Tag Archives: FCC

Elected Officials Push For Countrywide Performance Equality of Broadband Providers

NCC Logo

As advertisements promoting increasing broadband speeds circulate around the internet, elected officials in cities throughout the United States are coming together to ask for a system that gathers performance information across providers. This collective of elective officials, including some mayors, is known as Next Century Cities (NCC), an advocacy group which aims to bring reliable and affordable broadband internet to everyone in the country. Formed last September, the mission of this group is to make available to any community in America fiber broadband with speeds of 1 Gbps.

There are large urban areas included in the NCC, such as Boston, Massachusetts, Seattle, Washington, and Kansas City, Kansas. Overall, there are 35 members of the group, not all of which are large or urban areas, as seen by member communities like Salisbury, North Carolina, which has a population around 33,000, and Yellow Springs, Ohio, which has a population around 3,500. In a letter to the FCC, these city leaders stressed the need to find ways to measure the cost, the reliability, and the speed of broadband internet. The current procedure does not require a standard measurement method for providers, so for the consumer shopping around, the situation is a bit like comparing apples to oranges. Furthermore, the NCC wants the reports produced through these new standard measurement rates to be easily understood, by both government officials and citizens, in the hope that they will be more empowered when selecting a broadband provider.

The member cities of the NCC have gained considerable backing from recent findings published by the Government Accountability Office (GAO). A GAO report suggested two changes to the current FCC policy. The first change involves the FCC publishing resources on broadband performance that are accessible to the general public while still including the pertinent reliability and speed information about the ISPs. The second suggested change involves ISPs adopting a universal standard to measure their broadband speeds but also adding relevant information from consumer reports and research to these findings to make them more inclusive.

Methods for implementing these suggestions have already been developed. The NCC is stressing the need for an advisory panel of local and state officials, in addition to community organizers, to take the new broadband information and present it to cities and individual customers. To ensure that this process goes smoothly, a centralized and accessible database will be created that allows users to track the standardized performance reports for all providers according to geographic region. Finally, there will be measures and assessments made of the general public to ensure that the database meets their needs and that the advisory panel is conveying effectively the pertinent information.

AT&T Fighting Fines For Throttling Customers’ Data

ATT Logo with a tightened belt around it

Despite the company’s recent success in gaining approval from the Federal Communications Commission (FCC) to complete its purchase of DirecTV, AT&T has suffered from a string of legal decisions and regulatory violations that have resulted in sizeable fines. Both the FCC and the Federal Trade Commission (FTC) have taken aim at the telecom firm over what they claim are illegal and unethical practices related to AT&T’s data usage policies.

The FTC’s case began last October when the commission made clear that they were going to sue AT&T for “deceptive and unfair data throttling.” In particular, the lawsuit focuses on customers who have unlimited data plans on their mobile devices. AT&T discontinued the plans years ago, but around 20% of its customers have been grandfathered in and retain the cap-free data packages. However, according to the FTC’s suit, AT&T has actually been imposing a limit on these consumers. This has been occurring in two ways. For those customers with older 3G phone models, a 90% reduction of their speeds took place as soon as they hit 3GB of data during the monthly cycle, while those with LTE phones saw a similar reduction in their speeds after hitting 5GB per month. Ultimately, the crux of the FTC’s lawsuit is that such actions are in violation of the contract signed by unlimited data plan customers. While AT&T claims that no such violation exists, they have modified the language in their contracts to state that throttling will only occur if the user is connected to an overloaded cellular relay.

Around the same time that the FTC’s case got underway, the FCC saw an increase in the number of complaints from AT&T customers who were irritated that their connection speeds had been slowed down. This led the commission to accuse the telecom provider of violating a transparency rule that was part of the Open Internet Order passed in 2010. Although the FCC has known about AT&T’s data throttling policy for the last four years, it was only recently that the number of unhappy customers prompted Chairman Tom Wheeler to level a massive $100 million fine against the mobile service provider.

AT&T is not simply accepting its fate and has vowed to fight the $100 million fine in court, claiming that customers knew full well that their data speeds would be throttled after reaching a certain quota and that no harm came to customers as a result of the slowdown. There is no doubt that AT&T is going to stand its ground for as long as it can on the issue, knowing that the judge in the FTC case may cite the FCC’s actions as a precedent. The telecommunications conglomerate has filed a grievance against the FCC stating that the current fine is excessive and that, at most, AT&T should have to pay only $16,000, even though its policies were not illegal.

 

 

 

AT&T Expansion and DirecTV Merger

AT&T and Direct TV Logos

In 2014 AT&T and DirecTV announced a merger worth almost $50 billion dollars. While this proposed deal would provide a new way for AT&T to expand its footprint, the process had been stuck in the approval phase for months, although after FCC Chairman Tom Wheeler recommended last week that the deal move ahead, industry experts now believe that it will be approved formally within ten days. It appears that the main sticking point had been ensuring that AT&T adheres to the new FCC rules pertaining to broadband speeds. While this impasse persisted, AT&T was forced to file for two extensions to close the deal, the most recent only a few weeks ago.

When the deal does receive final approval, it will make AT&T the largest TV provider in the nation and will give DirecTV customers access to broadband services. Two recent filings to the FCC detail parts of AT&T’s plan to address the Department of Justice’s concerns that the merger may create a TV and broadband monopoly. The first filling stipulates that lower and middle income families will have access to DSL services, if available, at discounted prices. Upon further review of the filling, however, there are major limitations on this provision. In particular, the program will continue for only four years and for the more remote locations, will only provide speeds of 1.5 Mbps, which is too slow to support streaming services like Hulu Plus or Netflix. This low speed option has caused experts to speculate this is a different tactic in video slowdown and wonder if AT&T will be in full compliance with the Net Neutrality ruling if they do not improve this aspect of their proposal. Prices for this service would range from $5 to $10 per month, while a higher tier with speeds up to 5 Mbps would cost $10 to $20 per month.

The second filing to the FCC also addresses coverage issues, but deals with fiber internet customers. As part of its proposed merger, AT&T has promised that it will extend its 1 Gbps fiber footprint to almost 12 million businesses and homes within the next four years. This announcement comes on the heels of one made in April 2015 that AT&T was looking at nearly 100 cities where they might roll out fiber service, including Chicago, San Francisco, and Atlanta. As mentioned in the new FCC filing, AT&T has now added a new focus on the state of Florida, in particular the cities of Miami and Fort Lauderdale. The company will draw on its recent successful expansion in the state of Texas, particularly around Dallas and Austin, to implement an efficiency plan to bring its GigaPower fiber service to the Sunshine State by the middle of 2016. Whether or not these efforts are enough to alleviate any lingering concerns still held by the Department of Justice should become clear by the middle of August 2015.

 

Time Warner Cable Mergers and Net Neutrality Expectations for Charter

Charter Communications and Time Warner Cable logos combined.

A little over two months ago a proposed merger between Comcast and Time Warner Cable (TWC) was called off. Almost no time passed before Charter Communications entered into an agreement to purchase TWC for roughly $57 billion. As the calendar turns to July, there remains a certain level of uncertainty surrounding the details of this proposed purchase, as well as how the FCC will respond to the bid.

 

Early after its announcement in 2014, the bid by Comcast to purchase TWC was considered a long shot. Claims from within the broadband community, consumer advocate groups, and the public all made it clear that they were concerned with the creation of what would have been the largest TV operator in the United States. Even the Chairman of the FCC, Tom Wheeler, expressed his opposition to the merger. Wheeler’s main point of contention, however, was that if the purchase were allowed to proceed, it would create an unfair competitive advantage for Comcast in the broadband market. In particular, the company would have enjoyed a controlling share of almost 60% among broadband providers. Ultimately it was this near monopoly, coupled with the lack of any penalty fee for ending the agreement, which caused Comcast to back out of the deal.

 

Drawing lessons from the failed deal between Comcast and TWC, Charter has begun to promote how its proposed purchase of TWC will not alter the television or broadband playing field on the national stage. The CEO of Charter, Tom Rutledge, has stressed that even if his company is successful in acquiring TWC and Bright House, the newly expanded company will still be only the second largest provider of cable and high speed internet services behind Comcast. At most, Charter would supply about 20% of all TV customers and 29% of all broadband customers. Another issue that Charter does not need to address is that unlike Comcast, which has a financial interest in Hulu, there is no concern that Charter may regulate speeds for video streaming services, such as Netflix or Amazon Prime.

 

Charter is also drawing on the FCC ruling which made broadband a Title II utility as a reason for why its proposed merger should be approved. Rutledge made clear that the footprint of the expanded company would not overlap geographically and that there would remain competition for broadband services offering 25 Mbps in all of its coverage areas. Additionally, he stated that since the majority of the company’s investment is in broadband, not television, it would encourage the expansion of Over the Top (OTT) streaming video services and not impose any sort of data cap on customers. Indeed, subscribers with the new Charter, if the merger is approved, could see significant savings on their broadband subscriptions as their speeds are tripled while their monthly bill is lowered.

 

While the merger works its way through regulatory checks, industry analysts appear confident that the deal will occur. The latest suggestions are that there is a 75% chance that the deal is approved. The FCC has announced that they hope to have this process decided, in favor or opposition of the merger, by the end of 2015.

 

FCC Reclassification, Broadband Access, and OTT: Does it Mean Anything?

Collection of rainbow-colored internet cables

One of the biggest hassles that people experience when they move is finding new cable and internet providers. While there are a bevy of cable packages to choose from, the options for broadband providers are not always as plentiful. With the recent FCC decision to reclassify broadband as a Title II utility, coupled with its change in what constitutes broadband, services with speeds of 25 Mbps or higher, the process of selecting a provider by a new homeowner has gotten even harder. The issue at hand is that for the vast majority of American households, there is only one, if any, Internet Service Provider (ISP) that can supply true broadband. The latest statistics are that 19.7% of American households do not have access to an ISP offering the 25 Mbps speed, while 54.3% have access to only one such ISP.

 

While the broadband provider issue appears to be changing with the development and expansion of fiber networks throughout the country, Roger Lynch, CEO of Sling TV, is stressing that consumers may see an increased strain on their finances as they purchase internet access. In particular, Lynch believes that those consumers who are broadband-only subscribers, the type who thrive in the expanding Over the Top (OTT) ecosystem of Netflix, Amazon Prime, and Hulu Plus, will feel the pinch as cable companies attempt to offset their loss of TV subscribers by raising the price on single-use consumers. While OTT-only dwellings remain a small part overall, the percentage is growing and has now reached 10.5 million households, up over 15% from 2012. This expansion is occurring at the same time that pay TV subscriptions have declined over 0.5% since the start of 2015, the largest decline ever recorded.

 

Although Lynch’s claims must be taken with a grain of salt, considering that Sling TV is a subsidiary of Dish Network and a competitor to the cable companies, there is no denying that the new OTT offering is seeing early growth. Since its February 2015 launch, the $20 per month service has expanded to over 250,000 customers. While this is a fine showing, it is not a surprise to industry analysts who predicted a fast start but see Sling TV’s subscription numbers slowing down quickly. With its focus on offering smaller channel bundles and the option to add other thematic bundles for an additional cost per month, Sling is trying to develop its own niche, no doubt assisted by the existing relationships that Dish Network enjoys with broadcasters. However, Sling’s sustained growth, especially from those consumers interested in a variety of sports offerings, of which the OTT service has limited access, remains the question.

 

Ultimately, all of the talk about falling pay TV customer totals, increasing costs for broadband-only subscribers, and the increase of OTT offerings means that consumers need to be aware of what services are available in their area before they sign a lease or close on a home.

FCC removes local regulation rules

FCC logo

While the much-discussed March 2015 decision by the FCC upheld the idea of Net Neutrality, there is a change taking place at the local level that cable providers are hailing as a victory for streamlining the distribution of content to their customers. For the last twenty-two years, local, city, and state committees have possessed oversight of the basic programming packages provided by the cable companies. Now, after a unanimous 5-0 ruling by the FCC to remove this restriction, the providers will be able to determine all the details of their programming packages without having to receive the approval of local authorities.

 

Up until now, the oversight provided by the local committees as part of the 1992 Cable Television Consumer Protection and Competition Act not only dictated which channels could not be excluded from the basic programming packages, but also how much those packages could cost. The new FCC ruling determined that the regulation was no longer necessary because of changes in the market that have created an elevated level of competition for the cable providers, in particular through the expanding footprint of services provided by companies like DirecTV and Dish. Another factor in the FCC’s decision was that since 2013, 220 of 224 requests for exemption from local rate-setting restrictions were approved. With such a high success rate for receiving exemptions, the FCC believes that it is simply removing an unnecessary level of red tape.

 

Cable providers state that with the removal of uniform package requirements, they will be able to present consumers with a variety of service and channel packages, ultimately providing more choices for service packages that don’t include the higher cost premium channels. At the same time the cable providers have cheered the latest FCC decision, broadcasters have been critical of the claims that satellite companies provide reliable enough competition to all parts of the United States to justify this victory for the cable providers. As a result of this rule change, and contrary to the cable companies’ claims, there is a fear among broadcasters that basic TV station signals will now be placed in costly service tiers, ultimately lowering the viewership of local programming.

 

The concern over the FCC ruling is not confined to just local regions, but also the halls of power in Washington D.C. A representative for the National Association of Broadcasters remains perplexed why the one defense available to safeguard consumers from skyrocketing prices has been removed so easily. Furthermore, members of Congress have questioned the FCC’s ruling, stating that this decision will result in increased prices and fewer channel choices for residents in rural and remote areas.

FCC Chairman Tom Wheeler Claims Title II Reclassification Would Not Hurt Broadband Investment

The Federal Communications Commission (FCC) has been warming up to the sound of Title II reclassification, following President Obama’s declaration of support for ‘common carrier’ reclassification on broadband companies.

Continue reading FCC Chairman Tom Wheeler Claims Title II Reclassification Would Not Hurt Broadband Investment