FCC Makes It Clear It Thinks Some Net Neutrality Abuses Are 'Innovative' And 'Pro Competition'

from the down-the-slippery-slope dept

If you were wondering whether or not the FCC would bless T-Mobile's new controversial zero rating plans, agency boss Tom Wheeler has given a pretty good indication of which way the agency is leaning. As covered previously, T-Mobile's been aggressively experimenting with zero rating -- first by exempting only the biggest music services from its usage caps -- then more recently by announcing Binge On. Binge On exempts video services from T-Mobile's wireless data caps, but "optimizes" those streams, limiting them to 480p.

T-Mobile tap danced around net neutrality rather cleverly, by making the option something users can disable, while stating that any company that wants to participate can join, for free. The problem remains one of precedent: by opening the doors to carriers as middle men in this fashion, you're fundamentally changing the way the internet works. Companies now need to seek special permission from ISPs to ensure their traffic is on a level playing field. A small streaming company in Cleveland, for example, may not even realize it's being discriminated against, or that it needs to contact T-Mobile to stop it.

The pitfalls are nuanced, and consumers have generally been oblivious to the bad precedent thanks to the lure of "free data" (that's not really free, since usage caps are entirely arbitrary constructs to begin with). And now we can add FCC boss Tom Wheeler to the list of folks who apparently think abandoning a truly open internet is just a nifty idea:

"Wheeler, in a press conference following the FCC's November meeting, appeared to endorse the Binge On offering, calling it pro-competitive and innovative. "It is clear in the Open Internet order that we are pro-competition and pro-innovation and clearly, this meets both of those criteria," he said. "It is highly innovative and highly competitive."

But apparently to appease the six of us that see the potential pitfalls here, the FCC boss then turned around and suggested the agency will be keeping an eye on the program:

"He said the FCC would keep an eye on Binge On per the general conduct standard in those new open Internet rules, which allows the FCC to look at such business models on a case-by-case basis.

That rule, he elaborated, says a carrier "should not unreasonably interfere with the access to someone who is trying to get to an edge provider and an edge provider who is trying to get to a consumer. So, what we are going to be doing is watching Binge On, keeping and eye on it, and measure it against the general conduct rule."

Again, T-Mobile's program may not be the most offensive net neutrality violation ever seen, but the precedent remains horrible. While T-Mobile may be more consumer friendly than other carriers, the simple act of allowing zero rating opens the door to carriers like AT&T and Verizon that are decidedly less so. Meanwhile, Wheeler may be replaced by an FCC boss with an even more flexible interpretation of "innovation" (assuming they're not busy trying to dismantle the rules entirely). This potential for preferential discrimination is why Chile, Norway, Netherlands, Finland, Iceland, Estonia, Latvia, Lithuania, Malta and Japan all moved to prohibit zero rating in some fashion.

The FCC did e-mail me to note that the "Commission staff is working to make sure it understands the new offering," but Wheeler's comments (and previous FCC statements) make it pretty clear that the agency sees usage caps and zero rating as little more than creative pricing. In other words, the agency's telling ISPs: violate net neutrality, just be creative about it. As T-Mobile's program took root, the magenta-hued character that is T-Mobile CEO John Legere was quick to applaud himself:

HAPPY #BINGEON DAY!!! What are you going to watch first?! pic.twitter.com/PChCJGis8k

— John Legere (@JohnLegere) November 19, 2015

I don't know. The slow but steady erosion of a healthy, neutral internet to the sound of thunderous applause?

Filed Under: binge on, competition, fcc, innovation, net neutrality, tom wheeler, zero rating
Companies: t-mobile

Comcast Tests Net Neutrality By Letting Its Own Streaming Service Bypass Usage Caps

from the special-treatment dept

By now, Comcast's strategy for fighting internet video competition is very clear. For one, the company is slowly but surely expanding usage caps into dozens of new markets. In these ever-expanding areas, Comcast imposes a 300 GB usage cap, then charges users $10 for every 50 GB of extra data they consume. Comcast's also now testing a new wrinkle wherein users have the option of paying another $30 to $35 if they want unlimited data. In short, the option to have the same unlimited connection they had yesterday will cost these users significantly more.

But recently, Comcast's other spoke in this strategy started to reveal itself. The company is slowly but surely expanding a creatively named streaming video service named Stream. Stream provides Comcast broadband-only users a $15 service that includes live TV, video on demand, and HBO, and it's Comcast's way of trying to keep would-be cord cutters in house. Here's the kicker though: Comcast's new streaming service doesn't count against Comcast user usage caps:

"We asked Comcast today if Stream TV usage will count against the 300GB data plans imposed in certain parts of Comcast's territory. "No, Stream is an IP cable service delivered over our managed network to the home," a Comcast spokesperson replied.

Comcast also pointed Ars to an (sic) FAQ that says, "Stream TV is a cable streaming service delivered over Comcast's cable system, not over the Internet. Therefore, Stream TV data usage will not be counted towards your Xfinity Internet monthly data usage."

In short, Comcast's trying to argue that this isn't a net neutrality violation because the service spends significantly more time traveling over Comcast's managed IP infrastructure instead of the public Internet. It's the same excuse Comcast gave back in 2012, when it was criticized for exempting its streaming service via the Xbox 360 from usage caps. The move resulted in some pointed criticism by Netflix CEO Reed Hastings, who declared that Comcast was "no longer following net neutrality principles" and the company "should apply caps equally, or not at all." The FCC, however, did nothing.

Of course since then, Comcast has deployed its usage caps to significantly more households. Its caps now cover an estimated 12% of its userbase, and the company shows no sign of slowing down anytime soon, with dozens more markets slated for caps on December 1. There were some vague rumors the FCC was watching Comcast's cap expansion plans carefully, but so far the FCC has done nothing.

Unlike 2012, we also now have some actual net neutrality rules in place. The problem, as we've noted a few times, is they don't specifically ban zero rating, but insist the FCC will look at examples of bad behavior on a "case by case" basis. That opens the door -- as we're seeing with T-Mobile -- for carriers to violate net neutrality, if they're just clever enough about it.

It's unclear when exactly the FCC intends to step in to actually enforce the rules it fought (and is still fighting in court) so hard for. Consumer groups like Public Knowledge say they already have a complaint pending with the FCC, and are waiting for the FCC to stop napping:

.@publicknowledge has a pending complaint about Cmcst exempting self from #datacap. https://t.co/TjSKtQxrZ5 Maybe now @FCC will act?

— haroldfeld (@haroldfeld) November 19, 2015

As it stands, our shiny new net neutrality rules may not be worth all that much if regulators aren't willing to use them.

Filed Under: data caps, fcc, net neutrality, streaming, zero rating
Companies: comcast

T-Mobile And MetroPCS Go All In On The Horrible Precedent Of Zero Rating

from the setting-the-stage-for-disaster dept

Last year we noted that for being such a supposedly cool CEO, T-Mobile's John Legere seemed utterly clueless on the subject of net neutrality. Not only did the CEO claim that Title II and new net neutrality rules would "kill innovation" (tip: that didn't happen), he seemed totally oblivious to the bad precedent set by the company's zero rating efforts. Those efforts began with T-Mobile's decision to let some music services bypass user usage caps, which as we've discussed at great length puts smaller companies and non-profits at a distinct disadvantage.

But since our regulators (and much of the press and public) seem clueless to the harm of zero rating so far, T-Mobile has decided to expand these efforts. Last week the company started cap-exempting video services, and now the company has announced it's bringing zero rating to the company's prepaid wireless brand (MetroPCS) as well. Now the company's prepaid and postpaid (monthly billed) customers both will find that thirty-three of the biggest music stream services no longer count against their usage caps (yeah, sorry, small independent radio streaming stations too little to get on T-Mobile's whitelisted radar).

As usual, the move was framed as a huge boon to consumers:

“Once again we are setting MetroPCS apart from the rest of the pack in ways that no one else will,” said John Legere, president and CEO of T-Mobile US. “MetroPCS is the #1 brand in prepaid because we keep giving customers more of what they want, and today that means adding Music Unlimited and Data Maximizer to the list! Their data will last longer than ever before without ridiculous penalty fees or trickery!"

And like regulators, most of the telecom beat covering T-Mobile has been oblivious to the bad precedent set. They don't quite yet understand that letting a wireless carrier suddenly decide what traffic gets whitelisted from already-arbitrary usage restrictions sets the stage for a total upheaval of how the Internet works now. They also don't understand that if it's ok for T-Mobile to do this, it's ok for a company like AT&T to do something similar -- and AT&T's version is going to be notably worse. The Los Angeles Times, for example, struggles to see where the problem lies:

"Besides, there's nothing in the FCC's neutrality rules that bars data caps, which enable carriers to segment the market and charge higher prices to those who put a higher value on bandwidth. Binge On represents another reduction in the pain caused by data caps, which seems like an unalloyed good thing for consumers."

But you're not reducing a "pain point" by creating an arbitrary data cap, then letting some content bypass that cap -- you're just getting in the way of a healthy Internet ecosystem. And just because the FCC lacked the foresight to prohibit zero rating in our net neutrality rules (unlike Chile, Norway, Netherlands, Finland, Iceland, Estonia, Latvia, Lithuania, Malta and Japan, which all bar zero rating), that doesn't mean this isn't a potentially horrible idea that's going to change the face of the Internet. It's very clear that the perils of zero rating are something we're eager to experience first hand here in the States, applauding our own "great fortune" all the way.

Filed Under: john legere, music unlimited, net neutrality, wireless, zero rating
Companies: metropcs, t-mobile

Sorry Net Neutrality Chicken Littles, Title II & Net Neutrality Still Haven't Hurt Broadband Investment In The Slightest

from the the-sky-is-not-falling dept

It's the ISP lobbyist and think tank meme that simply won't die. ISPs of course predicted all manner of doom and gloom should net neutrality and Title II reclassification come to pass. Tubes were supposed to clog, innovation was supposed to die, and investment in broadband networks was supposed to shrivel up completely. Of course, none of that happened. Instead what we've seen is broadband investment actually spike, many of the companies feuding before the rules came to pass suddenly getting along beautifully, and Netflix streams that no longer suck thanks to the threat of a regulator actually doing its fucking job.

Of course, if you're a mega-ISP lobbyist or executive (or one of the millions of people paid to parrot their bullshit in one fashion or another) you can't admit that, lest you get kicked out of the ISP think tank astroturf adventure club.

So instead, we've seen everyone from ex-Verizon lawyers turned FCC Commissioners to Congressmen repeat the idea that Title II killed the broadband golden goose. As net neutrality opponents continue to hold a series of show pony hearings intended to shame the FCC for daring to stand up to ISPs, the claim that net neutrality is the anti-Viagra to sustained broadband spending continues to play front and center. Though entertainingly, even the "experts" that neutrality opponents have been inviting to DC to tell them what they want to hear have even started to balk:

"Robert Shapiro, co-founder Sonecon LLC, has predicted investment could eventually decline between 5 percent and 20 percent per year because of the rules. He said the rules will have a "substantial adverse effect" but noted that those who claim to know fully how the rules will affect investment are "talking through their hat." Michael Mandel of the Progressive Policy Institute similarly said, "We don't know now what is going to happen." The institute has previously blamed the rules for a decline in broadband capital expenditures in the first half of 2015, though others have disputed the cause."

The same Progressive Policy Institute claiming "we don't know what is going to happen," is the same organization that's been circulating a study by Hal Singer for months claiming that Title II was responsible for a 12% dip in network investment. That study has been popping up in everything from editorials to Congressional testimony for months. Except as we've already explored at length, Singer cherry-picked his data, including companies that were winding up major projects that had nothing to do with net neutrality (like AT&T's completion of "Project VIP" fiber upgrades, or Charter's finished digital cable conversion).

And indeed, the one or two people in the tech and telecom press that can be bothered to actually look at CAPEX numbers are discovering that lo and behold, investment is doing just fine:

"In the nine months ending September 30, Comcast said its "capital expenditures increased 12.8 percent to $5.9 billion compared to the prior year." The Q3 increases are primarily due to "increased spending on customer premise equipment related to the deployment of the X1 platform and wireless gateways and our ongoing investment to expand business services," Comcast said.

...Time Warner Cable, the nation's second biggest cable company after Comcast, reported today that its capital expenditures increased to $3.5 billion in the first nine months of 2015 due to efforts "to improve network reliability, upgrade older customer premise equipment and expand its network to additional residences, commercial buildings and cell towers."

...The new classification hasn't slowed mobile investment at Verizon, which is preparing for an upgrade to 5G and reported that its wireless capital investment is "$8.5 billion year to date, up 8.4 percent from a year ago." The increase was even more striking when comparing Q3 2014 to Q3 2015, with wireless capital spending going up 17.6 percent from $2.48 billion to $2.92 billion.

Anybody noticing a trend? And again, in the instances where an ISP did reduce spending, it was usually related to things that have jack shit to do with net neutrality, such as AT&T and Verizon's refusal to upgrade their DSL networks, or cable companies finishing up set top box deployment projects. Surely Hal Singer and the net neutrality chicken little band will be issuing statements admitting they were in error any day now? Of course not. What they'll do is insist that it's just too early to see the diabolical impact real net neutrality rules will have on the broadband sector. Then, in ten years, when there's still no impact (assuming the rules aren't sued into oblivion), these folks will be on to the next scary paymaster talking point, pretending they never made these predictions at all.

Filed Under: investment, net neutrality, title ii
Companies: comcast, time warner cable, verizon

T-Mobile Wades Into Net Neutrality Minefield With Plan To Zero Rate Netflix, HBO

from the slippery-slope dept

We've discussed many times now how zero rating, or the carrier act of letting some apps or services bypass a user's broadband usage cap, sets a horrible, dangerous precedent. By its very nature, letting one company or service bypass usage caps immediately puts non-whitelisted services, small businesses or non profits at a disadvantage, tilting the entire playing field and distorting the entire democratic nature of the Internet. For some reason, this is a very difficult concept for some consumers to understand, so lathered up they are by the initial lure of getting something for "free."

Of course you're not getting something for free. Usage caps are entirely arbitrary, untethered from financial or network performance necessity. They're an artificial construct, and allowing some services to bypass them (for a fee or otherwise) puts the ISP in the powerful position of picking winners and losers, instead of just doing its job (the delivery of bits). When it comes to net neutrality, the battlefield is no longer focused on ham-fisted throttling or blocking of services, it has shifted to more nuanced and clever abuses of gatekeeper power including interconnection, usage caps, and zero rating.

Last year T-Mobile introduced its first foray into zero rating called Music Freedom. Under the program, the biggest and most popular music services no longer count against user usage caps. That's great if you're, say, Spotify or Pandora, but not so great if you're an independent streaming radio station operating out of Cleveland, or an innovative new startup not yet on most users' radar. This kind of practice does violate neutrality, even if most regulators are painfully and utterly oblivious to the problem, but the violation isn't as idiotically obvious as the kind of neutrality infractions we're used to.

With its music zero rating efforts well underway, T-Mobile is now rumored to be planning to zero rate the biggest video services including Netflix, Sling TV and HBO. While the plan isn't supposed to be unveiled until November 10, early news of the plan was revealed on Twitter by reliable leaker and reporter Evan Blass:

T-Mobile's Uncarrier 10 to offer unlimited high speed data for watching select streaming video services like Netflix, HBO, etc.

— Evan Blass (@evleaks) October 29, 2015

T-Mobile CEO John Legere tried to re-inflate the hype balloon, but Blass offered up even more details about T-Mobile's plan, noting that HBO, Sling TV, Netflix and Hulu all appear to have been usage-cap whitelisted under the looming program:

.@JohnLegere Is it called BingeOn, by any chance, compatible with Netflix, HBO, Hulu, and Sling (all of whom will offer discounts)?

— Evan Blass (@evleaks) October 29, 2015

To be clear, Legere's brash demeanor is entertaining as hell in the normally dull telecom sector; his profanity-laden tirades and amusing press releases second to none. But when it comes to net neutrality, Legere has proven to be just as tone deaf as the stodgy duopoly sector counterparts his character mocks on a weekly basis. Legere opposed Title II reclassification and tougher neutrality rules for all the usual nonsensical reasons, including claims that protecting net neutrality would "kill innovation and competition."

Don’t let the gov’t kill innovation. It has made us the fastest growing wireless company in America. #netneutrality

— John Legere (@JohnLegere) November 10, 2014

And when the anti-competitive nature of his zero rating ambitions were first pointed out, Legere insisted he was "genuinely surprised" by the backlash to such a "pro consumer" idea. But even wearing magenta high tops, zero rating is zero rating. Give consumers the choice of a service that's cap exempt and a service that isn't, they'll pick the cap-exempt service the majority of the time. That's a wholesale distortion of competition (pdf), and it's a carrier injecting itself into the position of middle man in an Internet app and service ecosystem that's healthier and more competitive with them out of the way.

And while plenty of consumers, reporters, and analysts will be superficially thrilled by such a model, letting a carrier give preferential treatment to one app over another sets the stage for a future Internet where startups and independents are relegated to the outer fringes of the 'Net. It's a neutrality slippery slope we seem intent on running directly toward, cheering all the way.

Filed Under: net neutrality, streaming video, video, zero rating
Companies: netflix, t-mobile