FCC reveals glacial progress on the resale of location data by operators

US operators have been reselling the location data they accumulate about their subscribers and have been slow to deliver on promises to stop.

This practice was already well-known by the time it was highlighted in an expose at the start of this year. At the time operators were quick to stress that they’re pulling out all the stops to protect their customers’ personal data but Federal Communications Commissioner Jessica Rosenworcel was apparently skeptical. Frustrated by their deafening silence on the matter she wrote to the four US MNOs at the start of the month to ask them what they were playing at.

Rosenworcel received relatively prompt responses from those operators and decided to publish them alongside a mea culpa that was probably directed more at other FCC Commissioners than herself. “The FCC has been totally silent about press reports that for a few hundred dollars shady middlemen can sell your location within a few hundred meters based on your wireless phone data. That’s unacceptable,” she said.

“I don’t recall consenting to this surveillance when I signed up for wireless service—and I bet neither do you. This is an issue that affects the privacy and security of every American with a wireless phone. It is chilling to think what a black market for this data could mean in the hands of criminals, stalkers, and those who wish to do us harm. I will continue to press this agency to make public what it knows about what happened. But I do not believe consumers should be kept in the dark. That is why I am making these letters available today.”

You can read the contrite and exculpatory responses here, but in case you can’t be bothered here’s a summary. AT&T said it started phasing out this sort of thing in June 2018, while still making location data available in emergencies. Additionally the letter attempted to distance AT&T from the reports in question and said it had stopped sharing and data with location aggregators and LBS providers on 29 March 2019.

Sprint said it current works with just one LBS (location based services) provider but will pack that in by the end of this month. T-Mobile said it had terminated all contracts with LBS types by 9 March 2019 and went on at considerable length to correct what it considers to be flawed reporting on how it used to handle this sort of thing. Verizon said it had terminated all location deals by the end of March 2019.

So that would appear to be that. All the operators have said they don’t deal with location data aggregators anymore and presumably Rosenworcel is a happy Commissioner. But the fact that they’ve only just stopped reselling their customer’s personal data, and even then only after persistent nagging and bad publicity, is a further illustration of how cavalier the tech industry has been with personal data to date.

T-Mobile/Sprint merger approval is still hanging in the balance

The US DoJ’s anti-trust chief has not made up his mind on the T-Mobile/Sprint merger case, saying the deal must meet key criteria.

Speaking on CNBC (see below) Makan Delrahim, Assistant Attorney General for the US Departments of Justice’s Antitrust Division, said he has not made up his mind yet. Although he refused to comment on if his staff resisted the deal, as was reported by the media, Delrahim did allude to more data being requested from the two parties.

Delrahim also dismissed the notion that there is any magical number of competitors to deliver optimal competition in a regulated market like telecom. Any proposed deal needs to deliver efficiency, but the efficiency needs to be both merger specific, that is the efficiency cannot be achieved through other means, and verifiable.

With regard to the effects of the merger on consumers, Delrahim listed two items, price effect and coordinated effect. The first is related to the potential price move up or down after the merger. The second refers to if the merged company has the incentive to continue to compete with the existing competitors on price, in this case AT&T and Verizon. 5G will also factor in the DoJ’s decision making consideration, Delrahim said. But, instead of being positioned as a counteract against China, in this interview Delrahim was treating 5G in the framework of service offer to consumers, and the merger’s impact on it.

When being asked on the timeline, Delrahim said there is no deadline on the DoJ side, except that the deal cannot be completed before a certain date. This timeline can be extended if more deliberation is needed.

On the FCC front, another hurdle that the two carriers need to overcome before they can become one, they continued to play the offensive. Last week representatives from the two companies, including John Legere, the CEO of T-Mobile, and Marcelo Claure, Executive Chairman of Sprint, called on the FCC commissioner Jessica Rosenworcel and her Legal Advisor. The team presented the updated merger case, including their pledge to deploy home broadband, drive down prices, deliver more benefits to prepaid customers, and create, instead of cutting, jobs.

FCC’s unofficial 180-day consultation period was reopened early this month, after being halted three times, and is now on day 147.

Makan Delrahim’s CNBC interview is here:

 

 

Android officially endorses AT&T’s 5GE thing

Now that AT&T has got the all clear the Android Open Source Project has decided to embrace 5G Evolution.

The news comes courtesy of XDA Developers, which spotted a recent addition to the Android Open Source Project site headed ‘Add 5G evolution icon’ and supported with the instruction to ‘…add the 5GE icon to the system UI for specific carriers LTE CA network.’

Right now we have no reason to assume those specific carriers are any other than AT&T but, since the implied threshold for being able to display that icon is nothing more than an LTE signal with a bit of carrier aggregation sprinkled on top, in principle anyone else could jump on the bandwagon if they felt like rebranding their LTE-A as 5G-adjacent.

The apparent failure of Sprint to get any legal support for its claim that 5GE is misleading to consumers, on the perfectly reasonable grounds that people think the presence of a 5G icon on their phones might mean they’re getting 5G, presumably emboldened Android to endorse it. This could end up backfiring on AT&T, however, when it tries to convince customers who already think they’re getting 5G to pay more for an upgrade.

AT&T will stick with 5GE after settling with Sprint

US operator Sprint has settled the case it brought against AT&T for unfair competition with the 5GE marketing gimmick with apparently little to show for it.

The legal trade publication Law360 reported that Sprint and AT&T have reached a settlement of the case Sprint brought to a federal court in New York in February. A short statement was mailed to the media, “The parties have amicably resolved this matter,” it said. A source told Law360 that AT&T will continue to use “5G Evolution” or 5GE in its marketing and ads materials. No details on the terms of settlement have been disclosed.

In the court case, Sprint complained that AT&T was conducting false advertising, therefore misleading consumers, and in turn, directly harming Sprint’s business interest. In addition to the law suit, Sprint also took out a full-page ad in the New York Times in March to warn consumers “Don’t be fooled. 5G Evolution isn’t new or true 5G. It is fake 5G.”

The other big US operators were not holding back from attacking AT&T’s antics either. Verizon’s CTO wrote an open letter calling on the industry “to commit to labeling something 5G only if new device hardware is connecting to the network using new radio technology to deliver new capabilities,” as well as promised that Verizon “won’t take an old phone and just change the software to turn the 4 in the status bar into a 5.” T-Mobile, on the other hand, in keeping with its CEO’s maverick spirit, uploaded a video showing someone taping over the LTE indicator on the phone with a sticker labelled “9G”.

Even the OEMs would not let go the chance to mock AT&T’s shenanigans. Xiaomi, when launching its 5G smartphone before MWC in Barcelona, pointedly highlighted the 5G network by Orange it used for the demo was real 5G, “not fake 5G”.

A few days before the announcement of settlement AT&T defended itself at the court that consumers were not fooled into believing the 5GE is actually 5G. On the other hand, for the purists like the EU-backed 5G Infrastructure Association or Qualcomm, none of the 5G networks launched so far in Korea and the US can be called “real 5G”.

Skint AT&T flogs its 10% of Hulu for $1.43 billion

Having dropped $85 billion on Time Warner AT&T needs to raise some cash sharpish and getting out of OTT TV company Hulu us a start.

Hulu is a private company that is roughly 60% owned by Disney, 30% by Comcast and 10% AT&T. The latter stake (9.5% to be precise) is being bought back by Hulu itself for $1.43 billion, valuing the whole company at $15 billion. Hulu will presumably apportion the stake such at Disney owns two thirds of the company and Comcast one third.

“We thank AT&T for their support and investment over the past two years and look forward to collaboration in the future,” said Hulu CEO Randy Freer. “WarnerMedia will remain a valued partner to Hulu for years to come as we offer customers the best of TV, live and on demand, all in one place.”

AT&T says it will use the case to pay down its debt pile a bit, but the ongoing relationship of its expensively acquired media business with OTT players like Hulu will remain a source of intrigue. Disney recently announced its own streaming service, as did Comcast’s NBCUniversal at the start of this year.

On top of that Apple is getting funny ideas, Netflix and Amazon continue to throw money at original content and you’ve got all the various on-demand versions of traditional broadcasters. They can’t all go it alone. So the aggregation of this proliferation of video on-demand is a critical issue. How long WarnerMedia will remain a valued partner of Hulu now that AT%T doesn’t own a piece of it remains to be seen.

Don’t expect upstarts to knock Netflix off its throne – report

A new report from UK analyst firm Re-Think has painted a gloomy picture for those attempting to muscle into Netflix’s dominance in the streaming world.

With the likes of AT&T, Disney and Comcast all attempting to diversify revenues, the riches being raked in by Netflix in the entertainment streaming market must look very tempting, though the rewards will not come easily. This is not to say there is not room for new services, the price point creates an opportunity for multiple service providers in a single household, but Re-Think is predicting Netflix will continue to hoover up profits.

“Despite moves by major studio conglomerates come 2024 Netflix will remain the dominant force in streaming, earning more streaming revenue than the big three put together,” the report states. “Its market share will dilute from 63% last year to 52% by 2024, but our forecasts show that Netflix cannot be shifted from the number one spot.”

Despite going through years of dredge, swallowing the ‘reward’ of being a loss leader in an emerging market, Netflix shareholders are beginning to see the breaking dawn. During the last earnings call, CEO Reed Hastings proudly told shareholders revenues had grown 35% to $16 billion across 2018, with operating profits almost doubling to $1.6 billion. The business finished with 139 million paying memberships, up 29 million across the year.

139 million might sound like an incredible number already, but then you have to consider whether this is just the beginning. International subscriptions, outside of the US market, accounted for approximately 63% of the total offering plenty of headroom for growth. The team is forecasting an additional 9 million additional subscriptions over Q1 alone.

This is the challenge which the upstarts are facing. Not only is this a company which is sitting very comfortably in the number one spot, but it has momentum which it is doubling down on. At IBC last year, Maria Ferreras, VP of EMEA Business Development at Netflix pointed towards partnerships with telcos (carrier billing), more original and local content, as well as launching in new markets to continue the growth.

During the results call, Hastings confirmed these plans were scaling up. The relationships with local partners were working well, and the team were searching for more, while more investment was being directed towards content. Investments over the last twelve months totalled $7.5 billion, and this number will only grow. It probably won’t be on the same trajectory as previous years, but the number of big-budget titles are visibly increasing on the platform.

“The extraordinary success of Netflix has got it lined up in the sights of the big studios and content houses and the big question now is how well it will stand up to that assault on multiple fronts,” the report states.

Hulu is an established platform, as is Amazon Prime, but with Disney entering the market with an impressive portfolio, while Comcast is pushing forward, and AT&T will soon start making waves with its $85 billion acquisition of Time Warner. There is a lot of competition emerging on the horizon, but these the upstarts have a lot of distractions.

Over the next couple of months, we see two developments which will worth keeping an eye on in this space. Firstly, the protection of traditional TV services and also the consumer appetite for AVoD services, streaming with advertising.

Advertising is clearly big business. In the UK, you only have to look at the success of Sky as the leader in the premium content space as an example. Like the social media giants, Sky has created a sophisticated advertising platform, AdSmart, allowing advertisers to drive engagement through hyper-targeted campaigns. This model continues to work with Sky, but perhaps it is living on borrowed time.

The Netflix model is the opposite. An upfront payment and the promise of no advertising to break-up shows or movies on the platform. The more people who subscribe to Netflix, or similar platforms, the lower the tolerance for adverts will become. Netflix might be missing a cash generation opportunity, but it also might be irrevocably changing the industry. This will not happen overnight, but it might be the light at the end of the tunnel.

The second point, protecting legacy services, is going to be a tricky one. The likes of Comcast and AT&T will have cash revenues to worry about as they effectively cannibalise themselves in search of the OTT dream. Looking at the revenues on the traditional TV services, Re-Think is forecasting AT&T will decline from $64.7 billion in 2018 to $47.7 billion in 2024, Comcast from $25.8 billion to $20 billion and Disney from $11.5 billion to $9 billion.

Should these companies encourage users to migrate to their streaming alternatives, the decline could be even steeper. This might give the streaming service more opportunity to succeed in an increasingly fragmented market, but investors might get spooked. It’s a catch-22 situation, with one option killing revenues but the other holding back a more future-proofed concept.

The challenges for those trying to break Netflix dominance is not only dealing with the beast’s popularity, but also handling the internal politics of change. This might be much more of a challenge, especially when you consider the traditional culture of the challengers.

Ultimately the feedback here is relatively simple; Netflix is king and don’t expect the usurpers to wobble the throne too much.

Turns out AT&T’s 5G E is just LTE-A after all

Network measurer OpenSignal has had a look at the performance subscribers are getting from AT&T’s whizzy new 5G Evolution service and it’s nothing special.

“Analyzing Opensignal’s data shows that AT&T users with 5G E-capable smartphones receive a better experience than AT&T users with less capable smartphone models, for example those with an LTE Category below 16,” wrote OpenSignal Analyst Ian Fogg. “But AT&T users with a 5G E-capable smartphone receive similar speeds to users on other carriers with the same smartphone models that AT&T calls 5G E. The 5G E speeds which AT&T users experience are very much typical 4G speeds and not the step-change improvement which 5G promises.”

In other words there’s nothing special going on. If you’ve got a phone that supports LTE-Advanced you’re going to get around 29 Mbps download speed regardless of whether your operator cheekily rebrands it on your phone screen. Unless you’re on Sprint, however, which has a best effort of around 20 Mbps (see table).

Opensignal 5GE table

AT&T was universally mocked when its bright idea of rebranding LTE-A at 5G E first emerged. Sprint, of all companies, even decided to call the lawyers in to challenge the claimed deception, but AT&T continues to insist it was a great idea. Its marketing department presumably won’t be thanking OpenSignal for this latest revelation, but what did they expect?

AT&T mucks about with WarnerMedia some more

AT&T has finally got the US government off its back, but now the challenge of making a success of its mega-acquisition really begins.

Last week an appeal from the US Department of Justice to reverse the acquisition of Time Warner by AT&T, which completed in the middle of last year, was rejected and the DoJ decided not to appeal, so that seems to be the last of the US governmental opposition to it. Now we get to the small matter of absorbing a massive media company into an even bigger telecoms one and making a success of it.

Respecter of tradition as AT&T clearly is, the first step is a good old reorg. There’s nothing like hiring some fellow members of the CEOs golf club and drafting up a shiny new organogram to make you feel like you’re really getting somewhere and in that respect AT&T seems to have scored a hole in one.

The flagship appointment could also be viewed as a replacement since Richard Plepler, long time boss of arguably the most valuable component of the acquisition – HBO – decided to call it a day last week. It has been widely reported that this was the result of the kind of culture clash and competing visions that are typical of M&A, but it still feels like a major negative to lose someone with such rare experience of making and monetising premium content.

In retrospect the writing had been on the wall for a while. Last summer the AT&T lifer put in charge of WarnerMedia, indicated that he wanted to refocus on quantity of content, which usually means a reduced emphasis on quality. That’s not what HBO is about and all the talk in the world about big data and advertising won’t change that. HBO is a premium subscription model and AT&T would be unwise to think it knows better.

The person charged with reinventing the wheel is Robert Greenblatt, who was previously Chairman of NBC Entertainment. He will head up the entertainment and direct-to-consumer silos. Meanwhile Jeff Zucker is in charge of news and sports, which includes CNN, Kevin Tsujihara is in charge of kids content and Gerhard Zeiler is Chief Revenue Officer for WarnerMedia.

“We have done an amazing job establishing our brands as leaders in the hearts and minds of consumers,” said Stankey. “Adding Bob Greenblatt to the WarnerMedia family and expanding the leadership scope and responsibilities of Jeff, Kevin and Gerhard – who collectively have more than 80 years of global media experience and success – gives us the right management team to strategically position our leading portfolio of brands, world-class talent and rich library of intellectual property for future growth.”

“I’m honoured to be joining WarnerMedia during such an exciting time for the company and the industry as a whole, and I look forward to working alongside the many talented executives and team members across the company,” said Greenblatt, as convention demands. “WarnerMedia is home to some of the world’s most innovative, creative and successful brands and we’re in a unique position to foster even deeper connections with consumers. And it goes without saying I will always have a soft spot in my heart for HBO going back to the rewarding experience I had producing Alan Ball’s Six Feet Under.”

See? He’s all over this HBO shizzle. Thanks for everything Plepler, but I got this. To be fair Greenblatt he does seem to have pretty solid experience and is presumably a safe pair of hands, but if Stankey tells him to sacrifice quality for margin and the mass market he will presumably oblige. Telecoms is a very quantitative game and there is a real danger that AT&T will be culturally incapable of appreciating things that are harder to measure and for which the ROI is less immediate and demonstrable. If that turns out to be the case at least the former Time Warner people will be able to draw on their rich experience of failed M&A to help them.

Trump opposition to AT&T/Time Warner deal was personal revenge – report

Few would consider Donald Trump a conventional President but attempting to block AT&T’s acquisition of Time Warner to get revenge for poor coverage would be another level.

Trump’s distaste for CNN is widely known, though The New Yorker is now claiming the President’s opposition to AT&T’s acquisition of Time Warner was little more than a personal vendetta against the newsroom for poor coverage as opposed to an ideological protest against market consolidation. We’re not too sure whether to be surprised by such an accusation, such is the dramatic impact to the status quo Trump has had on politics.

It is claimed President Trump was attempting to pressure the Department of Justice into blocking the monstrous acquisition as revenge for the negative news coverage on Time Warner-owned CNN. According to The New Yorker, in a meeting with Trump’s former lawyer Michael Cohen and former Chief of Staff John Kelly, the President said:

“I’ve been telling Cohn to get this lawsuit filed and nothing’s happened. I’ve mentioned it fifty times. And nothing’s happened. I want to make sure it’s filed. I want that deal blocked.” Gary Cohn was, at the time, the Director of the National Economic Council – the main Presidential policy-making forum for economic matters.

The New Yorker then goes onto to claim Cohn resisted the push from the President, with aides suggesting he did not understand the ‘nuances’ of antitrust and competition law.  The Department of Justice did eventually file its complaints, though these were eventually overturned by a Federal Judge, with the DoJ then turning to the court of appeals.

It’s worth noting is that The New Yorker is not a friend of President Trump. Owned by Conde Nast, the editors are apparently given complete freedom from the parent company, with the publication having endorsed Barack Obama in 2012 and Hillary Clinton in the 2016 Presidential Election. The main topic of the New Yorker piece was an investigation into the relationship between right-leaning Fox News and President Trump.

While there certainly is a left-sided slant, it is also a highly respected title which has never failed a fact check according to the Media Bias/Fact Check website. This should not be considered as unusual as there are very few (if any) mainstream media titles in the US (or worldwide for that matter) which can honestly state they are impartial; there is always some sort of political bias.

What this does indicate is the growing, and not always positive, influence of politics of the TMT segments. Although politicians might have been slow off the mark in regard to the digital euphoria, they are certainly catching up quickly. Mass market communication has dramatically shifted away from traditional media in recent years, and the politicians are following the wake.

For AT&T, this is a headache which it will be happy to put in the past. Last week, a US Court of Appeals for the DC Circuit rejected an appeal from the Department of Justice challenging the Federal Judge which overturned its complaint against the acquisition. The DoJ claimed AT&T would have “both the incentive and the ability to raise its rivals’ costs and stifle growth of innovative, next-generation entrants”, though the Federal Judge and the appeals court dismissed the antitrust claims.

The number of lawsuits, counter-lawsuits and appeals has now created an incredibly complicated timeline, but there does not seem to be many routes of resistance left. Sooner or later, AT&T will be able to start figuring out how to recoup the $107 billion it decided to spend on Game of Thrones.

We’re cashing the IoT cheques now – AT&T

Some telcos are readying themselves for the IoT bonanza, but AT&T is cashing in on the connected dream today.

With 51 million ‘things’ connected to the network today, three million were added during the last period, AT&T’s Executive Director for Mobility Marketing Mobeen Khan boasts IoT is more than a commercial win for the telco, it is driving diversification.

“We have a deliberate strategy to go up the stack,” Khan stated at Mobile World Congress.

While traditionally telcos fortunes have been delivered through the network, Khan pointed to IoT as a means to diversify revenues, a long-sought desire from the industry. At the base level, AT&T can sell customers the hardware, moving up one level it can provide the connectivity, thirdly there are platform offerings, and finally, there are enterprise applications available to manage the business of IoT. AT&T is fulfilling the ambition of being more than a dumb pipe.

This is where it becomes more interesting to be involved in the IoT world. AT&T of course makes money off everything ‘thing’ which is connected to the network, but the massive potential is providing the platforms on the third layer. This is where Khan sees the IoT fortunes being delivered.

“Most companies already have the applications and software to make IoT work at a business level,” said Khan. “We don’t need to sell them these products, but we need to create the platforms which allow the data to be integrated into these applications.”

Take Salesforce as an example. Numerous companies around the world have already purchased licenses for this product, so there is little value in attempting to compete with a market leader which is a perfect foil for the business side of IoT. However, these applications are not designed to handles the vast swell of information generated through IoT. The pain point for many is filtering and actioning the useful information.

If a fridge is designed to work at 34 degrees, no-one needs to know if there are minor fluctuations each minute. If it rises to 34.2 or drops to 33.7 degrees, this is not insight. However, if the temperature spikes to 42 degrees, then you know there is a problem, this is data which can be actioned. This filtering process is the aspect of IoT which is complicated and time-consuming, not of interest to the application developers in the business, allowing AT&T to slide into the stack and provide value to the ecosystem.

Perhaps more importantly is the compounding effect. The simpler AT&T makes it for insight to be derived from data, the lower the barrier for entry for customers. Not only does this improve the potential for platform sales, but it also accelerates the number of ‘things’ connected to the network. There’s cash everywhere.

Some might be billing IoT as a justification for future 5G investments, but AT&T is getting a jump start on the market.