Moving backwards: consolidation, deregulation & lack of accountability in the US media and broadband industries

Benton Institute for Broadband & Society

Monday, September 23, 2019

Digital Beat

Moving backwards: consolidation, deregulation & lack of accountability in the US media and broadband industries

Prepared Remarks to Centro De Investigación y Docencia Económicas, A.C.

“Competencia en Telecommunications y Radiodifusión:

Disrupción Technológica y Neutralidad de Redes

Mexico City, Mexico

September 23, 2019

Gracias Alexander, buenos días a todos. Me siento honrado de estar aquí.

Gigi Sohn

Today I’m going to talk about an issue I’ve worked on for about 17 years -- net neutrality. I know that there is an effort in Mexico to make net neutrality the law, which is terrific. I just hope it doesn’t take that long! 

In the U.S., policymakers and the mainstream media are obsessed with every move made by the country’s 4 largest online platforms: Google, Facebook, Apple, and Amazon. The U.S. Justice Department, the country’s leading law enforcement agency has undertaken an antitrust investigation of Google and Apple. The U.S. Federal Trade Commission or FTC, which oversees unfair, deceptive and anticompetitive practices across the U.S. economy, is engaged in a similar investigation of Facebook and Amazon. 48 State Attorneys General are investigating Google and 9 are investigating Facebook, also under the antitrust laws. 

Congressional and media scrutiny of the offenses of what is now referred to as “GAFA,” is seemingly nonstop. Just last week, officials from Facebook, Twitter and Google appeared before the U.S. Senate Commerce Committee for a hearing on online extremism. The U.S. House Judiciary Committee launched its own antitrust investigation, sending more than 80 letters to other companies asking how they might have been harmed by GAFA. And, as reported breathlessly by the press, members of Congress met and dined with Facebook CEO Mark Zuckerberg on Wednesday to discuss everything from privacy, election interference, and misinformation to Facebook’s new cryptocurrency, Libra.

Scrutiny of these massive online companies is warranted, and I’d argue, overdue. But at the same time, the U.S. broadband and media industries are increasingly becoming consolidated, deregulated and freed of accountability, with little attention either from policymakers or the media. While Mexico is moving forward -- having recently developed new institutions and regulations intended to promote competition and accountability in telecommunications and media, the U.S. is moving backwards. 

Competition in broadband and media in the U.S. is vanishing as a result of decisions, big and small, by the Trump Administration. For example, over the past two and a half years, the FCC has weakened or lifted all of the regulations that limit multiple and cross-ownership of broadcast stations. It no longer requires that a broadcast station have a studio in its community of license, and it recently weakened the rules that require broadcasters to provide 3 hours of children’s educational and informational programming weekly. The FCC pulled from consideration an Obama-era order that would have required cable operators to open their networks to competitive set-top-boxes and recently declared that states and cities that regulate cable operators cannot also regulate their broadband services.

Mergers have proceeded largely unabated. Last week, the FCC approved the merger of the two of the largest TV broadcast groups, Nexstar and Tribune. The combined company is now the nation’s biggest broadcaster with nearly 200 stations. The U.S. Justice Department quickly greenlighted the $66 billion merger of Fox and Disney months before anybody, including the companies, expected it. The FCC will soon vote to approve the merger of two of the four national mobile wireless carriers -- Sprint and T-Mobile, two months after the Justice Department gave its approval.

The U.S. Justice Department did sue to block the merger of AT&T and Time Warner. But in doing so, it refused to argue that AT&T could use its status as a broadband Internet access gatekeeper to disadvantage competing programmers. That would have validated the idea that broadband providers have the incentive and ability to discriminate against their competition. Such discrimination is the rationale for net neutrality protections, which the Trump FCC was poised to eliminate at the time. The Justice Department lost in court and the merger was consummated.

Which brings me to my main point: the centerpiece of the Trump Administration’s effort to free industry of any accountability is its December 2017 repeal of the 2015 Open Internet Order. The Open Internet Order included the net neutrality rules, which prohibited both fixed and mobile broadband providers from blocking, throttling or otherwise discriminating against any particular content, application or service. Most importantly, the 2015 Order restored the FCC’s authority to oversee the broadband market, including industry practices such as fraudulent billing, price gouging, data breaches and other violations of privacy. I was proud to have been part of the team that worked on the Order.

The FCC’s repeal of the 2015 Open Internet Order eliminated the net neutrality rules, save for a weakened transparency rule requiring broadband providers to reveal their network management practices. Critically, it abdicated the FCC’s legal authority to protect consumers and competition in the broadband market. For the second time since 2002, the FCC classified broadband internet access services as unregulated information services, removing from the agency the legal power to prohibit anti-consumer and anti-competitive practices in the broadband market. To make matters worse, the FCC neutered another part of the Communications Act that gave it the authority to affirmatively promote broadband competition. Never had an FCC, either under Republican or Democratic control, so completely abandoned its responsibility to oversee access to a communications network.

Instead, the FCC purported to give that responsibility to the Federal Trade Commission. Setting aside whether one independent agency can legally cede authority to another, the FTC has neither the technical expertise nor the legal tools to oversee the broadband industry. It doesn’t have the power to make rules, and it can only take action against what the law calls “unfair or deceptive trade practices.” For all intents and purposes, if your broadband provider tells you that it will block, throttle or discriminate, there is little the FTC will do. Moreover, the FTC is not at all empowered to promote more competition in the broadband market – competition that the US sorely needs.

The FCC named its decision to repeal the 2015 Open Internet Order the Internet Freedom Order. But the only ones enjoying that freedom are broadband providers.  And while the FCC claims that the Internet is operating just fine post repeal -- there are still a lot of cute cat and dog videos online, after all -- the FCC’s refusal to engage in oversight of the broadband industry has harmed competition, innovation, and overall consumer welfare. 

The two most startling examples impacted public safety. Beginning in December 2017 and continuing for 8 months, the Fire Department of Santa Clara County, California, engaged in a debate with Verizon over the company’s throttling of its broadband connection. This connection was used to coordinate emergency response and communicate with the public during what was at the time the biggest fire in California’s history -- the Mendocino complex fire. Verizon only agreed to stop throttling the fire department’s broadband service after the latter agreed to pay more than double of what it had paid for service previously.

While Verizon’s throttling of the fire department’s broadband might not have been a violation of the plain language of the net neutrality rules, the fact that the fire department had nowhere to go to resolve this matter was a direct result of the FCC’s abdication of its authority to oversee the broadband market. I find it telling that neither the FCC nor the FTC responded to this incident -- which got national media attention -- by saying that if only the fire department had filed a complaint, one of the agencies would have addressed the problem.

The second example concerns the revelation by a writer for Vice Motherboard that three of the four U.S. national wireless carriers -- AT&T, T-Mobile and Sprint, were selling subscribers’ precise geolocation data to data brokers, who then sold them to bounty hunters. Bounty hunters’ sole mission is to find people who don’t want to be found, like victims of domestic violence. Once again, neither the FCC nor the FTC have acted to stop this practice.

Meanwhile, competitors and innovators are at the mercy of the broadband industry. Two studies several months apart by researchers at Northeastern University in Boston (see here and here) have shown that nearly every mobile broadband provider is throttling online video providers like Netflix and YouTube, even during non-peak usage periods. That’s convenient if, like AT&T, you own competitive online video platforms like HBO and DirecTV Now. And Frontier Communications refused to stop charging a customer $10 a month for renting a router even though he had purchased his own. The FCC did nothing more than pass the consumers’ complaint onto Frontier, which simply rejected it.

So, I just painted a bleak picture of net neutrality and the broadband market for U.S. consumers and competitors. But there is hope. A group of small and large online companies, consumer groups and state attorneys general have appealed the FCC’s net neutrality repeal order, and a decision is imminent. The case is before a federal appeals court in Washington, DC, and, based on the 5 hour-long oral argument before the judges, which I attended, I think the parties challenging the repeal have a good chance of prevailing. Meanwhile, the U.S. House of Representatives in April passed the Save the Internet Act, which would restore the 2015 Open Internet Order, including the FCC’s legal authority to oversee the broadband market. And net neutrality, along with issues of broadband access and affordability, are showing up in the plans of many of the current Democratic Presidential candidates

Even more exciting is that as the federal government has stepped back on broadband policy, states and cities are stepping up. Some 36 states have either introduced or passed net neutrality laws or executive orders in the wake of the FCC’s 2017 repeal. Earlier this year, the state of Maine passed a bill regulating the privacy practices of broadband providers, largely because Congress repealed similar FCC protections in 2017. In taking such actions, the states are attempting to restore their authority over broadband, authority that nearly half of the states abandoned at the urging of the broadband industry in the early part of this millennium. The industry’s argument, of course, was that states didn’t need to mind the broadband industry because the federal government was doing so. And now, the federal government isn’t minding the broadband industry either. 

Moreover, while some 19 states still have restrictions on communities building their own broadband systems, the state of Arkansas just repealed its restrictions and others are considering either doing the same or carving out broad exceptions. These states realize that for their citizens and their economies to thrive, they need fast broadband and that the private sector doesn’t always fulfill that need, particularly in rural and poor areas. Increasingly, these community broadband networks are open access networks -- where any ISP can provide last-mile service. Policies like open access, wholesale access, and functional separation, all of which I’m delighted to see that Mexico has adopted, are some of the best ways to ensure that consumers have a choice in broadband providers.

In closing, I urge Mexican policymakers and advocates, if you look to the U.S. as an example for broadband policy, please look to the states and not to the federal government – at least not this federal government. We had a good run at the FCC while I was there, adopting strong net neutrality, privacy and other policies that promoted affordable access, competition, diversity, and consumer protection. Perhaps under another administration, the U.S. can look to you for how to rebuild our broadband and media policies to the benefit of all Americans.

Thank you.

Gigi B. Sohn is a Distinguished Fellow, Georgetown Law Institute for Technology Law & Policy and Benton Senior Fellow and Public Advocate. She is one of the nation’s leading public advocates for open, affordable and democratic communications networks. For nearly thirty years, she has worked across the country to defend and preserve the fundamental competition and innovation policies that have made broadband Internet access more ubiquitous, competitive, affordable, open and protective of user privacy.

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

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