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Resource id #61Leaked Trump Plan To 'Nationalize' Nation's 5G Networks A Bizarre, Unrealistic Pipe Dream

There's been a lot of hand wringing and hyperventilation over a new report claiming that the Trump administration wants to nationalize the nation's looming fifth-generation (5G) wireless networks, despite the fact the proposal has a snowball's chance in hell of ever actually materializing. According to a leaked PowerPoint deck and memo drafted by a "Senior National Security Council official," the Trump administration wants the U.S. government to build and own a centralized, government-controlled 5G network in order to, purportedly, fight Chinese hackers.

More specifically, the memo claims this plan would be akin to the "21st century equivalent of the Eisenhower National Highway System," creating a "new paradigm" for the wireless industry and for national security. Fear of Chinese hackers drives the proposal from stem to stern, suggesting the plan needs to be completed in three years to protect American interests worldwide:

"The PowerPoint presentation says that the U.S. has to build superfast 5G wireless technology quickly because “China has achieved a dominant position in the manufacture and operation of network infrastructure,” and “China is the dominant malicious actor in the Information Domain.” To illustrate the current state of U.S. wireless networks, the PowerPoint uses a picture of a medieval walled city, compared to a future represented by a photo of lower Manhattan.

The best way to do this, the memo argues, is for the government to build a network itself. It would then rent access to carriers like AT&T, Verizon and T-Mobile."

And while the Trump administration running our nationwide wireless infrastructure seems both equal parts fascinating and terrifying, it's hard to take the proposal seriously.

For one thing, it ignores the technical realities of the telecom sector and the path to 5G. Individual carriers like AT&T, Verizon and T-Mobile already have their own 5G network builds well underway and spectrum already largely assigned, with commercial launches of the faster, lower-latency standard expected beginning in 2020 or so. Suddenly injecting the United States government into this process at this point makes little to no actual sense, at least for an administration that has stated repeatedly that telecom Utopia is achieved by government letting these entrenched carriers do whatever they'd like.

The proposal also tends to ignore political realities. AT&T and Verizon have more state and federal political influence than nearly any other companies thanks to their already extensive ties to domestic surveillance operations. They don't want their assets seized to help operate such a "nationalized" network, and any effort to do so would prove politically suicidal. That's why Trump's own FCC (you know, the agency that actually regulates publicly-owned airwaves) was quick to release a statement shooting down the proposal:

"I oppose any proposal for the federal government to build and operate a nationwide 5G network. The main lesson to draw from the wireless sector’s development over the past three decades—including American leadership in 4G—is that the market, not government, is best positioned to drive innovation and investment. What government can and should do is to push spectrum into the commercial marketplace and set rules that encourage the private sector to develop and deploy next-generation infrastructure. Any federal effort to construct a nationalized 5G network would be a costly and counterproductive distraction from the policies we need to help the United States win the 5G future."

US Telecom, a lobbying organization backed by AT&T, was just as quick to shoot down the proposal:

"There is nothing that would slam the breaks more quickly on our hard-won momentum to be the leader in the global race for 5G network deployment more quickly than the federal government stepping-in to build those networks. The best way to future-proof the nation’s communications networks is to continue to encourage and incentivize America’s broadband companies -- working hand-in-glove with the rest of the internet ecosystem, and in partnership with government, to continue do what we do best: invest, innovate, and lead."

When I first read the proposal, my instinct was that it was just the random brain fart of some natsec advisor who doesn't understand how telecom works or the mammoth influence companies like AT&T have over such policy. And that seems to be supported by subsequent leaks in the wake of the memo's release:

"As multiple White House officials confirmed to Recode on Sunday, the document as published is dated. They also stressed it had merely been floated by a staff member, not a reflection of some imminent, major policy announcement — and probably might never be."

To be clear, none of this is to say nationalizing networks couldn't work or be beneficial in an ideal world that actually respected civil liberties. Data has suggested a nationwide, taxpayer-funded fiber network where ISPs come in and compete (aka "open access") would potentially provide America with cheaper, better service than the pricey dreck currently passing as American broadband. Of course, given incumbent ISP influence that proposal will never actually materialize either, since to do it correctly would mean increasing competition in the broken telecom market, and we certainly wouldn't want that.

That said, the proposal does engage in all the usual hand-wringing about how the existing $700 billion defense budget isn't enough to counter the "Chinese threat" to American industry. So while the proposal isn't likely to result in nationalized networks, any runner up proposal is likely to just double down of all of our worst habits to date, including throwing countless billions at companies like AT&T, bone-grafting them to our global intelligence apparatus, then ignoring all the ways this power has been routinely and consistently abused.

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US Telcos Threatened With Loss Of Government Contracts If They Do Business With Huawei

Last week we noted how AT&T was forced to scrap a partnership with Huawei to sell the company's smartphones here in the States, just hours before it was set to be announced at CES. The reason? Apparently a few members of the Senate and House Intelligence Committees fired off a letter to the FCC demanding that they pressure US telcos into avoiding Huawei. The letter, which nobody has published, allegedly accuses the company of being little more than an intelligence proxy for the Chinese government.

There are several problems with this. While it's certainly possible that Huawei helps the Chinese government spy, there's been no hard evidence of this. In fact, numerous investigations (including one eighteen months long) found no evidence of any spying whatsoever. What inquiries did find is that these allegations pretty consistently originate with U.S. hardware vendors like Cisco, who routinely enjoy playing up the threat simply because they don't want to compete with Chinese hardware vendors. You know, the very same thing we routinely (often quite accurately) complain about China doing.

Despite no real evidence, a new Reuters report indicates this new pressure is much greater than just AT&T's smartphone partnership. In fact, the report suggests that the government is now urging all US telcos and ISPs to avoid using any Huawei gear whatsoever if they want to continue winning government contracts (and as an NSA BFF, AT&T has plenty of contracts to protect). From the report:

"The lawmakers are also advising U.S. firms that if they have ties to Huawei or China Mobile, it could hamper their ability to do business with the U.S. government, one aide said, requesting anonymity because they were not authorized to speak publicly.

One of the commercial ties senators and House members want AT&T to cut is its collaboration with Huawei over standards for the high-speed next generation 5G network, the aides said. Another is the use of Huawei handsets by AT&T’s discount subsidiary Cricket, the aides said.

And while Reuters mentioned that there have been investigations, it oddly forgets to mention what the outcome of those investigations were (again, zero evidence of spying). Also ignored is the fact that Chinese networking hardware is absolutely everywhere in the States, including being embedded in many of the products sold by U.S. manufacturers. If China wants to spy on America, it only need turn to the ocean of poorly secured IOT devices, the lion's share of which are now made in China by companies with a complete and total disinterest in anything even vaguely resembling security standards.

Similarly and comedically ignored is the fact the United States government engages in this kind of behavior all of the time. You might recal the NSA was caught intercepting Cisco hardware to install surveillance technology a few years ago. The Snowden documents also revealed how the NSA hacked into Huawei and stole company source code as early as 2007, all in the hopes of planting backdoors in network hardware used by countries who avoid buying American gear. Everyone but the most ardently myopic patriots realize that the United States' credibility on this subject was dismantled decades ago.

This latest wave of hysteria comes simultaneously and not-coincidentally as Representatives Michael Conaway and Liz Cheney introduced a bill banning US carriers from doing any business whatsoever with Huawei or ZTE Corp (two guesses on which companies are pushing for that law). Again, it's perfectly possible that Huawei helps the Chinese government spy. But if that's the case, it shouldn't be too difficult to provide some hard evidence supporting this position. Unless, of course, this is all little more than an adorable little stage play concocted simply to protect US hardware vendors from having to actually compete.

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Trump's New Rural Broadband Executive Order Doesn't Actually Do Much Of Anything

You have probably noticed by now that the biggest problem in the U.S. broadband market is a lack of vibrant competition in many areas. This lack of competition over the "last mile" is the core reason for the majority of the problems in the sector, from privacy violations to net neutrality infractions. And while lawmakers from both parties adore paying empty lip service to making broadband faster, cheaper, and more available, very few have the courage to stand up to AT&T, Verizon, and Comcast and actually implement policies that improve our competitive options.

More often than not, government's "solution" for the broadband market involves first ignoring that there's any real competition problem whatsoever, then hyping "broadband expansion" efforts that fail to truly address the underlying problems.

That's usually accomplished via programs with "goals" that would have been accomplished anyway. Like when Obama promised in 2011 to ensure wireless broadband reached 98% of the public (ignoring the problem of high prices and usage caps, or the fact this coverage was going to occur anyway), or when Obama's former FCC boss Julius Genachowski promised a gigabit ISP in each one of the fifty states (also something that would have happened without government involvement). Such efforts usually comically ignore how limited competition and high prices are the biggest problem.

Keeping this proud tradition alive, President Trump this week held a rally to hype his purported dedication to the nation's forgotten rural areas. This dedication, according to a breakdown by Reuters, will involve "making it easier for the private sector to locate broadband infrastructure on federal land and buildings":

"U.S. President Donald Trump was expected on Monday to sign an executive order to make it easier for the private sector to locate broadband infrastructure on federal land and buildings, part of a push to expand high-speed internet in rural America. Faster internet speeds in rural areas have long been seen as key to addressing the economic divide between rural and urban America, but the costs have so far been prohibitive."

But if you bother to read the actual order, the "new efforts" cited within are nothing new. They're simply part of a concerted effort to speed up construction and placement of cellular towers and other essential gear on government property at the behest of AT&T and Verizon, a priority at the FCC for several years now. In Trump fashion however, the President took ample time to insist this looming surge in "great, great broadband" was exclusively thanks to his leadership and the creation of this new executive order:

"Those towers are going to go up and you’re going to have great, great broadband,” Trump told the annual convention of the American Farm Bureau Federation. "Farm country is God’s country,” he declared..."Oh, are you happy you voted for me,” he added. “You are so lucky that I gave you that privilege."

While faster cellular tower placement is great and all, it doesn't solve the real problem in the sector: a lack of competition. FCC data indicates that two-thirds of American homes lack access to modern broadband (25 Mbps) from more than one ISP. Instead of addressing that problem, the Trump FCC has been actively working to undermine how broadband is measured in a blatant attempt to hide coverage and competition gaps. Trump's FCC has also started taking a hatchet to programs that help bring broadband to the poor, an increasing problem given that incumbent providers refuse to upgrade countless poor or rural markets.

Reuters' and other mainstream coverage of Trump's EO also ignores the countless problems that will be caused by the Trump administration's attack on net neutrality, elimination of consumer broadband privacy protections, or industry-backed efforts to gut nearly all meaningful oversight of entrenched telecom duopolies, something that history repeatedly tells us only makes service worse and more expensive. Unsurprisingly, reports fail to note the fact that the Trump FCC has taken steps to protect the entrenched monopoly at the heart of the cellular backhaul and business data services (BDS) markets, ensuring competition there remains tepid and cellular connectivity remains expensive.

Here's a tip: you'll know a politician's "broadband plan" is worth anything if it makes Comcast, AT&T and Verizon lawyers, lobbyists and lackeys angry. Any plan worth its salt would drive competition to the sector, eroding revenues for duopolies all-too-comfortable nursing the status quo. If they approve of it, it likely doesn't actually tackle the heart of the dysfunction that is the American broadband market.

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AT&T, Huawei Phone Partnership Killed At Last Second By More Unproven Accusations Of Huawei Spying

If you remember a few years ago, there was ample hysteria and hand-wringing in Congress regarding Huawei's plan to compete in the American cell phone and network hardware business. But despite near-constant claims by certain lawmakers that Huawei was an intelligence proxy for the Chinese government, numerous, multi-year investigations found absolutely no evidence to support this conclusion. That of course didn't stop certain parties from repeatedly insisting that Huawei was a Chinese government spy, since we all know that in the post-truth era, what your gut tells you is more important than empirical evidence.

Never mind that almost all U.S. network gear is made in (or comprised of parts made in) China. Never mind that obviously NSA allegations show the United States spies on almost everyone, constantly. Never mind that reports have emerged that a lot of the spy allegations originate with Huawei competitor Cisco, which was simply concerned with the added competition. Huawei is a spy. We're sure of it. And covert network snooping is bad. When China does it.

Fast forward to this week. A new report in the Wall Street Journal indicates that AT&T and Huawei were about to announce a new cellphone sales partnership at CES. While Huawei phones are available unlocked in the States (and Huawei has helped Google build its own smartphones already), the deal would have marked the first major partnership between the company and a major cellular provider. But the deal was scrapped at the last second for reasons neither company wanted to disclose to the Journal:

"It was unclear why AT&T, the country’s No. 2 carrier by subscribers, changed its mind. An AT&T spokesman declined to comment. A Huawei spokesman declined to comment on conversations with AT&T, saying only that “Huawei has proven itself by delivering premium devices with integrity globally and in the U.S. market."

A paywalled report over at the Information appears to offer the real reason for the last-minute scuttling of the partnership: namely a letter sent to the Trump FCC by members of the Senate and House Intelligence Committees again claiming that Huawei is a spy for the Chinese government:

While it's certainly not impossible that Huawei is aiding Chinese government surveillance, the fact remains that there have been numerous, lengthy investigations into this claim (one of which was eighteen months long), none of which have actually resulted in the slightest bit of evidence proving the allegations. And again, what has been proven so far is that lobbyists for companies like Cisco have spent ample time pouring fire on these concerns in the minds of cash-compromised lawmakers, simply because they don't want to have to face another deep-pocketed competitor in the US hardware market.

That is, as some guy named Mike Masnick noted on Twitter, something we've long enjoyed criticizing China for:

AT&T, no stranger to domestic spying (bone grafted as it is to the United States own intelligence-gathering aparatus) may have been willing to kill the deal out of blind "patriotism" or the belief it could help gain regulatory approval for the company's $86 billion acquisition of Time Warner (currently being challenged by the DOJ in court). Nobody in this chain has much in the way of integrity or a history of truth-telling, and until evidence emerges that Huawei is the nefarious spymaster allegations have long alleged, a dash of skepticism seems warranted.

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Chicago Considers Another Dumb 'Texting And Walking' Law To Raise Revenue

Since the advent of the smartphone, it seems that every few years or so, one government enttity or another suddenly has the brilliant idea that its constituency ought to have fines levied on them for "distracted walking." This catchall term has a much more specific meaning with in the laws in question: walking and using a phone at the same time. While this nonsense began mostly in foreign countries, there a few states in America that have some flavor of this kind of law on the books.

And now my beloved hometown of Chicago is looking to join the nanny government ranks in the most Chicago way possible: by charging enormous fines for "distracted walking" in a fairly naked attempt to generate revenue for the government.

Aldermen Ed Burke (Ward 14) and Anthony Beale (Ward 9) introduced an ordinance Wednesday aimed at changing pedestrians' bad behavior by fining them if they text or use a mobile device while walking through intersections in Chicago.

The measure proposed by Burke and Beale would fine pedestrians between $90 and $500 for each incident of using a mobile device while crossing a street or highway. The full City Council would have to pass the measure.

There are a myriad of reasons why these laws are silly. Given that we're talking about pedestrians here, it seems clear that these laws are being pitched as an attempt to protect the safety of the very citizens it would fine. That kind of parental hue of government is generally pretty silly, but not nearly as silly as expecting that a $500 fine will get someone to not blindly walk across a highway while texting, but the very likely result of being splattered across the windshield of an SUV wouldn't. In other words, were this crisis as dangerous as the good Aldermen suggest, the roads would be paved with blood, making for a perfectly suitable warning to distracted walkers. Notably, these deaths simply aren't happening.

Which is entirely besides the point, because if a fine that can be up to $500 for something as subjective as distracted walking is anything other than a cash-grab by a municipal government whose efforts to balance its budget are comedic at Mel Brooks levels, then I can't imagine what that other thing would be.

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Competition Dodges A Bullet As T-Mobile, Sprint Merger Dies

In the end it wasn't regulators, but giant international egos that derailed Sprint's latest attempt to acquire T-Mobile. As last week's rumors had suggested, T-Mobile owner Deustche Telecom and Sprint majority owner Softbank couldn't agree on terms of the latest attempted megamerger, formally calling off the deal over the weekend. At issue, apparently, was the fact that T-Mobile wanted greater control over the merged company in the wake of the deal. Company executives wanted to keep T-Mobile's momentum, which has resulted in bigger net subscriber gains per quarter than any other U.S. carrier, intact.

The failure is good news for consumers, employees, and business customers alike. Wall Street had estimated that the deal would have killed between 10,00 and 30,000 jobs -- potentially more positions that Sprint currently even has. Telecom history suggests that the reduction of major competitors from four to three would have also had a profoundly-negative impact on overall competition (go ask a Canadian). As a result users not only likely would have seen higher rates, but the end of the recent resurgence in unlimited data plans -- only made possible by T-Mobile's competitive disruption of the market.

In a joint statement, the two companies pay a little empty lip service to the supposed "consumer benefits" of the deal, before promising to get back to upgrading their networks and competing:

"The prospect of combining with Sprint has been compelling for a variety of reasons, including the potential to create significant benefits for consumers and value for shareholders. However, we have been clear all along that a deal with anyone will have to result in superior long-term value for T-Mobile’s shareholders compared to our outstanding stand-alone performance and track record,” said John Legere, President and CEO of T-Mobile US, Inc. “Going forward, T-Mobile will continue disrupting this industry and bringing our proven Un-carrier strategy to more customers and new categories – ultimately redefining the mobile Internet as we know it. We’ve been out-growing this industry for the last 15 quarters, delivering outstanding value for shareholders, and driving significant change across wireless. We won’t stop now.”

The death of the deal is perhaps extra good news for T-Mobile CEO John Legere. Legere has spent the last few years fashioning himself as a massive consumer ally (except for that whole opposing net neutrality and mocking the EFF thing), dropping F-bombs, and making fun of AT&T and Verizon. Selling consumers on a deal all-but guaranteed to devastate sector jobs and price competition would have required some PR acrobatics that challenge the laws of physics.

The death of the deal is ironic, given that Sprint will not likely have a better chance at getting regulatory approval. Softbank and Sprint spent the better part of the year buttering up the Trump administration, going so far as to let Trump take credit for Softbank job promises he not only had absolutely nothing to do with, but which were announced months before Trump even became President. Given the rubber stamp nature of the current FCC, the chances of regulators doing the right thing and stopping the job and competition-killing deal were far from certain.

Fortunately for consumers, fussy international egos derailed the deal before regulators had a chance to downplay how bad a deal it actually was. Sprint can now turn its focus toward striking deals with other companies like Altice and Charter; deals that won't erode the overall level of competition in the wireless sector.

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Giant International Egos May Derail The Sprint T-Mobile Merger

We've been discussing how Sprint's plan to merger with T-Mobile would be notably awful for the wireless industry. Not only do Wall Street analysts predict it would kill anywhere from 10,000 to 30,000 jobs (potentially more people than Sprint even currently employs), but it would reduce the number of major competitors in the space from four to three -- dramatically reducing the industry's incentive to compete on price and service. The resulting competitive lull could derail many of the good things a resurgent T-Mobile has encouraged in the sector (like the death of long-term contracts and the return of unlimited data plans).

Given the giant industry rubber stamp that is Trump FCC boss Ajit Pai, many analysts believed the administration would approve the deal anyway. Sprint and its Japanese owner Softbank have spent the better part of the year buttering up the Trump administration in preparation for regulatory approval, going so far as to custom craft some job creation bullshit synergies Donald could easily use to justify approval of the arguably-awful deal.

Unfortunately for Sprint lobbyists, they may never get the chance. This week reports out of Japan indicated that Softbank Chair Masayoshi Son had walked away from the negotiations table after a dispute over who should have the most control over the freshly-merged company:

"SoftBank Group plans to break off negotiations toward a merger between subsidiary Sprint and T-Mobile US amid a failure to come to terms on ownership of the combined entity, dashing the Japanese technology giant's hopes of reshaping the American wireless business. SoftBank is expected to approach T-Mobile owner Deutsche Telekom as early as Tuesday to propose ending the talks. They had reached a broad agreement to integrate T-Mobile and Sprint -- the third- and fourth-largest carriers in the U.S. -- and were ironing out such details as the ownership ratio."

T-Mobile and its owner Deutsche Telekom obviously want to retain control of the brand identity of T-Mobile in the wake of the deal, since the company has been immensely successful thanks to actually listening to customers (mostly). Sprint in contrast has stumbled through the last several years loaded with debt, and hasn't been able to craft a brand identity (or a working network) that truly resonates with consumers. It's not particularly surprising that T-Mobile and cheeky CEO John Legere want more control over the merged company than Sprint and Softbank may be willing to give.

The problem for Sprint at this point is that the only thing holding up the company's stock price for most of this year has been merger rumor and speculation. As such, some Wall Street analysts think Sprint might want need to go private if it's to survive fallout from the deal's collapse, while other analysts say failure to finalize the deal could erode up to $50 billion in theoretical value between the two companies:

"(I)f these management teams fail to get this deal across the goal line, they have failed to do their job,” New Street wrote. “They will be walking away from close to $50 billion in value. Regardless of what either side things their asset is worth on its own, adding $50 billion to that starting value would be a big enough increase in value that they ought to have found a way to get the deal done.”

A scuttled deal would be good news for T-Mobile's Legere, who might find synchronizing his consumer-friendly brand with the competition-killing deal a tall order. That said, it remains entirely possible that Sprint's leaked decision to walk away from the negotiations table is a bluff. Since Sprint needs the deal much more than T-Mobile does -- it's more than possible the two sides will still find a way to get the deal done. Should that occur, we can look forward to a winter filled with entirely bogus "synergy" promises as investors wait to see just how big of a mindless rubber stamp the Trump administration truly is.

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Wireless Carriers Again Busted Collecting, Selling User Data Without Consent Or Opt Out Tools

A few years ago, Verizon and AT&T were busted for covertly modifying wireless user data packets in order to track users around the internet. Verizon used the technology to track browsing behavior for two years before the practice was even discovered by security researchers. It took another six months of public shaming before Verizon was even willing to offer opt out tools. And while the FCC ultimately gave Verizon a $1.3 million wrist slap, it highlighted how we don't really understand the privacy implications of what mobile carriers are up to, much less have real standards in place to protect us from abuse in the modern mobile era.

While notably different in scope and application, these same companies were again caught this week collecting and selling user information without user consent or working opt out tools.

Earlier this week Philip Neustrom, co-founder of Shotwell Labs, discovered something interesting and documented his findings in this blog post. Neustrom discovered a pair of websites that, when visited by a mobile device over a cellular connection, appeared to easily glean numerous personal visitor details, including the visiting user's name, some billing and location data, and more. Users simply needed to input a zip code, and the carriers providing your cellular service seemingly provide a wide array of personal data to these services without user consent or an opt out.

On the surface, the intention behind these services isn't particularly nefarious. These websites are examples of fraud prevention services companies like Payfone offer to companies, employers and organizations to help verify a visitor is who they say they are. Visitors to a specific website have their data immediately cross-referenced with billing, phone number, or even GPS data that's provided by wireless carriers. The problem, as Neustrom documents, is that mobile carriers don't appear to be adequately informing users this data is being collected or sold:

"But what these services show us is even more alarming: US telcos appear to be selling direct, non-anonymized, real-time access to consumer telephone data to third party services — not just federal law enforcement officials — who are then selling access to that data. Given the trivial “consent” step required by these services and unlikely audit controls, it appears that these services could be used to track or de-anonymize nearly anyone with a cell phone in the United States with potentially no oversight.

He also found that the existing opt out mechanisms used by T-Mobile, Verizon, AT&T and other mobile carriers don't do a damn thing to prevent this data from being monetized:

"AT&T’s “consumer choice” opt-out at didn’t appear to do anything to stop this, even after waiting the stated 48 hours. All of the demos were still working for me on the morning of 2017–10–15 after I had opted out on 2017–10–13. Many users on Twitter and elsewhere also report that AT&T’s opt-out process doesn’t do anything here. Verizon’s “opt-out” pages also may not do anything to prevent this, either (A, B)."

The report was seemingly a bit too obscure to get much mainstream media attention, but obviously hit a nerve all the same. Shortly after publication, both websites -- and their previously public API documentation were pulled offline by Payfone. Similarly, video of a joint AT&T Danal presentation from 2014 explaining how this technology works was pulled from YouTube. The security community was surprised to learn of the technology, with some offering more concise analysis than others:

You'll recall that for years mobile carriers like Verizon argued that we don't need meaningful privacy protections because they always self-regulate within the boundaries of good taste. Carriers re-used this justification earlier this year when they convinced the Trump administration and GOP to kill FCC broadband privacy protections. But it's hard to hold these companies accountable for privacy violations when even security researchers aren't aware it's happening, and unlike the realm of Google, Facebook or other advertisers, a lack of competition in the telecom sector means less organic competitive pressure to behave.

This week's discovery is just another example of how mobile carrier self-regulation isn't working, and some modest rules requiring more transparency (and mandatory, opt out or opt in tools) would have been of immense public benefit.

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Mission Accomplished: Ajit Pai's FCC Declares Wireless Competition Issues Fixed

The FCC is required by law to offer an annual report on the state of competition in the broadband industry. Depending on who's in power, and how eager they are to downplay the lack of said competition to the benefit of industry, these reports often provide comical insight into how the regulator fiddles with data to justify policy apathy. Under George W. Bush's presidency, the FCC declared the wireless industry perfectly competitive. Under the Obama administration, the FCC refused to state one way or the other whether the sector is competitive. Neither party has what you'd call courage when it comes to calling a spade a spade.

Fast forward to this year, and you likely won't be surprised to learn that the Ajit Pai led agency has declared the wireless sector perfectly competitive -- for the first time since 2009. In a press statement, Pai declared (pdf) that the re-introduction of unlimited data plans, prompted in turn by a resurgent T-Mobile, is proof positive that the sector is perfectly healthy and "fiercely competitive":

"The 20th Report reviews many factors indicating that the wireless marketplace is, indeed, effectively competitive. I won’t repeat them here; that’s why we have the report. But looking at the bigger picture, most reasonable people see a fiercely competitive marketplace. For example, since the FCC’s last report in 2016, all four national carriers have rolled out new or improved unlimited plans. This is strong, incontrovertible evidence.

And looking at the wireless industry from a superficial level, many would likely agree. But look under the hood and things aren't quite as rosy as Pai would lead you to believe. For one, even with T-Mobile disrupting AT&T and Verizon, these companies still largely engage in theatrical non-price competition, resulting in Americans paying more money for slower speeds than most developed nations. There's also the fact that AT&T and Verizon have a duopoly stranglehold over the special access and tower backhaul market, allowing them to drive up operational costs for competitors like T-Mobile and Sprint.

Pai also just floats right over the other major elephant in the room: the looming merger between Sprint and T-Mobile, which is expected to be formally unveiled in a few weeks. Every analyst in telecom worth their salt expects Pai to rubber stamp the deal, despite the obvious, major competitive impact of reducing the number of major carriers in the space from four to three. Pai's fellow Commissioner Jessica Rosenworcel, who voted down the cocksure declaration of industry health, was quick to highlight this problem in her own statement (pdf) on the decision:

"Like everyone else, I read reports of mergers waiting in the wings. So while this report celebrates the presence of four nationwide wireless providers, let’s be mindful that a transaction may soon be announced that seeks to combine two of these four. While the Commission should not prejudge what is not yet before us, I think this agency sticks its collective head in the sand by issuing this report and implying move along, there is nothing to see here."

Oddly, news outlets like Reuters were quick to somehow insist that declaring the industry perfectly competitive (when under the surface it still really isn't) will somehow "help Sprint and T-Mobile to merge":

"A divided Federal Communications Commission on Tuesday approved a report that found for the first time since 2009 there is “effective competition” in the wireless market, a finding that could help Sprint Corp and T-Mobile US Inc to merge."

But on what planet does a partisan, arbitrary declaration of industry health make it OK to dramatically reduce sector competition further? That's the kind of flimsy logic and mindless megamerger cheer leading you're going to see a lot of the next few months as the industry -- and the policy folk and politicians paid to love them -- tries to convince the public that reducing wireless competition even further in the States is a really wonderful idea.

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After Backlash, Verizon Will Give Rural Data Users A Bit More Time To Get The Hell Off Its Network

When last we checked in with Verizon Wireless, it was taking heat for kicking at least 8,500 wireless customers off of its network without much warning. The short version: Verizon created a program aimed at shoring up connectivity to rural areas, but after hyping the program and promising rural users access to unlimited data, Verizon realized the roaming costs were higher than initially projected, resulting in them quickly pulling the plug. In a notice to customers Verizon justifies the purging of these mostly-rural users by insisting they're using a "substantial" amount of data:

"During a recent review of customer accounts, we discovered you are using a significant amount of data while roaming off the Verizon Wireless network. While we appreciate you choosing Verizon, after October 17, 2017, we will no longer offer service for the numbers listed above since your primary place of use is outside the Verizon service area."

There's several problems here. One, Verizon's apparent inability to understand what "unlimited" means is a decade and numerous lawsuits old, yet clearly the company hasn't learned much. Two, nowhere is the company telling these users what a "substantial" amount of data is, leaving them uncertain as to what they were supposed to do. And three, many of these impacted customers say their usage is absolutely nowhere near excessive, and in some instances amounted to little more than a few gigabytes per month:

"My family has three lines, and we had a 6GB plan," Dedmon, who lives in Machiasport, told Ars. "We frequently either bumped it or had to purchase 1GB extra for $15." Dedmon provided us with screenshots of her data usage that back this up.

The Dedmon family's data use shows they were going through about 2GB or a little more per person each month. But the disconnection notice from Verizon told Dedmon that her family was "using a significant amount of data while roaming off the Verizon Wireless network."

So Verizon apparently thought it was a good idea to sell limited "unlimited" plans, then kick many of these users off the network for bogus reasons. But problems began to emerge when Verizon simply refused to state how much usage was too much. Additional problems surfaced when law enforcement officials began to state that the sudden disconnections have impacted them too, reducing their ability to protect the public. Facing the added backlash from law enforcement, Verizon was forced to issue a statement saying they'd be giving many of these users an additional few months to get the hell out of dodge:

"We recently notified approximately 8,500 Verizon customers that we would no longer offer service to them because our costs when they roam on other wireless networks exceeds the amount they pay us every month. Since that notification, we have become aware of a very small number of affected customers who may be using their personal phones in their roles as first responders and another small group who may not have another option for wireless service.

After listening to these folks, we are committed to resolving these issues in the best interest of the customers and their communities. We’re committed to ensuring first responders in these areas keep their Verizon service.

If you’ve received a letter in the past two weeks, we’re giving you more time to switch providers - you now have until December 1, 2017. If there is no alternative provider in your area, you can switch to the S (2 GB), M (4 GB), 5 GB single line or L (8 GB) Verizon plan but you must do so by December 1.

While that's nice of Verizon and all, nothing in Verizon's statement explains why it's falsely claiming that many of these users were consuming excessive data when they weren't. The statement itself also goes well out of its way to downplay a problem that's impacting around 20,000 lines belonging to around 8,500 users -- so far. Again, if companies don't want customers "abusing" unlimited data plans, there's quite a simple solution: stop using the word unlimited. And again, Verizon's been facing lawsuits and investigations for its inability to use the dictionary correctly for more than a decade.

But there's another problem bubbling just under the surface of this mess. Verizon has spent years justifying its failure to upgrade its fixed-line networks (in many instances after getting numerous tax breaks or subsidies to do so) by claiming wireless broadband was going to be "good enough" for these users. And in the wake of natural disasters like Hurricane Sandy, Verizon simply refused to repair destroyed fixed-line infrastructure, insisting that wireless was "good enough." Yet here we are, and it's abundantly clear that good enough -- simply isn't.

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Prepare For An Epic Bullshit Sales Pitch For The Competition-Killing Sprint, T-Mobile Merger

For much of this year, Sprint and its Japanese owner Softbank have been buttering up the Trump administration in the hopes it will sign off on a merger between Sprint and T-Mobile. Sprint tried the same merger back in 2014, but found the attempt wisely blocked by regulators because it would have killed one of just four major wireless competitors in the space. Said buttering up has involved letting Trump falsely claim responsibility for murky Softbank job creation claims that were originally planned years ago, have nothing to do with the merger, and even less to do with Donald Trump.

Obviously the wireless market is enjoying a bit of a resurgence lately courtesy of T-Mobile, which has been giving bigger competitors fits by simply listening to what consumers want (fewer hidden bullshit fees, no contracts, cheaper international roaming) and providing it. In turn, wireless consumers have seen some notable improvements in the last year or two, including AT&T and Verizon being forced to bring back unlimited data plans they had previously tried to claim consumers didn't want. It's a resurgence that wouldn't have happened if regulators hadn't blocked AT&T's own attempted takeover over T-Mobile back in 2011 (something telecom giants and the "who needs government oversight?" sect would have you forget).

Yet here we are once again. With the Trump administration now acting as little more than a rubber stamp for telecom sector incumbents (see the killing of privacy protections, net neutrality rules, attempts to bring competition to the cable box, efforts to bring broadband to the poor, etc.) most analysts believe the Trump DOJ and FCC will happily approve this deal, the obvious competitive repercussions be damned. To help make sure, Sprint this month hired a lobbyist connected to Trump in the hopes of further greasing the skids for deal approval.

As a result, the proposed superunion between Sprint and T-Mobile appears to be quickly gaining steam, with a deal to be formally announced sometime in October:

"The transaction would significantly consolidate the U.S. telecommunications market and represent the first transformative U.S. merger with significant antitrust risk to be agreed since the inauguration of U.S. President Donald Trump in January. The progress toward a deal also indicates that T-Mobile and Sprint believe that the U.S. antitrust enforcement environment has become more favorable since the companies abandoned their previous effort to combine in 2014 amid regulatory concerns.

With the deal set to make headlines, you can expect an absolute torrent of pay-to-play editorials to start popping up in newspapers and websites nationwide, all of them trying to insist this deal will be of indisputable benefit to consumers. A wide variety of groups take telecom cash to repeat whatever they're told, whether it's rural Texas school associations, the U.S. Cattlemen's Association or co-opted minority groups, and you can be damn sure the dollar-per-hollar voices paid to support shitty policy will be out in force making a littany of false claims about the supposed perks of this latest, attempted union.

But as John Oliver just got done exploring, history isn't murky on this particular point: the elimination of a major competitor by merger undermines competition in a sector that's already well-known for a lack of it. Removing one of four competitors in the space will drive up prices, and could result in the elimination of unlimited data plans that only just re-appeared on the market. Apparently, this isn't a historical reality many T-Mobile customers are particularly tuned into, if this informal poll is any indication:

Many of these looming pay-to-play editorials selling this turd of a deal will try to argue that Sprint needs the deal to remain viable, but under SoftBank Sprint has notably improved its balance sheet and network, and there's a litany of possible suitors that could help Sprint manage its debt load (Comcast, Charter, Dish) that don't involve killing one of four major wireless competitors. Others will try to claim immeasurable job creation from the merger, when history repeatedly indicates that these kinds of mergers are indisputable job killers -- thanks to the elimination of countless redundancies at the acquired company.

The real challenge in selling this merger will fall in the lap of John Legere, the admittedly amusing T-Mobile CEO that has built a reputation for saying fuck a lot on Twitter and for being a consumer ally (even if this dedication has proven skin deep on subjects like net neutrality and the EFF). Leaks suggest Legere will stay on at the freshly-merged company, but may face headwinds in convincing some of the more alert T-Mobile customers that dramatically reducing market competition will somehow, magically, be immeasurably good for them.

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Verizon Hangs Up On Tens Of Thousands Of 'Unlimited' Wireless Customers For Using Too Much Data

Over the last few years, you may have noticed that Verizon is attempting a pivot from stodgy old telco to sexy new advertising juggernaut. Part of that effort has involved refusing to upgrade its lagging DSL infrastructure in countless towns and cities as it shifts its focus toward wireless and using its AOL and Yahoo acquisitions to sling videos and advertisements at Millennials. To justify its failure to upgrade its fixed-line network during this period (something it's being sued for by cities like New York), Verizon has long proclaimed that wireless is a "good enough" replacement for fixed-line alternatives.

But the company is now inadvertently highlighting just how not-ready for prime time wireless connections truly are. Verizon has been taking heat over the last few weeks for kicking thousands of customers off of its wireless network in more rural areas. Why? The company insists these customers (at last count 8,500 customers utilizing 19,000 lines across 13 states) are being kicked off the Verizon wireless network for using a "substantial" amount of data. But Verizon is refusing to tell these users what "substantial" actually means, after marketing "unlimited" data plans to these users for much of the year:

Verizon said in June that it was only disconnecting "a small group of customers" who were "using vast amounts of data—some as much as a terabyte or more a month—outside of our network footprint." But one customer, who contacted Ars this week about being disconnected, said her family never used more than 50GB of data across four lines despite having an "unlimited" data plan.

"Now we are left with very few choices, none of them with good service," the customer told us. "I guess small-town America means nothing to these people. It's OK—though I live in a small town, I know a lot of people, and I'm telling every one of them to steer clear of Verizon."

The problems here are multi-faceted. Three years ago, Verizon Wireless launched something called its LTE in rural America program (LTEiRA). Under this program, Verizon partnered with rural carriers to help extend the reach of their networks by letting them lease access to Verizon’s 700MHz Upper C Block spectrum. Several of the companies that worked with Verizon on this program state the company hyped the program, hired companies to help extend the reach of rural networks, then began marketing unlimited data plans to customers in many of these rural areas.

But when the program wasn't as profitable as Verizon hoped, it abruptly pulled the plug, leaving thousands in connectivity purgatory:

“It appears that Verizon induced these companies to build out in the rural areas around the country and then significantly promoted it by saying that they’re covering the rural areas, when it fact now, after putting those ads out, they’re now not covering the rural areas — in fact, they’re cutting it back,” he says.

And without much advance notice.

“This move caught them completely by surprise and totally blindsided them as it did the customers in the region,” says Jason Sulham, speaking for Wireless Partners LLC."

Again, Verizon isn't bothering to inform these users what "substantial" usage even means, part and parcel of a sector that has long advertised wireless connections as "unlimited," then saddled users with all manner of murky restrictions (part of the reason we have net neutrality rules). Some of the impacted users are telling news outlets they used as little as three gigabytes per month, so there's every indication that Verizon Wireless isn't being honest here as it tries to portray many of these folks as unreasonable data gluttons (which is traditionally par for the course).

In this case, Verizon's decision to kick thousands of people off of the network is also having a dramatic impact on first responders in many of these rural areas, who say their ability to protect the public has been compromised:

"Law enforcement agencies in eastern Maine are criticizing a decision by Verizon Wireless to terminate cell service due to excessive cost. Police say the company’s decision will have an adverse effect on their work, and on the ability of residents to call 911.

Verizon officials remained tight-lipped Wednesday regarding the actual number of dropped customers, which some sources say could be as high as 2,000."

Again, there's nothing particularly revelatory about the fact that delivering wireless broadband to rural markets is expensive. Wireless spectrum is costly (often impossible for smaller companies), as is access to the fiber backhaul needed to feed wireless towers. But Verizon has spent the last decade insisting that freezing its deployment of FiOS fiber connections wasn't a big deal because wireless would be "good enough" for the millions of subscribers left in a lurch. In fact, Verizon found itself repeatedly under fire after Hurricane Sandy for refusing to repair fixed line networks for just that reason.

Verizon's decision to purge thousands of users off of the network for murky reasons comes as the FCC is looking -- largely at Verizon and AT&T's behest -- to weaken the standard definition of broadband to include wireless. The goal: redefine broadband to declare an area competitive and served if wireless is present, justifying institutional apathy toward doing anything about the lack of competition in the space. Granted this effort ignores instances exactly like this one clearly demonstrating that -- even with 5G on the horizon -- wireless is not a magical broadband panacea for under-served areas.

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Unlimited Data Customers Report Fewer Network Problems Than Capped Users

Back in 2011, you might recall that AT&T and Verizon stopped offering users unlimited wireless data plans. Taking advantage of a lack of competition at the time, the duo worked in concert to shove users toward confusing, metered plans that imposed a usage cap, then socked users with overage fees upward of $15 per gigabyte. When users refused to migrate to these plans, both companies spent years making life as difficult as possible for these subscribers, AT&T going so far as to block users from accessing Facetime until they switched to these more expensive, metered plans (but who needs net neutrality rules, right?).

All the while, both companies repeatedly insisted that nobody actually wanted simpler, unlimited plans. That was until increased competition from T-Mobile (thanks in large part to regulators blocking AT&T's attempted acquisition of the company) forced both companies to bring back their unlimited data plans. And while Wall Street has been whining for months that competition is preventing these companies from nickel and diming their customers, consumers generally like the return to unlimited data.

Case in point: a new study by JD Power and Associates indicates that unlimited data customers are consistently more impressed with the performance of their connections than their capped and metered counterparts. More specifically, users on unlimited data plans state that they experience fewer network problems of all kinds than metered users:

Unlimited data emerges as great equalizer for wireless network quality: Customers with unlimited data plans experience an average of 11 overall network quality problems per 100 (PP100) connections vs. an average of 13 PP100 among customers with data allowances. They also have lower incidences of data problems (15 PP100 vs. 16PP100, respectively); messaging problems (5 PP100 vs. 6 PP100); and calling problems (12 PP100 vs. 15 PP100). This trend holds true among both power users (100 or more network connections in the previous 48 hours) and lighter users (fewer than 100 network connections in the previous 48 hours).

That said, the study does proceed to note that this may be based, in part, on the "perception" by consumers that they have a better connection, not necessarily that the network is performing better. In other words, customer perception of a network's performance may be shaded by the fact they don't have to constantly worry about whether they're about to go over their usage restrictions:

“Whether a customer has unlimited data or a data allowance on their wireless plan should not really affect their overall network quality, but our data shows that—consistently—wireless customers who are not worried about data overages have a much more positive perception of their network’s quality,” said Peter Cunningham, technology, media, and telecommunications practice lead at J.D. Power. “This is a critical insight into wireless customer psychology for carriers who’ve been engaged in battle over unlimited data plans for the past several months.”

The meters used by fixed and mobile customers are notoriously unreliable, one study claiming carriers routinely over-bill consumer mobile data usage by between five and seven percent. Despite this, there's nary an effort from any regulator here in the States to ensure that usage is being metered accurately, and that's certainly not changing with the current FCC. And while it's nice to see competition forcing these carriers to actually listen to subscribers, a wave of merger mania in the sector means that this competition -- and the unlimited data resurgence it spawned -- may not be sticking around for long.

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Verizon Begins Throttling Wireless Users, Effectively Bans 4K Streaming

Thanks to a little something called competition, Verizon Wireless was forced recently to bring back unlimited data plans, after spending the last few years trying to tell consumers they neither wanted nor needed such plans (narrator: they did). But all has not been well in Verizon-land since, with several network performance reports indicating that Verizon's network configuration was struggling a little under the load of these new unlimited users. That's a problem for a company that justifies its higher prices by insisting it offers the best-available wireless network.

A few weeks back, customers complained when Verizon began throttling YouTube and Netflix customers without telling anybody, only to subsequently admit they were conducting a "test." Fast forward to this week, and Verizon Wireless has announced a complete revamp of its "unlimited" data plans that severely restrict how your mobile connection can be used.

The short version: Verizon is moving away from its fairly decent, competition-induced unlimited data plan (which generally let you do what you wanted with your connection), and replacing it with three, worse "unlimited" options:

  • Go Unlimited: $75/month for one line. Video capped to 480p on smartphones, 720p on tablets.
  • Beyond Unlimited: $85/month for one line. Video capped to 720p on smartphones, 1080p on tablets.
  • Business Unlimited: Price varies. Video capped to 480p on smartphones, 720p on tablets.
  • A few things of note. One, with this move, Verizon is joining the rest of the wireless sector in charging you more money to use your wireless connection as you'd like, requiring you pay $10 more just to stream HD video as transmitted. Two, the company is effectively banning 4K streaming, and no matter what kind of device you're using, won't be delivering more than 10 Mbps to any traffic Verizon's network gear identifies as video. So, if for some reason you wanted fully unthrottled video from a company server -- there's no way to get it. Verizon's not letting you access unthrottled video, period.

    On its surface, this isn't something most consumers will notice... yet. The difference between 720p and 1080p on a small smartphone screen is negligible, so Verizon quite correctly assumes that most customers won't care. It's also worth noting that even under former FCC boss Tom Wheeler and his 2015 rules, the FCC was turning a blind eye to both this (charging users more to avoid having games, video and music throttled) and zero rating (exempting an ISPs own content from usage caps while hindering competitors), something we have repeatedly stated was a mistake that would come back to bite consumers eventually.

    The bigger issue moving forward is of the slippery slope variety. Today, Verizon has decided that it's the one that gets to determine how much more you get to pay for higher-quality video, or if you have the option at all. With the company at the vanguard of an assault on existing net neutrality protections, you can be guaranteed that restrictions like this will only grow. The value proposition will also steadily decline as Verizon takes full advantage of Ajit Pai's quest to free some of the least liked, and most anti-competitive companies in America of most meaningful regulatory oversight .

    With said oversight on vacation, that leaves it to competition to keep Verizon Wireless on its best behavior. But with those same apathetic regulators resulting in a wave of almost-mindless merger mania, there's no indication that competition will be sticking around. Once Sprint merges with T-Mobile (which most expect to happen this year), there's going to be less pressure than ever on Verizon to avoid hamstringing your wireless connection further. So while you might not care about what Verizon's doing today, the company is only laying the foundation for some truly obnoxious behavior you're going to care a lot about tomorrow.

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    Canada Appoints Lobbyist To Top Telecom Regulator, Follows US Down The Regulatory Capture Rabbit Hole

    The last few years have seen a boon in consumer and small-business-friendly policies coming out of Canada's telecom regulator the CRTC. Under outgoing agency head Jean-Pierre Blais, the agency bumped the definition of broadband to 50 Mbps, required that phones must now be sold unlocked in Canada, shored up the country's net neutrality rules, and took aim at the anti-competitive use of usage caps and overage fees. Not everything Blais did was a success (like their attempt to force cable TV providers to offer cheaper plans, then failing to follow through) but by and large the CRTC has been an improvement over years past.

    But Canadian consumers are worried that's coming to an end with Justin Trudeau's decision to appoint telecom executive and lobbyist Ian Scott to head the agency. Scott has spent years working at and lobbying for several Canadian telecom incumbents, his velocity through the regulatory revolving door at several times leading to complaints over conflicts of interest.

    Scott's appointment have many Canadian consumer advocates worried that after several years of aiding consumers, Canada is eager to follow their neighbors to the south down the regulatory capture rabbit hole:

    "This is a concerning choice by the government,” said OpenMedia communications manager Meghan Sali, who also noted that, under Blais, the regulator declared broadband Internet a basic service in Canada.

    “Canadians were hoping for somebody with a strong consumer rights background, and will undoubtedly be disheartened to see the Trudeau government place someone from industry into the top decision-making position."

    Much like former US FCC boss Tom Wheeler, Blais' attempts to actually stand up for consumers raised hackles at Canadian incumbents. At one point, Canadian incumbent Bell actually refused to let Blais appear on their television channels in retribution for his efforts to make Canadian cable television more affordable. Similarly, much like here in the States, incumbent ISPs often tried to characterize Blais' slightly-more consumer-friendly policies as radical and fatal to industry investment and innovation. Needless to say, they're arguably thrilled by this new appointment of a direct ally.

    Of course the fact that Scott has spent the better part of the last few decades employed by incumbent Canadian ISPs doesn't automatically mean he'll be a sycophant to industry. Many are quick to highlight how nobody thought much of former U.S. FCC boss Tom Wheeler initially, his history of lobbying for the cable and wireless industries having raised plenty of eyebrows after his initial appointment. And because Wheeler went from dingo to what most see as the most-consumer friendly FCC boss potentially in agency history, he's now consistently used to downplay the historical threat posed by revolving door regulators.

    Except Wheeler was a lobbyist for the cable and wireless industries during their nascent years, when both were pesky upstarts actually interested in competition and disruption. Wheeler also historically showed an uncommon ability to actually change his positions based on facts, an attribute in increasingly rare supply. So while it's certainly possible Canada's new CRTC boss could "pull a Wheeler" and somehow magically become a consumer ally, history generally suggests that Tom Wheeler was the exception, not the rule. Still, maybe Canadians will get lucky and Canada won't revert to a more industry-cozy approach to telecom and media policy.

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    Verizon Throttles Netflix Subscribers In 'Test' It Doesn't Inform Customers About

    So for years Verizon Wireless refused to compete on price, insisting that the company's network was just so incredible, it didn't have to. Then came increased competition from T-Mobile, which forced the company to not only start competing a little more seriously on price, but to bring back unlimited data plans Verizon had spent years telling customers they didn't need. And while Wall Street cries about this rise in competition hurting earnings at least once a week, it has generally been a good thing for consumers.

    But there's two things waiting just over the horizon that could ruin everybody's good time. One is a looming merger between Sprint and T-Mobile, which would significantly reduce competition in the wireless sector, eliminating much of the pressure on mobile providers to compete. The other is the impending death of net neutrality protections at the FCC, which currently keep these carriers from abusing this lack of competition to drive up costs and hamper content competitors.

    But another, important part of net neutrality rules is the requirement that carriers are clear about just what kind of connection you're buying. Last week, Verizon apparently got a running start in being less transparent when it decided to begin throttling its wireless customers without telling anybody. Users at Reddit began noticing that when they streamed Netflix content or accessed Netflix's speedtest, their connections were magically limited to 10 Mbps. When they used other companies' speedtests or used a VPN to mask their traffic, they received the full speed of their mobile connections.

    To be clear, being restricted to 10 Mbps isn't that big of a deal in and of itself. 10 Mbps is more than enough to stream video at 1080p60 and 1440p30, though users say they're running into buffering at 1440p60 or 4K (not that most users care about 4K content on mobile devices anyway). But it was the fact that Verizon couldn't be bothered to tell anybody this was happening that's raising a few eyebrows. And when pressed, Verizon was only willing to give a rather vague answer about how they were simply conducting "tests" that didn't hurt anybody:

    "We've been doing network testing over the past few days to optimize the performance of video applications on our network. The testing should be completed shortly. The customer video experience was not affected."

    So while Verizon's throttling shouldn't be construed as the end of the world, you'd probably understand why Verizon, one of the most vocal opponents of net neutrality, would raise a few eyebrows by conducting tests like this without telling anybody. Consumer groups like Public Knowledge were quick to point out that one of the benefits of net neutrality rules is the assurance it gives customers that it can trust what carriers are saying:

    "The guidelines distinguishing ‘throttling’ from ‘reasonable network management’ developed as part of the FCC’s investigation into T-Mobile’s Binge On service provided precisely this certainty. Unfortunately, Chairman Pai’s decision to rescind the report and to reopen the net neutrality proceeding have created massive uncertainty and suspicion.

    “Before, Verizon could simply point to the FCC guidelines to reassure their customers. Today, we must look to Chairman Pai to tell us whether subscribers have anything more to rely on than Verizon’s promises. Rather than undermining consumer confidence and creating needless confusion, Chairman Pai should end his misguided efforts to roll back the FCC’s net neutrality rules any further."

    As the net neutrality protections (and the FCC's authority overall) are slowly but surely gutted, this uncertainty is only going to grow. Carriers will begin pushing to see just what kind of behavior Ajit Pai's FCC will let them get away with, and given Pai is repeatedly on record believing neither net neutrality nor a lack of competition are real problems, there's not going to be much, if any, regulatory pressure to behave. Combine that with a major reduction in competition from a looming wave of Trump-approved mergers and acquisitions, and there's certain to be less organic market or regulatory pressure keeping these mono/duopolies in line.

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    Comcast, Charter May Soon Get Even Larger With Joint Acquisition Of Sprint

    With the telecom sector seeing the Trump administration as somewhat of a blank check, the industry is busy considering all manner of mergers and acquisitions that would have been blocked under any number of previous administrations for being competition-killers. Verizon has made an offer to buy Charter (Spectrum), Sprint has been trying to merge with T-Mobile, AT&T's pushing for approval of its acquisition of Time Warner, Altice USA is gobbling up smaller providers hand over foot, and the industry is consolidating at a faster rate than ever.

    While obviously not all M&As are bad by default, ignored in this rush is that several recent high-profile telecom deals have been utter shitshows for the American consumer.

    While the Obama administration did block both AT&T and Sprint's attempted acquisitions of T-Mobile (which wound up being a very good thing for competition and consumers), its approval of Frontier's acquisition of Verizon's unwanted DSL customers in Florida, California and Texas resulted in endless outages and problems courtesy of a bungled integration. The Obama administration also approved Charter's $79 billion acquisition of Time Warner Cable and Bright House, resulting in not only much higher prices for consumers, but (somehow) even worse customer service for already one of the least-liked companies in America.

    Undaunted by any potential history lessons, now Trump-era merger mania rolls on with the news that Charter and Comcast are considering either a joint acquisition of Sprint, or a minority ownership stake in exchange for a more lucrative network sharing deal for both companies' wireless services:

    U.S. wireless carrier Sprint Corp is in talks with Charter Communications Inc and Comcast Corp about a partnership to boost the two U.S. cable companies' wireless offerings, according to sources familiar with the matter. Sprint, controlled by Japan's SoftBank Group Corp, has entered into a two-month period of exclusive negotiations with Charter and Comcast that has put its merger talks with U.S. wireless peer T-Mobile US Inc on hold till the end of July, the sources said on Monday.

    Said deal could involve an outright acquisition of Sprint by the two cable giants, though one source suggests that's unlikely at first. More likely is a joint minority investment by both companies in exchange for a discount network sharing arrangement to help fuel both cable companies' attempts to get into the wireless sector. Comcast has already launched a WiFi-centric wireless voice service that uses the Verizon Wireless network for backup, and Charter is planning a similar service for 2018. That would, depending on how it went, likely evolve into a full acquisition of Sprint down the road.

    Both companies had already struck a deal to partner on handset contracts, including a promise not to acquire a wireless carrier without first informing the other company. That deal was criticized on some fronts as a way for the two cable companies to avoid having to directly compete as they pushed their respective services to market.

    How all of this shakes out (and whether it's good for anybody not named Sprint, Comcast or Charter) remains unclear. The deal could be an improvement over a Sprint acquisition of T-Mobile as it would not only keep the four major wireless competitors intact, but would bolster Sprint's historically rocky balance sheet ensuring it remains a somewhat viable competitor. That said, Charter and Comcast are no strangers to anti-competitive behavior, and adding another entire service segment to this well-documented dysfunction could prove disastrous for what's already some of the worst customer service in any industry in America.

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    Wall Street Still Annoyed That Competition Forced Wireless Carriers To Bring Back Unlimited Data Plans

    T-Mobile's loopy idea to try and treat wireless subscribers better (well, if you exclude their attacks on the EFF and net neutrality) has been a great thing for American consumers and wireless sector competition. Thanks to more consumer-friendly policies, T-Mobile has been adding more subscribers per quarter than any other major carrier for several years running. This added competitive pressure recently resulted in both AT&T and Verizon being forced to bring back the unlimited data plans the companies had been insisting for years consumers didn't actually want.

    The problem, if you're a wireless carrier or investor, is that AT&T and Verizon are making slightly less money now that they're unable to sock consumers with restrictive caps and overage fees. In fact, wireless sector revenues dipped slightly in the first quarter for the first time in seventeen years, as T-Mobile competition forced carriers to engage in a little more than theatrical non-price competition. Keep in mind these companies are still making some fairly-incredible profits, and their expansion into areas like smart cities and the IOT give them ample opportunity for new revenue streams.

    But unlimited data plans returned at the start of the year, and Wall Street firms still can't quite let go of the fact that these industry giants might just have to make a little less money. Cowen and Company Equity Research analyst Colby Synesael simply isn't very happy about this whole competition thing:

    "The first quarter of unlimited for all four carriers left much to be desired. Both AT&T and Verizon incurred postpaid losses for the first time on record, a trend that could continue. Verizon specifically had its worst quarter in recent memory with a lackluster performance on nearly all sub metrics. Even T-Mobile’s guidance included a ‘less great’ postpaid net add increase of just +250,000. Combined with continued pricing pressure, AT&T and Verizon are pivoting to new avenues of growth such as Mexico, content, media, IoT and 5G, all of which can’t come soon enough."

    Mike McCormack of Jefferies shares similar worries about how the elimination of often-arbitrary usage caps and overage fees means precious wireless industry giants now have to more seriously compete:

    "The resurgence of unlimited plans is likely to delay more meaningful ARPU stabilization for multiple quarters due to the loss of overages and plan rightsizing. Impacts to ARPU on an incremental basis (i.e. for new subscribers) will depend on the number of accompanying lines activated. Our analysis suggests a willingness to use price with the hopes that multiline subscribers will churn less frequently. The move to unlimited also diminishes the ability to monetize growing data usage, removing an important lever of growth."

    Poor darlings, having to actually compete on price and listen to consumers!

    But worry not. Wall Street and these wireless companies have an ingenious solution to the sudden influx of T-Mobile competition: reduce competition through additional sector mergers and acquisitions. Wall Street analysts have been relentlessly fanning the flames of a Sprint acquisition of T-Mobile, which would eliminate one of four major competitors in the space. Sprint owner Softbank has been buttering up the Trump administration for much of the year in the hopes he'll approve a deal that was blocked by regulators in 2014 because it would have reduced competition.

    Sprint CEO Marcelo Claure spent this week insisting such a union would create "enormous" synergies, and the fusion of the two companies would let the merged company battle more effectively with the likes of AT&T and Verizon Wireless. Granted if you've spent five minutes with a history textbook (especially one governing the telecom sector), you'll find that these megamergers almost always kill jobs, reduce overall competition, and reduce incentive for consumer service and network improvements. Meaning that if this merger is approved, bringing back unpopular usage caps and overage fees will be a top priority.

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    Wireless Data Revenues Dip For First Time in Seventeen Years -- Thanks To A Crazy Little Thing Called Competition

    We've noted for some time how T-Mobile's crazy idea to be nice to consumers (well, if you exclude their attacks on the EFF and net neutrality) has been a great thing for American consumers. Thanks to more consumer-friendly policies, T-Mobile has been adding more subscribers per quarter than any other major carrier for several years running. This pressure recently resulted in both AT&T and Verizon being forced to bring back the unlimited data plans the companies had been telling consumers they didn't actually want for years.

    This added competition has really annoyed Wall Street, which has been grumbling about the shift back to unlimited plans for months. Wall Street had grown comfortable with the non-price competition in the wireless market, where plan pricing often obscured the fact that Americans pay more for mobile data than most developed countries. AT&T and Verizon used a lack of competitive pressure to kill off unlimited data plans in 2011, allowing them to introduce significantly more expensive metered plans -- just as video consumption on mobile began to take off. For the giant incumbents, things were going swimmingly.

    Of course as T-Mobile grew, improved its network, and fashioned its often brash and amusing new identity, it slowly but surely became a more viable competitor, forcing both companies to respond. And, just as Wall Street worried, the shift back to unlimited data is having a negative impact on cellular revenues. How negative? According to respected wireless industry analyst Chetan Sharma, cellular data revenues dropped last quarter for the first time in seventeen years. This was part of a number of firsts for an industry not-entirely-familiar with this whole competition thing:

    US had a rough start to 2017 with several indicators turning negative for the industry:

  • The US mobile data services revenue has seen QoQ growth for 17 straight years until Q1 2017 when it saw its first negative growth for the quarter. (Q1 is generally a down quarter but for the first time the revenue growth dipped below zero).
  • Verizon suffered its first ever decline in service revenues YoY.
  • For the first time, the net adds for connected (cellular) tablets were negative.
  • For the first time, the postpaid net-adds were negative (AT&T net-adds were impacted due to sun setting of the 2G network).
  • And while T-Mobile added 798,000 postpaid (month to month) subscribers, Verizon and AT&T saw a 289,000 and 348,000 postpaid subscriber reduction, respectively. Before you feel too badly for these industry giants, know that very healthy sector net income still managed to improve 13% overall as operators focused their attentions on other profitable markets (like the internet of things, ads and media, and smart cities), tightened their belts and lowered some expenditures.

    Still, there's little doubt this added competition has been of notable benefit to consumers, who still pay some of the highest prices on the planet, but are at least getting to touch the hem of what real competition is supposed to look like.

    The problem: there's no indication things will stay that way, and some indicators that things could reverse course. The FCC is busy gutting all consumer protections in belief that blind deregulation magically results in telecom utopia, ignoring that this has the opposite intended impact on less competitive markets (especially fixed-line broadband). And there's also every indication that these same regulators are keen to approve Sprint's planned acquisition of T-Mobile, a deal that would reduce the number of players in the space, likely putting an end to this pesky flirtation with competition in fairly short order.

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    AT&T Unveils A Fake 5G Network In The Hopes You'll Ignore T-Mobile Is Kicking Its Ass

    To be clear: fifth generation (5G) wireless should be really impressive when it actually arrives, providing significantly faster mobile broadband speeds at lower latencies. The catch: the 5G standard hasn't even been created yet, and any real deployment of the ultra-fast technology isn't expected to even seriously begin until 2020. That hasn't stopped wireless carrier and hardware vendor marketing departments, which have been hyping the technology as the second coming for several years now. Sure, these salesmen don't know what 5G really even is yet, but they're pretty sure it's going to fix everything.

    As these carriers rush to begin tests on the hardware and software advancements that may someday make up the 5G standard, the real yeoman's work is now being done in marketing. All of the big carriers are tripping over themselves, trying desperately to convince the public that they're going to be the first to offer the amazing new benefits 5G can provide. Verizon has traditionally been at the forefront of this hype, telling anyone who'll listen it hopes to offer gigabit speeds over wireless sometime this year (to a limited number of trial participants).

    Not to be outdone, AT&T has upped the ante this week with a proclamation that the company is first to market with "5G Evolution." What is 5G evolution? It's a largely meaningless marketing term concocted by AT&T to describe 4x4 MIMO (multiple input, multiple output) antennas and 256 QAM technologies that can be used to make existing LTE networks faster. It really has nothing whatsoever to do with "5G," but you wouldn't know that from reading AT&T's marketing missives this week:

    "AT&T* today announced 5G Evolution plans to pave the way to the next generation of faster speeds for its wireless customers with the latest devices in over 20 major metro areas by the end of this year. We continue to lay the foundation for our evolution to 5G while the 5G standards are being finalized."

    "Our 5G Evolution in Austin gives our customers a taste of the future," said David Christopher, chief marketing officer, AT&T Entertainment Group. "With 5G Evolution from AT&T you don’t have to wait to experience endless entertainment possibilities on the next generation network when you have the latest devices."

    Except you will wait. For some time. A closer look reveals that the trials are only currently available in a limited part of Austin, and only accessible from those that have one of two mobile devices: the Samsung Galaxy S8 or S8+. And while 4x4 MIMO and 256 QAM advancements are a useful improvement for existing networks, they're not really new, either. T-Mobile has been implementing the upgrades on its own network since last fall.

    And again, this has absolutely nothing to do with "5G." So why are carriers like AT&T and Verizon pushing so hard to hype a technology that doesn't technically exist? For years both carriers justified their higher prices by claiming their networks offered users superior connectivity. But as T-Mobile has ramped up competition, gobbled up their frustrated customers and closed the network coverage and performance gap -- these companies have been forced to find some other way to justify what are fairly consistently some of the highest LTE broadband prices among all developed nations. Their solution for this justification gap? Good, old-fashioned hype.

    With "4G" networks, we watched as carrier marketing departments slowly but surely convinced the ITU to let them call pretty much everything short of carrier pigeons 4G. Not to be outdone, you can expect the marketing bastardization of the term "5G" to be dramatically more misleading and annoying.

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    T-Mobile Backs Off Added Fee For HD Streaming As Unlimited Data Wars Heat Up

    While the U.S. wireless industry isn't quite as competitive as it's portrayed as (non-price competition is generally the law of the land), T-Mobile has still managed to disrupt the sector with a crazy idea: giving users what they want. That was again made evident this week when Verizon was forced to bring back sort-of unlimited data after spending the last several years telling consumers they didn't really want such simple, straightforward plans. Verizon's long-standing belief that it can tell consumers what they're supposed to want took a notable blow this week by any measure.

    Shortly after Verizon announced it was returning to unlimited data, T-Mobile once again upped the ante, announcing it would no longer be charging an extra fee to stream HD video over the company's LTE Network. According to the announcement, T-Mobile not only stopped charging a premium for HD quality (the de-prioritization of which you may recall T-Mobile lied was happening at several points), but also eased up on the restrictions surrounding tethering (using your phone as a modem).

    In a statement, T-Mobile CEO John Legere hinted at studies showing that Verizon has nearly lost its network size and speed edge over T-Mobile, which the company had long been using to justify its refusal to more seriously compete:

    "I don’t blame Verizon for caving. They just lost their network advantage, and they know it … and more importantly, more and more customers know it. Their back’s against the wall,” said John Legere, president and CEO at T-Mobile. “This is what the Un-carrier does—drag the carriers kicking and screaming into the future. Next up, we’re going to force them to include monthly taxes and fees. Mark my words."

    Granted the term "unlimited" is still being abused here, since you may find your connection throttled (technically "de-prioritized") after 28 gigabytes of consumption on T-Mobile's network, or 22 gigabytes of consumption on Verizon Wireless. And U.S. residents will still probably wind up paying significantly more money at slower speeds than most developed nations. Meanwhile, T-Mobile tells Ars Technica that video on the T-Mobile network is still throttled to 1.5 Mbps by default, with the onus placed on customers to remember to enable HD video manually or it reverts to the default, de-prioritized state:

    "T-Mobile responded to our question about HD video day passes by saying, "All customers have to do to get HD is go into the app or online to turn on. It’s very easy." Customers still have to enable HD video every 24 hours or it reverts to 480p, a T-Mobile spokesperson told Ars via e-mail. However, the company's Twitter support account says it only will have to be enabled once per month. T-Mobile's press release doesn't clear things up."

    Even with caveats, this is at least providing a vague resemblance of what wireless competition is supposed to look like. Given the number of customers T-Mobile is now hoovering up from AT&T, it may also force AT&T to revisit its own opposition to unlimited data plans (currently only available if you subscribe to both AT&T wireless and DirecTV). So even though the industry still struggles with the dictionary definition of unlimited, the fact T-Mobile is pushing AT&T and Verizon to actually try to compete is certainly a good thing.

    The problem is that competition in the wireless space is viciously fickle, and by and large most of AT&T and Verizon's promotions remain somewhat theatrical in nature when it comes to actually lowering your overall price once various fees are factored in. And should the rumored T-Mobile and Sprint merger be approved by regulators, you can be fairly sure that even this level of more superficial competition may not be around for long.

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    A Little Something Called Competition Forces Verizon To Bring Back Unlimited* Data

    Despite the rising competitive threat of T-Mobile, Verizon Wireless has spent the last few years simply refusing to seriously compete on price. That stubbornness has extended to the company's refusal to match T-Mobile's unlimited data plans, eliminated by Verizon back in 2011. In a truly competitive market, you're supposed to listen to your customers and try to provide whatever they're clamoring for. But Verizon's tack has been the exact opposite; the company spending the last few years trying to tell consumers they don't really want simpler, unlimited data options -- and that these plans are unnecessary and unviable.

    For most of this time, Verizon Wireless' excuse du jour was that it didn't have to compete on price or service because its network was just that phenomenal. But a report last week by Open Signal found that T-Mobile, once considered an under-cooked upstart, was finally fielding a network that nearly matches Verizon in terms of both speed and overall coverage:

    "Our testers were able to find a Verizon LTE signal 88.2% of the time, cementing Big Red's place at the top of our 4G rankings. But T-Mobile has been systematically closing the gap. In the fourth quarter its 4G availability was less than two percentage points below Verizon's, the closest we've seen that difference."

    Initially Verizon tried to downplay the results, insisting that because Open Signal uses crowdsourced data, that the results souldn't be taken seriously. That didn't go over particularly well over at T-Mobile:

    But Verizon then did a 180, announcing late last week that the company would finally be offering unlimited data again, and without throttling video, music or games as a result (which is now standard practice at both T-Mobile and Sprint). Of course the industry's definition of "unlimited" remains as murky as it has always been, with Verizon quick to note that by "unlimited," they actually mean somewhere around 22 gigabytes per month, after which your connection will likely be throttled:

    "On all Verizon Unlimited plans you get our fast LTE speeds. To ensure a quality experience for all customers, after 22 GB of data usage on a line during any billing cycle we may prioritize usage behind other customers in the event of network congestion. While we don’t expect to do that very often, network management is a crucial tool that benefits all Verizon customers."

    Still, a good move is a good move. And Verizon's decision will likely push AT&T (which currently only sells you unlimited data if you bundle your wireless connection a with DirecTV service) to follow suit. Granted competition in telecom is fickle and inconsistent, and non-price competition -- where theatrics trump actual value -- is generally the rule of thumb. And should rumors of a new Sprint, T-Mobile merger be accurate, we could very quickly be facing three large carriers with, once again, little to no incentive to actually give consumers what they want.

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    New FCC Boss Kills Zero Rating Inquiry, Signals Death Of Net Neutrality Enforcement

    Surprising nobody, new FCC boss Ajit Pai used a flurry of late-Friday announcements to roll back a number of consumer-friendly FCC initiatives the former Verizon lawyer (and the large ISPs that already love him) didn't like. Among them was the Wheeler-led FCC's attempt to crack down on zero rating, the practice of an ISP exempting its own content from its own arbitrary usage caps, while still penalizing competitors. The former FCC had just belatedly ruled that both AT&T and Verizon's zero rating efforts were anti-consumer, anti-competitive, and dramatically damaged the open streaming video market.

    That was then, and this is now.

    This new, Pai-led FCC wasted no time sending AT&T, Verizon and Comcast letters (pdf) proclaiming that all FCC inquiries into the anti-competitive impact of zero rating have been dropped. In a brief statement (pdf) issued to the media, Pai went so far as to imply he was doing this not because it's what giant ISPs wanted -- but because of a selfless dedication to the poor:

    "Today, the Wireless Telecommunications Bureau is closing its investigation into wireless carriers' free-data offerings. These free-data plans have proven to be popular among consumers, particularly low-income Americans, and have enhanced competition in the wireless marketplace. Going forward, the Federal Communications Commission will not focus on denying Americans free data. Instead, we will concentrate on expanding broadband deployment and encouraging innovative service offerings."

    You'll find that taking an anti-consumer position on something, then insisting it was only done to aid the downtrodden, will be a common refrain from this new Pai-led FCC. In reality, zero rating data doesn't create "free data plans," it simply shifts the cost burden onto streaming video providers -- or more accurately, the customers of streaming video providers. Those customers suddenly face having to pay more money for competing services, which naturally funnels them to the streaming services of AT&T (DirecTV Now), Verizon (Go90), or Comcast (Stream TV).

    ISPs like AT&T and Verizon had tried to argue that disadvantaging competitors in this fashion wasn't a big deal, because those companies could pay AT&T and Verizon a steep and unnecessary surcharge to cap-exempt their services too, putting themselves back on equal footing with ISPs. Given that many smaller companies couldn't afford such tolls, the former FCC's report (pdf) made it clear that this structure would be abused by giant, incumbent gatekeepers:

    "Thus, it would appear that AT&T's practices inflict significant unreasonable disadvantages on edge providers and unreasonably interfere with their ability to compete against AT&T's affiliate, DIRECTV, The structure of Verizon's FreeBee Data 360 program raises similar concerns. We are aware of no safeguards that would prevent Verizon from offering substantially more costly or restrictive terms to enable unaffiliated edge providers to offer services comparable to Verizon's affiliated content on a zero-rated basis.

    Again, for those confused, zero rating is simply incumbent duopolists using a lack of competition in broadband to impose arbitrary and unnecessary usage caps, then (ab)using those caps to dramatically tilt the playing field in their favor. Full stop. Zero rating has absolutely nothing to do with helping "low income Americans," innovation or "expanding broadband deployment," and Pai's claims to the contrary are transparent and insulting.

    There's more than a little cognitive dissonance required in insisting you're a stalwart defender of "free markets," then immediately turning a blind eye to the demolition of a level streaming video playing field by giant, lumbering monopolists. And, of course, this is just the opening salvo in the latest battle against net neutrality; while Pai gets to work refusing to enforce the agency's existing FCC rules, the GOP is getting to work on a Communications Act rewrite that will not only kill the net neutrality rules, but defang and defund the FCC as a consumer watchdog altogether.

    If you actually give a flying damn about net neutrality, broadband competition and a healthy, open internet -- 2017 is going to desperately need your help.

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    Report: President Trump Picks Former Verizon Lawyer Ajit Pai To Head FCC

    As many expected, Donald Trump has chosen former Verizon lawyer and current FCC Commissioner Ajit Pai to head the FCC, according to a report by Politico. According to two anonymous insiders "familiar with the decision," Pai, who met with Trump on Monday, should be formally announced as FCC boss in short order. Pai recently proclaimed that net neutrality's "days are numbered" under Trump, while stating that the reformed FCC would be taking a "weed whacker" to "unnecessary regulations" like the FCC's net neutrality rules and its new consumer broadband privacy protections.

    Politico rather soft sells the controversy that Pai will represent to those who don't think technology policy should be dictated by Verizon, AT&T, Comcast and Charter Communications:

    "Pai is already a familiar name in tech and telecom policy debates. He’s a fierce and vocal critic of many regulations passed by the commission's Democratic majority, including the 2015 net neutrality rules that require internet service providers to treat all web traffic equally and are opposed by the major broadband companies."
    Let's be clear here. Pai has supported the incumbent duopoly providers on nearly every issue of substance. He has vilified net neutrality to an often-comic degree, falsely claiming the rules encouraged dictators in North Korea and Iran and led to a massive slowdown in industry investment. He has consistently refused to even admit the U.S. broadband market has a competition problem. He's made it abundantly clear he wants to eliminate every FCC consumer protection function, and, alongside fellow Commissioner Mike O'Rielly, has even repeatedly voted down holding AT&T accountable for outright fraud.

    If you're looking for somebody who will rubber stamp every Comcast request shoveled in his general direction, Pai is certainly your man. If you're looking for an FCC leader who's going to care about consumer issues or the plight of the startup or small business in a word dominated by massive, ever-consolidating telecom conglomerates, you're about to get a master class in disappointment. The irony, of course, is that Pai is about as far from the "populist" rhetoric President Trump leaned on to get elected as one can get:

    Yes, nothing quite says "man of the people" like a former Verizon lawyer who has fought tooth and nail against every single effort to hold large ISPs accountable to the public. On any given day, if the wind is right and with enough pressure, Pai may just be convinced to occasionally do the right thing. But as the leader of an agency tasked with keeping Comcast from viciously savaging both consumers and the competition, it's not really physically possible to make a more controversial and uninspired selection.

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    FCC's Wheeler May Need To Stick Around If He Doesn't Want His Legacy Demolished
    So we've talked a lot over the years about how few people expected much from FCC boss Tom Wheeler, given his history lobbying for the wireless and cable industries. But amazingly enough, Wheeler wound up being one of the most consumer, small business, and competition-friendly bosses in FCC history (not that this is saying much). He passed net neutrality rules, new broadband privacy protections, raised the definition of broadband to 25 Mbps (to highlight a lack of competition at higher speeds), and more. In short, he wasn't the dingo many thought him to be.

    Now, with an incoming Trump administration making it very clear in public comments the goal is to kill net neutrality and gut the FCC as consumer broadband watchdog, the lion's share of Wheeler's efforts are poised to be demolished.

    This puts Wheeler in a notably prickly predicament. Wheeler's term technically extends until 2018, but under FCC rules he would be downgraded from Chairman to just vanilla commissioner should he stay on. If Wheeler leaves, the current FCC would face an immediate 2-1 Republican advantage. If he stays, the FCC remains with an even partisan 2-2 split, with Wheeler and Mignon Clyburn on one side, and Ajit Pai and Mike O'Rielly on the other -- at least until a new FCC boss is appointed to round out the five-person FCC leadership.

    Senate confirmation could take a large chunk of 2017, delaying any substantive policy changes. But if Wheeler chooses to leave, the 2-1 voting advantage would allow those looking to eliminate net neutrality and other recent FCC initiatives a running head start. Wheeler's predicament is thanks, in part, to the GOP refusing to renew current FCC Commissioner Jessica Rosenworcel to another term, something leaders originally promised they'd do -- then backed away from realizing they might have an advantage. Wheeler tried to force the issue last week when he said he'd resign immediately if Rosenworcel was reappointed to a new term.

    But Republicans refused to make any such deal hoping to gain the early advantage:
    "Republicans previously said they would not reconfirm Rosenworcel unless Wheeler resigned, because one Democrat must exit the FCC to let President-elect Donald Trump appoint a new Republican and give his party a 3-2 majority. But by the time Wheeler promised to do so, Republicans had other ideas. There wasn't enough time left in the Senate's session to handle Rosenworcel's confirmation, Commerce Committee Chairman John Thune (R-S.D.) said. Other Republicans supported taking no action on Rosenworcel because they hope both she and Wheeler will leave and give Republicans an immediate 2-1 majority."
    In an ideal world, partisan pattycake wouldn't dictate important technological issues of the age. Especially since issues like net neutrality actually have broad bipartisan support, and are only shoehorned into the mold of partisan politics because they operate in a dysfunctional vacuum. Ensuring that there's broadband competition (and by proxy cheaper, better service) enjoys similar bipartisan support among consumers. As does not letting incumbent ISPs write harmful protectionist state legislation solely to protect incumbent revenues from competition.

    None of this is probably a particularly enjoyable position for the 70-year-old Wheeler to inhabit. Instead of enjoying his retirement, Wheeler faces being forced to stick around if he doesn't want four years of hard work dismantled. And even if he does stick around, he'll inevitably find himself at the mercy of a 3-2 minority position anyway, one where he'll spend four years losing an endless series of 3-2 votes that carefully chip away at everything he fought for. In short, the recovering dingo is damned if he does, and damned if he doesn't -- music to the ears of those looking to strip away neutrality and other consumer protections.

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