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Justice Dept. Ready to Approve T-Mobile/Sprint Merger

The Justice Department has helped engineer an approvable merger deal between T-Mobile and Sprint that will get antitrust regulators’ blessings as early as tomorrow, according to a report in the Wall Street Journal.

The sticking point that held up merger approval for weeks was the divestiture of certain wireless assets to Dish Network, which claims it will temporarily use Sprint and T-Mobile’s wireless networks to offer a new nationwide “fourth option” for cell phone service. Dish’s new cell phone service will come from a $1.4 billion acquisition of prepaid carrier Boost Mobile, which currently relies on reselling Sprint’s 4G network. Dish would inherit Boost’s nine million customers. Dish will also be able to lease access to T-Mobile and Sprint’s existing wireless networks for up to seven years while it builds out its own network of cell towers. The deal also includes a guarantee that Dish can pay $3.6 billion to acquire 800 MHz wireless licenses held by Sprint.

The Justice Department claims that lower frequency spectrum will allow Dish to service rural communities, assuming Dish is willing to invest in cell tower construction in high cost, low return areas.

Regulators in the Trump Administration’s Justice Department claim shaving assets from a super-sized T-Mobile will preserve the competition that will be lost when Sprint becomes a part of T-Mobile. But Dish will emerge as a miniscule player with only a fraction of the 100+ million customers that AT&T and Verizon have, and at least 80 million customers signed with T-Mobile. One of the core arguments T-Mobile and Sprint made in favor of their merger was that each was too small to afford to deploy 5G service quickly and efficiently. Dish will have even less money to build out a basic 4G wireless network.

Another merger requirement for the combined T-Mobile and Sprint will be mandatory support for eSIM, which allows consumers to change wireless carriers quickly without investing in a physical SIM card. But that requirement will not impact AT&T or Verizon Wireless, which both continue to push physical SIM cards on the much larger customer bases.

If the Justice Department does publicly approve the merger, the last hurdle the wireless companies will have to overcome is a multi-state lawsuit filed by attorneys general that argue the merger will impact low-income customers and is anti competitive. That court case is unlikely to be heard until late fall at the earliest.

CNBC’s David Faber reports that T-Mobile and Sprint have settled with the Department of Justice to go through with their merger deal. (6:14)

What’s Eating Your Comcast Data Cap?

Comcast has put its proverbial finger to the wind to define an “appropriate” data cap it declares “generous,” regardless of how subjectively random that cap happens to be. Although 1,000 GB — a terabyte — usage allowance represents a lot of internet traffic, more and more customers are finding they are flirting with exceeding that cap, and Comcast has never been proactive about regularly adjusting it to reflect the reality of rapidly growing internet traffic. That means customers must protect themselves by checking their usage and take steps if they are nearing the 1 TB limit.

If you do exceed your allowance, Comcast will provide two “grace periods” that will protect you from overlimit fees, currently $10 for each extra 50 GB allotment of data you use. Another alternative Comcast will happily sell you is an insurance policy to prevent any risk of overlimit fees. For an extra $50 a month, they will take the cap off your internet plan allowing unlimited usage. But $50 a month is close to paying for your internet service twice and is indefensible considering how little Comcast pays for its customers’ internet traffic. It is just one more way Comcast can pick up extra revenue without doing much of anything.

Customers that do regularly break through the 1 TB data cap often have a guilt complex, believing they have no right to complain about data caps and should pay more because they must cost Comcast a lot more money to service. In fact, Time Warner Cable executives broadly considered internet traffic expenses as little more than a “rounding error” to their bottom line, according to internal emails obtained by the New York Attorney General’s office. Managing customers’ data usage is far less costly than network plant upkeep, the regularly increasing costs of video content, and expenses related to expanding service to new locations.

One VentureBeat reader investigated what chewed through Comcast’s data allowance the most, and it wasn’t easy:

Xfinity pretends to make this easier for you, but that’s a load of horsesh*t. Its X-Fi app claims to give you usage stats for your connected devices — only nothing appears up-to-date. The phone I was using to look at the X-Fi app doesn’t even appear on the connected-devices list. You also have to look at each device individually. I saw no way to sort a list of devices by data usage, which would obviously help a lot.

Some of the biggest data users are connected households, where multiple family members use a range of devices, often at the same time. Customers with multiple internet-connected computers, video game consoles, and streaming devices are most at risk of exceeding their cap.

Video Games Consoles/PCs

The biggest data consumption does not come from gameplay itself. It comes from frequent software updates, some exceeding 50 GB. If you play a number of games, updates can come frequently. In the case of the VentureBeat author, 17% of daily usage came from the home’s primary desktop PC. Another 12% was traced to the family’s Xbox One. An in-home media server that also runs Steam and auto-updates frequently was also suspect.

Streaming Devices

If you are not into video games and do not depend on cloud storage or large file transfers to move data back and forth, streaming set-top boxes and devices are almost certainly going to be the primary source of your biggest monthly data usage. Video resolution can make a difference in how much data is consumed. If you are regularly approaching or exceeding your monthly cap, consider locking down maximum video resolution for streaming on large televisions to 720p, and 480p for smartphones. Some streaming services offer customized resolution options in their settings menu.

Autoplay, also known as the ‘binge’ option can also consume a lot of video when a service automatically starts playback of the next episode in a series. Some people switch off their televisions without stopping video playback, which can mean you watched one episode but actually streamed six or more. Check the streaming software for an option to not autoplay videos.

Remember that cable TV replacements like DirecTV Now and YouTube TV will continue streaming live broadcasts until you stop them. Do not just switch off the television. Many live/linear TV apps will prompt you every few hours if you have not changed channels to make sure there is someone still watching. If you do not respond, streaming will stop automatically.

Cloud Storage Backups

When customers report staggering data usage during a month, cloud storage backup software is often the culprit. If you are new to cloud storage backup services like Dropbox or Carbonite, your PC may be uploading a significant part of your hard drive to create a full backup of your computer. This alone can consume terabytes of data. Fortunately, most backup services throttle uploads and do not automatically assume you need to backup your entire hard drive. Many offer options to limit upload speed, the total amount of data that can be uploaded each month, and options to selectively backup certain files and folders. 

Your Wi-Fi Network is Insecure

In areas where data caps are pervasive, those who want to use a lot more data and do not want to pay for it may quietly hop on your home Wi-Fi network and effectively bill that usage to you. This is most common in large multi-dwelling units where lots of neighbors are within range of your home Wi-Fi. The best way to reduce the risk of a Wi-Fi intrusion is to create a password that is exceptionally difficult to guess, using a mixture of special characters (!, ^, %, etc.) and mixed case random letters and numbers. Although this can be inconvenient for guests, it will probably keep intruders out and prevent them from running up your bill.

It is unfortunate customers have to jump through these kinds of hoops and compromise their online experience. But where cable and phone companies lack competition, they can charge a small fortune for internet access and still feel it is appropriate to cap usage and ask for even more money when customers “use too much.”

Netflix Loses 130,000 U.S. Customers After Raising Its Price to $12.99/Month

Phillip Dampier July 17, 2019 Competition, Consumer News, Netflix, Online Video, Video No Comments

Netflix stock lost over 11% of its value late today after the company reported second quarter results that underwhelmed Wall Street, including a surprising loss of 130,000 U.S. customers that left the streaming service during the last three months.

Netflix added 2.7 million customers in the second quarter, a much smaller number than the 6 million it added during the same period last year. As of the end of June, Netflix now has 151.6 million customers worldwide. Wall Street expected between 153-156 million by that time. The $2/month U.S. rate increase during the first quarter for Netflix’s popular two-concurrent stream plan (was $10.99, now $12.99 in the U.S.) helped keep company revenue up 26%, to $4.92 billion for the quarter. But analysts expected $4.93 billion. Profits also declined to $270 million, compared with $384 million a year ago during the same quarter.

The company blamed the lackluster results on the lack of compelling content during the second quarter. In a letter to shareholders, Netflix claimed the recent price increase slowed growth, but the real problem was overheated growth during the first quarter and not a lot of blockbuster movies and shows to watch.

“We think [the second quarter’s] content slate drove less growth in paid net adds than we anticipated,” Netflix executives said.

The company also noted it is raising prices in several European countries including the United Kingdom, Spain, Ireland, France and Germany.

Netflix does not believe competition with other streaming services had a material impact on its subscriber numbers during the quarter, but analysts suggest Netflix should be concerned about forthcoming streaming competition from AT&T/WarnerMedia (HBO Max) and Walt Disney (Disney+). As more services become available, consumers are likely to take a hard look at the streaming services they are watching and ditch those they are not.

Netflix also declared it will not introduce a cheaper, ad-supported version, despite increasing speculation it would.

“We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction.” Netflix told shareholders.

The Wall Street Journal reviews the many challenges to Netflix from forthcoming contenders in the streaming wars. (4:36)

Republican FCC Overrides San Francisco Pro-Competition Wiring Ordinance

It’s a good day to be AT&T or Comcast in San Francisco. The Republican majority on the FCC today voted to protect their monopoly control of existing building wiring, claiming it would inspire competitors to wire buildings separately..

In a 3-2 Republican majority vote, the FCC today decided to pre-empt a San Francisco city ordinance that required multi-dwelling apartment, condo, and office space owners to allow competing service providers to share building-owned wiring if a customer sought to change providers.

“Required sharing of in-use wiring deters broadband deployment, undercuts the Commission’s rules regarding control of cable wiring in residential [multi-dwelling units], and threatens the Commission’s framework to protect the technical integrity of cable systems for the benefit of viewers,” according a news release issued by the FCC.

FCC Chairman Ajit Pai was joined by the two other Republicans on the Commission to block the San Francisco ordinance, which will allow dominant cable and phone companies like AT&T and Comcast to continue reserving exclusive use of building wiring, forcing would-be competitors to place costly redundant wiring in each building before offering service.

Pai said the city’s ordinance chilled competition because it encouraged competitors to re-use existing wiring instead of providing their own. That could harm the business plans of incumbent monopoly providers that depend on deterring or locking out would-be competitors by prohibiting them from using existing building wiring to reach customers. Pai called the ordinance an “outlier” and declared the city went beyond its legal authority by allowing a competitor to re-use building-owned wiring used by one provider to switch a customer to another. Pai added he had no objection to sharing unused wiring.

“By taking steps to ensure competitive access for broadband providers to [multi-dwelling homes and shared offices] while at the same time cracking down on local laws that go beyond the bounds of federal rules, our decision can help bring affordable and reliable broadband to more consumers,” echoed Republican FCC Commissioner Brendan Carr.

But critics contend the FCC’s decision to disallow required shared use of wiring will likely deter new competitors from entering existing buildings, because of the cost of installing redundant wiring. Others object to the FCC regulating the use of wiring owned and installed independently by building owners, not telecom companies. FCC Commissioner Jessica Rosenworcel, a Democrat who voted against the pre-emption, was unimpressed.

“We stop efforts in California designed to encourage competition in multi-tenant environments,” Rosenworcel told her fellow commissioners. “Specifically, we say to the city of San Francisco—where more than half of the population rents their housing, often in multi-tenant units—that they cannot encourage broadband competition. This is crazy.”

The FCC press release trumpeting the Republican majority vote to prohibit the shared use of existing building wiring was sympathetic to incumbent telecom giants AT&T and Comcast, which now dominate as service providers in multi-tenant buildings:

Nearly 30% of the U.S. population lives in condominiums and apartments, and millions more work in office buildings. The FCC must address the needs of those living and working in these buildings to close the digital divide for all Americans. However, broadband deployment in [multi-tenant buildings or ‘MTEs’] poses unique challenges. To provide service, broadband providers must have access to potential customers in the building. But when broadband providers know that they will have to share the communications facilities that they deploy with their competitors, they are less likely to invest in deployment in the first place. For decades, Congress and the FCC have encouraged facilities-based competition by broadly promoting access to customers and infrastructure—including MTEs and their tenants—while avoiding overly burdensome sharing mandates that reduce incentives to invest.

T-Mobile Prepares for Boost Auction if Dish Network Talks Stall

(Reuters) – T-Mobile US Inc is preparing an alternative plan if a deal to sell wireless assets to Dish Network Corp falls through, according to two sources familiar with the matter.

Investment bank Goldman Sachs Group Inc., which is advising T-Mobile, the third largest U.S. wireless carrier, on selling prepaid brand Boost Mobile as part of the company’s concession to gain regulatory approval to buy Sprint Corp, is expected to send out books to prospective buyers in two weeks, one source familiar with the matter said.

While satellite television provider Dish Network remains the front-runner to acquire the Boost assets, Goldman has told prospective buyers as late as Tuesday that it is preparing for an upcoming auction of Boost.

Another source characterized the process being run by Goldman as moving slowly. Among the details holding up an auction is that Goldman is not yet clear what exactly is up for sale from the merger, one source said.

T-Mobile and Sprint did not immediately respond to requests for comment. Goldman Sachs declined to comment.

T-Mobile and Sprint have agreed to a series of deal concessions, including to sell Boost, to gain regulatory approval for the $26.5 billion merger with Sprint, but still needs the green light from the U.S. Department of Justice antitrust chief, though his staff have recommended the agency block the deal.

A source close to the discussions said T-Mobile was hopeful it would reach an agreement with the Justice Department by early next week.

The Boost assets have stirred up interest from a variety of parties, including Amazon.com and cable companies Comcast, Charter Communications, and Altice USA, according to sources.

T-Mobile and Sprint are still negotiating possible additional concessions with the Department of Justice, and Goldman Sachs is waiting for the details of the agreement before working on the terms that will be sent out to bidders, one source said.

Two potential bidders told Reuters on the condition of anonymity that they are still in the dark about critical information related to the Boost sale, such as how the Boost wireless deal with T-Mobile will be structured, or financial details about the Boost customers, which the bidders will use to determine the prepaid brand’s valuation.

Dish is also speaking with other parties on potential partnerships with Boost, sources said.

T-Mobile has agreed to negotiate a contract with Boost’s buyer that will allow the spun-off company to run on the combined T-Mobile and Sprint network, according to a regulatory filing that outlined the merger concessions. But the carriers are currently debating whether to provide the buyer an infrastructure-based mobile virtual network operator deal, which would allow the buyer more control over the wireless plans, including control of the user’s SIM card, one source said.

That could help convince the Department of Justice to approve the merger, which has held discussions on how to preserve competition in the wireless industry.

Cable provider Altice is one of the few so-called MVNO partners to have this type of wireless agreement, which it currently has with Sprint. An infrastructure-based MVNO is generally seen as more favorable than a standard deal that allows wireless providers that do not own and operate their own network to piggyback off of one of the four major wireless carriers for wholesale prices.

Other concessions being discussed include whether T-Mobile and Sprint will divest wireless spectrum, or the airwaves that carry data, and the possibility of giving up more retail customers or retail shops from either T-Mobile or Sprint’s prepaid brands, according to one source familiar with the matter.

Reporting by Sheila Dang and Angela Moon in New York and Diane Bartz in Washington; Editing by Kenneth Li and Lisa Shumaker

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