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Hedge Fund to FairPoint: Sell the Company to Maximize Shareholder Value

fairpoint greedAfter years of financial problems, union problems, and service problems, customers of FairPoint Communications in northern New England report the company has stabilized operations and has been gradually improving service. A hedge fund holding 7.5% of FairPoint agrees, and is now pressuring FairPoint’s board of directors to sell the company, allowing shareholders that bought FairPoint stock when it was nearly worthless to cash out at up to $23 a share.

That almost guarantees shareholders a huge profit while likely saddling whoever buys FairPoint with the same kind of sale-related debt that bankrupted FairPoint in 2009.

Maglan Capital’s David Tawil and Steven Azarbad communicated their displeasure to FairPoint CEO Paul Sunu in a letter earlier this summer that complains “shareholders have been extremely patient with the company’s operational turnaround and have suffered because the board has not been vigilant in protecting shareholder value.”

maglan“Not as patient as FairPoint’s own customers that spent several years of hell dealing with Verizon’s sale of its landlines in Vermont, New Hampshire, and Maine,” said FairPoint customer Sally Jackman, who lives in Maine. “It looks like the hedge funds want their pound of profits from another sale, exactly what FairPoint customers don’t need right now.”

Jackman endured three weeks of outages after FairPoint took over Verizon’s deteriorating landline networks in northern New England. The nearest cable company – Time Warner Cable, is almost 50 miles away, leaving Jackman with FairPoint DSL or no broadband service at all.

“Wall Street doesn’t care, they just want the money,” Jackman added. “They probably assume Frontier will pay a premium for FairPoint and then we can go through the kind of problems customers in Texas and Florida dealt with for over a month.”

The hedge fund managers argue that FairPoint “has made enormous strides” and notes “revenue is stabilizing and growth is coming.”

Maglan is well positioned to cash out with an enormous gain, having been an investor in FairPoint since the phone company declared Chapter 11 bankruptcy almost six years ago. The fund held shares when their price dipped below $4. Now, assuming FairPoint will put shareholders first “in ways that other wireline telecom companies do,” investors like Maglan hope to see a sale at a share price of $23, a 75% premium.

“With the company’s labor challenges behind it and with it $700 million of long-term debt removed from FairPoint’s balance-sheet, the time has come for the company to be sold or to be merged into a peer,” the hedge fund managers write.

Tawil (L) and Azarbad (R)

Tawil (L) and Azarbad (R)

Maglan recommends the company be sold to Communications Sales & Leasing, a tax-sheltered Real Estate Investment Trust spun off from Windstream with no current experience running a residential service provider. CS&L primarily provides commercial fiber services for corporations, institutions, and cell phone towers. Shareholders would benefit and CS&L would benefit from diversification, argues Maglan. But the hedge fund has nothing to say about the sale’s impact on FairPoint customers.

Maglan also demanded that while FairPoint explored a sale of the company, it must turn its investments away from its network and operations and start “generating value for shareholders immediately.” Maglan wants FairPoint to turn spending towards a $40 million share repurchase program (to benefit shareholders with a boost in the stock price) and initiate a recurring shareholder dividend payout. To accomplish this, FairPoint will have to designate much of its $23 million of cash on hand and a hefty part of the $52 million of free cash flow anticipated in 2016 directly to shareholders. The company may even need to tap into its revolving credit line if financial results are worse than expected.

Tawil and Azarbad characterize their plan as “well within the range of comfort.”

“It is high-time that the company and the board turn its attention directly to shareholders and, specifically, unlocking shareholder value,” the hedge fund managers add. “We have been a very patient group.”

But perhaps not as patient as they thought. This week, Maglan demanded that FairPoint remove four of its board members — Dennis Austin, Michael Mahoney, David Treadwell and Wayne Wilson, demanding they “immediately tender their resignations” and warned Maglan would push for a special meeting if no action was taken. The reason? Tawil and Azarbad said they did not think the four were “critical to the board in any way.”

“Wall Street has been about as useful as cancer for those of us trying to communicate with the outside world up here,” Jackman said. “I hope all three states get copies of these temper tantrums, because if FairPoint does sell, maybe this time they won’t approve the deal. After all, even the Titanic only sank once.”

Wash. Attorney General: Comcast Broke the Law 1.8 Million Times

comcastWashington State Attorney General Bob Ferguson filed a $100 million lawsuit today against Comcast Corporation in King County Superior Court, alleging the company’s own documents show a pattern of illegally deceiving customers to fatten their bottom line by tens of millions of dollars.

The lawsuit claims Comcast violated Washington’s Consumer Protection Act (CPA) at least 1.8 million times as the cable operator misrepresented what is covered under its “Service Protection Plan,” improperly charged customers service call fees when they should have been free, and violated customer privacy by engaging in improper credit screening.

At least 500,000 Washington residents are victims of Comcast’s deceptive acts, the lawsuit alleges.

“This case is a classic example of a big corporation deceiving its customers for financial gain,” Ferguson said. “I won’t allow Comcast to continue to put profits above customers — and the law.”

Ferguson

Ferguson

Comcast routinely claims its $4.99/mo “comprehensive” service plan covered the cost of all service calls, including those related to inside wiring, customer-owned equipment connected to Comcast services and on-site education about products. That is, unless a customer wanted the wiring hidden by installing it inside a wall, which the majority of customers want. A so-called “wall fish” is not covered by Comcast’s plan, even though 75% of the time, Comcast representatives told state investigators the plan did cover all inside wiring.

It turns out many other things are not covered by Comcast’s “comprehensive” plan, including consumer-owned equipment troubleshooting and repairs involving cable jumpers, splitters, and other types of connectors. Some customers were billed for an entire service call if an excluded item happened to be checked by a Comcast technician. Ferguson claims Comcast does all it can to keep the fine print revealing the exclusions away from customers. Comcast does not offer customers enrolling in the plan a printed terms and conditions brochure or point to one on its website. Customers must dig around Comcast’s website to find the terms on their own. Just enrolling in the plan automatically gives Comcast a customer’s consent to whatever terms and conditions are in effect at the time.

Comcast also has a habit of charging Washington customers for trouble-related service calls that should have been free, the lawsuit alleges.

Comcast’s so-called “Customer Guarantee” promises that the company “won’t charge you for a service visit that results from a Comcast equipment or network problem.” Comcast discloses no limitations on this guarantee. But state investigators discovered Comcast routinely charged thousands of customers for service calls involving Comcast’s own equipment or service problems. Customers were also billed for service calls involving defective Comcast-supplied HDMI and component cables, cable cards, and installations of drop amplifiers, commonly installed to resolve a signal problem when Comcast’s network is not functioning properly.

long distance billComcast allegedly facilitated the service call charges until approximately June 2015 by encouraging technicians to use a service call “fix code” that permitted Comcast to “add service charges to a normally not charged fix code.” That allowed technicians to properly track Comcast’s own network troubles yet still charge customers to roll a truck to their home, even when the service call should have been free.

Finally, as many as 6,000 Washington residents saw their credit scores drop after Comcast engaged in improper credit screening, causing a “hard pull” on credit reports which can negatively impact credit scores, at least temporarily.

Comcast requires an equipment deposit, but it is usually waived for customers with an adequate credit score. But the AG’s office uncovered at least 6,000 occasions where customers paid an equipment deposit, despite their high credit score. Ferguson’s office claims this indicates either:

  • customers “opted out” of a credit check and paid the deposit instead to avoid a credit score hit appearing on their credit report, only to have Comcast run one anyway; or
  • customers were forced to pay the deposit despite their high credit score, contrary to Comcast’s policy.

The case is the first in the nation of this size and scope, and comes after Ferguson spent more than a year trying to work with Comcast. Ferguson said he was not satisfied with Comcast’s response and filed the lawsuit.

For violating Washington’s Consumer Protection Act, the Attorney General’s Office is seeking:

  • More than $73 million in restitution to pay back Service Protection Plan subscriber payments;
  • Full restitution for all service calls that applied an improper resolution code, estimated to be at least $1 million;
  • Removing improper credit checks from the credit reports of more than 6,000 customers;
  • Up to $2,000 per violation of the Consumer Protection Act; and
  • Broad injunctive relief, including requiring Comcast to clearly disclose the limitations of its Service Protection Plan in advertising and through its representatives, correct improper service codes that should not be chargeable and implement a compliance procedure for improper customer credit checks.

FCC’s Wheeler to Consumers: Contract Dispute TV Blackout? You’re On Your Own

Wheeler

Wheeler

The Federal Communications Commission has decided it won’t get too involved in the increasing number of contract renewal disputes between TV networks and cable TV providers, and has refused to issue new rules governing what represents “good faith negotiations” in disputes that take channels off the lineup.

“Based on the staff’s careful review of the record, it is clear that more rules in this area are not what we need at this point,” said FCC chairman Thomas Wheeler. “It is hard to get more inclusive than to review the ‘totality of circumstances.’  To start picking and choosing, in part, could limit future inquiries.”

A growing number of disputes over the rising cost of video programming frustrate pay-TV customers who find strident messages about nasty programmers or greedy providers blocking their favorite channels after contract renewal talks fail. Cable operators, sensitive about cord-cutting, want to keep price hikes down. Wall Street and shareholders expect growing revenue from charging providers for access to programming, which has become a major revenue source for most. Wheeler wrote Congress had good intentions to put a stop to contract disputes that eventually affected the public:

Congress, in Section 325 of the Communications Act, sought to reduce the likelihood that TV viewers would face this roadblock. The law requires broadcasters and multichannel video programming distributors (MVPDs) to negotiate for retransmission consent in good faith. Congress gave the Commission the authority to keep an eye on these negotiations, and our rules include a two-part framework to determine whether broadcasters and MVPDs are negotiating in good faith.

  • First, the Commission has established a list of nine objective standards, the violation of which is considered a per se breach of the good faith negotiation obligation.
  • Second, even if the specific standards are met, the Commission may consider whether, based on the totality of the circumstances, a party failed to negotiate retransmission consent in good faith.

In the recent STELA Reauthorization Act of 2014 (STELAR), Congress expressed concern about the harm consumers suffer when negotiations fail and sought-after broadcast programming is blacked out on their pay TV service. STELAR directed the Commission to initiate a rulemaking to consider possible revisions to our “totality of the circumstances” test.

Everyone has a different opinion of what represents “good faith” and many of these disputes quickly get acrimonious. Or worse. Take the one-month-and-counting little hatefest between Tribune Media and DISH Network also known as Satan’s Mother-in-Law v. the Zika virus. Tribune blacked out DISH customers’ access to 42 local channels in 33 markets, including WGN Chicago, WPIX New York and KTLA Los Angeles back in June. Many are major network-affiliated over the air stations. The dispute, as usual, is over money. Tribune wants DISH to bundle WGN America, a low-rated basic cable network, with its Tribune-owned stations, as a condition for renewal.

dish dispute

WGN America has little to do with WGN-TV, the over-the-air independent former superstation based in Chicago. As of late 2014, WGN America runs a vastly different schedule of syndicated sitcoms, drama series and feature films, and some first-run original television series produced exclusively for the channel. Long gone are local, syndicated, or sports shows that a viewer in Chicago would see watching channel 9 over-the-air. As a result, viewership of WGN America is 20% less than the former WGN-TV, and dropping. Many of the shows on WGN America also turn up on other cable channels, making the network a questionable addition to the lineup.

WGN America, not your father's Channel 9 from Chicago.

WGN America, not your father’s Channel 9 from Chicago.

DISH obviously has no interest in WGN America, but Tribune’s negotiators told them they better get interested, because WGN America will come along for the ride, part of any renewal for the over-the-air stations Tribune owns.

DISH is in no hurry to negotiate over the summer months, when shows are repeats and folks are on vacation. Many expect that will change once football season nears. But the battle continues anyway.

A new low was reached a few weeks ago when a frustrated Rev. Jesse Jackson claimed in an open letter that DISH’s refusal to negotiate was racist, in part because the blackout affected the show Underground, chronicling the Underground Railroad system that helped slaves escape to the northern free states.

“Is DISH using the same kind of math with ratings that the old south employed when enacting laws that counted African-Americans as three-fifths of a man?” wrote Jackson in a letter released by his Rainbow Push Coalition. “For far too long African-Americans have been underrepresented and unfavorably portrayed on television, silencing the significant contributions they have made to this country. Underground is a crucial part of a brand-new day of diversity on television that sheds a bright light on the bravery, ingenuity and power of the African-American experience, and is being used as teachable moments in homes and history classes around the nation at a time when we need it most.”.

Jackson

Jackson

DISH avoided taking the bait, responding, “We are skeptical that Rev. Jackson is truly interested in finding a fair deal for DISH customers.”

The FCC isn’t apparently interested in putting a line in the water either, steering clear of the controversy and allowing programmers and networks to continue to work things out with each other while customers watch repeating barker channels claiming none of this is the fault of their provider.

Wheeler points out he is aware of the DISH/Tribune dispute, but isn’t exactly rushing to end it.

“I summoned both parties to Washington to negotiate in coordination with Commission staff,” Wheeler wrote. “When that step failed to produce an agreement or an extension, the Media Bureau issued comprehensive information requests to both parties to enable FCC staff to determine whether they were meeting their duty to negotiate in good faith; we are reviewing their responses as I write. If that review reveals a dereliction of duty on the part of one or both parties, I will not hesitate to recommend appropriate Commission action.”

To DISH viewers, that represents a “definite maybe.”

At the end of last month DISH decided it wasn’t “good faith” when the Tribune subsidiary operating WGN America started running ads calling DISH a “dishgusting” company. Too much? Apparently so for DISH’s lawyers who filed a lawsuit.

“In a last-ditch bid to force DISH to accept its terms, DISH is informed and believes, and thereon alleges, that Tower created and broadcast, via its channels, disparaging content regarding DISH, its services and its performance,” states the complaint. “The campaign launched by Tower with these commercials cast DISH in an extremely negative light — Tower claims that DISH has not acted in good faith, that its performance and services are the worst in the industry, and even that DISH is a ‘disgusting’ company.”

Apparently, DISH maintains a disparagement clause in its old contract with Tribune, designed to stop nasty exchanges like this. Tribune called the lawsuit frivolous and the FCC today effectively called it a day.

New Charter Gets Tough With Time Warner/Bright House Employees: Happy Fun Time is Over

Here’s the corporate memo the folks at Charter just sent employees at Time Warner Cable and Bright House Networks. If you’ve seen the movie 9 to 5 with Jane Fonda, Lily Tomlin, and Dolly Parton, let’s just say this is what the sequel would look like if Franklin Hart, Jr. escaped from the Amazon River natives that kidnapped him in Brazil and he reasserted his brand of autocracy in the office.

To summarize:

  • Get back to the office. Your job is being relocated to a “designated Charter office location” wherever that is. Work-at-home is a thing of the past unless you can find an executive vice president to sign off (good luck with that).
  • Wear your jeans at home, not around here. In fact, if you have any doubts about your ensemble, don’t show up at the office wearing it to find out.
  • Summer Hours are so yesterday. Get over it. It’s Monday through Friday, not Friday when you decide to leave.

Charter_logo

Sent to all employees at corporate office locations in Charlotte, St. Louis, Denver, Herndon, NYC and Stamford.

Charter will harmonize various work policies in the coming months, but I wanted to address specific employee questions regarding Charter’s practices at corporate locations. Here you will find immediate guidance on three areas:

Work Location:
9_to_5_moviepRemote work locations:
 All Charter employees will be co-located with their work group at a designated Charter office location. We will work with you and your departmental leadership on potential relocation if necessary. In the interim, anyone who manages people should travel and be onsite where the majority of their employees report for work, for the duration of the work week.

Work from home: Charter does not have a work from home policy. If you have been or sometimes work from home and you are assigned to work functions in these corporate buildings you should immediately begin to report to your work location every day. If you have a concern regarding this you should speak to your manager. In the interim, anyone who manages people should travel and be onsite where the majority of their employees report for work, for the duration of the work week. Any formal work from home arrangement must be approved by an EVP and must have time bound criteria.

Workplace Dress Policy:
Whether we service internal or external customers, employees in Charter’s corporate functions are all professionals by trade and the expectation is we look the part. We will provide a harmonized workplace dress policy in the coming months, however unless approved by an EVP for a specific department and location, jeans are not deemed professional attire. In advance of the policy, if you are in doubt as to whether your attire is appropriate, better to not wear it. If you are still in doubt as to what is appropriate, please see your immediate manager.

“Summer Hours”:
We recognize that this practice at Legacy TWC was in exchange for working additional hours, earlier in the week. However, this is a benefit that is not extended to employees whom our departments serve, the same employees who generate our revenue and provide service to our customers. Perception matters, and a different standard for “Corporate” employees is not consistent with the values we want to project to the much larger employee base who work regular shifts during the day, nights and weekends. We will continue to be flexible with our employees as needs or special situations arise, but a broadly applied Summer Hours policy will not be in place within Charter.

If you should have any questions or concerns please discuss with your manager or let me know.

Paul Marchand
Executive Vice President and Chief Human Resources Officer

Employees at Altice-owned SFR Smash Difficult Customer’s Phone Live on Periscope

SFR

This SFR retail store is part of the Altice telecom empire

Two customer service representatives at Altice-owned SFR, a wireless carrier in France, may not have understood that the video they broadcast over Periscope showing the destruction of a difficult customer’s cell phone wasn’t just for their friends’ viewing pleasure.

France is buzzing today about the wider release of the video, showing the two employees complain that despite the fact the customer’s phone was being repaired, “he’s breaking our balls this morning. You know what we’ll do to his phone?”

The miracle of Periscope, which let’s you “explore the world through someone else’s eyes,” means everyone watching quickly found out as they obliterated the smartphone by repeatedly throwing it to the ground.

Their evil plan, shared with countless viewers, was first to prove it was not a dummy phone they were destroying, and then claim it was the condition of the phone as it was received.

These two SFR employees apparently misunderstood that more than their friends would be watching Periscope as they destroyed a difficult customer’s cell phone. (French) (1:54)

broken phoneAfter the first 10,000 views of the video-that-went-viral, SFR’s damage control team moved in… to rescue SFR’s reputation. The company tweeted it had identified the culprits, (later independently identified as employees of the SFR shopping center in Villeneuve d’Ascq) and they would be “severely punished.” Within hours, both men were fired.

But customers of this Altice-owned operation consider it business as usual. As Altice continues to fight for approval of its acquisition of Cablevision, its largest wireless holding in France is fighting to to be taken seriously by its dwindling customer base.

On Wednesday, the French Association of Telecom Users (AFUTT) released its 2015 Report on Complaints and Customer Dissatisfaction, and no company disappointed more than SFR.

Despite repeated assurances from Altice and SFR-Numericable executives that things were improving, the report found the exact opposite. SFR-Numericable (the combination wireless and cable operator) was the subject of 36% of all complaints against all French telecom companies among Internet users, despite only having a 21% market share. It was the only telecom operator in France to further decline in the ratings, for a second year in a row.

“We can assume the acquisition of SFR by [Altice-owned] Numericable resulted in some initial disruptions to the quality of their service,” the AFUTT report speculates. “The first reports of this appeared in 2014 and have continued and grown in 2015.”

That may be bring pause to New Yorkers and state regulators currently reviewing Altice’s application to acquire Cablevision. Several consumer groups and unions have specifically called out the management methods of Altice founder Patrick Drahi as responsible for many of the problems, noting his demands for forcible cost cutting, squeezing supplies, and exasperating unions have caused many employees to depart.

39% of all complaints about telecom companies in France are directed against Altice-owned SFR-Numericable.

36% of all complaints about telecom companies in France are directed against Altice-owned SFR-Numericable, claims AFUTT.

Google Fiber’s Contractors Create Headaches for Austin Residents

Flash flooding in a neighborhood where storm drains were blocked by construction debris. (Image: Adolfo Romero)

Flash flooding in a neighborhood where storm drains were blocked by Google’s construction debris. (Image: Adolfo Romero)

Some Austin residents are fuming over the sloppy construction work and eyesores left by contractors hired by Google to install its fiber optic service.

Last year, 254 formal complaints were filed against Google and its contractors, by far the largest compared with AT&T and Time Warner Cable, which are also in the process of upgrading their networks in the city.

The epicenter of construction nightmares for homeowners is on Lambs Lane in Southeast Austin, where last October a flash flood allegedly caused by Google’s construction crews blocking nearby storm drains brought two feet of water into the home of Arnulfo and Dolores Cruz, causing $100,000 in damages.

HissyFitWatch: Cable Operator Shames Past Due Customers by Naming Them on Facebook

Phillip Dampier December 2, 2015 Canada, Consumer News, HissyFitWatch, Public Policy & Gov't 4 Comments

past dueA cable operator in Canada’s Northwest Territories doesn’t bother sending past due notices to customers in arrears anymore. It posts their names and amounts owed on Facebook instead.

Senga Services Cable TV is facing heat for posting its past due list publicly on several Facebook community pages, including the ‘Fort Simpson Town Cryer‘, naming and shaming customers including former Member of the Legislative Assembly (MLA) Kevin Menicoche (who quickly called to make payment arrangements).

Jennifer Simons, who works with Senga Services, told CBC News she’s fed up with sad stories about why people won’t pay their cable bill.

“We always got excuses from everybody,” Simons said. “Promissory notes and everything, and it never arrives. So we found the most effective way is to publicly post the names.”

Customer reaction varied from supportive to swift and harsh condemnation. With the story going viral, Senga has restricted access to its own Facebook page.

“What a shotty [sic] disrespectful way to try and get people to pay,” wrote one reader.

fort-simpson-town-crierMost of the amounts owed are between $100-300, but one customer had managed to avoid paying an apparent court judgment of $1,406.80.

Michelle Léger, a Fort Simpson resident told the CBC the post “just wasn’t right.” With a population of just 1,200 in Fort Simpson, the list was sure to generate a lot of buzz in the community.

“If I had been a person on that list, I would have been really embarrassed,” she said. “It’s publicly shaming people. That’s kind of abusive to your customer base. Everybody knows who owes money to a cable company. So we know who is irresponsible with money or who might be struggling. If I were struggling to pay bills, I wouldn’t want my community knowing.”

Simons had none of that, doubling down in a follow-up message that people “should not live outside their means,” adding “maybe their family can step up and help them out.”

“We run a business, not a charity,” Simons explained. “We have bills to pay and paying customers who deserve to have services. Not paying your bill is stealing.”

MLA Menicoche told the CBC he was not embarrassed after appearing on the list, but complained he should have been contacted privately first.

Whether customers agree or disagree, the public disclosure does not appear to violate Canadian law.

According to Canada’s Personal Information Protection and Electronic Documents Act, organizations may disclose personal information of an individual without their consent if “the disclosure of the information is necessary in order to collect a debt owed to the organization.”

Hilton Hotel Chain Fined $25,000 for Obstructing Investigation into Wi-Fi Blocking

The Hilton Convention Center in Anaheim, Calif. Come for the color but don't stay for the $500 Wi-Fi.

The Hilton Convention Center in Anaheim, Calif. Come for the color but don’t stay for the $500 Wi-Fi.

The Federal Communications Commission’s Enforcement Bureau today announced a tentative $25,000 fine against Hilton Worldwide Holdings, Inc., owner of the Hilton Hotel Chain, for allegedly obstructing a FCC investigation into the blocking of consumers’ use of personal Wi-Fi while visiting hotel properties.

“Hotel guests deserve to have their Wi-Fi blocking complaints investigated by the Commission,” said Travis LeBlanc, chief of the FCC Enforcement Bureau. “To permit any company to unilaterally redefine the scope of our investigation would undermine the independent search for the truth and the due administration of the law.”

The regulator accuses Hilton of stonewalling requests for information and documents about how the hotel chain manages Wi-Fi for visitors and guests. In August 2014, the FCC received a consumer complaint accusing Hilton of purposely blocking visitors’ Wi-Fi hot spots on its property in Anaheim, Calif., to compel guests to pay a $500 fee to use Hilton’s own Wi-Fi network. The complaint was followed by others who alleged similar experiences with Hilton hotels elsewhere.

In most cases, fees of that amount are sought from vendors attending conventions and other large events held at Hilton hotels. Wi-Fi services can be a lucrative revenue generator, but not if vendors rely on company or personal cell phone hotspot services to bypass the hotel’s internal Wi-Fi network. Hilton hotels in the area generally offer Wi-Fi in rooms for prices ranging from free to $14.95 a night. The charges evidently vary depending on the promotion in effect when a room is booked. Fees for convention vendors are often dramatically higher, which seems to be the case surrounding this complaint.

In November 2014, the FCC issued Hilton a letter of inquiry seeking information concerning basic company information, relevant corporate policies, and specifics regarding Wi-Fi management practices at Hilton-brand properties in the United States. After nearly one year, the FCC alleges Hilton has effectively ignored the FCC’s request for the vast majority of its properties. Hilton runs hotels under the Hilton, Conrad, DoubleTree, Embassy Suites, and Waldorf Astoria brands.

In the last two years, the FCC has made it clear it will aggressively pursue and fine those intentionally interfering with Wi-Fi signals, especially if a revenue motive is found. In October 2014, the FCC fined Marriott International, Inc. and Marriott Hotel Services, Inc. $600,000 for similar Wi-Fi blocking activities at the Gaylord Opryland Hotel and Convention Center in Nashville, Tenn. In August 2015, the FCC fined Smart City Holdings, LLC $750,000 for similar Wi-Fi blocking at multiple convention centers across the country. The Commission also recently proposed to fine M.C. Dean $718,000 for apparent Wi-Fi blocking at the Baltimore Convention Center.

HissyfitWatch: Witch Hunt – T-Mobile Declares War on “Abusive LTE Tethering”

heavy user

Burn Her! T-Mobile CEO John Legere announces a data hog crackdown.

T-Mobile’s CEO has declared war on about 3,000 current customers caught “stealing data from T-Mobile” by using workarounds to avoid T-Mobile’s tethering usage allowance.

T-Mobile customers with unlimited 4G LTE plans get a fixed allowance to be used for tethering when using the Smartphone Mobile HotSpot feature, which allows laptops, tablets, and other wireless devices to share a T-Mobile wireless data connection.

“These violators are going out of their way with all kinds of workarounds to steal more LTE tethered data,” said John Legere, CEO of T-Mobile USA. “They’re downloading apps that hide their tether usage, rooting their phones, writing code to mask their activity, etc. They are ‘hacking’ the system to swipe high-speed tethered data.”

Legere claims the “clever hackers are willfully stealing for their own selfish gain” and are running up as much as two terabytes of usage a month over T-Mobile’s network. Legere thunders he won’t allow this on his watch and the company is starting a campaign of countermeasures this week to go “after a small group of users who are stealing data so blatantly and extremely that it is ridiculous.”

Legere was not specific about how T-Mobile identifies customers it considers to be abusing its network, but a new FAQ on the carrier’s website explains what will happen to those deemed to be exploiting workarounds to exceed T-Mobile’s standard 7GB tethering allowance:

We’re first warning these customers that they’re illegally using more data than they bought. We hope folks will stop on their own so they can keep their current plan. These customers are on an unlimited 4G LTE smartphone plan that includes a set amount of Smartphone Mobile HotSpot data, but they’re using workarounds to make their tethering look like smartphone usage which helps them use significantly more 4G LTE tethering than their plan includes.

Customers who continue to do this will be warned, then lose access to our Unlimited 4G LTE smartphone data plan, and be moved to an entry-level limited 4G LTE data plan.

Legere

Legere

Legere is clearly concerned the crackdown could be interpreted by the Federal Communications Commission as a Net Neutrality violation.

“These abusers will probably try to distract everyone by waving their arms about throttling data,” Legere wrote. “Make no mistake about it – this is not the same issue. Don’t be duped by their sideshow. We are going after every thief, and I am starting with the 3,000 users who know exactly what they are doing. The offenders start hearing from us tomorrow. No more abuse and no risk to the rest of our customers’ experience. It’s over. If you are interested, you can find more info in our [FAQ].

The FCC has no rules prohibiting usage caps, but the issue of speed throttling is less settled and Legere’s comments are intended to frame the issue in terms of data theft and violations of the company’s terms and conditions.

Carriers are often less lenient with hotspot usage because desktop computers and laptops often consume much more data than portable handheld devices like tablets and smartphones. T-Mobile admits that customers who need to consume a lot of data should find another ISP:

[Wired] Broadband services would be a better solution for customers who need more high-speed for tethered devices.

Blow Your Usage Allowance With New Unlimited Pornhub Premium, the “Netflix of Porn”

pornhubThe unstated reality of Internet traffic growth usually leaves out what impact streaming pornographic videos can have on network traffic, and for consumers, their broadband usage allowance. We are about to find out with last week’s arrival of Pornhub Premium (noted by DSL Reports), a new on-demand Internet streaming service its owners believe will quickly become the “Netflix of porn.”

Pornhub Premium ($9.99/mo) “offers an all new ad-free experience to its users, complete with faster playback and higher quality streaming on the millions of videos currently on Pornhub as well as the largest collection of exclusive full length HD adult titles available in crisp 1080p resolution.” Customers get a free seven-day trial before the charges begin. They can use it to test what kind of impact HD video will have on their usage allowance. It could prove considerable for frequent return visitors.

“Simply put, Pornhub Premium, is setting the new standard. Users will benefit from enhanced access to all of the content they already enjoy on Pornhub.com – with improved streaming quality – as well as over 100,000 full-length premium exclusive scenes at the touch of a finger or click of the mouse,” said Corey Price, vice president, Pornhub. “We’re looking to take the crown as the ‘Netflix of porn,’ and with the colossal amount of content we’ll be providing – and adding tons more daily – we’re confident our fan base will totally embrace this product and reinforce our position as the top provider of on-demand adult video.”

Pornhub Premium's ad campaign has sparked an international incident. Cheese producers in Italy are not pleased.

Pornhub Premium’s ad campaign has sparked an international incident. Cheese producers in Italy are not pleased.

Or not.

The publicity campaign introducing the adult entertainment service has already caused one international incident. The Parmigiano-Reggiano Cheese Consortium is weighing legal action against Pornhub after referring to their aged family friendly Parmigiano-Reggiano cheese in the same sentence as “that vulgar website.”

The European Union and Italian authorities both protect the image of the consortium’s dairy products, so there could be trouble. The cheese group wants Pornhub to immediately stop capitalizing on the fame of Parmigiano-Reggiano to pitch “vile” porn videos.

The dispute threatens to become far worse than the Spaghetti Scandal of 1957, when Italian authorities were on fire after the BBC aired a hoax story suggesting spaghetti was harvested from trees. Adding to the outrage – many in northern Europe believed the report was true.

Then there are the other objections, of course.

“Pornhub Premium is unlimited filth and degradation, a new low,” came an anonymous comment from a Florida resident who claimed he was a pastor.

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