The GOP Is Using Veterans As Props To Demonize Net Neutrality

from the lying-liars-and-the-liars-that-love-them dept

Earlier this year net neutrality opponents (read: US telecom monopolies and those who love them) used veterans as a cheap prop to unfairly demonize California's shiny new net neutrality law. California's net neutrality law bans "zero rating," or the act of imposing bullshit, arbitrary usage caps, then exempting an ISP's own content (or the content of any individual organization or company) from them. The reason for the ban? Caps are artificial constructs, and exempting select content from them tilts the internet playing field in favor of an ISP or deep-pocketed companies.

The prohibition is a good thing, in that it thwarts companies like AT&T or Comcast from exempting their own streaming content from caps, while still penalizing customers of competing streaming services (something AT&T has been doing for several years). It also prohibits letting a company like ESPN pay AT&T to exempt its own content from caps and obnoxious overage fees, ensuring they only apply to smaller sports media startups or competitors. It's an issue of fair competition.

Last month, the telecom industry clearly leaked a letter to Politico sent by two anonymous broadband providers (I believe to be T-Mobile and Verizon) to the VA, warning them that California's net neutrality law might ban veteran access to a healthcare app dubbed VA Video Connect. The issue: VA Video Connect is exempted from wireless and fixed broadband usage caps, providing veterans with a little financial relief for using it. So it technically violates the California law (not that California enforcers would actually act on it), and the VA was simply asking questions about what happens next.

But here's the thing: usage caps are bullshit constructs in the first place. They serve no technical function, and aren't helpful in managing network load or congestion. They're created by ISPs as a way to not only nickel-and-dime consumers and competing businesses, but to put themselves in an unwarranted position of control. As such, the whole model of exempting some content from such arbitrary restrictions is equally bullshit. And while the VA agreement does violate California's law, the workaround is simple: simply give veterans a discount off their entire mobile bill. Problem solved.

But because this is difficult for Luddites to understand, the GOP and its political operatives quickly pounced on the issue to exploit it, falsely claiming that "veterans were being cut off from essential healthcare." That message soon popped up everywhere in GOP-friendly news outlets like the Wall Street Journal and Fox News, among telecom backed think tanks, and in the mouths of FCC Commissioners like Brendan Carr. As somebody who's covered telecom for longer than I'd like, it's clear the entire thing was coordinated by industry lobbyists/policy wonks from the start.

This week, GOP lawmakers sent a letter to FCC boss Jessica Rosenworcel again using this non-issue to try and warn the FCC away from restoring net neutrality:

"Almost immediately after California enforced this law, two Internet providers reportedly told the Department of Veterans Affairs (VA) that the law could force them to end arrangements with U.S. wireless carriers that enable veterans to access a free, mobile telehealth app called VA Video Connect...We cannot risk losing lifesaving programs like VA Video Connect by imposing heavy handed regulations under Title II of the Communications Act."

Again, vets aren't losing access to anything. The app in question will just no longer be zero rated because zero rating is ISP-crafted bullshit. And the VA and providers could simply give veterans a discount off their entire bill. It's not an problem, and using veterans as a political prop to try and stall some basic regulatory oversight of widely disliked telecom monopolies is just grotesque.

But the GOP literally has a fifteen year track record of simply lying about what net neutrality is or what it does, most notably the bogus claim that net neutrality somehow harmed industry investment. And despite this claim of "net neutrality is hurting veterans!" being total nonsense, it will be repeated for months and years to come as the gospel reality, parroted by all of the GOP loyal news outlets and lawmakers, until it lodges in the brains of people (and some reporters!) who don't know any better.

Filed Under: california, fcc, net neutrality, va, veterans, zero rating

Telecom Using Veterans As Props To Demonize California's New Net Neutrality Law

from the scare-mongering-incorporated dept

Efforts by industry and captured regulators to demonize California's net neutrality law have begun in earnest.

Last week, AT&T lied that it had been forced to stop giving its customers "free data" nationwide because of the new law. Of course, that's not true. In reality, the law (slightly tougher than the FCC rules AT&T lobbied to kill) prevents AT&T from abusing its bullshit monthly usage caps. Under the law, AT&T can no longer abuse usage caps to give its own streaming services an unfair advantage over competitors like Netflix (which it had been doing for several years), nor can it let deep-pocketed companies buy an unfair advantage on AT&T's network (something AT&T called "sponsored data").

Despite the industry's attempts to frame this so-called "zero rating" as akin to "free data," that's not accurate, and numerous experts say blocking such efforts is a good thing for consumers and competitors alike (for many reasons). And it's not that AT&T was forced to stop offering "free data," so much as the law stops AT&T from erecting artificial network limits, then exploiting those pointless restrictions to give itself (and deep-pocketed competitors) an unfair advantage in online competition.

Because the broadband industry's gamesmanship with zero rating is hard for non-technical (or outright dumb) people to understand, it's easy to confuse folks. Enter FCC Commissioner Brendan Carr, who this week falsely tried to claim California's new net neutrality law would soon be "cutting off free health services" from veterans nationwide:

Would you be surprised to learn that absolutely nothing Carr claims here is true? Nobody is pulling video health care from veterans. It will never happen. Nobody's even "sounding the alarm," really. The VA is just doing competent due diligence to make sure they're in compliance with a new law.

Carr was riffing off a story in Politico noting that the VA is simply asking if their existing telehealth services will run afoul of California's net neutrality restrictions. The VA's correspondence was leaked by an anonymous party (wink!) Politico wouldn't reveal:

"POLITICO received a copy of the correspondence on the condition that it not identify the parties involved in the communication."

Of concern is the VA's Video Connect App, which provides veterans with access to video health services. The service is technically "zero rated" (doesn't count against a user's wireless caps), and while that's technically against the law, nobody in California is going to come along and sever veteran access to the app. Any claim to the contrary is scare mongering. Everybody involved here will find an easy workaround (more on that later) that makes everybody happy, because nobody wants to harm veterans.

I should note I'll be pretty surprised if the "most progressive state in the nation" even bothers to enforce the state's new net neutrality law on any consistent basis when it comes to actual harms. So the idea that California's going to suddenly start kicking veterans around as one of its first acts under this law (in the process giving ammunition to industry) is fairly laughable. Also: the claim this would occur nationally is just outright false. There's nothing stopping ISPs from zero rating this service in every state but California, given there's no federal restrictions on the practice due to relentless telecom industry lobbying.

Way more importantly to note, this is a non-issue with a simple solution. As Stanford Professor Barbara Van Schewick points out in a blog post, usage caps are bullshit constructs in the first place. If you understand that usage caps are pointless cash grabs by industry that serve no real technical purpose, you should also understand that exempting a service from those arbitrary caps is rather meaningless.

You should also understand there's any number of simple alternatives to help veterans get discounted access to this app that don't involve mucking about with monthly usage caps, confusing overage fees, or zero rating. Including, but not limited to offering a subsidy off of a veteran's overall bandwidth bill, or simply not charging so much money in the first place:

"Carriers can also lower the cost of unlimited plans for everyone so people can use the internet in the way that’s best for them. That’s the real solution, not allowing ISPs to pick and choose what apps and what segment of the population gets relief from low data caps.

Congress understands that, which is why it recently passed the Emergency Broadband Benefit that provides $50 a month to households with low incomes so they can do all the things they need to do online."

The broadband industry and Brendan Carr know this. They know California regulators won't bring the hammer down on the VA. They also know there's ample workarounds that can be struck so this will never become an actual problem (from what I hear that's already underway). But the telecom industry is on the hunt to try and find ways to demonize popular, pro-consumer, pro-competition rules of the road. So "somebody" (read: telecom companies or any one of their policy tendrils) leaked the VA's questions to Politico, Carr hops on board with a helpful quote designed to mislead, and Politico runs with it. Without providing any context by actual subject experts like Van Schewick who would have quickly explained that this was all an easily-remedied non-issue.

It of course didn't take long for the bogus claim to pop up at other industry-friendly outlets like Fox, which quickly jumped on board to amplify the false claims further under the pretense it was a "scoop":

The Fox story on this whole manufactured controversy is particularly amusing. In part because it provides absolutely no context informing readers that this is a non-issue with a trivial workaround. Nor do the reporters even try to contact actual subject experts. Instead, they just lazily quote former Ajit Pai "advisor" Nathan Leamer (now doing K street PR work for the GOP and industry) as some kind of objective expert. Leamer in turn is allowed to just spread falsehoods about how the Biden DOJ's decision to drop its dumb lawsuit against California somehow creates "regulatory uncertainty":

"Last month, the Department of Justice dropped a case against California that prevented the state from implementing net neutrality. The DOJ's decision to drop the case surprised many telecom insiders.

“This is another example of the regulatory uncertainty for wireless and tech industries as a whole,” Nathan Leamer, vice president at Targeted Victory, a public affairs firm, told FOX Business. “There was a lot of frustration that Biden’s DOJ dropped the suit in a heel turn."

This entire quote is nonsense. Biden's move surprised absolutely nobody, anywhere (and if you were surprised, you're not a "telecom insider"). And the only people "frustrated" that the DOJ backed away from Trump and Bill Barr's dumb lawsuit against California (simply for trying to protect broadband consumers) are telecom giants. Also, I'd be curious if A. "Targeted Victory" (also employed by Facebook) has telecom giants as clients, and if B. work for those clients ever involves working with captured regulators and allied media outlets to generate bogus controversies to attack policies and laws the industry doesn't like.

As the telecom sector and guys like Leamer and Carr were busy pushing this bogus claim at favorable news outlets, other telecom-backed think tanks were busy spreading the same message:

From there, it wasn't long before the bullshit claim, pushed heavily again by Carr, pops up in the mouths of the Wall Street Journal editorial board, showcasing how this whole thing was coordinated from the start:

See how this all works yet? It's not as hard to manufacture a controversy as you might think. Especially when the US press is eager to help.

Filed Under: brendan carr, california, net neutrality, va, veterans, zero rating
Companies: at&t

AT&T Whines That California Net Neutrality Rules Are Forcing It To Behave

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

Giant US ISPs have long (ab)used the lack of competition in the broadband market by imposing completely arbitrary and unnecessary monthly usage caps and overage fees. They've also taken to exempting their own content from these arbitrary limits while still penalizing competitors -- allowing them to tilt the playing field in their favor (or the favor of other deep pocketed giants). For example, an AT&T broadband customer who uses AT&T's own streaming services (like HBO Max) faces no bandwidth penalties or fees. If that same customer uses Netflix or a competitor they're socked with surcharges.

When the FCC passed net neutrality rules in 2015, it failed to recognize how this "zero rating" could be abused anticompetitively. They were just starting to figure this out and shift policy positions when Donald Trump was elected and net neutrality rules were killed. However, in the wake of net neutrality's federal repeal, states like California (much like the EU) passed their own net neutrality rules that genuinely prohibit zero rating.

More specifically, California's rules prohibited a company like AT&T from taking money from, say, ESPN, to exempt just ESPN content from caps. Why? One, again, caps are bogus artificial constructs that serve no technical function. And two, if a deep-pocketed giant like ESPN can afford to bypass your pointless cellular restrictions, and smaller online sports website can't, ESPN just gained an unfair competitive advantage (once AT&T gets its slice of the pie, of course).

AT&T, as you might expect, doesn't like this loss of revenue and power (the only two things this has ever been about for them). As such, the company took to their policy blog this week to whine incessantly about how unfair this all is. The company says that as a result of the rules it's backing off its "sponsored data" zero rating plan not just in California, but in other states. It will also no longer let companies buy cap-exempt, "zero rated" status. That's a good thing for internet competition, startups, innovation, and consumers. But this being AT&T, of course the company claims the exact opposite:

"Since it began, our sponsored data service, and competing offers from other wireless providers, have delivered significant benefits and saved consumers money. Consumers also have enjoyed an explosion of video streaming services."

Again though, you're not providing "significant benefits" by creating entirely arbitrary restrictions then letting the wealthiest companies pay you more to bypass them. You're creating a new business paradigm where you inject telecom giants into the mix to determine who can or can't be the most successful. Caps aren't based on any technical necessity, and they don't really help manage network congestion.

Here in the States, large ISPs have done a great job confusing the press and public by claiming that zero rating is the bits and bytes equivalent of a 1-800 number for data or free shipping. Customers who don't understand that usage caps are arbitrary nonsense from the get go often buy into this idea that they're getting something for free. Industry loyal regulators like Ajit Pai intentionally compound this confusion by claiming that this model is somehow of immense benefit to low income communities.

Except that's not true. In fact data has shown zero rating drives up consumer costs where it's heavily adopted:

"AT&T and industry-friendly regulators like Ajit Pai have also tried to claim that “zero rating” helps make broadband more affordable. But van Schewick said data has clearly shown that consumers pay notably more for broadband access in countries that embrace the practice.

“For example, in the European Union, ISPs that don’t zero-rate video give subscribers 8 times more data for the same price than ISPs that zero-rate video,” van Schewick said. “In announcing this shutdown, AT&T is trying to score political points against state net neutrality protections by lying to the public about the law and its effects."

Meanwhile, AT&T also continues to complain about how a "patchwork" of net neutrality rules is "totally unworkable," despite the fact this is the direct result of their successful fifteen year lobbying quest to not only kill net neutrality, but lobotomize the FCC:

"A state-by-state approach to “net neutrality” is unworkable. A patchwork of state regulations, many of them overly restrictive, creates roadblocks to creative and pro-consumer solutions. We have long been committed to the principles of an open Internet."

It takes a fair amount of hubris to repeatedly whine about a problem your lobbyists created. AT&T also continues to proclaim that this is an issue that should be settled by Congress passing a net neutrality law, hoping you'll ignore that it pays US lawmakers oodles of money to not do this. Yeah, AT&T wants a federal net neutrality law, but it wants one its lawyers write. One that's filled with loopholes and, most importantly, pre-empts tougher, better state or federal consensus driven solutions that might actually have some teeth.

Filed Under: broadband, california, competition, data caps, net neutrality, overage fees, zero rating
Companies: at&t

Facebook's Australian News Ban Did Demonstrate The Evil Of Zero Rating

from the a-massive-problem dept

People have been very angry at me for pointing out that Facebook's decision to ban links to news down under actually made sense -- even though Facebook has now cut a deal to return the links. The move was in response to an incredibly poorly thought out law to force Facebook and Google to pay giant news organizations, just because those news organizations couldn't figure out how to innovate online. One key point: I said that even if Facebook is the worst representative of the "open web," this move is the right one for the open web. That's because the alternative is much worse. Since the Australian law would force Google and Facebook to pay for the crime of linking to news, it would set up the incredibly anti-open web concept that you could be forced to pay to link.

Again, as we've already explained, this is idiotic. The links give websites free web traffic. Most news organizations, including those down in Australia, employ SEO and social media managers to try to get more links and more traffic from these websites because the links themselves are valuable. And thus, this entire bill is bizarre. It's saying that not only do you have to give us valuable traffic for free... you also have to pay us. I still can't think of any reasonable analog, the situation is so insane.

But -- some people argue back -- Facebook is no champion of the open web. Indeed. I've never argued otherwise. It's not. But this move was important to protect the open internet (and it's now disappointing that the company has caved). But, of course, this move also has demonstrated why Facebook has, historically, been a danger to the open web as well. And that's because when it blocked access to news links in Australia, it also did the same for many Pacific islands. And while we've mocked Australians who don't seem to realize they can just go to the websites of news organizations, for some of these Pacific islands, that's not actually the case. Because of Facebook's other attacks on the open web.

For years, we've pointed out the evil that is Facebook's "Free Basics" program. This is a form of "zero rating," in which Facebook would subsidize (or even make free) access in remote parts of the world... but only to Facebook. Facebook, of course, framed this as a way of "connecting the poor" and helping to get affordable internet access to places that didn't have it. But that's not true. It only gave them access to Facebook. As many people have pointed out over the years, if Facebook really wanted to subsidize internet access in these parts of the world, it should have have subsidized real access to the wider internet, not just Facebook.

So, now, these two things have collided in the South Pacific. Facebook's anti-open internet policies with zero rating, and Facebook's pro-open internet decision to not link if it requires payment. And those who bought into the false prophet of Free Basics, are now suffering:

Across the Pacific, thousands of people are on pre-paid data phone plans which include cheap access to Facebook. Those on limited incomes can get news through the social network, but cannot go to original source websites without using more data, and spending more money.

The region’s largest telco provider, Digicel, with a presence in Fiji, Nauru, Papua New Guinea, Samoa, Tonga and Vanuatu, offers affordable mobile data plans with free or cheap access to Facebook.

In Australia, news from Pacific sites also appeared to be blocked, a significant impediment for diaspora communities and seasonal workers.

And this, in turn, is creating disinformation risks:

Articles reposted from Australian news sources are often used in the Pacific to rebut misinformation being spread on Facebook, Watson and Howarth said.

“One very popular page in PNG seems to attract more than its fair share of long-longs [an ill-informed person in pidgin] opposing vaccination as the Covid pandemic quietly spreads daily,” Howarth said.

It's not clear why Facebook cut off news to those Pacific islands in addition to Australia, but it might just be because they cut up the map by regions and lumped the south Pacific islands in with Australia. And, even if it wasn't that, since Facebook is blocking all links to news sources from Australia to the rest of the world, the Australian news sources that many of the small islands rely on are cut off for users on Facebook's zero rated plan.

So, yes, of course Facebook itself is no great friend of the open internet. And these two moves have combined to mess up news in the South Pacific. If Facebook actually wanted to support the open internet, it should keep banning news links where governments demand payments, but it should drop the silly "Facebook only" limitation of its zero rating program.

Filed Under: free basics, islands, link tax, news tax, south pacific, zero rating
Companies: facebook

The EU Makes It Clear That 'Zero Rating' Violates Net Neutrality

from the tilting-the-playing-field dept

For years now we've discussed how large ISPs have (ab)used the lack of competition in the broadband market by imposing completely arbitrary and unnecessary monthly usage caps and overage fees. ISPs have also taken to exempting their own content from these arbitrary limits while still penalizing competitors -- allowing them to use these restrictions to tilt the playing field in their favor (or the favor of partners with the deepest pockets). For example an AT&T broadband customer who uses AT&T's own streaming service faces no penalties. If that same customer uses Netflix or a competitor they're socked with surcharges.

The anti-competitive impact of this "zero rating," as it's called, should have been obvious. But here in the States, large ISPs have muddied the water by claiming that zero rating is the bits and bytes equivalent of a 1-800 number for data or free shipping. Customers who don't understand that usage caps are arbitrary nonsense from the get go often buy into this idea that they're getting something for free. And Ajit Pai's FCC has helped confuse the public as well by trying to claim that this model is somehow of immense benefit to low income communities (it's not, and in fact data has shown zero rating drives up consumer costs).

Muddled by lobbying influence here in the States, even the previous pro net neutrality Tom Wheeler FCC steered clear of banning zero rating with its initial net neutrality rules for fear of "hindering innovation." Wheeler's FCC was just starting to figure out this was a problem when Trump's election happened, resulting in the Ajit Pai FCC gutting the consumer protections completely (you know, for "internet freedom").

In contrast, a few years ago the European Union passed some fairly decent net neutrality rules that went notably further than the FCC. They not only prohibited ISPs from unjustly blocking, throttling, or restricting access to services the ISP may compete with, they imposed some basic protections governing zero rating -- a practice ISPs here in the US have increasingly been using anti-competitively. Despite the rules, enforcement has thus far been inconsistent and patchy, resulting in some EU wireless carriers continuing to embrace zero rating.

That may soon come to an end however, as Europe's top court this month ruled that yes, zero rating violates net neutrality. In its ruling, the court made it clear that zero rating distorts the entire concept of level playing fields and fair competition:

"Such packages are liable to increase the use of the favoured applications and services and, accordingly, to reduce the use of the other applications and services available, having regard to the measures by which the provider of the internet access services makes that use technically more difficult, if not impossible. Furthermore, the greater the number of customers concluding such agreements, the more likely it is that, given its scale, the cumulative effect of those agreements will result in a significant limitation of the exercise of end users’ rights, or even undermine the very essence of those rights."

Opponents of net neutrality here in the States like to frequently trot out the claim that net neutrality was repealed here in the States and the internet didn't immediately implode, therefore the rules must not have mattered. But that ignores (usually quite intentionally) the fact that companies like AT&T are already clearly using zero rating to try and disadvantage competitors like Netflix. More importantly that logic ignores the fact that when the federal government gave up on consumer protection many states passed their own rules.

With a goal of zero oversight for U.S. monopolies, ISPs, with the Trump FCC and DOJ's help, have tried to ban states from protecting consumers whatsoever. But so far the courts haven't looked kindly on those efforts. In short, the "internet hasn't exploded" in the wake of net neutrality's repeal in the States because ISPs don't want to run afoul of state regulators. They also aren't likely keen on getting too aggressive on this front when it's very possible that a Biden administration passes new net neutrality rules.

Whatever future net neutrality rules look like, zero rating needs to be taken seriously as a real threat to fair online competition free of malicious gatekeepers. It's abundantly clear giants like AT&T want to abuse the idea to inject themselves into business relationships they should have no part of, something groups like Mozilla have long made clear. Big ISPs want to abuse the lack of competition by erecting arbitrary barriers, then charging competitors and consumers extra should they choose a competitor's service. That this was portrayed as a good thing speaks to the effectiveness of U.S. telecom's PR vilification of even the most basic of oversight.

Filed Under: broadband, eu, net neutrality, zero rating

Senators Wyden And Markey Make It Clear AT&T Is Violating Net Neutrality

from the ill-communication dept

For years now, AT&T has imposed arbitrary broadband monthly usage caps and costly overage fees -- but not if you use the company's own streaming TV service. As a result, when you use AT&T's own streaming TV platforms, you won't see any limits. But try to use an AT&T competitor like Amazon, Hulu, or Netflix, and you'll face monthly limits and usage surcharges. Like many big ISPs, AT&T has temporarily lifted its caps on fixed-line broadband networks, but is expected to quietly return to the practice once things semi-normalize.

AT&T has confirmed that the same approach will be applied to AT&T's latest streaming TV service, HBO Max. Use AT&T's broadband service and AT&T's HBO Max? No arbitrary, unnecessary, or costly restrictions. Use AT&T's broadband service but want to use Netflix instead? Suddenly you're facing annoying restrictions and a higher monthly bill. AT&T also lets deep-pocketed companies pay for exclusion from usage caps, something that disadvantages smaller competitors.

AT&T's been doing this for several years without penalty, so the extension to its newest streaming service isn't surprising. But last week Senators Ron Wyden, Ed Markey, and Richard Blumenthal fired off a letter to outgoing AT&T CEO Randall Stephenson (pdf), asking the company to explain how giving preferential treatment to its own services isn't a terrible precedent:

"According to AT&T, HBO Max is benefiting from AT&T’s “sponsored data" system, which allows content companies to pay AT&T for the right to be exempt from data caps. Although HBO Max may technically be paying for this benefit, AT&T is essentially paying itself. This practice of allowing one arm of your company to “pay” another arm of your company for preferential treatment attempts to mask its true impact. The Trump FCC may have gutted critical net neutrality protections, but AT&T nonetheless has a responsibility to avoid any policies or practices that harm consumers and stifle competition. We urge you to provide us with an explanation for the behavior described above by June 25, 2020."

Several other ISPs (like Comcast) have engaged in similar behavior. When pressed, they'll usually trot out a pseudo-technical justification for the practice, insisting that because much of this traffic only touches an ISP's own network, usage caps need not apply. That's not only nonsensical, it ignores the fact that there's simply no technical justification for caps and usage charges in the first place. None. Such limits don't manage congestion. They're simply arbitrary price hikes imposed in uncompetitive markets. And they're not a useful price differentiator either (that's what speed tiers and business class service is for).

AT&T knows full well that since its lobbyists just got done convincing the FCC to effectively not just gut net neutrality rules but also the FCC's authority over telecom, there's nothing the FCC can do about any of this. And users can't really punish AT&T via "the market," because they have no competing ISP to flee to. That leaves either Congress, which is awash in AT&T campaign contributions (making it extremely unlikely we see a net neutrality law anytime soon), and states, whose responses will range from inconsistent to nonexistent.

However folks attempt to justify this, it's an entrenched telecom monopoly imposing arbitrary limits, then selectively removing them to give their own platforms an unfair market advantage. And because AT&T has incredible sway over the lion's share of regulators and lawmakers, nobody's going to do a damn thing about any of it beyond a few polite letters.

Filed Under: data cap, hbo max, net neutrality, playing favorites, ron wyden, sponsored data, zero rating
Companies: at&t

Net Neutrali-what? AT&T's New Streaming Service Won't Count Against Its Broadband Caps. But Netflix Will.

from the fake-barriers-but-real-penalties dept

For a long time, we've noted how broadband usage caps are bullshit. They don't actually help manage congestion, they have nothing to do with "fairness," and are little more than glorified price hikes on the backs of captive customers in uncompetitive markets. Worse, they can be abused anti-competitively by incumbent broadband providers, one of the major triggers of the net neutrality debate.

For example, AT&T for a while has made its own streaming TV services exempt from its usage caps, while competing streaming services (Netflix, Amazon, whatever) count against a user's monthly data allotment. This gives AT&T a distinct advantage in that users are incentivized to avoid competing services lest they face completely arbitrary and unnecessary usage limits and fees. It's bullshit. It has always been bullshit.

AT&T has added another layer to this bullshit cake. The company has long experimented with something called "sponsored data," which lets companies pay AT&T extra if they want to be exempt from AT&T's (again, completely arbitrary and unnecessary) broadband usage caps. This adds yet another anti-competitive layer to the equation by letting a deep pocketed company (say: ESPN) get a distinct advantage over smaller startups that can't afford to pay AT&T's toll.

Last week AT&T launched yet another streaming TV service, HBO Max. This service also won't count against AT&T's usage caps and overage fees, AT&T confirmed to The Verge:

"According to an AT&T executive familiar with the matter, HBO Max is using AT&T’s “sponsored data” system, which technically allows any company to pay to excuse its services from data caps. But since AT&T owns HBO Max, it’s just paying itself: the data fee shows up on the HBO Max books as an expense and on the AT&T Mobility books as revenue. For AT&T as a whole, it zeroes out. Compare that to a competitor like Netflix, which could theoretically pay AT&T for sponsored data, but it would be a pure cost."

This has been a hard thing for some folks to understand (for whatever reason) so I'll reiterate: this is a regional telecom monopoly, imposing completely unnecessary limits on uncompetitive markets, which don't apply to the incumbent's own services. Efforts to impose net neutrality have always been about preventing incumbent telecom monopolies from abusing their market power by imposing unnecessary barriers to competitors, and this is precisely that. Fortunately AT&T's own incompetence has kept the company from dominating the streaming space so far, but it doesn't make this any less of a bad precedent.

Filed Under: competition, favoritism, hbo max, net neutrality, sponsored data, streaming, zero rating
Companies: at&t, netflix

AT&T Exec Insists That No Broadband Company Is Violating Net Neutrality Even Though AT&T Is Absolutely Violating Net Neutrality

from the nothing-to-see-here dept

For a couple of years now, AT&T has been trampling net neutrality without much of anybody giving a damn. Like many ISPs eager to take full advantage of limited US broadband competition, AT&T imposes arbitrary and unnecessary usage caps and overage fees on its broadband lines. If you're an AT&T broadband customer who uses more than 150 GB (DSL) to 1 terabyte (fiber) monthly, you'll suddenly face having to pay $10 per each additional 50 gigabytes consumed. Again to be clear: there's no technical reason for these limits to exist outside of nickel-and-diming captive customers.

While these caps have been in place for a while, a few years ago AT&T began eliminating these restrictions for its broadband customers if you use AT&T's own streaming platforms. Use Netflix instead, and you'll face a significantly higher broadband bill. This is by any measure a net neutrality violation because it allows AT&T to use its power as network operator to try and stake out a distinct advantage.

Speaking at Recode's Code Media conference this week, AT&T President John Stankey was asked a bit about the potential for AT&T to abuse its power as newfound owner of both the content and the conduit. His response was fairly stunning:

"You'd be hard-pressed to point to an instance of anybody's behavior that would suggest that there is any kind of discrimination, favoritism, or anything else going on in how people get to content on the Internet over a broadband connection," Stankey said. "It's a problem that's non-existent. There's absolutely nothing that's occurring."

Again, either Stankey doesn't understand how his own products work, or he's flat out lying. Hard to tell, since, as is usually the case at such conferences, nobody followed up with any pointed questions. Hell, AT&T pioneered the idea of "sponsored data," which involves letting companies literally buy their way to network favoritism if they had enough cash. Under AT&T's ideal model, if you pay AT&T enough cash, arbitrary restrictions (like usage caps) won't apply to you.

Unsurprisingly, AT&T saw resistance to these kinds of playing-field tilting business models. In fact, the previous FCC was just gearing up to crack down on this kind of behavior when Trump was elected, Pai was appointed head of the FCC, and all meaningful rules on this front were quickly obliterated at AT&T's request. Good times.

As the telecom sector has been known to do in recent months, Stankey then tried to brush aside any telecom monopoly concerns, and suggested those worried about predatory behavior look toward Google and Apple:

"Stankey would prefer that consumers direct their ire elsewhere. "I'd be far more concerned over the scale of what's occurring in terms of distribution platforms on mobile OSes, in terms and conditions associated with new product development on that and what that does to squash innovation, than anything to do with how traffic over the Internet is being treated today," he said"

The idea that telecom is an innocent angel and the only real threat to the internet comes from Silicon Valley has been a line the telecom sector has been pushing for a while, in large part because giants like AT&T want to elbow in on Facebook and Google's online ad domination. Given the fact government is exploring saddling Silicon Valley with new regulations, penalties, and oversight (many justified) while dismantling all meaningful oversight of telecom should give you some insight into how well that gambit has been going.

Filed Under: broadband, competition, data caps, fcc, john stankey, net neutrality, zero rating
Companies: at&t

Zero Rating Actually Costs Broadband Customers More, EU Study Finds

from the ill-communication dept

For years now we've discussed how large ISPs have (ab)used the lack of competition in the broadband market by imposing completely arbitrary and unnecessary monthly usage caps and overage fees. ISPs have also taken to exempting their own content from these arbitrary limits while still penalizing competitors -- allowing them to use these restrictions to tilt the playing field in their favor. For example an AT&T broadband customer who uses AT&T's own streaming service faces no penalties. If that same customer uses Netflix or a competitor they're socked with surcharges.

The anti-competitive impact of this should be obvious.

But large ISPs have muddied the water by claiming that zero rating is the bits and bytes equivalent of a 1-800 number for data or free shipping. Customers who don't understand that usage caps are arbitrary nonsense from the get go often buy into this idea that they're getting something for free. And Ajit Pai's FCC has helped confuse the public as well by trying to claim that this model is somehow of immense benefit to low income communities.

Guess what: it's not. Studies from Mozilla have shown that zero rating isn't some mystical panacea. You might recall that Facebook has spent years trying to offer a walled-garden internet service to developed nations where select content is "zero rated," something that was banned in India when regulators realized that letting Facebook determine which content was most widely accessed was a decidedly stupid idea. Facebook's altruism on this subject was ultimately revealed to be a ham-handed attempt to dominate advertising in developing nations.

Now a new study (pdf) by the non-profit Epicenter.works has shown that zero rating models actually increase costs for the end user, the exact opposite of what incumbent carriers and Ajit Pai's FCC have claimed.

While the EU passed net neutrality guidelines back in 2016, it left actual enforcement to each country. Mirroring efforts in India and Japan, some EU countries prohibited zero rating entirely. Others took a more hands off approach and allowed such models (usually based on ISP promises that such practices aided low-income users). The study took a look at 30 EU nations and found that those that prohibited zero rating saw a double-digit drop in the cost of wireless data plans compared to countries that embraced the concept.

The study theorizes the higher costs are due to carriers being incentivized to jack up the cost of accessing normal, "non-zero rated" content in a bid to make zero-rated content seem more attractive. The EFF has been noting for years how this kind of gamesmanship distorts the market, putting natural telecom monopolies in a troubling position of determining which content and services will be cap-exempt (usually their own or whoever can afford to pay them). The EFF was particularly concerned this would be a cornerstone in the wake of AT&T's $86 billion acquisition of Time Warner. Its concerns proved well founded.

The EFF continued to make that same point on the heels of this latest study's findings:

"Zero rating by wireless carriers has effectively become a tool for them to direct their user traffic under the guise of giving consumers a benefit,” EFF lawyer Ernesto Falcon told Motherboard in an email.

“This EU study reveals that it actually is a more covert way to raise prices and increase their profits with the added benefit of anti-competitive self dealing,” he added. “This is particularly problematic with low-income users, which tend to be people of color, because they can only afford wireless broadband services and forgo wireline connections where zero rating is not a predominant practice."

You might recall that the FCC's 2015 net neutrality rules didn't specifically ban zero rating, but left the door open to thwarting such efforts if they were found to be clearly anti-competitive. But the FCC figured out too late that ISPs were already using zero rating to favor their own streaming services, and just as the former Wheeler FCC was about to crack down on the practice, Trump was elected, Ajit Pai was appointed to head the FCC, and the agency dismantled the country's first meaningful net neutrality rules entirely. AT&T's now doing exactly what critics predicted, and few seem to care.

Net neutrality supporters have since come to realize that any real net neutrality rules that don't thwart anti-competitive use of zero rating are useless. California's looming net neutrality rules, for example, allow zero rating if it applies to all classes of traffic (games, video, music), but prohibits it if it's used to specifically favor one company's content. Should Congress ever get its act together and pass a real net neutrality law (which still seems like long odds given telecom's lobbying grip), the patently obvious anti-competitive and cost impact of selective zero rating is something that shouldn't be forgotten.

Filed Under: broadband, consumers, data pricing, eu, zero rating