FCC Chairman Ajit Pai may have effectively derailed Sinclair’s $3.9 billion dollar acquisition of Tribune Media today after issuing a statement criticizing the deal.

“Based on a thorough review of the record, I have serious concerns about the Sinclair/Tribune transaction,” Pai said in a statement few expected to see from the current chairman. “The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”

Pai is responding to ample evidence from those objecting to the deal showing Sinclair’s proposal to acquire 42 additional Tribune-owned TV stations and effectively maintain shadow control over stations it planned to divest would put the company far over the federal station ownership cap. Sinclair’s proposal to sell 21 stations to win government approval came under close scrutiny when it was revealed most of the buyers had direct ties to Sinclair or its founding Smith family. Critics charged Sinclair offered sweetheart deals to buyers in return for “sidecar” agreements to effectively retain control of the spun-off stations and have the option of buying them back later at a discount.

Pai

“When the FCC confronts disputed issues like these, the Communications Act does not allow it to approve a transaction,” Pai noted. “Instead, the law requires the FCC to designate the transaction for a hearing in order to get to the bottom of those disputed issues. For these reasons, I have shared with my colleagues a draft order that would designate issues involving certain proposed divestitures for a hearing in front of an administrative law judge.”

The chairman’s views were welcomed by FCC Commissioner Jessica Rosenworcel.

“As I have noted before, too many of this agency’s media policies have been custom built to support the business plans of Sinclair Broadcasting,” she said in a statement. “With this hearing designation order, the agency will finally take a hard look at its proposed merger with Tribune. This is overdue and favoritism like this needs to end.”

Industry observers suggest such a referral is a death blow in cases of similar mergers because of long delays and uncertainties. The FCC effectively ended the 2015 Comcast-Time Warner Cable merger when it referred the merger to a similar complicated hearing process. The two companies abandoned the deal after getting the news.

Sinclair’s deal has also been a lightning rod for controversy between liberal and conservative groups. The Washington Post found Sinclair “gave a disproportionate amount of neutral or favorable coverage to Trump during the campaign” while portraying Hillary Clinton negatively in much of its coverage. Politico reported Jared Kushner, President Trump’s son-in-law, made a deal with the president’s campaign to get additional access to the president in return for assurances Mr. Trump would receive, in Kushner’s words, “better media coverage.”

After the election, Sinclair-owned stations have been under growing scrutiny for airing mandated “must-air” conservative-slanted stories and editorials during local newscasts. Recent commentaries from former Trump campaign adviser Boris Epshteyn included praise for the president’s newest nomination for the Supreme Court and criticism over how the president is treated by the media.

Pai

In an effort to “streamline” procedural rules and paperwork at the Federal Communications Commission, FCC Chairman Ajit Pai is proposing to theoretically weaken the existing informal complaints process, leaving consumers with unresolved complaints only one firm option — paying a $225 filing fee to pursue a formal complaint at the Commission regarding their internet service provider.

“This Order streamlines and consolidates the procedural rules governing formal complaints against common carriers, formal complaints regarding pole attachments, and formal complaints concerning advanced communications services and equipment,” the FCC proposal reads. “We base these rule refinements on 20 years of experience adjudicating formal complaints and conducting mediations. We find that these rule revisions will eliminate inconsistencies among various complaint proceedings, promote a fully developed record in each case, foster disposition of formal complaints in a timely manner, and conserve resources of the parties and the Commission.”

With thousands of informal complaints about the nation’s cable, phone, wireless, and satellite companies arriving at the FCC every week, and millions of comments to process on hot-button topics like net neutrality, the federal agency is trying to distance itself from being a government’s version of the Better Business Bureau. Under the Obama Administration, FCC Chairman Tom Wheeler invited consumers to bring their complaints about internet service providers to the FCC’s attention. In 2015, the FCC launched a Consumer Help Center that, like Pai’s latest proposal, also claimed to “streamline the complaint system.”

FCC’s online Complaint Center

“The first responsibility of the FCC is to represent consumers,” the agency noted in a 2015 blog post. “Facilitating consumer interface with the Commission is a major component of that responsibility.”

Three years ago, the FCC stepped up involvement in the consumer complaints process to keep an eye on the marketplace and its providers — to see whether consumers were being well-served and ferret out companies that were not responsive or “bad actors” in the industry. The best way the FCC determined that was to track and measure consumer complaints.

“The information collected will be smoothly integrated with our policymaking and enforcement processes,” the FCC wrote in 2015. “The result will be better results for consumers and better information for the agency. The insights we gain will help identify trends in consumer issues and enable us to focus Commission time, money, and resources on the issues that matter most.”

The proposed changes supported by Chairman Pai are subtle, but in the regulatory world, a few words can mean a lot — something the New York State Public Service Commission and Charter/Spectrum are debating right now. A single appendix in the 2016 Merger Order approving Charter’s acquisition of Time Warner Cable and the cable company’s interpretation of it led to threats by the PSC to de-certify the multi-billion dollar merger.

Matthew Berry, the FCC’s chief of staff, promptly attacked as “fake news” a partly specious article on the subject published by The Verge (which was substantially modified from the original this afternoon).

This is fake news. No change is being proposed to the FCC’s process for handling informal complaints. I’ve rarely seen an article about an FCC item that has been this far off base. https://t.co/L59YxbggSY

— Matthew Berry (@matthewberryfcc) July 10, 2018

But Berry ignores the fact the proposal states up front it amends or changes current rules. Whether the FCC intends to make changes in its day-to-day operations as a result is a separate matter from the rules that govern the FCC’s work. The former can be changed almost at will, the latter cannot.

The section that has sparked controversy this week is: § 1.717 Procedure. It details what happens when the FCC receives an informal complaint from a consumer, either from a web-based complaint form or written complaint:

Current Language:

The Commission will forward informal complaints to the appropriate carrier for investigation. The carrier will, within such time as may be prescribed, advise the Commission in writing, with a copy to the complainant, of its satisfaction of the complaint or of its refusal or inability to do so. Where there are clear indications from the carrier’s report or from other communications with the parties that the complaint has been satisfied, the Commission may, in its discretion, consider a complaint proceeding to be closed, without response to the complainant. In all other cases, the Commission will contact the complainant regarding its review and disposition of the matters raised. If the complainant is not satisfied by the carrier’s response and the Commission’s disposition, it may file a formal complaint in accordance with § 1.721 of this part.

Proposed Language:

The Commission will forward informal complaints to the appropriate carrier for investigation and may set a due date for the carrier to provide a written response to the informal complaint to the Commission, with a copy to the complainant. The response will advise the Commission of the carrier’s satisfaction of the complaint or of its refusal or inability to do so. Where there are clear indications from the carrier’s response or from other communications with the parties that the complaint has been satisfied, the Commission may, in its discretion, consider a complaint proceeding to be closed. In all other cases, the Commission will notify the complainant that if the complainant is not satisfied by the carrier’s response, or if the carrier has failed to submit a response by the due date, the complainant may file a formal complaint in accordance with § 1.721 of this part.

At first glance, these two sections appear nearly identical. The subtle changes relate to defining, in writing, the exact responsibilities of the FCC. Weasel words like “may,” “advise,” “in its discretion,” and “consider” are red flags. When these kinds of words replace black letter words like “will,” the rules are weakened by making them discretionary. In such cases, a decision to pursue a matter is no longer a requirement, it’s an option.

In this case, Mr. Pai is proposing to reduce the FCC’s obligations to oversee an informal consumer complaint from the moment it is received to its ultimate disposition.

Under the current complaint rules, the FCC has collected a lot of information about the nature and resolution of consumer complaints. Let’s say Nancy Smith files a informal complaint against Comcast using the FCC’s online complaint center. Right now, the FCC requires Comcast to respond to Nancy’s complaint within 30 days. Comcast knows that the FCC will be monitoring the complaint and Comcast’s response. If Comcast were to ignore the letter or dismiss it, the FCC will be watching.

Consumers getting squeezed by reduced oversight.

The high complaint rates earned by telecom companies have been fodder for regulators and politicians for years, so most companies refer complaints filed with the FCC to their highest level “executive customer service” personnel empowered to resolve complaints almost anyway they can. If Mrs. Smith is pleased with the response from Comcast, the cable operator knows the FCC sees that as well. Comcast is also sensitive to the fact the FCC might one day act on unresolved issues that generate the most complaints. Over time, statistics gathered by the FCC will reveal the companies least willing to cooperate with their customers and those most motivated to resolve issues. That could count if a company like Comcast sought a merger with another cable company with a lower complaint rate, for example.

Under the proposed informal complaint rules, the FCC’s role is effectively reduced to a complaint letter-forwarder. Nancy Smith’s letter sent to the FCC under the new rules will still be forwarded to Comcast and probably arrive with a 30 day deadline to respond, should the FCC choose to maintain that requirement. In a theoretical response to Mrs. Smith, the FCC can immediately notify her it has forwarded her complain to Comcast and regardless of the provider’s response (assuming Comcast sends one), her only recourse if she remains dissatisfied is to pursue a formal complaint — the one that involves a previously established $225 filing fee and comes with a mass of terms, conditions, and requirements comfortable only for lawyers and lobbyists.

The FCC attempts to explain away the changes in a footnote (emphasis ours):

We also clarify rule 1.717, which addresses informal Section 208 complaints. See 47 CFR § 1.717. In addition to wording revisions that do not alter the substance of the rule, we delete the phrase “and the Commission’s disposition” from the last sentence of that rule because the Commission’s practice is not to dispose of informal complaints on substantive grounds. We also add a rule memorializing MDRD’s staff-assisted mediation process, which enables parties to attempt to resolve their disputes before or after the filing of a formal complaint.”

A “practice” is not a “rule” or “requirement,” however. “Substantive grounds” is also undefined in the footnote and could be subject to interpretation. After all, Mr. Pai has also claimed that repealing net neutrality would have no substantive impact on the internet.

D.C.’s lobbyists routinely make regulatory language change suggestions on behalf of their clients.

Lobbyists are paid handsomely to urge adoption of similar, subtle modifications in regulatory rules and laws because they can establish loopholes large enough to drive a truck through. In virtually every proceeding, comments routinely focus on proposed language changes. This will be the core part of the discussion at the FCC before voting on the rule change proposal as early as tomorrow – July 12, 2018.

In practical terms, the changes are designed to subtly distance the FCC from involvement in consumer disputes with their providers. Oversight is weakened in this proposal, but more importantly, the focus of the FCC’s mandate changes from “the first responsibility of the FCC is to represent consumers” in 2015 to “if the complainant is not satisfied by the carrier’s response, or if the carrier has failed to submit a response by the due date, the complainant may file a formal complaint.” Only then, assuming a consumer successfully navigates a very complicated procedure to file a formal complaint and correctly follow notification requirements, will the FCC be compelled by the rules to stay involved with a complaint from start to finish.

Keep in mind companies that frequently have regulatory business before the FCC have staff attorneys and employees familiar with the FCC’s bureaucracy and rules. A $225 filing fee is an afterthought. For the average consumer, neither is probably true.

The likely result of the change will act as a deterrent for consumers relying on the FCC to help them resolve problems. Providers will also quickly recognize the FCC is no longer as willing to scrutinize customer complaints.

Ranking Member Rep. Frank Pallone, Jr. (D-N.J.) and Ranking Member of the Subcommittee of Communications and Technology Mike Doyle (D-Penn.), who both serve on the House Energy & Commerce Committee, quickly realized the implications of the FCC’s proposed rule changes and fired off a letter to Mr. Pai this week:

We are deeply concerned that the Federal Communications Commission (FCC) is poised to adopt a rule that would eliminate the agency’s traditional and important role of helping consumers in the informal complaint process. Too often, consumers wronged by communications companies face unending corporate bureaucracy instead of quick, meaningful resolutions. Historically, FCC staff has reviewed responses to informal complaints and, where merited, urged companies to address any service problems. Creating a rule that directs FCC staff to simply pass consumers’ informal complaints on to the company and then to advise consumers that they file a $225 formal complaint if not satisfied ignores the core mission of the FCC — working in the public interest.

At a time when consumers are highly dissatisfied with their communications companies, this abrupt change in policy troubles us.

After reviewing a lot of regulatory proceedings and comments over the last ten years of Stop the Cap!, it troubles us too.

WASHINGTON (Reuters) – AT&T will pay $5.25 million to settle a U.S. investigation after two outages in 2017 prevented about 15,000 callers from making emergency “911” calls, the company and a federal regulator said last week.

The Federal Communications Commission said Thursday AT&T had agreed to make changes to reduce the likelihood and impact of future 911 outages and improve notifying 911 call centers of outages.

AT&T said it has “taken steps to prevent this from happening again.”

The FCC said the 911 service outages were the result of planned network changes implemented by AT&T inadvertently interfering with the company’s routing of 911 calls.

The FCC said the March 2017 outage lasted about five hours, resulting in the failure of 911 calls from some 12,600 unique users, while the May 2017 outage lasted 47 minutes, resulting in 2,600 failed 911 calls.

The FCC said during the March outage the company failed to “quickly, clearly, and fully notify all affected 911 call centers.”

AT&T said it had cooperated with the review and agreed that “providing access to emergency 911 services is critically important.”

Several other carriers agreed to settlements after an April 2014 outage affected 11 million telephone users.

Verizon Communications agreed to a $3.4 million fine after a six-hour 911 outage in April 2014 that affected about 750,000 wireless consumers in nine California counties.

CenturyLink agreed to a $16 million settlement in the April 2014 outage.

The FCC said the outages at the carriers in April 2014 resulted in 6,600 missed 911 calls about domestic violence, assault, motor vehicle accidents, a heart attack, an overdose, and an intruder breaking into a residence.

The April 2014 outage was the result of a preventable software coding error at a call management center in Colorado, the FCC said.

In 2015, T Mobile US agreed to a $17.5 million settlement after two 911 service outages nationwide in August 2014. The separate but related outages lasted approximately three hours and affected almost all of T-Mobile’s then 50 million customers.

Reporting by David Shepardson; Editing by Lisa Shumaker and David Gregorio

Rosenworcel

Using “stitched-together” stories and caricature, lobbyists are finding an audience among Republican members of the Federal Communications Commission eager to sweep away local control of broadband infrastructure to allow wireless companies to locate equipment almost anywhere they want.

FCC Commissioner Jessica Rosenworcel warned attendees at the 86th annual meeting of the U.S. Conference of Mayors that the ability of local communities to control what equipment ends up on municipally owned light and utility poles is at risk:

In our first city—which happens to be a fictional one—public infrastructure is dated. The city needs better broadband and wireless services. But city officials view improvements skeptically. They lack the policies and processes needed to clear the way for the deployment of fiber facilities, wireless towers, and small cells—all of which are essential digital age infrastructure. They delay applications for facilities siting. They charge big fees for access to municipal poles. And get this, these bad actors have the audacity to have public safety and aesthetic concerns.

Like I said, this city is fictional. It’s a caricature based on some outliers and stitched-together stories. But this city is the one dominating discussion in Washington. It’s unfortunately shaping the debate where I work—at the Federal Communications Commission. It’s animating our discussions about broadband deployment and how we ensure the next generation of wireless broadband known as 5G reaches everyone, everywhere. This narrative is priming the pump for Washington preempting cities and towns and preventing them from having a role in what is happening in their own backyards.

The wireless industry is backing a number of state measures that severely restrict local control and decision-making powers over wireless infrastructure and its placement. The coordinated campaign has relied heavily on dubious stories of local communities arbitrarily rejecting wireless infrastructure upgrades or seeking huge amounts of money in return for permission to place equipment on community-owned utility poles or street lights:

The telecommunications industry has stacked the deck on many levels of the debate over how much control local municipalities should have over locations for cell towers, small cells, backup battery cabinets, and other infrastructure, claiming cities want to extort confiscatory pole attachment fees, drag their feet on permitting, and impose arbitrary rules that delay the deployment of wireless upgrades.

FCC Chairman Ajit Pai’s Broadband Deployment Advisory Committee (BDAC) is heavily packed with telecom industry insiders and lobbyists. Only a small handful of members are local public officials. As a result, the industry-stacked committee quickly identified local communities as one of the biggest impediments of next generation broadband services like 5G, and prioritized recommendations for new policies designed to deregulate the process in favor of providers.

The Republican FCC chairman and commissioners frequently characterize this issue as ‘old rules’ getting in the way of new technology, like 5G, necessitating regulatory reform.

State lawmakers, often relying on information packages assembled by telecommunications companies, have introduced industry-drafted model bills dramatically curtailing local control over equipment placement and pole attachment pricing. In states like Tennessee, the debate was framed as an either/or choice of Tennessee receiving advanced 5G investment and deployment or watching companies choose more industry-friendly states for 5G services.

Rosenworcel acknowledged San Jose Mayor Sam Liccardo, who resigned from BDAC after complaining it was heavily biased in favor of telecommunications companies. She praised Liccardo for independently streamlining provider access to poles for future 5G service with fair pricing and for developing new digital inclusion projects that will funnel some provider compensation into programs designed to achieve broader adoption of broadband services by the public.

For Rosenworcel, the fastest and most resilient way to broadband deployment is with a community on board.

“That’s because picking fights with cities and states promises to yield little more than a fast trip to the courts. It’s already happening with the FCC’s effort to redefine “federal actions” under the National Historic Preservation Act and National Environmental Policy Act,” Rosenworcel said.

Rosenworcel recommends the FCC develop a new framework that spends less time on the lobbyists’ talking points and scare stories and instead relies on common sense cooperative coordination between companies, the FCC, and local communities.

“We can begin by developing model codes for small cell and 5G deployment—but we need to make sure they are supported by a wide range of industry and state and local officials,” Rosenworcel said. “Then we need to review every infrastructure grant program at the Department of Commerce, Department of Agriculture, and Department of Transportation and build in incentives to use this model. In the process, we can build a more common set of practices nationwide. But to do so, we would use carrots instead of sticks.”

Christmas comes early for Comcast and AT&T, thanks to Ersatz Santa, FCC Chairman Ajit Pai.

In the view of FCC Chairman Ajit Pai and his Republican colleagues serving as members of the Federal Communications Commission, Monday – June 11, 2018 is Internet Freedom Day, marking the official end of net neutrality. Republican FCC commissioners, working hand-in-hand with the nation’s largest telecommunications companies, successfully abolished a pro-consumer rule that ensured all internet traffic was treated equally by your internet service provider, with a ban on paid fast lanes and other types of traffic discrimination. 

The FCC website has a new look today, one that discourages consumers from bringing internet-related complaints to an agency that has invited consumers to reach out about unresolved internet problems since the earliest days of internet access.

While much of the country is focused on the Republicans’ successful repeal of open internet protections, many might have missed the fact the FCC also intends to ‘pass the buck’ on your internet problems to the Federal Trade Commission (FTC), an agency that can take a year or more to bring action against companies suspected of violating the law.

Consumers who visit the FCC’s Consumer Complaint Center will find a stripped down resource that now primarily exists to forward consumer complaints to another federal agency. Chairman Pai has made certain the experience is as discouraging as possible for those who manage to find their way to the FCC’s complaint department (emphasis ours):

If you choose to file an informal complaint with the FCC about an Internet-related issue, we will share the information you provide, including your name and contact information, with the Federal Trade Commission (FTC). Your complaint may be used to investigate cases or in a legal proceeding.

Before proceeding with your submission, please note that an informal consumer complaint should only be filed at the FCC if you have a specific issue with your provider.

If you are interested in submitting an informal complaint about an Internet-related issue, please complete this form.

The old form made no mention of the FTC, which is central to Pai’s new “hands off” policy at the FCC.

This morning, Pai told CBS that the Federal Trade Commission will now work to prevent such cases of “bad apples in the internet economy” from ripping off consumers.

“We’ve empowered the FTC to take action against any company that might act in any anti-competitive way,” said Pai. “The consumer is going to be protected and we preserve the incentive for companies to build out better, faster, and cheaper internet access. Consumers need to be protected and the FTC is the only one under current law that can do that.”

But Pai’s claims don’t ring true to Gigi Sohn, who served as a counselor to former FCC Chairman Thomas Wheeler.

Sohn

“Should consumers or innovators have a complaint about fraudulent, discriminatory, privacy violating or predatory pricing practices of broadband ISPs, the FCC won’t answer their call,” Sohn said. “For the first time since the creation of broadband, the agency will not take responsibility for protecting consumers or competition.”

Neither will the FTC, which warns would-be complainants upfront on its website: “The FTC cannot resolve individual complaints, but we can provide information about what next steps to take,” which is equivalent to calling the fire department because your house is on fire and receiving a booklet that explains how to acquire and use a hose to put the fire out yourself.

ISP’s no longer need fear having a federal agency like the FCC following every consumer complaint. The FTC claims it may share your complaint with local, state, federal, and foreign law enforcement partners, or may be used to investigate cases or hold a legal proceeding. But unlike the guidelines the FCC answered to under the Obama Administration, there is no requirement to force a provider to quickly respond to you, no easy access to statistics detailing received internet-related complaints (such as the tens of thousands of complaints about data caps, throttling, and net neutrality collected by the FCC under the last administration), and no significant likelihood of action. Want an example? The FTC has been charged with ending the scourge of automated robocalls that generated more than 275,000 complaints last year… from the state of Ohio alone. In the last two years, the FTC issued press releases touting cases brought against a total of three alleged telemarketers. Has your phone stopped ringing?

Under the Trump Administration’s FCC, it is open season on consumers, and the complaint department is now closed.