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Broadband Industry Pushing for Industry Version of Net Neutrality

A group largely funded by the telecommunications industry is among the latest to call on Congress to pass net neutrality legislation, just as long as the cable and phone companies that have fiercely opposed net neutrality as we know it get the chance to effectively write the law defining their vision of a free and open internet.

Broadband for America (BfA) has long pretended to represent the interests of consumers. It has tried to steer clear of partisan politics by representing itself as a bipartisan organization, claiming that since its formation in 2009, the Broadband for America coalition “has included members ranging from consumer groups, to content and application providers, to the companies that build and maintain the internet. Together these organizations represent the hundreds of millions of Americans who are literally connected through broadband.”

In this spirit, BfA has given top priority to adopting a new, bipartisan, federal net neutrality law that would eliminate the regulatory uncertainty changing administrations have introduced through agencies like the FCC.

The telecom industry shuddered under the Obama Administration’s FCC with Thomas Wheeler as chairman. Wheeler pushed for bright line net neutrality rules that cut off the industry’s ability to toy with paid fast lanes on the internet, potentially costing telecom companies billions in future revenue opportunities. Wheeler backed his regulatory authority by using Title II regulations that have withstood corporate court challenges since the 1930s, and made clear that authority also extended to blocking or banning future creative monetization schemes that unfairly favored some internet traffic at the expense of other traffic.

The incoming Trump Administration discarded almost every regulatory policy introduced by Wheeler through its appointed FCC chairman, Ajit Pai. With Republicans in firm control at the FCC, in the White House, and in Congress, the broadband industry and its political allies feel safe to draft and pass a new federal law that will give companies regulatory certainty. One proposal could potentially permanently remove the FCC’s future ability to flexibly manage changing broadband industry practices.

BfA’s “pro net neutrality” campaign directly targets consumers through its website while also pretending to represent their interests. It is a classic D.C. astroturfing operation — fooling unwitting consumers into pushing for policies against their best interests. BfA claims it supports “policies that align with the core principles of an open internet: no blocking, no throttling, no discrimination and most importantly, ensuring all consumers have access to internet. Further, despite state efforts, only Congress maintains the power to regulate the internet.”

Broadband for America’s campaign to block this legislative maneuver actually helps net neutrality opponents.

Since no phone or cable company in the country is seeking to block, throttle, or discriminate against certain websites, passing a law that prohibits this is not controversial. But BfA does not mention other, more threatening practices ISPs have toyed with in recent years that would be banned by robust net neutrality rules. At the top of the list is “paid fast lanes,” allowing preferred content partners to get preferential treatment on sometimes clogged internet pipes. As past controversies between Netflix and Google over interconnection agreements illustrate, if an internet provider refuses to continually upgrade traffic pipelines, all traffic can suffer. With paid prioritization, some traffic will suffer even more because of preferential treatment given to sponsored traffic. The industry does not call this throttling, and some ISPs have blamed content providers for the problem, suggesting Netflix and YouTube traffic unfairly takes a toll on their networks.

BfA also objects to state efforts to bring back net neutrality, claiming such regulatory powers only belong in the hands of the federal government (especially the current one). It is no coincidence BfA’s beliefs and policies mirror their benefactors. While claiming to represent the interests of consumers, BfA is almost entirely funded by: AT&T, CenturyLink, Charter, CTIA – The Wireless Association, Comcast, Cox, NCTA – The Internet & Television Association, Telecommunications Industry Association (TIA), and USTelecom-The Broadband Association. The only major American telecom company not on this list is Verizon, but their interests are represented by USTelecom, an industry-funded lobbying group that backs America’s top telephone companies.

Broadband for America shares a list of some of its members — all a part of the cable, wireless, and telephone industry.

Under the guise of the midterm elections, BfA issued a new call for federal legislation enforcing the telecom industry’s definition of net neutrality, and not just on telecom companies. BfA also wants regulation of “edge providers,” a wonky term that means any website, web service, web application, online content hosting or online content delivery service that customers access over the internet. In reality, the only edge providers the industry is concerned with are Apple, Amazon, Google, Microsoft, and Facebook — companies that often directly compete against telecom company-backed content ventures and lucrative online advertising. Ironically, many Republicans that have strongly argued for deregulation have supported imposing new laws and regulatory oversight on some of these companies — notably Google and Facebook. Amazon joined the list as a result of President Trump’s ongoing feud with Jeff Bezos, Amazon’s CEO and owner of the Washington Post.

Backing the BfA’s lobbying push for a new net neutrality law are results from a suspect BfA-commissioned (and paid for) study by a polling firm that claims “87 percent of voters ‘react positively to arguments for a new legislative approach that sets one clear set of rules to protect consumer privacy that applies to all internet companies, websites, devices and applications.’” A full copy of the study, the exact questions asked during polling, and more information about the sampling process was not available to review. Instead, the conclusions were posted as an opinion piece by Inside Sources, a website that provides D.C. strategy, public relations, and lobbying firms with a free home to publish OpEds on behalf of their clients. Newspapers are allowed to reprint Inside Sources wire service content for free, sometimes without full disclosure of the financial arrangements behind the studies or author(s) involved.

The BfA campaign for a federal net neutrality law is not in isolation. The telecom industry has been on an all-out push for a new net neutrality law since Ajit Pai led the campaign to repeal the FCC rules. The industry’s campaign for pseudo-net neutrality has even won over some in the media like the editorial board of the Washington Post, that published its own OpEd in early October calling Wheeler’s use of Title II authority a regulatory overreach. The Post also has no patience for lawsuits being filed by telecom companies and the Justice Department against the state of California after passing its own statewide net neutrality law. The industry pushback in court is part of the Post’s argument for a new national law to ‘end confusion’:

The fight over net neutrality today can be reduced to a single sentence: Everyone is suing everyone else. Congress should step in.

The Justice Department said Sunday it will take California to court over its law requiring Internet service providers to treat all traffic equally. Those ISPs were already primed to sue states on their own. And California is one of more than 20 states suing the Federal Communications Commission over its repeal of the Obama administration’s rules. “We’re not out to protect the robber barons. We want to protect the people,” California Attorney General Xavier Becerra (D) told us.

The FCC abdicated its responsibility on net neutrality when it repealed the old rules with no adequate replacement. Now, without setting forth its own rules, the federal government is seeking to block states from creating their own. That may be frustrating to Americans who want an Internet where providers do not dictate what information reaches them and how fast. But a nationwide framework governing net neutrality would be preferable to a patchwork of state regulations establishing local regimes for systems that transcend borders. And creating that framework is up to Congress.

But not all are confused. California resident Bob Jacobson defended his state’s interests in a rebuttal to the Post’s editorial:

Absurd reasoning emanating from the nation’s capital of corruption, Washington, DC. California has always led the nation — including the Federal government — in the sensible, productive regulation and consequent growth of its telecom and information economy, now the world’s largest. The Moore Universal Telecom Services Act, passed in reaction to the breakup of the old AT&T, is still the nation’s only comprehensive, progressive telecom policy, its success reflected in California’s robust technological and social infrastructure. Rather than supersede California’s policies, our national and other state legislature’s and regulatory agencies should learn from and adapt them to better serve equally all the American people. (And get rid of that mockery known as the Trump FCC.)

Wall Street’s Latest Great Idea: Providers Should Charge More for 5G, But Only After You Are Hooked

“You’re giving it away… you are giving it all away!” — An unknown Wall Street analyst tossing and turning in the night.

America is simply not paying enough for wireless service. Thanks to dastardly competition introduced by T-Mobile and Sprint (potentially to be snuffed out in due course if their merger gets approved), wireless pricing is no longer a license to print money. Forced to offer one-size-fits-all affordable $40-50 unlimited plans, the prospects to grow Average Revenue Per User (ARPU) have never been worse because you can’t charge people for more service on an “unlimited plan” without admitting that plan is not exactly “unlimited.”

Wall Street analysts, already upset at the thought of carriers spending more than $100 billion on 5G network upgrades, are in a real tizzy about how companies are going to quickly recoup that investment. No matter that some wireless companies have profit margins in the 50% range and customers have paid providers for a service they were assured would keep up with the times and network demand. If there is to be a 5G revolution in the United States, some insist it must not come at the cost of reliable profits — so the industry must find a way to stick consumers with the bill.

It is not common for industry analysts to go public brainstorming higher prices and more customer gouging. After all, North Americans already pay some of the highest cell phone bills in the world, only mitigated (for now) by scrappy T-Mobile and Sprint. Mark Lowenstein, a leading industry analyst, consultant, and commentator, was willing to go public in the pages of Fierce Wireless, arguing “operators should be considering charging a premium price for what will hopefully be a premium service.” That is likely music to the ears of AT&T and Verizon, both frustrated their pricing power in the market has been reduced by credible competition from a significantly improved T-Mobile.

Lowenstein fears the prospects of a “race-to-the-bottom 5G price war” which could arrive if America’s wireless companies offer a credible home internet replacement that lets consumers tell the local phone or cable company to ‘take a hike.’ Since wireless operators will bundle significant discounts for those who subscribe to both home and mobile plans, telecommunications services may actually cost less than what Wall Street was banking on.

Something must be done. Lowenstein:

In mobile, there’s been premium pricing for premium phones. And Verizon Wireless, for a few years when it had a clear network lead, was sort of able to charge a higher price for its service (but not a premium price). But today, there isn’t really premium pricing for premium services. That should change when 5G really kicks into gear.

So how do you extract more cash from consumers’ wallets? Create artificial tiers that have no relationship to the actual cost of the network, but could potentially get people to willingly pay a lot more for something they will initially get for a simple, flat price:

One simple way would be a flat premium price, similar to the “tiers” of Netflix for a higher number of devices or 4K/Ultra HD.  So, perhaps $10 per line for 5G, or $25 for a family plan. Another approach would be more akin to broadband, where there are pricing tiers for different levels of service performance. So if the base 4G LTE plan is $50 per month today, for an average 100 Mbps service, 5G packages could be sold in gradations of $10 for higher speeds (i.e. $60 for 300 Mbps, $70 for 500, $80 for 1 Gbps, and so on). An interesting angle on this is that some of the higher-end 4G LTE services such as Gigabit LTE (and beyond) could get incorporated into this, so it becomes less of a 4G vs. 5G discussion and more of a tier of service discussion.

I would also like to see some flexibility with regard to how one can purchase 5G capabilities. For example, a user might only need those premium 5G features occasionally, and might only be prepared to pay that higher price when the service is being used. Here, we can borrow from the Wi-Fi model, where operators offer a “day pack” for 5G, or for a certain city, location, or 5G-centic app or experience. 5G is going to be hot-spotty for awhile anyway, so why not use a Wi-Fi type model for pricing?

Even better, now with net neutrality in the ash heap of history, courtesy of the Republican-dominated FCC, providers can extract even more of your money by artificially messing with wireless traffic!

Lowenstein sees a brand new world of “app-centric pricing” where wireless carriers can charge even more to assure a fast lane for those entertainment, gaming, and virtual reality apps of the future, designed to take full advantage of 5G. Early tests have shown millimeter wave 5G networks can deliver extremely low latency traffic to customers from day one. That kills the market for selling premium, low-latency add-ons for demanding apps before companies can even start counting the money. So assuming providers are willing to purposely impede network performance, there just could be a market selling sub-100ms assured latency for an extra fee.

The potential of a Money Party only 5G can deliver is coming, but time is short to get the foundation laid for surprise toll lanes and “premium traffic” enhancements made possible without net neutrality. But first, the wireless industry has to get consumers hooked on 5G at a tantalizingly reasonable price. Charge too much, too soon and consumers may decide 4G LTE is good enough for them. That is why Lowenstein recommends operators not get carried away when 5G first launches.

“We don’t want to be setting ourselves up for a WiMAX-like disappointment,” Lowenstein writes. “The next 12-18 months are largely going to be ‘5G Experimentation’ mode, with limited markets, coverage, and devices. Heck, it’s likely to be two years before there’s a 5G iPhone in the United States, where iOS still commands nearly half the market.”

The disappointment will eventually be all yours, dear readers, if Lowenstein’s recommendations are adopted — when “certain milestones” trigger “rate adjustment” letters some day in the future.

Lowenstein sees four signs to start the pillaging, and we’ve paraphrased them:

  • Coverage: Wait until 30-40% of a city is covered with 5G, then jack up the price. As long as customers get something akin to 5G one-third of the time, they’ll moan about why their 5G footprint is so limited, but they will keep paying more for the scraps of coverage they get.
  • Markets: Price the service differently in each market depending on how stingy customers are likely to be at different price points. Then hike those prices to a new “nationwide” standard plan when 5G is available in the top 20-30 cities in the country. Since there may not be much competition, customers can take it or leave it.
  • Performance: AT&T and Verizon’s gotta gouge, but it’s hard to do it with a straight face if your 5G service is barely faster than 4G LTE. Lowenstein recommends waiting until speeds are reliably north of 100 Mbps, then you can let rip with those diamond-priced plans.
  • Devices: It’s hard to extract another $50-100 a month from family plan accounts if there are an inadequate number of devices that support 5G. While your kids “languish” with 4G LTE smartphones and dad enjoys his 5G experience, mom may shut it all down when the bill comes. Wait until everyone in the family can get a 5G phone before delivering some good old-fashioned bill shock, just like companies did in the golden days of uncompetitive wireless.

These ideas can only be adopted if a lack of competition assures all players nobody is going to call them out for pickpocketing customers. Ajit Pai’s FCC won’t interfere, and is even subsidizing some of the operators’ costs with taxpayer dollars and slanted deregulation to let companies construct next generation 5G networks as cheaply as possible (claiming it is important to beat China, where 5G service will cost much less). Should actual competition remain in the wireless market, all the dreams of rate-hikes-because-we-can will never come true, as long as one carrier decides they can grow their business by charging reasonable prices at their competitors’ expense.

Telecom Lobby Sues California to Block State’s Net Neutrality Law

WASHINGTON (Reuters) – Four industry groups representing major internet providers and cable companies filed suit on Wednesday seeking to block California’s new law to mandate net neutrality rules.

The groups represent companies including AT&T Inc, Verizon Communications Inc, Comcast Corp and Charter Communications Inc. The lawsuit came after the U.S. Justice Department on Sunday filed its own lawsuit to block the new law.

The lawsuit filed by the American Cable Association, CTIA – The Wireless Association, NCTA – The Internet & Television Association and USTelecom – The Broadband Association, called California’s law a “classic example of unconstitutional state regulation” and urged the court to block it before it is set to take effect Jan. 1.

U.S. Attorney General Jeff Sessions said on Sunday in a statement that the “the California legislature has enacted an extreme and illegal state law attempting to frustrate federal policy.”

This marked the latest clash between the Trump administration and California, which have sparred over environmental, immigration and other hot-button issues.

In December, the Federal Communications Commission said in repealing the Obama-era rules that it was preempting states from setting their own rules governing internet access.

California Attorney General Xavier Becerra said on Sunday the Trump Administration was ignoring “millions of Americans who voiced strong support for net neutrality rules.”

The Trump administration rules were a win for internet providers but opposed by companies like Facebook Inc, Amazon.com Inc and Alphabet Inc.

Under President Donald Trump, the FCC voted 3-2 in December along party lines to reverse rules that barred internet service providers from blocking or throttling traffic or offering paid fast lanes, also known as paid prioritization.

In August, 22 states and a coalition of trade groups representing major tech companies urged a federal appeals court to reinstate the rules. The states argue that the FCC cannot preempt state rule because it is not setting any limits on conduct by internet providers.

A federal judge on Monday set a Nov. 14 hearing in Sacramento on the Justice Department lawsuit.

Trump Administration’s Justice Dept. Sues to Block California’s Net Neutrality Law

Phillip Dampier October 1, 2018 Consumer News, Net Neutrality, Public Policy & Gov't 1 Comment

Gov. Brown

Within hours of California’s Gov. Jerry Brown signing the state’s sweeping new net neutrality protection law, Attorney General Jeff Sessions filed a federal lawsuit to block the law, calling it an illegal attempt to bypass the Federal Communications Commission and its chairman Ajit Pai, which the Trump Administration argues has the sole authority over the nation’s internet service providers.

“States do not regulate interstate commerce — the federal government does,” Sessions said in a statement. “Once again the California legislature has enacted an extreme and illegal state law attempting to frustrate federal policy. The Justice Department should not have to spend valuable time and resources to file this suit today, but we have a duty to defend the prerogatives of the federal government and protect our Constitutional order. We will do so with vigor. We are confident that we will prevail in this case—because the facts are on our side.”

The Department of Justice claimed in its lawsuit that California’s open internet protection legislation was blatantly against the public interest because it imposes a host of rules on the conduct of companies like AT&T, Verizon, Comcast, and Charter that are contrary to the administration’s deregulation principles.

“[This new law] unlawfully imposes burdens on the federal government’s deregulatory approach to the internet,” the lawsuit stated. “The United States concluded that California, through Senate Bill 822, is attempting to subvert the federal government’s deregulatory approach by imposing burdensome state regulations on the free internet, which is unlawful and anti-consumer.”

FCC Chairman Ajit Pai wholeheartedly supports the lawsuit, releasing his written comments praising it as part of the Justice Department’s media release.

“I’m pleased the Department of Justice has filed this suit,” Pai wrote. “The internet is inherently an interstate information service. As such, only the federal government can set policy in this area. And the U.S. Court of Appeals for the Eighth Circuit recently reaffirmed that state regulation of information services is preempted by federal law.”

“Not only is California’s internet regulation law illegal, it also hurts consumers,” added Pai. “The law prohibits many free-data plans, which allow consumers to stream video, music, and the like exempt from any data limits. They have proven enormously popular in the marketplace, especially among lower-income Americans. But notwithstanding the consumer benefits, this state law bans them.”

The Trump Administration fears the new California law will set a de facto standard of net neutrality protection across all 50 states, because California’s market size makes it difficult for telecommunications companies to apply one standard in California, while maintaining different standards everywhere else.

Sessions

The California net neutrality law restores most of the rules ISPs followed during the Obama Administration, including bans on blocking or throttling internet content and outlawing paid prioritization schemes, which would allow ISPs to charge content providers extra to guarantee their internet traffic was prioritized over other traffic. The new law also covers interconnection agreements between ISPs, which are cited as largely responsible for traffic slowdowns on websites like Netflix and YouTube. Some ISPs have used these traffic exchanging agreements as leverage to seek compensation from internet content companies in return for higher capacity, less congested connections between a content provider and the ISP’s customers. The FCC did not address this issue in its own, now repealed, net neutrality rules.

California’s attorney general promised to defend the new law in court and oppose the Justice Department lawsuit.

“We will not allow a handful of power brokers to dictate sources for information or the speed at which websites load,” said Xavier Becerra. “We remain deeply committed to protecting freedom of expression, innovation and fairness.”

FCC Seeks to Strip Broadband Oversight, Net Neutrality Authority from Local Governments

Phillip Dampier September 25, 2018 Net Neutrality, Public Policy & Gov't, Video 3 Comments

The Federal Communications Commission moved Tuesday to formally strip local franchise authorities from regulating cable companies’ non-video services, prevent town and city governments from enforcing their own net neutrality policies, and limit the amount of obligations cable companies owe communities in return for winning and keeping a cable television franchise agreement.

The Commission announced a notice of proposed rulemaking that most observers claim is a mere formality before the Republican majority formally adopts the proposal in what is being seen as a clear and sweeping victory for the cable television industry.

Under the FCC proposal, local franchising authorities that issue franchise agreements allowing cable television companies to provide service in a community will see their powers of oversight and regulation significantly cut, threatening existing agreements that require cable operators to wire public schools, libraries, and local government offices and offer certain other services, excluding Public, Educational, and Government access channels.

Some franchise agreements require cable operators to maintain a certain number of local cable customer service offices, support local infrastructure projects by placing fiber or service cables in shared conduits, offer services or scholarships to communities in need, and provide near-universal service availability in neighborhoods without regard to income. While communities would be allowed to continue requiring these extra benefits, the cost could be deducted from franchise fee payments made by cable operators to local governments. Currently, franchise fees are capped at a maximum of 5% of gross revenue, although cable companies and corporate-funded interest groups like FreedomWorks and Free State Foundation argue “in kind” required contributions found in some franchise agreements allow cities and towns to exceed that amount.

Cooper

The FCC also reiterated its intention to limit local franchising authorities to only regulating cable television services, disallowing them from writing rules, regulations, or requirements that govern a cable system’s non-television services, most notably telephone and broadband service. While some at the FCC suggest this ruling allows broadband and voice services to remain unregulated as intended, analysts suggest the real impact of this declaration is to lay a legal foundation to prohibit communities from imposing local net neutrality requirements on cable broadband services designed to replace the federal net neutrality rules that were vacated by the Republican majority on the Commission earlier this year.

“Congress has designated information services such as broadband for non-regulated or light-touch treatment,” said Seth Cooper, senior fellow from the conservative group Free State Foundation. “The Commission’s proposed rulemaking clarifies that local governments cannot leverage their cable franchising authority to regulate broadband services. This will help shore up important limits on local government regulation set out in the Communications Act.”

After passage, cable operators could complain to the FCC about requirements imposed by local governments or regulatory bodies requiring them to honor basic net neutrality principles. FCC Chairman Ajit Pai has repeatedly voiced his view that only the federal government should be allowed to regulate the internet, and he is prepared to challenge state and local laws that attempt to create an end run around the decision to eliminate federal net neutrality protections.

“What we’re going to do is take a look on a case-by-case basis at each state law and determine the right course, but at a broad level, the internet is inherently an interstate service,” Pai told CNBC in June. “We don’t [want] every one of the 50 states and however many local jurisdictions to have a bite of the regulatory apple.”

The FCC has also asked for input on extending its authority to overrule similar franchising requirements on the state level as well, a significant expansion of the FCC’s authority that Mr. Pai himself has questioned when his predecessor, Chairman Thomas Wheeler, attempted to override state laws deterring or forbidding public/municipal broadband networks.

“In taking this step, the FCC usurps fundamental aspects of state sovereignty. And it disrupts the balance of power between the federal government and state governments that lies at the core of our constitutional system of government,” Pai complained in 2015. “What is clear, however, is that the FCC does not have the legal authority to override the decisions made by Tennessee and North Carolina. Under the law, it is up to the people of those two states and their elected representatives—not the Commission—to decide whether and to what extent to allow municipalities to operate broadband projects.”

But in Pai’s view, it is not up to those and other states to decide for themselves what type of level playing field will be provided to internet users if a sovereign state wishes to define those terms in the public interest.

FCC’s Ajit Pai talks net neutrality on CNBC in June 2018 and is skeptical of state efforts to preserve net neutrality rules, saying the internet “has to be regulated by the federal government.” (10:48)

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