit loopholes in the program, Congress could mandate a low-income tier like the one that New York State passed into law (which was met with a lawsuit and subsequent injunction courtesy of the telecom industry).

Consumer groups say much more needs to be done in order to improve both broadband access and affordability. A new Pew study found that a quarter of Americans still lack broadband access at home, with forty-four percent citing cost as the primary reason. Up to 42 million Americans lack access to broadband, and roughly 83 million Americans find themselves stuck under a monopoly where they have just one choice in internet service providers.

Regional monopolization and a lack of competition is directly responsible for the higher broadband prices paid by US consumers, putting an essential lifeline to healthcare, opportunity, employment, and education just out of reach for many. As such, it’s essential to adopt policies that drive creative broadband alternatives to market, lowering historically high broadband prices through competition. At the same time, restoring the consumer protection authority stripped away from the FCC by the Trump administration would ensure that government regulators have the tools needed to protect consumers.

While Covid has been an unspeakable tragedy, it has also been the catalyst for real change. The government insists a $1 billion investment to improve broadband infrastructure in tribal areas -- part of a Covid relief bill passed last December -- was just a “down payment” on the $2.3 trillion American Jobs Plan, which itself aims to set aside $100 billion to shore up US broadband coverage gaps. Assuming the proposal can survive "bipartisan negotiations" in the Senate, which have continued to whittle away at the scope of the effort.

Until the government realizes the true scope of the problem, the Emergency Broadband Benefit program, warts and all, at least gives struggling Americans a fighting chance. Those curious if they qualify for discounted broadband service under the program should visit the FCC application website. Users experiencing unnecessary barriers when signing up for the EBB program should file their complaints directly with the FCC.

Filed Under: broadband, competition, covid, covid discount, emergency broadband benefit, fcc

AT&T Gets Loyal Lawmakers To Push A Broadband Tax For 'Big Tech'

from the you're-not-helping dept

Hoping to capitalize on legitimate animosity against "big tech," AT&T lobbyists and policy makers have been busy recirculating a fifteen-year-old talking point. Namely, that big tech companies should throw billions of dollars at big telecom companies to subsidize their broadband deployments. The argument that AT&T has been pushing since 2004 or so is that since big tech companies get a "free ride" on telecom networks (which has never been true), they should pay telecom giants billions of additional dollars... just because.

The argument never made any coherent sense. Tech giants like Netflix and Google pay not only billions of dollars for bandwidth, they also spend billions of additional dollars on cloud, transit, undersea cable, CDN, and other broadband infrastructure. U.S. consumers and businesses alike also pay an arm and a leg for bandwidth courtesy of limited competition. When it comes to U.S. telecom, nobody gets a free ride.

Telecom giants like AT&T also invest billions of dollars in telecom infrastructure. But they also receive billions upon billions in taxpayer subsidies, dubious tax breaks, and regulatory favors in exchange for network upgrades that are always mysteriously half-delivered. There's not a day that goes by where some telecom company isn't getting ridiculous sums of money for projects that don't make sense or simply never get deployed. So if you were serious about reforming the FCC's USF or subsidy systems used to expand broadband access, that would be the place to start.

Instead, AT&T has asked captured regulators like FCC Commissioner Brendan Carr to push for a broadband tax on tech giants. Carr recently pushed the idea in a an editorial over in a Newsweek Op/Ed, and since then outlets from CNET to Axios have been parroting the idea as if it's a good faith effort. It's not. It's an AT&T policy and lobbying missive being dressed up as a legitimate idea by corrupt lawmakers and regulators.

Now, Senators Roger Wicker, Shelley Moore Capito, and Todd Young have introduced a doomed bit of legislation dubbed the Funding Affordable Internet with Reliable (FAIR) Contributions Act. It too suggests that "big tech" has gotten a "free ride" on US telecom networks and should be subject to a new tax to fund broadband deployments:

"For too long, Big Tech has been able to profit off of the critical infrastructure used for common day-to-day activities while not helping at a sufficient level to improve those capabilities with broadband investment in states like West Virginia. With communications platforms moving away from telephone networks toward internet heavy platforms, it’s important now more than ever that we start looking at ways that Big Tech can step up and help close the digital divide and secure true universal service for West Virginians."

Again, the gross irony here is that for the better part of twenty years, West Virginian lawmakers have been in persistent thrall to regional telecom monopoly Frontier Communications. This generally involves doing everything the telecom giant asks, then throwing billions in unaccountable subsidies at the company in exchange for jack shit. The same problem is repeating itself in most states across America. So to come out and suggest the country's broadband shortcomings are Google's, Netflix's, or Amazon's responsibility to fund and fix is fairly laughable.

Our broken and corrupt telecom regulatory approach is precisely why US broadband is so expensive, patchy, and slow by global standards. Yet you'll note that the AT&T loyal Republicans (and some Democrats) pushing this stuff never acknowledge the need for reform of the telecom industry and the subsidies we throw its direction. They're usually not even capable of acknowledging the sector has any problems.

Josh Hawley and friends have spent several years hyperventilating over "big tech monopolies" but rarely (if ever) acknowledge the problems with regional telecom or energy monopolies. They're using legitimate concerns about "big tech" to push policies of interest to "big telecom." But with very few exceptions, the modern GOP is genuinely not interested in fixing any problems. They're interested in keeping campaign contributions from the likes of Comcast and AT&T flowing. And their only interest in "big tech" is finding leverage that will force them to carry race-baiting disinformation, a cornerstone of modern GOP power.

That's not to say "big tech" doesn't have ample problems that need fixing. It's also not to say that the subsidy and FCC funding mechanisms propping up our feeble broadband efforts aren't in dire need of reform. But this "big tech gets a free ride and therefore should throw billions at the telecom industry" is not a serious argument, and anybody treating it as such hasn't been paying attention to more than fifteen years of telecom history. If you want to fix the US broadband industry and improve service the path is obvious: tackle regional monopolization and the corruption that enables and protects it.

Filed Under: big tech, brendan carr, fair share, fcc, free ride, universal service fund

Biden Still Hasn't Picked An FCC Boss, But He Just Tagged A Comcast Lobbyist As Ambassador To Canada

from the priorities-priorities dept

Consumer groups have grown increasingly annoyed at the Biden administration's failure to pick a third Democratic Commissioner and permanent FCC boss six months into his term. After the rushed Trump appointment of unqualified Trump BFF Nathan Simington to the agency (as part of that dumb and now deceased plan to have the FCC regulate social media), the agency now sits gridlocked at 2-2 commissioners under interim FCC head Jessica Rosenworcel.

While the FCC can still putter along tackling its usual work on spectrum and device management, the gridlock means it can't do much of anything controversial, like reversing Trump-era attacks on basic telecom consumer protections, media consolidation rules, or the FCC's authority to hold telecom giants accountable for much of, well, anything. If you're a telecom giant like AT&T or Comcast, a gridlocked agency remains a policy gift.

It will take months to appoint and seat a third commissioner and permanent FCC boss. It will take additional months to get that person settled in place to even start working on serious policy proposals. In other words, by the time the FCC is fully staffed, a full year may have been wasted that could have been spent on tackling the not insubstantial problems in the telecom space. While Biden certainly has been aggressive on other fronts (appointing Lina Khan head of the FTC), fixing the mess in telecom clearly hasn't been a top priority.

What has been more of a priority? Appointing former Comcast lobbyist David Cohen to the U.S. Ambassador to Canada, apparently. Cohen held the very first fundraising dinner for Biden's Presidential campaign back in 2019, and has now been amply rewarded for his loyalty:

"Biden has nominated David Cohen, a former senior executive vice president at NBCUniversal owner Comcast, to serve as the U.S. ambassador to Canada. Cohen is currently a senior advisor to Comcast CEO Brian Roberts."

Comcast historically gets very angry when you call Cohen a lobbyist, despite the fact he spearheaded the company's lobbying and policy efforts for the better part of the last decade. After the U.S. updated its feeble lobbying rules in 2007 to require lobbyists to register if they spent any more than 20% of their time lobbying, Comcast simply called what Cohen did...something else. More specifically the company's "Chief Diversity Officer," despite Cohen's actual lack of any, you know, diversity. Cohen was a huge architect of gaining government approval of Comcast's massive 2011 merger with NBC Universal.

Making an aging telecom retiree and loyal fundraiser happy in his twilight years certainly isn't the end of the world. But it's still not a great look when you've prioritized rewarding telecom lobbyists over properly staffing the agency that oversees telecom.

Previous FCC boss Ajit Pai spent four years studying how the FCC worked as a Commissioner, then when appointed agency Chairman by Trump, set about using that knowledge to ruthlessly dismantle not just consumer protections, but state and federal oversight of telecom in general. Usually, Pai operated in perfect symmetry with large regional telecom monopolies like AT&T and Comcast, embracing some extremely ruthless behavior along the way. Reversing those policies requires a certain level of urgency from team Biden that so far really hasn't been particularly apparent.

How tough Biden will be on telecom remains an open question. While his executive order contained some interesting promises, most can't be accomplished without a properly staffed FCC, or an agency head with a backbone. I can still see things going either way here. I can see him appointing a tougher, Lina-Khan esque type interested in genuine reform. But I can also see him making a safe pick that chirps all the right notes (5G is great! damn that digital divide!) but, like so many in DC, isn't willing to truly acknowledge monopolization and corruption are the primary causes of U.S. telecom dysfunction.

Filed Under: ambassador, canada, competition, david cohen, fcc, joe biden, political favors, soft corruption

GAO Tells US Government Its Speed Definition For Broadband Sucks

from the keeping-the-bar-at-ankle-height dept

The US has always had a fairly pathetic definition of "broadband." Originally defined as anything over 200 kbps in either direction, the definition was updated in 2010 to a pathetic 4 Mbps down, 1 Mbps up. It was updated again in 2015 by the Wheeler FCC to a better, but still arguably pathetic 25 Mbps downstream, 3 Mbps upstream. As we noted then, the broadband industry whined incessantly about having any higher standards, as it would only further highlight industry failure and a lack of competition.

Unfortunately for them, pressure continues to grow to push the US definition of broadband even higher. Back in March, a coalition of Senators wrote the Biden administration to recommend that 100 Mbps in both directions become the new baseline. And last week, the General Accounting Office (GAO) issued a new report noting that the current standard of 25 Mbps down, 3 Mbps up is simply too pathetic to be useful. The focus was on small businesses, but the GAO politely noted that the FCC should update its definition soon:

"Is broadband fast enough for small business owners? As they shift to more advanced uses of broadband, their speed needs are likely increasing. However, the FCC has not updated its speed benchmark for 6 years. We recommended that the FCC determine whether its current definition of broadband really meets the needs of small businesses."

Granted entrenched ISPs fight tooth and nail against upgrading the standard for several reasons. One, higher speed standards means having to work harder for the billions in subsidies we throw at them for networks that routinely wind up half-deployed anyway. Two, better broadband definition more clearly highlights the lack of broadband competition, especially at faster speeds. That, in turn, brings more public and policymaker attention to their regional monopolies, and the state and federal corruption that protects and enables it. All bad things if you're a largely unaccountable telecom monopoly.

Former FCC boss and industry BFF Ajit Pai refused to upgrade the FCC's broadband definition during his term, something current interim FCC boss Jessica Rosenworcel said "confounds logic." But if your over-arching policy goal is to protect AT&T, Verizon, and Comcast revenues from any threat to the status quo, it's perfectly logical. Rosenworcel will now need to update the definition on her watch, something she can't do (thanks to partisan gridlock) until the Biden administration gets around to finally staffing the FCC (which it appears in no rush to actually do).

Filed Under: broadband, definitions, fcc, gao

Biden Executive Order Disrupts Hot DC Trend Of Pretending 'Big Telecom' Doesn't Exist

from the do-not-pass-go,-do-not-collect-$200 dept

We've been submerged in kind of a bizarre asymmetrical tech policy paradigm over the last few years, in which "big tech" is viewed as the absolute root of all evil requiring all manner of hand-wringing and antitrust/regulatory reform. At the same time, policy leaders have simply forgotten that heavily monopolized internet-adjacent sectors like "big telecom" even exist, giving them cover to gut regulatory oversight, consumer protections, and media consolidation rules. Telecom (AT&T) and media (Rupert Murdoch) giants have successfully exploited legitimate public anger at big tech to encourage this kind of lopsided policy thinking.

This week this policy myopia shifted back to baseline a bit with Biden's new executive order focused on shoring up competition issues. According to the EO fact sheet, the order pushes more than 72 different initiatives across a dozen federal agencies, including the FCC and telecom. Mike covered the not telco portions, which will be covered in this post. Most notable (for telecom, anyway) is that the order nudges the FCC to restore net neutrality rules:

We've noted more than a few times how the Trump/Pai net neutrality repeal didn't just kill "net neutrality rules." It gutted much of the FCC's consumer protection authority, limiting its ability to police fairly consistent telecom sector billing fraud and other bad behavior. It also attempted to ban states from filling that consumer protection void. It was effectively a giant wishlist cooked up by telecom monopolies like AT&T, based entirely on bullshit justifications, and propped up by fabricated public support. Despite this, the whole thing was dressed up as "serious policy" by press and policy wonks who should have known better.

In addition to the restoration of net neutrality, the Biden EO also takes several other steps to shore up telecom issues. Among them is urging the FCC to stop telecom giants from creating block-by-block broadband monopolies via exclusive landlord arrangements. The FCC passed rules prohibiting this back in 2007, but they're so filled with loopholes that telecom giants have been allowed to tap dance around them for years now (Susan Crawford wrote an essential primer on this problem for Wired a few years back).

A not insubstantial portion of the EO involves urging government agencies to simply do their jobs. Like the antitrust enforcers at the DOJ and FCC, who under both administrations are often little more than mindless rubber stamps for problematic job- and competition-eroding megadeals (see: the entirety of US telecom history since 1990). Simply leveraging more scrutiny to the often illusory benefits of endless megadeals would go a long way in shoring up both regulation and this whole "antitrust reform" so popular with the kids these days.

Other aspects of the EO related to telecom are more specific, like requiring that the FCC restore plans (also scuttled during the Ajit Pai era) requiring a sort of nutrition label for broadband, making ISPs disclose hidden fees, throttling, caps, or other restrictions on your broadband line (aka transparency). The order also urges the FCC to collect more data on broadband pricing, something it historically (at telecom lobbyist behest) hasn't been keen on doing for what should be obvious reasons.

Most of these proposals are common sense, while others restore a lot of the FCC consumer protection authority and policies telecom giants stripped away in a parade of fraud and dodgy bullshit during the Ajit Pai era. But many of them require a fully staffed FCC and permanent agency boss to actually implement, something the Biden administration has been in no rush to provide, much to the annoyance of consumer groups. There's a lot of ground to cover between what's in the executive order and actual implementation, and it's going to require an FCC with some real backbone to accomplish most of it.

Still, much to AT&T and Comcast's chagrin, the Biden EO makes it clear that the problems created by big telecom haven't been entirely forgotten, however much these regional monopolies would prefer policy conversations to remain myopically fixated on big tech and big tech alone.

Filed Under: antitrust, broadband, competition, doj, executive order, fcc, joe biden, net neutrality, telco

Biden's Executive Order On Competition Has... Lots Of Really Good Ideas? Though, Potential Overreaches On Executive Power

from the nice-to-see dept

Given how many discussions on antitrust these days are mind bogglingly bad, I was nervous when it was announced that the Biden Administration would be releasing an executive order on competition. Now that it's out however, I have to admit that I'm very surprised. The executive order is actually full of mostly good ideas. I was... not expecting that. I do think, however, that in some areas it probably (unfortunately) over-stretches executive authority, which should be concerning. But on the whole, there are a bunch of ideas in here to actually deal with anti-competitive problems.

On labor markets, the executive order encourages the FTC to take some positive steps:

Encourages the FTC to ban or limit non-compete agreements.

Encourages the FTC to ban unnecessary occupational licensing restrictions that impede economic mobility.

Encourages the FTC and DOJ to strengthen antitrust guidance to prevent employers from collaborating to suppress wages or reduce benefits by sharing wage and benefit information with one another.

We've talked about all three of these issues extensively in the past, and just how damaging they are. Occupational licensing is massively damaging, in that it's used to exclude people from jobs, limit competition, and drive up costs to consumers, all based on often completely bogus claims about "safety and security." I've talked in great detail about how noncompete agreements suppress innovation, and that there is extremely compelling evidence that a key reason why Silicon Valley became Silicon Valley is because noncompetes are not enforceable in California (and, relatedly, that the downfall of Detroit was in Michigan making noncompetes enforceable in the early 1980s). Indeed, I've long advocated that every state should follow California's lead and ban noncompetes. And, for all the talk about how "evil" big tech companies are, one area where I have strong agreement is how they colluded to keep wages down a decade ago.

So these three things all sound... really great? However, I'm not entirely sure that the President can actually do things this way. Yes, the executive order just says that he's "encouraging" the FTC to take these steps, but the FTC is supposed to be an independent agency, and we should all be at least somewhat hesitant to embrace the President pushing independent agencies. Also, it's not entirely clear to me that the FTC has the authority to follow these suggestions. They are all good suggestions and ideas, and I support the goals. I just worry that taking a shortcut by executive order via the FTC (under potentially dubious authority) could undermine the value of these moves.

The moves regarding healthcare are also interesting and mostly good ideas:

Directs the Food and Drug Administration to work with states and tribes to safely import prescription drugs from Canada, pursuant to the Medicare Modernization Act of 2003.

Directs the Health and Human Services Administration (HHS) to increase support for generic and biosimilar drugs, which provide low-cost options for patients.

Directs HHS to issue a comprehensive plan within 45 days to combat high prescription drug prices and price gouging. 

Encourages the FTC to ban “pay for delay” and similar agreements by rule.

We've talked about much of this before as well, especially the ability to import drugs from Canada and the pure, unadulterated evil of the pay for delay scam. What's missing, though, is a recognition that the problem with every single one of the items listed above is really in the patent system beneath it. Every one of these issues wouldn't be an issue at all if we fixed our broken patent system and how it handled pharmaceutical patents. But, because doing that requires (1) Congress, and (2) an impossible fight that the Pharma lobbyists would kill immediately... we instead have to dance around the real problem with again, executive order-driven nudging.

That's not to say patents are ignored in the executive order. There's a really nice bit in which it asks the DOJ and Commerce Department to "re-evaluate" its stance on allowing patents in standards:

To avoid the potential for anticompetitive extension of market power beyond the scope of granted patents, and to protect standard-setting processes from abuse, the Attorney General and the Secretary of Commerce are encouraged to consider whether to revise their position on the intersection of the intellectual property and antitrust laws, including by considering whether to revise the Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments issued jointly by the Department of Justice, the United States Patent and Trademark Office, and the National Institute of Standards and Technology on December 19, 2019.

There are some other items in the healthcare proposal that are beyond typical Techdirt scope, but certainly sound reasonable: such as more hospital transparency and limiting hospital mergers. Back in 2013, we wrote about how healthcare is a giant economic scam, mostly driven by the hospitals (everyone blames the insurance companies, who are complicit, but if you look at the details, it's often the hospitals themselves that are the real scams).

More specific to tech, there are some new items regarding the FCC and the telco broadband space, which Karl will cover in a separate post. I will note that many of the ideas do seem reasonable -- but again, I worry about executive overreach regarding an independent agency, and a failure to address the actual issues.

Regarding "big tech" the executive order pushes for greater scrutiny of mergers -- and, especially, acquisitions by the "big" companies. While many people in tech policy I know disagree with this take, I actually don't have a problem with it in concept. We should scrutinize carefully when very large companies buy smaller companies to see what the impact on competition and consumer welfare should be. What we should not do is automatically rule out all such mergers and acquisitions, because that would create a bunch of consequences that would actually be bad for innovation -- such as discouraging investment in startups or limiting acquisitions that actually are additive. But, conceptually, yes, we should scrutinize such mergers carefully. As expected, it also encourages the FTC to make rules barring restrictions on independent repair and DIY repair. Again, the FTC may be somewhat limited in what it can do, but this is a huge step forward for the important right to repair movement.

There is also a part about rules on the collection of user data and how it's used. That's... potentially good and potentially bad depending on how it plays out. It asks the FTC to explore:

unfair data collection and surveillance practices that may damage competition, consumer autonomy, and consumer privacy;

In theory that's good. And there are many companies engaged in sketchy practices with data. But there are also lots of important, and useful uses of data. And I worry that an overly aggressive FTC could conflate the two. I'd much prefer working on proposals to unlock our data by providing more transparency and control to end users, so we don't have to trust companies that don't have our best interests in mind.

There's also a bit about "unfair competition in major Internet marketplaces," which seems to be aimed specifically at Amazon selling its own branded products. To be honest, I've never really understood why this is a problem. A ton of retailers have done this going back basically forever. And, it's not clear that the supposed "data advantage" that Amazon has really exists or is meaningful.

Overall, there really are a lot of good ideas in here. I just wish most of them were taken up by Congress, rather than being nudged through executive order.

Filed Under: antitrust, competition, doj, executive order, fcc, ftc, non-compete agreements, occupational licensing, patents

AT&T Has DC Pushing The Idea That 'Big Tech' Should Give 'Big Telecom' Billions For No Coherent Reason

from the we've-been-over-this dept

Last month we noted how FCC Commissioner Brendan Carr had taken to Newsweek to dust off a fifteen year old AT&T talking point. Namely that "big tech" companies get a "free ride" on telecom networks, and, as a result, should throw billions of dollars at "big telecom" for no real reason. You'll recall it was this kind of argument that launched the net neutrality debate, when former AT&T CEO Ed Whitacre proclaimed that Google wouldn't be allowed to "ride his pipes for free." Whitacre was effectively arguing that in addition to paying him a premium for bandwidth, tech giants should pay him a troll toll. You know, just because.

Telecom lobbying and policy folks have done a great job capitalizing on the legitimate animosity over "big tech" to reseed this idea in the press using captured lawmakers and unskeptical news outlets. For example here's Axios this week parroting GOP claims that they genuinely want to address the shortfall in broadband subsidy funding by... having technology giants pay for it:

"It's just simply asking them to pay a fair share and start contributing on an equitable basis for these networks that they benefit from so tremendously," Carr told Axios."

Again, this is a self-serving 20 year old AT&T policy argument parroted by captured regulators and politicians. Namely that tech giants are mean old freeloaders, and should be throwing billions of dollars at telecom giants. Telecom giants that have long coveted Silicon Valley ad revenues, but have repeatedly proven too incompetent to develop their own modern media and advertising alternatives. So instead, they come up with creative ways to game DC's revolving door regulators and campaign cash slathered lawmakers in a bid to obtain money they legitimately believe they're "owed."

But it's all bullshit. For one, nobody gets a "free ride" when it comes to US telecom. Companies like Amazon, Google, and Netflix all pay billions of dollars in total for undersea cable runs, massive cloud storage, transit routes, and content delivery networks. Hell, Google is even a residential ISP. That's on top of the money consumers, businesses, and Silicon Valley giants pay for their own bandwidth, which in the US is often some of the highest in the developed world thanks to regional monopolization and captured regulators (precisely like those quoted in the Axios piece).

Axios, like many outlets, has also helped push the narrative that the modern GOP is genuinely interested in "antitrust reform":

"The interest in taxing Big Tech coincides with some GOP support for antitrust bills that would prevent the companies from buying up smaller rivals or favoring their own products."

I'm in the minority in thinking the GOP's support for "antitrust reform" (with a tiny few exceptions) is populist, performative bullshit. In reality, they're just generally pissed that some wealthy Californians belatedly (and sloppily) prevented them from spreading disinformation and racist dog whistles on the internet. So they're looking for any leverage over those companies they can find. They're also listening to the siren calls of AT&T and Rupert Murdoch, who want their competitors in "big tech" saddled with additional scrutiny as they successfully obliterate government oversight of their own sectors (media and telecom).

I'm not saying tech giants haven't engaged in dodgy business practices or that we don't need meaningful reform. But I am saying that a lot of corrupt, bad actors have capitalized on the public's legitimate animosity over big tech to push idiotic, self-serving ideas via corrupt lawmakers. And while the FCC's broadband subsidy (E-Rate, USF) systems do need a funding overhaul, there are plenty of ways to accomplish that that don't involve forcing Netflix to pay AT&T billions of additional dollars for no reason.

Axios doesn't bother to mention it, but the FCC's broadband subsidy programs are a broken mess that routinely dole out billions of dollars for network build-outs that make no coherent sense. We also throw billions in tax breaks, subsidies, and regulatory favors (like killing net neutrality) at companies like AT&T in exchange for jack shit. Those genuinely interested in shoring up broadband funding gaps should probably start looking at the vast, unaccountable subsidy trough that gives giants like AT&T untold billions in exchange for perpetually half-completed fiber networks.

Filed Under: brendan carr, fcc, free ride, net neutrality, networks
Companies: facebook, google

No, 'Big Tech' Should Not Give 'Big Telecom' Billions Of Dollars For No Reason

from the we've-already-been-over-this dept

A few weeks back we noted how FCC Commissioner Brendan Carr had taken to Newsweek to dust off a fifteen year old AT&T talking point. Namely that "big tech" companies get a "free ride" on telecom networks, and, as a result, should throw billions of dollars at "big telecom" for no real reason. You'll recall it was this kind of argument that launched the net neutrality debate, when former AT&T CEO Ed Whitacre proclaimed that Google wouldn't be allowed to "ride his pipes for free." Whitacre was effectively arguing that in addition to paying for bandwidth, tech giants should pay him a troll toll. You know, just because.

The claim that technology giants (or anybody, really) gets a "free ride" when it comes to US telecom is farcical. Companies like Amazon, Google, and Netflix all pay billions of dollars in total for undersea cable runs, massive cloud storage, transit routes, and content delivery networks. Hell, Google is even a residential ISP. That's on top of the money consumers, businesses, and Silicon Valley giants pay for their own bandwidth, which in the US is often some of the highest in the developed world thanks to regional monopolization and captured regulators (precisely like Carr).

Carr's right about one thing: we need to reform the USF broadband subsidy system, heavily reliant on income from dying landline phones. But he's not actually coming at the issue in good faith. He's using that need for reform to help shovel yet more unearned cash at AT&T, a company that already gleaned billions in utterly pointless tax breaks, subsidies, and regulatory favors under Carr and Donald Trump's watch.

I've covered the telecom beat for twenty years of an adult life, and know what a captured regulator looks like when I see one. But despite the fact AT&T's argument is coming out of Carr's mouth, the press somehow keeps taking Carr's point earnestly. CNET recently took him at face value last week. This week it was Bloomberg's turn to promote Carr's idea that Google, Netflix, and Amazon should throw money at companies like AT&T for no damn reason:

"The pandemic has spotlighted the need for fast internet connections for schooling, work and health care and has emerged as an area of agreement as President Joe Biden and lawmakers of both parties grope for ways to support more broadband. Carr, in an interview, said one way to do that is by getting companies such as Amazon, Google and Netflix Inc. to pay. He cited “businesses that are benefiting from the modern network and paying virtually nothing."

Bloomberg oddly doesn't even challenge this argument that Google and friends "pay virtually nothing" for bandwidth, despite the billions upon billions they pay for...bandwidth. You literally can't stumble five feet without seeing some report about a major Netflix, Google, or Amazon investment in cloud storage, transit, undersea cables, or content delivery networks. Like CNET, Bloomberg also implies that Carr is having an original thought that AT&T just happens to agree with, when the underlying argument is actually AT&T's:

"AT&T Inc., the largest U.S. phone company by revenue, perked up when Carr laid out his plan in Newsweek.

“Hard to imagine successful reform that does not include some version of this proposal,” Hank Hultquist, vice president of federal regulatory for AT&T, said in a tweet. The company has advocated for appropriations from Congress -- an idea opposed by others who fear the subsidy may fall prey to annual funding fights.

Amazing. AT&T planted a dated, dumb argument in a Newsweek article with the help of a captured regulator, then continues to get major outlets to amplify it as if they are just some objective third party. Worse, Bloomberg somehow manages to get interim FCC boss Jessica Rosenworcel to give her tacit approval to socking tech giants with arbitrary troll tolls:

"Carr in a Newsweek editorial suggested lawmakers and regulators could set fees for web companies such as Google, Facebook, Apple Inc. and even Microsoft Corp. for Xbox gaming.

The call from Carr, a Republican, has drawn interest. “It’s an intriguing idea. And we’re going to need ideas,” FCC Acting Chairwoman Jessica Rosenworcel, a Democrat, told Bloomberg TV on June 11.

I know Rosenworcel is just being polite, but we just had a fifteen year fight (dubbed net neutrality) over applying arbitrary fees on websites and services, then throwing that money at telecom giants for no reason. Yes, the USF and broadband subsidy process needs reform. But that starts with fixing a broken FCC subsidy process that throws billions of dollars annually at politically powerful telecom companies that game the system. You'll notice this idea never quite crosses Carr's lips, in large part because such slush funds have historically been of immense benefit to AT&T and friends, his only real constituents.

Carr and AT&T's argument is popping up now because AT&T, Comcast, Verizon and friends want to pre-empt the Biden broadband plan (which promises to heavily fund local competitors and community broadband efforts) with their own alternative: have "big tech" throw billions at AT&T. AT&T strategy and policy folks want to exploit the justified political and public anger at big tech to seed an idea they've been pushing for literally twenty years now. That "big tech" is a bunch of mean freeloaders who should be funding telecom giants' perpetually unfinished network builds.

In reality you fix/fund US broadband infrastructure like you fund most of the rest of our neglected infrastructure: by actually taxing corporations and billionaires. You then fix the very broken (intentionally) broadband mapping and subsidy process, using that money to fund competitors that meaningfully challenge entrenched local monopolies. Said entrenched local monopolies don't want that sort of real reform, so instead we get this theater. Theater the unskeptical press then regurgitates because it apparently doesn't know how this game is played.

Filed Under: big tech, brendan carr, competition, fcc, jessica rosenworcel, subsidies, universal service fund