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Resource id #60Canada 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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    T-Mobile Applauds Likely Death Of Net Neutrality Under Trump
    While T-Mobile has certainly brought some welcome changes to the wireless industry (including a CEO with a rare sense of humor), the consumer-friendly brand they've established has consistently fallen short when it comes to one major subject: net neutrality. The company lobbied and fought consistently against the reclassification of ISPs as common carriers and the creation of net neutrality rules. The operator then pissed off much of the internet when CEO John Legere mocked the EFF for raising questions about the misleading nature of the company's zero rating and throttling practices.

    This week, the company again made its opposition to net neutrality clear. Speaking at a media and telecom conference, T-Mobile CFO Braxton Carter applauded the incoming President-elect Donald Trump, whose telecom transition team members have all made it abundantly clear that eliminating net neutrality rules and gutting the FCC as a consumer watchdog will be among their top priorities. This is, T-Mobile claims, going to be a real "positive" for the industry:
    "It’s hard to imagine, with the way the election turned out, that we’re not going to have an environment, from several aspects, that is not going to be more positive for my industry,” Carter said in comments this morning at the 44th Annual Global Media and Communications Conference. “I think that it’s very clear that there’s going to be less regulation. And less regulation—regulation often destroys innovation and value creation."
    Except of course that net neutrality rules exist to protect innovation from entrenched telecom monopolies. But Carter doubles down, insisting specifically that the elimination of net neutrality rules should provide "opportunity" for "significant innovation":
    "Carter also specifically addressed the issue of net neutrality, arguing that the reversal of the FCC’s Open Internet rules would pave the way for additional innovation in the space. “It would provide the opportunity for significant innovation and differentiation,” Carter said of a telecom industry without net neutrality rules. “You could do some very interesting things” without net neutrality."
    Carter appears excited about "deregulation" because it might lower T-Mobile's tax burden and increase its chances of merging or being acquired. But his excitement is shortsighted and fairly typical for executives in the telecom sector.

    The problem is that in telecom, "deregulation" (of the sort promised by folks like Trump advisor Jeff Eisenach) doesn't actually mean straight deregulation. What it means in practice is pay-to-play regulation, where the biggest and most politically powerful companies (usually AT&T or Comcast) get to literally write the law. That's why you'll often see these folks breathlessly proclaim they adore "open markets," yet turn a blind eye when AT&T or Comcast write protectionist state law that hamstrings local communities and keeps competitors at bay.

    In telecom, "deregulation" is all-too-frequently code for "let's let AT&T and Comcast decide what's best." That was the preferred mantra of former FCC boss Michael Powell (now the cable industry's top lobbyist), who also shared Jeffrey Eisenach as a transition team member. The end result of that administration was "deregulation" that wound up empowering AT&T and Comcast, making broadband less competitive and customer service worse than ever. We've apparently decided to collectively forget that.

    As such, when your biggest competitor is AT&T, cheering for the one regulator that has tried to ensure a level playing field for smaller competitors seems a bit myopic. Remember it was the FCC and DOJ that blocked AT&T's attempted acquisition of T-Mobile, which ultimately resulted in T-Mobile being a more innovative, fierce competitor than ever before. Again, every indication coming from Trump's telecom transition team and the GOP is that they hope to completely defund and defang the FCC. That means more mergers, less competition, less innovation, and more net neutrality violations than ever before.

    T-Mobile has repeatedly tried to downplay its opposition to net neutrality by claiming that the company is on the "right side of history" as it fights neutrality rules with broad, bipartisan support among consumers. But the company's enthusiastic support for the gutting of nearly all consumer protections in the broadband space make it clear, once again, the brand's dedication to consumers and "innovation" is entirely and unsurprisingly superficial.

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    Argentina Orders Telecoms To Create A Permanent Database Of All Mobile Phone Users

    The Argentine government has announced the creation of a new national register of everyone using mobile phones in the country (original in Spanish). An article on says that discussions between the government and telecom companies have been underway for some months, and last week the scheme was finally unveiled. According to the Joint Resolution No. 6 of the Ministries of Security and Communications (original in Spanish), the mobile phone companies will be responsible for developing, operating and managing the system "at their own cost." In practice, this is likely to mean that the extra expenses will be passed on to customers. The personal data must be stored in a "safe, audited and permanent" manner, and yes, the records will be available to the authorities.

    The justification for the national register is to combat theft: according to a report in La Nación, 5000 mobile phones are stolen every day (original in Spanish.) To put that in context, another article in La Nación (original in Spanish) says that there are around 60 million mobile numbers in use, which seems rather high given that Argentina's total population is 42 million. Clearly, some people have two or more phones.

    Even one is a problem, for reasons that Edward Snowden and Andrew "bunnie" Huang pointed out earlier this year: a mobile phone is "the perfect tracking device." The new register may indeed help tackle the theft of mobile phones in Argentina. But it will also create a powerful and dangerous new resource that the authorities will surely be unable to resist dipping into for other purposes.

    Follow me @glynmoody on Twitter or, and +glynmoody on Google+

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    Google Fiber Announces Layoffs & Deployment Pause, Will Likely Pivot To Wireless
    Back in August a report emerged claiming that Google Fiber executives were having some second thoughts about this whole "building a nationwide fiber network from the ground up" thing. More specifically, the report suggested that some executives were disappointed with the slow pace of digging fiber trenches, and were becoming bullish on the idea of using next-gen wireless to supplement fiber after acquiring fixed wireless provider Webpass. As such, the report said the company was pondering some staff reductions, some executive changes, and a bit of a pivot.

    Fast forward to this week when Access CEO Craig Barrett posted a cheery but ambiguous blog post not only formally announcing most of these changes, but his own resignation as CEO. According to Barrett, Google will continue to serve and expand Google Fiber's existing markets (Austin, Atlanta, Charlotte, Kansas City, Nashville, Provo, Salt Lake City, and The Triangle in North Carolina), and will also build out previously-announced but not yet started efforts in Huntsville, Alabama; San Antonio, Texas; Louisville, Kentucky; and Irvine, California.

    From there, the direction Google Fiber will be headed gets murky. According to Barrett, Google has paused (read: killed) potential deployments in cities where Google Fiber had been having conversations, but hadn't yet given the green light for full deployment (Portland, Chicago, Jacksonville, Los Angeles, Oklahoma City, Phoenix, San Diego, San Jose, and Tampa). Most of the layoffs will be in these cities, notes Barrett:
    "For most of our “potential Fiber cities” — those where we’ve been in exploratory discussions — we’re going to pause our operations and offices while we refine our approaches. We’re ever grateful to these cities for their ongoing partnership and patience, and we’re confident we’ll have an opportunity to resume our partnership discussions once we’ve advanced our technologies and solutions. In this handful of cities that are still in an exploratory stage, and in certain related areas of our supporting operations, we’ll be reducing our employee base."
    A report over at Bloomberg notes that about 9% of employees at Access (which covers multiple projects, not just Google Fiber) will be let go, which is notably fewer staff reductions than last summer's report had suggested. Bloomberg's insiders also claim that there have been some rifts among executives at Google/Alphabet/Access over whether to remain dedicated to the laborious process of fiber installations, or to pivot more completely to wireless:
    "Moving into big cities was a contentious point inside Google Fiber, according to one former executive. Leaders like Barratt and Dennis Kish, who runs Google Fiber day-to-day, pushed for the big expansion. Others pushed back because of the prohibitive cost of digging up streets to lay fiber-optic cables across some of America’s busiest cities."
    That there's some hesitation isn't surprising. Not only is building a fiber network from the ground up incredibly hard, expensive, and time consuming, the telecom industry is awash with deep pocketed incumbents intent on making things as difficult as possible for competitors like Google Fiber (and downright impossible for smaller ISPs). From AT&T suing cities to thwart attempts to streamline utility pole attachments, to incumbent ISPs writing awful state law prohibiting public/private partnerships, telecom can certainly be a cesspool of protectionism of the worst sort.

    While these incumbent ISPs (and their armies of paid policy mouthpieces) will likely spend the next few weeks celebrating the "death of Google Fiber," there's nothing stopping the company from pivoting to next-generation wireless. Google has filed applications with the FCC to conduct trials in the 71-76 GHz and 81-86 GHz millimeter wave bands, and is also conducting a variety of different tests in the 3.5 GHz band, the 5.8 GHz band and the 24 GHz band. That said, it certainly remains possible that at some point Google gets tired of ramming its head against VerizoCasT&T and sells the project off in a few years, leaving us with another sad historical footnote in the often pitiful national quest for something vaguely resembling broadband competition.

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    FCC Fines T-Mobile For Abusing The Definition Of 'Unlimited' Data
    For the better part of the last decade, wireless carriers have had an often vicious, adversarial relationship with the dictionary. More specifically, they've struggled repeatedly with the definition of the word "unlimited," often pitching data services that proclaim to be unlimited, only to saddle users with onerous, often confusing restrictions. For the last decade, regulators have tried to cure them of this behavior, from Verizon paying $1 million to New York's Attorney General in 2007, to the FCC fining AT&T $100 million last year.

    Yet despite repeated warnings, the problem persists. Case in point: this week the FCC announced it had struck a $48 million settlement with T-Mobile (pdf) for advertising unlimited data plans without making it clear the limitations of these connections. More specifically, the FCC says T-Mobile didn't clearly inform consumers that these "unlimited" lines would be throttled during periods of network congestion, or after users consumed 17 GB of data in any given month:
    "The FCC’s investigation found that company policy allows it to slow down data speeds when T-Mobile or MetroPCS customers on so-called “unlimited” plans exceed a monthly data threshold. Company advertisements and other disclosures may have led unlimited data plan customers to expect that they were buying better and faster service than what they received. The Commission’s 2010 Open Internet transparency rules require broadband Internet providers to give accurate and sufficient information to consumers about their Internet services so consumers can make informed choices."
    All told, T-Mobile will pay a $7.5 million fine and dole out $35.5 million in "consumer benefits" (mostly just minor discounts on select hardware and plans) from T-Mobile and its prepaid subsidiary MetroPCS. This will, the FCC insists, surely teach T-Mobile a lesson about marketing unlimited data tiers that aren't:
    "Consumers should not have to guess whether so-called ‘unlimited’ data plans contain key restrictions, like speed constraints, data caps, and other material limitations,” said FCC Enforcement Bureau Chief Travis LeBlanc. “When broadband providers are accurate, honest and upfront in their ads and disclosures, consumers aren’t surprised and they get what they’ve paid for. With today’s settlement, T-Mobile has stepped up to the plate to ensure that its customers have the full information they need to decide whether ‘unlimited’ data plans are right for them."
    While this sounds superficially nice, there are a few problems with the FCC's move here. For one thing, the FCC has been making it abundantly clear that it's ok to sell "unlimited" plans with all manner of misleading limits -- you just have to make sure your marketing fine print makes those limitations clear. And while that's good, these kinds of wrist slaps clearly aren't working. And just ensuring transparency is not the end of this particular conversation.

    For example, T-Mobile's and Sprint's newest plans, which the FCC hasn't raised a peep about, offer users "unlimited" connections, but throttle all games, video and music unless users shell out a monthly premium if they actually want these services to work as intended. That's a fairly obvious violation of net neutrality principles and an abuse of the word "unlimited," yet the FCC has made it abundantly clear it thinks this sort of behavior is perfectly ok. In other words, you can be a misleading cheat. You just have to make it clear you're a misleading cheat via fine print in your three-hundred page terms of service.

    We've noted repeatedly how the FCC simply refuses to acknowledge how usage caps and zero rating are causing significant problems, and it doesn't look like it's an issue that's going to get fixed anytime soon. While current FCC boss Tom Wheeler's pro-consumer bent was a surprise to many (especially given his cable and wireless lobbying past), there are growing signs that his tenure will be up at the end of the year. And given the particular leanings of both Trump and Clinton, there's certainly no guarantee his replacement will have the political courage to stand up for consumers and finish what Wheeler started.

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    Facebook Wants To Bring Controversial Zero Rated 'Free Basics' Service To The States
    Last year the Indian government forged new net neutrality rules that shut down Facebook's "Free Basics" service, which provided a Facebook-curated "light" version of the internet -- for free. And while Facebook consistently claimed its program was simply altruistic, critics (including Facebook content partners) consistently claimed that Facebook's concept gave the company too much power, potentially harmed free speech, undermined the open nature of the Internet, and provided a new, centralized repository of user data for hackers, governments and intelligence agencies.

    In short, India joined Japan, The Netherlands, Chile, Norway, and Slovenia in banning zero rating entirely, based on the idea that cap exemption gives some companies and content a leg up, and unfairly distorts the inherently level internet playing field. It doesn't really matter if you're actually altruistic or just pretending to be altruistic (to oh, say, lay a branding foundation to corner the content market in developing countries in 30 years); the practice dramatically shifts access to the internet in a potentially devastating fashion that provides preferential treatment to the biggest carriers and companies.

    Fast forward a year and Facebook is now considering bringing the controversial service to the United States. The company has apparently been in talks with the White House about getting the idea rolling in the U.S., without setting off the same kind of regulatory alarm bells it faced in India:
    "The effort to offer a U.S.-based version of Free Basics is moving forward in fits and starts, said the people, who spoke on the condition of anonymity because the effort has not been publicly revealed. In particular, the company wants to ensure that Free Basics will be viewed favorably by the U.S. government before it launches, thus avoiding a costly repeat of its experience in India."
    Again, India reacted poorly not because Facebook was giving away "free stuff," but because Facebook was trying to install itself as the 90's AOL of the modern internet. Content partners dropped out because they didn't like Facebook dictating which websites and services get to be "zero rated." Companies like Mozilla suggested that if Facebook really wants to help the world's poor, it can start by funding access to the actual Internet. Facebook, annoyed by those who don't believe it's being purely altruistic, responded by calling such critics "extremists" who are hurting the poor.

    The fight comes to US shores as the country is already facing a growing array of problems thanks to zero rating. Whereas India banned the practice, the FCC passed net neutrality rules that don't ban it outright, opening the door to companies trampling net neutrality if they're just creative enough. As a result, Comcast, Verizon and AT&T all now exempt their own streaming content from caps while still penalizing Netflix. Similarly T-Mobile and Sprint have now started throttling video, music and games unless customers pay a steep monthly premium.

    So while the FCC twiddles its thumbs to what's quickly becoming a growing problem (unless you're an ISP or a deep-pocketed content company), Facebook is looking to get in on the ground floor of a concept that professes to be "helping" while dramatically changing the way access to the internet works. Amusingly, the social media giant appears to be treading so carefully, it's refusing to strike deals with big carriers out of an obvious fear of anti-competitive criticism:
    "Facebook has not attempted to strike a deal with national wireless carriers such as T-Mobile or AT&T, said the people familiar with the matter, over concerns that regulators may perceive the move as anti-competitive. Instead, it has pursued relationships with lesser-known carriers."
    Again, if you want to help low-income global citizens access to the internet -- doesn't it just make more sense to help fund connections to the actual internet?

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    The FCC Wants To Know Why Journalists Had To Pay $200 For WiFi At Presidential Debate
    Journalists and citizens attending this week's Presidential debate at Hofstra Univserity found themselves facing an unexpected surprise when they were informed that WiFi at the event would cost them $200. Worse, perhaps, was that attendees said that the college was going around using this $2,000 WiFi signal detector to identify those using their smartphone as a mobile hotspot, and encouraging them to instead shell out the big bucks for a few hours of Hofstra WiFi:
    The behavior caught the eye of FCC Commissioner Jessica Rosenworcel, who proclaimed on Twitter that there's "something not right" with what Hofstra was doing, and that it potentially violated FCC rules:
    Several times over the last few years, the FCC has fined hotel and conference center companies for willfully blocking users' hotspots from working, forcing them to shell out exorbinant rates for conference center WiFi. The crackdown began with Marriott in 2014, which initially tried to fight the fine before realizing it was outnumbered by regulators, annoyed consumers, and even companies like Microsoft. The FCC subsequently fined Hilton for similar behavior, as well as for actively obstructing the FCC's investigation into what Hilton was doing. Several smaller conference center WiFi companies have been fined by the FCC as well.

    The difference in this instance is that Hofstra wasn't actively jamming personal hotspots in the same way conference centers have. And when pressed for comment, Hofstra representatives laid the blame for the $200 price tag at the feet of the Commission on Presidential Debates. They also claim they worked to shoot down people's personal hotspots out of fear that they might cause interference with the existing network:
    "The Commission on Presidential Debates sets the criteria for services and requires that a completely separate network from the University’s network be built to support the media and journalists. This is necessary due to the volume of Wi-Fi activity and the need to avoid interference. The Rate Card fee of $200 for Wi-Fi access is to help defray the costs and the charge for the service does not cover the cost of the buildout.

    For Wi-Fi to perform optimally the system must be tuned with each access point and antenna. When other Wi-Fi access points are placed within the environment the result is poorer service for all. To avoid unauthorized access points that could interfere, anyone who has a device that emits RF frequency must register the device. Whenever a RF-emitting device was located, the technician notified the individual to visit the RF desk located in the Hall. The CPD RF engineer would determine if the device could broadcast without interference."
    While interference is certainly real, it's not particularly likely that a user's personal tethered hotspot would grind the Hofstra network to a halt if properly designed. Regardless, Rosenworcel says she has urged the FCC Enforcement Bureau to take a closer look at whether debate staffers went too far. Regardless of the outcome, Rosenworcel is probably happy to have her name in print for something other than her failure to support the FCC's quest for cable box competition, a position fueled largely by inaccurate claims by the US Copyright Office.

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    Verizon Claims Nobody Wants Unlimited Data, Wouldn't Be Profitable Anyway
    Back in 2011, Verizon and AT&T eliminated unlimited wireless data plans, instead pushing users toward share data allotments and overage fees as high as $15 per gigabyte. And while the companies did "grandfather" many of these unlimited users at the time, both companies have made at art form out of harassing or otherwise annoying these customers until they convert to costlier shared plans. And despite the fact that such overage-fee-based plans confuse the living hell out of most customers (who have no idea what a gigabyte is), both companies continue to insist that customers don't actually want unlimited data.

    Speaking at an investor conference last week, Verizon CFO Fram Shammo once again declared that Verizon knows what consumers want, and it isn't unlimited data:
    "At the end of the day, people don't need unlimited plans," Verizon Chief Financial Officer Fran Shammo said at an investor conference Thursday."
    And despite the fact that plenty of companies (like T-Mobile) have seen explosive growth of late selling unlimited data plans, Shammo proclaimed making money off of unlimited just isn't possible:
    "T-Mobile and Sprint have introduced cheaper unlimited data plans -- in exchange for slowing the connection for lower-resolution video -- and AT&T has been trumpeting its own unlimited data bundle with DirecTV video service. The push to unlimited data marks a reversal of the last few years of rhetoric about the costs of delivering service. For Verizon, that remains the biggest argument against unlimited. "You cannot make money on an unlimited video world," he said
    Of course what Shammo means is that Verizon won't see the same generous profit margins it's currently seeing if it were to actually give consumers what they want. Verizon saw $8.0 billion in profit on $21.7 billion in second-quarter revenues in large part thanks to shared data plans (though Verizon Wireless' earnings were perfectly healthy under unlimited data plans as well). Since most users don't know what a gigabyte even is, they tend to sign up for bigger plans than they actually need for fear of hitting the overage wall.

    Those fears pay huge dividends for the mobile carrier, whose wireless plans are constructed like a giant funnel that constantly pushes users to more and more expensive levels of service once in the door.

    Verizon for years has justified some of the highest rates in the industry as reflective of the overall quality of its wireless network. But as competitors like T-Mobile begin to catch up, Verizon's running out of marketing ideas to justify its service's higher price point. Enter last week, when Verizon responded to new unlimited data promotions from Sprint and T-Mobile with new ads proclaiming that the company doesn't sell unlimited data, it sells "limitless data." When asked how you can call a gigabyte-capped shared data plan limitless, Verizon PR trots out its very finest dancing shoes:
    "Limitless refers to how you can use your data and unlimited refers to the amount of data,” said Kelly Crummey, director of corporate communications at Verizon...Our competitors claim they offer ‘unlimited plans’ but if you really look at them, they are full of limits on how you use your data with thinks (sic) like SD (not HD) and automatically slowing down your speeds. The way our plans are structured, you can use your data however you want – there are no limits.
    Well, no limits except the very clear limits. Apparently, Verizon thinks that you compete by telling customers what they want while abusing the hell out of the dictionary. It should be interesting to see how that tactic plays out as T-Mobile continues to erode Verizon's wireless market share.

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    NYC Kills Internet Browsing At Free WiFi Kiosks After The City's Homeless Actually Use It
    Earlier this year, New York City undertook one of the biggest free city WiFi efforts ever conceived. Under the plan, an outfit by the name of LinkNYC is slated to install some 7,500 WiFi kiosks scattered around the five boroughs that will provide free gigabit WiFi (well, closer to 300 Mbps or so), free phone calls to anywhere in the country (via Vonage), as well as access to a device recharging station, 311, 911, 411 and city services (via an integrated Android tablet). The connectivity and services are supported by a rotating crop of ads displayed on the kiosks themselves.

    The only problem? As part of the initiative, the city and LinkNYC attached an Android-powered tablet that lets anyone browse the internet for as long as they wanted. This, as you might expect, has resulted in some people camping out for long periods of time actually using the free service. That includes, unsurprisingly, New York City's ample homeless population. As Motherboard notes in a report, after spending much of August tracking usage of the kiosks, a snapshot view of daily use doesn't make for shiny marketing fodder:
    "My small sample of Link users that Saturday afternoon suggests these kiosks are indeed mostly used by the city’s least privileged. Of the 15 people I saw using a Link, only two or three of them would be likely to appear on LinkNYC promotional materials (i.e., one well-dressed woman making a phone call, or one middle aged, casually-dressed tourist waiting for his phone to finish charging).
    Again, this shouldn't really be surprising, especially since the city has consistently claimed that one of its goals is to close the digital divide. Since June there has also been a lot of breathless hysteria about the fact that some of the homeless users have been using the tablets to watch porn. In response, LinkNYC began implementing internet filters that, as internet filters tend to do, didn't seem to work.

    Responding to public complaints, LinkNYC announced this week that it would be discontinuing tablet browsing functionality at the kiosks:
    "...Some users have been monopolizing the Link tablets and using them inappropriately, preventing others from being able to use them while frustrating the residents and businesses around them. The kiosks were never intended for anyone’s extended, personal use and we want to ensure that Links are accessible and a welcome addition to New York City neighborhoods.
    The announcement notes that the internet browsing will be disabled, but other services will still work:
    "Starting today, we will be removing web browsing on all Link tablets while we work with the City and community to explore potential solutions, like time limits. Other tablet features—free phone calls, maps, device charging, and access to 311 and 911—will continue to work as they did before, and nothing is changing about LinkNYC’s superfast Wi-Fi. As planned, we will continue to improve the Link experience and add new features for people to enjoy while they’re on the go."
    While countless news stories suggest that the move was primarily in response to overwhelming porn consumption, there's no real evidence that this was an epidemic of any real scale. While there have certainly been documented instances of public masterbation at the kiosks (this is NYC after all, and occasionally viewing a homeless person's gentials is not a new concept), LinkNYC has suggested that people camping out around the kiosks (sometimes bringing chairs, couches and crates with them) was the larger source of complaints by locals.

    The real problem appears to be that the service put the city's homeless population on stark display, making them more difficult for city residents to ignore. On one hand it's understandable that homeless populations camping around the kiosks isn't great "optics" or olfactory ambiance for the city and local business owners, but at the same time it's not clear what one expects to happen when you provide the city's 60,000 homeless residents with free access to technology they otherwise lack access to. LinkNYC says it's working with the city on a solution, and may restore public browsing at a later date with tougher filters and access limitations in place. Given the fact that filters historically don't work, it seems more likely that the free browsing will be gone for good.

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    Netflix Urges FCC To Crack Down On Broadband Usage Caps
    We've long pointed how how broadband usage caps (especially on fixed-line networks) are arbitrary, punitive and confusing. In addition to being totally unnecessary, broadband caps open the door to anti-competitive behavior (like zero rating a company's own content but not a competitor's). The idea that caps are necessary to manage the network has long been debunked, and even the ISPs themselves have admitted that caps have nothing to do with congestion. Broadband caps are little more than glorified price hikes on captive markets, useful to protect legacy TV revenues from streaming video.

    Despite the profoundly negative impact of usage caps, most Silicon Valley companies remain mute on the subject. One of the few exceptions is Netflix, which not only has been a vocal opponent of caps, but has often taken steps to try and help consumers navigate them. Now the company is once again pushing the FCC to take action in a new filing (pdf), urging the agency to use its authority under Section 706 of the Communications Act to crack down on caps and overage fees:
    Data caps (especially low data caps) and usage based pricing ("UBP") discourage a consumer's consumption of broadband, and may impede the ability of some households to watch Internet television in a manner and amount that they would like. For this reason, the Commission should hold that data caps on fixed line networks and low data caps on mobile networks may unreasonably limit television viewing and are inconsistent with Section 706.
    From there, Netflix is quick to reiterate that even ISPs have admitted that caps have no actual technical purpose when it comes to managing the network:
    "Data caps on fixed line networks do not appear to serve a legitimate purpose: they are an ineffective network management tool. Fixed line BIAS providers have stated that data caps on fixed line networks to not serve a traffic management function. They have been described alternatively as a way to align customers' use of the network with what they pay. As a method of price discrimination however, data caps and UBP are redundant to the speed tiers that consumers are used to. Data caps and UBP raise the cost of using the connections that consumers have paid for, making it more expensive to watch Internet television. The Commission should recognize that data caps and UBP on fixed line networks are an unnecessary constraint on advanced telecommunications capability.
    Netflix (now technically the world's biggest pay TV company) notes that in addition to being unnecessary, punitive, and potentially anti-competitive, usage caps are simply confusing. The majority of consumers don't know what a gigabyte even is, and by nature will tend to pay for higher tiers of service they don't need just to avoid being penalized (something that's quite easy by ISP design). Netflix is also quick to note that even higher caps may not be sufficient as consumers slowly shift to 4K streaming (not to mention other bandwidth-intensive applications we haven't even invented yet).

    The problem for Netflix (and any consumer who cares about usage caps) is that the FCC's enforcement or interest in this subject has historically been inconsistent at best. While the agency did manage to prevent Charter from imposing caps for seven years as a recent merger condition, the agency has consistently turned a blind eye while companies like AT&T and Comcast expand their own usage restrictions and overage fees. And while Comcast and AT&T may have recently raised their own caps to 1 terabyte to fend off possible regulatory action, there's no real indication that any broader FCC action is forthcoming.

    While the FCC has hinted that it may include usage caps as part of a voluntary push for broadband "nutrition labels", it's not likely the commission will do much more than that (even though nobody is confirming meter accuracy). Whether it's the FCC's $300 million broadband availability map that intentionally omits price data, or the agency's failure to even mention the ISP practice of using bogus fees to covertly jack up advertised broadband rates, punishing or even highlighting the price gouging that goes on in the broadband industry on a daily basis has never been the FCC's strong suit.

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    What Net Neutrality? While The FCC Naps, AT&T Now Exempting DirecTV Content From Wireless Usage Caps
    When the FCC crafted its new net neutrality rules, we noted that the agency's failure to ban "zero rating" (exempting your own company's content from usage caps) was going to be a problem. And lo and behold, with the FCC AWOL on the subject, companies are starting to take full advantage. Verizon and Comcast now exempt their own streaming video services from usage caps without penalty, while companies like T-Mobile and Sprint have launched new confusing and punitive data plans that throttle games, music and video content -- unless users pay a premium.

    These were all concepts net neutrality rules were supposed to prevent. But because the FCC's rules didn't go quite far enough, we're effectively looking at rules that make net neutrality violations ok -- provided you're just a little bit creative about it.

    Outside of the vague promise of an "information inquiry" that began last January, the FCC hasn't said much of anything as ISPs test the limits of the existing rules and pretty much finds that so far -- there really aren't any. Encouraged by the FCC's apathy on the subject, AT&T this week quietly began exempting DirecTV video content from its usage caps after buying the satellite TV provider last year for $69 billion. A quiet update to the DirecTV app indicates that the company is now pushing this as a new "data free TV" option":
    AT&T is getting into the messy business of zero-rating, offering wireless data subscribers the opportunity to stream video from the DirecTV mobile app with no data costs at all. According to update notes from the latest version of the app released today, users can "stream DirecTV on your devices, anywhere — without using your data."

    This promise was tested by Verge staff this morning, who were able to play DirecTV content on their mobile without any noticeable impact to their data allowance. However, the release notes for the app warn that there are restrictions. Under some unspecified circumstances users may still "incur data charges," says DirecTV, and any free video streaming is subject to "network management, including speed reduction."
    Much like T-Mobile's Binge On efforts (which zero rate only the biggest video services) the idea of getting something for "free" sounds wonderful upon superficial inspection. At least until you realize that AT&T's decision to give its own content an unfair leg up in this fashion puts its competitors, like Netflix and Amazon, at a distinct disadvantage. That's why so many people had urged the FCC to follow India, Japan, Finland, Iceland, Estonia, Latvia, Norway, The Netherlands, and Chile's approach to net neutrality rules and ban zero rating entirely.

    The FCC didn't, and thanks to its failure, we now face a scenario where net neutrality can be trampled without repercussion -- and may even be celebrated by the press and public -- provided you just use the right shade of public relations paint.

    And there's every indication AT&T's just getting started. This particular announcement (made on Apple product announcement day to capitalize on the tech media's distraction) was just AT&T dipping its toe into the zero rating water. The company plans to launch three different streaming services under the DirecTV brand later this year, and you can be fairly sure that AT&T intends to use zero rating to give all of them a distinct, and notably unfair, market advantage.

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    AT&T, Poster Child For Government Favoritism, Mocks Google Fiber For Government Favoritism
    You'd be hard pressed to find a better example of government-pampered mono/duopoly than AT&T. For years, the ISP has all but bought state laws protecting it from broadband competition. When simply buying awful state laws proves too cumbersome or obvious, it often tries to use poison pills in unrelated legislation (like traffic laws) to hinder competitors. The end result is a laundry list of states like Tennessee that remain broadband backwaters, quite by AT&T design, as the company uses state legislatures as glorified marionnettes, all marching in line to protect the status quo.

    That's why it's more than a little amusing to see AT&T pen a new blog post that mocks Google Fiber's lack of progress (in part thanks to AT&T), while maligning the upstart ISP for "seeking out government favoritism at every level":
    "Google Fiber will no doubt continue its broadband experiments, while coming up with excuses for its shortcomings and learning curves. It will also no doubt continue to seek favoritism from government at every level. Just last week Google Fiber threatened the Nashville City Council that it would stop its fiber build if an ordinance Google Fiber drafted wasn’t passed. Instead of playing by the same rules as everyone else building infrastructure, Google Fiber demands special treatment and indeed in some places is getting it, unfairly."
    First, let's just get out of the way that the idea of AT&T, now bone-grafted to our intelligence agencies' domestic surveillance efforts, giving anybody a lecture on government favoritism deserves a major hypocrisy award.

    What's AT&T actually upset about? Google Fiber has been pushing to reform utility pole attachment rules, one of several layers of regional bureaucracy telecom monopolies used to slow broadband competitors from coming to market. Google Fiber's been pushing cities like Louisville and Nashville for "one touch make ready" laws that let a single, insured contractor move any ISPs' hardware -- often reducing installation from half a year to just a month. AT&T's response? To sue cities like Louisville for overstepping their authority. Such decisions, AT&T argues, should be left up to the state regulatory bodies that AT&T all but owns.

    AT&T's taking the opportunity to kick Google Fiber while it's down, the company plagued by recent rumors that it's pausing a handful of unannounced cities to consider supplementing fiber service with wireless broadband. Sources with knowledge of Google Fiber's plan tell me many of the reports about Google Fiber hitting deployment "snags" have been either overstated or in error, but the fact that Google Fiber hasn't publicly clarified its dedication to expansion suggests there likely is some possible restructuring going on as the company takes stock of its recent Webpass acquisition and eyes wireless as a way to supplement fiber.

    Regardless, AT&T's blog post goes to great lengths to lecture Google Fiber about the limited impact of its gigabit fiber to the home deployments. This, despite the fact we've highlighted time and time again how AT&T's own gigabit deployments are dramatically and misleadingly overstated (something I affectionately refer to as "fiber to the press release."). Amusingly, AT&T's Joan Marsh also goes out of her way to mock Google Fiber for recently saying it might have to abandon Nashville as a launch market if AT&T and friends don't get out of the way:
    "Meanwhile, without excuses or finger-pointing, and without presenting ultimatums to cities in exchange for service, AT&T continues to deploy fiber and to connect our customers to broadband services in communities across the country. Welcome to the broadband network business, Google Fiber. We’ll be watching your next move from our rear view mirror. Oh, and pardon our dust."
    Right, like that time AT&T falsely threatened to withhold all fiber deployments if the government passed net neutrality rules?

    There are plenty of things AT&T is perfectly suited to give lectures on. How to buy state legislatures and laws? Sure. How to help government tap dance around the law to spy on Americans? Yup. How to turn the other cheek while scammers rip off your customers and the hearing impaired? Sure tootin'. But AT&T giving lectures on government favoritism, integrity and level playing fields is kind of like receiving lectures on halitosis from twelve-day-old road kill.

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    FCC Gives Up On Municipal Broadband Fight
    While over-shadowed by the net neutrality vote the same day, the FCC's decision last year to protect municipal broadband was potentially more important. For more than fifteen years incumbent ISPs have quite literally been allowed to buy state laws that hinder communities from improving their broadband networks, or even in some instances from striking public/private partnerships with the likes of Google Fiber. These protectionist laws, passed in nineteen different states, are a huge reason why you currently only have the choice of one shitty cable provider and one shitty telco for broadband service (if you're lucky).

    The FCC originally believed it could use its Congressional mandate to ensure "even and timely broadband deployment" to strike down the most restrictive portions of these laws. But as we noted earlier this month, an appeals court ruled that the FCC doesn't have this authority under Section 706 of the Communications Act. And in speaking with the New York Times this week, the agency stated for the first time publicly that this is a fight it won't be pursuing further:
    "The F.C.C. does not plan to appeal the federal court’s decision “after determining that doing so would not be the best use of commission resources,” Mark Wigfield, a spokesman for the agency, said in a statement. That means municipalities that want to keep expanding their municipal broadband networks will have to fight to overturn state laws on their own."
    Easier said than done. Telecom incumbents, like so many large players, have an absolute chokehold over state legislatures. So much so that ISPs like AT&T continue to have success passing new laws of this type despite growing, significant bipartisan public opposition to them. For years ISPs quickly passed these laws by framing this as a partisan issue of government "competing with the free market." But as Comcast and AT&T consumers get an ongoing master class in how broken and not free the telecom market is, members of both parties have grown increasingly hostile toward protectionism of this type.

    What happens now? In a statement (pdf), FCC boss Tom Wheeler proclaimed that he would happy to testify on the behalf of municipal broadband ISPs and their supporters, should they try to push this issue further:
    "Should states seek to repeal their anti-competitive broadband statutes, I will be happy to testify on behalf of better broadband and consumer choice. Should states seek to limit the right of people to act for better broadband, I will be happy to testify on behalf of consumer choice."
    Some members of Congress are pushing a law that would repeal state laws that curtail local broadband rights, but it has virtually no chance of passing in a Senate equally beholden to AT&T, Charter, Verizon and Comcast campaign contributions. A group of 42 mayors and local government officials have also fired off a letter (pdf) to muni-broadband deployments in North Carolina and Tennessee, expressing "solidarity" in the face of the FCC's court loss:
    "While our paths vary, we are united by our commitment to competition and the right of self-determination for all our communities, free from interference," states the letter. "The recent decision from the United States Court of Appeals for the Sixth Circuit was a disappointing reminder that the ability of local communities to make our own internet decisions remains at risk."
    So despite the court loss, there is a critical mass of people, activists, and small providers trying to do something about ISPs writing protectionist state law. But without some federal help and laser-like focus, their ability to magically fix the pay-to-play state legislative process remains a tall order.

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    AT&T Dodges FTC Throttling Lawsuit Using Title II Classification It Vehemently Opposed
    Back in 2011, AT&T stopped selling unlimited wireless data plans, and began heavily pushing more expensive capped and metered plans. Existing unlimited users at the time were grandfathered, but the company engaged in all manner of sneaky behavior to try and make life as unpleasant as possible for these users, ranging from blocking them from using Facetime unless they migrated to metered plans, to heavily throttling these "unlimited" users after only consuming a few gigabytes of data. Ultimately AT&T faced a $100 million fine by the FCC (currently being contested by AT&T), and a 2014 lawsuit by the FTC for misleading consumers and dramatically changing the terms of service while users were under contract.

    Originally we noted how AT&T had used a Schrodinger-esque attempt to derail the lawsuit by claiming that since it would soon be a common carrier under Title II of the Communications Act (something its lawyers fought and continue fighting to this day), it didn't technically qualify as a common carrier under the FTC Act. At the time, consumer groups like Free Press found AT&T's tap dancing rather funny:
    "It is rich to see AT&T in two different appellate courts at once, simultaneously arguing in this case that its mobile broadband is a common carriage service -- and therefore not subject to FTC jurisdiction -- while telling the DC Circuit that AT&T's mobile broadband cannot be treated as a common carrier service."
    Initially it seemed like the laugh would be on AT&T, with a court last year denying AT&T's motion for dismissal (pdf), ruling it was "unambiguously clear" that only AT&T wireless voice, not wireless data, was classified as common carrier when the lawsuit was filed last fall. But this week an appeals court in California contradicted this finding and dismissed the FTC's case entirely, the ruling (pdf) stating AT&T can no longer be held in violation of the FTC Act because it's now classified as a common carrier under the Communications Act:
    "The common carrier exemption in section 5 of the FTC Act carves out a group of entities based on their status as common carriers. Those entities are not covered by section 5 even as to non-common carrier activities. Because AT&T was a common carrier, it cannot be liable for the violations alleged by the FTC. The district court’s denial of AT&T’s motion to dismiss is reversed, and the case is remanded for entry of an order of dismissal."
    There's some indications in the ruling that the court wasn't sure that the FTC ever had authority over AT&T under the FTC Act (Title II or no). But it's still amazing to realize that AT&T was simultaneously arguing before two different courts that ISPs should not be classified as common carriers under Title II, while at the same time using this pending reclassification as grounds to dismiss the FTC lawsuit. Fancy footwork, that. AT&T may still face the $100 million FCC fine for lying to its customers, provided its lawyers can't tap dance out of that punishment as well. This all occurs, of course, as AT&T's lawyers and trade groups continue their original assault on Title II and the net neutrality rules Title II allowed.

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    T-Mobile Declares It's On 'The Right Side Of History' As It Laughs At Net Neutrality
    While T-Mobile has certainly done some good things for the wireless industry, the company's ongoing tone deafness on net neutrality isn't doing the carrier any favors. T-Mobile fought against real net neutrality rules, then, once passed anyway, got right to work trying to find creative ways around the rules using zero rating (exempting only some content from usage caps). When net neutrality advocates and scholars repeatedly pointed out T-Mobile was violating net neutrality and being a bit hypocritical ("we're edgy and love consumers but not real net neutrality!"), the company dug a deeper hole by attacking groups like the EFF.

    Last week T-Mobile upped the ante with new plans that promise "unlimited" data, but are not only more expensive, they throttle tethering, throttle overall consumption at 26 GB, and throttle all video to 1.5 Mbps or 480p. Users who want HD video to actually work correctly can apparently pony up $25 more per month. Emboldened by T-Mobile and a (so far) apathetic FCC, Sprint revealed similar "unlimited" data plans of its own, which throttle all video, games and music to 1.5 Mbps, 2 Mbps, and 500 kbps respectively, unless you pony up another $25 per month.

    Groups like the EFF were quick to point out that installing ISPs as middlemen who get to determine how well your services work based on how much you pay in a marginally-competitive broadband market sets a horrible precedent. If regulators allow T-Mobile to charge more money for HD video to work, what stops Comcast from charging you more if you want 4K Netflix streams to work? Or AT&T deciding it can charge you more if you want your Steam games to download at full bitrate? This is a door that, once opened, won't be easily closed. And once this practice is a standard, it will be abused.

    T-Mobile, for whatever it's worth, continues to be annoyingly tone deaf about the slippery slope it's dragging the entire industry toward. However bad zero rating was, the act of throttling entire classes of traffic unless you pay your ISP more money is notably worse. Highlighting how video conferencing isn't throttled but YouTube is, The Verge tried to get T-Mobile to define "video" and "data" but came away stymied:
    "I asked T-Mobile for the company’s definition of "data" and a spokesperson said "that’s not something I could give you," but suggested that the company was on "the right side of history," and that the goal was to make "unlimited sustainable for the mass market." That’s an admirable goal! But let’s not dance around the fundamentals of the situation. Net neutrality is the law of the land, and T-Mobile has aggressively pushed the boundaries of net neutrality by manipulating the traffic on its network."
    But again, violating net neutrality principles isn't the same as violating net neutrality rules, and the FCC's rules were carved out with numerous exeptions that allow all manner of throttling -- provided ISPs claim it's for the health of the network. That's why T-Mobile frames this as a matter of "sustainability," even though it's really about adhering to basic dictionary definitions and not selling an "unlimited" service if you're not actually willing to offer it. For a company that markets itself as a pro-consumer alternative to traditional wireless carriers, T-Mobile seems increasingly hell bent on continuing some of the industry's worst habits.

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