Telecom Monopolies Are Exploiting Crappy U.S. Broadband Maps To Block Community Broadband Grant Requests

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

We've noted repeatedly that despite a lot of breathless rhetoric about America's "quest to bridge the digital divide," U.S. government leaders still don't actually know where broadband is or isn't available. Shoddy broadband mapping has generally been a good thing for regional U.S. telecom monopolies, who not only have been allowed to obscure competition gaps (and the high prices and poor service that result), but hoover up an endless gravy train of subsidies and tax breaks for networks that...mysteriously...always wind up half deployed. Our failure to measure deployment success has been painfully, repeatedly exploited.

But there are other ways that incumbents exploit our ongoing failure to map broadband to their advantage. Case in point: roughly 230 U.S. communities have applied for broadband grants being doled out as part of the National Transportation Infrastructure Agency (NTIA)'s $288 million Broadband Infrastructure Program. But when a town or local cooperative/utility/public-private partnership looking to build its own, better broadband network applies for the grant, they're facing baseless challenges by ISPs which claim they already serve these areas.

Grafton, New Hampshire, for example, is looking to build its own fiber network after years of market neglect. It had 3,000 of the 4,000 census blocks they applied for grant money for falsely challenged by regional giants Comcast and Charter Spectrum:

"Of the 4,000 census blocks covered by Grafton’s grant application, Coates said that incumbent ISPs challenged 3,000 of them, even those dominated by cemeteries. In the majority of the challenges, telecom giants overstated available speeds and existing coverage, he noted. “My immediate response was that this was them telling us to go boil water,” Coates said. “Here you go, prove that you can do this in these three thousand census blocks. Have fun figuring it out.”

As we've noted, there's a big lobbying push afoot by entrenched monopolies to ensure as little government stimulus money as possible goes toward building out competition to their regional dominance, no matter what that competition looks like (cooperatives, utilities, local governments, smaller private ISPs, private/public partnerships). To justify their obstruction to local community grants, big ISPs like Comcast and Charter point to FCC broadband maps they know aren't accurate to insist nothing needs to be done. That perpetuates the sub-par service and high prices created by monopolization.

Except the FCC's maps routinely overstate both coverage and speeds, and have for decades. The FCC's methodology also declared (until only recently) that an entire census block is "served" with broadband, if an ISP claims it can serve just one home in that census block. While there have finally been some meaningful improvements to FCC mapping pushed through Congress, it's still going to be several years (and significantly more funding) before most of those fixes can be properly implemented. Some states have developed their own alternative mapping solutions, but for many, engaging in a bureaucratic battle with deep-pocketed monopolies to disprove their coverage claims isn't financially viable.

While the NTIA has made some progress of its own on mapping, it's still being tasked with doling out $42 billion in additional broadband grants as part of the recently passed infrastructure bill -- despite still not having an entirely accurate picture of the problem it's trying to fix. That is, and will continue to be, exploited by entrenched monopolies like AT&T, Comcast, Charter, or Verizon which have not only fought against better mapping for years (knowing more accurate data would only spur calls for reform), but have a vested interest in fighting tooth and nail against any effort to disrupt the uncompetitive status quo.

Filed Under: broadband, broadband maps, community broadband, digital divide, fcc, grants, ntia, telecom

Want To Understand Why U.S. Broadband Sucks? Look At Frontier Communications In Wisconsin, West Virginia

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

So for years I've noted if you really want to understand why U.S. broadband is so crappy, you should take a long, close look at Frontier Communications in states like West Virginia. For decades the ISP has provided slow and expensive service, routinely failed to upgrade or repair its network, and generally personified the typical bumbling, apathetic, regional monopoly. And its punishment, year after year, has generally been a parade of regulatory favors, tax breaks, and millions in subsidies. At no point do "telecom policy leaders" or politicians ever try to do much differently.

Case in point: Frontier, fresh off of an ugly bankruptcy, numerous AG and FTC lawsuits over repair delays, and repeated subsidy scandals, is positioning itself to nab yet more subsidies from the state of Wisconsin. Frontier is asking the state of for $35 million in additional grants, despite the fact Wisconsin was just one of several states whose AGs recently sued the company for being generally terrible. Folks familiar with the company argue it shouldn't be seeing a single, additional dime in taxpayer resources given fifteen years of scandal:

"I hope the state will seriously consider the track record of companies to understand which ones have a long record of meeting the needs of residents and businesses,” Christopher Mitchell, director of the Community Broadband Networks Initiative, a Minnesota-based think tank supporting communities’ telecommunications efforts, said in an interview with The Badger Project.

"Frankly, Frontier’s record suggests it should not receive a single additional dollar from any government,” he added. “Local companies, communities, and cooperatives have proven to be much better at turning public subsidies into needed networks."

Keep in mind Frontier has been accused of taking state and federal subsidies on several occasions, misleadingly billing the government extra, then basically just shrugging when asked for the money back. To date nobody has done much about any of it. Also keep in mind Frontier routinely lobbies for (and often ghost writes) state laws banning towns and cities from building their own broadband networks. They're also directly responsible for the gutting of state and federal regulatory and consumer protection authority. Facing little real competition and feckless oversight in most states, nothing much changes. By design.

Historically, state politicians and regulators ignore these kinds of problems, because, it should be made clear, they're corrupt. Regional monopolies find it immensely easy to throw a few bucks at state leaders in exchange for just mindless rubber stamping of whatever goal they're interested in (merger approvals, new subsidies, the gutting of consumer protections, tax breaks, zero accountability). That this strategy continually results in terrible, substandard, and expensive service never seems to enter into the picture. It's just rinse, wash, repeat in a long line of states.

The Wisconsin State Public Service Commission is expected to grant or deny Frontier's request by the end of the month. The company is also first in line to grab new federal broadband funding from the Biden FCC. It will be curious to see if just a parade of unprecedented scandal reduces Frontier's ability to have millions in additional taxpayer money thrown at it in the slightest. My guess is it doesn't. At all.

There are two, indisputable reasons U.S. broadband generally sucks: regional monopolization and the corruption that protects it. But when you see news articles, regulators, many think tankers, or politicians talking about broadband, notice how many are capable of even clearly acknowledging that fact, much less genuinely interested in actually doing anything about it.

Filed Under: broadband, competition, dsl, fcc, subsidies, telecom, upgrades, west virginia, wisconsin
Companies: frontier

Canadian Telecom Embraces Mindless Consolidation With Yet Another Major Megamerger

from the growth-for-growth's-sake dept

We've noted repeatedly how the United States has an unhealthy fascination with the growth for growth's sake mindset. That's best exemplified by our near-endless adoration of megamergers in sectors like telecom, which result in extremely harmful monopolization and consolidation problems that are extremely obvious, but we choose to ignore anyway. Time after time after time in telecom (and banking, and airlines, and...), companies promise a universe of investment, job creation, innovation, and synergies in exchange for merger regulatory approval. And time after time after time, reality shows that these pre-merger promises are meaningless and harmful... unless you're one of the few investors or executives who benefit.

Despite the steady drumbeat of market, employment, and consumer harms from such mergers, we insist on learning nothing from the experience here in the States; the job and competition killing Sprint T-Mobile deal being just the latest in a long line of examples of companies promising all manner of job growth, competition, and innovation, right before the exact opposite happens. With no meaningful penalty whatsoever, unless you're a consumer or employee.

While you might think things are different up in Canada, often they're even worse. This week, two of the nation's biggest telecom giants, Shaw and Rogers, announced they'd struck a new $26 billion deal that would dramatically reduce overall competition in the already not-particularly-competitive Canadian telecom market. The announcement is rife will all manner of dodgy claims of amazing "synergies" and job creation:

"Rogers to maintain and grow local Shaw jobs so that teams across Alberta, British Columbia, Manitoba and Saskatchewan will continue to serve customers and support local communities."

And:

"New technology and network investments will create up to 3,000 net new jobs across Alberta, British Columbia, Manitoba and Saskatchewan."

Of course this sort of job creation and retention never actually happens. What almost always does happen is the merging companies put on a good show for about a year to pretend nothing is really going to change. Then, once the press and policymakers stop paying attention, a massive stream of pink slips arrive as redundant positions and headquarters are inevitably eliminated.

It's not really something that's debatable; it's more akin to physics. The deals create massive new debt pressure that's only relieved by trimming rosters, and usually, trimming investment. The end result: Americans and Canadians alike pay some of the highest prices for fixed and wireless broadband in the developed world. So while Rogers and Shaw are promising that the deal will create jobs and is necessary to help fund 5G deployments, the reality is the deal will inevitably result in stunted deployment and fewer new jobs. How do we know? Because this has happened after every major telecom merger for going on forty years now.

One of the reasons we keep making the same mistakes is thanks to regulatory capture and blatant corruption. But another major culprit is the press, which routinely stenographs these announcements without including any historical context. Case in point: dig through these news reports on the Rogers Shaw deal, and try to find any that clearly spell out the historical human costs of monopolization and consolidation in any specific way. They literally don't exist. This Deadline's report on the deal can't even be bothered to mention the word "competition." Just mindless repetition of baseless claims of "synergies":

"Both companies are family founded and publicly traded on the Toronto Stock Exchange but have significant U.S. shareholders. Shares are both jumped Monday on the deal news. The scale created by the combination will allow for infrastructure expansion critical to drive growth and technology adoption and attract new consumer and business customers, the companies said. It will remain one of the biggest employers in Western Canada."

Most press reports on these US and Canadian mergers are pure stenography. And few if any of the outlets that hype pre-merger promises can be bothered to circle back around to report on the very real human impact of these deals. There's just no money in it. Wash, rinse, and repeat. Over and over and over again.

Filed Under: antitrust, canada, competition, mergers, telecom
Companies: rogers, shaw

Why Do Josh Hawley's Cures For 'Big Tech' Always Oddly Omit 'Big Telecom'?

from the half-the-battle dept

Over the last year, giants like Amazon, Facebook, Google, and Apple have all faced growing calls for greater regulatory oversight and antitrust enforcement, something that isn't particularly surprising. After all, experts have noted for decades that US antitrust enforcement has grown toothless and frail, and our definitions of monopoly power need updating in the Amazon era. Facebook's repeated face plants on privacy (and basic transparency and integrity) have only added fuel to the fire amidst calls to regulate "big tech."

But while Silicon Valley giants now face an endless cavalcade of outrage in DC, the telecom sector is suddenly seeing no scrutiny whatsoever. Whether it's the speed at which the problematic T-Mobile merger is being shoveled through the DOJ and FCC, or the blind eye being turned to major telecom privacy scandals (like location data), telecom lobbyists have been on a successful tear convincing well-heeled DC lawmakers to ignore the massive, obvious monopoly, privacy, and competition issues inherent in telecom to focus exclusively on the problems in "big tech."

This crusade against "big tech" has seen no shortage of advocates who've historically been absent on glaring and painful monopoly and consumer protection issues in other sectors. Like Marsha Blackburn, who has rubber stamped every fleeting monopolistic and privacy-violating whim AT&T executives have ever had, yet is now branding herself as some sort of consumer advocacy and privacy expert as she rails against "big tech."

Another major voice in the "battle to fix 'big tech'" has been Josh Hawley, who has been endlessly vocal about the issues with big tech, but just as absent as Blackburn when it comes to criticizing the same exact problems plaguing the telecom sector. Last week, Hawley unveiled a plan to fix the FTC (pdf) -- an agency, he correctly notes, that has been largely feckless when it comes to reining in the bad behavior of lumbering giants like Facebook:

"As it stands today, the FTC lacks teeth. Its jurisdiction is divided. It wastes time in turf wars with the Department of Justice (DOJ) while failing to confront the increasing concentration in our economy, in the tech sector most obviously. And it is woefully unaccountable. The agency as presently constituted is in no shape to ensure competition in today’s markets, let alone tomorrow’s."

He's certainly not wrong on that. If anything, he undersells the problem. The FTC has somewhere around 8% of the staff focused on resolving privacy issues as its counterpart in the UK, despite the UK having a fifth as many people as the US. The FTC is also a cesspool of revolving door conflicts, with most employees having either recently left the companies they're supposed to hold accountable, or simply biding their time until they can go lobby for those same companies. And, like the FCC, its partisan majority makeup results in whiplash as the parties jerk the reins of policy from one side of the spectrum to the other.

This is not some inadvertent error. An understaffed, underpowered FTC is the intentional lobbying byproduct of giant U.S. companies that don't find taxpayer or regulatory accountability particularly exciting. It's why even when the FTC finally acts on an issue, its solutions (as we saw with Equifax or Facebook) are pathetic messes that in no way deter future bad behavior (and in some ways only encourage the problems to repeat themselves). It's a feature, not a bug.

Hawley's cure for this involves essentially gutting the agency as it stands, then rolling it into the DOJ to provide "clear and direct oversight." His effort would also eliminate the FTC’s five-member structure, which, like the FCC, is based on a partisan 3-2 split depending which party holds the Presidency. Instead, the FTC boss would fall under the authority of a Senate-confirmed single director serving a five-year term.

There's stuff under Hawley's plan that's certainly common sense -- stricter controls on ethics, antitrust enforcement being centralized, etc. The problem is several fold. For one, do we really want ex-Verizon lawyer Bill Barr in charge of the FTC? Couldn't giving that kind of leverage to Barr only aid his relentless effort to break encryption and put backdoors into, well, everything? Meanwhile, the partisan FTC strife Hawley claims to be eliminating would probably just jump over to the confirmation hearing process, and the numerous hearings and laws you'd likely need to make his plan a reality.

The other big problem: a lot of these regulatory "modernization" plans often wind up being little more than exercises in butchery dressed up as reform once they actually materialize in the wild.

Case in point: with its recent net neutrality repeal, the FCC recently neutered its authority over telecom providers at telecom lobbyist behest amidst claims it would create "internet freedom" and spur investment (neither happened). But contrary to public wisdom, the repeal didn't just kill net neutrality. It effectively gutted the FCC, shoveling much of its responsibilities over to the FTC -- an agency that lacks the authority or resources to actually police the telecom sector. This was, in case you're a little slow, the entire reason the telecom lobby pushed for it. It wanted consumer protection and accountability to fall into a deep, dark chasm. It's working, and a lot of blatant efforts by telecom to rip users off or violate their privacy have gone utterly unpunished amidst crickets from "big tech" reformers.

Gutting already shaky oversight is not really "reform," and I'm curious what happens to telecom oversight if we destroy the existing FTC and hand management of the telecom sector over to Bill Barr. Former Verizon lawyers would be running both the FCC and FTC, and both consumer protection and antitrust enforcement would fall to a duo who've shown less than zero interest in reining in AT&T, Verizon and Comcast, or the trio's thirty year track record of aggressively anti-consumer, anti-innovation, and anti-competitive behavior. Behavior that was being bone-grafted to the American institution while Google and Facebook were still just twinkles in youngsters' eyes.

One might feel better about this if the perils of telecom monopolies weren't so utterly absent from Hawley's rhetoric. When you dig through his plan or his lengthy treatises on reform over at his website or in speeches, big telecom is almost never mentioned -- despite the sector engaging in many of the same, or worse behaviors. Much like Blackburn, Hawley appears to have placed the entire onus for the modern internet's ills securely on the back of big tech, while giving telecom a free pass. Why do you think that is, exactly?

There are certainly plenty of reasons to criticize big tech giants like Facebook, whose face plants on privacy are now the stuff of legend. But big telecom is every bit as bad as big tech. As government-pampered giants that also enjoy unaccountable monopolies over internet access itself, in some ways the sector is arguably worse.

AT&T's massive ad ambitions rival anything Silicon Valley ever concocted, fusing television, mobile, location, and countless other data sources into what The Verge recently called an "ad tracking nightmare hellworld." From Verizon getting busted for covertly modifying user packets to track you around the internet to recent location data scandals, the sector's just as terrible on privacy as anything Silicon Valley has to offer. This is before you even mention that they're enthusiastically bone-grafted to the NSA.

As companies like Comcast NBC Universal and AT&T Time Warner increasingly push into the ad tech space, they've been eagerly pushing a crackdown on the big tech giants whose market share they hope to erode. Any quest to fix the US' broken antitrust and consumer protection enforcement has to take a bigger picture view that identifies both big tech and big telecom monopolies as part of the same giant problem.

Politicians that fixate exclusively on the former are either being painfully but genuinely myopic, or they're exhibiting a byproduct of relentless lobbying by the telecom sector, which has been pushing for this special brand of asymmetrical "reform" for several years now.

Filed Under: antitrust, big tech, competition, doj, ftc, internet, josh hawley, law enforcement, privacy, telecom

Much Of The Assault On 'Big Tech' Is Being Driven By 'Big Telecom'

from the inauthentic-outrage dept

Over the last few months, Google, Amazon, and Apple have all taken a significant beating on Wall Street amidst rumblings of looming antitrust investigations by the DOJ and FTC. Google, we're told, is subject of a looming antitrust probe by the DOJ. Amazon, we've learned, is facing growing scrutiny from the FTC. Apple stock also briefly did a nose dive on the news that it too may soon be subject to a significant new antitrust probe.

On its surface, many of these actions aren't all that surprising. After all, experts have noted for a decade than US antitrust enforcement has grown toothless and frail, and our definitions of monopoly power need updating in the Amazon era. Facebook's repeated face plants on privacy (and basic transparency and integrity) have only added fuel to the fire amidst calls to regulate "big tech."

But while Silicon Valley faces an endless cavalcade of outrage, the telecom sector is suddenly seeing no scrutiny whatsoever. Whether it's the speed at which the problematic T-Mobile merger is being shoveled through the DOJ and FCC or the blind eye being turned to major telecom privacy scandals (like location data), telecom lobbyists have been on a successful tear convincing well-heeled DC lawmakers to ignore the massive, obvious monopoly, privacy, and competition issues inherent in telecom to focus exclusively on the problems in "big tech."

Yet somehow, this asymmetrical policy paradigm is still treated as entirely coincidental in press coverage. Only recently have some news outlets started to notice how well things have been going for telecom lately in DC (Axios calls it telecom's "sweet summer of revenge"). Outlets have even started to finally realize that with former telecom lawyers now running the FCC and DOJ (Ajit Pai and Bill Barr), that is not coincidentally being reflected in federal policies attempting to hamstring telecom's competitors:

"In a June speech, DOJ Antitrust Division Chief Makan Delrahim laid out ways his agency could could go after Big Tech for anti-competitive behavior. In a June Senate hearing, FCC Chairman Ajit Pai said, “The greatest threat to a free and open internet has been the unregulated Silicon Valley tech giants that do, in fact, today decide what you see and what you don’t,” he said."

It's routinely understated how telecom lobbying, not a sincere worry about market power or privacy, is what's driving much of this current policy paradigm in DC (including much of the hyperventilation over nonexistent Censorship of Conservatives). The telecom sector is pushing hard into an online advertising sector traditionally dominated by Silicon Valley. As such, telecom lobbyists have spent several years now pushing to hamstring their direct competitors with the help of cash-compromised lawmakers and full blown regulatory capture.

That includes successfully convincing government that a sector filled with natural, historically-predatory monopolies should see no guard rails whatsoever (see the killing of net neutrality and the neutering of the FCC as example A). Yet somehow, there are still a lot of folks in tech policy circles who see the lopsided focus on "big tech" as entirely authentic, and any failure to police telecom as somehow coincidental. But folks in DC (like former FCC lawyer Gigi Sohn), are well aware that much of this current policy paradigm is highly-produced theater and, shockingly, all about money:

Again, none of this is to say that there aren't massive problems with Silicon Valley giants and plenty of authentic calls for reform. But it is a reminder that an oversized portion of the current anti big tech sentiment in DC is telecom driven. Intellectual inconsistency and campaign finance data usually makes it clear which lawmakers are telecom sector marionettes. More often than not consumer rights, market power, or healthy competition are the very last thing on the minds of those pushing lopsided regulatory solutions to a "big tech" problem they don't actually care all that much about.

Filed Under: antitrust, doj, ftc, internet, telecom
Companies: amazon, apple, at&t, comcast, facebook, google, verizon

Trump's Chinese Telecom Protectionism Always Seems To Be Lacking Evidence

from the facts-matter dept

If you hadn't noticed by now, the Trump administration has made blacklisting Chinese telecom companies one of its top priorities. That's been most notably exemplified by the administration's attacks on Huawei, which is repeatedly cited as an asset of the Chinese government without much in the way of proof. From pressuring U.S. carriers to drop plans to sell Huawei phones to the FCC's decision to ban companies from using Huawei gear if they want to receive federal subsidies, this effort hasn't been subtle. A harder, broader ban is supposedly looming in the wings.

There's no doubt that Huawei, like AT&T here in the states, isn't a shining beacon of ethical behavior. At the same time, the dulcet undertones justifying much of the blacklisting is based on the premise that the company spies on Americans on a massive scale. Yet nobody has provided evidence of that. In the slightest. In fact, one 18-month investigation into Huawei in 2011 (the last time we had a similar epidemic of hand-wringing on this subject) found that there was no evidence supporting that claim. As in, at all:

"We knew certain parts of government really wanted” evidence of active spying, said one of the people, who requested anonymity. “We would have found it if it were there."

Also ignored is that U.S. hardware vendors like Cisco have a very long history of trying to gin up hysteria on Capital Hill on this front among lawmakers who aren't too keen on, well, facts:

"What happens is you get competitors who are able to gin up lawmakers who are already wound up about China,” said one Hill staffer who was not authorized to speak publicly about the matter. “What they do is pull the string and see where the top spins."

Again, it's certainly possible that Huawei has spied on Americans, but shouldn't somebody actually provide the smallest bit of public evidence of that fact before we blacklist a company from the better part of a continent? Wouldn't we demand the same if the shoe was on the other foot? The UK and Germany have been skeptical of the US claims, noting they've also yet to see hard evidence proving the scope of the claims. As such, they've taken steps to tighten up security in general, instead of stumbling down the facts-optional protectionism rabbit hole.

Fast forward to last week when the FCC announced it would be banning China Mobile from doing business in the US:

"After a lengthy review of the application and consultation with the U.S. intelligence community, in 2018, the Executive Branch agencies recommended that the FCC deny China Mobile USA’s application due to substantial national security and law enforcement concerns that cannot be resolved through an agreement with the company (called “voluntary mitigation”). Notably, this is the first time the Executive Branch has ever recommended that the FCC deny an application due to national security concerns. Based on this recommendation and the full public record in this proceeding, I have determined that approving this application would not serve the public interest. At our May meeting, the Commission therefore will vote on an Order that would deny China Mobile USA’s application."

Given the Trump administration's relationship to factual reality, that it was the "first" to deny a telecom application on national security grounds doesn't actually mean anything. What was the nature of the identified threat? How severe was it? Where was it discovered? Can you provide the slightest shred of data supporting this claim? Even in redacted form? ¯\_(ツ)_/¯

Again, it's entirely possible China Mobile is a surveillance threat. But again, why not make at least some of that information public? The problem with the all-too-patriotic and unquestioning press and analyst repetition of these claims (and that is the general tone of US coverage) is that it opens the door to letting government and US industry disguise protectionism as national security. And when you press for evidence, those pushing the agenda hide behind government secrecy. Hopefully it's not too hard to see how this is a problem, or to understand that demanding a bit more (any?) actual evidence isn't really a steep ask.

But the press, oblivious to its own patriotism, tends to parrot these claims without much in the way of hard questions. Or without providing much meaningful context.

For example, you'd be hard pressed to find many stories on Huawei that mention that Americans are so happy to install poorly secured internet of things devices on their home and business networks, foreign intelligence organizations probably don't even need to own the core infrastructure. Or that there's an absolute universe of other Chinese-made hardware embedded in everything from your home router to your not-so-smart refrigerator we apparently don't seem nearly as perplexed by. Or that the United States engages in most of the dubious behavior we have routinely accused China of.

That the "US engages in much of this same behavior and probably shouldn't be giving lectures on surveillance ethics" isn't intended as whataboutism. There's a genuine problem at the heart of this issue: if the US press doesn't demand a factual, transparent public accounting of the Chinese surveillance threat, the door is opened wide to lobbyists eager to disguise protectionism as national security. Companies like Cisco, who simply don't want to compete with cheaper Chinese hardware, have been exploiting this dysfunction for years. And the press, with a few occasional exceptions, has been happy to lend a hand.

Filed Under: china, evidence, fcc, protectionism, telecom
Companies: china mobile

Judge Ruling In AT&T Merger Again Highlights Broken Antitrust Enforcement, Court Myopia

from the ill-communication dept

Last year AT&T defeated the DOJ's challenge to the company's $86 billion merger with Time Warner thanks to a comically narrow reading of the markets by U.S. District Court Judge Richard Leon. At no point in his original 172-page ruling (which approved the deal without a single condition) did Leon show the faintest understanding that AT&T intends to use vertical integration synergistically with the death of net neutrality and neutered FCC oversight to dominate smaller competitors and tilt the entire internet ecosystem in its favor.

While the DOJ lost its original case, it was quick to appeal late last year, highlighting how within weeks of the deal AT&T had jacked up prices on consumers and competitors like Dish Networks, which says it was forced to pull HBO from its lineup because it could no longer afford the higher rates. Those rate hikes were directly courtesy of the huge debt AT&T incurred from both its 2015 merger with DirecTV (which eliminated a direct pay TV competitor from the market), and last year's Time Warner merger.

None of this apparently mattered to a three-judge panel from the US Court of Appeals for the DC Circuit, which ruled this morning (pdf) that AT&T's latest merger would be allowed to stand. According to the Judges, the DOJ's claims that Leon failed to understand basic economic realities in the broadband and video markets were "unpersuasive." Much like the initial Leon ruling, the cornerstone of the Judges ruling centers around the idea that because there's more and more streaming competition, any anti-competitive problems from the deal would be mystically mitigated:

"Evidence also indicated that the industry had become dynamic in recent years with the emergence, for example, of Netflix and Hulu. In this evidentiary context, the government’s objections that the district court misunderstood and misapplied economic principles and clearly erred in rejecting the quantitative model are unpersuasive. Accordingly, we affirm."

But, like the Leon ruling, the Judges failed to understand the bigger picture, almost to an embarrassing degree. In part with the DOJ's help, since throughout the entire case, the phrase net neutrality wasn't uttered even once in context.

While AT&T does face more competition via streaming competitors, its control over wireless and wired broadband networks those services run over gives AT&T a distinct advantage. So in addition to making "must have" content more expensive for competitors (something the court just ignores), AT&T can also use its broadband networks to hamstring these emerging competitors. We've already seen that demonstrated clearly as AT&T imposes arbitrary and unnecessary usage caps on overage fees on its broadband users if they use a competitor like Netflix, but not if they use AT&T's own streaming service.

It's not rocket science to see how AT&T's domination of broadband, control of essential content, and successful obliteration of FCC oversight all work synergistically to distort the market AT&T operates in. This is a company that effectively told the Ajit Pai FCC to go neuter itself, and the agency was more than happy to oblige. It's the same company that had so much political power, it was able to convince the government to retroactively change the law when it was found to be spying on Americans without a warrant. The problems with this type of power couldn't be more obvious.

Meanwhile, the case continues to show how the steady lobbying erosion of U.S. antitrust authority is having a decidedly negative impact US market health. For decades we were told that the telecom industry should be deregulated to unleash brave new synergies and amazing innovation. This wouldn't be a problem, telecom giants and their allies insisted, because antitrust authority would help keep these natural monopolies in line.

Yet here we are, with antitrust authority so comically eroded that lawyers are trapped within very narrow confines of economic theory, utterly incapable of proving even the most obvious of harms.

The broadband industry is a broken, natural monopoly plagued by federal and state regulatory capture. When you obliterate what few consumer protections exist, giants like AT&T and Comcast don't just mystically start behaving thanks to a free market, they just double down on existing, bad behavior. That's because telecom isn't a free market, it's a broken mess. And free of both competition and meaningful regulatory oversight, it only gets worse. History has made this point time and time again, and the public's utter disdain of Comcast and AT&T is example A.

In the wake of the telecom industry's successful attack on FCC authority, there are only a few things that can keep these natural monopolies in line absent meaningful competition. One, an FTC that lacks the authority, resources, or rule-making ability to actually police bad ISP behavior. Two, state regulators and AGs that ISPs and the FCC have working overtime. And antitrust enforcement that's been so neutered by lobbying that the government can't police even the most obvious instances of competitive issues caused by mindless merger mania.

Anybody, Judges included, that can't see the obvious problem here isn't paying close enough attention.

Filed Under: competition, doj, merger, streaming, telco, telecom, tv
Companies: at&t, time warner

Court Again Rules That Cable Giants Can't Weaponize The First Amendment

from the no-luck,-try-again dept

Over the last few years, telecom giants have increasingly been trying to claim that pretty much any effort to hold them accountable for their terrible service (or anything else) is a violation of their First Amendment rights. Historically that hasn't gone so well. For example, courts generally laughed off ISP lawyer claims that net neutrality violated their free speech rights, quite correctly highlighting that ISPs are simply conduits to information, not acting as editors of available speech through their blocking or filtering of available information.

Charter Spectrum, the nation's second biggest cable operator, has been trying to embrace this argument a lot lately as it fights off state lawsuits for terrible service. It recently tried to use the First Amendment card again in a legal battle with Byron Allen's Entertainment Studios Networks (ESN), which recently accused Charter of violating the Civil Rights Act of 1866 by refusing to carry TV channels run by the African-American-owned ESN.

While Charter tried to have the suit dismissed by claiming that the First Amendment prohibits such claims because an ISP enjoys "editorial discretion," the ruling (pdf) by the U.S. Court of Appeals for the Ninth Circuit didn't agree. The court noted that while ISPs and cable companies do enjoy some First Amendment protection, it doesn't apply here, just like it didn't apply in the net neutrality fight:

"As part of its defense, Charter had told the court that by choosing which channels to carry, the company was engaging in a form of editorial discretion protected by the First Amendment. Therefore, it said, the court would have to use a stricter standard to evaluate Entertainment Studios’ claim of a legal violation — a standard that might result in the claim being rejected.

The Ninth Circuit said otherwise, saying that just because Charter engages in corporate speech when it selects which channels to carry does not “automatically” require the court to use the tougher standard.

As a result, the court is letting the case move forward. For its part, ESN's discrimination complaint alleges that its complaint is based on more than just having its channel withheld from the company's cable lineup:

"The opinion on Charter’s motion to dismiss also marks a victory for the 25-year-old programming firm founded by comedian Byron Allen, which bought the Weather Channel in March and accused Charter executives in court of hurling racist insults at Allen and other black Americans in numerous encounters. In one alleged instance, Charter chief executive Tom Rutledge called Allen, who is black, “boy” at an industry conference and advised him to change his behavior, according to court documents. In another alleged example, the court said, Charter’s senior executive in charge of programming, Allan Singer, approached a group of black protesters outside Charter’s offices to tell them to “get off of welfare."

Consumer groups like Public Knowledge were quick to applaud the ruling, happy to see another effort to "weaponize" the First Amendment shot down. The district court will now proceed to determining whether Charter did engage in racially discriminatory conduct.

"Holding us accountable for absolutely anything violates our free speech" rights was historically something telecom lobbyists often just throw at a wall in a bid to see if it sticks. But these efforts have escalated in the last few years. For example FCC staffers under Ajit Pai, at this point nearly indistinguishable from big telecom lobbying efforts, have even tried to claim that community-run broadband (an organic, voter-approved response to terrible service) is a threat to free speech, a charge there's absolutely zero supporting evidence for.

It's a legal argument giant ISPs have also embraced more recently in large part because they hope that new Justice Brett Kavanaugh, who bought into some of these arguments during previous net neutrality battles, will ultimately be a deciding vote should many of these battles wind their way to the Supreme Court. So far, however, these efforts haven't worked out all that well, and while that's not likely to change when the net neutrality court fight kicks off next February, it could be an important issue should that fight make its way to the highest court in the land.

Filed Under: cable, first amendment, isp, ninth circuit, telecom
Companies: charter spectrum, esn

Canada Appoints Lobbyist To Top Telecom Regulator, Follows US Down The Regulatory Capture Rabbit Hole

from the whiplash-from-the-revolving-door dept

The last few years have seen a boon in consumer and small-business-friendly policies coming out of Canada's telecom regulator the CRTC. Under outgoing agency head Jean-Pierre Blais, the agency bumped the definition of broadband to 50 Mbps, required that phones must now be sold unlocked in Canada, shored up the country's net neutrality rules, and took aim at the anti-competitive use of usage caps and overage fees. Not everything Blais did was a success (like their attempt to force cable TV providers to offer cheaper plans, then failing to follow through) but by and large the CRTC has been an improvement over years past.

But Canadian consumers are worried that's coming to an end with Justin Trudeau's decision to appoint telecom executive and lobbyist Ian Scott to head the agency. Scott has spent years working at and lobbying for several Canadian telecom incumbents, his velocity through the regulatory revolving door at several times leading to complaints over conflicts of interest.

Scott's appointment have many Canadian consumer advocates worried that after several years of aiding consumers, Canada is eager to follow their neighbors to the south down the regulatory capture rabbit hole:

"This is a concerning choice by the government,” said OpenMedia communications manager Meghan Sali, who also noted that, under Blais, the regulator declared broadband Internet a basic service in Canada.

“Canadians were hoping for somebody with a strong consumer rights background, and will undoubtedly be disheartened to see the Trudeau government place someone from industry into the top decision-making position."

Much like former US FCC boss Tom Wheeler, Blais' attempts to actually stand up for consumers raised hackles at Canadian incumbents. At one point, Canadian incumbent Bell actually refused to let Blais appear on their television channels in retribution for his efforts to make Canadian cable television more affordable. Similarly, much like here in the States, incumbent ISPs often tried to characterize Blais' slightly-more consumer-friendly policies as radical and fatal to industry investment and innovation. Needless to say, they're arguably thrilled by this new appointment of a direct ally.

Of course the fact that Scott has spent the better part of the last few decades employed by incumbent Canadian ISPs doesn't automatically mean he'll be a sycophant to industry. Many are quick to highlight how nobody thought much of former U.S. FCC boss Tom Wheeler initially, his history of lobbying for the cable and wireless industries having raised plenty of eyebrows after his initial appointment. And because Wheeler went from dingo to what most see as the most-consumer friendly FCC boss potentially in agency history, he's now consistently used to downplay the historical threat posed by revolving door regulators.

Except Wheeler was a lobbyist for the cable and wireless industries during their nascent years, when both were pesky upstarts actually interested in competition and disruption. Wheeler also historically showed an uncommon ability to actually change his positions based on facts, an attribute in increasingly rare supply. So while it's certainly possible Canada's new CRTC boss could "pull a Wheeler" and somehow magically become a consumer ally, history generally suggests that Tom Wheeler was the exception, not the rule. Still, maybe Canadians will get lucky and Canada won't revert to a more industry-cozy approach to telecom and media policy.

Filed Under: canada, crtc, ian scott, jean-pierre blais, justin trudeau, lobbyists, net neutrality, regulatory capture, telecom

The Boston Globe Will No Longer Let John Sununu Shill For Telecom Companies Under The Pretense Of Objectivity

from the sockpuppets-marching dept

Like so many industries, the telecom industry employs a literal army of paid "consultants," fauxcademics, fake consumer advocates, ex-politicians and other talking heads to parrot industry policy under the pretense of objective analysis. Usually this sockpuppet army is used to build a sound wall of illusory support for shitty policy. This practice has worked for decades, in large part, because very rarely can newspapers or websites be bothered to disclose the fact that these individuals are paid to spew total and absolute nonsense by anybody interested in hiring their services via a third party (usually a law firm or lobbying group).

Case in point: the Boston Globe apparently has declared that it will no longer allow former New Hampshire Senator John Sununu to proudly shill for telecom companies within the publication's hallowed halls. Sununu is on the board of directors for Time Warner Cable, and has been paid $750,000 to be an "honorary co-chair" for broadband industry lobbying group Broadband for America. As a loyal hireling, Sununu can often be found repeating broadband industry dreck in media outlets everywhere, whether that's the claim that net neutrality rules will destroy the Internet, or that Netflix is a vile monster getting a "free ride" on ISP networks and must be punished.

Historically, when Sununu parrots writes for the Globe, the paper has simply described him as "a former Republican senator from New Hampshire, (who) writes regularly for the Globe," without bothering to disclose that somebody's often paying for Sununu's time. Despite years of this, only recently has the Globe come under fire for its flimsy-to-nonexistent transparency policies for Sununu and other freelance contributors.

Globe editorial-page editor Ellen Clegg recently responded to this criticism by stating the paper would no longer be sharing Sununu's telecom-related insights:

"In the interest of more transparency, we’re posting bios for our regular freelance op-ed columnists online and linking those bios to their bylines. John Sununu has told me he will avoid writing about issues pertaining to cable and internet access because of his seat on the Time Warner Cable board."

Note Clegg's primary worry appears to be Sununu's seat on a cable company board, not the fact that he's been paid by a lobbying group since 2011 or so. Sununu can, of course, still write on other issues where his conflicts of interest are at least marginally obscured in some half-assed fashion. Clegg goes on to make some ambiguous promises in regards to shoring up any transparency gaps moving forward:

"It’s safe to say that few freelance columnists make their living solely from writing for newspapers these days, so most have other jobs or consultancies. We want to be more transparent with our readers about the nature of columnists’ work and affiliations. When appropriate, we’ll include relevant details in the text of the print edition of the column, as well as the link for our digital readers."

Great, except it's not entirely clear that just posting a bio is enough, since those bios often intentionally obscure direct financial relationships. Take a recent Sununu piece in the San Francisco Chronicle, for example, which actively helps Sununu and friends confuse customers by pretending the telecom lobbying group that pays Sununu, "Broadband For America," is actually "a coalition of 300 Internet consumer advocates, content providers and engineers."

It takes about twenty minutes of research to discover "Broadband For America" is primarily a big-telecom lobbying vessel, funded almost solely by the cable industry, whose broader roster of members are included to create the illusion of diversity (often to their own surprise). These connections don't require back-breaking journalism to make; the money trail and faux objectivity is usually only obscured by the thinnest of veneers. Yet apparently, it took the Globe the better part of five years to decide it might be a good idea to highlight their purportedly objective telecom-related editorials were being written by a paid lobbyist.

And Sununu's just one of thousands of discourse-polluting mouthpieces employed by the telecom sector. Former Senator and fair use champ Rick Boucher now works for Sidley Austin's "Government Strategy Group," one of countless AT&T lobbying vessels for policy regurgitation. When Boucher gets paid by AT&T to argue that CISPA would be good for privacy or pretend the broadband industry is ultra-competitive, you'd be hard pressed to find a single news outlet willing to highlight the umbilical cord that affixes him to the AT&T mothership.

And that's just two former politicians. There are thousands of other academics, consultants, politicians, think tankers and freelance telecom editorialists happy to regurgitate any and everything for pay, whether that's cheering Comcast's latest merger or insisting the broadband industry is secretly, wonderfully competitive. While this lack of transparency is common across the board in media, you'd think that journalism-lecture-happy newspapers in particular would be the first in line to proactively highlight dubious editorial funding relationships.

Filed Under: disclosure, john sununu, net neutrality, shills, telecom
Companies: boston globe, broadband for america, netflix