Regulation - What is it Good For?

My Broadband Regulatory Wishlist

Chairwoman Jessica Rosenworcel wasted no time in declaring that the FCC is going to tackle reinstituting Title II regulation for broadband. She made the announcement only a few days after the Senate approved Anna Gomez to fill the open fifth Commissioner slot. Since her announcement, I’ve been thinking about the things I’d like to see the FCC tackle with five Commissioners.

Net Neutrality. This is not at the top of my list, but I put this first to get it out of the way. Most big ISPs have not been engaging in big violations of the net neutrality principles. This is partially because ISPs didn’t want to see net neutrality to be the excuse for reintroducing broadband regulation. But it’s also because California has been successful in implementing net neutrality. There is no practical way for a nationwide ISP to violate net neutrality rules everywhere except California, so they hesitate to do so. The bottom line is that discriminating against some classes of customers or types of traffic is bad business and most big ISPs just don’t go there to the extent that was always feared by net neutrality proponents. But it seems likely that the net neutrality rules will be reinstated.

Carrier Disputes. Industry insiders miss the ability to take broadband disputes between carriers to the FCC for resolution. This is a quiet part of the industry that has always been effective yet under the radar. Just the threat of taking another carrier to the FCC was often an effective negotiating tactic when ISPs violated contracts or industry practices. But killing Title II regulation for broadband meant that the FCC no longer claimed jurisdiction over many broadband disputes – leaving carriers with a much tougher path of taking disputes to court.

Consumer Protection. Probably the biggest change when Title II regulation was killed was that the FCC stopped taking an active role in protecting consumers against bad behavior by ISPs. When people got so fed up that they finally complained to the FCC about bad ISP behavior, the ISPs generally tried to resolve issues to stay on the good side of the FCC. In the cases where a lot of consumers were harmed by an ISP practice, the FCC ordered ISPs to fix bad behavior and often required refunds of overcharges. That all went away with the end of Title II regulation. The FCC still has a complaint process, but the agency just forwards consumer complaints to ISPs which have been free to ignore them. The FCC further passed the responsibility for consumer protection to the FTC to police ISP’s bad behavior – which is totally ineffective since the FTC doesn’t have the authority to set industry-wide rules and only prosecutes the worst of the worst behavior, one ISP at a time.

Merger Conditions. The FCC often used its Title II authority to make ISPs accept conditions for broadband mergers. Charter customers can all thank the FCC for blocking the company from instituting data caps as a result of an agreement made when the company wanted to merge with Time Warner Cable. The FCC has not always stuck to its guns in enforcing merger conditions, but this is one that has saved millions for Charter customers. This prohibition will end soon, so be on the lookout for Charter data caps.

Collecting Real Pricing Data. The FCC periodically does urban rates studies, but in doing so, it doesn’t collect real prices – just the prices that ISPs claim. A study in Los Angeles last year showed that Charter had different prices by neighborhood throughout the City, with the best deal being offered to areas with higher household incomes. Title II regulation theoretically would allow the FCC to somehow regulate prices – but it’s hard to imagine it would ever do so. It doesn’t regulate prices for telephone, cable, or cellular service, and it’s hard to imagine an FCC wading into this issue. But having Title II authority could give the FCC leverage to encourage lower rates when ISPs ask for other concessions from the agency.

Privacy. Like with net neutrality, California is far ahead of the FCC in terms of trying to protect customer privacy. It would be great to see the FCC change privacy policies to protect consumer data in today’s complicated online world.

Giving the States Cover for Regulating. When the FCC gave up on regulating broadband, most states did so as well. It’s difficult and expensive for states to take on the big ISPs without the cover of the FCC regulating and taking most of the industry flak. ISPs use the tactic of suing states that try to regulate them in any way.

A Broadband Map that Works. This issue probably means I am completely fantasizing. I don’t think there will ever be a broadband map that can work. When the BEAD grants are behind us, I suspect we’ll move back to not carrying how lousy the maps are. But if we are somehow forced to care about maps, it would be good if the process worked.

Regulation - What is it Good For?

Filling a Regulatory Void

Earlier this year, the Ninth Circuit Court of Appeals upheld the net neutrality regulations enacted by California. The appeal case was filed on behalf of big ISPs by ACA Connect, CTIA, NCTA, and USTelecom.

The case stems from the California net naturality legislation passed in 2018. The California law was a direct reaction to the Ajit Pai FCC that not only killed federal net neutrality rules but also wiped out most federal regulation of broadband. The California legislation made it clear that the State doesn’t want ISPs to have an unfettered ability for bad behavior.

The California net neutrality rules are straightforward. The law applies to both landline and mobile broadband. Specifically, the California net neutrality law:

  • Prohibits ISPs from blocking lawful content.
  • Prohibits ISPs from impairing or degrading lawful Internet traffic except as is necessary for reasonable network management.
  • Prohibits ISPs from requiring compensation, monetary or otherwise, from edge providers (companies like Netflix or Google) for delivering Internet traffic or content.
  • Prohibits paid prioritization.
  • Prohibits zero-rating.
  • Prohibits interference with an end user’s ability to select content, applications, services, or devices.
  • Requires the full and accurate public disclosure of network management practices, performance, and clearly worded terms of service.
  • Prohibits ISPs from offering any product that evades any of the above prohibitions.

This is an interesting step in the battle to regulate ISPs. The big ISPs put a huge amount of money and effort into getting the FCC under Ajit Pai to kill federal broadband regulation. There has been a long-standing tradition in the telecom world that cedes that the FCC has the power to make federal rules, but states have always been free to regulate issues not mandated by the FCC. There have been some tussles over the years between states and the FCC, but courts have consistently sided with the FCC’s authority to make national rules. When the FCC walked away from most broadband regulation it created a regulatory void that tradition would imply that states are allowed to fill.

Losing this court case creates a huge dilemma for big ISPs. California is such a large part of the economy that it would be hard for ISPs to follow this law in California and not follow it elsewhere. It also seems likely that other states will now pass similar laws over the next few years, and that will create the worst possible nightmare for big ISPs – different regulations in different states.

I’ve always adhered to the belief that there is a regulatory pendulum. When regulations get too tough for a regulated industry, there is usually a big push to lighten the regulatory burden. But when the pendulum swings the other way and regulation gets too slack, there is inevitably a big push to put more restrictions on the industry being regulated. In this case, the ISPs and Ajit Pai went too far by eliminating most meaningful federal broadband regulation. There is nothing surprising about California and other states reacting to the lack of federal regulation.

With this court decision, there is nothing to stop a dozen states from creating net neutrality rules or tackling the other regulations that got voided by the Ajit Pai FCC. It’s also not hard to predict that the big ISPs will now push to create a watered-down federal version of net neutrality as a way to override a plethora of state rules.

I said earlier that this is a dilemma for large ISPs because it is extremely rare and not easy for a small ISP to violate net neutrality principles. The California rules will require ISPs to create more plain English terms of service, but otherwise, small ISPs in California will not likely be bothered by any of these rules.

For the big ISPs, this is a harsh reminder that the regulatory pendulum always swings back. It’s not hard to envision celebration behind the scenes at the big ISPs when they convinced the FCC to give them everything on their wish list. But when regulations get out of balance, there is inevitably pushback in the other direction.

There is still one piece of unfinished business in this case. There is still an open issue in the court examining if the California law impinges on interstate commerce. But the Ninth Circuit’s ruling made it clear that California is free to enforce its version of net neutrality within the state.

Regulation - What is it Good For?

Net Neutrality Legislation

In late July, Senators Edward Markey and Ron Wyden, along with Representative Doris Matsui introduced a short bill titled the Net Neutrality and Broadband Justice Act that would classify broadband as a telecommunications service under Title II of the FCC rules.

It’s an interesting concept because this bill would stop the see-saw battle between democrats and republicans about regulating broadband. The Tom Wheeler FCC implemented net neutrality and related broadband regulation using Title II authority in 2015, and the Ajit Pai FCC completely killed Title II regulation in 2017. It’s clear that the current FCC under Jessica Rosenworcel intends to reinstate the Title II authority. If Congress was to enact this law, it would make it impossible for future FCC’s to flip flop on the issue.

What is almost comical about the issue is that both parties make this appear to be a fight over net neutrality, which it is not. All of the public discussions of the issue have been couched as a discussion of whether we need federal net neutrality rules. However, the real fight is about whether broadband should be regulated. When the Ajit Pai FCC stripped away Title II authority for broadband, most of the FCC’s ability to regulate broadband in any meaningful way disappeared. It seems crazy not to have a national policy to regulate an industry where the two biggest ISPs control over 55% of the national market, where the four largest ISPs control over 75% of the market, and where fifteen ISPs control 95% of the market. Beyond the market power of a handful of ISPs, most consumers will say they have only one choice of fast broadband.

Net neutrality has never been the issue. The big ISPs have only violated the principles of net neutrality in a serious way a few times, like when the biggest ISPs restricted Netflix traffic in 2013 and 2014 to get the company to pay more for using the Internet. Soon after the Ajit Pai FCC killed net neutrality, the State of California introduced nearly identical rules, which have subsequently been affirmed by the courts. The biggest ISPs are largely following net neutrality since doing so everywhere except California would be nearly impossible to manage.

The real fear the big ISPs have of Title II authority is that the FCC could theoretically implement rate regulation. This is the underlying issue for the continuing fight. The big ISPs also understand that the FCC will enact other restrictions if the agency has the authority to do so. But it is the fear of putting any restrictions on rates that draws heavy lobbying from the industry. The big ISPs have been using the term light-touch regulation to describe the current state of affairs – which in real life translates to practically no regulations at all.

I can’t imagine a time when the FCC would try to put a cap on ISP rates, but the agency could still restrict what ISPs charge. For example, it’s not hard to imagine the FCC putting curbs on data caps, where ISPs charge customers a lot extra for using too much broadband in a month. Everybody who knows how ISPs operate understands that there is almost no extra cost to an ISP for serving a heavy broadband user – data cap fees verge on the edge of fraud.

It doesn’t look likely that this bill has any chance of making it through the current Congress. The bill is unlikely to draw any Republican votes and may not even gain a positive vote from all of the Democrats. The only way to ever get this passed would be to somehow find a way to do so with a simple majority vote rather than the needed 60 votes to pass.

It’s a shame because there should be regulatory oversight over such a vital industry that is operated by oligopolies. While a few cities seem to be finding a way to bring multiple ISPs to complete, most of the country still only has one or two ISPs that offer fast broadband. Because of the huge barrier to market entry due to the cost of building a new network, most of the country is not likely to see price competition for broadband. At a bare minimum, we ought to have the FCC fulfilling one of its prime regulatory responsibilities, which is to make sure that ISPs don’t overreach too badly with the public.

Regulation - What is it Good For?

Big ISP Fear of Rate Regulation

Policy fights often take bizarre directions. You might remember the furor seven years ago when the FCC under Chairman Tom Wheeler was contemplating imposing net neutrality. There were over 22 million public comments filed in the case. There was a big controversy when some of those against net neutrality filed bulk comments labeled as being from people who knew nothing about the comments, including several politicians.

I’m not entirely sure why the public got so stirred over the topic, because up until that time, there had been only a few blatant cases where ISPs had violated the net neutrality principles, with the most common being something the public largely favored – ISPS giving free access to a video service for buying broadband.

The big ISPs all lobbied hard against the net neutrality rules, but the CEO of every big ISP was on the record at least once saying that the net neutrality rules were not a big deal and that they could live with net neutrality. So why did the big carriers lobby so hard about what the FCC was doing?

The answer is that the carriers were far more worried about the FCC’s regulations that came along with FCC’s planned net neutrality rules. The FCC under Tom Wheeler was planning on strengthening the Title II regulatory policies that gave the FCC the right to regulate ISPs. The real fear that ISPs had was that the FCC would eventually use Title II authority to impose rate regulation on broadband. I think in hindsight that the big ISPs seven years ago already had long-term plans to migrate broadband rates as high as possible. Today we’re seeing the big cable companies starting to narrow in on basic broadband rates of $100 per month.

But the big ISPs couldn’t publicly lobby against rate regulation and Title II. The ISPs would have had a hard time convincing folks to file comments against controlling ISPs rates. The big ISPs would have had to argue that ISPs don’t need to be regulated – something the public would clearly and strongly disagree with. Most broadband customers of the big ISPs had at least one story of when they had an uncomfortable interaction with their ISP. The big ISPs were so unpopular at the time that they had the lowest ranking of all industries on surveys of how people rank U.S. corporations.

The big ISPs certainly could not have publicly told the truth and said that the only squabble with net neutrality rules was the risk of being told that rates are too expensive. That would be a public argument that even public allies of the big ISPs would have shied away from.

Seven years ago, the big ISPs pulled out all stops to lobby against net neutrality, although all they really cared about was the ability of some future FCC to tell them to stop raising rates. The big ISPs lost that battle in the Wheeler FCC, which everybody expected – because the FCC at the time had a Democrat majority.

The big ISPs didn’t have to wait long to get what they wanted after Donald Trump unexpectedly won the presidency. He promoted Ajit Pai to head the FCC, and his first order of business was to completely dismantle Title II regulation. This was again framed by the big ISPs as eliminating unneeded net neutrality rules – but the real issue that still was never said out loud was the goal of eliminating the threat of rate regulation.

Now that Democrats are back in charge of the White House, the whole issue has surfaced again. The big ISPs have been trying to derail or delay confirmation of Gigi Sohn as the fifth FCC Commissioner because they know that one of the first actions of the FCC under Chairman Jessica Rosenworcel will be to reintroduce Title II regulation.

I’ve seen a lot of pro-ISP articles lately talking about how net neutrality was an empty issue and how there have been no bad consequences from killing net neutrality. That may be largely true other than a few ugly examples like Verizon disconnecting firefighters battling forest fires.

But the lack of a threat of rate regulation has allowed big ISPs to raise rates with impunity. In the last five years, we’ve seen Comcast and Charter regularly raise broadband rates. Comcast rates are now north of $90, and after a series of $5 rate increases, Charter is not far behind. Other big cable companies like Cox and Atlantic Broadband charge even more than the big two. The public is currently complaining about inflation due to supply chain issues, but the cable companies have been busy raising broadband rates at a pace that far outstrips inflation.

In the recent confirmation hearing, Gigi Sohn said she was not in favor of rate regulation. I’m positive we’ll never hear the big ISPs publicly ask that question again because it will remind people about the impact of broadband on their pocketbooks. But I think we need to brace for another gigantic lobbying effort against rate regulation – disguised as arguments against net neutrality again.

Regulation - What is it Good For?

The Consequences of No Broadband Regulation

A few weeks ago when the COVID-19 pandemic became apparent we saw the ridiculous spectacle of an FCC chairman begging ISPs to not disconnect customers during a pandemic that would likely throw tens of millions of people out of work. Chairman Pai was reduced to begging because a few years earlier he had voted to strip the FCC if its power to regulate broadband. Before that decision, Chairman Pai could simply have ordered ISPs to be on their best behavior during the pandemic.

This is the most recent demonstrations of the negative impact of deregulating an industry that is controlled by a tiny handful of carriers. In most urban markets the big cable companies have become de facto monopolies – and even most markets that haven’t quite reached monopoly status are, at best, duopolies. There is little broadband competition in most major metropolitan areas, and even in many rural county seats.

It’s not hard to see that the ISP industry thinks it’s bullet-proof against regulation. Consider what’s happened with prices in just the past few years:

  • When comparing data prices around the world, the US has the highest data rates among industrialized countries. Our cellular data prices are nearly the highest anywhere in the world other than a few remote places like Antarctica and war zones.
  • All the major ISPs have raised broadband rates in the last year – when everybody in the industry knows that broadband is already a product with huge margins. These rate increases serve no other purpose other than padding the bottom line. What’s worse is that Wall Street analysts are pushing the ISPs to raise rates much higher.
    • ISP bills are now full of hidden fees. Consumer Reports said last year that the average monthly company-imposed fees for the bills they analyzed averaged to $22.96 for AT&T U-verse, $31.28 for Charter, $39.59 for Comcast, $40.16 for Cox, and $43.79 for Verizon FiOS. They estimate that these fees could total to at least $28 billion per year nationwide.
  • Some ISPs like AT&T, Comcast, Cox, and Mediacom are making big money on data caps. It’s clear that the argument of having data caps to protect networks against overuse has zero basis in fact. Data caps are just a quiet way to raise rates and billings. We now know that over 8% of homes now use over a terabyte of data per month – and that was before the COVID-19 pandemic.
  • ISPs feel brave to openly gouge customers, like Frontier that is billing a monthly fee for WiFi modems that the customers purchased. Even when challenged publicly, the company won’t remove the charges because they don’t fear regulatory retribution.

One of the worst things about the deregulation of broadband is that the average consumer has no idea this happened. The FCC was slick enough to bury the deregulation of broadband in the net neutrality topic. Most people don’t realize that when the FCC killed net neutrality that they also gave away their authority to regulate broadband. People still look to the FCC to correct broadband injustices, without realizing that when they file an FCC complaint against a broadband provider that the agency is powerless to intercede on their behalf.

The FCC will argue that they didn’t kill broadband regulation, but they instead handed the responsibility to the Federal Trade Commission. That claim falls apart quickly once you realize that the FTC has zero authority to regulate industries – they can’t write a rule that applies to all ISPs. The FTC’s power is limited to fining ISPs that have blatantly injured the public – and this must be done by an agency that is also overlooking all other US corporations.

Other than to dole out spectrum for 5G, it’s hard to even justify the FCC any longer. If the US isn’t going to regulate one of the most important industries in the country – many would say during the current pandemic the most important – then perhaps we ought to stop pretending to do so.

Only Congress can fix the problem and they’ve shown no inclination to do so. Congress hasn’t done anything meaningful concerning broadband since the 1996 Telecommunications Act that was signed just as people were subscribing to AOL and Compuserve.

The FCC should be taking drastic action during this pandemic. The agency could have been leading the charge looking for ways to get broadband to kids stuck at home. They could have been taking actions to make it easier for telemedicine in the last few months. They could have reacted to the pandemic with plans to finally solve the broadband gap. Instead, all we got was a powerless FCC Chairman politely asking ISPs to not harm people during a national emergency.

The Industry

My Telecom Predictions for 2020

Technical Resource Shortage. There is already a growing shortage of fiber resources that includes engineers, construction companies, and fiber consultants. The upcoming $16.4 billion RDOF program will create a resource shortage in 2020 for those who can help companies seek grant funding. Once the grants are awarded, the size of the program will add stress to the resources needed to build networks. Companies that don’t line up their experts early might find themselves without help.

Broadband Price Increases Are Now Routine. The biggest ISPs including Comcast, AT&T, Charter, Verizon, and others have now made it clear that they will be raising broadband rates annually – at least in the majority of their markets where they don’t face real competition. Anybody building a business plan for a new market has to decide how to predict future rate increases.

5G Cellphones Will Prove to be a Joke. At least for 2020, almost everybody who spends extra for a 5G handset is going to be disappointed. The companies deploying millimeter wave spectrum are doing it in limited downtown areas of major cities – and the speeds are only faster outdoors. Carriers implementing low frequencies like 600 MHz and 850 MHz admit that service won’t be any faster than 4G LTE.

FCC Will Eliminate the Last Vestiges of Regulation. The FCC has been actively tearing down regulations affecting the biggest ISPs. The agency has completely deregulated broadband and killed net neutrality. They’re in the process of gutting the use of unbundled network elements They’ve preempted local authority on the placement of wireless infrastructure. Since there is a chance that the administration will change at the end of the year, the FCC will kill as many regulations as they can during 2020.

T-Mobile / Sprint Merger Will be Approved. While there is a lot of opposition to the merger, the reality is that Sprint is not particularly viable as a cellular carrier. The biggest cable companies are entering the cellular markets and will push down urban cellular prices. Dish Networks seems to have a viable plan to become a major carrier if the T-Mobile/Sprint merger is approved.

Courts Will Chip Away at the 5G Pole Attachment Rules. The authority of the FCC to override local policy for the placement of cellular infrastructure boils down to a state versus federal jurisdiction battle. The courts have already said that cellular companies must heed some historic preservation and aesthetics rules. Ultimately the courts will weaken, but not kill the FCC rules, giving cellular carriers more rights than they historically had, but not full carte blanche authority to place devices anywhere.

State Net Neutrality Will Be Almost as Powerful as Federal Policy. It will be hard for the big ISPs to comply with net neutrality rules in California and Washington without complying everywhere. It’s also likely that more states will pass similar net neutrality rules

The RDOF Grants Will Fund Poor Broadband Solutions. Unfortunately, the $16.4 billion RDOF grants will award some grant money to technologies that are not future-proofed. Since the grants can be awarded for technologies that deliver broadband speeds of as little as 25/3 Mbps, we’ll see money go to technology solutions that might be obsolete before the end of the RDOF implementation period.

Cellular Networks Will Continue to Degrade. The nationwide use of cellular data is currently doubling every two years, which is greatly stressing cellular network quality. The cellular carriers need to implement massive numbers of small cells, add new spectrum, and fully implement 5G to keep up with the growing demand. Since those solutions will take 3 – 7 years to implement, cellular network quality is going to get a lot worse before the problems are solved.

Household Bandwidth Usage Will Continue to Grow. OpenVault says the average home now uses 275 gigabytes of data per month, with cord cutting households using 520 GB per month. Opensignal and Cisco both report that household broadband usage continues to grow rapidly, at about 21% annually, or a doubling every 4 years. There is nothing to suggest this growth will be slowing.

Meet CCG

Why I am Thankful – 2019

It’s Thanksgiving again and I pause every year to look at the positive events and trends for the small ISP industry. I found a number of things to be thankful for at the end of 2019.

FCC Finally Admits Its Maps Suck. The FCC has begrudgingly admitted that its broadband mapping sucks and is considering several proposals for improving the mapping. It looks like the proposals will fix the ‘edge’ problem, where today rural customers that live close to cities and towns are lumped in with the broadband available in those places. Sadly, I don’t believe there will ever be a good way to measure and map rural DSL and fixed wireless. But fixing the edge problem will be a great improvement.

FCC Released the CBRS Spectrum. The 3.65 GHz, (Citizens Band Radio Spectrum) should provide a boost to rural fixed broadband. There are some restrictions where there is existing government use and there will be frequency sharing rules, so the frequency is not fully unrestricted. The 80 MHz of free spectrum should prove to be powerful in many parts of the country. The FCC is considering other frequencies like white space, C Band, and 6 GHz that also will be a benefit to rural broadband.

States Are Reversing a Few Draconian Laws. Several states have removed barriers for electric cooperatives to get into the broadband business. Arkansas softened a prohibition against municipal broadband. Local politicians are now telling state legislators that broadband is the top priority in communities that don’t have access to good broadband. It’s been obvious for a long time that the best solutions to fix rural broadband are local – it makes no sense to restrict any entity that wants to invest in rural broadband.

The FCC Has Made it Easier for Indian Tribes to Provide Broadband. Various rule changes have streamlined the process of building and owning broadband infrastructure on tribal lands. Many tribes are exploring their options.

Local Broadband Activists Make a Difference. It seems like every community I visit now has a local broadband committee or group that is pushing local politicians to find a solution for poor broadband coverage. These folks make a difference and are prodding local governments to get serious about finding broadband solutions.

The FCC Announces a Monstrous Grant Program. I hope the RDOF grants that will award over $16 billion next year will make a real dent in the rural digital divide. Ideally, a lot of the grants will fund rural fiber, since any community with fiber has achieved a long-term broadband solution. However, I worry that much of the funding could go to slower technologies, or even to the satellite companies – so we’ll have to wait and see what happens in a massive reverse auction.

States Take the Lead on Net Neutrality. When the US Appeals Court ruled that the FCC had the authority to undo net neutrality, the court also rules that states have the authority to step into that regulatory void. Numerous states have enacted some version of net neutrality, but California and Washington have enacted laws as comprehensive as the old FCC rules. My guess at some point is that the big ISPs will decide that they would rather have one set of federal net neutrality rules than a host of different state ones.

The Proliferation of Online Programming. The riches of programming available online is amazing. I’m a Maryland sports fan and there are only three basketball or football games that I can’t watch this season even though I don’t live in the Maryland market. I don’t understand why there aren’t more cord cutters because there is far more entertainment available online than anybody can possibly watch. A decade ago, I didn’t even own a TV because there was nothing worth watching – today I keep a wish list of programming to watch later.

NC Broadband Matters. Finally, I’m thankful for NC Broadband Matters. This is a non-profit in North Carolina that is working to bring broadband to communities that don’t have it today. The group invited me to join their Board this year and I look forward to working with this talented group of dedicated folks to help find rural broadband solutions in the state.

Regulation - What is it Good For?

Perverting the FCC Comment Process

In a recent article, BuzzFeed dug into the issue of the FCC receiving millions of bogus comments in the last two rounds of the net neutrality docket. During the 2015 net neutrality comment period, the agency received over 4 million comments. Many of these were legitimate comments such as many that were driven by HBO’s John Oliver, who prompted people to comment in favor of net neutrality.

When the new FCC wanted to reverse the original net neutrality order they had to again open up the docket for public comment. This second time the FCC got over 20 million comments. The comments were so voluminous that the FCC website crashed in May 2017.

There were fake comments filed on both sides of the issue. On the pro-net neutrality side were 8 million nearly identical comments that were tied to email addresses from There were another million comments from people with email addresses. On the anti-net neutrality side Buzzfeed identified several organizations that uploaded millions of comments using names, addresses and email addresses that came from a major data breach. These fake comments were generated on behalf of real people who had no idea their name was being used in the FCC proceeding. The fake filings included comments from some people who had died and also some anti-net neutrality comments from a few Democrats in the House of Representatives who clearly were pro-net neutrality.

While the FCC’s net neutrality dockets received the largest number of fake comments, there are fake comments being filed in other FCC dockets and false comments are being made for legislation at state legislatures.

As somebody who often comments on FCC dockets, the fake comments give me heartburn. Flooding a docket with fake comments makes it likely that legitimate comments are not read or considered. What might be the most interesting thing about the net neutrality docket is that in both cases it was clear the FCC COmmissioners had already decided how they were going to vote – so the fake comments had no real impact. But most FCC dockets are not partisan. For example, there were a lot of fake comments filed in the docket that was considering changing the rules for cable cards – the devices that allow people to avoid paying for the cable company settop boxes. That kind of docket is not partisan and is more typical of the kinds of issues that the FCC has to wangle with.

Hopefully, legal action will be taken against the bad actors that were identified in the net neutrality filings. There are several companies that have been formed for the express purposes of generating large volumes of comments in government dockets. There is nothing wrong in working with organizations to generate comments to politicians. It’s almost a definition of the first amendment if AARP galvanizes members to comment against changes in social security. But it’s a perversion of democracy when fake comments are generated to try to influence the political process.

Fighting this issue was not made any easier when the current FCC under Ajit Pai ignored public records requests in 2017 that wanted to look deeper at the underlying fake comments. After a lawsuit was filed the FCC eventually responded to public records requests that led to investigations like the one described in the Buzzfeed article.

There are probably ways for the FCC and other agencies to restrict the volume of fake comments. For example, the FCC might end the process of allowing for large quantities of comments to be filed on a bulk basis. But federal agencies have to be careful to not kill legitimate comments. It’s not unusual for an organization to encourage members to file, and they often do so using the same language in multiple filings.

This is another example of how technology can be used for negative purposes – in essence, the FCC was hacked in these dockets. As long as there is a portal for citizens to make comments it’s likely that there will be fake comments made. Fake comments are often being made outside the government process and fake reviews are a big problem for web sites like Amazon and Yelp. We need to find a way to stop the fake comments from overwhelming the real comments.

Regulation - What is it Good For?

Court Upholds Repeal of Net Neutrality

The DC Circuit Court of Appeals ruled on the last day of September that the FCC had the authority to kill Title II regulation and to repeal net neutrality. However, the ruling wasn’t entirely in the FCC’s favor. The agency was ordered to look again at how the repeal of Title II regulation affects public safety. In a more important ruling, the courts said that the FCC didn’t have the authority to stop states and municipalities from establishing their own rules for net neutrality.

This court was ruling on the appeal of the FCCs net neutrality order filed by Mozilla and joined by 22 states and a few other web companies like Reddit and Etsy. Those appeals centered on the FCC’s authority to kill Title II regulation and to hand broadband regulation to the Federal Trade Commission.

Net neutrality has been a roller coaster of an issue. Tom Wheeler’s FCC put the net neutrality rules in place in 2015. An appeal of that case got a court ruling that the FCC was within its power to implement net neutrality. After a change in administration, the Ajit Pai FCC killed net neutrality in 2017 by also killing Title II regulation. Now the courts have said that the FCC also has the authority to not regulate net neutrality.

The latest court order will set off another round of fighting about net neutrality. The FCC had quashed a law in California to introduce their version of net neutrality and this order effectively will allow those California rules to go into effect. That battle is far from over and there will be likely new appeals against the California rules and similar rules enacted in Washington. It wouldn’t be surprising to see other states enact rules in the coming year since the net neutrality issue is overwhelmingly popular with voters. It’s possibly the worst of all worlds for big ISPs if they have to follow different net neutrality rules in different states. I think they’d much prefer federal net neutrality rules rather than different rules in  a dozen states.

The reversal of net neutrality rules only went effect in June of 2018 and there have been no major violations of the old rules since then. The ISPs were likely waiting for the results of this court ruling and also are wary of a political and regulatory backlash if they start breaking net neutrality rules. The closest thing we had to a big issue was mentioned in this ruling. Verizon had cut off broadband for firemen in California who were working on wildfires after the firemen exceeded their monthly data caps. It turns out that wasn’t a net neutrality violation, but rather an enforcement issue on a corporate cellular account. But the press on that case was bad enough to prompt the courts to require the FCC to take another look at how ISPs treat public safety.

This issue is also far from over politically. Most of the democratic presidential candidates have come out in favor of net neutrality and if Democrats win the White House you can expect a pro-net neutrality chairman of the FCC. Chairman Pai believes that by killing Title II regulation that a future FCC will have a harder time putting the rules back in place. But the two court appeals have shown that the courts largely believe the FCC has the authority to implement or not implement net neutrality as they see fit.

While net neutrality is getting all of the press, the larger issue is that the FCC has washed its hands of broadband regulation. The US is the only major economy in the world to not regulate the broadband industry. This makes little sense in a country where are a large part of the country is still controlled by the cable/telco duopoly, which many argue is quickly becoming a cable monopoly. It’s easy to foresee bad behavior from the big ISPs if they aren’t regulated. We’ve seen the big ISPs increase broadband rates in the last few years and there is no regulatory authority in the country that can apply any brakes to the industry. The big ISPs are likely to demand more money out of Google, Facebook and the big web companies.

The FCC handed off the authority to regulate broadband to the Federal Trade Commission. That means practically no regulation because the FTC tackles a single corporation for bad behavior but does not establish permanent rules that apply to other similar businesses. The FTC might slam AT&T or Comcast from time to time, but that’s not likely to change the behavior of the rest of the industry very much.

There is only one clear path for dealing with net neutrality. Congress can stop future FCC actions and the ensuing lawsuits by passing a clear set of laws that either implements net neutrality or that forbids it. However, until there is a Congress and a White House willing to together implement such a law this is going to continue to bounce around.

The big ISPs and Chairman Pai argued that net neutrality was holding back broadband investments in the country – a claim that has no basis when looking at the numbers. However, there is definitely an impact in the industry from regulatory uncertainty, and nobody is benefitting from an environment where subsequent administrations alternately pass and repeal net neutrality. We need to resolve this once way or the other.

The Industry

Is AT&T the 800-pound Gorilla?

For years it’s been understood in the industry that Comcast is the hardest incumbent to compete against. However, they are still a cable company and many people dislike cable companies – but Comcast has been the most formidable competitor. The company is reported to have the highest gross margins on cable TV and might be one of the few companies still making a significant profit on cable. Much of that is due to their extensive programming holdings – it’s easier to make money on cable when you buy your own programming. Comcast has also been the best in the industry in creating bundles to lock in customers – bundling things like smart home and more recently cellular service.

But the new 800-pound Gorilla in the industry might be AT&T. The company seems to be finally shaking out of the transition period from integrating their purchase of Time Warner. It can be argued that the programming that came from that merger – things like HBO, CNN, and blockbuster movies – will make AT&T a more formidable competitor than Comcast.

AT&T will be launching its new streaming service, AT&T TV, next month. The company already has one of the largest streaming services with DirecTV Now. It’s been rumored that the streaming service will start at a price around $18 per month – an amazingly low price considering that HBO retails for $15 online today. The company is trying to coax more money out of the millions of current HBO subscribers. This pricing also will lure customers to drop HBO bought from cable companies and instead purchase it online.

AT&T has also been building fiber for the last four years and says that they now pass 20 million homes and businesses. They recently announced the end of the big fiber push and will likely now concentrate on selling to customers in that big footprint. The company is one of the more aggressive marketers and has sent somebody to my door several times in the last year. That’s a sign of a company that is working hard to gain broadband subscribers.

The one area where AT&T is still missing the boat is in not bundling broadband and cellular service. AT&T is still number one in the country with cellular customers, with almost 160 million customers at the end of the recently ended second quarter. For some reason, they have never tried to create bundles into that large customer base.

AT&T has most recently been having a customer purge at DirecTV. For years that business bought market share by offering low-prices significantly below landline cable TV. Over the last, year the company has been refusing to renew promotional pricing deals and is willing to let customers walk. In the first quarter of this year alone the company lost nearly one million customers. The company says they are not unhappy to see these customers leave since they weren’t contributing to the bottom line. This is a sign of a company that is strengthening its position by stripping away the cost of dealing with unprofitable customers.

AT&T has also pushed a few net neutrality issues further than other incumbents. As a whole, the industry seems to be keeping a low profile with issues that are identified as net neutrality violations. There is speculation that the industry doesn’t want to stir up public ire on the topic and invite a regulatory backlash if there is a change in administration.

AT&T widely advertised to its cellular customers earlier this year that the company would not count DirecTV Now usage against cellular or landline data caps. The same will likely be true for AT&T TV. Favoring one’s own service over the competition is clearly one of the things that net neutrality was intended to stop. Since there are data caps on both cellular and AT&T landline products, the move puts Netflix and other streaming services at a competitive disadvantage. That disadvantage will grow over time as more landline customers hit the AT&T data caps.

AT&T has made big mistakes in the past. For instance, they poured a fortune into promoting 50 Gbps DSL instead of pushing for fiber a decade sooner. They launched their cable TV product just as that market peaked. The company seemed to lose sight of all landline and fiber-based products for a decade when everything the company did was for cellular – I remember a decade ago having trouble even finding mention of the broadband business in the AT&T annual report.

We’ll have to wait a few years to see if a company like AT&T can reinvent itself as a media giant. For now, it looks like they are making all of the right moves to take advantage of their huge resources. But the company is still managed by the same folks who were managing it a decade ago, so we’ll have to see if they can change enough to make a difference.

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