FCC-15-24A1

The Federal Communications Commission this morning released its final order detailing the agency’s official Net Neutrality rules intended to protect and preserve a free and open Internet.

The 400-page document includes footnoted, plain language explanations and arguments in favor of the new regulations as well as the rules of the road for Internet Service Providers, details about how to complain about alleged violators, and lengthy objections from the two Republican commissioners who oppose the new net policies.

Despite the exposition and dissent (and the Wall Street Journal editorial page calling the document a “blobfish,” the Net Neutrality rules and supplementary definitions are around 450 words long:

A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not block lawful content, applications, services, or nonharmful devices, subject to reasonable network management.

A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not impair or degrade lawful Internet traffic on the basis of Internet content, application, or service, or use of a non-harmful device, subject to reasonable network management.

A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not engage in paid prioritization.

“Paid prioritization” refers to the management of a broadband provider’s network to directly or indirectly favor some traffic over other traffic, including through use of techniques such as traffic shaping, prioritization, resource reservation, or other forms of preferential traffic management, either (a) in exchange for consideration (monetary or otherwise) from a third party, or (b) to benefit an affiliated entity.

Any person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not unreasonably interfere with or unreasonably disadvantage (i) end users’ ability to select, access, and use broadband Internet access service or the lawful Internet content, applications, services, or devices of their choice, or (ii) edge providers’ ability to make lawful content, applications, services, or devices available to end users. Reasonable network management shall not be considered a violation of this rule.

A person engaged in the provision of broadband Internet access service shall publicly disclose accurate information regarding the network management practices, performance, and commercial terms of its broadband Internet access services sufficient for consumers to make informed choices regarding use of such services and for content, application, service, and device providers to develop, market, and maintain Internet offerings.

A mass-market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints, including any capabilities that are incidental to and enable the operation of the communications service, but excluding dial-up Internet access service. This term also encompasses any service that the Commission finds to be providing a functional equivalent of the service described in the previous sentence, or that is used to evade the protections set forth in this Part.

A network management practice is a practice that has a primarily technical network management justification, but does not include other business practices. A network management practice is reasonable if it is primarily used for and tailored to achieving a legitimate network management purpose, taking into account the particular network architecture and technology of the broadband Internet access service.

In brief, the new rules forbid providers from fiddling with your Internet traffic for the purposes of speeding up their preferred partners while slowing down everyone else for economic motivations. It does allow providers to engage in reasonable “network management” as long as those management techniques apply equally to all content of a specific type. For instance, Comcast cannot slow down Netflix while speeding up its own affiliated online streaming services.

As part of the Federal Communications Commission’s release of final Net Neutrality regulations, the FCC included this “Fact/Fiction” news release intending to debunk industry (and political) opposition to Net Neutrality.

The Open Internet Order: Preserving and Protecting the Internet for All Americans

The Commission has released the full and final text of the Open Internet Order, which will preserve and protect the Internet as a platform for innovation, expression and economic growth. An Open Internet means consumers can go where they want, when they want. It means innovators can develop products and services without asking for permission. It means consumers will demand more and better broadband as they enjoy new Internet services, applications and content.

Protecting Consumers, Providing Certainty for Innovators and Investors
Before the Commission adopted this Order, there were no rules preventing broadband providers from conduct that would threaten the Open Internet.  This Order implements bright line rules to ban blocking, throttling and paid prioritization (or “fast lanes”) and, for the first time, the rules fully apply to mobile.

Open Internet rules are grounded in the strongest possible legal foundation by relying on multiple sources of authority, including Title II of the Communications Act and Section 706 of the Telecommunications Act of 1996. However, as part of this Order, the Commission refrains (or “forbears”) from enforcing provisions of Title II that are not relevant to modern broadband service.  Together, Title II and Section 706 support clear rules of the road, providing the certainty needed by innovators and investors, and the competitive choices and freedom demanded by consumers.

Separating Fact from Fiction
The Order uses every tool in the Commission’s toolbox to make sure the Internet stays fair, fast and open for all Americans, while ensuring investment and innovation can flourish. We encourage the public to read the Order, which reflects the input of millions of Americans and allows everyone to separate myths from fact, such as:

Myth: This is utility-style regulation.

Fact: The Order takes a modernized approach to Title II, tailored for the 21^st Century

There is no “utility-style” regulation. The Order bars the kinds of tariffing, rate regulation, unbundling requirements and administrative burdens that are the hallmarks of traditional utility regulation. No broadband provider will need to get the FCC’s approval before offering any price, product or plan. (paragraphs 37-38, 417, 451-452, 497-505)

Myth: The FCC plans to set broadband rates and regulate retail prices in response to consumer complaints.

Fact: The Order doesn’t regulate retail broadband rates.

Old-style telephone regulation required companies to file tariffs with the FCC and await regulatory review before they could bring new products to markets – such an approval process does not exist and is not permitted under this Order. Broadband providers will be able to adjust retail rates without Commission approval and without having to wait even a minute. (paragraphs 37, 451-452, 497-505)

Much has been made of the Section 201(b) authority in Title II under which the Commission may hear complaints and respond to conduct that violates our Open Internet rules. The claim is made that it will be a back-door form of rate regulation. This exact same authority has existed for wireless voice service since 1993 and has never produced rate regulation. (paragraphs 38, 409-410, 421-423)

Myth: This will increase consumers’ broadband bills and/or raise taxes.

Fact: The Order doesn’t impose new taxes or fees or otherwise increase prices.

Nothing in the Order imposes or authorizes new taxes or fees.  In fact, the Internet Tax Freedom Act currently bans state and local taxes on broadband access regardless of how the FCC classifies it.  With respect to Universal Service, the Order does not impose mandatory contribution assessments, but simply allows a current, separate proceeding on how to reform universal service contributions to proceed.  (paragraphs 37, 57-58, 430-433, 488-491)

Myth: This is a plan to regulate the Internet and let the government take over the Internet.

Fact: The Order doesn’t regulate Internet content, applications or services or how the Internet operates, its routing or its addressing.

The Order does not regulate the Internet. It applies to broadband providers – the companies that connect people’s homes to the public Internet.  In other words, the Order protects consumers’ and innovators’ “last-mile” access to what’s on the Internet—the applications, content or services that ride on it and the devices that attach to it.  It means consumers can go where they want, when they want and it means innovators can develop products and services without asking for permission.  (paragraphs 25-26, 186-193,336-340,382)

Myth: This proposal means the FCC will get to decide which service plan you can choose.

Fact: The Order doesn’t limit consumers’ choices or ban broadband data plans.

There is no approval requirement before retail plans, prices or services can be offered to consumers. Broadband providers will continue to be able to offer new competitive services and rates. This means that when a broadband provider wants to add a faster tier of service at a new price, for instance, it is free to do so. Similarly, a broadband provider is free to change pricing without approval. What providers can’t do is engage in behavior that threatens the Open Internet. (paragraphs 139, 144, 151-153)

Myth: This will embolden authoritarian states to tighten their grip on the Internet.

Fact: The Open Internet rules ensure the Internet continues to be a powerful platform for free expression, innovation and economic growth.

This Order does not regulate the operation of the Internet nor does it endorse governmental control of the way people use the Internet. This Order is a strong statement that no one – government or corporation – should interfere with the user’s right of free and open access to the Internet.  In order to encourage other governments to establish policies to protect the free exchange of ideas on an open, unrestricted Internet, we must first protect those values at home.  (paragraphs 76-77)

Myth: This will stifle innovation in new areas of Internet connectivity like connected cars or tele-health.

Fact: The Order doesn’t regulate the class of IP-based services that do not connect to the public Internet.

The Order does not regulate data services that do not go over the public Internet —sometimes called “specialized services” or “managed services” and described in the Order as “non-BIAS (Broadband Internet Access Service) services”. Consumers who buy these services don’t get, and don’t expect to get, access to all points on the Internet. Examples can include: VoIP from a cable system, VoLTE from a mobile operator, a dedicated heart-monitoring service, e-readers, connected cars, and other innovative data services we cannot imagine today. (paragraphs 35, 207-213)

Myth: This will lead to slower broadband speeds and reduced investment in broadband deployment.

Fact: The Order doesn’t reduce broadband investment or slow broadband speeds.

More openness leads to more consumer demand for more and better broadband. It’s that simple. No price regulation means consumer revenues for ISPs should be the same the day after the Order takes effect as they were the day before. It is these revenues that provide the stimulus for investment. History proves that investment will not be affected. For instance, in addition to the $270 billion invested in wireless voice service in the years in which it was the prime driver of mobile traffic (through 2009), wireline DSL was regulated as a common-carrier service until 2005—including a period in the late ‘90s and early 2000’s that saw the highest levels of wireline broadband infrastructure investment ever. (paragraphs 39, 412-414, 421-425)

More recently, Verizon spent $4.74 billion in 2008 for licenses to C-block spectrum governed by FCC open access regulations and since then has invested tens of billions of dollars deploying mobile services.  And just this year, Sprint, T-Mobile, Google Fiber, Frontier Communications, COMPTEL and NTCA—The Rural Broadband Association have all said that applying Title II to broadband services won’t harm investment.  Finally, the recent AWS auction, conducted under the prospect of Title II regulation, generated bids (net of bidding credits) of more than $41 billion—further demonstrating that robust investment is not inconsistent with a modern, light-touch Title II regime. (paragraphs 339-40, 416, 423)

Myth: The new transparency rules add up to a new form of regulation.

Fact: Clear disclosure requirements benefit both consumers and industry.

The enhanced transparency requirements, which build on the existing transparency rule, will do a better job of ensuring that consumers know the price and performance of their Internet connections. They also benefit broadband providers and Internet content, application, and service providers by removing unnecessary uncertainties that affect the quality of their services.  That’s not regulation, that’s efficient common-sense consumer protection. (paragraphs 23-24, 154-185)

Myth:  The general conduct standard will chill innovation.

Fact: This is not new ground.  The Commission also adopted a general conduct standard in 2010 and investment flourished.

There has always been a “just and reasonable” standard for telecommunications services – and investment has flourished. Since 2005, the Commission has made plain its intent to take action to preserve the Open Internet – and broadband services and investment have continued grow. Of specific significance, the 2010 Open Internet Order applied such a general conduct standard that was in force until 2014. In the three years that the 2010 Open Internet rules were in effect, broadband capital expenditures increased from $64 billion in 2009 to $75 billion in 2013. The standard adopted in the Order is tailored to the open Internet harms the Commission has identified.  It focuses on whether the broadband provider is using its gatekeeper status in ways that unreasonably affect consumers’ and edge providers’ ability to use the Internet to communicate with each other.  (paragraphs 2-4, 20-22, 133-153)

Charter Communications is in talks with Si Newhouse, Jr., the billionaire owner of Bright House Networks, to acquire the cable operator in an all-stock deal that could be worth over $12 billion, according to a report by Bloomberg News.

Bright House Networks serves 2.5 million customers, primarily in central Florida but also in parts of Alabama, Indiana, California and Michigan. Bright House has been closely controlled by the Newhouse family and has avoided efforts to consolidate the cable industry for more than two decades.

The deal is not yet finalized, according to two people asking not to be identified discussing confidential details of the deal. A side dispute over who will control voting shares of Charter after any acquisition remains at issue. John Malone’s Liberty Broadband, the largest single shareholder of Charter, is said to be seeking a larger ownership share of Charter Communications in what analysts expect will be a gradual takeover of Charter by Malone.

This afternoon, Bright House confirmed acquisition talks are underway.

“While we have had conversations with many parties about this transaction, we do not have an agreement with anyone regarding future plans for Bright House,” a company spokeswoman said in the statement.

The deal may also depend on whether regulators approve the merger of Comcast and Time Warner Cable. Time Warner Cable currently represents Bright House in most cable programming negotiations and the two cable companies have closely worked together on technology and services for more than a decade. That collaboration is likely to end if the Comcast merger is approved, stranding New House as a small independent operator.

Charter was long-expected to make offers to acquire other cable operators in its quest to grow larger, especially after failing in its bid to acquire Time Warner Cable for itself. An acquisition of Bright House by Charter would allow the company to further expand its presence in the south and midwest where it focuses most of its cable operations.

But it is not a done deal yet. The talks between Charter and Bright House could still fall apart and may not result in a deal, one source cautioned.

[flv]http://www.phillipdampier.com/video/Bloomberg Charter in Talks to Buy Newhouse Bright House Networks 3-12-15.flv[/flv]

Bloomberg News reports Charter Communications is in talks with the Newhouse family to acquire Bright House Networks in an all-stock deal. (1:22)

KMGH Denver reporter Marshall Zelinger holds up some of the 50 emails received in the newsroom from victims that had new iPhone 6 smartphones billed to their Verizon Wireless account in February. (Image: KMGH-TV/Denver)

If you want a new iPhone 6 and don’t want to bother paying for it, buy one from an Apple store and they just might bill your purchase to a unknowing third-party with few or no questions asked.

The scam, which first emerged last month, has now spread coast to coast and now involves more than 100 illegally obtained iPhones that victims complain were billed to them with little or no verification by Apple or wireless carriers. Many of those orders, but not all, originated inside Apple retail outlets and AT&T told one Connecticut victim they are being hampered in their fraud investigation by Apple, which is allegedly not cooperating with the wireless carrier.

In Denver, dozens of victims shared their stories with KMGH-TV back in February when the fraud first appeared.

“We have heard from more than 50 customers who said their accounts have been charged for new iPhone 6s, and new service plans or altered service plans, that they never requested,” reporters told viewers.

Verizon Wireless and their customers were the original targets, and Verizon initially blamed their own customers for the fraud.

Denver area resident Terri Olson was livid after Verizon accused her son of ordering new iPhones on her business account.

“He happened to be in the office that day,” said Olson. “We’re like, ‘Wow, he’s here. He’s not on the phone with Verizon.'”

Verizon promised it would drop the charges and tighten security on her account, but two days later, Verizon called confirming they had just accepted and shipped an order for four new iPads.

“She explained to me that she had my son on the other phone line, on hold. Funny thing, he was here with me,” Olson told KMGH. “We proceed, later that day, to get an email confirmation from Verizon that our order is shipping to Henderson, Nevada — (the order) that was supposedly stopped.”

Olson was able to get FedEx confirmation the four iPads were indeed sent to Henderson and signed for by someone, and it was not her son.

“It’s no way to run a business. If I did this to my customers, oh my God, we’d be out of business,” said Olson.

A few days later, more than $2,000 in fraudulent charges showed up on her Verizon bill, and the company was stalling on crediting her account.

“Basically, I’m risking my entire fleet of cell phones and data plans and iPads and everything because I don’t want to pay thousands of dollars ahead, waiting for this supposed credit,” said Olson. “I have already gone up the food chain. I’ll continue to go up the food change. We’re not taking no for an answer.”

Another Denver victim suddenly received news he was the proud new owner of four new iPhone 6 smartphones from Verizon Wireless, despite the fact he was an AT&T customer and had never authorized the purchase of the phones or the two-year contracts that came with them. A Verizon store told him if he didn’t return the phones, he’d be on the hook for their full value — $449 each as well as $160 in service charges.

[flv]http://www.phillipdampier.com/video/KMGH Denver More than 50 Verizon customers tell 7NEWS they are victims of unauthorized charges on their accounts 2-10-15.mp4[/flv]

In February, KMGH in Denver reported more than 50 viewers were billed for illegally obtained Apple iPhones charged to their Verizon Wireless accounts. (2:35)

Verizon couldn’t believe the security problem was on their end or at their authorized resellers, so they initially blamed customers in a statement:

As we have stated before, there is no evidence of a data breach at Verizon Wireless that would put our customers’ information at risk. In order for us to look into this further, we will need to work with our customers one-on-one.

In fraud cases, we often find customers have been tricked or persuaded to provide information that allows fraudsters to compromise their accounts. But without the further information you have offered to provide on these particular cases, we cannot determine what has happened.

That triggered a social media backlash.

“For them to suggest that this was phishing and effectively blame the customer is even more appalling,” wrote one victim. “I realize phishing happens too and folks are duped, but that is not the way this happened in my case.”

A North Carolina church was billed for 17 illegally-obtained iPhone 6 smartphones, totaling more than $10,000. (Image: WAVY-TV/Norfolk)

Verizon Wireless has been the victim of phishing attempts inviting customers to use their Verizon Wireless login credentials and a four digit billing code which many might assume to be the last four digits of their Social Security number to get a one-time credit on their account. The link actually leads to a fraudulent website, where information obtained by the hacker could be used to log into a legitimate customer’s Verizon Wireless account. But a Verizon store representative tells Stop the Cap! that alone would not be enough to complete a purchase at a retail store.

“A phishing fraud victim would be providing the crook login information that could be used to order equipment off Verizon’s website, which seems to be a lot less risky than walking into a retail store to commit fraud,” a Verizon store employee not authorized to speak to the media tells Stop the Cap! “Verizon confirms direct online orders right away with customers, so they would know immediately if there was something wrong with their account. They wouldn’t usually know if a third-party retail reseller billed a phone to their account until the bill or the phone came.”

After the number of fraud reports ballooned, Verizon Wireless evidently tightened its own internal security because by late February, the fraudsters moved on to AT&T.

In Hartford, Conn., Meg O’Brien found out she was a victim when her own phones stopped working.

“Three of our four phones had no service,” O’Brien told Hartford’s WFSB-TV. When she called AT&T, they knew straight away what was happening. “They responded by saying ‘oh – hold on a minute – there’s obviously some fraud…you have three new iPhone 6’s’ and I said ‘ah no we have no iPhone 6’s’.”

AT&T told O’Brien she was far and away not the only victim, and AT&T was concerned because Apple reportedly was not cooperative assisting AT&T in tracking down the Apple retail store(s) where the theft originated. AT&T did confirm the thieves were able to acquire the equipment by charging it to random AT&T wireless accounts.

The Apple store(s) involved allegedly did not need proof of identity or a credit card to complete the transactions, and that leaves O’Brien fuming.

She told WFSB she found it unbelievable Apple stores were handing out phones to customers with nothing more than an AT&T customer’s phone number, and she’s unhappy Apple isn’t being forthcoming.

“So I have no idea what other information has been sold or bought or anything,” O’Brien said. She is filing a complaint with Connecticut’s attorney general.

An Apple spokesperson tells us nobody is supposed to be able to walk out of an Apple store with a new phone without a complete wireless account number, the last four digits of the account holder’s Social Security number, photo ID, and final approval from a wireless carrier. Apple claims the purchase met all four criteria, something O’Brien disputes.

[flv]http://www.phillipdampier.com/video/WFSB Hartford Hacker charged 6 iPhones to woman ATT account 3-11-15.mp4[/flv]

WFSB in Hartford reports AT&T customer Meg O’Brien was victimized by fraudulent purchases at an Apple retail store Apple is refusing to name. (2:39)

The Fountain of Life Ministries in Elizabeth City, N.C., has been victimized at least twice by a crook using the church’s name to get at least 17 iPhone 6 smartphones for himself, leaving the church with the bill from AT&T.

Church employees first learned they were targets when the thief tried to acquire the phones from Verizon Wireless, which apparently learned its lesson from earlier fraud cases and rejected the purchase.

AT&T was more receptive, authorizing the purchase of more than a dozen phones bought on different days.

“I’m just amazed somebody would do that,” Pastor Preston Pitchford told WAVY-TV.

Church employee Christy Wells was even more stunned when the bill arrived.

“When I saw it was from AT&T, I was like, I know this has got to be him. He probably succeeded,” Wells told WAVY. “I see a charge to Fountain of Life for $10,000, and I knew that wasn’t for us. Who would even think to do something like this?”

The church doesn’t use iPhones and doesn’t have an account with AT&T.

[flv]http://www.phillipdampier.com/video/WAVY Norfolk Church billed 10K for fraudulent iPhone purchases 3-3-15.flv[/flv]

The Fountain of Life Ministries in Elizabeth City, N.C. was victimized twice by iPhone 6 fraud. Verizon Wireless rejected the fraudster’s first attempt, but AT&T accepted his second… for 17 iPhones. From WAVY-TV in Portsmouth, Va. (2:12)

Speed costs.

At least in central Florida where Bright House Networks provides cable service.

The company’s entire Florida service area will be able to sign up for 300/15Mbps broadband beginning later this month. The cost ranges from $95 a month for customers with a deluxe bundle of services all the way up to $199.95 a month for Internet-only customers.

“We continually look for ways to provide the best available choices to our customers. Just a few months ago, we increased our maximum bandwidth offering to 150Mbps, and now we are making available an additional product at 300Mbps,” said Kevin Hyman, executive vice president, Cable Operations, Bright House Networks. “We’ve opted to make this product available to our entire Florida footprint meaning millions of Floridians will have this choice available to them.”

Bright House will support the speeds on its existing DOCSIS 3 network, which means some customers with older modems and slower speeds may need new equipment to take full advantage of the speed tier. Upload speeds drag behind download speeds because of existing network architecture, although other cable companies are managing to offer higher upload speeds than Bright House. When DOCSIS 3.1 arrives, expect upstream speeds to get a boost.

Verizon reminds us its customers can already get faster upload speeds (300/300Mbps) for around the same price Bright House charges for broadband-only service.

The newest tier joins Bright House’s other tiers, which were upgraded late last year: