Blumenthal

Three Democratic senators are calling for an investigation into why nearly 10 million phony net neutrality comments were allowed to be included on the record as part of the Republican majority decision to rescind the rules in early 2018.

Sens. Ed Markey (Mass.), Richard Blumenthal (Conn.), and Brian Schatz (Hawaii), jointly signed a letter addressed to the FCC’s Inspector General claiming the net neutrality matter was likely clouded by industry-funded lobbyists and astroturf groups, possible Russian interference, and intransigence by Republican FCC officials unwilling or unable to investigate the phony comments.

The New York Attorney General’s office has made significant progress in its own independent investigation, identifying 14 so-called “groups of interest” that could have subverted the net neutrality debate with fake comments from non-existent individuals, comments from those whose identities had been stolen, duplicate comments, and signatures on questionnaires and petitions that may have misled the public about the definition of net neutrality.

New York subpoenaed industry-friendly special interest, lobbying, and public strategy groups including: Broadband for America, the Center for Individual Freedom, Century Strategies, CQ Roll Call, LCX Digital, Media Bridge, the Taxpayers Protection Alliance and Vertical Strategies.

Markey

Freedom of Information requests and the ongoing investigation uncovered multiple historical instances of manipulation and potentially counterfeit comments, according to the senators:

• CQ Roll Call submitted “millions of individual comments” on behalf of a paid client in the broadband privacy docket.
• In 2014, Broadband for America claimed many community organizations, veterans groups, and small businesses were opposed to net neutrality, but in fact these groups had no position on the issue and in some instances claimed they never heard of Broadband for America.
• Media Bridge was involved in assisting a group called American Commitment to flood the net neutrality docket with duplicative comments hostile to net neutrality. Media Bridge sells companies on manipulating the public debate on issues, claiming “if your organization wants to stop ‘showing’ and start dominating the issues, pick up the phone and give Media Bridge a call.”
• The Center for Individual Freedom was responsible for submitting comments that repeated the inflammatory phrase, “unprecedented regulatory power the Obama administration imposed on the internet.” A Wall Street Journal investigation found that 72% of those comments may have been falsely submitted.

Schatz

“The Commission’s apparent disinterest in investigating fraudulent comments risks undermining public trust in the FCC’s rule-making process. Presently, the only efforts at accountability have been led by the New York State Attorney General and the Government Accountability Office (GAO), prompted by a request from Congress,” the senators’ letter reads. “The status of cooperation with both is unclear, and the FCC has previously resisted requests from the NY AG. Moreover, while journalists have sought to conduct their own research through FOIA requests, the Commission has ignored those requests and withheld documents under dubious exemption claims. Given the seriousness of this issue, the FCC should respond transparently and thoroughly, and fully cooperate with all attempts to investigate fraudulent comments.”

The senators are requesting the FCC’s Inspector General investigate:

• What policies are in place at the FCC to investigate and address fake comments?
• When did the FCC first become aware of the fraudulent comments?
• Was the FCC aware of the sources of these comments, and did they investigate them?
• Is the FCC fully cooperating with the NY Attorney General and GAO and is the agency turning over requested documents? If not, why?
• What is the status of FOIA requests at the FCC. Are they being handled in a timely and responsive manner? Were denials and exemptions appropriate?

Pai

Despite the potential for a Democratic Party takeover of the U.S. House of Representatives that is likely to usher in a new era of more aggressive oversight of the Republican-dominated Federal Communications Commission, current chairman Ajit Pai “plans to lead the FCC for the foreseeable future.”

Multichannel News reports Pai is unlikely to leave his post just two years after being appointed to the position by President Donald Trump, despite an ethics controversy over alleged assistance given to Sinclair Broadcast Group to allow the company to acquire more stations despite a federal ownership cap on the number of stations that can be owned by a single entity. Pai also was responsible for a highly controversial decision to cancel net neutrality provisions enacted during the Obama Administration.

“Chairman Pai remains focused on his key priorities, including bridging the digital divide, fostering American leadership in 5G and empowering telehealth advancements,” said Brian Hart, director of the FCC’s office of media relations.

Should both the Senate and House flip to Democrats in next week’s midterm election, Pai’s agenda of deregulation, media consolidation, and elimination of many Obama-era consumer protections would be in peril and subject to determined Congressional oversight.

Pai has taken heat from consumer groups for ending a set-top box competition program that could have forced television providers to accept equipment obtained competitively in the retail market. He also faced criticism for reinstating a program giving UHF TV station owners the opportunity to acquire more stations, directly benefiting Sinclair and allowing it to pursue its since failed merger with Tribune Broadcasting.

Sen. Hoylman

New York is one of several reliably “blue” states that could have net neutrality protections in place as early as next year if voters get rid of the Republican majority in state legislatures that have blocked free and open internet proposals from becoming law.

Sen. Brad Hoylman (D/Working Families-Manhattan), is sponsor of S8321, a comprehensive bill enacting net neutrality in the State of New York. The bill was expected to easily pass the State Assembly, but Republicans in the State Senate seem to have helped bury the bill in committee.

“A free and fair internet is a cornerstone of our 21st-century democracy. The sentiment is unfortunately not shared by the federal government,” Hoylman complained. “Trump’s nominee for the Supreme Court, Judge Brett Kavanaugh, believes that big telecom corporations have the first amendment right to block or throttle any website at their discretion. States must take possible every measure to protect free speech and the rights of consumers, and California has taken a bold first step in enshrining these rights into law. New Yorkers unequivocally deserve the same protections Californians do, which is why I hope the legislature will bring my equivalent bill  S8321 to a floor vote next session.”

Hoylman was hopeful New York would join California in passing a comprehensive state net neutrality bill to counter the FCC’s abandonment of net neutrality under Republican FCC Chairman Ajit Pai. Hoylman said if New York and California both enshrined net neutrality into law, it would extend protection to one-fifth of the U.S. population. That bill has almost no chance of passage as long as Republicans maintain control of the State Senate. That is why an increasing number of Democrats are calling on voters in New York and other states to turn out in upcoming elections and vote against Republicans that serve corporate interests while voting against their constituents.

Electing Democrats to state legislatures could alter the influence of corporate-backed groups like the American Legislative Exchange Council (ALEC), a group that facilitates corporations interested in writing bills companies hope will become law. Having a Democratic governor might also help protect initiatives like municipal broadband, which has been under assault by many Republican-controlled state legislatures with state laws attempting to dissuade or strangle community internet services from threatening large phone and cable company duopolies.

Net Neutrality was a hot button state issue in California this year, where it faced surprisingly strong opposition from an organized telecom industry and its lobbying force. The bill finally became law in late September. It now faces a Justice Department lawsuit, courtesy of Attorney General Jeff Sessions, who called the law “extreme and illegal.”

To date, 30 state legislatures have introduced bills that creatively require internet providers in their states to preserve and maintain net neutrality regardless of what the FCC has to say about the matter. Four moderate states (Washington, Oregon, Vermont, and California) found strong bipartisan support for the preservation of net neutrality this year. In states where legislative branch opposition exists, governors have signed Executive Orders that proclaim a state will only issue contracts to telecom companies that pledge to abide by net neutrality. Six state governors (Montana, New York, New Jersey, Hawaii, Vermont, and Rhode Island) have signed such orders, although state legislatures have yet to take the bigger step of making net neutrality a state law.

The National Conference of State Legislatures has issued a rundown of current net neutrality legislation as of October, 2018:

NET NEUTRALITY LEGISLATION BY STATE

Most pollsters expect Democrats will pick up seats in state legislatures, governor races, and the U.S. House of Representatives, but perhaps not as many as initially thought because of overall voter intensity and well-crafted redistricting by Republicans to protect their majorities in several key states. Governor races become key in years nearing the Census, taken every decade. The results of the Census trigger a wave of redrawing district boundaries to conform to changing population numbers in states. Some will pick up more House seats, while others lose them. The party in charge of the legislature and the governor typically have the authority to redraw district maps, except in a few states where non-partisan experts manage the task without favor to any political party. Those candidates elected in the next few election cycles will be key to that redistricting process.

But industry observers do not believe electing Democrats alone will be key to net neutrality enactment. In California, a handful of Democrats who received large campaign contributions from the telecom industry hampered efforts to enact net neutrality or tried to water down the language. In other states, some legislators held jobs in the industry and still favor positions friendly to phone and cable companies.

Some states may also be waiting to see what the courts do with the Justice Department lawsuit against the State of California, something that USTelecom, one of the industry’s biggest lobbying organizations, also recommends.

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.)

“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.