Pai gobbles up Sprint and T-Mobile US merger

After months of headaches and sleepless nights, the tides of favour seem to be turning for Sprint and T-Mobile US as the FCC chief gives his blessing for the union.

254 days into the 180 days the FCC gives itself to approve mergers, FCC Chairman Ajit Pai has officially confirmed his position. It is still not quite 100% guaranteed for the two telcos, however with Pai’s recommendation, the future is looking very rosier.

“After one of the most exhaustive merger reviews in Commission history, the evidence conclusively demonstrates that this transaction will bring fast 5G wireless service to many more Americans and help close the digital divide in rural areas,” Pai said in a statement.

“Moreover, with the conditions included in this draft Order, the merger will promote robust competition in mobile broadband, put critical mid-band spectrum to use, and bring new competition to the fixed broadband market.”

Suggesting this was a protracted and painful process might be one of the biggest understatements of the year. However, it might have been necessary considering the significant impact a merger of this scale could potential have on competition, diversification and network deployment across the US.

Above all else, the US is a monstrous market with an incredibly small number of nationwide telcos. This does of course offer economy of scale to improve investment capabilities, though there is a risk of regional monopolies due to the sheer size and geographical variance across the country. Proposed mergers which would take the number of national telcos from four to three has been extinguished in the past, though this one has passed almost every test.

The greenlight from the FCC Chairman is an important step, adding momentum to positive news from the Department of Justice in the last few weeks. At the end of July, the DoJ’s antitrust division gave the thumbs up, assuming Sprint’s prepaid brand Boost is divested, and Pai has made the same demands.

This is one concession which many expected, but we have major issue with. Dish will acquire the Boost brand, allowing it to make use of its horde of valuable spectrum, satisfying the demands, though will this be enough to maintain the current levels of competition, the objective of both the FCC and DoJ? We do not believe so.

Firstly, instead of having four established telcos in the US, consumers will now have to choose from three telcos and a newbie with zero experience of effectively running a mobile business and network. Dish does not have the competence, experience, infrastructure, processes, billing systems or supply chain to run a mobile business, and it will take years to build these elements to the degree expected.

Secondly, Dish is now an MVNO. It will be able to make use of the T-Mobile network, but the FCC and DoJ has replaced a functional MNO with an MVNO and expects no-one to notice the difference. Both of these agencies expect Dish to have its own network up-and-running in a few years, but this is another ridiculous ambition.

As mentioned in the first point, this is a company which is not practiced in the dark arts of mobile. The three remaining traditional players took decades to rollout their own networks, and they are still not genuine nationwide telcos (there are still network gaps across the country). How is Dish expected to create a nationwide, 4G and 5G, network across a country of 9.8 million km2, with an incredibly variety of different urban densities, geographical landscapes and economic societies.

If anyone thinks Dish is going to be a replacement which can maintain the current status quo, they are quite frankly fooling themselves.

What is worth noting is that this is not the end of the road for Sprint and T-Mobile. It might have secured the relevant regulatory approval, but now it will have to combat the various legal challenges.

Led by New York Attorney General Letitia James, a coalition of State Attorney Generals have filed a lawsuit to block the proposed merger. The lawyers are arguing the merger would harm competition, and it should be blocked to maintain the status quo. As it stands, with four separate MNOs challenging each other, prices and mobile experience is improving for the consumer; the lawyers are arguing that the situation is not broken, it is in fact improving, so why should the FCC and DoJ try to fix an imaginary problem?

Although the approval process from the DoJ and FCC might have been considered a significant problem, the telcos will not have to face legal heavyweights from more than a dozen States. Lawyers have a way of being very difficult when they want to be, so there might well be a few more twists and turns in this saga.

Committee Democrats tell Pai to stop being so horrid

FCC Chairman Ajit Pai has received a scalding letter from House Committee on Energy and Commerce effectively telling him to play nicer with poor people and Democrats.

Signed by Committee Chairman Frank Pallone (Democrat representative of New Jersey) and Communications and Technology subcommittee Chairman Mike Doyle (Democratic representative of Pennsylvania), the letter accuses Pai of representing the interest of corporations over consumers, ignoring questions from Democrat politicians and inadequately representing the objectives of the FCC.

“Under your leadership, the FCC has failed repeatedly to act in the public interest and placed the interest of corporations over consumers,” the letter states.

“The FCC should be working to advance the goals of public safety, consumer protection, affordable access and connectivity across the United States. To that end, it is incumbent upon the Committee’s leadership and its members to oversee the activities of the FCC.”

While under the protection of a Republican majority across US politics, Pai has been freely swinging the machete to cut public programmes and reduce the influence of the FCC. The destruction of net neutrality is of course what has grabbed the headlines, but Pai has also overseen the deregulation of broadcasters and gutted the Lifeline subsidies which so many families rely on to bridge the digital divide.

These are only a few of the accusations pointed towards Pai by the Democrat politicians, but they are not wrong. The influence and footprint of the FCC has been diluted under Pai, though only time will tell whether it has created too much of a light-touch regulatory landscape. The Democrats clearly believe Pai is impacting the US negatively, but they were never going to be nice after the November elections win.

“Not only have you have failed on numerous occasions to provide Democratic members of this Committee with responses to their inquiries, you have also repeatedly denied or delayed responding to legitimate information requests from the public about agency operations,” the letter states.

“These actions have denied the public of a full and fair understanding of how the FCC under your leadership has arrived at public policy decisions that impact Americans every day in communities across the country.”

One thing which is clear is the relationship with between Pai and the two Democrats is hardly on the friendliest of terms. That would be putting it politely, but Pallone and Doyle have painted a target on Pai.

Moving forward, Pai will no-longer be able to frolic freely through the offices of the FCC. Pallone and Doyle have promised ‘oversight time’, with the Committee reassuming its traditional role of oversight to ensure the agency is acting in the best interest of the public and consistent with its legislative authority. In short, Pallone and Doyle will be breathing down Pai’s collar at every corner.

Pai might have enjoyed freedom over the last two years, but that is all about to change.

Options are running out for net neutrality supporters

FCC Chairman Ajit Pai has released a gloating statement after Democrats failed to invalidate the pompously named ‘Restoring Internet Freedom’ order, making the path for net neutrality much rockier.

In June last year, net neutrality was officially struck from the FCC rulebook as the ink dried on the aforementioned order. There has been much protest and opposition to the rules, and while there are still routes to restore the Tom Wheeler-era rules, the number of options are getting smaller. With a new Session of Congress now in play, the path of invalidation is now closed.

As the rules were passed during the previous Session, the Democrats had a limited amount of time to try and invalidate the ‘Restoring Internet Freedom’ order passed by Pai and his Republican Commissioner cronies. Unfortunately for the net neutrality supporters, the 218 votes required in the Senate was a step too far. By close of play on January 2, only 182 votes, the majority of whom where Democrat, were mustered.

“I’m pleased that a strong bipartisan majority of the US House of Representatives declined to reinstate heavy-handed Internet regulation,” said Pai. “They did the right thing – especially considering the positive results for American consumers since the adoption of the Restoring Internet Freedom Order. Over the past year, the Internet has remained free and open.

“In short, the FCC’s light-touch approach is working. In 2019, we’ll continue to pursue our forward-looking agenda to bring digital opportunity to all Americans.”

What does this mean for net neutrality? There is still a route back for the rules, though it is becoming increasingly difficult.

Invalidating the rules was the simplest option, though the Democrats only had one shot at this. A new Session sets the rules in play, though there are other routes, both legal and regulatory.

On the legal side of things, there are still challenges being made to the ‘Restoring Internet Freedom’ order by numerous companies, consumer groups and Attorney Generals throughout the US. While many of the lawsuits are fundamentally arguing the same point, albeit with various different nuances, the courts will be asked to rule on one area in particular; whether the individual States can enforce their own localised legislation on net neutrality.

Central to this conundrum is California. Having agreed to delay the implementation of its own net neutrality rules in the State, judges will have to ponder the age-old debate of Federal vs. State. This is where it gets very complicated; as the internet is not a localised ‘service’, can California guarantee it will only impose the rules on traffic which is restricted to its borders? Should traffic traverse the cables elsewhere, the State has no right to implement net neutrality rules. This is a concept which is stated in the US Constitution.

On the regulatory front, the Democrats could attempt to force through new legislation which would supersede the ‘Restoring Internet Freedom’ order, in the same was this order did to net neutrality. This would be complicated as you have to suspect the Democrats to not have enough bodies in the room to drive through a majority.

All of the options remaining for the net neutrality supporters are time coming however, which is a factor which will certainly work against them. Pai can take his time and attempt to prolong the issue, as the longer it takes to resolve the less interest the general public and other politicians will have. We are fickle people, we get bored easily, and politicians are as shallow as we are fickle. If net neutrality is no longer getting the necessary amount of attention in the press, less enthused politicians will find a new cause to champion in pursuit of PR points.

The net neutrality battle is not over, but, unfortunately, Pai is winning.

FCC Chairman attacks social media giants calling for transparency laws

Ahead of this week’s interrogation of the social media giants by Senators, FCC Chairman Ajit Pai has penned his thoughts including the introduction of transparency laws to squeeze out explanations on how algorithms work.

While we do not agree with a lot of the dribble Pai spews onto the industry, here he does have a point. The operations of the social media giants have been shrouded in mystery for years, with most recent scandals demonstrating a need for more transparency. So many aspects of our lives are entwined in social media nowadays, the public interest case for transparency exceeds the protections afforded to private sector organizations.

“Consumers interact with these digital platforms on a daily basis,” Pai writes. “We get our news from them. We interact with our family and friends on them. But how do these companies make decisions about what we see and what we don’t? And who makes those decisions? We still don’t know.”

News, online expression, protection of freedom of speech and the sensitivities of users are all contentious issues. This is a very complicated topic as drawing a line on what can or cannot be said brings out a huge number of opinions, many of which are biased by experience or current situation. There is no right answer and there isn’t a wrong one either, but the argument is a moot point if no-ones understands how these decisions are being made. Transparency is key to informing the debate, and people do need to know how these algorithms work.

Of course, there is a sense of irony around Pai weighing in here. Firstly, let us not forget the FCC is responsible for regulating the networks which facilitate the digital economy. Cables in the ground, cell towers on hills and satellites in the sky. The agency is not responsible for regulating content or the social media giants. While Pai may consider himself an important man in the telco world, his influence on social media regulation and governance should be no greater than yours or mine.

Secondly, let’s not forget Pai has been working to remove the same transparency rules which are imposed onto the telcos. During the Obama administration, former FCC-Chairman Tom Wheeler imposed rules stating the telcos would have to seek explicit permission, an opt-in, to use personal information obtained from various records, including web browser history, to generate additional revenues. These rules were immensely unpopular with the telcos and one of Pai’s first jobs was to set out reversing the culture of transparency Wheeler had enforced.

Inconsistencies from the Trump regime and the puppets it commands is hardly news, but Pai is trying his best to push his luck here. Another brilliant example is criticising Twitter for violating net neutralities rules when banning content. Firstly, net neutrality rules are written for the companies who transport data, not those who own content platforms. And secondly, these are rules he supposedly disagrees with on a fundamental level and is trying to erase from the rulebook. Pai either doesn’t understand net neutrality or believes the people reading the post don’t.

A final irony to Pai’s intervention here is the actual intervention itself. As mentioned before, Pai is not responsible for regulating the social media giants, but seems to be seeking more of an active role in contributing to the debate. Since taking office, Pai has seemingly been on a mission to reduce the workload of the FCC, perhaps worrying his staff are overworked, creating a more light-touch environment and even suggesting some powers should be moved over to other agencies. Seeking additional responsibilities does not align with our experience of Pai.

Perhaps this is a strategic move from the White House as it is finding which puppets are most responsive. Pai has been instrumental in creating the light-touch regulatory environment sought by the Trump administration as well as battling the evil China treat. Perhaps orders from above are pushing the FCC towards new shores as Trump ramps up his battle with the social media giants.

Ultimately, we agree with Pai, just disagree with the way he has approached the argument. The social media giants do need to be held more accountable and offer greater levels of transparency. Social media is critical in numerous aspects of our lives from education on current events to authentication, these organizations can no longer hide behind the curtain, manically pulling levers, sending data to unknown corners of the web. More transparency is needed on how the business actually works.

The hearings with the House Energy and Commerce Committee start today, and we hope the Senators have done a bit more research for this interrogation. The last thing we need are rule-makers being outed as the technology-ignorant elitists they probably are. Let’s hope we don’t get another ‘Senator, we sell ads’ moment.

California defies FCC and Trump by passing tough net neutrality laws

The state versus federal argument looks like it is heading towards full-throttle as California passes what it describes as the toughest net neutrality laws in the country.

The FCC and President Trump’s administration are seemingly set on creating a regulation-free USA, though some states are not having it. California is the latest to demonstrate its mistrust of the US telcos, passing its own net neutrality laws.

“We passed the strongest net neutrality standards in the nation,” said State Senator Scott Wiener, who authored the bill alongside Senator Kevin de León. “The internet is at the heart of 21st century life – our economy, our public safety and health systems, and our democracy. So when Donald Trump’s FCC decided to take a wrecking ball to net neutrality protections, we knew that California had to step in to ensure our residents have access to a free and open internet.”

Looking at the broadest of explanations, Senate Bill 822 prohibits blocking websites, speeding up or slowing down websites or whole classes of applications such as video. Certain aspect of zero rating will also be banned, unfortunately this is where the bill becomes a bit more complicated. Zero rating services, applications or content will be allowed, providing ‘no consideration, monetary or otherwise’ is paid to the ISP by third parties. This is the sort of grey area which lawyers dream about, and will encourage the creative thinkers of the judiciary community to hunt down the loop holes.

While the Trump administration and the FCC have been consistently moving to eradicate every aspect of net neutrality from the rule books, this move from California could threaten to fuel the state versus federal jurisdiction arguments and power plays which we have seen in years gone. In the latest version of the Communications Act, the legislation which underpins all telecommunications regulations in the US, states any state-level rules which contradicts the position of the FCC are invalid. This would suggest Senate Bill 822 will have a short lived life, though should the dominos start to fall who knows what could happen. How many states would have to pass laws contradicting the Communications Act for something to be done?

Privacy-advocacy groups, coalitions of private businesses, attorney generals and more have been challenging the FCC dismantling of the rules, and the escalation of this saga seems to be entering into uncharted territories. We have been talking about a need for an opposition win in the net neutrality resistance, but whether this can topple some dominos remains to be seen.

This is not the first state wide resistance to the FCC’s attack on net neutrality, with Washington State passing House Bill 2282 in March, with the rules coming into effect on June 6. While there has been a lot of posturing and promises about defying the FCC position, that is until Wiener and his meaty balls stepped up. Perhaps this might encourage other states to move forward with their own ambitions.

That said, the telco lobbyists and supporter of more light-touch regulatory environments are powerful. Over the last couple of years, dozens upon dozens of proposed laws to increase user privacy and scale back the untouchable power of the telcos have been defeated by money. In Kentucky for instance, House Bill 332 failed. This bill proposed no telco or ISP would collect personally identifiable information from a customer as a result of the customer’s use of the telecommunications or internet services without the customer’s approval. In Nebraska, LR 453 would have allowed for an interim study to examine the impact of net neutrality, though this failed.

There are countless examples of the sticky telco fingers prodding various bills, which perhaps make the passing of both the Washington and California bills a bit more impressive. With the net neutrality debate continuing to rumble on, the conflict between the states and the White House will only escalate. If more states start passing net neutrality laws, ignoring federal guidance and the chain of command, what will be the reaction of central government?

Net neutrality resistance continues to gain PR support

There is usually resistance towards anything the ruling party does in the US, but net neutrality is proving to be a very bad smell for the Republicans as the Writers Guild of America West and small businesses join the push back.

FCC Chairman Ajit Pai has erased the rules and is now moving onto the classification of telcos as common utilities to kill off any return route, but that has not prevented a horde of legal cases. The Attorney Generals of 23 jurisdictions are making a nuisance of themselves, so are the internet companies with their own lawsuits, but we can’t imagine Pai suspected comedy and documentary writers would sign-up.

The Writers Guild of America West are the latest to adorn the chainmail, joining various advocacy organizations to file an intervenor brief to reinstate net neutrality:

“Last year, the Federal Communications Commission’s Chairman Pai repealed open Internet protections, leaving powerful Internet providers free to decide what content reaches viewers and how, harming content creators and consumers alike,” a statement reads.

“The decision to abandon those protections, which had been overwhelmingly supported by the public and upheld in court, was factually and legally unsound. The Writers Guild of America West has joined fellow intervenors in filing a brief in the D.C. Circuit Court of Appeals to challenge the FCC’s abdication of its responsibilities to protect competition and ensure a free and open Internet.”

While these group might not be the biggest heavyweights in the technology lobby, they can be public figures. The Writers Guild of America West (WGAW) is a labour union representing writers of motion pictures, television, radio, and internet programming; some of its members will have a notable presence and an emotional link to the general public. This is an opportunity for the opposition to whip the general public into a frenzy.

During the first days of the net neutrality annihilation, Pai’s opposition did an excellent job in rallying the general public in support of the rules. The FCC’s website was flooded with public comments, the original some were very dubious, as the removal of the rules was perceived as the end of days. Pai and his cronies did well to negate much of the negative PR generated through the chapter, but another resurgence of public support for net neutrality would not a welcome turn of events for the Republicans.

Elsewhere, research commissioned by insureon states the majority of small businesses are worried about the impact of net neutrality on their prospects. 48% of small business owners were not aware that the FCC repealed net neutrality, while of those who were aware, 63% were against the FCC’s moves.

The concern here is about preferential conditions for websites, as the removal of the rules opens up a pay-to-play environment for the speed at which websites can be loaded. 76% think the repeal could give big corporations an unfair advantage online, while 77% worry that they may not be able to afford to pay higher prices for faster loading times on their website. Website loading times might sound like a first world problem, but it will significantly impact customer experience and also website ranking results on search engines. The risk is online businesses could be held to ransom.

Again, these are not organizations which will swing the heaviest of punches in the lobby game, but there is a PR risk. Small businesses are supposedly the ‘backbone’ of the US economy, or so say shallow politicians chasing the lime light. Whether this attitude prevails under the pressure of campaign funding from multi-national corporations is suspect, though removing the rules which offer protections to the ‘backbone’ of the US economy from the money-grabbing telcos could be a disaster.

The net neutrality supporters in the US need a win in the legal system, and whipping up a public euphoria of support might well just be the momentum needed. While the resistance has been vocal and active, it has not slowed Pai’s gradual march towards net neutrality eradication. New ideas are needed.