telcos – Techdirt (original) (raw)

Telecoms To Get $45 Billion In Taxpayer Broadband Subsidies, But Are Whining Because They Might Have To Deliver Affordable Broadband To A Few Poor People

from the greedy-telcos dept

The 2021 infrastructure bill is throwing more than $42 billion at America’s mediocre broadband networks. And while a lot of that money will be put to good use shoring up fiber, a lot of it is being dumped in the laps of regional monopolies with a long, long history of taking subsidies in exchange for broadband networks they repeatedly, mysteriously, leave half completed.

Companies like AT&T, Charter, and Comcast that, thanks to years of anti-competitive behavior and lobbying, enjoy regional monopolies, limited oversight, and all that results (spotty access, high prices, slow speeds, and comically terrible customer service).

So not too surprisingly, there’s some fairly basic requirements affixed on this infrastructure bill money. The feds are preferring that the money be used to help build future-proof fiber networks. Some states (like Washington) are also urging the construction of “open access” networks, which allow numerous ISPs to come in and compete in layers, driving down prices.

To be clear, the NTIA rules affixed to the $42 billion in infrastructure subsidies allow states to ask that in exchange for this massive handout, ISPs make an effort to ensure they’re providing low-income users in those areas some kind of lower-cost option. And telecom giants like AT&T, Comcast, Charter, and Verizon are successfully lobbying states to have those requirements killed.

The feds themselves aren’t engaging in “rate regulation,” though this is how it’s been framed by telecom lobbyists and the politicians who love them. AT&T lobbyists have gone state by state, having success in states like Virginia threatening them to eliminate requirements that ISPs provide lower-cost service for poor people, or they’ll take their ball and go home:

“In Virginia, AT&T warned the state in a legal filing last September that strict pricing requirements “would be contrary to good public policy, lead to litigation and more importantly will discourage provider participation.” The company requested that “any rate regulation language be removed” from Virginia’s blueprint.”

If you’re a regular Techdirt reader, you probably know that AT&T has an extremely long history of taking taxpayer money, subsidies, tax breaks, and other federal favors, then making a sort of farting sound when asked to do much of anything (including actually delivering on a broadband network or new jobs).

That they’re being asked to do some basic things to get taxpayer money shouldn’t be seen as onerous notes Gigi Sohn, the popular telecom sector reformer whose nomination to the FCC, you might recall, was scuttled by a coordinated GOP and telecom industry smear campaign:

“This is a requirement in exchange for a humongous government benefit,” said Gigi Sohn, executive director of the American Association for Public Broadband, which advocates for low-cost options. “The kind of notion that government can require something in exchange for giving out billions of dollars, that’s standard.”

The state requirements aren’t a big deal. And decades of lobbying and dodgy court rulings have left most states without the staff or regulatory firepower to actually enforce requirements anyway, so it’s unlikely that telecoms would have faced any real penalty should they have half-assed it.

But big ISPs are absolutely terrified of even the faintest idea that anybody in government would so much as think about “rate regulation” (or any attempt to stop them from exploiting their regional monopolies to rip off captive customers). Even if, thanks to regulatory capture and widespread U.S. corruption, that hasn’t been a serious threat to their regional fiefdoms any time in the last quarter century.

Most state and federal regulators are so corrupt and captured, they can’t even publicly admit that monopoly power and consolidation has resulted in competitive market failure, much less propose any real solution to it. So what we get instead are these sort of bare minimum half efforts; and even that results in no limit of ceaseless whining by these pampered, widely disliked telecom giants.

Giants who find it trivially easy to throw a few hundred thousand dollars at corrupt state and federal officials to ensure that even the most basic requirements affixed to taxpayer money are rendered inert.

Filed Under: affordable access, broadband, infrastructure bill, subsidies, telcos
Companies: at&t, charter, comcast, verizon

The Global Trend That Could Kill The Internet: Sender Party Network Pays

from the corporate-subsidies dept

There is a Korean proverb that says: “There is always a way out, look for it.” South Korea’s recent revision of its Telecommunications Business Act (TBA) might, however, be the one thing South Korea is not able to get out of, unless it abandons its plans for redistributing the monopoly power back to telecommunication providers.

South Korea, just like Europe, faces similar challenges — an ageing population, and the need to compete in high-value sectors and create a digital ecosystem that is robust and facilitates economic and social growth. It is, therefore, quite ironic that both countries are considering policies that could put at risk and undermine much of the Internet and their digital futures.

The “Sending-Party-Network-Pays”(SPNP) proposal, currently at the center of the respective countries’ legislative agendas, is premised on a simple idea: content platforms that generate and send most internet traffic over the Internet should pay a certain fee to telecommunications providers in order to have those providers deliver that traffic to users. This model may make perfect sense in the telephony environment, where traditionally telephone operators have a termination monopoly for their customers; but, when it comes to the Internet, this proposal will prove counterproductive and dangerous as it creates bottlenecks for investment and degrades users’ internet experience.

We often hear that the internet is a network of networks. This is not a philosophical statement; rather, it means that, through voluntary agreements, networks decide independently with whom to interoperate while identifying ways to optimize connectivity in order to meet users’ demands. This ensures resilience and, at the same time, the robustness of the system. As a decentralized network, the Internet has no central authority or a gatekeeper to determine which networks can and cannot join, meaning that any network is able to autonomously participate, decide on which other network to interconnect and at what cost and become part of the global Internet. The only requirement is that it “speaks” the IP protocol language.

In 2013, a still relevant report by the OECD confirmed the success of the internet model in comparison to traditional telephony. “While national regulatory authorities have closely regulated circuit-switched (TDM) traffic exchange to achieve such policy goals as universal connectivity and competition, the Internet market has attained those same goals with very little regulatory intervention, while performing much better than the older markets in terms of prices, efficiency, and innovation”.

This fundamental design choice and the benefits it has produced are now getting ignored and the results are at best unpredictable and, in the long run, possibly irreversible.

In 2016, South Korea became the first country to enforce a “Sending-Party-Network-Pays” model, requiring ISPs to charge fees for the volume of traffic they were exchanging between them. Although enforced only among ISPs to date, it has already been detrimental to South Korea’s competitive market. With high fees being imposed, a number of South Korean and foreign content providers were left with only two options: exit the market or degrade their services. In the meantime, smaller Korean providers and a host of startups have to face insurmountable barriers to entry in the market.

For a long time, South Korean users have enjoyed fast and reliable internet connectivity and South Korea was an example other countries looked to for addressing issues of connectivity. Not any longer. According to a recent report, in South Korea, “regulation appears to have discouraged peering and investment […], leading to higher costs for ISPs, initially lower quality for users, and need for more regulation to correct unintended consequences.” In particular, in comparison to Europe, Internet access fee disparity skyrocketed to 8-10 times while, when it comes to the US, that figure was 5-6 times, causing many content providers to intentionally degrade their services.

Europe may have to face a similar reality soon should it decide to move forward with its own “Sending-Party-Network-Pays” model. Since March, when the European Commissioner for the Internal Market, Thierry Breton, announced the European Commission’s intention to move forward with such a plan, there has been widespread concern from a diverse set of actors across Europe. Civil society has condemned the proposal, specifically regarding the barriers to entry it will introduce as well as its potential impact on “freedom of expression, freedom to access knowledge, freedom to conduct business and innovation in the EU”. Similarly, the European Consumer Organisation has stated that “for consumers in particular, the risks or potential disadvantages of establishing measures such a SPNP system would range from a potential distortion of competition on the telecom market, negatively impacting the diversity of products, prices and performance, to the potential impacts on net neutrality, which could undermine the open and free access to the Internet as consumers know it today.” Similarly, Europe’s Mobile Virtual Network Operators (MVNO) group called for a “careful impact assessment”, while the European Association for Commercial Television and Video on Demand (ACT) urged European “institutions to thoroughly consider the wider implications before taking any actions that would directly or indirectly impact the stability and sustainability of the European audiovisual industry (and consumer rights) as a whole.

What could then be driving this fundamental shift both in Europe and in South Korea, especially given that the proposal has been rejected by everyone bar a handful of telecommunication companies?

Let’s think of this in terms of policy objectives. Telecommunication providers argue that a “fair contribution” scheme is needed for infrastructure and the need for both countries to meet their respective digital agenda targets. If this is really the case, however, then the starting point of the conversation is wrong. Throwing money to the largest telecommunication companies will not lead to infrastructure development so much as encourage monopolistic behavior and unpredictability. Considering that such deals will most definitely be confidential, it will also be hard for anyone to know the tradeoffs that will need to be agreed on every time. A pay-off will simply extend the termination monopoly telecommunication providers enjoy from telephone to content; it will not address any real infrastructure concerns.

To this end, a real infrastructure strategy might be necessary. In its preliminary assessment of the SPNP proposal, the Body of European Regulators for Electronic Communications (BEREC) said that, although “debate about network investments, traffic volumes and cost drivers needs to be carefully analysed”, at the same time, “the internet has proven its ability to cope with increasing traffic volumes, changes in demand patterns, technology, business models, as well as the (relative) market power between market players”. The focus, therefore, should be on services that facilitate user experience and enhance the resilience and stability of the Internet, including Internet Exchange Points (IXPs), Content Delivery Networks (CDNs), caches and the like.

Bad ideas tend to be solutions to problems no one really has. And, truly, there is no identifiable problem in the market of interconnection. The norms and rules that were set years ago continue to apply, ensuring connectivity. Europe must learn from the South Korean experience and avoid replicating mistakes that, in the end, will only harm its citizens and its digital future. As other countries, including the UK and India, are starting to flirt with similar ideas, the conversation about what sort of a digital future we want becomes increasingly pressing.

Konstantinos Komaitis, Internet policy expert and author & K.S. Park, Professor, Korea University, Director, Open Net

Filed Under: competition, eu, greed, korea, sender pays, south korea, spnp, telcos, thierry breton

Hollywood, Media, And Telecom Giants Are Clearly Terrified Gigi Sohn Will Do Her Job At The FCC

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

Wed, Feb 2nd 2022 01:43pm - Karl Bode

Media and telecom giants have been desperately trying to stall the nomination of Gigi Sohn to the FCC. Both desperately want to keep the Biden FCC gridlocked at 2-2 Commissioners thanks to the rushed late 2020 Trump appointment of Nathan Simington to the Commission. Both industries most assuredly don’t want the Biden FCC to do popular things like restore the FCC’s consumer protection authority, net neutrality, or media consolidation rules. But because Sohn is so popular, they’ve had a hell of a time coming up with any criticisms that make any coherent sense.

One desperate claim being spoon fed to GOP lawmakers is that Sohn wants to “censor conservatives,” despite the opposite being true: Sohn has considerable support from conservatives for protecting speech and fostering competition and diversity in media (even if she disagrees with them). Another lobbying talking point being circulated is that because Sohn briefly served on the board of the now defunct Locast, she’s somehow incapable of regulating things like retransmission disputes objectively. Despite the claim being a stretch, Sohn has agreed to recuse herself from such issues for the first three years of her term.

Hoping to seize on the opportunity, former FCC boss turned top cable lobbyist Mike Powell is now trying to claim that because Sohn has experience working on consumer protection issues at both Public Knowledge and the FCC (she helped craft net neutrality rules under Tom Wheeler), she should also be recused from anything having to do with telecom companies. It’s a dumb Hail Mary from a revolving door lobbyist whose only interest is in preventing competent oversight of clients like Comcast:

“He said it is not clear why those would be the only issues from which she would recuse herself, ?given the breadth of issues in which Public Knowledge was involved? under Sohn. He said the recusal should ?logically extend? to all the matters she advocated for at Public Knowledge, or none.

Second, he said: ?Next, in the more recent years since her service at the Commission during the Obama administration, Ms. Sohn has been publicly involved on matters of direct interest to our membership. There is no logical basis for treating these matters differently from the retransmission and copyright issues for purposes of recusal.”

Facebook, Amazon, and Google all tried similar acts of desperation to thwart FTC boss Lina Khan, suggesting that because she opined on antitrust matters as an influential academic, she was utterly incapable of regulating these companies objectively. But both have a deep understanding of the sectors they’re tasked with regulating. Both are also the opposite of revolving door policymakers with financial conflicts of interest, which you’ll note none of these critics have the slightest issue with.

Of course telecom and big broadcasters aren’t the only industries terrified of competent, popular women in positions of authority. Hollywood (and the politicians paid to love them) are also clearly terrified of someone competent at the FCC. The Directors Guild of America is also urging the Senate Commerce Committee to kill Sohn’s nomination. Their justification for their opposition? Sohn once attempted to (gasp) bring competition to the cable box:

“Hollander pointed to one of the proposals that Sohn championed when she served as counselor to FCC Chairman Tom Wheeler during Barack Obama?s second term. Wheeler and Sohn saw the proposal, introduced in 2016, as a way to free cable and satellite subscribers from having to pay monthly rental fees for their set top box. The proposal would have required that pay TV providers offer a free app to access the channels, but ran into objections from the MPAA, which said it would be akin to a ?compulsory copyright license.? It?s unlikely that the proposal would come up again in that form, as it was sidelined when Jessica Rosenworcel, who now is chairwoman of the FCC, declined to support it.”

You might recall the 2016 proposal in question tried to force open the cable industry’s dated monopoly over cable boxes by requiring cable companies provide their existing services in app form (it wasn’t “free”). You might also recall that the plan failed in part because big copyright, with the help of the Copyright Office, falsely claimed the proposal was an attack on the foundations of copyright. It wasn’t. But the claims, hand in hand with all kinds of other bizarre and false claims from media and cable (including the false claim the proposal would harm minorities), killed it before it really could take its first steps.

I had my doubts about the proposal. Streaming competition will inevitably kill the cable box if we wait long enough, so it would seemingly make sense to focus the FCC’s limited resources on more pressing issues: like regional broadband monopolization and the resulting dearth of competition. But the FCC’s doomed cable box proposal most absolutely was not an “attack on copyright.” Companies just didn’t want a cash cow killed (cable boxes generate about $20 billion in fee revenue annually), and the usual suspects were just absolutely terrified of disruption, competition, and change.

Congress was supposed to vote Sohn’s nomination forward on Wednesday, but that has been delayed because Senator Ben Ray Luj?n suffered a stroke (he’s expected to make a full recovery). Industry opponents to Sohn’s nomination then exploited that stroke to convince Senator Maria Cantwell to postpone the vote further so they could hold yet another hearing. Industry wanted an additional hearing so they can either try to scuttle the nomination with bogus controversies they spoon feed to select lawmakers, or simply delay the vote even further.

We’re now a year into Biden’s first term and his FCC still doesn’t have a voting majority. If you’re a telecom or shitty media giant (looking at you, Rupert), that gridlock is intentional; it prevents the agency from restoring any of the unpopular favors doled out during Trumpism, be it the neutering of the FCC’s consumer protection authority, or decades old media consolidation rules crafted with bipartisan support. It’s once again a shining example of how U.S. gridlock and dysfunction are a lobbyist-demanded feature, not a bug or some inherent, unavoidable part of the American DNA.

These companies, organizations, and politicians aren’t trying to thwart Sohn’s nomination because they have meaningful, good faith concerns. Guys like Mike Powell couldn’t give any less of a shit about ethics or what’s appropriate. They’re trying to thwart Sohn’s nomination because she knows what she’s doing, values competition and consumer welfare, and threatens them with the most terrifying of possibilities if you’re a monopoly or bully: competent, intelligent oversight.

Filed Under: copyright, fcc, gigi sohn, hollywood, michael powell, net neutrality, telcos

AT&T Exits The Ad Business As Merger Ambitions Continue To Unravel

from the another-one-bites-the-dust dept

Tue, Dec 28th 2021 09:38am - Karl Bode

We’ve noted for years how U.S. telecom giants aren’t particularly competent when it comes to wandering outside of their core competencies (building and running networks, lobbying the government to hamstring competitors). As government pampered regional monopolies who haven’t had to try particularly hard for decades, stuff like competition, innovation, adaptation, and creativity are often alien constructs.

It routinely shows in the failed products they try to launch: mobile payment platforms that share names with terrorist organizations; Millennial-targeting streaming video platforms nobody actually wanted to watch; news websites that aren’t allowed to write about the news; “me too” apps, app stores, and other products that can’t compete.

AT&T in particular has showcased telecom’s knack for face plants with its $200 billion acquisitions of DirecTV and Time Warner, which was supposed to cement the telecom’s place as an advertising and mobile media giant. Instead, the company somehow managed to lose millions of subscribers while laying off tens of thousands of employees, despite receiving no shortage of regulatory favors and tax breaks to make it easier to succeed.

After recently spinning off the entire media fiasco, AT&T’s now jumping ship from its ad ambitions as well as it tries to recover from the massive debt load creating by its megamerger fiasco. The company last week quietly announced it would be selling Xandr, its programmatic advertising marketplace, to Microsoft:

“AT&T formed Xandr in September 2018, combining its TV and digital advertising businesses, including digital ad marketplace AppNexus, which the telco bought for a reported $1.6 billion that year. …Xandr had ambitions of becoming a dominant player in cross-platform advertising.”

Again though, none of AT&T’s ambitions worked out. In part, employees have consistently noted, because AT&T executives were cocksure, thought they knew better, and generally didn’t bother to listen to folks with expertise in the markets they were trying to disrupt. A year out past the wreckage and AT&T executives still haven’t really accepted their role in the entire mess, spending a lot of time claiming they’re not getting enough credit.

That hubris stems from being an industry that historically hasn’t had to listen to anybody, compete, or generally innovate (outside of which network technologies to adapt, or which anti-competitive lobbying strategies to adopt). But investors demand their pound of flesh in the form of quarter over quarter results. Having cut as many corners as they can on broadband deployment and customer service, that growth has to come from somewhere, so it routinely comes from pushing into business sectors telecoms lack the core competency to play in.

Filed Under: advertising, telcos
Companies: at&t

Verizon Once Again Expands Its Snoopvertising Ambitions

from the opt-in-to-adventure dept

Tue, Dec 7th 2021 10:42am - Karl Bode

Back in 2008, Verizon proclaimed that we didn’t need additional consumer privacy protections (or opt in requirements, or net neutrality rules) because consumers would keep the company honest. “The extensive oversight provided by literally hundreds of thousands of sophisticated online users would help ensure effective enforcement of good practices and protect consumers,” Verizon said at the time.

Six years later and Verizon found itself at the heart of a massive privacy scandal after it began covertly injecting unique user-tracking headers into wireless data packets. The technology allowed Verizon to track users all over the internet, and the company neither bothered to inform users it would happen, or gave users any way to opt out. It took security researchers two years before security researchers even realized what Verizon was doing. Verizon ultimately received a $1.35 million fine from the FCC (a tiny portion of what Verizon made off the program), but still uses the same tech (albeit with functioning opt-out) today.

A few years later and it’s not clear Verizon has actually learned all that much. The company last week began expanding its data collection and monetization once again, this time via a new “Verizon Custom Experience” the company says will help it “personalize our communications with you, give you more relevant product and service recommendations, and develop plans, services and offers that are more appealing to you.” In reality that means Verizon is expanding the collection of data on the websites you visit, the people you communicate with, and the apps you use.

Of course Verizon isn’t asking user permission before enrolling them in this new exciting “experience,” and while the company claims it emailed users to inform them they were being opted in, many customers (including myself) never received any such notification. So while users can opt out through a fairly simply opt-out process, most users aren’t going to know they’re enrolled in the first place. And Verizon being Verizon (where most of its apps and services are shoddy copies of better products), nobody really wants any of this stuff in the first place:

“Nothing I?ve read about the program would make me even consider staying in, especially since Verizon is sneakily signing people up without asking. In an example of how the program could benefit you, Verizon says it could present music listeners with a ?Verizon offer that includes music content? or give you a ?choice related to a concert in our Verizon Up reward program.? The company then tries to persuade you with ?personalized content and marketing? when opting into Custom Experience Plus.”

Of course Verizon has been caught up in more privacy scandals than I can remember, from its collection of user metadata to its role as one of the NSA’s most trusted allies in domestic surveillance. And when Verizon gets too greedy, which it does a lot, it generally sees a wrist slap with a fine that’s always a tiny, tiny fraction of the money made from the dodgy behavior. And the only demand placed on it is usually that it be transparent about whatever dodgy behavior it’s doing, while providing working opt out tools.

So not only does Verizon never really face any meaningful accountability when it goes too far, any feckless regulatory enforcement that does happen generally puts the onus on the consumer to not only pay attention to what Verizon’s doing, but to also take the time to understand it then opt out. Verizon being Verizon, it’s going to always be financially incentivized to make that as convoluted and cumbersome as possible, assuming the opt out system works at all (telecom, like Facebook, has a nasty habit of re-enrolling users who’ve opted out of such programs).

Filed Under: advertising, custom experience, opt-out, privacy, super cookie, surveillance, telcos
Companies: verizon

Big Telecom Continues Its Global Quest To Tax Big Tech For No Good Reason

from the troll-tolls dept

Wed, Dec 1st 2021 09:37am - Karl Bode

A few months back we noted how FCC Commissioner Brendan Carr had taken to Newsweek to dust off a fifteen year old AT&T talking point. Namely that “big tech” companies get a “free ride” on telecom networks, and, as a result, should throw billions of dollars at “big telecom” for no real reason. You’ll recall it was this exact argument that launched the net neutrality debate, when former AT&T CEO Ed Whitacre proclaimed that Google wouldn’t be allowed to “ride his pipes for free.” Basically, telecom giants have long wanted somebody else to fund network builds they routinely leave half finished despite billions in subsidies.

While this dumb argument originated with AT&T, it has been adopted by countless international telecoms over the years. Like this week, when a coalition of 13 large European telecom companies signed a joint letter demanding that U.S. tech giants pay them more money for no coherent reason:

“Large and increasing part of network traffic is generated and monetized by big tech platforms, but it requires continuous, intensive network investment and planning by the telecommunications sector. This model?which enables EU citizens to enjoy the fruits of the digital transformation?can only be sustainable if such big tech platforms also contribute fairly to network costs.”

Again, this is the idiotic argument that just never dies. We had an entire fifteen year net neutrality debate over this that nobody appears to have learned much from.

Tech giants like Google already pay for not only bandwidth, but they own billions of dollars worth of transit routes, undersea cables, and other infrastructure (Google even runs its own residential ISP). Consumers also pay an arm and a leg for bandwidth thanks to heavily monopolized telecom markets. This idea that anybody in this chain gets a free ride is absolutely ridiculous. Telecom giants regularly enjoy fat profits thanks to limited competition and largely feckless government oversight. They’re also endlessly subsidized to finish networks routinely left mysteriously undercooked.

Telecom is basically just trying to exploit its market power in a bid to nab an unnecessary troll toll. Yet despite being in bad faith with little merit, it doesn’t take much for telecom giants to dust off the dumb argument and re-inject it into the discourse every few years. That’s thanks in large part to unskeptical news outlets like Reuters that parrot the claims in good faith, without including any important context. For example, Reuters frames the entire debate like this:

“The call by the CEOs comes as the telecoms industry faces massive investments for 5G, fibre and cable networks to cope with data and cloud services provided by Netflix and Google’s YouTube and Facebook.

Reuters doesn’t deem it worth mentioning that it’s consumers demanding access to those services. Consumers that already pay their regional telecom monopoly an arm and a leg for broadband. This demand isn’t somehow “big tech’s” fault. Nor is it somehow big tech’s responsibility to pay an extra troll toll if an ISP fails to meet consumer bandwidth demand despite bloated revenues. Reuters (much like telecom allies like the FCC’s Brendan Carr) also somehow omits how global telecom giants routinely underinvest in network upgrades despite billions of dollars in tax breaks, subsidies, and regulatory favors over a period of decades.

It’s just uncanny how telecom just keeps trotting out the same dumb argument that it deserves to be paid extra for no coherent reason, and the majority of news outlets parrot the request as if it’s actually being made in good faith.

Filed Under: brendand carr, fcc, free ride, internet services, internet taxes, net neutrality, telcos

Biden FCC Green Lights Yet More Telecom Consolidation With Verizon Tracfone Merger

from the meet-the-new-boss dept

Wed, Nov 24th 2021 06:36am - Karl Bode

For literally 30 years telecom regulators have, with the occasional rare exception, rubber stamped a steady parade of mergers, resulting in a consolidated, less competitive overall market. The end result of these decisions are everywhere, from terrible customer service and high prices, to routine apathy to consumer privacy and spotty overall telecom coverage. And while regulators occasionally affix merger conditions designed to limit these harms, these conditions are usually either pathetic (often because they’re volunteered by the companies themselves) or they’re just not enforced in any meaningful capacity (outside of the rare and laughable fine).

While there’s a bit more awareness and opposition to mindless mergermania coming from the left, when it comes to regulators and politicians, this obsession with embracing mergers and consolidation is bipartisan. This week, the Biden FCC announced it would be greenlighting Verizon’s $6 billion merger with Tracfone. Tracfone, currently owned by Am?rica M?vil, largely caters to low-income Americans. Consumer groups initially balked at the deal, arguing that Verizon’s long history of nickel-and-diming made it likely the company would inevitably nickel-and-dime those financially precarious users as well.

But Verizon, a company with a long history of not living up to merger promises, made some promises… and now the Biden FCC says it’s approving the deal. Verizon has promised to try and keep prices the same for a while, make 5G devices available to these users, continue participation in the FCC’s low-income Lifeline program for a while, and generally not be a predatory ass. All overseen by what the FCC calls “strong, independent, enforcement mechanisms”:

“The Commission also adopted strong, independent mechanisms for enforcing these conditions and ensuring that the transaction does not harm low-income or other consumers. These enforcement mechanisms include both an internal and an independent compliance officer who are empowered to proactively monitor conditions, ensure that low-income consumers are not being harmed, and facilitate consumer complaints about potential violations.”

I’m sure the FCC thinks they’ve fixed the deal by extracting conditions. The problem is we’ve been through this rodeo before, and there are 40 years of history showing that these pinky swears are frequently meaningless. Verizon has a long, rich history of nickel and diming consumers and tap dancing around obligations, usually with minimal to no penalty. They’re simply responding to pressure to maximize shareholder value within the framework of limited competition and regulatory capture. Claiming they’re not going to nickel and dime consumers this time because you hired compliance officer or extracted a few pinky swears is like claiming water won’t flow downhill.

The vast majority of the time the FCC lacks the resources, interest, or attention span to follow up after deals like this to ensure meaningful compliance. And if there is a failure to adhere to conditions, the worst that happens is a few million in fines, which is piddly couch change to a giant like Verizon. And as the FCC shifts leadership during elections and falls under Republican control, there’s even less incentive to hold Verizon accountable for failures than there is under the historically inconsistent and feckless Democratic party.

It’s extremely rare that regulators just… shoot down mergers like this. In large part because companies like Verizon are trusted, patriotic participants in our domestic surveillance efforts. Between that and their deep campaign contributions and political pull, upsetting them by simply blocking more consolidation is frequently just not even considered. So policymakers approve the deal, convince themselves that they’ve extracted meaningful conditions, and fool themselves into thinking that this time will surely be different. Until it isn’t, and the regulators who approved the deal are nowhere to be found.

The same regulators that approve greater telecom consolidation will, with their very next breath, often complain about things like the “digital divide,” as if the former isn’t directly causing the latter. It’s a big dumb loop, and any time there’s an effort to appoint the kind of regulators that might break the cycle, these massive, consolidated telecom giants just throw more cash and influence around to block reform and perpetuate the profitable dysfunction.

Filed Under: broadband, competition, consolidation, fcc, telcos
Companies: tracfone, verizon

Jeff Bewkes Blames AT&T Incompetence For Bungled Time Warner, HBO Mergers

from the everybody-is-to-blame-except-myself dept

Wed, Nov 17th 2021 06:28am - Karl Bode

We’ve noted more than a few times how the AT&T Time Warner and DirecTV mergers were a monumental, historical disaster. AT&T spent $200 billion to acquire both companies thinking it would dominate the video and internet ad space. Instead, the company lost 9 million subscribers in nine years, fired 50,000 employees, closed numerous popular brands (DC’s Vertigo imprint, Mad Magazine), and basically stumbled around incompetently for several years before recently spinning off the entire mess for a song.

In a new book slated to be released next week, Time Warner CEO Jeff Bewkes didn’t hold back when talking about AT&T’s absolute incompetence at running a media empire:

“The most disappointing thing to me about the AT&T merger,” Mr. Bewkes is quoted in the book as saying, is that he and his board thought AT&T “would basically leave our people alone.” That didn’t happen, he said. “We didn’t think they would go to such a level of malpractice as to not listen to anybody? even though they themselves had no experience in those areas.”

Granted Bewkes was the one that proposed the sale of Time Warner and HBO to AT&T in the first place as a way to fend off a Rupert Murdoch News Corporation acquisition attempt. But if you’ve paid even the slightest bit of attention to U.S. telecom over the past 30 years, you quickly come to understand that US telecom a sector dominated by hubris and yes men and women who live in reality-optional bubbles. Being a government pampered monopoly creates an executive culture that’s not great at listening to or playing with others, and AT&T is the poster child.

Whether it’s Verizon’s Go90 or AT&T’s megamerger spree, the end result is always fairly consistent any time a telecom giant wanders outside of its core competencies (running networks and lobbying to dismantle competition and regulatory oversight). 50,000 people lost their jobs as a result of AT&T incompetence and hubris, and AT&T executives are still out there acting as if they are the victims. That’s the message again sent in the book by AT&T CEO John Stankey, who blames everybody but himself for the implosion:

“If you are in an acquisition and somebody pays a premium for your stock, by definition it means something has to change,” Stankey is quoted as saying in Miller’s book, according to the WSJ. “If you paid a premium for an operation and you continue to operate it exactly the same way, you never pay back the premium.”

Stankey also said that “he still believes in the vision behind AT&T’s purchase” but that he made the spinoff deal with Discovery in part because investors “refused to give us credit for [the] progress” made with Time Warner. “One of the jobs I need to do in carrying AT&T forward is ensuring we come up with a strategy that the investor base will tolerate and work through and give us the right credit for,” Stankey said.

This is the same AT&T that not only proposed but funded OAN as a facts option disinformation mill. It’s the same company that has repeatedly been caught ripping off customers, governments, and schools, and has spent decades engaging in sleazy lobbying tactics to protect its regional broadband monopoly. And it’s the same telecom industry that has failed repeatedly every single time they try something new (mobile payment systems, app stores, Millennial-targeting ad ventures, apps, whatever). Especially if it requires collaboration, competition, innovation, creativity, and adaptation.

Anybody surprised that myopic telecom monopoly executives wouldn’t be good at running a new media venture in a functional, competitive new market either wasn’t paying attention — or was just blinded by giant number signs.

Filed Under: competition, content, jeff bewkes, merger, telcos
Companies: at&t, hbo, time warner

Telecom, Broadcasters Convince FCC To Explore New Taxes On 'Big Tech'

from the this-probably-won't-go-well dept

Wed, Oct 27th 2021 06:29am - Karl Bode

Earlier this year, we noted how FCC Commissioner Brendan Carr had launched a bad faith effort suggesting that “big tech” gets a “free ride” on the internet, and should be forced to fund broadband expansion. Carr’s argument, that companies like Google and Netflix somehow get a free ride (they don’t) and should “pay their fair share,” is a fifteen year old AT&T lobbyist talking point. AT&T’s goal has always been to “double dip”; as in not only get paid for bandwidth by consumers and businesses, but to get an additional troll toll simply for, well, existing.

AT&T has long tried to offload its (often neglected or half-completed) network build and maintenance costs to somebody else to make investors happy. That somebody else is usually taxpayers, who’ve thrown billions in pointless tax breaks and dubious regulatory favors at the company in exchange for fiber networks that are always (so mysteriously!) left half completed and jobs that never arrive. Now AT&T (and their broadcaster allies) want tech giants to pay as well.

Over at the right wing Washington Examiner, you can see how this effort is framed in order to sell it to the public and regulators:

“The Federal Communications Commission is looking to hit Big Tech companies with new regulatory fees related to their high use of broadband facilitated by the agency ? a sign of Washington’s growing skepticism of Silicon Valley wealth and power.”

You’re given no indication that this is a telecom (AT&T) or broadcasting (the National Association of Broadcasters) bad faith political play. Carr (read: AT&T’s policy folks) had originally suggested in a carefully seeded editorial that tech companies should be forced to pay into the Universal Service Fund, which helps fund broadband expansion to schools and low-income communities. Now, Carr’s argument has also been piggybacked onto by broadcasters, who want tech companies to pay a tax simply to use unlicensed spectrum (like Wi-Fi hardware). Fortunately, the Examiner at least includes experts who point out the idea is stupid:

“Unlicensed spectrum was first established by the commission in 1985, and allows the general public to freely use, without a license, services such as Wi-Fi networks, Bluetooth waves, garage door openers, and other wireless technologies.

?The FCC is asking the public if we think fees on unlicensed spectrum is a good idea or not,? said Harold Feld, a telecom policy expert and lawyer at the consumer advocacy group Public Knowledge. ?And I?m here to say it?s a bad idea. In the spirit of Halloween, I plan to take a chainsaw to it.”

So I think the FCC is considering this route because it’s true the USF needs more money if we’re going to help make sure low-income kids and schools have decent connectivity. The problem is that the FCC’s proposal is written in such a way that it sounds like you could potentially be seeing annoying new taxes on Wi-Fi networks, Bluetooth devices, garage door openers, and more. The other problem is the core motivation here is by telecom and broadcast companies who simply want to offload their costs to somebody else. If they’re the ones writing the proposal (and it sounds like they are), the end product isn’t going to be particularly balanced or productive.

But to me the bigger problem is that if we’re genuinely interested in shoring up broadband funding and expanding access, we should first be targeting the billions upon billions in tax breaks, regulator favors, merger approvals, and other perks we give to telecom and broadcast giants (in Comcast and AT&T’s case one in the same) in exchange for jack shit. The idea that we waste billions by throwing it mindlessly at regional monopolies seems like a good place to start if you’re serious about reform. But please take a moment to notice that this idea never gets mentioned by folks like Carr. That’s fairly telling.

Nothing gets fixed in U.S. broadband (especially affordability and access issues) without addressing regional monopolization and the state and federal corruption that protects it. But not only do we not do that, if you watch regulators and lawmakers on both sides of the aisle, they can barely even candidly acknowledge it’s even a problem. As a baseline (and it has been the baseline for 30 straight years) that’s not a great recipe for success.

Filed Under: big tech, brendan carr, broadband, broadcasters, fcc, free ride, net neutrality, subsidies, taxes, telcos, universal service fund
Companies: at&t, facebook, google

FTC Study Highlights How 'Big Telecom' Privacy Practices Are Even Worse Than 'Big Tech'

from the stating-the-obvious dept

Tue, Oct 26th 2021 06:34am - Karl Bode

I’ve noted for a few times that the very obvious dysfunction in “big tech” has proven to be the gift that keeps on giving for “big telecom.” While tech giants like Google, Amazon, and Facebook get the entirety of (often very justified) attention for dodgy business practices and terrible judgement, telecom has basically been forgotten in the DC Policy conversation. While lawsuits and Congressional posturing all focus on expanding oversight of “big tech,” “big telecom” and “big media” have been able to lobotomize most of the oversight of its own businesses, despite engaging in all the same (and sometimes worse) dubious business practices.

An FTC report on privacy reiterated that forgetting about telecom and media was a mistake. The FTC’s latest report on privacy noted largely what most people knew: telecom and cable companies collect an absolute ocean of data on U.S. consumers, then “sell” access to that data to third parties (they usually just call it something else) without being clear about it. They then provide users with opt out and transparency tools that are intentionally cumbersome, if they work at all. This data then bounces around the internet creating potential harm and abuse among countless parties, whether stalkers, law enforcement, people pretending to be law enforcement, or other corporations.

The FTC found that many ISP and cable companies “privacy policies” are utterly theatrical in nature. As in they’re designed to be so cumbersome as to deter people from using them (which companies then use as evidence that consumers “don’t care about privacy”). Other times the “opt out” tools don’t work at all, and in some cases they result in even more user data being collected. None of this is made particularly clear to the end user:

“…rapid consolidation has allowed ISPs to access and control a much larger and broader cache of consumer data than ever before, without having to explain fully their purposes for such collection and use, much less whether such collection and use is good for consumers.”

The FTC correctly noted that as network operators, ISPs and cable companies have access to way more data than even tech giants, app makers, or advertising companies. This includes DNS data, browsing data, clickstream data (how long you spend on each site down to the second), behavioral ad information, location data, race and ethnicity data, data on which TV programs you watch, and more. The report is quick to bring up the repeated location data scandals that have plagued the wireless industry, as well as the “zombie cookie” scandals at Verizon (and briefly AT&T) that involved embedding tracker headers in each user data packet to track them around the internet (again without informing them or letting them opt out):

“Unlike traditional ad networks whose tracking consumers can block through browser or mobile device settings, consumers cannot use these tools to stop tracking by these ISPs, which use ?supercookie? technology to persistently track users,? the FTC report said.

ISPs and cable companies will usually tell the press, lawmakers, and regulators they don’t “sell” access to this data, but they still technically do. They simply call the practice something else.

Like a network security, auditing, or marketing company will get access to “anonymized” (a worthless term) user datasets as part of a broader contract for “security consultation,” “marketing and brand awareness,” or “strategic consultation.” That company will get a bit more money for whatever their broader contract is, while also often being allowed to sell that data out the back door. It’s not technically “selling access to your data” because they’ve actively just called it something else, knowing that U.S. regulators are too feckless and understaffed to dig through a tangled web of intentional complication.

Of course the FTC’s report on the terrible privacy practices of the telecom industry is just a report. Actually doing something about the problem is another issue entirely. And every time we’ve tried to do something about the problem, lobbyists scuttle it in pretty short order (like those FCC broadband privacy rules killed by a heavily-lobbied Congress before they could even take effect, or even a basic federal privacy law). And, more recently, with telecom and media giant lobbying encouragement, the entirety of DC is so fixated exclusively on the problems with tech giants, telecom and media reform has effectively been forgotten entirely.

Filed Under: big tech, competition, consolidation, ftc, privacy, telcos
Companies: at&t, comcast, verizon