April 2015

OWNERSHIP

COMCAST ENDS BID FOR TIME WARNER CABLE
[SOURCE: New York Times, AUTHOR: Emily Steel, Davis Gelles, Rebecca Ruiz, Eric Lipton]
Facing intense regulatory scrutiny, Comcast is planning to abandon its $45 billion takeover of Time Warner Cable, ending a bid that would have united the country’s two largest cable operators and reshaped the rapidly evolving video and broadband markets. The public perception of the two companies was also damaging to the deal’s prospects. Comcast and Time Warner Cable consistently rank at the bottom of consumer satisfaction surveys. The companies are expected to announce their decision as soon as the morning of April 24. One of the biggest concerns of the Justice Department, according to two former antitrust lawyers for the department who were briefed on the agency’s concerns, was that Comcast, with such a large footprint in broadband and cable television operations, could use its clout to place restraints on television networks. Christopher Jon Sprigman, a former Justice Department antitrust official who is now a professor at the New York University School of Law, said that officials he had spoken with in recent days who were involved in reviewing the transaction had concluded that the deal could not be fixed simply by asking Comcast to make changes.
benton.org/headlines/comcast-said-end-45-billion-bid-time-warner-cable | New York Times | WSJ | FT | LA Times
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FOCUS ON BROADBAND SINKS DEAL
[SOURCE: New York Times, AUTHOR: Jonathan Mahler]
[Commentary] The government’s verdict on the Comcast-Time Warner Cable merger and its stance on network neutrality were separate issues, but they were very much intertwined. At the end of the day, the government’s commitment to maintaining a free and open Internet did not square with the prospect of a single company controlling as much as 40 percent of the public’s access to it. All the more so given the accelerating shift in viewing habits, with increasing numbers of consumers choosing streaming services like Netflix over traditional TV. In this sense, it didn’t really matter if Comcast and Time Warner’s cable markets overlapped. The real issue was broadband. “The simple way to think about the problem with the Comcast merger is that once they get that big, they’re pretty much too big to regulate,” said Marvin Ammori, a lawyer who helped lead the campaign for net neutrality.
benton.org/headlines/once-comcasts-deal-shifted-focus-broadband-its-ambitions-were-sunk | New York Times
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BENTON FOUNDATION STATEMENT ON COMCAST-TIME WARNER CABLE
[SOURCE: Benton Foundation, AUTHOR: Amina Fazlullah]
Today’s announcement is a major victory for consumers and the future of communications in the US. With high-capacity broadband growing in importance each day, more and more consumers are realizing that putting 50 percent of the broadband market into Comcast’s control would result in too much power in the hands of one company. Hopefully, moving forward, Comcast and Time Warner will take the path of competition over consolidation and consumers will benefit with more choices, better services, lower prices, and increased innovation. Benton commends the expert work of the Department of Justice and Federal Communications Commission staffs who were charged with taking a fact-based look and ensuring the deal would support the public interest.
https://www.benton.org/node/217623
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INTERNET/BROADBAND

WE NEED BETTER BROADBAND
[SOURCE: Revere Digital, AUTHOR: Peter Kafka]
[Commentary] Killing the Comcast deal just maintains the status quo. And when it comes to broadband Internet in the US, the status quo is pretty lousy: Most people who want high-speed access are stuck with a single provider, with no incentive to provide better speeds, quality or service. There’s no way we’d settle for a monopoly or duopoly for wireless service, but somehow we’ve become so used to the situation that there’s almost no complaint about it for broadband. It’s also why it initially seemed like Comcast’s bid would get approved: The company argued, correctly, that if it bought Time Warner Cable it wouldn’t be reducing competition for broadband -- because there wasn’t any competition to begin with. Enter Google. So far the company’s limited forays into super-fast Internet delivery (it’s in three cities now, with another half-dozen or so to come) have done exactly what Google has said they wanted them to do -- force incumbents to improve their products. It’s hard to imagine Google actually pushing Fiber through America, and creating real competition city by city. But it’s harder to imagine any other solution. And we need something.
benton.org/headlines/blocking-comcast-start-if-we-want-better-broadband-we-need-much-more | Revere Digital
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THE NET NEUTRALITY SAGA: A LONG-EXPECTED JOURNEY
[SOURCE: Public Knowledge, AUTHOR: Kate Forscey]
Internet service providers are launching a multitude of counterattacks to try to reverse the Federal Communications Commission’s open Internet protections, and it’s up to all of us to keep on defending the rules in several forums. Now that the rules are officially on the books, the ISPs and the trade associations that represent them have filed several challenges against the FCC. The petitioners include AT&T, CenturyLink, the American Cable Association, NCTA, US Telecom, CTIA--The Wireless Association, and Alamo Broadband, and they claim the FCC does not have legal authority to implement real net neutrality rules. Meanwhile, some members of Congress are also taking aim at the FCC’s rules, introducing a slew of bills, each purporting to address some part of the agency process that only seem to be in response to the FCC’s rules. Fundamentally, these attacks all amount to the same thing -- conservative backlash at the behest of the ISP industry to weaken the Commission’s ability to protect consumers and the public interest.
MORE FLIES WITH HONEY: First, Sens John Thune (R-SD) and Fred Upton (R-MI) introduced bills before the FCC even voted, sensing the strong regulations coming and hoping to head the Commission off at the pass. They claim the bill legislatively protects net neutrality by preventing non-throttling and non-blocking, but these are in fact only two subcategories of the myriad of ways ISPs can and have demonstrated anti-consumer, anti-competitive practices online. More importantly, the bill revokes the Commission’s authority over any other aspect of the broadband ecosystem, forever. In short, though the bill paid lip service to an open Internet to the casual observer, it would have rendered the FCC completely impotent. Although several Democratic supporters have indicated some openness to a bipartisan legislative proposal, the policies embodied by the FCC’s rulemaking must be the floor for any negotiations.
SALTING THE EARTH: An alternative -- but unsurprising -- attack came from a different faction of Congressional Republicans, headed by Rep Doug Collins (R-GA). Once the rules hit the Federal Register, the clock starts ticking on the Congressional Review Act - which allows Congress to review a “major” rule issued by any federal agency before the rules take effect (so, 60 days). The resolution (“CR”) only needs a simple majority to pass in the House and the Senate -- although the President Barack Obama can veto it, and likely would in this case. A CRA resolution has only passed once in history, during the Clinton administration - and a previous “CRA” attempt against the FCC’s 2010 rules failed. However, if successful, a CRA resolution would not only repeal the net neutrality rules, but prohibit the FCC from acting on net neutrality in any capacity again without direction from Congress.
AND THE “REFORM” KITCHEN SINK: Most recently, three members dropped three different draft “FCC process reform” bills, each of which aims to restructure how the agency functions. Each of these bills problematically bogs down the already complex and lengthy rulemaking process -- yet another obvious attempt to undermine the FCC’s ability to do its job. Regardless of whether or not any of these initiatives passes, the message to the agency is siloed disapproval of net neutrality, rather than a comprehensive exploration of how the agency can operate most productively.
benton.org/headlines/net-neutrality-saga-long-expected-journey | Public Knowledge
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USTELECOM TAKES AIM AT INTERCONNECTION, CONDUCT STANDARD
[SOURCE: Multichannel News, AUTHOR: John Eggerton]
USTelecom has signaled the arguments it plans to make in its court challenge of the Federal Communications Commission's Feb. 26 decision to reclassify broadband as a Title II telecommunications service subject to common carrier regulation. Among them are the FCC's classification of interconnection under Title II and its creation of an "amorphous" general conduct standard. In a nonbinding statement of issues -- it could add or subtract -- filed with the US Court of Appeals for the DC Circuit April 23, USTelecom said the issues it was raising are:
Whether Title II reclassification "violates the terms of the Communications Act of 1934, as amended, and the First and Fifth Amendments to the U.S. Constitution [speech and taking of property]; or is based on an unreasonable interpretation of the statute, is arbitrary and capricious, or is otherwise contrary to law.
Whether the FCC's assertion of authority over the terms on which broadband Internet access providers interconnect with other IP networks, and its classification of that interconnection as a common carrier telecommunications service under Title II" is similarly illegal.
Whether the specific rules the FCC adopted, including but not limited to its Internet conduct standard, exceed the agency's authority, are arbitrary and capricious, or otherwise contrary to law.
Whether the reclassification violated the requirement that the FCC provide the requisite notice and comment.
benton.org/headlines/ustelecom-takes-aim-interconnection-conduct-standard | Multichannel News
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UNIVERSAL SERVICE

GAO REPORT ON LIFELINE PROGRAM
[SOURCE: Government Accountability Office, AUTHOR: Mark Goldstein]
The Government Accountability Office was asked to review the Federal Communications Commission’s 2012 reforms of its Lifeline program which provides discounts on telephony for eligible low-income households. This report examines (1) the status of reform efforts and the extent to which FCC has evaluated program effectiveness, (2) the extent to which households participate and challenges they face in accessing and retaining benefits, and (3) FCC’s plans to evaluate the broadband pilot program. GAO has found that program evaluation can help agencies understand whether a program is addressing an intended problem. Without a program evaluation, FCC does not know whether Lifeline is effectively ensuring the availability of telephone service for low-income households while minimizing program costs. GAO recommends that the FCC should conduct a program evaluation to determine the extent to which the Lifeline program is efficiently and effectively reaching its performance goals.
benton.org/headlines/fcc-should-evaluate-efficiency-and-effectiveness-lifeline-program | Government Accountability Office | Sen Thune
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VERIZON DROPS LIFELINE CUSTOMERS
[SOURCE: Wall Street Journal, AUTHOR: Yuliya Chernova]
Efforts to reduce fraud in the Federal Communications Commission’s Lifeline program that subsidizes phone bills for low-income Americans may be resulting in a large number of eligible customers being dropped from its rolls. In 2012 the FCC passed new regulations designed to reduce fraud in the program, including a requirement that all beneficiaries certify their eligibility annually. That led to significant declines in enrollment. But this year’s drop was especially large. It appears that a new certification procedure, as well as a new identity-verification system, both introduced in 2014, are causing problems. New York state and city lawmakers, among them City Council Member Margaret Chin, state Sen. Daniel Squadron and Assemblyman Sheldon Silver, on April 17 sent letters to Verizon and the FCC detailing problems their constituents faced and asking for fixes. Getting back on the program’s rolls is proving difficult for some customers.
benton.org/headlines/verizon-drops-customers-low-income-program | Wall Street Journal
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PRIVACY/SECURITY

NATIONAL CYBERSECURITY PROTECTION ADVANCEMENT ACT
[SOURCE: Multichannel News, AUTHOR: John Eggerton]
The House passed a second cybersecurity bill, the National Cybersecurity Protection Advancement Act of 2015 (HR 1731), that would make it easier to share cyber threat information. The vote was 355 to 63, and followed passage of a companion bill, the Protecting Cyber Networks Act (HR 1560), on April 22. The National Cybersecurity Protection Advancement Act amends the Homeland Security Act to ease info sharing while protecting civil liberties. The bill encourages voluntary sharing of cyber threat info between companies and with the government. It provides for the voluntary exchange of "government-to-private" and "private-to-private" threat information, and would provide liability protection for companies who monitor their information systems and take measures to defend them from attack. The bill was the handiwork of Rep. Michael McCaul (R-TX).
benton.org/headlines/companion-cybersecurity-bill-passes-house | Multichannel News | reaction
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DEFENSE SECRETARY UNVEILS NEW PENTAGON CYBERSTRATEGY
[SOURCE: Washington Post, AUTHOR: Ellen Nakashima]
Defense Secretary Ashton Carter will unveil a Pentagon cyberstrategy that stresses deterrence, private-sector partnerships and transparency. The strategy will be announced at a speech at Stanford University, where Sec Carter will address leaders of tech firms that he hopes will drive innovation in cybersecurity and defense. Clarity is key to dispelling misperceptions about the Pentagon’s role in fending off attacks against US companies and in attempting to deter adversaries who are increasingly bold in targeting American industry and government, senior defense officials said. The strategy builds on the first cyberstrategy released in 2011. That one focused heavily on defense to avoid appearing bellicose at a time when the Pentagon was seen in some quarters as seeking to militarize cyberspace. The Defense Department has a “small role” in defending the nation against cyberassault, one senior official said. “It’s only when those attacks rise to the level of an armed attack . . . an attack of very significant consequence, not just a mere denial of service or a mere hack,” said the official. Such attacks constitute “less than 2 percent of all the types of attacks against the United States,” he said. The strategy focuses on defense because protecting military networks is still “80 percent of the mission,” the official said. But in the intervening years, a growing threat, the development of a cyber-mission force, new capabilities and clearer policy guidance have enabled the department to revise its strategy, he said.
benton.org/headlines/defense-secretary-unveils-new-pentagon-cyberstrategy | Washington Post | Revere Digital | LA Times
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RETAIL TRACKING FIRM SETTLES FTC CHARGES IT MISLED CONSUMERS ABOUT OPT OUT CHOICES
[SOURCE: Federal Trade Commission, AUTHOR: Press release]
Nomi Technologies, a company whose technology allows retailers to track consumers’ movements through their stores, has agreed to settle Federal Trade Commission charges that it misled consumers with promises that it would provide an in-store mechanism for consumers to opt out of tracking and that consumers would be informed when locations were using Nomi’s tracking services. The Federal Trade Commission’s complaint against Nomi states that beginning in late 2012, the company’s privacy policy promised that Nomi would provide an opt-out mechanism at stores using its services. This promise implied that consumers would be informed when stores were using Nomi’s tracking technology. The complaint alleges that these promises were not true because no in-store opt-out mechanism was available, and consumers were not informed when the tracking was taking place. The complaint alleges that Nomi collected information on about nine million mobile devices within the first nine months of 2013. The complaint is the FTC’s first against a retail tracking company. “It’s vital that companies keep their privacy promises to consumers when working with emerging technologies, just as it is in any other context,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “If you tell a consumer that they will have choices about their privacy, you should make sure all of those choices are actually available to them.” Under the terms of the settlement with the FTC, Nomi will be prohibited from misrepresenting consumers’ options for controlling whether information is collected, used, disclosed or shared about them or their computers or other devices, as well as the extent to which consumers will be notified about information practices.
benton.org/headlines/retail-tracking-firm-settles-ftc-charges-it-misled-consumers-about-opt-out-choices | Federal Trade Commission | FTC blog | Washington Post
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POLICYMAKERS

FCC ANNOUNCES STAFF CHANGES IN WIRELINE COMPETITION BUREAU AND CONSUMER AND GOVERNMENTAL AFFAIRS BUREAU
[SOURCE: Federal Communications Commission, AUTHOR: Press release]
The Federal Communications Commission announced that Julie Veach, Wireline Competition Bureau Chief, will be departing the FCC on May 22. FCC Chairman Tom Wheeler intends to name Deputy Bureau Chief Matt DelNero as her replacement. In addition, Chairman Wheeler intends to name Alison Kutler as Acting Chief of the consumer and Governmental Affairs Bureau, and Kris Monteith, Acting Chief of CGB, as Deputy Chief of the Wireline Competition Bureau. "Julie's leadership and intelligence have made lasting positive impacts on the Commission's work," said Chairman Wheeler of Veach, who has worked at the FCC since 2001 in WCB and the office of General Counsel. "We will greatly miss her wise counsel and creative problem solving." DelNero joined the FCC as Deputy Chief of the Wireline Competition Bureau in February 2014. Previously, he was a partner in the Communications & Media and Privacy & Data Security practice of groups of Covington & Burling LLP. He also taught communications and media law as an adjunct professor at George Mason University School of Law. DelNero received his law degree, magna cum laude from Harvard Law School and his undergraduate degree, summa cum laude from Tufts University. "Matt has been a key player in a series of major policy initiatives since joining the FCC last year," said Chairman Wheeler. "His substantive experience and strong leadership skills will enable him to excel in leading WCB as it takes on the next set of policy challenges."
benton.org/headlines/fcc-announces-staff-changes-wireline-competition-bureau-and-consumer-and-governmental | Federal Communications Commission
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COMPANY NEWS

CHEAPER BANDWIDTH OR BUST: HOW GOOGLE SAVED YOUTUBE
[SOURCE: ars technica, AUTHOR: Ron Amadeo]
YouTube, the Web's de-facto video service, is turning 10 in 2015. The site has become so indispensable that it feels like a basic part of the Internet itself rather than a service that lives on top of it. YouTube is just the place to put videos, and it's used by everyone from individuals to billion-dollar companies. It's obvious to say, but YouTube revolutionized Web video. It made video uploading and playback almost as easy as uploading a picture, handled all the bandwidth costs, and it allowed anyone to embed those videos onto other sites. The scale of YouTube gets more breathtaking every year. It has a billion users in 61 languages, and 12 days of video are uploaded to the site every minute -- that's almost 50 years of video every day. The site just continues growing. The number of hours watched on YouTube is up 50 percent from 2014. It's easy to forget YouTube almost didn't make it. Survival for the site was a near-constant battle in the early days. The company not only fought the bandwidth monster, but it faced an army of lawyers from various media companies that all wanted to shut the video service down. But thanks to cash backing from Google, the site was able to fend off the lawyers. And by staying at the forefront of Web and server technology, YouTube managed to serve videos to the entire Internet without being bankrupted by bandwidth bills.
benton.org/headlines/cheaper-bandwidth-or-bust-how-google-saved-youtube | Ars Technica
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STORIES FROM ABROAD

EU CONSIDERS CREATING POWERFUL REGULATOR TO OVERSEE WEB PLATFORMS
[SOURCE: Wall Street Journal, AUTHOR: Tom Fairless]
The European Union is considering creating a powerful new regulator to oversee a swath of mainly US-based Internet platforms, according to an internal policy document that lays bare the deep concerns in top EU policy circles around the threat posed by companies like Google and Facebook. Such a move would be the biggest hurdle yet for US Internet firms operating in Europe, many of which are already facing investigations and lawsuits over issues ranging from unfair competition to tax avoidance. The document, prepared in February by senior officials for the EU’s Digital Commissioner Günther Oettingerl, is a long way from becoming policy. Its analysis would need to be converted into proposals by the European Commission -- the EU’s executive arm -- and approved by national governments and the European Parliament. But it offers a long-term blueprint for the regulation of Europe’s digital sector that goes far beyond a general plan for the region due to be announced in May, which calls only for a “comprehensive investigation” into the role of Internet platforms. The February paper warns that some online platforms -- such as search engines, online marketplaces and social networks -- “are transforming into super-nodes that can be of systemic importance for the rest of the economy.” Only a very limited part of the economy will not depend on them in the near future,” it says. It lists 32 examples of such platforms, all but five of which are US-based, and only one based in Europe -- Swedish music-streaming service Spotify AB. The paper warns that a lack of transparency around how these platforms operate allows them “to exploit asymmetric positions on the market at the expense of other market operators and consumers,” potentially putting “the whole European economy at risk.”
benton.org/headlines/eu-considers-creating-powerful-regulator-oversee-web-platforms | Wall Street Journal
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April 2015

April 24, 2015 (Comcast Walking Away from Time Warner Cable)

Comcast Is Said to End $45 Billion Bid for Time Warner Cable

Why Comcast Seems to Be Walking Away

Once Comcast’s Deal Shifted to a Focus on Broadband, Its Ambitions Were Sunk

Comcast can't make one huge cable firm look better than two big ones

Comcast Finds Golf and 128 Lobbyists Can’t Sell US on Merger

Comcast-Time Warner Cable Reported Merger Collapse Hailed as ‘Victory’ by Experts

Benton Foundation Statement on Comcast-Time Warner Cable