Verizon and T-Mobile are redlining their up and coming 5G wireless services to target wealthy neighborhoods and business districts while shunning the urban poor.

Dave Burstein examined the coverage maps of both carriers in cities like Manhattan and found a distinction in the service available in wealthy southern Manhattan and what upper Manhattan neighborhoods including Harlem and the mostly Latino Washington Heights are getting. For both companies, 5G is not much of a priority for Brooklyn either.

“I do not think T-Mobile specifically intended to exclude people of color, but that seems to be the practical effect,” Burstein wrote.

(Image: Dave Burstein)

Ronan Dunne, executive vice president & group CEO of Verizon Consumer confirmed that Verizon will be targeting 5G service to areas where it makes the most economic sense. He said that more than half of Verizon Wireless customers will continue to get 4G LTE-like speeds, with the rest eventually upgraded to 5G service.

“So we’ve taken a very clear view that we want to have both a coverage strategy and a capability strategy. And a very large majority of the volume of data that we carry on our networks goes to large, dense urban environments,” Dunne told investors recently. “So from a population point of view, it’ll be significantly less than half of the customers [getting 5G]. But from a data traffic point of view, it’s significantly more than half. So when it comes to the ability to use 5G as a significant capacity enhancement, there’s more of an opportunity to leverage that in the urban areas.”

In other words, Verizon plans to target population dense urban areas for 5G service the most, because that is where most of its data-loving customers live and where they network’s cost effectiveness may be the highest. Although the geographic coverage of 5G will seem relatively small, the population density of areas targeted for 5G service is not.

Dunne

Verizon has been touting its forthcoming nationwide 5G network, but Dunne has hinted to investors that the devil will be in the details. Not every customer will have access to Verizon’s super fast millimeter wave 5G service. In fact, at least half the country will be serviced by existing 4G LTE cell towers upgraded to provide 5G service on lower frequencies capable of reaching far beyond the coverage area offered by millimeter wave service. But that will also mean a much larger number of customers will share the same 5G network connection, potentially dramatically reducing speed and performance. Dunne said the performance of this type of 5G service “will approximate a good 4G service.”

Burstein notes in real terms, this will mean a significant difference in network speed. Verizon’s millimeter wave service will be capable of delivering 1-2 Gbps, while Verizon’s 5G upgrade of its existing 4G cell towers will deliver speeds in the low hundreds of megabits per second, potentially even slower on crowded cell sites.

Verizon 5G Home will begin accepting new customer orders for its in-home wireless broadband replacement as of this Thursday, Sept. 13, with a scheduled service launch date of Oct. 1.

The new high-speed wireless service will be available in select parts of Houston, Indianapolis, Los Angeles, and Sacramento.

Verizon CEO Hans Vestberg is calling the service part of Verizon’s 5G Ultra Wideband network. Initial reports indicate speed will range between 300-1,000 Mbps and existing Verizon Wireless customers will get a $20 price break on service — $50 a month instead of $70 for non-Verizon Wireless customers. We are still waiting word on any data caps or speed throttle information. Verizon informs Stop the Cap! there are no data caps or speed throttles. Service is effectively unlimited, unless hidden terms and conditions introduce unpublished limits.

Interested customers can determine their eligibility starting at 8 a.m. ET on Thursday from the Firston5G website. If you are not eligible initially, you can add your email address to be notified when service is available in your area.

Early adopters will be awarded with a series of goodies:

• Free installation (a big deal, since it could cost as much as $200 later. An external antenna is required, as well as in-home wiring and equipment.)
• 90 days of free service (a good idea, considering there may be bugs to work out)
• 90 days of free YouTube TV (a welcome gift for cord-cutters)
• Free Chromecast or Apple TV 4K (a common sign up enticement with streaming cable-TV replacements)
• Priority access to buy forthcoming line of 5G-capable mobile devices

Customers in the first four launch cities will be using equipment built around a draft standard of 5G, as the final release version is still forthcoming. Verizon is holding off on additional expansion of 5G services until the final 5G standard is released, and promises early adopters will receive upgraded technology when that happens.

Verizon is clearly providing a greater-than-average number of enticements for early adopters, undoubtedly to placate them if and when service anomalies and disruptions occur. Although Verizon has done limited beta testing of its 5G service, it is very likely the 5G network will get its first real shakeout with paying customers. Unanticipated challenges are likely to range from coverage and speed issues, unexpected interference, network traffic loading, the robustness of Verizon’s small cell network, and how well outside reception equipment will perform in different weather conditions, particularly heavy rain and snow. With a large number of freebies, and no charges for 90 days, customers are likely to be more forgiving of problems, at least initially.

Chromecast

Verizon’s 5G network depends on millimeter wave spectrum, which means it will be capable of providing very high-speed service with greater network capacity than traditional 4G LTE wireless networks. But Verizon will have to bring 5G antennas much closer to subscribers’ homes, because millimeter wave frequencies do not travel very far.

Verizon will combine a fiber backhaul network with small cell antennas placed on top of utility and light poles to reach customers. That explains why Verizon’s initial 5G deployment is unlikely to cover every customer inside city limits. There are substantial deployment costs and installation issues relating to small cells and the optical fiber network required to connect each small cell.

Verizon’s existing FiOS network areas will offer an easier path to introduce service, but where Verizon does not offer its fiber to the home service, it will need to bring fiber optic cables deep into neighborhoods.

AT&T sees a similar challenge to 5G and is openly questioning how useful wireless 5G can be for urban/suburban broadband service, considering it can simply extend fiber optic service to those homes and businesses instead, without a costly 5G small cell deployment.

Verizon introduces 5G wireless in-home broadband in four U.S. cities and starts taking new customer orders on Thursday. (1:00)

Article updated at 6:28pm ET with information about data caps and speed throttles provided by Verizon.

Your bundle is bigger than ever.

A-la-carte TV is still dead. Long live the super-sized bundle!

If AT&T and Time Warner wanted to deliver a message to the cable industry as a result of their now-approved blockbuster merger deal, it is one that promises hundreds, if not thousands of more TV channels, movies and shows headed your way in the coming days, bundled into super-sized pricier packages of television, telephone, and internet service.

Despite the fact consumers claim they want to pick and pay only for the entertainment options they specifically want, in reality people are paying for more bundled packages and services — usually from multiple online streaming services — than ever before, with no possibility they will ever watch everything these services have to offer.

AT&T and Time Warner are well aware customers are now subscribing to cable television -and- streaming video services like Hulu and Netflix. But many customers are also buying streaming live cable TV alternatives, despite the fact they already subscribe to a cable television package. Given the option of selling you an inexpensive package of a dozen cable channels you claim to want or selling you much larger and more expensive bundles of services many are actually buying, AT&T will follow the money every time.

What will be different as a result of this merger is where you buy that programming. Before, you may have purchased AT&T Fiber internet access, AT&T wireless mobile phone service, a HBO GO subscription through DirecTV Now, a cable TV alternative, and Netflix. Now, with the exception of Netflix, all of that money will go directly to AT&T. The company will also be able to enhance their bottom line by monetizing content viewed over mobile devices. After taking control of Time Warner’s vast entertainment offerings, which range from HBO to Turner Broadcasting networks like CNN and TNT, AT&T will generously bestow liberal (or possibly free) access to this content for its broadband and wireless customers, while those served by other providers will have to pay up to watch. AT&T will ultimately set the terms of its licensing agreements. AT&T Wireless customers with unlimited data plans already have a sample of this with a free year of DirecTV Now, which customers of other wireless companies have to pay to watch.

AT&T plans to offer the best deals to customers who bundle everything through AT&T. The “quad play” bundle of TV, internet, home phone, and wireless phone will offer customers discounts on each element of the package, but some may experience sticker shock even with the discounts.

The Wall Street Journal noted a premium AT&T customer could pay more than $500 a month for AT&T’s best package — that’s more than $6,000 a year. Most bundled AT&T customers will pay about half that — around $246 a month for a package of 100 Mbps internet, a home phone line, wireless phone and a limited TV package bundling Time Warner content, including HBO. The entry level ‘poverty’ package will still cost around $115 a month.

By controlling each element of the package, AT&T can discourage a-la-carte package pickers by substantially raising the price of standalone services, to encourage bundling. That explains why many customers take a promotional TV offer priced just $10-20 more than the $70 broadband-only package some customers start with. If broadband-only service costs $40 a month and the TV package also costs $40 a month, those leaning towards cord-cutting would find it much easier to pass on cable television.

With Comcast on the verge of picking up much of 21st Century Fox’s content library and studio, Comcast will be able to defend its own turf creating similar giant bundles of content to keep its customers happy. Wall Street is already putting pressure on Verizon to respond with an acquisition of its own to protect its base of FiOS and Verizon Wireless customers.

Companies likely left out in the cold of the next wave of media and entertainment consolidation include online content companies like Google, Facebook, Amazon, and Apple, which will be stuck licensing someone else’s content or bankrolling many more original productions. Charter Communications, which has a small deal with AMC for content, is also stranded, as are smaller cable companies like Cox, Altice, and Mediacom. Independent phone companies like CenturyLink, Windstream, Consolidated, and Frontier are also in a bad position if Wall Street determines telecom companies without content divisions are in serious trouble.

Netflix stands alone as the behemoth content company, and is not likely to be impacted by the current wave of consolidation. Hulu will most likely end up in the hands of a telephone or cable company, most likely Comcast, if it successfully acquires Fox’s ownership share of Hulu.

For customers, your future choice of provider is about to get more complicated. In addition to pondering speed tiers and wireless coverage maps, you will also have to decide what content packages are the most valuable. Your choices will range from basic company-owned networks to third-party services like Netflix and Hulu, as well as full cable TV lineups ranging from DirecTV Now to XFINITY TV. Then get ready for the bill, which will likely include charges for most, if not all, of these services.

The Wall Street Journal explains the current wave of media consolidation. (2:44)

Last week, AT&T announced its intention to abandon an appeal of a decision of the 9th Circuit Court of Appeals granting the Federal Trade Commission the right to continue its lawsuit against AT&T for speed throttling its “unlimited data” wireless customers.

The notification came in a surprising four sentence notice filed with the court May 30:

At the May 10, 2018 case management conference in this matter, AT&T informed the Court that it expected at that time to request a 60-day extension from the Supreme Court of the deadline to file a petition for certiorari. See Audio Recording of May 10, 2018 Hr’g at 7:22. Since that hearing, AT&T has decided not to request such an extension and not to file a petition for certiorari to review the decision of the en banc Ninth Circuit, see 883 F.3d 848 (9th Cir. 2018). The deadline to file a petition for certiorari lapsed on May 29, 2018.

AT&T spokesman Mike Balmoris later told reporters: “We have decided not to seek review by the Supreme Court, to focus instead on negotiating a fair resolution of the case with the Federal Trade Commission.”

AT&T’s sudden change of heart surprised many observers, including some closely following the case at the 9th Circuit, which has held regular court supervised meetings to prepare for the widely expected Supreme Court challenge. AT&T notified the court in early May it would file its appeal as soon as May 29, and the court was preparing new discovery guidelines and deadlines between the two parties as the case proceeded.

AT&T had achieved a major victory in 2017 when a three-judge panel at the Ninth Circuit agreed with AT&T’s argument that the FTC had no jurisdiction over the company because part of its business includes traditional telephone service, something defined in law as being regulated exclusively by the FCC. At the same time, the FCC did not seem to have jurisdiction either, because wireless data throttling took place over a network not subject to common carrier service regulations.

Ninth Circuit Court of Appeals — San Francisco.

The Ninth Circuit then agreed to hear the case once again, this time “en banc” — meaning the full court would re-hear the case instead of a limited panel of three judges. In February, the court unanimously found the FTC did have regulatory jurisdiction over AT&T after all:

We conclude that the exemption in Section 5 of the FTC Act – “except . . . common carriers subject to the Acts to regulate commerce” – bars the FTC from regulating “common carriers” only to the extent that they engage in common-carriage activity. By extension, this interpretation means that the FTC may regulate common carriers’ non-common-carriage activities.

[…] This statutory interpretation also accords with common sense. The FTC is the leading federal consumer protection agency and, for many decades, has been the chief federal agency on privacy policy and enforcement. Permitting the FTC to oversee unfair and deceptive non-common-carriage practices of telecommunications companies has practical ramifications. New technologies have spawned new regulatory challenges. A phone company is no longer just a phone company. The transformation of information services and the ubiquity of digital technology mean that telecommunications operators have expanded into website operation, video distribution, news and entertainment production, interactive entertainment services and devices, home security and more. Reaffirming FTC jurisdiction over activities that fall outside of common-carrier services avoids regulatory gaps and provides consistency and predictability in regulatory enforcement.

In short, AT&T’s “get out of regulatory oversight free”-card was revoked, much to its consternation. The company promised a fast appeal to the Supreme Court. The case concerned a number of observers, not the least of which was the Federal Communications Commission, which has been so concerned about AT&T’s novel argument to escape regulation, it filed a brief supporting the FTC with the court:

If the en banc Court were to adopt AT&T’s position that the FTC Act’s common-carrier exception is “status-based” rather than “activity-based,” contrary to the reasoned analysis of the district court below, the fact that AT&T provides traditional common-carrier voice telephone service could potentially immunize the company from any FTC oversight of its noncommon-carrier offerings, even when the FCC lacks authority over those offerings—creating a potentially substantial regulatory gap where neither the FTC nor the FCC has regulatory authority.

That approach is contrary to a common-sense reading of the relevant statutes and could weaken or eliminate important consumer protections. While AT&T may prefer to offer services in a regulatory no man’s land, the law does not dance to AT&T’s whims.

While AT&T publicly expressed confidence about its appeal right up to the day it abandoned it, minutes from the Ninth Circuit trial scheduling and progress conferences reveal AT&T and the FTC were already privately talking with each other to avoid further litigation:

“Parties reported that they are conducting settlement negotiations.”

All observers agree a successful appeal by AT&T to the Supreme Court could have put telecommunications laws and regulations into chaos. Had AT&T successfully restored the three-judge panel’s decision, any telecommunications company could walk away with impunity from FCC and FTC oversight by simply starting a small telephone company serving just a handful of customers. Just one product or service subject to common carrier rules could effectively immunize a phone or cable company from regulations indefinitely, or until Congress changed the law to close that loophole.

Some observers predict AT&T’s decision not to appeal is a prelude to an imminent, favorable permanent settlement of the four-year old case. The evidence strongly suggests AT&T will likely escape any significant monetary punishment, and affected consumers may not get significant (if any) compensation for AT&T’s prior acts:

• The FCC shows no sign of following through on a 2015 press release threatening AT&T with $100 million in fines for its failure to properly disclose its speed throttling policy arbitrarily imposed on unlimited data customers who exceeded a company-defined amount of data usage. At the time the press release was issued, there were three Democrats and two Republicans serving on the Commission. Both of those Republicans opposed the fine and are now part of the Republican majority at the FCC under the Trump Administration. The FCC admitted in court papers that no further action has been taken to fine AT&T. The case was largely left in the hands of the FTC.
• During the Obama Administration, the FTC claimed it was interested in pursuing refunds for affected customers and punishing AT&T for its throttling practices. Last week, Andrew Smith, the FTC’s new director of the Consumer Protection Bureau told an audience today’s priority it to monitor providers over traffic throttling and making sure those practices are transparently disclosed to customers. “We’re planning to examine current practices in the industry,” Smith said. “We’re looking for areas in which ISPs may be engaged in unfair or deceptive practices, and we will bring enforcement action as appropriate.”

Smith

For AT&T, the decision to drop its appeal may have come down to whether it preferred to temporarily escape regulatory oversight until an enraged Congress passed new laws to put AT&T and other telecom companies back under oversight, or living with the kind of “light-to-little touch” regulatory approach favored by the Trump Administration and its regulatory agencies. Whatever deal emerges between AT&T and the Trump Administration’s FTC will likely be “win-win” for the company and the regulator, with consumers offered only token relief.

The goals likely to be achieved in any settlement:

• AT&T would clearly like to avoid a $100 million fine and other enforcement actions, so agreeing to ease throttling (something it has done already) and better disclose the practice would hardly create a problem for the company, especially if fines are dropped as a result.
• The FCC’s new “net neutrality” policy depends almost entirely on effectively abdicating oversight responsibility to the FTC, something embarrassing and hard to justify if AT&T managed to permanently bar the agency from regulating the company.
• The FTC can claim victory by telling consumers they are watching ISPs for undisclosed and unwarranted throttling, without opening up new legal challenges by outright banning of the practice, heavily fining violators, or collecting damages on behalf of customers victimized by prior bad acts.

AT&T’s attempt to avoid oversight and enforcement of consumer protection laws by the Federal Trade Commission (FTC) failed in a federal appeals court Monday, overturning a 2016 decision that agreed with AT&T the FTC could not oversee or punish AT&T for its business practices.

In a unanimous 11-0 decision by the Ninth Circuit Court of Appeals, the court found AT&T’s interpretation of a law it said gave the Federal Communications Commission exclusive authority to regulate and oversee “common carrier” telecom companies was overly broad and based on a misinterpretation of the law. The decision means the FTC will continue to pursue AT&T in court to secure relief for AT&T’s wireless customers that the FTC claims were misled by AT&T’s unlimited data plan that was not truly unlimited.

“The phrase ‘common carriers subject to the acts to regulate commerce’ thus provides immunity from FTC regulation only to the extent that a common carrier is engaging in common-carrier services,” the court ruled Monday. In laymen’s terms, the judges found that the FCC does have the regulatory authority to oversee common carrier services like basic telephone service, but the law does not prevent other government agencies like the FTC to oversee AT&T’s conduct in non common-carrier services.

The FTC and the FCC both argued that allowing AT&T and the 2016 lower court opinion to stand would create a regulatory loophole through which virtually any corporation with even the slightest ownership stake in a common carrier telecommunications company could escape all oversight and enforcement of consumer protection laws.

The dispute began in 2014, when the FTC sued AT&T in court for intentionally throttling wireless internet speeds of millions of AT&T customers hanging on to their legacy unlimited data plans.

The FTC’s complaint alleged that the company failed to adequately disclose to its customers on unlimited data plans that, if they reached a certain amount of data use in a given billing cycle, AT&T reduced – or “throttled” – their data speeds to the point that many common mobile phone applications – like web browsing, GPS navigation and watching streaming video –  become difficult or nearly impossible to use.

“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” said former FTC Chairwoman Edith Ramirez in 2014. “The issue here is simple: ‘unlimited’ means unlimited.”

According to the FTC’s complaint, AT&T’s marketing materials emphasized the “unlimited” amount of data that would be available to consumers who signed up for its unlimited plans. The complaint alleged that, even as unlimited plan consumers renewed their contracts, the company still failed to inform them of the throttling program. When customers canceled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars.

The complaint accused AT&T of violating the FTC Act by changing the terms of customers’ unlimited data plans while those customers were still under contract, and by failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans.

AT&T responded in court asking the case be dismissed, arguing that the FTC could not bring a case against AT&T because, as a common carrier, only the FCC has jurisdiction over the company.

The case was largely decided on whether Congress intended to exempt common carrier companies from FTC oversight based on their “status” or their “activities.” AT&T argued the law clearly gave companies deemed to be common carriers a blanket exemption from FTC oversight. The FTC argued Congress only intended to exempt the specific common carrier “activities” or services sold by a company from FTC oversight, not the entire company. The three-judge panel of the Court of Appeals agreed with AT&T’s view, affirming AT&T’s claim it was untouchable by the FTC and dismissed the FTC’s lawsuit.

Judge Kozinski, questioning AT&T: “I’m regulated by the FTC and I don’t like it. I go out and I buy a small, money-losing common carrier. Do I say, ‘bye bye FTC,’ under your reading of the statute?”

The decision was a stunner in D.C. regulatory circles and opened a chasm-sized loophole for almost any company to completely escape the FTC’s oversight and enforcement of consumer protection laws just by providing a single common carrier service (or acquiring a small phone company that does) to secure blanket immunity. The FTC appealed the decision before the Ninth Circuit Court of Appeals.

Both the FTC and at least one judge hearing the federal agency’s appeal saw the potential impact of the earlier 2016 decision immediately.

“I’m regulated by the FTC and I don’t like it,” Judge Alex Kozinski said to AT&T’s attorney. “I go out and I buy a small, money-losing common carrier. Do I say, ‘bye bye FTC,’ under your reading of the statute?”

The FTC warned if AT&T’s view was upheld, any company could buy a common carrier and violate federal consumer protection laws with no recourse for consumers and no available FTC enforcement action.

This week’s decision, called “common sense” by the judge who wrote the summary of the court’s finding, restores the FTC’s authority over non-common carrier services at companies large and small, including AT&T. It is also a relief to FCC Chairman Ajit Pai, who earlier argued the FTC had jurisdiction over abusive ISPs and would effectively oversee broadband providers without any need to continue the net neutrality policies of his predecessor. Had the court ruled in favor of AT&T, Pai’s policy would have transferred oversight of internet services to an agency legally prohibited from overseeing most broadband providers.

The FTC was pleased with the decision.

“It ensures that the FTC can and will continue to play its vital role in safeguarding consumer interests including privacy protection, as well as stopping anti-competitive market behavior,” Maureen Ohlhausen, acting Chairwoman, said in an emailed statement.

AT&T was not, and claimed the court ignored the merits of the case.

“We are reviewing the opinion and continue to believe we ultimately will prevail,” the representative said in an emailed statement, which did not definitively state whether AT&T intended to appeal the decision.