Citigroup is advocating for another super-sized merger, this time lobbying Comcast to buy Verizon Communications — a deal worth up to $215 billion.

Citigroup analyst Jason Bazinet believes the more corporate friendly Trump Administration would not block or impede a deal that would bring together the nation’s largest cable operator and wireless provider. Such a merger would leave a significant portion of the mid-Atlantic, northeast, and New England with a monopoly for telephone and broadband service.

Bazinet offers four reasons why the deal makes sense to Wall Street banks like his:

• Verizon Wireless could give Comcast customers internet access seamlessly inside and outside of the home;
• The cost of expanding fiber optics to power faster internet and forthcoming 5G wireless broadband would be effectively split between the two companies and there would be no need to install competing fiber networks;
• Verizon would benefit from additional wireless consolidation because it would no longer face significant emerging wireless competition from Comcast;
• A combined Comcast-Verizon could see their corporate tax rate slashed by a considerable percentage, reducing tax liabilities.

We’d add Wall Street banks that win the enviable position of advising one company or the other on a merger deal stand to make tens of millions of dollars on consulting fees as well.

Such a merger would be unthinkable under prior administrations, if only because a combination of Verizon and Comcast would eliminate the only significant telecommunications competitor for tens of millions of Americans, giving the combined company a monopoly on telecommunications services.

Some Wall Street analysts believe a deal is still possible with Republicans in charge in Washington. But some spinoffs are likely. One scenario would involve selling off Verizon’s wireline assets in areas where Comcast and Verizon compete. But increasing questions about the financial viability of a likely buyer like Frontier Communications may make a deal bundling old copper wire assets and FiOS Fiber in New Jersey, the District of Columbia, Maryland, Delaware, Massachusetts, and Virginia a difficult sell for other buyers.

“If Brian came knocking on the door, I’d have a discussion with him about it,” Verizon CEO Lowell McAdam reportedly said this spring, according to Bloomberg News, referring to Comcast CEO Brian Roberts.

McAdam shouldn’t wait in his office, however. This morning, as part of a quarterly results conference call, Roberts made clear he wasn’t particularly interested in a merger with a wireless provider.

“I thought we were really clear last quarter,” Roberts said. “Yes, we always look at the world around us and do our jobs related to the opportunities that are out that. But we love our business. No disrespect to wireless, but that’s a tough business.”

AT&T will spend $9.7 million in annual public subsidies to bolster its cell tower network in South Carolina in part to expand its rural wireless broadband program. Perhaps services like mobile tower lease would come in handy.

The Federal Communications Commission approved the funding, which is expected to cost Americans nearly $10 million annually until 2020 to boost wireless coverage in 20 mostly rural counties in South Carolina to reach an estimated 12,000 new homes and businesses by the end of this year. Nationwide, the company is getting almost $428 million a year to extend access to 1.1 million customers in 18 states, the FCC says.

AT&T plans to spend the money to improve cell towers it already has in place for its mobile phone customers. The company admitted it will rely on existing infrastructure and won’t lay a single new strand of fiber optics. Instead, wireless broadband customers will share space with AT&T’s existing mobile customers on AT&T’s backhaul network.

“Because of the wireless aspect of it and the greater ability to deliver that last-mile connection, it does help to overcome any obstacles that may be in the cost equation,” Hayes said. “This initial build, with it being infrastructure that we have in place with these towers, that comes from years of investment.”

AT&T will also be able to promote its own products and offer customers discounts and free installation when they agree to sign up for other AT&T services. Hayes said the service will cost $60 a month for everyone else, along with a one-time installation fee of $99.

“Because of the wireless aspect of it and the greater ability to deliver that last-mile connection, it does help to overcome any obstacles that may be in the cost equation,” spokesman Daniel Hayes told The Post and Courier. “This initial build, with it being infrastructure that we have in place with these towers, that comes from years of investment.”

AT&T is treating the fixed wireless program, which offers up to 10Mbps service, as an alternative to wiring fiber optics in outer suburban and rural areas.

With taxpayer/ratepayer dollars financing a significant part of the cost, AT&T will have a de facto monopoly in its rural service areas where it has traditionally declined to offer or maintain DSL service or consider fiber optic upgrades, leaving these areas without broadband service until the subsidy program began.

Unclear and unenforced Net Neutrality rules in India give a cautionary tale to U.S. internet users who could soon find Net Neutrality guarantees replaced in the U.S. with industry-written rules filled with loopholes or no Net Neutrality protections at all.

As India considers stronger enforcement of Net Neutrality protection, broadband providers have been merrily violating current Net Neutrality guidelines with fast lanes, sometimes advertised openly. Many of those ISPs are depending on obfuscation and grey areas to effectively give their preferred partners a leg up on the competition while claiming they are not giving them preferential treatment.

Medianama notes Ortel advertises two different internet speeds for its customers – one for regular internet traffic and the other for preferred partner websites cached by Ortel inside its network. The result is that preferred websites load 10-40 times faster than regular internet traffic.

Ortel’s vice president of broadband business, Jiji John, said Ortel is not violating Net Neutrality.

“Cache concept is totally based on the Internet user’s browsing. ISP does not control the contents and it has nothing to do with Net Neutrality,” John said in a statement.

Critics contend ISPs like Ortel may not control the contents of websites, but they do control which websites are cached and which are not.

Alliance Broadband, a West Bengal-based Internet provider, goes a step further and advertises higher speeds for Hotstar — a legal streaming platform, Google and popular movie, TV and software torrents, which arrive at speeds of 3-12Mbps faster than the rest of the internet. Alliance takes this further by establishing a reserved lane for each service, meaning regardless of what else one does with their internet connection, Hotstar content will arrive at 8Mbps, torrents at 12Mbps and the rest of the internet at 5Mbps concurrently. This means customers can get up to 25Mbps when combining traffic from the three sources, even if they are only subscribed to a much slower tier.

Alliance Broadband’s rate card. Could your ISP be next?

Which services are deemed “preferred” is up to the ISP. While Alliance may favor Google, Wishnet in West Bengal offers up preferential speeds for YouTube videos.

The ISPs claim these faster speeds are a result of “peering” those websites on its own internal network, reducing traffic slowdowns and delays. In some cases, the ISPs store the most popular content on its own servers, where it can be delivered to customers more rapidly. This alone does not violate Net Neutrality, but when an ISP reserves bandwidth for a preferred partner’s website or application, that can come at the expense of those websites that do not have this arrangement. Some ISPs have sought to devote extra bandwidth to those reserved lanes so it does not appear to impact on other traffic, but it still gives preferential treatment to some over others.

Remarkably, Indian ISPs frequently give preferential treatment to peer-to-peer services that routinely flout copyright laws while leaving legal streaming services other than Hotstar on the slow lane, encouraging copyright theft.

American ISPs have already volunteered not to block of directly impede the traffic of websites, but this may not go far enough to prevent the kinds of clever preferential runarounds ISPs can engineer where Net Neutrality is already in place, but isn’t well defined or enforced.

(Image by Brad Jonas originally for Pando.com)

A shadowy group claiming to advocate for sensible online privacy is urging California’s legislature to ditch the California Broadband Internet Privacy Act (AB 375), introduced by Assemblyman Ed Chau (D-Monterey Park), claiming it will curb innovation, reduce competition, and hurt consumers.

“First, the proposal attacks a nonexistent problem,” complained Jon Leibowitz, a partner at Davis Polk & Wardwell and co-chair of the 21st Century Privacy Coalition. “Internet service providers have committed that they will seek permission from consumers before using sensitive personal information, such as health and financial data. Customers will have to affirmatively opt in before any such transaction could take place. So no one’s personal data is being sold.”

“Second, even if a problem exists, there are legal tools to combat it. In short, there is no legislative privacy gap,” he said. “The Federal Communications Commission has statutory authority to bring cases against internet service providers that fail to protect consumer privacy. In addition, the California attorney general can bring cases under the state Unfair Competition Law, which prohibits ‘unlawful, unfair or fraudulent business acts or practices.’”

Leibowitz seemed unusually concerned with how phone and cable companies would fare if the proposed bill becomes law.

Leibowitz

“The California proposal ignores the principle, almost universally accepted, that privacy should not be about who collects data, but rather what data is collected and how it is used,” Leibowitz said. “It would treat Internet service providers, a small subset of the Internet ecosystem, differently from every other company that collects consumer information online.”

Leibowitz told readers of The Sacremento Bee he hoped the legislature would “give this proposal the burial it deserves.”

The interest in state online privacy bills has grown because of the Republican-dominated FCC and Congress that tossed out federal internet privacy rules earlier this year. Consumers concerned about how their personal information and browsing habits are collected and sold are now largely dependent on whatever state laws exist to protect personal privacy and give consumers the right of informed consent for online information gathering and marketing.

While Leibowitz advocates for burying California’s effort to re-establish internet privacy, he has also attempted to bury his exceptionally close ties to the cable and phone companies that are responsible for almost all of his group’s funding.

The 21st Century Privacy Coalition, also co-chaired by former Republican congresswoman Mary Bono, is funded by Comcast, AT&T, Verizon, Time Warner Cable/Charter Communications, DirecTV, and their respective industry trade associations. The checkbooks are wide open, because the coalition has already spent nearly $2 million on lobbying, according to disclosure records. Most of that money has gone to hiring lobbyists from Mayer Brown and Ryan, MacKinnon, Vasapoli, and Berzok.

The group launched in 2013 and primarily concerned itself with federal online privacy issues, but since the Trump Administration came into office, there is little work to be done on the federal level, so their new mission appears to be hassling state legislatures who are unwilling to do the industry’s bidding.

Leibowitz is also a traveler through D.C.’s revolving door, serving as former Democratic chairman of the Federal Trade Commission. Today he collects accolades and more from the cable and phone companies.