Karl Bode | The Verge

Brendan Carr’s FCC is an anti-consumer, rights-trampling harassment machine

2025-04-28T12:47:29-04:00

In less than 100 days the Federal Communications Commission (FCC) has been converted from a media and telecom watchdog into a bizarre, rights-trampling grievance machine built for one purpose: to coddle and protect the ego of President Donald J. Trump.

Gone is the agency that used to occasionally care about whether broadband maps were accurate or if consumers are being ripped off by sneaky cable industry fees. Gone is the agency that sometimes cared about media consolidation, or had begun taking a closer look at decades of discrimination in next-generation broadband deployment.

In its place is an FCC custom-built to harass companies and organizations that fail to support Trumpism, usually via a rotating crop of publicity-seeking pseudo-investigations that often have a fleeting relationship to factual reality or the law.

Media and telecom policy experts have been taken aback by the quick transformation under Chairman Brendan Carr, who they say has abused agency authority and the law to harass journalists, cajole insufficiently deferential media companies, and bully telecom giants into taking an obedient knee to the administration.

“I have been shocked at the lengths that the Chairman will go to use the FCC as a vessel to address the president’s personal grievances,” says Gigi Sohn, a respected consumer advocate and former FCC staffer whose nomination to the agency was derailed by industry lobbying in 2023. “His implied threats over the DEI policies of major telecom and media companies have also gone beyond what I would have expected — but they 100 percent mirror what the president is doing with corporations, law firms, and universities.”

Donald Trump’s personal censor

Carr has lacked a voting majority for the first few months of his tenure, and in lieu of substantive policymaking, he’s focused on abusing FCC authority to bully companies seeking major merger approval — with the help of a right-wing media echoplex keen on amplifying manufactured offenses. The goal is supporting Trump personally — but also, civil rights leaders say, bolstering his administration’s effort to normalize discrimination and bigotry while reframing it as government efficiency.

“Carr is meddling into areas such as private contractual relationships between broadcast networks and affiliates for which the FCC has no jurisdiction,” says Andrew Jay Schwartzman, an expert on media law and senior counselor for the Benton Institute for Broadband & Society. “While my trepidation quotient was high, he has far exceeded my worst expectations. Chairman Carr is out to prove he is the Trumpiest of all Trumpers.”

Paramount/CBS, which is planning an $8 billion merger with Skydance, has been a primary target for administration ire. Trump filed a legally dubious lawsuit against CBS last fall, claiming brevity edits of a 60 Minutes interview with Kamala Harris violated federal law. Experts across the ideological spectrum say it was an obvious effort to trample journalistic free speech.

Carr also claims, without evidence, that CBS’s edits violated the FCC’s broadcast news distortion rule, which is extremely rarely used to punish news outlets that falsify news reports, or take documented bribes in exchange for favorable or misleading news coverage.

Trump has called for CBS to lose its local broadcast licenses for 60 Minutes segments critical of his policies on Ukraine and Greenland. Carr has obediently launched a slew of new investigations into several local broadcasters, threatening the revocation of their broadcast licenses if they engage in journalism disfavorable to the administration.

Carr also recently threatened the local NBC broadcast licenses of Comcast, because the administration didn’t like Comcast-owned MSNBC’s coverage of Kilmar Abrego Garcia, the Maryland man illegally kidnapped by the Trump administration and sent to an El Salvador work prison.

A bipartisan collection of five former FCC officials recently told the FCC Carr’s actions are turning the FCC into the “White House’s personal censor.” Carr’s Democratic fellow FCC Commissioner, Anna Gomez, told attendees of a broadcaster conference earlier this month that the chairman is “weaponizing” the FCC’s licensing authority to “censor and control” journalism.

Carr, who has historically opposed meaningful oversight or scrutiny of telecom giants like Comcast and AT&T, has also launched multiple investigations into public broadcasters claiming, without evidence, they are violating rules restricting them from airing traditional commercials. The move comes as the administration looks to cut already modest NPR and PBS funding.

“Carr is carrying out Trump’s bidding to exact revenge and quell dissent in the media sector,” says Victor Pickard, professor at the University of Pennsylvania’s Annenberg School for Communication. “The rationale for going after public media — purportedly because they’re airing commercials — seems especially disingenuous.”

Meanwhile, Verizon (which is seeking a $20 billion merger with Frontier) and Comcast (rumored to be eyeing a merger with T-Mobile) have both faced “investigations” by Carr for failing to embrace the administration’s assault on popular civil rights reforms. Legal experts suggest Carr has no solid legal footing on which to penalize either company. Carr has launched an equally dubious investigation into Disney for “violating FCC equal employment opportunity regulations by promoting invidious forms of DEI discrimination.”

Even if the targeted companies aren’t actually guilty of anything, the accusations — repeated across Trump-friendly media sources, including Breitbart, The Daily Wire, OAN, Newsmax, Fox News, Sinclair Broadcasting, and countless others — cement the idea in the public’s head that they might be.

“Whether it has any ‘legal’ basis is beside the point,” Sohn says. “The point of these exercises is to intimidate regulatees to see if they will bend to his will. So far, it’s working.”

Have your terrible cake and eat it too

To Carr, the FCC has all the power in the world or none at all, depending on who’s in charge and who stands to benefit.

The Trump administration hasn’t been subtle about its plan to hollow out the administrative state, giving large corporations carte blanche to misbehave. The Supreme Court’s Loper Bright ruling effectively destroyed U.S. regulators’ independence to enforce or create consumer protections without the explicit approval of a Congress widely viewed as too corrupt to function.

Combined with DOGE cuts and executive orders, the goal is to defang corporate regulatory oversight and consumer protection at unprecedented new scale. Many of Carr’s more bombastic efforts are providing cover for less headline-grabbing fare like ensuring the FCC can’t stand up to the whims of massive, unpopular U.S. broadband providers.

Data suggests that regional telecom monopolies have long discriminated against minority and less affluent communities when it comes to broadband repairs and fiber upgrades. Journalists have also found broadband providers charge minority, low-income neighborhoods more money for slower broadband speeds than their less diverse, more affluent counterparts.

Carr has already taken steps to unwind the FCC’s efforts to address discrimination in broadband deployment. He’s hinted at plans to end FCC oversight of issues like predatory usage caps, or the use of sneaky fees to covertly jack up the advertised price of internet access. He’s also made it clear he’d like to eliminate whatever’s left of U.S. media consolidation limits.

As part of his “Delete, Delete, Delete” initiative, Carr has framed this as an act of government efficiency, though experts like Sohn and Pickard see it more as a symptom of corruption and regulatory capture. Everyone from telecoms to robocallers are lining up, demanding Carr dismantle popular consumer protections they’ve deemed harmful to their bottom lines.

Carr has indicated he’d also like to leverage authority the FCC doesn’t have to regulate social media companies like TikTok and erode Section 230 of the Communications Decency Act, a foundational cornerstone of free expression on the internet.

“Once he gets a majority, I expect that he may start to move on the items that he discussed in his Project 2025 chapter — deregulating media and broadband companies, attempting to preempt states’ and localities’ permitting processes, and seeing how far he can move to interpret Section 230 before the courts give him the Loper Bright treatment, which will not turn out well for him,” Sohn says.

This, it should be noted, is a dramatic and ideologically inconsistent shift from Carr’s time as a commissioner during Trump’s first term, where he repeatedly proclaimed that popular FCC efforts to protect consumers — from broadband privacy rules to net neutrality protections — were a dramatic abuse of agency authority.

The fight for the future is local

With competent federal consumer protection across agencies dead for the foreseeable future, and the FCC launching a frontal attack on American journalism, most experts agree the responsibility for protecting the public interest now shifts to the state and local level.

“Go to every state who will listen and get them to reinstate, or strengthen, their authority over broadband,” Sohn suggests. “Help unserved and underserved communities build their own broadband networks. The fight at the FCC is a losing battle, and while it should not be ignored entirely, putting too many eggs in the FCC basket is not a winning strategy for underfunded and undermanned advocates for competition and consumer protection.”

Seven states have passed net neutrality laws. Some states, like New York and California, have been eyeing laws requiring that broadband providers provide affordable broadband access to low-income residents. A growing number of states are passing “right to repair” reforms, all while highly localized, worker-owned independent media is gaining steam.

But states facing all manner of costly new legal fights across healthcare and immigration may not have the attention, staff, or resources to pick up the slack on corporate oversight and consumer protection. Courts and federal agencies may also try to further curtail state rights, like Trump’s first FCC did when its net neutrality repeal tried to ban states from protecting broadband consumers.

An informed electorate is a cornerstone of whatever comes next, something that can’t be attained without significant U.S. media reform, Pickard notes.

“We need to defend our media, especially public broadcasting, against Trump-inspired attacks,” he says. “But we also need to go on offense at the state and municipal levels to make public investments in local media institutions, which are rapidly disappearing.”

Pickard’s research has found the collapse of quality local journalism has resulted in vast news deserts where the American public is increasingly uninformed or misinformed. His university has also found that countries that invest heavily in publicly funded media tend to have healthier democracies, which explains some politicians’ interest in targeting them.

“For the long term we need something far more ambitious,” Pickard says. “For starters, we need to fund our public media in line with global norms and create structural alternatives — truly democratic and independent news outlets — to replace failing commercial models that are so easily captured and cowed by oligarchs.”

The battle to stop broadband discrimination has only just begun

2023-12-05T08:30:00-05:00

For the better part of a generation, low-income and minority US communities have struggled to gain access to affordable broadband. It’s not an accident: numerous studies indicate that major internet service providers, or ISPs — despite billions in taxpayer subsidies — have consistently avoided low-income, minority, and tribal neighborhoods when it comes to affordable fiber upgrades.

It’s something federal policymakers historically haven’t done much about — until now. The 2021 infrastructure bill set aside $42.5 billion for broadband. It also tasked the FCC with crafting new rules taking aim at “digital discrimination.” On November 15th, the agency obliged, passing rules banning ISPs from broadband discrimination based on income, race, and religion.

“These rules are strong,” FCC boss Jessica Rosenworcel said in a statement. “I am grateful to so many in the civil rights community who have helped us give it meaning and the companies that worked with us to improve our process.”

But while activists are thrilled the government has formally acknowledged decades of inequity, they say the FCC went out of its way to avoid criticizing ISPs that have historically discriminated. They also worry that, at an agency with a shaky track record on consumer protection, the rules may not be consistently enforced.

A problem generations in the making

US broadband has long suffered from a lack of regional competition. Most Americans live under either an internet monopoly or a duopoly, resulting in patchy coverage, slow speeds, terrible customer service, and some of the highest prices for broadband in the developed world.

The problem is particularly pronounced in low-income, minority, tribal, and other marginalized communities that have long been victims of redlining, or institutionalized discrimination in everything from home loan approval to the delivery of next-generation infrastructure.

In 2017, minority residents of Cleveland and Detroit filed formal complaints with the FCC, noting they were consistently paying AT&T premium prices for sluggish DSL, while neighbors in more affluent, less diverse communities received faster, cheaper service. The petitioners’ broadband was so slow, it hampered the ability of their children to access online homework.

“Broadband has been deployed where good infrastructure exists, and for decades infrastructure investments were determined by racist government policy”

“Redlining, in any form, is often framed as ‘disinvestment in communities of color,’” Paul Goodman, a lawyer at the Center for Accessible Technology, told The Verge. “That’s only half the picture. Redlining is an investment transfer — money that should go to communities of color and low-income communities is instead redirected to wealthier, whiter communities.”

The lack of affordable internet access severs these communities from modern healthcare, education, and employment opportunities. The problem was highlighted during peak covid-19 lockdowns, when low-income families resorted to huddling in the dirt outside fast food restaurants just to attend online class.

“The digital divide is in many ways a side effect of redlining and the ‘urban renewal’ projects of the 1970s, because broadband has been deployed where good infrastructure exists, and for decades infrastructure investments were determined by racist government policy,” Adria Tinnin, director of race equity policy at The Utility Reform Network, told The Verge. “In other words, it’s not that an ISP has an explicitly racist policy, it’s that they are building on top of infrastructure that was determined by racism, thereby reproducing the negative effects.”

Discrimination has long been present in the construction of US highways and the delivery of reliable and affordable electricity. The deployment of next-generation fiber often runs parallel with both, shaped by decisions made decades or generations earlier.

The National Digital Inclusion Alliance (NDIA) has been tracking the problem for years. The organization closely studied broadband deployment gaps in Cleveland and Detroit and found large local ISPs consistently refused to upgrade broadband networks in minority neighborhoods or areas where poverty rates exceed 35 percent.

ISPs like AT&T have repeatedly denied they ever engaged in any form of digital discrimination. In 2021, the company claimed, without evidence, that the NDIA’s findings were based on “antiquated, inaccurate and cherry-picked data.”

While it’s no surprise that publicly traded telecoms are often fixated on ensuring an adequate return on their investment, these companies have been given untold billions in regulatory favors, subsidies, and tax breaks in exchange for the promise of even broadband deployment. While ISPs may deny that they engage in digital discrimination, the data keeps getting clearer.

Poorer customers are getting hit with higher prices for slower speeds

Last year, The Markup studied 800,000 broadband promotions across 38 cities and found that big ISPs not only refuse to upgrade poor and minority neighborhoods but they also charge these customers more money for slower speeds than those in more affluent and less diverse areas. In many locations, the broadband coverage gaps line up perfectly with historic redlining data.

Fixing the problem has proven to be a complicated mess, in part because the government has historically failed to accurately map affordable broadband availability, rein in sector consolidation, or share broadband pricing data. Big ISPs have long fought against improved broadband mapping or public price comparisons for fear it would highlight market failure.

The telecom industry has already threatened to sue the FCC over the new rules and is particularly incensed at the government’s plan to tackle discriminatory broadband pricing. Industry-allied GOP senators wrote the FCC to complain the rules would harm “the practical business choices and profit-related decisions that sustain a vibrant and dynamic free enterprise system.”

But real-world data indicates that US broadband is far from a vibrant and competitive free market. In reality, it’s a collection of powerful regional monopolies and duopolies that often lobby the government into apathy as they charge captive subscribers a premium for patchy, expensive internet access. It’s a problem that’s always worse for marginalized Americans.

A very promising start, but activists say it’s not enough

Simply creating a framework that tethers historical discrimination to modern broadband redlining is a huge step forward, opening the door to meaningful action down the road, said Shayna Englin, director for the LA-based Digital Equity Initiative.

“It could be a lot stronger in a myriad of ways,” Englin said. “But I will say, we are absolutely celebrating where it landed on the definition of discrimination and access. That makes a world of difference and opens up at least, as far as we see, new avenues that are actionable.”

NDIA executive director Angela Siefer shared those sentiments in comments to The Verge, noting that the FCC’s decision to craft rules that cover both “disparate treatment” (inequity caused by active, provable discrimination) and “disparate impact” (inequity in deployment, regardless of intent) will be historically useful moving forward.

Short of executives putting discriminatory intent in an email to staff, intentional discrimination in broadband deployment can be difficult to prove. Including guidelines that cover disparate impact will be helpful to police systemic discrimination, regardless of conscious intent, activists say.

“This is a huge win.”

“The Digital Discrimination draft rules are not all we wanted but we got the most important — the definition of digital discrimination includes disparate impact,” Siefer said. “This was not easy. NDIA spent a ridiculous amount of time on this because it is so important. And we got it. This is a huge win.”

At the same time, many digital equity activists contacted by The Verge expressed concern that the order doesn’t go far enough to penalize existing bad actors and may not be consistently enforced by an agency with a rocky history of standing up to politically powerful telecom giants closely tethered to US domestic surveillance and first-responder systems.

Consumers will soon have a new system to file discrimination complaints with the FCC, which will be forwarded on to the ISP. If the ISP doesn’t address the concerns, the agency says its enforcement bureau will step in to take action and will conduct “self-initiated Commission investigations” when warranted by available data. Past discrimination will see no penalties. And the process will largely rely on these complaints rather than proactive FCC investigations, although the FCC says it will take action if consistent patterns reveal themselves.

“Nothing in these rules would address historical, existing and the ongoing redlining and discrimination against BIPOC and low income communities by large corporate ISPs,” Brandon Forester, a media and telecom reform activist at MediaJustice, told The Verge. “The FCC expressly declined to look at or eliminate existing discrimination.”

Forester noted that the FCC complaint process is cumbersome and not publicly transparent, and consumers stuck on slow, expensive broadband may not even understand they’re being discriminated against. Given the FCC voting majority shifts with the winds of each presidential election, future, consistent action on complaints is also far from certain.

“Even if a complaint rises to the level of the FCC intervening, we still have a secret process that isn’t public, won’t remediate the discrimination, and at best the FCC may quietly fine the ISP,” Forester said. “So there’s very little disincentive for ISPs who are discriminating to change their behavior. Secret fines and settlements, without any real remediation for the discriminatory behavior, simply becomes a cost of business calculation.”

Tackling monopoly power head-on

Activists say that to truly address discrimination in broadband deployment, federal regulators have to more seriously tackle market failure and monopoly power. These entrenched monopolies work tirelessly to undermine competitive alternatives while lobbying the federal government to ensure regulatory oversight is as feckless as possible.

“We have to acknowledge that we have widespread market failure in the market for residential telecommunications, and that market failure has been driven by incumbent providers, who have not only failed to deliver on promises to close the digital divide, but have actively thwarted any federal policy that would help new entrants gain a foothold,” Goodman said.

Goodman noted that the government has a long history of throwing billions of dollars at regional monopolies in exchange for networks that routinely wind up only partially deployed, whether in rural Mississippi, the hills of West Virginia, or the streets of New York City.

“We have to stop giving broadband subsidies to ISPs that have built their profitability off of digital discrimination,” Goodman said. “Those providers have repeatedly made decisions that resulted in disparate access to broadband, and now they are demanding taxpayer funds to solve a problem which ISPs themselves have created.”

“They are demanding taxpayer funds to solve a problem which ISPs themselves have created”

Activists say there’s a path forward. Federal support of open-access fiber networks and community-owned broadband (including by cooperatives and city-owned utilities) can challenge monopoly power, boost competition, and lower the cost of market entry. The end result: faster, cheaper, and more equitable broadband access inherently less prone to discrimination.

But it’s hard to fix a problem you can’t or won’t measure. While there has been progress since Congress passed a 2020 law demanding the FCC do a better job on broadband mapping, both consumer groups and state leaders say it remains very much an active problem. And the agency still refuses to collect and publicly share essential broadband pricing data.

Some of the FCC’s inaction can be blamed on an industry-backed blockade of popular FCC nominees like Gigi Sohn, leaving it without a voting majority for much of President Joe Biden’s first term. But even with the recent confirmation of Anna Gomez, activists remain skeptical that the agency has the political backbone to consistently stand up to industry giants when it truly matters.

Neglected neighborhoods aren’t waiting for the FCC to get its act together. Hundreds of US communities have been building community-owned and -operated broadband networks in a quest for better, faster, and cheaper internet access. That includes Cleveland, which recently launched a plan to deploy citywide fiber and wireless broadband for as little as $18 a month.

Whether the FCC’s digital discrimination protections can begin to truly repair generations of injustice remains unclear. Industry lawsuits could derail rule implementation until long after infrastructure bill subsidies begin to flow, complicated by looming, industry-backed Supreme Court rulings aimed at undermining the independent authority of US regulators.

The next presidential election will matter as well; while the creation of digital discrimination rules was a congressional mandate, Republican FCC leadership — which historically has sided with the telecom industry on most issues of substance — could simply choose not to enforce them.

Still, the federal government’s belated formal acknowledgment of systemic discrimination remains monumental and historic all the same, providing a much stronger foundation for those on the front lines of the fight for equitable and affordable access.

Joshua Edmonds, CEO of equity activism nonprofit DigitalC, is working closely with Cleveland city officials to help build its new network. He told The Verge he was cautiously optimistic about the FCC’s rules and was quick to acknowledge the historic precedent.

“It’s one thing for an activist group to say that, or even a local equity champion, but for the FCC to acknowledge that digital discrimination has persisted, that’s moving in the right direction,” he said, adding that he has been impressed by the agency’s community outreach sessions in cities like Baltimore, Los Angeles, and Topeka.

“But what does it mean to be penalized?” he asked. “Is it a public facing walk of shame? What actually is it? I think this FCC has big ambitions, and I laud them. I think the question that I have is: with big ambitions, do you guys have teeth? And I don’t know if they do or not.”

The Dish ‘fix’ for the T-Mobile-Sprint merger seems more shortsighted than ever

2021-07-21T05:00:00-04:00

To sell regulators on their $26 billion mega merger, T-Mobile and Sprint executives told anyone who’d listen that the deal would provide near-miraculous benefits. But economists warned that US telecom merger promises are historically meaningless, and the reduction in overall competitors would — sooner or later — result in higher prices and job cuts.

Instead of heeding their warnings and blocking the deal, US antitrust enforcers concocted an elaborate workaround: they would erect Dish Network as the nation’s new fourth major wireless carrier. Under the plan Dish received some T-Mobile spectrum, the Boost Mobile prepaid brand, and the assurance that T-Mobile would help Dish run a Mobile Virtual Network Operator (MVNO) while it got its own nationwide network up and running.

But squabbling between the companies culminated this week in Dish announcing it would be replacing T-Mobile with AT&T as its primary partner, indicating that T-Mobile and Dish were simply incapable of getting along, and the government was never that interested in forcing them.

“If T-Mobile is able to shirk this regulatory obligation with impunity, what’s to prevent future consent orders from being ignored?” Hal Singer, an economist who testified against the merger approval tells The Verge.

Earlier this year, Dish called T-Mobile a “grinch” for shutting down its CDMA network earlier than Dish had expected. In complaints to state and federal regulators, Dish accused T-Mobile of reneging on its merger promises, and claimed the shutdown risked leaving many of Boost’s 9 million wireless customers without service in 2022. T-Mobile has denied fault and effectively accused Dish of not understanding its own agreement.

So far the Biden administration, focused largely on Big Tech policy conversations, hasn’t taken much action in the telecom space. The administration has yet to fully staff the FCC, and only just appointed a DOJ antitrust enforcer this week. Dish’s deployment goals are far off, and any meaningful government action, if it comes at all, likely remains years away.

The deal gives Dish until 2025 to deploy its wireless network to 70 percent of the population. Given that 70 percent of the US lives on roughly 3 percent of the country’s landmass, that shouldn’t have been a particular challenge. (Dish hasn’t given any public indication that it’s nearing that goal yet.) But it’s getting to 95 percent coverage where Dish needs help, given that the remaining chunk lives on ten times the land mass as the initial 70 percent.

That’s where Dish’s $5 billion deal with AT&T comes in. Under the proposal, AT&T will grant Dish MVNO customers access to AT&T’s 4G and 5G networks in rural and harder to reach markets, as Dish focuses on building out its own 5G network in major cities. Dish will still have access to T-Mobile’s network until 2027, but AT&T will now be Dish’s primary partner.

In a research note to investors, Wall Street analyst Craig Moffett argues that while Dish’s relationship with T-Mobile may have soured, the deal with AT&T likely increased Dish’s chance of survival as a wireless operator — for the time being.

“Under the T-Mobile agreement, Dish had until 2025 to satisfy the FCC, but only two more years afterwards to satisfy the much more exacting demands of customers,” Moffett says. “That was always the real challenge.”

How many major cellular carriers does it take to prop up their supposed competitor?

Given that AT&T has never offered CDMA access, the arrangement won’t solve Dish’s complaints about T-Mobile’s decision to shutter its CDMA network, potentially harming Boost Mobile subscribers. AT&T, meanwhile, nabs significant wholesale revenue with the dangerous bet that Dish will never become successful enough to erode AT&T market share.

But with Dish bleeding wireless and TV subscribers at an alarming rate, the clock is ticking on Dish’s overall survivability. In the next six years, Dish has to remain financially viable, build out a massive and popular next-generation wireless network, keep state and federal regulators happy, and somehow steal meaningful market share from a US telecom sector historically averse to being meaningfully disrupted by competition.

It’s a big ask for a company long criticized — including by T-Mobile in 2018 — for gobbling up troves of valuable spectrum, then not delivering on its promises to put that spectrum to use. While the government deal bars Dish from selling its spectrum for six years, analysts have long pondered if Dish will just string regulators along, sell its spectrum, then use the immense profits to laugh off any remaining regulatory, legal, and contractual obligations.

Moffett tells The Verge that Dish has already spent upward of $10 billion in long-term cellular tower leases, and risks losing its spectrum in addition to financial penalties for missing deployment goals. Singer, however, remains unimpressed by the integrity of the merger arrangement with the government and still thinks an early Dish exit remains possible.

“The decree always gave Dish an easy out,” Singer says. “The real target of the regulation was T-Mobile. And now T-Mobile is getting to slither out.”

The saga could also end with AT&T buying Dish Network, AT&T nabbing Dish’s vast spectrum holdings, the US wireless industry consolidating even further, and everybody involved pretending none of this ever happened.

“jobs positive from day one” turned out to be a joke

Meanwhile, other merger promises remain unfulfilled. T-Mobile’s promise that the deal would create new jobs — still viewable over at the company’s website — wound up not being worth much. Despite claiming the deal would be “jobs positive from day one and every day thereafter,” the company has eliminated 5,000 positions so far, much as critics like Singer predicted.

Historically, antitrust enforcers are supposed to look at the available evidence of a proposed union and act accordingly. In the case of Sprint and T-Mobile, the Trump FCC approved the deal before even seeing impact analysis, and the Trump DOJ’s top antitrust enforcer Makan Delrahim personally worked with all three companies to ensure deal approval.

Instead of simply blocking the merger and finding a way to prop up Sprint, the resulting solution always required a great deal of optimism in both the integrity of corporate merger promises and the competency of US regulators. Now consumers are left waiting for a network that may never arrive, based on relationships that were sour from the start.

“Just as Delrahim scripted it,” Singer jokes.

AT&T promised a TV revolution — instead, we got a giant mess

2021-03-03T10:34:01-05:00

Last week, AT&T announced it would be spinning off its TV business — including DirecTV, AT&T TV, and U-verse — in a deal it claimed would greatly benefit the company’s customers, employees, and shareholders. The deal provides AT&T with a $7.8 billion cash infusion to pay down debt and recent wireless spectrum purchases, and a 70 percent stake in the “new” DirecTV. But it also values the entire operation at around $16.25 billion, a massive loss from the $67 billion AT&T paid just a few years earlier for just DirecTV alone.

“It’s fair to say that some aspects of the transaction have not played out as we had planned,” AT&T said of the deal, trying to put a good face on a more than $50 billion loss, “such as pay TV households in the US declining at a faster pace across the industry than anticipated when we announced the deal back in 2014.”

It’s the latest chapter in AT&T’s long journey to transform from a boring old telecom into a dominant player in new media. Six years, 54,858 layoffs, two mergers, and nearly $175 billion later, AT&T is only marginally closer to streaming TV dominance. Instead, customers and employees are footing the bill for their bad decisions in the form of TV rate hikes and layoffs that show no sign of slowing down.

“One of the worst acquisitions of all time”

Wall Street telecom analyst Craig Moffett surveyed the wreckage in a research note to investors, in which he noted the deal does little to tackle $157 billion in remaining AT&T debt.

“AT&T’s DirecTV is inarguably one of the worst acquisitions of all time,” Moffett said. “They bought it for $67 billion in 2013. Even at the overly-generous valuation reported last night, they are exiting at a price 76% below what they paid for it just seven years ago.”

It wasn’t supposed to be this way. AT&T executives once dreamed of creating an online video juggernaut that could rival the power of Google and Facebook in the online advertising space, using must-watch HBO content — and AT&T’s wireless network — as the glue holding the effort together. That dream fueled the DirecTV acquisition in 2014 (which executives promised would deliver “enhanced innovation” and “significant benefits for consumers”) as well as the Time Warner acquisition in 2018 (which we were told would usher forth the “next wave of innovation in converging media and communications”).

54,858 employees laid off since 2017

But for AT&T, a company built on the back of the far less competitive and innovative US broadband sector, that dream proved hard to realize. First, AT&T unveiled so many discordant TV brands across both its traditional cable and streaming platforms, even the company’s own employees got confused. The company then attempted to dig out from under its massive merger debt load by imposing repeated price increases on subscribers already tired from years of relentless rate hikes. A discounted $15-per-month streaming TV offering, used to lure regulators into approving the Time Warner merger, quickly disappeared as soon as the merger ink had dried. AT&T’s customers, paying an average of $130.55 per month for television, quickly revolted. As a result, AT&T has lost 8 million pay TV subscribers in just the last four years.

But the casualties from AT&T’s merger go well beyond the financial.

As streaming shifted from pesky upstart to the mainstream, younger consumers began viewing traditional satellite television as an antiquated relic of a bygone era. As a result, companies like Dish Network and DirecTV were particularly hard hit by the cord-cutting revolution.

Yet, in 2017, company executives made repeated television appearances promising that if the Trump administration passed its tax relief plan, the company would respond with billions in investment and thousands of “high-paying, really good jobs with great benefits.” Similar promises were made by both AT&T and unions ahead of each merger.

After receiving an estimated $42 billion in tax cuts from the Trump administration, the company has instead laid off an estimated 54,858 employees since 2017. AT&T imposed additional layoffs at Time Warner properties, including HBO and DC, and shuttered businesses like DC’s popular Vertigo label in a desperate bid to cut costs.

“A sprawling collection of businesses battling well-funded competitors”

Elsewhere, AT&T remained under steady fire for failing to upgrade its aging DSL lines to fiber, a problem particularly pronounced in marginalized neighborhoods. Attention and resources that may have helped address the country’s stubborn digital divide were instead funneled into an aggressive proposal designed largely to appease shareholders, consumer groups say.

“[Former AT&T CEO Randall Stephenson] was getting a ton of pressure to generate cash flow to support the dividend, but also pressure to increase the stock price,” S. Derek Turner, Research Director at consumer group Free Press, told The Verge. “Buying DirecTV on credit did that. The deal benefited whomever held AT&T’s stock as a dividend source. The customers and potential customers in AT&T service areas didn’t benefit.”

But even some investors grew angry with AT&T’s “growth for growth’s sake” strategy. Activist investors at Elliott Management penned a letter to AT&T in late 2019 complaining the company had spent nearly $200 billion to become “a sprawling collection of businesses battling well-funded competitors,” instead of focusing on core competencies like wireless.

The end result of AT&T’s ambition wasn’t entirely fruitless: HBO Max, the latest in a long line of attempted streaming TV brand refreshes, could still challenge other rising streaming services like Disney Plus or Comcast’s Peacock. But however successful HBO Max winds up being, it’s a product that shouldn’t have cost $200 billion and 55,000 jobs to create.

Ironically, AT&T’s failure comes despite the fact that it spent the better part of a decade lobbying to tilt the regulatory playing field in its favor, culminating in the company’s successful 2017 assault on net neutrality and the Federal Communications Commission’s consumer protection authority. But even abusing broadband usage caps to give itself a tactical advantage over streaming competitors didn’t help.

Ultimately, no amount of money or political power could buy the TV dominance the company’s executives envisioned. And as AT&T struggles to offload the mammoth debt load created by its ambition, employees and customers continue to foot the bill.

AT&T tried to buy out the streaming wars — and customers are paying for it

2020-01-30T11:35:25-05:00

Over the past five years, AT&T has spent hundreds of billions of dollars preparing for the streaming wars, going on a spree of mergers and acquisitions to build a juggernaut that could stand against companies like Netflix, Apple, and Amazon. But as this week’s earnings showed, it’s not working quite the way AT&T executives had hoped.

The numbers were grim — not just for AT&T, but for conventional cable in general. According to AT&T’s fourth quarter earnings report, the company lost 4.1 million pay TV subscribers in 2019 — 1.16 million of them in the last three months of the year alone. Around 945,000 AT&T customers dropped the company’s traditional TV services last quarter, and another 219,000 customers hung up on AT&T’s creatively named AT&T TV Now internet video platform, previously named DirecTV Now.

AT&T brushed aside the company’s losses — and an afternoon stock slide — by telling investors the subscriber losses were due to an intentional reduction in overall promotions, and a renewed “focus on profitability” at the Dallas-based company.

AT&T carried more than $151 billion in debt at the end of 2019

But that’s not the whole story. AT&T spent huge amounts of money building a streaming-ready media conglomerate — from its $67 billion acquisition of DirecTV in 2015, to the hugely controversial $108.7 billion merger with Time Warner in 2018 — and now that bill is coming due. The two deals saddled AT&T with a mammoth mountain of debt, placing the telecom giant between a rock and a hard place. Even with the Trump tax cuts — estimated to have delivered AT&T a $42 billion windfall — AT&T still carried more than $151 billion in debt at the end of 2019, nearly all of it thanks to its M&A appetites.

AT&T passed that debt on to its subscribers in the form of price hikes, which in turn accelerated the company’s subscriber losses. And while those price hikes certainly helped AT&T increase its revenues (average monthly revenue for traditional TV users was $131 at the end of 2019, up from $121.76 late last year), it came at a steep reputational cost.

AT&T employees have also bore the brunt of the company’s debt-recovery efforts. The Communications Workers of America — the country’s biggest telecom union — this week complained that AT&T has laid off 37,818 jobs since the Tax Cuts and Jobs Act was passed in late 2017, the precise opposite of what the company promised while it was lobbying for the law’s passage.

AT&T’s TV ambitions weren’t helped by a year filled with numerous additional missteps, including a growing roster of so many seemingly conflicted and redundant streaming brands (HBO Go, HBO Now, AT&T Now, AT&T TV, AT&T WatchTV, AT&T U-verse, DirecTV), even AT&T support staff occasionally found themselves befuddled.

“It should have been obvious that that was never going to work out well”

Craig Moffett, a Wall Street telecom and media sector analyst who downgraded AT&T stock to a “sell rating” last November, told The Verge he expects things will likely get worse for AT&T before they get better. And the company’s looming launch of yet another $15 per month streaming service next May — HBO Max — isn’t likely to help.

“They bought legacy assets and then tried to spin a story about how it positioned them to disrupt the status quo,” Moffett said. “It should have been obvious that that was never going to work out well.”

Moffett said AT&T’s problems are compounded by the fact that the company has a large number of programming contracts set to expire this year. The new contracts will drive up AT&T’s costs, which in turn will be passed on to consumers, accelerating its existing cord cutting worries.

AT&T had originally hoped that the huge influx of subscribers acquired from DirecTV would provide the company greater leverage in negotiations with programmers. Similarly, it hoped that acquiring Time Warner and HBO gave the company access to top-shelf original programming that could help it do battle against deep-pocketed competitors like Apple and Amazon.

But many on Wall Street (including some of AT&T’s own shareholders) felt that acquiring a traditional satellite TV company on the eve of the cord cutting revolution never entirely made sense. Neither did driving up the company’s debt load — then shoveling those costs onto the back of consumers already pissed off by the endless price hikes and abysmal customer service for which the pay TV sector is notorious.

T-Mobile has made big promises about its merger — but talk is cheap

2019-11-13T09:11:16-05:00

To gain federal approval of their $26 billion merger, T-Mobile and Sprint have spent years promising a universe of incredible benefits, from lower prices to better rural wireless coverage. So far, agencies like the Federal Communications Commission have been more than happy to believe them.

“The merger will promote robust competition in mobile broadband,” FCC chairman Ajit Pai said in a recent statement. “Consumers will directly benefit from improvements in network quality and coverage, which in turn will foster innovation in a wide variety of sectors and services.”

But US telecom history suggests you shouldn’t believe a word coming out of their mouths. From AT&T’s 2006 merger with BellSouth to Comcast’s 2011 merger with NBC, telecom megadeals are routinely accompanied by any number of promises that are promptly ignored once the deal ink is dry. Instead, consolidation routinely delivers terrible customer service and ever-higher prices.

The Sprint-Nextel deal became a colossal disaster

Take Sprint’s 2005 $35 billion merger with Sprint Nextel, which combined the then-fifth and third largest wireless carriers, for example. Sprint’s government filings from the period promised that the integration of the Sprint Nextel networks would be largely seamless, popular features like Nextel’s “push to talk” iDen network would be painlessly duplicated, and the company would deliver nationwide service in the 2.5GHz band reaching even the most distant rural markets. A press release heralded the creation of a “premier communications company” that would revolutionize the telecom sector, thanks to “efficiencies” and “synergies” that would be hugely beneficial to American consumers.

Then, like now, FCC leaders took the promises at face value.

“This action will ensure that consumers continue to receive the benefits of wireless competition, such as reduced prices and increased coverage,” former FCC boss Kevin Martin said in a statement approving the deal. “In addition, consumers can expect improved service quality and more advanced services.”

But the deal became a colossal disaster. Difficult integration of discordant technologies resulted in network and billing problems that drove millions of angry customers to the exits. Sprint’s promises of a nationwide 2.5GHz network would never even come close to materializing. By 2008, Sprint was using the spectrum to push another doomed joint venture with a company named Clearwire. By the time the Clearwire expansion ended in 2011, it had reached less than 44 percent of the public. By 2015, Clearwire would be shut down entirely.

By 2015, Clearwire would be shut down entirely

Sprint’s promises that it would implement a copycat version of Nextel’s popular push to talk technology on its 1xEV-DO Rev A platform also went nowhere. Trials for the company’s QChat service didn’t go well, and by 2008, the project was shuttered to the annoyance of users.

There were also familiar predictions that consolidation would help the market and Sprint itself. In filings, Sprint promised that the merged company would have the “highest average revenue per user (ARPU) in the wireless industry and be positioned to lead the industry in sustainable revenue growth.” With T-Mobile not yet a serious player, the Nextel deal left Cingular (fresh off its similarly hyped 2004 merger with AT&T Wireless), Verizon, and Sprint as the three dominant major carriers.

Many analysts lauded the reduction in overall competitors. “Three major carriers can help keep prices low for customers, expenses lower for the companies and innovation high,” telecom analyst Jeff Kagan proclaimed. “The wireless industry needed this wave of consolidation, and this merger will help the market.” At the time, the FCC agreed, insisting the deal would provide vast consumer benefits including lower prices.

In reality, the deal was a financial catastrophe, with Sprint’s revenues dropping every year from 2005 to 2008. In 2005, each company had a market cap of $33 billion; just three years later, the combined company’s entire value would be $25 billion. It wouldn’t be until 2013 when Sprint was able to reach the revenue levels it saw in 2005.

More than 8,000 employees would lose their jobs

Employment promises were just as hollow. Government filings had promised the FCC that the deal would “generate economic growth and jobs in the United States.” Then-Sprint CEO Gary Forsee told media outlets in 2005 that employees “shouldn’t expect to see a headline that there’s thousands of jobs that are going to be cut on the first of November or any time along the way.” By the end, more than 8,000 employees would lose their jobs.

It’s a troubling sign for the T-Mobile-Sprint merger, which is counting on the same magic of synergy and consolidation to make good on its promises. Hal Singer, an economist at Georgetown University, is one of seven antitrust experts that recently warned the government that the deal should be blocked. He told The Verge that when determining the harm of a potential merger, economists look to predictive metrics like upward pricing pressure and diversion ratios to simulate a merger’s impact. In the case of T-Mobile and Sprint, the data clearly suggests that the deal will raise prices.

It doesn’t really matter that T-Mobile has cemented a reputation as a trash-talking consumer-friendly company (even if the latter reputation is often skin deep). If the opportunity to raise rates is there, companies are obligated to their shareholders to take full advantage.

“Given the 4-3 nature of the merger the diversion ratio is off the charts and so are the predicted price effects,” Singer said. Because T-Mobile and Sprint target a lot of the same customers (budget-conscious and prepaid users), the effects are even worse than usual, he added.

Singer pointed to a 2018 European study showing that 4-3 consolidation in Europe has repeatedly resulted in higher prices, something that has also plagued the Canadian market.

While the Department of Justice and FCC have approved the deal, T-Mobile still faces a multistate lawsuit aimed at derailing the merger. Singer said legal precedent means the courts won’t look kindly upon T-Mobile’s claims that expanded 5G coverage in rural America — assuming that even happens — is enough to offset broader harm to other areas of the country.

“This bogus offset argument worked at the FCC,” he said. “But it shouldn’t hold up in court.”

T-Mobile’s merger promises are meaningless

2019-05-21T14:36:02-04:00

For the last year, T-Mobile and Sprint have been telling anyone who’ll listen that their planned $26 billion merger will bring some incredible benefits to American consumers. To hear the companies tell it, the industry’s latest super-union will result in faster speeds, broader broadband deployment, and a dramatic boost in well-paying American jobs.

But if you’ve seen telecom mergers go through this process before, there’s plenty of reason to be skeptical. Consolidation tends to make prices higher, connectivity worse, and customer service even more terrible. Pre-merger promises to do better are usually hollow, as consumer advocates, unions, and many antitrust experts all agree. For Sprint and T-Mobile, the biggest new wrinkle is the promised arrival of 5G, but that new tech is just cover for the same promises of better service and broader access — promises that are shaky at best.

To gain FCC approval, T-Mobile promised to deploy a 5G network covering 97 percent of the US population within three years, and 99 percent of Americans within six years. “The construction of this network and the delivery of such high-speed wireless services to the vast majority of Americans would substantially benefit consumers and our country as a whole,” the FCC claimed.

“Vague and unenforceable”

As a result, the FCC this week stated it would be approving the deal, insisting the merger would be a net positive for American consumers. The deal still needs to be approved by the Department of Justice, which has shown growing skepticism, but as far as FCC boss Ajit Pai is concerned, T-Mobile’s promises are money in the bank.

In a statement, Pai claimed T-Mobile would “suffer serious consequences” if they failed to follow through on this deployment pledge. “These consequences, which could include total payments to the U.S. Treasury of billions of dollars, create a powerful incentive for the companies to meet their commitments on time,” Pai said.

But Gigi Sohn, a lawyer with the FCC under the Obama administration, told The Verge T-Mobile’s promises were “vague and unenforceable,” and it was unlikely Pai would follow through.

“I have little hope that this Chairman will enforce any of these promises, if he is even around when they become due,” Sohn said. “In nearly two and a half years, the Trump FCC has not taken even one action that is contrary to the interests of the big mobile carriers.”

Sohn pointed to the Pai FCC’s failure to address the wireless industry’s ongoing location data scandals, or or its failed promises in the wake of hurricanes in both Florida and Puerto Rico. As the net neutrality fight made clear, the Pai FCC’s focus has been on prioritizing the industry’s desires, not holding it accountable for misdeeds, she said.

“A sad joke, and nothing more”

“Even if Chairman Pai’s successor was more willing to enforce these conditions, they would certainly be subject to delaying tactics and litigation from the ‘new’ T-Mobile,” Sohn said.

Both companies have already said they would have deployed these 5G networks anyway to keep pace with AT&T and Verizon, so the proposed merger can’t fairly take credit for their 5G rollout. Reducing the total number of competitors only reduces the competitive incentive to improve service or invest in broader availability.

Given the US government’s history of terrible service maps, confirming T-Mobile adhered to its promises would be an uphill climb, even for a third-party auditor. The government has only a fleeting idea where service currently is, making tracking improvement difficult. Industry lobbyists have routinely fought against better mapping.

“It’s universally agreed upon that the FCC’s maps are based on flawed data, and T-Mobile was caught red-handed claiming that its coverage in Vermont and other states was far greater than it was,” Sohn says. “So we can’t rely either on the government or T-Mobile to be accurate about whether these coverage conditions have been met or not.”

There are also good reasons to think rates would go up after the merger. In countries from Canada to Ireland, the reduction of major wireless competitors from four to three also directly contributed to significantly higher rates for mobile data. While T-Mobile promised the FCC it would avoid raising rates for a period of three years, that waiting period wouldn’t protect consumers in the long term, as consumer group Free Press argued in a statement shortly after Pai announced his support.

”The supposed three-year price freeze is meaningless in a wireless market where prices are falling and likely would continue to drop in the absence of this merger,” the group argued. “The little bit of price competition people have enjoyed thanks to the rivalry between Sprint and T-Mobile could keep sending prices lower. So a meaningless and unenforceable promise to just tread water where we are now is a sad joke, and nothing more.”

Sprint claims it wouldn’t survive without such a deal, but DOJ regulators have been skeptical toward that claim. There are a number of other potential partners, including Comcast and Dish Network, that could buy out Sprint without eliminating a direct competitor.

T-Mobile’s history as a disruptive carrier in the wake of the failed AT&T merger — not to mention its sometimes profanity-using CEO — seems to have convinced some of the company’s fans that this merger will be better than the countless other mega deals before it. But consumer advocates say that’s wishful thinking, and the data on the costs of consolidation is very clear.

The White House is using fuzzy math to justify net neutrality veto

2019-04-09T12:16:56-04:00

In a statement on Monday, the White House promised to veto the Save the Internet Act — a bill designed to restore net neutrality protections and undo the FCC’s extremely unpopular 2017 decision to repeal them. To justify the veto, the statement painted a picture of surging broadband investment and robust new networks, free to flourish now that Title II was out of the way.

“Since the new rule was adopted in 2018, consumers have benefited from a greater than 35 percent increase in average, fixed broadband download speeds, and the United States rose to sixth, from thirteenth, in the world for those speeds,” the White House said. “In 2018, fiber was also made available to more new homes than in any previous year, and capital investment by the Nation’s top six Internet service providers increased by $2.3 billion.”

Unfortunately for the White House, there’s no evidence to suggest any of those improvements had anything to do with killing net neutrality. Some of the data points aren’t accurate, and others are the result of policies from past administrations.

One figure comes from a telecom group’s press release

The first portion of the government’s data comes courtesy of an Ookla broadband speed report from last December, which found that average fixed broadband speeds increased by 35.8 percent in 2018. However, the speed tests at the heart of the report were conducted by Ookla users between Q2 and Q3 of last year. Net neutrality wasn’t formally repealed until June 11th of 2018 — or about halfway through the measurement period in question. There’s no evidence to suggest the net neutrality repeal impacted these numbers one way or the other, and past analysis has shown recent broadband growth to be well in line with past years.

The claim about record deployment of fiber (a favorite of Pai’s FCC) also has less to do with deregulation than the White House would have you believe. At least half of 2018’s 5.6 million new fiber-connected homes are included as a condition of AT&T’s merger with Time Warner, negotiated by the previous FCC. As part of that agreement, AT&T agreed to deploy fiber to an additional 3 million homes every year; a far cry from the “light-touch regulatory scheme” the government claims was responsible for the growth.

There’s a litany of other reasons why 2018 broadband speed improvements likely had nothing to do with net neutrality. Cable operators spent much of 2018 finishing up relatively inexpensive DOCSIS 3.1 cable upgrades, which began before Trump was elected. Other improvements were courtesy of community broadband efforts the Trump FCC has actively opposed.

One of the other figures is pulled directly from a telecom lobbying group’s press release. The White House boasted that telecoms had invested $2.3 billion in better networks over the course of 2018 — but the figure seems to have come from a press release sent out by USTelecom, a major broadband lobbying group, which attributed the rise to the FCC’s new hands-off approach. But not everyone agrees: consumer groups say the connection isn’t supported by hard data — and industry CEOs have even disputed that the Title II was stifling investment.

“Whether we look at inflation-adjusted figures or nominal values, these companies did not invest $2.3 billion more in 2018 than they did in 2017,” Free Press general counsel Matt Wood told The Verge. “In fact, four of those six companies saw investment declines in 2018, and the total decline for all of them put together was more than $1.5 billion” said Wood, who pointed to his group’s own analysis of the data.

“We’re getting more and more members of Congress on the record in support of real net neutrality protections”

Wood said there are lots of reasons why industry investment ebbs and flows, including the level of competition ISPs face in their home territories. Few, if any, of those reasons have anything to do with the Pai FCC’s decision to repeal net neutrality.

“To claim that large ISPs increased their spending when they did just the opposite—whatever the natural cause for such decreases—is a fraud designed to deter Members of Congress from voting for rules that their constituents need and demand by 4 to 1 margins,” Wood said.

Regardless, the Save the Internet Act still faces long odds as it winds its way through the legislative process. While it may survive a vote today in the House, it faces a tougher uphill battle in passing the Senate and avoiding a Trump veto. Should it fail, the rules could still be restored by an ongoing lawsuit filed by 23 state attorneys general.

“It’s obviously a long shot,” Fight for the Future deputy director Evan Greer told The Verge. “But so was stopping SOPA,” they said, referring to a hugely controversial copyright law only thwarted due to immense internet backlash.

“Either way, we’re getting more and more members of Congress on the record in support of real net neutrality protections,” Greer said. “That’s the key for restoring net neutrality in the long term, and the Save the Internet Act gives us a powerful path to push our way toward that goal.”

5G can’t fix America’s broadband problems

2019-02-06T08:47:22-05:00

Speaking on the company’s earnings call last week, AT&T CEO Randall Stephenson said he sees fifth-generation wireless (5G) becoming a “fixed broadband replacement product” within the next three to five years, providing consumers with faster speeds than most existing cable and DSL connections.

AT&T’s marketing department insists that the public will see “unforeseen innovation” as these networks come online. Both AT&T and Verizon have spent several years portraying 5G as an almost utopian solution to the slow speeds and sporadic availability of traditional broadband, heralding 5G as an essential cornerstone of the smart cities of tomorrow.

If 5G really could stand in for broadband, it would be filling a serious gap in American internet access. Federal Communications Commission data shows that fiber broadband remains unavailable for the majority of Americans, and there’s virtually no broadband competition at faster speeds. Both Verizon and AT&T have been repeatedly criticized (and occasionally sued) for promising fiber they don’t deliver, something often obscured by the government’s failure to adequately map broadband availability.

“Absolutely no way is wireless service ever going to be competitive with high-speed wireline services.”

But experts say there are plenty of reasons to be skeptical about the hype surrounding 5G, especially given these same companies’ long history of unfulfilled broadband promises. While 5G will most definitely provide faster, lower-latency networks, it shouldn’t be seen as a magical cure-all for the numerous problems that plague the US broadband sector, they argue.

Groups like the Electronic Frontier Foundation have argued in government filings that 5G hype overshadows these same companies’ long-standing failures to deploy real fiber broadband to rural and less affluent urban markets (despite billions in tax breaks, subsidies, and regulatory favors), and 5G shouldn’t be seen as synonymous with the fast, reliable fiber connections these same companies should have deployed years ago.

“Absolutely no way is wireless service ever going to be competitive with high-speed wireline services,” Ernesto Falcon, legislative counsel at the EFF, told The Verge. “The fastest speeds the industry is boasting about for the future of wireless has already been surpassed by fiber to the home years ago.”

Rural carriers have long accused companies like AT&T and Verizon of overstating 4G availability, and researchers have shown that early 5G availability is already being aggressively overstated by carrier marketing departments. History suggests that consumers should believe carrier promises of ubiquitous 5G availability only once they’ve actually seen it.

US consumers already pay some of the highest prices in the developed world for 4g lte

Meanwhile, most 5G marketing and press coverage tends to omit the biggest reason why 5G isn’t likely to be a perfect replacement for fixed-line broadband: price.

US consumers already pay some of the highest prices in the developed world for 4G LTE access, and so far, 5G is no better. AT&T’s initial foray into 5G is not only barely available at $500 for a hot spot and $70 for just 15 gigabytes of usage (plus access fees just to connect to the network), but it’s also certainly no fixed-line replacement, especially as 4K gaming and next-generation game streaming go mainstream.

The shift to 5G also won’t address one of the biggest — but largely overlooked — reasons for high wireless prices in the United States. Large ISPs enjoy a de facto monopoly over the business data services (BDS) market, which adds a huge cost to providing wireless service. This “special access” market connects everything from cell towers to ATMs to the larger internet, and FCC data indicates that in 73 percent of geographical areas, this market is dominated by just one ISP (usually AT&T, Verizon, or CenturyLink).

Smaller cellular carriers have complained for years that incumbents use this monopoly power to charge egregious rates to connect their towers to the internet backbone, putting them at a competitive disadvantage and driving up rates for carriers and consumers alike.

Incompas, a trade group representing these smaller carriers, told The Verge that 5G isn’t likely to change this dynamic. “The incumbents have already raised prices on business customers via BDS lines,” the group said, “and allowing them to burn the bridge to broadband would leave millions of customers with higher bills, slower speeds and without a 5G future.”

Other experts argue that your wireless connection may soon come packed with arbitrary restrictions that have never been a problem on wireline connections. The EFF, for example, told The Verge that industry attacks on net neutrality and FCC authority open the door to all manner of aggressive pricing and network restrictions that will not only drive up your monthly bill, but profoundly change the way we use the internet for the worse.

Verizon, for example, already charges its unlimited data customers notably more money just to view content in full HD. Sprint has similarly toyed with charging users additional money to avoid the throttling of games, video, and music. And both AT&T and Verizon have explored using arbitrary usage caps and overage fees to unfairly hamstring streaming competitors.

“If the carriers adopt aggressive zero-rating plans in the 5G market as a means to charge ever higher prices, it will directly stifle the promise of faster wireless service and allow them to engage in anti-competitive practices against alternatives on the Internet,” Falcon said.

None of this is to say that 5G won’t be a generally good thing when it finally arrives at scale, something that’s not expected to happen until 2020 or later.

Early trials have resulted in speeds as high as 1.7 Gbps in the labs, and the virtualization technology accompanying the standard will make wireless networks more resilient and easier to manage. The lower latency 5G provides will make mobile network-reliant technologies simply function better. There’s no debate that 5G is a modest but important evolution.

But if there’s anything to be taken from the telecom industry’s long history of unfulfilled promises, caveats, head fakes, and outright falsehoods, it’s that sector promises should always be taken with several grains of salt. Those waiting for 5G to magically fix the worst aspects of a troubled US broadband sector — particularly, high prices — probably shouldn’t hold their breath.

How the new AT&T could bully its way to streaming domination

2018-12-18T08:55:09-05:00

After decades of soaring cable TV prices, the streaming revolution has finally arrived. Netflix, YouTube, Hulu, and Amazon are all fully stocked services, entirely capable of competing with cable on content, and they’re all rated far higher in customer satisfaction than the companies they hope to supplant.

The result is new competition for cable companies that’s pushing them into the streaming business. Nearly every broadcaster that’s currently in the cable TV lineup will offer some kind of direct-to-consumer streaming service by 2022. Most notable will be Disney’s looming Disney+ service, which will soon be the exclusive streaming home of must-have content from Pixar, Marvel, and the Star Wars universe. AT&T plans to launch its own streaming service next year, drawing on content from DC Comics and Harry Potter that was acquired as part of the recent Time Warner deal.

“AT&T will have carte blanche to discriminate in favor of the video content it owns.”

But telecom companies have a unique advantage: they control the content and the networks that content travels over, presenting a wonderful opportunity to hamstring competitors and unfairly advantage their own services. Heavy-handed tactics like throttling and usage caps would have been blocked by the 2015 net neutrality rules. But the rules were rolled back by Trump Federal Communications Commission chairman Ajit Pai, and those networks could be a crucial advantage in the streaming wars.

The first tool in telecom’s arsenal is zero-rating, which lets preferred services get a break on network-level data charges. Wireless users may find that AT&T’s DirecTV Now service doesn’t count against their monthly usage limit, an arrangement that was still allowed under Wheeler’s FCC but was increasingly frowned upon.

With preferred services in a separate lane, telecoms are free to degrade service for standalone streaming services. Both Comcast and AT&T have long imposed costly and unnecessary usage caps and overage fees on broadband connections. Those limits often don’t apply to their own content, but they do apply to competitors like YouTube or Netflix, driving up consumer costs should they pursue these alternative options. Netflix streaming on an AT&T wireless device often results in either additional charges or a throttling of the connection, not-so-subtly incentivizing you to use AT&T’s service.

All three major ISPs have already explored the idea of driving up costs that streaming competitors must pay to access ISP networks at interconnection and peering points at the heart of the internet. Back in 2014, Netflix and transit operators accused ISPs of letting peering points intentionally congest, resulting in mysterious Netflix slowdowns that only resolved once ISPs were paid more money. When the FCC’s 2015 net neutrality rules banned this sort of gamesmanship, the entire contentious cross-industry battle suddenly and almost magically disappeared.

Former FCC lawyer Gigi Sohn tells The Verge that ISPs now have a blank check to behave anti-competitively. With a weakened FCC and no net neutrality rules, ISPs will be free to throttle or block competing services, drive up competitor costs for essential content and network access, or punish users that veer away from an ISP’s own services.

“The repeal of net neutrality — and more importantly, the abdication of the FCC’s duty to protect consumers and competition in the broadband market — ensure that AT&T will have carte blanche to discriminate in favor of the video content it owns,” says Sohn.

Corporate consolidation makes the problem even worse. AT&T bought DirecTV in 2015 for $67 billion, and it’s poised to grow even more powerful with a still-pending acquisition of Time Warner that’s worth $85 billion. That would give the telecom giant ownership of programming like HBO and CNN that’s essential to the company’s newfound competitors.

The Department of Justice sued to stop the highly controversial merger, citing a series of experts who documented in detail how a bigger, stronger AT&T would be heavily incentivized to drive up programming costs for competitors in a bid to favor its own services.

Verizon or AT&T could throttle Netflix 4K streams, while avoiding such limitations for their own video

But in a widely criticized ruling, US District Court Judge Richard Leon ignored those experts and approved the deal without a single condition. Within weeks, AT&T had, just as critics and the DOJ’s expert witnesses predicted, raised prices on both consumers and competitors like Dish Network to recoup the mammoth debt that was created by the deal.

“Whether it means freeing Time Warner and DirecTV content from restrictive data caps to the detriment of other streaming services, or charging cable and satellite rivals more for must see programming, AT&T will certainly take advantage of an absent FCC and weak antitrust enforcement,” Sohn says.

Tim Wu, author of The Curse of Bigness: Antitrust in the New Gilded Age, tells The Verge that the DOJ’s recent loss is simply the culmination of a several-decade decline in meaningful antitrust enforcement in America.

As for AT&T, Wu argues that “Judge Leon embarrassed himself in the opinion by failing to take into account the larger picture, with its lopsided crediting of all of the defendant’s witnesses, and strained efforts to find a way out of [DOJ expert Carl] Shapiro’s reasoning.”

The death of net neutrality will make wireless devices particularly vulnerable. AT&T and Verizon have been accused of erecting artificial and unnecessary barriers on wireless services, often under the guise of battling network congestion. AT&T, for example, was widely criticized in 2012 for blocking Apple’s FaceTime in a bid to drive consumers to more expensive plans. In the years since, both AT&T and Verizon have been similarly creative when selling users “unlimited” data plans with arbitrary limits.

Competitors without telecom support could face higher costs and anti-competitive restrictions

Verizon’s unlimited plans, for example, now throttle all video to 480p (about 1.5 Mbps) by default and ban the streaming of 4K video entirely. To receive video streams at their full quality, users have to pony up significantly more cash. Researchers have suggested that this has nothing to do with managing network congestion and everything to do with making additional money.

In the absence of net neutrality rules and FCC oversight, it’s not hard to see how this idea could be expanded and abused. Verizon or AT&T could, for example, throttle Netflix 4K streams specifically, while avoiding any such limitations for its own video services, justifying the discrepancy by implying that their own services simply work more efficiently by design.

As Verizon’s recent throttling and upselling of California firefighters showed, this kind of behavior is far from theoretical. These companies are, historically, fixated on crafting arbitrary and unnecessary limitations consumers, and competitors are then forced to hurdle at ever-escalating cost.

Competitors without telecom support could face higher costs and anti-competitive restrictions with only the Federal Trade Commission (whose authority here is extremely limited) to turn to. Without net neutrality’s transparency requirements, ISPs won’t have to clarify the limits of a connection, meaning competitors and consumers alike may not even realize what’s occurring.

Like the boiling frog fable, ISPs are likely to move slowly to minimize consumer backlash and negative media coverage. But the past is filled with examples of ISPs wielding their advantage as network gatekeepers as a bludgeon, and critics say it won’t take long before they use that power to reduce choice, raise rates, and bully their way to the top of the streaming heap.