Tag Archives: net neutrality

Pai gets the call as weed-whacker-in-chief

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Mainstream, of a sort.

Ajit Pai is the new chairman of the Federal Communications Commission, as predicted. An explicit announcement hasn’t been released – at least not as of earlier this morning – but Pai posted a thank you note and his colleagues have offered official congratulations, so take it as a given.

The appointment appears to be permanent. The FCC’s website has an historical listing of commissioners and chairs, and Pai is designated as “chairman”, while Mignon Clyburn, who held down the job while Tom Wheeler was awaiting confirmation in 2013, is listed as “acting chairwoman”. So take that as a given too.

Pai will need to be renominated to a full term and confirmed by the U.S. senate at some point, but that’s not an immediate problem. Designation as chair is within the president’s gift.

Like Trump, Pai has an over active Twitter account and a penchant for colorful hyperbole. Shortly after the election, he said he wanted to to “fire up the weed whacker and remove those rules that are holding back investment, innovation, and job creation”. Particularly, that means the FCC’s 2015 decision that reclassified broadband as a common carrier service, and all the rules – like network neutrality and privacy requirements – that flowed from it.

Even so, Pai is squarely in the mainstream of republican thinking regarding telecoms regulation in Washington, D.C. His appointment in 2012 was at the behest of congressional republicans and during the Obama administration he reliably voted on the losing side of the frequent three-to-two decisions produced by Tom Wheeler during his chairmanship.

Critics have characterised Pai as a “former Verizon lawyer”. While that’s true, it’s also a bit of a distortion. His resume includes a couple of years working for Verizon as a lawyer, as well as a stint at a private law firm, but he’s spent most of the past two decades in federal government jobs – clerk to a federal judge in Louisiana, and stints as a staff lawyer for the justice department, FCC, and republican-led U.S. senate committees.

The only way to get actual industry experience is to work for one of the companies that comprise the industry – duh – and it’s a rare telecoms regulator these days that knows how it looks from the other side. Neither of his two remaining colleagues – republican Michael O’Rielly and democrat Mignon Clyburn – can claim that kind of real world experience.

From the perspective of Beltway politics, Pai is not a radical choice.

Zero chance of FCC zero rating opinion mattering

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Just leave it in the in-box.

AT&T’s and Verizon’s practices of offering video programming and then giving subscribers free – zero rated – bandwidth to watch it “present significant risks to consumers and competition” according to a report prepared by Federal Communications Commission staff and destined for a quick trip to the recycling bin. Zero rating wasn’t explicitly banned by the commission’s 2015 decision to classify broadband as a common carrier service, but it wasn’t given a clean bill of health either. Instead, it was left in the case-by-case review category.

FCC staff looked also looked at T-Mobile’s zero rating program, and concluded it’s probably okay.

AT&T lets certain DirecTv subscribers watch programming without it counting against their data caps. The report dismissed AT&T’s contention that DirecTv is actually paying for the bandwidth used, saying, in effect, that it was an accounting ploy and “would result in no net expenditure at the holding company level”. It’s a different story, though, for competing video service providers…

AT&T imposes hefty per-gigabyte charges on unaffiliated third parties for use of Sponsored Data. All indications are that AT&T’s charges far exceed the costs AT&T incurs in providing the sponsored data service. 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, in violation of the General Conduct Rule [of the 2015 common carrier/net neutrality decision].

And that handwringing is pretty much all that’s going to come of the report. FCC chairman-in-waiting Ajit Pai was quick to shred the findings…

This report, which I only saw after the FCC released the document, does not reflect the views of the majority of Commissioners. Fortunately, I am confident that this latest regulatory spasm will not have any impact on the Commission’s policymaking or enforcement activities following next week’s inauguration.

Pai’s dismissal echoed the comments AT&T made when it blew off FCC staff during the review process that led to the report.

Republican congressmen plan their own kind of telecoms policy activism

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“Over the last several years, what we’ve seen has been lot of reaction in congress, reacting to things. What I think we’re going to see now more is planning”, said Bob Latta, a republican representative from Ohio, who holds a key telecoms committee portfolio in Washington, D.C. He was on a four-congressman panel at CES, talking about the reconfigured Federal Communications Commission. It will begin the Trump administration with a republican majority and, Latta expects, commissioner Ajit Pai installed as chairman.

Freeing up more spectrum for wireless Internet access, circling back on set top box rules and revisiting rules made during the Obama administration – such as the network neutrality decision that re-classified broadband as a common carrier service – are high on the republican telecoms agenda for the coming year.

Latta said that he favors a light-touch regulatory approach and the FCC will be taking a different direction. Net neutrality, as currently defined, is the wrong direction, he said.

California representative Darrell Issa, a San Diego republican, said that outgoing chairman Tom Wheeler overreached. New set top box rules floated by Wheeler and then quickly withdrawn after the election tried to do much. There should be new rules, Issa said, but the objective should be limited to getting rid of the 1990s vintage cable cards – limited and clunky hardware interfaces that never found a market – and simply giving consumers a way of connecting directly to the digital streams delivered by cable companies, without the complicated and detailed review process proposed by Wheeler.

Issa said that congress needs to take a hard look at how spectrum is allocated for wireless broadband service, particularly the balance between licensed and unlicensed bands…

“Today, more data goes through [WiFi] than, in fact, goes through cellular. How much spectrum we have in our WiFi? A fraction of what just one carrier owns in the way of cellular. So the reality is that one of the greatest failures in the world is, in fact, selling spectrum, and one of the greatest successes in the world is sharing spectrum”.

Latta also put a high priority on finding more spectrum. He said that even though 95% of the U.S. might have access to wireless broadband, the remaining 5% need to be served too.

Broadband, conduit bills left stranded in Washington, D.C.

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The 114th congress ended with a stack of unfinished broadband business. The most consequential might be the failure to confirm Jessica Rosenworcel for a new term on the Federal Communications Commission, but buried in the wreckage of more than a dozen broadband-related bills are hints of what to expect from the new congress and the new administration next year.

The one major bill with a chance to pass muster with lawmakers as well as the white house was the Mobile Now act. There was bipartisan support for its primary objective of transferring more spectrum from government departments to mobile and other wireless broadband uses. But the same political arm wrestling that fatally stalled Rosenworcel’s nomination also stalled the Mobile Now bill and it died on the U.S. senate floor.

Bills that would have kneecapped the FCC’s regulation of broadband as a common carrier service and widened the loopholes in ISP transparency rules – HR 2666 and HR 4596 respectively – also withered away from neglect in the senate. Dig once bills, that would have promoted conduit installation in federal highway projects, also proved unpopular with parallel house and senate bills dying without a vote. The Mobile Now act also had such language at once point, but it didn’t survive the trip through the committee process.

Duelling municipal broadband measures fought to a standstill. Two bills that would have restricted state governments’ power to ban muni broadband, including HR 6013 by Silicon Valley representative Anna Eshoo, and two bills that would have baked that authority into federal law never even got to a vote in their first committee stop, let alone to a full floor vote.

No one is talking publicly about reintroducing any of these bills next year, but if you’re trying to handicap the early odds, party affiliation is the best clue as to what to expect. The bills that would have peeled back FCC broadband regulations and affirmed the right of states to regulate what cities do came from republicans, while those that would have given cities more independence and opened up competitive opportunities by putting conduit into road projects were authored by democrats. Even if the former had been passed by congress, a presidential veto was certain. And the latter never stood a chance.

Next year, though, republicans will control both branches and the FCC. Odds of a pruning – if not a wholesale weed-whacking – of federal broadband rules are high. Bills with bipartisan support, such as Mobile Now, are also good candidates for enactment. On the other hand, don’t expect much in the way of dig once legislation or federal preemption of state laws restricting muni broadband.

Another net neutrality skeptic lands at the FCC

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Telecoms policy solidifies.

A third, like minded crew member beamed down to the Trump transition’s landing team at the Federal Communications Commission this week. Roslyn Layton was named to the volunteer position and, together with previous appointees Jeffrey Eisenach and Mark Jamison, will help manage the transition from an Obama-appointed democratic majority to a Trump-appointed republican one.

Like Jamison and Eisenach, Layton has links to the American Enterprise Institute, a right-of-center consulting shop, and works as a consultant and in academia, albeit with a thin scholarly resume. Unlike them, though, she does not have any major telecoms companies as clientsat least none that are disclosed on her website – and doesn’t have a history as an industry lobbyist.

Layton has gone on record opposing many of the FCC’s recent initiatives, including the recently adopted telecoms privacy rules and the decision to regulate broadband as a common carrier service. At the time, she argued that that the new regulations were unnecessary because “net neutrality is the freedom for an Internet user to connection to any content, applications or service…and Internet service providers already agree to uphold this principle”.

On the other hand, she wrote that “companies such as Netflix hijack the language of net neutrality to lobby for regulatory favors” and giving common carrier status to broadband service…

…would effectively give control of the Internet to the federal government, allowing it to monitor networks and set prices. For starters, expect a price increase due to new federal, state and local fees on your Internet subscription.

There seems to be no room for Trump-style populism in Layton’s philosophy. “That a regulator would grandstand on public comment as justification for its rules impugns the very notion of an expert, independent regulator”, she wrote in blog post earlier this year, adding that “European telecom regulators want to exit the rigorous, evidence-based world of economics and enter the world of human rights adjudication, an area to which they are not necessarily chartered or qualified to enforce”.

When he takes office, Donald Trump will be able to appoint at least one new commissioner, and possibly two if he decides not to reappoint republican Ajit Pai. He’ll also pick which commissioner serves as chairman.

To drain the telecoms swamp, first stop filling it

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The buzz around the incoming Trump administration’s telecoms policy is centering on Jeffrey Eisenach, a consultant to Verizon and apparently the man in charge of picking key staffers and, ultimately, commissioners at the FCC. He’s also been affiliated with the American Enterprise Institute – a conservative Washington, DC think tank – and in that capacity co-authored a white paper with a number of colleagues there that calls for drastically shrinking the Federal Communications Commission.

The paper is animated by a fear of regulatory overreach resulting from a federal court decision involving – surprise! – Verizon that affirmed that the FCC has broad authority under federal law to, among other things, “promote competition in the local telecommunications market” and “remove barriers to infrastructure investment”. It was that bit of the Communications Act – section 706 – that formed the legal basis for the FCC’s so far successful effort to regulate broadband as a common carrier service.

Broadly speaking, the paper proposes two remedies: rely on market competition among increasingly indistinguishable digital service providers instead of 20th century-style regulation based on outdated analog technology distinctions, and farm out FCC functions to other federal agencies that do similar things.

The problem with both approaches is that true competition – the sort where the classical invisible hand of the market restrains predatory behavior – does not exist in the U.S. telecommunications industry. The telephone, cable television and, ultimately, broadband sectors were built on a foundation of monopoly or near monopoly access to public goods, such as right of ways and spectrum, and protected and nurtured by regulators over the course of a century.

The FCC needs an overhaul. Its secretive decision making process, lobbyist and lawyer-centric culture and willingness to bend to political pressure creates destabilising uncertainty for businesses that rely on telecoms services (as opposed to providers who have the deep pockets and experience to play the Beltway game) and locks the public out of a meaningful role. There are any number of ways to fix it. But letting massive monopoly players do the job themselves, subject only to cursory review by generic bureaucrats, will only suck the digital economy further into the mire of a rent extraction swamp.

Update: Pai can keep FCC seat through 2017

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I made a mistake about FCC terms in this story (click here). FCC commissioners can stay in office for up to two years after their terms expire (until “the expiration of the next session of Congress subsequent to the expiration of said fixed term of office”). That changes Ajit Pai’s position – he’s good through 2017 unless a replacement is appointed – and extends Mignon Clyburn’s and Tom Wheeler’s potential terms through 2019. That changes the chess board a bit, but not the main point of the story: Wheeler is out as chairman in January and must resign before the end of the year if Rosenworcel is to continue as a commissioner.

Wheeler’s FCC agenda hits the wall in December

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If he doesn’t pull the trigger, someone will do it for him.

The Federal Communications Commission will look a lot different come January, as chairman Tom Wheeler either resigns or is shoved aside. With a republican president set to take office, the priority will be to clear enough seats on the five member commission to give the new administration a three-vote majority.

Democrat Jessica Rosenworcel will be out of a job at the end of year, unless the republican-led senate votes to confirm her. Rosenworcel was renominated by president Obama, but senate republicans have delayed a confirmation vote, reportedly because Wheeler hasn’t agreed to resign. Both Wheeler and fellow democrat Mignon Clyburn can stay on the commission through 2019, and giving Rosenworcel a new five year term would lock in a democratic majority for the next three years. Republicans are not going to let that happen.

Ajit Pai, on the other hand, hasn’t been renominated yet. His term expired in June, but the rules allow him to stay on through 2017. He’s been mentioned as a possible replacement for Wheeler, perhaps just on an interim basis while the new administration picks a new chairman. Congressional republicans put his name forward for his first term and he, like Rosenworcel, has performed well, but whether that cred will mean anything to the incoming Trump administration, which would have to renominate him next year, is an open question.

My bet is that Wheeler will resign. If he stays on, it won’t be as chairman – the new president can reassign that job – and being a working commissioner from the minority party would be a huge come down from his current role as America’s Lobbyist-in-Chief. That’ll clear the way for Rosenworcel and give republicans a chance to fill the other two seats, perhaps with Pai returning for a second five year term and perhaps not.

Given current republican opposition, that means that a vote will have to be taken on the FCC’s new set top box rules before the end of year, or those will fade away. New regulations for wholesale broadband service and facilities are up for a now or never vote this month too. There’s not enough time to take up mandatory arbitration clauses in consumer service agreements, as contemplated last month, or to work though the many issues surrounding implementation of the current net neutrality and broadband common carrier rules, such as zero rating. In any event legal challenges will continue well into Trump’s first term and offer a potential path to watering down or scrapping broadband’s common carrier status completely.

On the other hand, there’s bipartisan support for increasing the federal preemption of local zoning and permit rules that impact construction of cell towers and other wireless facilities. If anything, republicans are even more gung ho about that than democrats.

UPDATE: I made a mistake about FCC terms in the first version of this story. FCC commissioners can stay in office for up to two years after their terms expire (until “the expiration of the next session of Congress subsequent to the expiration of said fixed term of office”). That changes Ajit Pai’s position – he’s good through 2017 unless a replacement is appointed – and extends Mignon Clyburn’s and Tom Wheeler’s potential terms through 2019. That changes the chess board a bit, but not the main point of the story: Wheeler is out as chairman in January and must resign before the end of the year if Rosenworcel is to continue as a commissioner. The story above reflects the correction.

Consumers must have clear choices under new broadband privacy rules

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Gobbledygook not allowed.

The Federal Communications Commission has finally published the actual privacy rules for Internet service providers it approved at last week’s meeting. In more than 200 tightly packed pages, the FCC tries to offer detailed definitions of what kind of information ISPs can’t share or use without explicit, opt-in approval from customers, what kind is usable with assumed, opt-out permission, and what kind is exempt from either.

There’s a big loophole that the FCC only partially closes: charging customers different prices based on whether or not they give up their privacy rights.

ISPs can’t refuse to offer service on the basis of customers’ privacy choices – the new rules are very clear on that point – but the degree of financial incentives they offer is pretty much up to them, so long as customers have a fair chance to make choice. The only hard requirement is that the deal on offer has to be “explained in a way that is comprehensible and not misleading” and ISPs “must also provide at least as prominent information to customers about the equivalent plan without exchanging personal information”.

And, subscribers have to be able to change their mind at any time…

If customer opt-in approval is given, the [Internet service] provider must make available a simple, easy-to-use mechanism for customers to withdraw approval for participation in such financial incentive program at any time. Such mechanism must be clear and conspicuous, in language that is comprehensible and not misleading, and must be persistently available on or through the carrier’s website; the carrier’s application (app), if it provides one for account management purposes; and any functional equivalent to the carrier’s homepage or app. If a carrier does not have a website, it must provide a persistently available mechanism by another means such as a toll-free telephone number.

If an ISP does have a website, then customers must be able to make their opt-in/opt-out choices online, with a simple click. Requiring them to call a toll free number and run the gauntlet of manipulative, hard sell agents is not allowed.

Report and Order In the Matter of Protecting the Privacy of Customers of Broadband and Other Telecommunications Services, 2 November 2016

FCC approves stricter consumer privacy rules for ISPs and telcos

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Secure shopping.

The Federal Communications Commission voted 3 to 2 along party lines yesterday to implement privacy requirements for Internet service providers. If your ISP wants to, say, sell your web browsing history to Facebook, it will need to get your permission first. Facebook, on the other hand, will still be running under the Federal Trade Commission’s looser rules, since it’s an edge provider and isn’t regulated by the FCC.

We don’t know what the rules actually say – that’s a secret, despite the open vote – but a revised summary released afterwards clears up a few outstanding questions.

The post-vote summary was largely identical to the pre-vote summary released earlier this month. Grammatical tweaks aside, there were some changes to reporting requirements, more details about what ISPs can do with your private data for their own purposes, and a promise to “address mandatory arbitration requirements in contracts for communications services” early next year. The concern is that the legal boilerplate ISPs flash at customers unfairly restricts their legal rights. The summary implies that subscribers will be able to take advantage of the FCC’s existing dispute resolution process, regardless of whether a mandatory arbitration clause is in effect.

ISPs will have to get positive, opt-in permission from customers to share or sell sensitive information to third parties. The definition of sensitive information remains the same, and includes precise geolocation data, web browsing and app usage history and the content of communications, as well as things like social security numbers and medical information.

Non-sensitive information, such as a customer’s service tier, is assumed to be shareable unless customers specifically ask that it not be. In some cases, for example if an ISP wants to sell extra services to a subscriber or do routine things like send bills or troubleshoot a line, that consent is inferred regardless. Or so it seems – it’ll be interesting to read the actual text of the rules to see how the FCC proposes to draw those lines.

Telephone companies will have to play by the same rules – the FCC said that call records and such are also considered sensitive information.

Absent legal and procedural challenges – not a good assumption, actually – the meat of the new privacy rules will take effect in a little over a year, with small ISPs given two years to comply.