Five years and two FCCs later, FTC settles data throttling case against AT&T

by Steve Blum • , , , ,

The slow motion network neutrality enforcement ping pong match between the Federal Communications Commission and the Federal Trade Commission resulted in a data throttling settlement with AT&T, according to a story by Bevin Fletcher in FierceWireless. The details haven’t been released yet, but if approved by FTC commissioners it would end a dispute over how AT&T manages – throttles – the bandwidth consumed by millions of customers with grandfathered unlimited data plans.

AT&T’s mobile data throttling isn’t limited to legacy all-you-can-eat customers, at least according to research published last year, but the FTC’s enforcement action is limited to legacy data plans that are no longer offered.

The dispute tracks with the history of net neutrality regulation. It began in 2014 with a consumer rights lawsuit filed by the FTC against AT&T, when there were no federal rules in effect regarding net neutrality. When the Obama-era FCC declared broadband to be a common carrier service, AT&T’s response was to claim the FTC no longer had jurisdiction…

The agency said AT&T had been throttling speeds since 2011, and in some cases customers’ data speeds were reduced by nearly 90%. AT&T previously said it has been “completely transparent" with customers since starting its unlimited data throttling practices in 2011.

AT&T’s website currently discloses that for unlimited plans “AT&T may temporarily slow data speeds when the network is busy.”

AT&T had also argued the FTC lacked authority under the then-imposed net neutrality regulations enforced by the FCC, which in 2015 reclassified internet service providers as common carrier telecommunications service providers under Title II of the Telecommunications Act.

Then the Trump administration’s FCC reversed that ruling, saying that broadband isn’t a common carrier service, but instead it’s an information service that’s overseen by the FTC. That reversal led to the pending settlement.

California sits out Google anti-trust investigation

by Steve Blum • , , ,

Attorneys general from forty-eight states, plus the Commonwealth of Puerto Rico and the District of Columbia, launched a joint anti-trust investigation against Google on Monday, looking specifically at how the company handles online advertising. The group isn’t accusing Google of anything in particular yet, but they have their suspicions and if those prove out, an anti-trust lawsuit is sure to follow.

Only two states opted out of the investigation: Alabama and California. The absence of California attorney general Xavier Becerra from the group is puzzling to many, and he isn’t offering any hints. According to a story in the Los Angeles Times by Suhauna Hussain, maybe Becerra has something else up his sleeve…

Citing a need to protect the integrity of “potential and ongoing investigations,” Atty. Gen. Xavier Becerra declined to say why he refused to join the chief law enforcement officers of 48 other states, plus Washington, D.C., and Puerto Rico, in examining the Mountain View-based internet giant’s dominance in online advertising.

Or maybe he has something else on his mind…

As a candidate for the House of Representatives, Becerra was the recipient of considerable largess from Google. From 2010 through 2016, Becerra’s campaign received $23,000 from Google’s corporate political action committee, Google Inc. NetPAC, according to Federal Election Committee records. Two Google executives donated $2,600 and $5,300, respectively, to Becerra’s campaigns over that span. Google also contributed $7,300 to Becerra’s 2018 campaign for attorney general, and $3,000 to Marshall’s, according to data from FollowTheMoney.org.

Another consideration is California’s new privacy law, which is of particular interest to online companies. Becerra is responsible for coming up with new rules and procedures, and enforcing them when the law takes effect in January. So he might be in some kind of legal or policy arm wrestling match with Google already. There are also two days left to go on the California legislature’s 2019 regular session, and there are bills in the hopper that could change that privacy law, in one direction or the other. Or both.

AT&T’s backdoor telecoms deregulation bill runs out of room in the California senate

by Steve Blum • , , , ,

Coyote cliff 625

“AB 1366 was pulled by the author, so it will not be considered today”, said senator Ben Hueso (D – San Diego) as he called the senate’s energy, utilities and communications committee to order yesterday. Assembly bill 1366 would extend a ban on regulation of voice over Internet protocol (VoIP) and other “Internet protocol enabled” services in California.

Conventional wisdom says the bill is dead for this year. It wasn’t amended before last night’s constitutional deadline, so there’ll be no more wrangling over the bill’s language. On the other hand, there are still three days left in the legislative session and it’s a high stakes bill for monopoly model telcos and cable companies like AT&T and Comcast. They stuff a lot of cash into lawmaker’s pockets have deep, philosophical points yet to make.

No reason for pulling the bill was offered. A hastily prepared analysis by committee staff shows that the line up of organisations for and against it didn’t change. AT&T, Frontier Communications, and the lobbying front organisation that Comcast and Charter Communications duck behind – the California Cable and Telecommunications Association – still support it; the Communications Workers of America, AT&T’s principal union, and the California Labor Federation still oppose it. In the heat of the end-of-the-session rush, what ends up in print often doesn’t reflect backroom reality, but in this case it’s probably accurate. Organised labor is probably the only force in Sacramento with more political power and money than AT&T, Comcast and Charter.

AB 1366 was disowned on Friday by assembly member Lorena Gonzalez (D – San Diego), who introduced it earlier this year and muscled it to within inches of the goal line. Presumably, she passed it over to two other assembly members – Jay Olbernolte (R – San Bernardino) and Tom Daly (D – Orange) – because the stiff opposition from labor organisations, which are the foundation of her political base, finally made it impossible for her to front for it.

The bill was amended during the handoff, limiting the ban’s extension to two years. But other amendments added even more perks for incumbent telecoms companies, particularly AT&T and, to a lesser extent, Frontier. Not surprisingly, that turned out to be a bad way to win friends in the final days of the legislative session.

The ban on VoIP regulation was imposed by the legislature in 2012, when no one was sure what direction VoIP or other services that ride on the Internet would take. Now we know. Today, VoIP is the telephone service technology preferred by telephone and cable companies because 1. it’s a century or so ahead of legacy copper phone tech, and 2. it’s unregulated. As a California Public Utilities Commission analysis shows, telcos are switching customers to VoIP at a rapid rate, to the point that state regulation of broadband and telephone infrastructure and service, which depends on legacy copper rules, will effectively end.

California telecoms backdoor deregulation bill, AB 1366, stalls

by Steve Blum • , , , ,

Front line dispatch 625

Assembly bill 1366 was “pulled by the author” ahead of a committee hearing this afternoon. The California senate’s energy, utilities and communications committee was supposed to review amendments made last Friday, but that didn’t happen. No reason was given. The bill might be dead, or it might be going through a final rewrite, ahead of tonight’s hard, constitutional deadline for amending it. Or something else – anything is possible today. Tomorrow, well, that’ll be a different story. Stay tuned.

“Rate neutral framework”, whatever that is, promised as PG&E offers plan to pay wildfire costs and get out of bankruptcy

by Steve Blum • , , , ,

PG&E filed its plan for coming out of bankruptcy with the federal judge handling the case yesterday. The company proposes to give $8.4 billion to those harmed by wildfires over the past four years, both individual and public agencies, another $8.5 billion to insurance companies that have already paid out claims resulting from those fires, as well as a previously agreed $1 billion to a group of northern California public agencies.

In a press release, PG&E’s CEO, Bill Johnson, was quoted as saying the reorganisation plan is a “rate neutral framework”, but didn’t elaborate. Media outlets have interpreted it as meaning that wildfire settlement costs won’t be passed onto electric customers, but there’s potentially a lot of weasel in those few words. The press release also promised “participation in the state wildfire fund established by Assembly Bill 1054” and “satisfaction” of its requirements.

AB 1054 was passed by the legislature in July, and sets up a couple of funds – one paid for by utilities, the other directly by their customers – that will provide a way of financing wildfire liabilities for Southern California Edison and San Diego Gas and Electric, and for PG&E if it clears the bankruptcy process by next summer. Since the $2.50 monthly charge for the second fund is already tacked onto customers’ bills, keeping it presumably qualifies as “neutral”. There are other ways to pass on costs to customers, directly and indirectly, so don’t assume that northern California electricity costs won’t go up even further if the judge eventually accepts PG&E’s plan.

The proposal also says that PG&E will honor existing contracts with community choice aggregators, lean energy producers and employees, and pay back its debts to lenders.

Just ahead of the filing, the City and County of San Francisco sent PG&E a letter offering to buy its electric (but not gas) system for $2.5 billion. It’s a follow up to a municipal power plan floated earlier this year by San Francisco mayor London Breed. According to the San Francisco Chronicle, PG&E unsurprisingly responded that the offer wasn’t in “the best interests of our customers and stakeholders”.

AT&T snakes perks into California deregulation bill, while its author ducks for cover

by Steve Blum • , , , ,

Copper head snake 625

AT&T slipped more special privileges into a bill that would, in effect, deregulate broadband and modern voice service in California. At the same time, the bill was disowned, sorta, by its godmother, assembly member Lorena Gonzalez (D – San Diego).

Assembly bill 1366, which would extend an existing ban on regulation of voice over Internet protocol service (VoIP), was amended ahead of Friday’s soft deadline for changing bill language in the California legislature (Tuesday is the hard, constitutional cutoff for amendments). Many of the changes are tweaks that weaken the few, feeble consumer protections that were added to the bill as it moved through committee and floor votes. AT&T, because of its basic service obligations over a large rural footprint and its plans to replace wireline networks with low capacity fixed broadband technology, will benefit particularly. So will Frontier Communications for the same reasons, albeit over a much smaller subscriber base.

Gonzalez, who introduced the bill and muscled it through the Sacramento sausage machine, took her name off of it and handed it over to a pair of assembly members – Jay Olbernolte (R – San Bernardino) and Tom Daly (D – Orange) – who are less likely to be damaged by blowback from organised labor, which strongly opposes AB 1366.

The prior version of AB 1366 would have allowed current California Public Utilities Commission regulations governing basic telephone service and universal service programs to encompass VoIP service. No longer – those potential loopholes were sewn shut on Friday. A more specific set of rules that sets out requirements for incumbents when they are the “carrier of last resort” – an issue primarily for rural areas – still applies to VoIP, but only to the extent that they must “offer” telephone connections to hard-to-reach customers. The CPUC would no longer be able to oversee “the provision of” those carrier of last resort services. In other words, AT&T and Frontier can use VoIP to meet their most basic service obligations, but the quality and reliability of that service is up to them.

Another gift is the exclusion of “services using radio frequency spectrum licensed by the Federal Communications Commission” from already weak and exception-ridden time frames for restoring VoIP service following an outage. The immediate benefit will be to mobile carriers that use new “voice over LTE” (VoLTE) technology, but over the long term it will also apply to “wireless local loop” (WLL) systems that AT&T plans to use to replace rural telephone lines. WLL runs on licensed spectrum, but not much of it – capacity is a fraction of what wireline networks can carry.

Another change might make AB 1366 easier to swallow for some union allies in the legislature, but also sets up a potentially lucrative payday for lawmakers, particularly those planning to run for statewide office. Instead of lasting five years, the ban on VoIP regulation would only last two years. That would mean a rerun of this session’s backroom dealing, just ahead of the 2022 campaign cycle for California constitutional offices. That’s when big, corporate contributions, such as those AT&T, Comcast and the rest lavish on their friends, are needed to reach voters across the state. Gonzalez plans to run for the California secretary of state’s job then.

FCC is a mouthpiece for telecoms industry’s “self-interested assertions”, local governments tell federal court

by Steve Blum • , , , ,

Riverside pole mount

The rounds of written arguments and counter arguments in the appeals of last year’s FCC decisions preempting state and local governments’ control of public right of ways and ownership of property, such as street light poles and traffic signals, they install there is drawing to a close. Several groups filed rebuttals to the FCC’s defence of its preemption. The primary opposition came from a reply brief filed by a long list of cities and counties in the federal appeals court based in San Francisco, which is hearing the combined challenges to two sweeping rulings made by the FCC last year.

The local governments shot down the FCC’s claim that mobile carriers will build more infrastructure if pole rental fees are lower isn’t based on independent evidence or company track records…

The Commission tries to fill the gap with industry’s self-interested assertions that they will increase small cell investment in response to lower fees. But the record shows that providers have not increased deployment when offered lower fees. The Commission relies on AT&T’s assertion that it has not deployed any small cells in Portland, Oregon, due to the current fee levels. Yet when Portland conducted a pilot project, lasting more than three years, that set lower annual rights-of-way fees, AT&T did not submit a single small cell application.

And, they said, the FCC falsely accuses cities of monopolising access to streets, while ignoring the real monopolists…

The Commission’s claim that local fees reflect “monopoly pricing” ignores record evidence that, unlike the case with wireline facilities, private property alternatives to rights-of-way and rights-of-way infrastructure exist for locating wireless facilities. It also overlooks this Court’s recognition in Charter Communications, Inc. v. County of Santa Cruz that unlike private businesses, local governments are accountable to voters with interests beyond profit maximization.

The FCC’s preemption of ownership of municipal property placed in the public right of way, such as street light poles and traffic signals, isn’t based on powers granted by congress, the local governments’ brief further argues…

The Communications Act of 1934’s only affirmative grant of authority with respect to regulation of access to utility poles and similar structures…does not reach municipal property…There is no response to our argument that the Act gives the Commission no general roving authority to regulate private or public property merely because it is convenient or even necessary for use in telecommunications.

The American Public Power Association, which represents municipal electric utilities, also made the argument that federal law specifically bars the FCC from regulating poles owned by government agencies.

Four mobile carriers – AT&T, Verizon, Sprint and the Puerto Rico Telephone Company – filed a desultory brief in support of the judge shopping lawsuits they filed in four different appellate districts. I can imagine the conversation: I know we gotta make it look good, but keep the billable hours to a minimum please. And Montgomery County, Maryland’s quest to make tin foil hats great again continued.

Links to petitions, court documents and background material are here.

FCC’s bromance with mobile lobbyists shines through in briefs. Court briefs, that is

by Steve Blum • , , , ,

The FCC’s subservience to the telecommunications companies it’s supposed to regulating – or at least the grovelling of its republican majority – is highlighted by the industry’s defence of sweeping preemptions issued by the commission last year. In a brief filed with the San Francisco-based ninth circuit federal appeals court, carriers and their lobbyists effectively admit they were gaming the judicial system when they tried to steer the case to a friendlier court, with the collusion of the FCC. Four cell companies filed the same argument – that the FCC committed a heinous error by not automatically granting construction permits when shot clocks expire – in four different appellate courts.

In this latest reply, which is signed by two of the four, Verizon and Sprint, mobile industry mouthpieces said the FCC’s “authority to interpret and apply the Communications Act” is “well-established”, and the rules it adopted were “common-sense interpretations of the statutes as they apply to all telecommunications services, an action clearly within its statutory discretion”.

They go even further, and say flat out that requiring carriers to go to court to get permission to build once a shot clock runs out is “reasonable” and “the commission’s decision to take a more moderate tack is thus more than justified by the record”.

That’s not what they said when they went judge shopping.

Although mobile carriers won the judicial lottery – the case was first assigned to Sprint’s favored judges in the Denver-based tenth circuit – the wheels of judicial procedure continued to grind, and an earlier challenge mounted by the City of Portland was given precedence. As a result, all the cases filed by cities and carriers were bundled into one big proceeding in San Francisco.

The tight relationship between industry lobbyists and republican commissioners was made crystal clear during the FCC’s broadband deployment advisory committee charade. That was enough to get a wish list published, but it will take more than a bromance to convince federal judges.

AT&T’s executive shuffle puts WarnerMedia chief in charge of broadband service

by Steve Blum • , , , ,

AT&T made two key executive promotions yesterday, naming erstwhile technology chief Jeff McElfresh to head up its broadband and telephone (landline and mobile) businesses, as well as DirecTv, and promoting WarnerMedia head John Stankey to president and chief operating officer, making him the clear second in command to chairman and CEO Randall Stephenson.

Stankey’s new job, according to an AT&T press release is “bringing together the distinct and complimentary capabilities of AT&T Communications, WarnerMedia and [advertising subsidiary] Xandr to deliver…the benefits of a modern media company”.

He’s a career AT&T insider. For the present, Stankey’s “current WarnerMedia executive team” will report to him, meaning he’ll still be in charge of day to day operations there, while also having executive authority over AT&T’s distribution and advertising assets. It’s an open question whether he’ll try to use those assets, and the control over consumer broadband connections that come with them, to increase the profitability of the content arm. The republican majority on the Federal Communications Commission already cleared the path for him to do that, all he needs to do is start walking down it.

According to an update by The Information’s Jessica Toonkel, the promotion leaves everyone wondering whether Stephenson will stick around, and if he doesn’t, then what happens with WarnerMedia…

AT&T’s mandatory retirement age is 65 for top executives and Stephenson is only 59, which suggests there is no urgency. And as Stankey is 56, if Stephenson doesn’t retire early, Stankey may miss out entirely. If Stephenson waits another six years, AT&T’s board might focus on the next generation. But I hear Stephenson may choose to go earlier, which would give Stankey a shot.

That raises the question of who would succeed Stankey at WarnerMedia, including whether they bring someone in from outside. Cue the speculation. There are a lot of seasoned entertainment executives who are in circulation, thanks to various mergers.

So far, the trend has been for “seasoned entertainment executives” to walk away from AT&T’s management team.

Unanimous approval by key committee sends AT&T’s deregulation bill to a vote of the full California senate

by Steve Blum • , , , ,

When the legislative dust settled on Friday, after a whirlwind morning in which the fate of hundreds of bills were announced after being decided behind closed doors in Sacramento, assembly bill 1366 remained alive. Carried by assembly member Lorena Gonzalez (D – San Diego) would, on the face of it, simply extend an existing ban on regulation of “Internet Protocol enabled communications services”, including voice over Internet protocol (VoIP) telephone service.

Given the increasing number of consumers switching – and being switched without their consent – from legacy copper-based plain old telephone service (POTS) to VoIP since the regulatory ban went into effect six years ago, AB 1366 spells a de facto end to state oversight of broadband and telephone infrastructure and service in California. As presently written, AB 1366 has a few exceptions to the broad prohibition on state or local VoIP regulation, but doesn’t say how those will be enforced. According to the most recent legislative staff analysis of the bill, it “places these provisions in a portion of the Business and Professions Code over which no board at the Department of Consumer Affairs has oversight…As a result, lawsuits brought by the Attorney General may be the only mechanism to enforce these provisions”.

AT&T deployed its cash, lobbyists and astroturf non-profit groups to argue for the bill, with universally similar support from Frontier Communications, Comcast and other cable, telephone and mobile companies. So far, it has prevailed over objections from organised labor, the California Public Utilities Commission and the Newsom administration. The seven members of the California senate’s appropriations committee – five democrats and two republicans – unanimously voted in favor of the bill, and passed it on to the senate floor without new amendments.

There’s less than two weeks left in the California legislature’s 2019 regular session, with a soft deadline of the end of this week to amend bills, and a hard, constitutional deadline of next Tuesday. The question will be whether Gonzalez listens to her (otherwise) allies in organised labor – particularly the Communications Workers of America union – and tries to find new language they will accept, or simply sends the current version on to a vote by the full senate.