Morning Consult

FCC Schedules November Vote on Bulk Data Price Caps

The Federal Communications Commission said that commissioners will vote on final rules governing the pricing of older bulk-data services during its next open meeting, scheduled for Nov 17. The commission first unveiled its final rules for business data services on Oct 7. The rules were initially placed on circulation, and they could have been passed at any time after receiving votes from three commissioners. The commission’s plan would place price caps on parts of the $45 billion business data services industry, which powers ATM and retail transactions as well as cell towers. The rules expand upon price caps affecting older, largely copper-based bulk-data technology. Newer packet-based Ethernet technology would not be capped under the rule, but there would be an FCC-overseen complaints process for prices deemed noncompetitive. Oct 27’s announcement said the rules will “allow for light-touch regulation of packet-based business data services,” while “retaining and updating price cap regulation” for slower bulk-data technology.

AT&T, Time Warner Execs Knock Trump, Kaine for ‘Uninformed’ Merger Comments

AT&T and Time Warner chief executives Randall Stephenson and Jeffrey Bewkes are pushing back against “uninformed comments” from top politicians attacking the pending $85 billion deal to combine their companies. The two business leaders also announced a new, $35-a-month streaming content service called DirecTV Now, which will likely include Time Warner content among 100 “premium” channels and will compete nationally with pricier cable plans.

A spokesman for AT&T said the company does not expect the merger with Time Warner to be approved before the planned late-November launch of DirecTV Now. The launch of the new service is just the “tip of the iceberg” in terms of its collaboration with Time Warner. “These are uninformed comments,” the AT&T executive said, stressing the $35 monthly price point of AT&T’s new DirecTV Now streaming service. “Anybody who characterizes this as a means to raise prices is ignoring the basic premise of what we’re trying to do here.” Stephenson also pointed out that the merger was a classic case of “vertical integration,” where two companies occupying different stages of production in an industry come together. “Vertical integrations are rarely a means for raising prices,” said Stephenson. “You’re not changing the market structure in any way, shape or form.” He added that while he’s sure regulators “will have some concerns with this,” the federal government has historically approved vertical integrations.

How the Broadband Industry Could Challenge FCC’s Privacy Rules

The Federal Communications Commission is expected to pass privacy rules. Once approved, the rules would require explicit consent from customers before companies can use many forms of data for marketing purposes. The agency is permitted to regulate internet service providers as it does phone companies as a result of a 2015 network neutrality rule that reclassified ISPs as common carriers.

While the net neutrality rule gives the regulator solid legal standing to issue rules for ISPs, industry giants such as AT&T have argued that the privacy rules still might not align with the FCC’s authority to regulate privacy under the 1996 Telecommunications Act. If broadband providers decide to sue, that argument will likely be the one that they use, an industry source said. The law prohibits phone carries from using a customer’s “proprietary” information, which includes the location, time, date, duration of phone calls, the type of network a consumer subscribes to, as well as any other information that a provider could obtain from a customer’s phone bill. In a regulatory filing with the FCC, AT&T argued data such as web browsing and app usage can’t be proprietary if other web entities have access to it.

Vuja De All Over Again

[Commentary] We should learn from our own history. Following the AT&T battles, the entry of competition and new technology was greatly beneficial to consumers and businesses at every level of our economy. Can you imagine having to rent a laptop from the telephone company to access the internet? Despite the echoes of the monopolists of the past, competition in cable boxes will be sound policy as well. New technology will follow, and consumers will see the benefits in their pocketbooks. Set-top boxes are a good place to continue our positive tradition of innovation and competition in telecommunications.

[Timothy E. Wirth (D-CO) represented Colorado in the U.S. Senate from 1987 to 1993 and in the House of Representatives from 1975 to 1987.]

Fight Over FCC Privacy Rule Ramps Up Ahead of Vote

The Federal Communications Commission’s plan to designate web browsing and app usage as “sensitive” has privacy advocates cheering and the industry rushing to lobby the agency to tweak the final rule ahead of next week’s vote. Sen Ed Markey (D-MA), a privacy advocate, told reporters that “every click Americans make online paints a detailed picture of their lives. … Consumers should have the power to stop ISPs from collecting and using their browsing information, app usage data and other sensitive information without their express consent.”

Opponents argue that the FCC should avoid adding new categories to the existing Federal Trade Commission definition of “sensitive” data. “The proposal to include web browsing and apps usage data as sensitive information would be especially counterproductive,” the industry officials said in their filing. They added that consumers “benefit” from online advertising and personalized content that the use of web browsing history and apps usage information allows. On the other side of the debate, advocacy groups including Public Knowledge and the Center for Democracy and Technology met with FCC Commissioner Mignon Clyburn’s office to urge the agency to make the definition of sensitive data “as expansive as possible,” according to a filing.

Why the FCC Chose Not to Regulate Ethernet Bulk Data Prices

When the Federal Communications Commission unveiled a new regulation to regulate the $45 billion “business data services” market, many in the industry were surprised the rules didn’t include price caps on newer, Ethernet-based technology. A nonbinding agreement reached summer 2016 between two key players — incumbent carrier Verizon and the competitive-carrier trade group INCOMPAS — included Ethernet price caps. The goal for both the FCC and some in the industry is to curb anti-competitive pricing of the bulk data connections that power ATMs, retail transactions and cell phone towers. Most observers — including some inside the FCC itself — expected the commission’s final rule to track closely to the Verizon/INCOMPAS deal. The rule, which is actually quite different from that agreement, is currently on circulation among the five commissioners. A vote on it could come at any time, but it has not been included on the docket for the commission’s open meeting on Oct 27.

There are competing reasons why the commission excluded Ethernet price caps in the rule, apparently. The main reason is that a thorough examination of its marketplace data showed insufficient evidence that the Ethernet market was noncompetitive. Recent data revealed an uptick in Ethernet competition, driven in part by the entrance of cable companies into the bulk data marketplace. It would be premature to regulate the price at this point. Apparently, there are additional reasons, beyond the main argument about inconclusive data, that explain why the commission didn’t include Ethernet price caps in its latest version. The FCC lacked the pricing data that would make the caps capable of effectively withstanding a legal challenge. In addition, apparently some regulators were concerned by unworkable provisions in the Verizon/INCOMPAS proposal to cap Ethernet prices by census blocks. What’s more, apparently regulators were worried about industry reaction to earlier FCC orders that exempted some bulk data providers from regulation.

Yahoo Surveillance Report Rekindles FISA Fight

Privacy advocates are hitting hard at the government process that likely led Yahoo Inc. to create software and scan all of its users’ incoming e-mails on behalf of US intelligence agencies. The reaction was immediate to a report that said a classified government order directed the Internet company to scan hundreds of millions of Yahoo Mail accounts searching for a specific “set of characters.” Advocates agree that many questions remain unanswered about the case.

Still, the Washington (DC) backlash coalesces around a foreign surveillance law, set to expire at the end of 2017, that privacy-minded lawmakers want to change. Privacy advocates are zeroing in on a controversial provision of the 2008 Foreign Intelligence Surveillance Amendments Act as the likely avenue that brought forth the government order. Provisions in the law allow US intelligence officials to request consumer data from phone and Internet firms to spy on targets believed to be outside the US. Even before the Yahoo report, lawmakers and civil liberties advocates were pushing for changes to that provision, Section 702. They say US intelligence agencies abuse it, conducting mass surveillance on Americans that shouldn’t be targeted in the first place. In the wake of the Yahoo news, these advocates say the administration now has a duty at least to tell people if it is conducting mass searches.

Frontier Drops Opposition to Price Caps After Reaching Deal With Sprint

Telecommunication companies Sprint, Frontier Communications and Windstream Services released a joint filing to the Federal Communications Commission expressing their support for upcoming FCC rules that may place price caps on the data services that power transactions at retail outlets and ATMs. They simultaneously urged the commission to adopt a tiered approach to the new rules for business data services, or BDS, that would favor smaller carriers.

The filing marked an about-face for Frontier, which has long resisted changing the market in which bulk data connections are sold directly to businesses from phone companies. Frontier said the latest agreement is satisfactory. “Yesterday’s filing by Frontier, Windstream, and Sprint reflects a consensus approach which affords the smaller price-cap carriers a reasonable transition period to adjust to potential reductions to BDS rates,” spokesman John Puskar said in a statement.

FCC Faces Tough Timeline Over the Next Few Months

Federal Communications Commission Chairman Tom Wheeler has an ambitious agenda ahead of him as the agency eyes rules in three telecommunications areas that face staunch opposition from large factions of the private sector. Chairman Wheeler wants the FCC to set price caps on business data services, open the cable set-top box marketplace, and implement privacy regulations on Internet service providers. He told reporters he aims to complete all those items before the end of the year. The stars will have to align perfectly for this to happen.

Tech Sparks Global Consensus, White House Official Says

David Edelman, special assistant to the president for economic and technology policy at the National Economic Council, said technology areas like cybersecurity, privacy, and network neutrality are winners in the international community.

Edelman said that the core principles behind the net neutrality rules — ones that some industry lobbyists and Republicans fought so vehemently in the United States — were widely adopted in other major economies. “Something was happening under our noses that I think wasn’t truly recognized in an international forum until this G20 [summit],” Edelman said. “The vast majority of G20 economies already had open internet protection on the books.” Republicans and some industry executives say the rules are an overreach that will squelch broadband innovation. Edelman disagrees. “As it turns out, the principles that were so controversial domestically were ones that had surprising international consensus,” he said, noting that Brazil, India and the European Union were all in the process of drafting open internet rules as policymakers in the United States debated the validity of the rules put forward by the Federal Communications Commission. “This is a remarkable evolution in a debate that reflected and became a part of the global consensus, certainly well before any would have said the issue is resolved domestically,” he added. The issue of privacy also reflects an area where, despite differences, the U.S. has been able to strike key agreements with allies because of domestic policy, Edelman said.