Congress Has No Idea How The FCC's Cable Box Reform Plan Works, Conyers, Goodlatte Compare Effort To 'Popcorn Time'

from the not-very-good-at-my-job dept

As we've been discussing, the FCC is cooking up a plan to bring much-needed competition to the cable set top box market. As a fact sheet being circulated by the agency (pdf) notes, the FCC hopes to force cable operators to offer their existing cable lineups to third party hardware -- without the need of a pesky CableCARD. This would obviously disrupt the $21 billion in annual, captive set top rental fees enjoyed by the industry, and the competitive set top box market that emerges would likely drive more users than ever to alternative streaming options.

As such, the cable industry has been having a monumental hissy fit. This has ranged from threatening lawsuits to publishing an absolute ocean of misleading editorials in news outets nationwide, claiming the FCC's plan would destroy consumer privacy, increase piracy, hurt programming diversity, and make little children cry.

Not too surprisingly, the cable and entertainment industry has now gotten some members of Congress to contribute to the hysteria. Note that the FCC's proposal makes it abundantly clear that under the proposal, a cable provider can "determine the content protection systems it deems sufficient to prevent theft and misuse, and will not impede the introduction of new content protection systems." Yet in a letter sent to the FCC this week, Representatives Bob Goodlatte and John Conyers say creators have "shared concerns" that the FCC's plan will lead us down the road to rampant piracy. You know, like Popcorn Time:

"As Members of the House Judiciary Committee, which oversees our nation's copyright laws, we recognize the harm the American economy caused by the theft of copyrighted works. Creators have shared concerns that under the FCC's proposed rule, future set-top boxes or their replacements could purposely be designed to distribute pirated content obtained from sources that primarily offer stolen content. For example. apps such as Popcorn Time that focus on providing access to piratical content have tried to match the form and ease of use of legitimate apps to mark the theft of copyrighted content. Creators are legitimately worried about the prospect that future set top boxes, or their functional equivalents, could incorporate apps such as Popcorn Time or its functionality, or otherwise lead to the unauthorized distribution of copyrighted works."

From the letter it's pretty clear the Representatives -- and the "creators" expressing their worry -- don't actually understand what the FCC is trying to do. Conyers and Goodlatte throw Popcorn Time into the mix seemingly at random, given the FCC's proposal has absolutely nothing to do with the app.

For better or worse, under the FCC's proposal nothing about copy protection will actually change. Users will still pay the cable industry for service, those users will just be able to access that same programming on hardware from the likes of TiVO, Google, Amazon, whose hardware will already be in most consumer homes. And while these devices are more open than cable boxes, it's bizarre to suggest this shift results in some kind of piracy free for all. In fact, having more open set top boxes not ensconced by the cable industry's walled garden approach will present consumers with access to more legitimate streaming content sources than ever before. That's what the cable industry is actually worried about.

The piracy bogeyman was also recently trotted out in an editorial by "The Walking Dead" Producer Gale Anne Hurd, who tried to argue that making the set top box market more open and competitive would only drive users to pirated content because hey -- a more open device might actually include a browser and access to the actual Internet. That's again missing the forest for the trees on an absolutely mammoth scale, ignoring that open platforms and an exponential explosion in access to streaming services means more ways to access her content legitimately than ever before.

Again, it's not clear if the people yelling about piracy just don't understand how this all works and are just being "informed" by the wrong people, or if they're intentionally aiding the cable industry and mis-characterizing what the FCC is planning (probably a combination of both). But make no mistake: the TV industry's opposition to set top box reform has nothing to do with being worried about piracy, diversity, security, or the welfare of puppies -- and everything to do with protecting a stagnant industry from market evolution and lost revenue.

Filed Under: bob goodlatte, competition, copyright, fcc, innovation, john conyers, open, piracy, set top boxes, stb

The Cable Industry Threatens To Sue If FCC Tries To Bring Competition To Cable Set Top Boxes

from the you-see,-we-don't-really-do-competition dept

Back in February the FCC voted on a new plan to open up the traditional cable box to competition. According to a fact sheet being circulated by the agency (pdf), under the FCC's plan you'd still pay your cable company for the exact same content, cable operators would simply have to design systems -- using standards and copy protection of their choice -- that delivered this content to third-party hardware. The FCC's goal is cheaper, better hardware and a shift away from the insular gatekeeper model the cable box has long protected.

Given this would obliterate a $21 billion captive market in set top box rental fees -- and likely direct consumers to more third-party streaming services -- the cable industry has been engaged in an utterly adorable new hissy fit. This breathless hysteria has primarily come in the form of an endless stream of editorials -- most of which fail utterly to disclose financial ties to cable -- claiming that the FCC's plan will boost piracy, hurt privacy, "steal the future," and even harm ethnic diversity.

And now, the industry is also threatening a lawsuit. As the industry argued with Title II, net neutrality, and everything else, former FCC boss turned top cable lobbyist Michael Powell is arguing that the FCC has once again overstepped its regulatory authority:

"An agency of limited jurisdiction has to act properly within that jurisdiction," Powell said, making it abundantly clear the NCTA does not believe the FCC has not done so in this case. He said that the statute empowers the FCC to create competition in navigation devices, not new services. "Every problem does not empower an FCC-directed solution. The agency is not an agency with unbridled plenary power to roam around markets and decide to go fix inconveniences everywhere they find them irrespective of the bounds of their authority.

Except unlike net neutrality, telecom policy wonks like Public Knowledge's Harold Feld (who probably spends more time wading through FCC policy and legal issues than anybody on earth) notes there's absolutely no doubt the FCC has the authority to act here:

"First, it’s important to recognize that the cable folks were already in front of the D.C. Circuit three times on this issue, and lost each time. See General Instrument Corp. v. FCC, 213 F.3d 724 (D.C. Cir. 2000); Charter Communications Corp. v. FCC, 461 F.3d 31 (D.C. Cir. 2006); and Comcast Corp. v. FCC. In each of these cases, the cable industry made similar statutory arguments about the limits of FCC authority in Section 629. On each occasion, the D.C. Cir. — which was a lot more pro-business and anti-FCC back then, rejected them.

Despite being 0-3 on all challenges to the FCC’s 629 rules to date, NCTA’s cadre of lawyers assures us that this time will be totally different because FCC, overreach, regulation, power mad, Title II, Google too, Leonard Bernstein Leonid Brezhnev, Lenny Bruce, and Tom Wheeler END OF THE WORLD AS WE KNOW IT!! Or something like that.

So if the cable industry's lawsuit goes nowhere, its only other hope is that it can convince the public via editorials, sockpuppetry and astroturfing that the FCC's plan isn't actually about helping consumers, it's just a power-crazed attempt by "big tech" (read: Google, Amazon) to treat poor, under-appreciated cable companies unfairly. The problem with this effort, as usual, is that the cable industry remains the least liked industry in America thanks to a generation of anti-competitive behavior. Therefore the only folks likely to buy the cable industry's argument here are those with a political axe to grind (conflating government over-reach in other areas with the FCC's attempts to fix a broken telecom market), or those that tend to profit from said broken telecom and TV market.

If there's any question at all about the FCC's effort, it's whether or not the agency would find its time better spent focusing its regulatory calories on shoring up broadband competition, since the rise of Internet video is inevitably destined (even though it may take another decade) to put the lame old cable box out to pasture without government intervention.

Filed Under: cable, competition, fcc, lawsuit, set top box, stbs
Companies: comcast, ncta, time warner cable

Nervous About Regulatory Action, Comcast Bumps Usage Caps To One Terabyte Per Month

from the giving-you-a-little-more-rope dept

After taking a PR beating for several years on the matter, Comcast has announced that it's significantly bumping the company's usage caps. Since 2013 Comcast has been conducting a "trial" in many of the company's less competitive markets, capping usage at 300 GB per month, then charging users either $10 per each additional 50 gigabytes, or providing users the option of paying $30 to $35 per month extra to avoid the cap entirely. But according to a new blog post by the cable giant, the company will be bumping that usage allotment to one terabyte per month starting June 1.

Users will still need to pay $10 per each additional 50 gigabytes of data consumed should they go over the cap. And they still have the option of paying a penalty should they want to avoid usage caps entirely, though Comcast has bumped the price of such an option to an additional $50 per month. Comcast's quick to insist that the terabyte cap is so generous, few consumers will ever find themselves running into the limit:

"A terabyte is an enormous amount of data. It’s far more than most of our customers will ever use in a month. Today, more than 99 percent of our customers do not come close to using a terabyte. Our typical customer uses only about 60 gigabytes of data in a month – that’s far less than a terabyte (in fact, 940 gigabytes less), or less than six percent of a terabyte."

Of course, while that's true today, that doesn't mean it will be true tomorrow. And while the increase is certainly welcome, that doesn't change the fact that usage caps on fixed-line networks still aren't necessary. As we've repeatedly noted, Comcast's cost to provide broadband service remain fixed or in decline, and the company's own support documents and engineers have suggested the caps have nothing to do with congestion or network necessity. That's because they have everything to do with protecting TV revenues from Internet video competitors.

While Comcast's announcement implies Comcast is graciously responding to consumer feedback, the origins of the company's decision lie elsewhere.

With the FCC imposing a seven year ban on usage caps as a Charter merger condition this week, many believe the FCC is signaling it intends to finally crack down on usage caps. The agency has tap-danced around the issue for years, but with a growing number of companies exploring the option -- and a growing number of companies (including Comcast and Verizon) exempting their own content from such caps, pressure has mounted steadily on the FCC to wake up from its regulatory coma on the subject. If that's to happen, it will likely happen after the industry's lawsuit against the agency over net neutrality is settled.

Comcast's also responding to the fact that AT&T is planning to impose its own usage caps starting May 23. AT&T plans to begin imposing usage caps ranging from 300 GB to 1 terabyte, and, like Comcast, charge $10 per each additional 50 GB consumed. Also, like Comcast, AT&T intends to begin charging customers a $30 premium should they want to avoid the charges, effectively charging customers significantly more money for the same service they had yesterday. Comcast bumping its cap to more closely match AT&T's is the U.S. broadband market's rather twisted version of competition.

It seems likely that some news outlets will frame what Comcast's doing as "generous." And while a definite improvement, it shouldn't overshadow the fact that these caps are little more than glorified price hikes on uncompetitive broadband markets, and an anti-competitive weapon against the threat of Internet video disruption.

Filed Under: 1 terabyte, broadband, cable, data cap, fcc, usage cap
Companies: comcast

Roku CEO Kisses Up To Comcast, Supports Opposition To Cable Set Top Box Competition

from the rooting-against-your-best-self-interests dept

As we've been discussing, the FCC is cooking up a plan to open up the closed cable set top box to third party competition. As we've also been pointing out, the cable industry has been throwing an absolutely epic hissy fit about this plan, given it would destroy the $21 billion in annual revenues cable operators make off of cable box rental fees. Since it can't just admit this is all about protecting set top rental fees, the cable industry has been pushing an endless wave of editorials in newspapers and websites nationwide, claiming more set top box competition will hurt consumer privacy, increase piracy, harm diversity, and rip the very planet from its orbital axis.

Most of these editorials are being penned by the usual assortment of entertainment industry and telecom hand-wringers, the majority of whom have a vested financial interest in the status quo and as such have been happy to repeat the talking point that the FCC's well-intentioned plan is just a secret plan by "big Tech" (aka Google) to treat the noble and ultra-innovative cable industry unfairly.

Back in March we noted that despite the fact that such rules would obviously help streaming set top vendors, Roku had come out in defense of the cable industry, rather timidly saying it wouldn't be supporting the FCC's plan because it has been trying to secure new, semi-exclusive deals with cable providers:

"We have not been advocating for a rule making in this area at this time,” Tricia Mifsud, a Roku spokeswoman, told IBD. “While we are known for selling streaming players, it is only one area of our business. Customers also access our platform through smart TVs and streaming players that operators deploy."

Roku's opposition to the FCC's plan became a little clearer last week, when Comcast (trying to preempt the FCC's plan), announced it was launching an initiative to let some Comcast customers access cable content via Comcast apps on third party devices. Comcast's partners in this new initiative? Samsung and Roku, who'll be offering the Comcast Xfinity app on smart TVs and streaming devices. And while Comcast's plan is certainly a step in the right direction, Comcast being Comcast you can be fairly certain that there will be caveats when the program launches to ensure the impact to set top box revenue is minimized. Comcast's plan obviously also doesn't impact other pay TV operators, so it doesn't really change things for the overall industry.

Trying to defend the company's self-immolating position, Roku CEO Anothony Wood decided last week to write an editorial over at the Wall Street Journal, breathlessly insisting the FCC's plan would hurt consumers. And, as with every editorial of this type, Google is trotted out as the bogeyman pulling the FCC's strings in a plan to somehow treat cable companies unfairly:

"...With prodding from Google and TiVo, the FCC is proposing new “set-top-box” rules that would force cable companies to make their video services available as an “open” set of streams. In other words, companies like Comcast or DirecTV would be required to provide their video, guide data and encryption for use by other companies who could then create their own hardware and software to deliver cable content. As Google argued in an FCC filing last year, the intent is to “unleash competition in the retail navigation-device market” and drive down costs.

This might seem like a great deal for consumers and companies like mine, but once you start peeling back the layers, the picture changes. The proposed regulation would—as we say in the industry—“decouple the user interface” from the video and data itself. This would allow a company like Google to do to the TV what it did on the Web—build an interface without the “inconvenience” of licensing content or entering into business agreements with content companies such as ABC, FOX, HBO, or video distributors like pay TV operators. The unintended consequences of circumventing these kinds of arrangements are likely to include increased costs for consumers, reduced choices and less innovation."

But if you actually read the FCC's proposal so far (pdf), you'll notice the plan does nothing of the sort. In short, customers will still have to pay their cable provider to access cable content, it will just be delivered to additional hardware platforms -- using copyright protection standards determined by the cable industry. The content can't just be repackaged without cable companies getting compensation. How letting consumers have access to more, better and cheaper methods to access the same content results in "reduced choice and less innovation" is a logical leap that makes no coherent sense whatsoever. Similarly, this repeated claim that this is some secret cabal by Google -- when the quest for clunky cable set top box reform is decades old -- remains a bizarre narrative unsupported by reason. Would Google benefit from open set top boxes? Yes. So would countless other hardware vendors and developers.

Woods also tries to argue that regulation isn't necessary, because we're already seeing innovation in the streaming set top box market:

"Regulating the set-top box is unnecessary in the modern age of Internet streaming. Consumers now have tremendous choice for their TV operating system and interface. Robust competition among companies like Roku, Apple, Amazon and Google is already driving rapid innovation and pushing costs down.

Right, but we're not talking about streaming players and services, we're talking about the traditional cable set top box. You know, the cable boxes that consumers, on average, pay $231 to rent annually (and thousands of dollars for over the life of the hardware) despite most boxes being worth a fraction of that? And while we have seen some innovation in recent years on the set top box front (voice search, marginally less archaic GUIs), by and large the cable box remains a clunky relic of a bygone era and a cornerstone of the cable industry's antiquated and uncompetitive walled garden approach to customer services.

The thing is that if anybody should know better, it's Roku. The company had to file a complaint with the FCC (pdf) after Comcast spent years refusing to let its customers access HBO Go on Roku devices (in order, of course, to push those users toward Comcast's own Xfinity set top boxes and apps). Roku also expressed concerns in net neutrality filings with the FCC that Comcast was using TV Anywhere authentication as yet another way to inhibit Internet video competitors; Roku included:

"A large and powerful MVPD may use this leverage in negotiations with content providers or operators of streaming platforms, ultimately favoring parties that can either afford to pay for the privilege of authentication, or have other business leverage that can be used as a counterweight to discriminatory authentication. Additionally, MVPDs with affiliated ISPs can abuse their power over authentication by choosing to authenticate only their own or affiliated offerings."

Yet here we are, with Roku's CEO now playing kissy face with that same company because they've struck a new deal that will give Roku its own, special advantage in the pay TV market.

It should be noted that Woods wasn't entirely willing to pledge unwavering fealty to Comcast. Nor is his editorial entirely devoid of good points. Though Woods isn't willing to mention his new BFF by name, he does make some vague references to Comcast's decision to give its own content an unfair advantage via usage caps and zero rating:

"...the FCC proposal is distracting from the leading risk to the continued evolution of TV—open and fair broadband Internet access for all consumers. In particular, cable companies often control their customers’ broadband access and can take measures against competing streaming services and devices to give their own streaming services and devices an advantage. FCC regulations banning the discriminatory use of data caps and “zero-rating” schemes that selectively exempt certain content from data limits are far more important to the future of TV than “opening” the cable box.

If broadband Internet services are accessible and affordable to consumers and there is a level playing field for content providers and devices makers, then consumers will benefit from a revolutionized television experience. Let’s not bog down the revolution with an unnecessary government intervention in a dynamic marketplace.

In other words, while Woods is perfectly happy to blow a few kisses to protect his new business relationship with the Philadelphia-based cable giant, he's not willing to entirely sell himself and his company down river by ignoring the problems Comcast is causing on the net neutrality and zero rating fronts. And this is actually the one area I don't disagree with Woods on. With Internet video disrupting traditional cable anyway, it might make more sense for the FCC to focus its efforts on improving broadband competition. And, more specifically, the telecom industry's use of usage caps and zero rating to protect legacy TV from Internet video.

By the FCC's logic however, the glacial pace of cord cutting means that traditional cable and ye olde cable box will still be a dominant force for much of the next decade -- and consumers could still benefit from increased cable set top box competition during that period. The problem is that the cable industry clearly intends to fight this proposal tooth and nail, by dragging the FCC's effort out via lawsuit, and funding a major PR offensive in the hopes of convincing the public the FCC's gone power mad. With so many efforts on its plate (from municipal broadband to new broadband privacy rules), the FCC may have to seriously consider just which battles are truly worth fighting, and which problems, like the cable box, may be resolved organically by the market.

All of that said, it remains more than a little embarrassing that Woods and Roku are so eager to sell their longer-term success -- and the overall viability of the broader streaming industry -- downriver just to snuggle up a little closer to one of the most anti-competitive companies in the television industry.

Filed Under: cable, competition, fcc, set top boxes, tv
Companies: comcast, roku

As Broadband Usage Caps Expand, Complaints To The FCC Skyrocket

from the pay-more-for-the-same-service dept

For several years now, broadband providers have been taking full advantage of the lack of competition in the broadband market by expanding usage caps and overage fees. More recently, companies like AT&T, Comcast and Suddenlink have taken this practice one step further by charging users a $10 to $35 per month surcharge if consumers want to avoid usage caps. In other words, consumers are paying more money than ever for a service that costs less and less to provide, thanks again to limited competition in the broader broadband market.

And while companies like Comcast have used the same approach seen in the boiling frog metaphor to slowly expand its usage cap "trials" and hope nobody notices, people are definitely noticing the rising temperatures. The Wall Street Journal filed an FOIA request with the FCC, and has found that consumer complaints about broadband caps have been skyrocketing over the last year:

"Fearful of crossing data limits, some customers say they are canceling the streaming services, including Netflix, Sling TV and Sony PlayStation Vue. Consumer complaints to the Federal Communications Commission about data caps rose to 7,904 in the second half of 2015 from 863 in the first half, according to records reviewed by The Wall Street Journal under the Freedom of Information Act. As of mid-April, this year’s total was 1,463."

Though we've warned about this for years, the Journal almost-but-not-quite comes to the realization that usage caps have nothing to do with congestion or financial necessity, and everything to do with hamstringing Internet video and protecting legacy TV revenues. Companies like SlingTV and Netflix make that abundantly clear in their comments to the Journal, though Comcast clings to a familiar narrative in trying to justify why it's charging more money for the same service:

"Comcast says its aim is to ensure the heaviest users are paying more than lighter ones, since 50% of its bandwidth is consumed by just 10% of its customers. Comcast set up the trials to show “people who are consuming the most should carry more of the bill rather than raise everybody’s bill by the same amount,” says Marcien Jenckes, executive vice president of consumer services at Comcast."

But we've long noted how that justification is nonsense. The cable industry itself admitted years ago that congestion had nothing to do with usage caps. Comcast's own leaked support documents and comments from company engineers have also acknowledged as much. Meanwhile, if a small fraction of your customers are consuming an "excessive" amount of bandwidth (and ISPs never provide hard data on this front), you could easily push them to business-class tiers without having to impose a draconian and confusing new pricing paradigm on your entire customer base.

No, Comcast is imposing usage caps to simultaneously cash in on, and thwart, Internet video. Granted the company can't just come out and admit that, so we often see flimsy claims that imposing huge new rate hikes on its entire userbase is about fairness, even if Comcast's cost to deliver broadband services remains fixed or declining. Not too surprisingly, Comcast tells the Journal that the company's a gift to the Internet and would never, ever behave anti-competitively:

"We everyday contribute to the use and the growth of the Internet,” Mr. Jenckes says. “There is absolutely no anticompetitive belief or objective."

The reality is that when it comes to complaints about caps, we're only starting to see the tip of the consumer annoyance iceberg. Not only are companies expanding usage caps, companies like Comcast are now exempting their own content from these caps -- a fantastic way to give their otherwise underwhelming Netflix alternatives an unfair advantage in the market. Other companies like AT&T are using usage caps to attack cord cutters in another way, by socking them with overage fees unless they sign up for traditional TV services they may no longer even want (something AT&T tells the Journal is just a "really compelling" offer).

And despite the soaring complaints, and the broad anti-competitive implications of such arbitrary limits, the FCC has remained largely mute about usage caps -- often supporting the industry narrative that this is just "creative pricing experimentation." The hope at the FCC has been that its policies to encourage broadband competition will make a specific crackdown on usage caps unnecessary, but so far it certainly hasn't worked that way. Though less talked about, it's also a problem that the FCC has failed to ensure that ISP usage meters are accurate; as a result they often aren't, with some consumers being billed for usage when their modem is off or the power is out.

Broadband competition isn't going to magically fix itself, and outside efforts like Google Fiber or community broadband are only helping a fraction of the market. As such, complaints submitted to FCC systems will only grow as more and more consumers realize that usage caps and overage fees are a giant con perpetrated on an already annoyed and captive market.

Filed Under: broadband, complaints, consumers, data caps, fcc, isps, usage caps

FCC To Ban Charter Communications From Imposing Usage Caps If It Wants Merger Approval

from the throttled-and-capped dept

If you recall, the FCC and DOJ blocked Comcast's acquisition of Time Warner Cable, in large part because of the sheer volume of nonsensical benefits Comcast tried to claim the deal would bring consumers. When Charter Communications subsequently announced its own acquisition of the company, it decided to take a different tack; most notably by taking a more congenial tone with regulators, dialing back the tone-deaf rhetoric and astroturf, and even hiring long-time net neutrality and consumer advocate Marvin Ammori to help seal the deal.

And it's now apparent that Charter's approach paid off. After months of meetings with regulators, both the FCC and the DOJ have announced they intend to approve the deal -- with a few conditions. After Bloomberg leaked word of the looming approval, FCC boss Tom Wheeler issued a statement saying (pdf) that most of the conditions being attached to the deal will focus on preventing Charter from harming Internet video competitors.

According to Wheeler, Charter won't be able to impose caps, engage in interconnection shenanigans, or bully broadcasters into withholding content from streaming providers (something Dish complained about) for a period of seven years:

"In conjunction with the Department of Justice, specific FCC conditions will focus on removing unfair barriers to video competition.

First, New Charter will not be permitted to charge usage-based prices or impose data caps. Second, New Charter will be prohibited from charging interconnection fees, including to online video providers, which deliver large volumes of internet traffic to broadband customers. Additionally, the Department of Justice’s settlement with Charter both outlaws video programming terms that could harm OVDs and protects OVDs from retaliation– an outcome fully supported by the order I have circulated today. All three seven-year conditions will help consumers by benefitting OVD competition. The cumulative impact of these conditions will be to provide additional protection for new forms of video programming services offered over the Internet."

The FCC's ban on usage caps is probably the most interesting or the proposed conditions. The agency has by and large turned a blind eye to usage caps and zero rating of content so far. In part because it was unsure whether or not the courts would uphold the regulator's new net neutrality rules (which should be settled any day now), but also because the FCC has been hesitant to engage in broadband rate regulation. Like net neutrality, usage caps are a sign of a lack of competition in the broadband market, and streaming competitors like SlingTV worried that the Charter merger would simply result in yet another giant like Comcast -- with a vested interest in using the lack of broadband competition to hammer emerging streaming TV evolution.

Granted the conditions aren't all that revolutionary in that while Charter has flirted with usage caps, it currently doesn't impose them anyway. And on the interconnection front, the devil will be in the condition details (the threat of neutrality rule enforcement appears to have solved many of these disputes, for now). Meanwhile, consumer groups like Free Press say they aren't impressed, arguing the debt created by the deal will be passed on to Charter customers in still-uncompetitive markets, one way or another:

"Customers of the newly merged entity will be socked with higher prices as Charter attempts to pay off the nearly $27 billion debt load it took on to finance this deal. The wasted expense of this merger is staggering. For the money Charter spent to make this happen it could have built new competitive broadband options for tens of millions of people. Now these billions of dollars will do little more than line the pockets of Time Warner Cable’s shareholders and executives. CEO Rob Marcus will walk away with a $100 million golden parachute."

And while it's probably true that Charter will just find some other way to impose rate hikes on these subscribers, the conditions are at least an interesting signal from the FCC (and the DOJ, that issued its own statement on the approval) that it recognizes the growing threat usage caps are posing to the future of innovative services. Still, the conditions will be no substitute for real broadband competition, the lack of which a bigger, badder Charter will simply have to find new and creative ways to abuse.

Filed Under: antitrust, broadband caps, conditions, data caps, datacaps, doj, fcc, merger, usage caps
Companies: charter, time warner cable

Comcast Preventing Customers From Accessing Starz Streaming App, Can Only Offer Flimsy Reasons Why

from the anti-competitive-shenanigans dept

Last year, we noted that Comcast was refusing to let the company's customers access HBO's streaming video service on certain platforms. In order to watch a service like HBO Go on your Roku or, say, gaming console, you need to log in using your cable credentials, as with most "TV Everywhere" type services. Most cable operators had no problem quickly enabling this authentication, but when it came to say -- HBO Go on Roku or the Playstation 3 or 4, Comcast refused to let the services work. Why? If users can't access this content via a third-party app, they're more likely to watch the content on Comcast's own apps, devices, and services.

Of course Comcast can't just come out and admit this, so when asked why it's having so much trouble getting this kind of authentication to work, it offers a rotating crop of excuses to news outlets, including claims such efforts just take "time and resources":

"With every new website, device or player we authenticate, we need to work through technical integration and customer service which takes time and resources. Moving forward, we will continue to prioritize as we partner with various players."

Right. The problem is that nearly every other cable operator has made this kind of authentication work without problems nearly instantaneously. For example if you head to the HBO Go activation page and select Playstation 4, you'll note that no other cable operator appears to be having these kinds of problems. Roku actually needed to file an FCC complaint to get Comcast to stop doing this (years after customers started complaining). But it's still a problem for Playstation 3 or 4 users trying to use HBO Go; those annoyed users are now being told over at the Comcast forums that the apps won't work due to some unspecified "business terms" that have yet to be agreed upon:

"HBO Go availability on PS3 (and some other devices) are business decisions and deal with business terms that have not yet been agreed to between the parties. Thanks for your continued patience."

Again though, these ambiguous "business disputes" are apparently specific to Comcast's unique way of doing business, since no other major cable operator appears to be having them when it comes to third-party authentication.

And this is a problem that just keeps happening. Starz recently announced that it was launching its own, shiny new streaming video service. According to the Starz announcement, non-cable customers can pay $9 a month to access the app, but cable customers can access the application for free. Well, once again, except for Comcast customers, who are being "blocked" from accessing the app:

"Comcast disagrees with Starz's one-app-fits-all approach. The biggest U.S. cable operator and a key Starz affiliate has opted not to participate in the TV-everywhere aspect of Starz's new app. For now, at least, Comcast is declining to enable the authentication (or verification) of Starz subscribers on Comcast Xfinity who want to use the new app. Representatives of Comcast and Starz both say they are "great partners" and hope something can be worked out to resolve the situation, though it is unclear what might cause Comcast to change its view on the matter.

But because this exists in the murky periphery of telecom and television services and not the general Internet, it's not technically a net neutrality violation. It's just another, vanilla example of Comcast behaving anti-competitively in the hopes of herding its customers away from alternative content access methods and toward its own services. And that's par for the course for Comcast, which is now using usage caps to exempt its own streaming video services, giving them yet another leg up in the marketplace.

How outrageous you'll find Comcast's latest crippling of a third-party app appears to vary from person to person. I've seen more than a few people argue it's Comcast's prerogative to engage in these kinds of ambiguous business disputes, though I've seen just as many argue that if the Starz app offers paying customers a better way to access the same content -- it should be up to the consumer to make that decision, not Comcast. Either way, it's this kind of behavior that not only contributes to Comcast's historically-bad customer service rankings, but also the slow but steady rise in traditional cable cord cutting.

Filed Under: fcc, internet streaming, protectionism, starz, streaming
Companies: comcast

The Broadband Industry Is Now Officially Blaming Google (Alphabet) For...Everything

from the glass-houses dept

From net neutrality to municipal broadband, to new broadband privacy rules and a quest to open up the cable set top box to competition, we've noted repeatedly that the FCC under Tom Wheeler isn't the same FCC we've learned to grumble about over the years. For a twenty-year stretch, regardless of party control, the agency was utterly, dismally apathetic to the lack of competition in the broadband space. But under Wheeler, the FCC has not only made broadband competition a priority, but has engaged in other bizarre, uncharacteristic behaviors -- like using actual real-world data to influence policy decisions.

Obviously, this doesn't please incumbent telecom operators like AT&T, Verizon and Comcast, who grew pretty comfortable with an FCC that asked "how high" when commanded to jump. The reality is that this is just what it looks like when a regulator does its job and tries to fix a very broken market. But incapable of admitting the broadband market's horribly broken, the telecom industry instead seems intent on pointing fingers elsewhere. In a strange story over at Politico, broadband providers blame Google for absolutely everything the FCC has been up to.

The quest to open the set top box, the quest for more unlicensed spectrum, and the quest for better consumer privacy controls? All the fault of Alphabet and Google:

The cable industry-led Future of TV Coalition earlier this year suggested Google had "a sneak preview" of the FCC’s February plan to open up the set-top box market to new competitors. The move would require pay-TV companies to make their content streams available to third parties that want to build and sell their own boxes — a move that cable firms say is designed to benefit Google, which has already demonstrated a prototype cable box to regulators.

AT&T, meanwhile, has charged that the agency is placing its "thumb on the scale" in favor of Google via Wheeler's March proposal to impose strict privacy rules on broadband companies. The plan, according to AT&T and others, would put telecom firms at a disadvantage compared with Internet companies like Google, which wouldn't fall under the FCC rules. Internet firms' privacy practices are policed by the Federal Trade Commission, which is seen as less prescriptive.

On another front, the National Association of Broadcasters argued that Google led a behind-the-scenes push at the FCC to set aside more unlicensed airwaves — something that could boost Wi-Fi networks that support the company's products and services. NAB says this FCC set-aside allows Google to avoid having to pay for spectrum during the FCC's current incentive auction.

The telecom industry taking pot shots at Google is certainly nothing new; in fact the net neutrality debate basically began in 2005 when then AT&T CEO Ed Whitacre proudly proclaimed that Google wouldn't be able to "ride his pipes for free." Traditionally though, the telecom industry has used third-party consultants, think tanks, and other policy tendrils to hurl strange attacks at Google. These new, more direct attacks are a sign of increased desperation.

This desperation originates with two things, one of them being Google Fiber. Though admittedly still limited in reach, Google Fiber has managed to light a fire under the apathetic posteriors of telecom giants that previously had little to no impetus to upgrade networks. It has managed to generate a national conversation about the sorry state of broadband competition, and even managed to illuminate the telecom sector's love of state protectionist laws that prevent community broadband and even public/private partnerships. In short, the broadband industry's mostly just pissed that they're now facing some competition (which is why they've resorted to lawsuits to slow Google Fiber's expansion).

The other thing on telecom executives' minds is the fact that with the broadband market saturated, they're turning to advertising and content to try and attain quarterly growth. That's why Verizon's been gobbling up companies like AOL and blowing kisses at Millennials in a quest to magically become the new Facebook or Google. But these ISPs face new neutrality and privacy regulations that Google doesn't have to worry about, solely because there's no competition in the broadband space (read: you have a choice in search engines, but often not in ISPs). This lack of competition isn't Google's fault. It's the fault of the carriers themselves and generations of lobbying.

The telecom industry has invited the wrath of regulators for years with a laundry list of bad behavior. The FCC's privacy rules weren't driven by Google, they were driven by Verizon's decision to use stealth cookies users couldn't opt out of to covertly track customers around the Internet. Net neutrality wasn't created by Google, it was created thanks to AT&T threatening to charge Google a "just because we can" toll. And while Google has lobbied to open up the cable set top box to competition, this idea is actually more than a decade old, driven primarily by the fact that the industry enjoys $20 billion in captive revenue thanks to absolutely no serious cable set top hardware competition whatsoever.

Yes, Google and Alphabet have become lobbying behemoths since Google first started ramping up its lobbying apparatus around 2007. And yes, like any large company, Google spends a good amount of its time lobbying to saddle the other guy with additional regulations -- something that will only increase as the company inevitably shifts from innovation to turf protection. And we've already started to witness this turn; most notably in the way Google turned its back on net neutrality in the States and abroad the last few years.

A saint Google isn't, but to suggest that the FCC is suddenly doing its job entirely because of Google lobbying borders on the comical, especially coming from an industry that has had its lobbying talons deep in the federal government for more than a generation. It's much the same way that ISPs and their loyal politicians have taken to attacking Netflix for daring to criticize usage caps and standing up for net neutrality. It's snide hubris from a sector that can't come to terms with the fact that a generation of telecom regulatory capture is finally starting to crumble. Instead of adapting to shifting markets, the telecom sector would rather blame "big tech" for a firestorm of regulatory activity it brought down upon itself.

Filed Under: blame, broadband, fcc, net neutrality, open internet, set top boxes, spectrum
Companies: alphabet, at&t, google, nab, verizon

White House Threatens To Veto Bill Attempting To Gut Net Neutrality, Defang FCC

from the sing-for-your-supper dept

As we just noted, the House has been pushing yet another bill that attempts to punish the FCC for its uncharacteristic new habit of actually standing up to giant ISPs. The "No Rate Regulation of Broadband Internet Access Act" (pdf) professes to be a bill focused on curtailing government run amok; with a particular eye on preventing the FCC from being able to regulate broadband rates (not-coincidentally just as ISPs begin heavily pursuing usage caps). But the bill uses a unique definition of "rate regulation" to, in reality, ban the FCC from doing, well, pretty much anything.

Given that in the last year-and-a-half the FCC has passed neutrality laws, finally stood up for municipal broadband, raised the definition of broadband to 25 Mbps (to emphasize competitive shortcomings), and is now pondering both new broadband privacy rules and opening the captive cable set top box market to competition, you can kind of see why the bill was a priority for both large ISPs and their Congressional allies. Stopping this new, uncharacteristically pro-consumer and pro-competition FCC has become a priority.

Bills like this one do a great job riling up those upset about numerous, other instances of actual government overreach -- especially folks that don't understand the broken telecom market or the nuances of net neutrality, or that the FCC under Tom Wheeler has actually been doing some non-idiotic things for arguably the first time in twenty years. But such bills are empty showmanship in that they require a President's signature to pass.

And according to a new statement of administration policy by the White House (pdf), that's simply not happening:

"H.R. 2666 is overly broad and extends far beyond codifying the FCC's forbearance from applying provisions of the Communications Act related to tariffs, rate approval, or other forms of utility regulation. Even as amended, H.R. 2666 would restrict the FCC's ability to take enforcement actions to protect consumers on issues where the FCC has received numerous consumer complaints. The bill also would hamstring the FCC's public interest authority to review transactions....If the President were presented with H.R. 2666, his senior advisors would recommend that he veto the bill."

There remains only a few ways to defang the FCC and/or truly gut net neutrality.

ISPs could get Congress to pass a new law that enshrines net neutrality rules that are weaker than what the FCC has proposed, though Senators John Thune and Representative Fred Upton tried this and it went nowhere. ISPs could also still win the ongoing lawsuit against the FCC, which would gut some or all of the rules (a ruling is expected shortly). Or ISPs could work to elect a President who opposes net neutrality and will set about making sure the FCC returns to its more traditional role of being a toothless, gutless, shell of a regulator dedicated to protecting the telecom status quo.

The House, of course, knows their options are limited, and that bills like this -- and the constant parade of taxpayer-funded FCC "fact finding" hearings -- don't actually accomplish anything. They do, however, rile up the uninformed, and do a fine job reminding giant telecom companies that Congress is ready and willing to dance on command for continued telecom campaign contributions.

Filed Under: congress, enforcement, fcc, net neutrality, veto, white house