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Huawei, Failing to Crack U.S. Market, Signals a Change in Tactics

The Chinese telecom giant, which has been dogged by concerns about its ties to Beijing, dropped its top Washington liaison and other American employees.

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Sinclair Deal With Tribune Hits Complications in Washington

Sinclair remains locked in a prolonged battle with Justice Department antitrust officials over how many stations it must sell to get their approval.

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Net Neutrality Repeal: What Could Happen and How It Could Affect You

What Might Happen?

The biggest concern is that the internet will become pay-to-play technology with two tiers: one that has speedy service and one that doesn’t. The high-speed lane would be occupied by big internet and media companies, and affluent households. For everyone else there would be the slow lane.

The brand-name internet companies like Google, Facebook, Amazon and Netflix, analysts say, will comfortably be able to pay the higher rent. It will not affect their business, though it may crimp their profits. Avoiding higher prices is one reason the major internet companies have been champions of net neutrality.

But higher prices may be prohibitive for start-up companies and new voices in the media and entertainment worlds. W. Kamau Bell, a comedian and host of the CNN documentary series “United Shades of America,” recently described in The New York Times how the internet is so often the path to popular and commercial success for newcomers. They upload a video and it goes viral.

That will no longer be true, Mr. Bell wrote, without net neutrality rules that “ensure that anyone who puts something on the internet has a fair shot at finding a life-changing audience.”

The government-backed guarantee of equal access is why public interest groups, nongovernmental organizations, charities and millions of private citizens wrote to the F.C.C. in support of the net neutrality rules.

But the broadband and telecom companies — and some economists — say that the freedom to charge different prices for different products and services is vital to healthy markets. That kind of “price discrimination,” they say, is the fuel of innovation and efficiency.

In a public comment earlier this year to the F.C.C., AT&T called the Obama-era rules “an unprecedented regulatory overreach for which there is no economic or marketplace justification.”

The F.C.C. rules mandated net neutrality principles under a utility-style telecommunications law, called Title 2, that dates to 1934. The carriers fear that it all but ensures price regulation.

“What they really object to is Title 2, not the net neutrality principles,” said Craig Moffett, an independent analyst.

Photo

Major telecommunication and broadband companies including Comcast have argued that the internet should not be subject to utility-style government regulation. They say that reduces their incentives to invest and improve service. But supporters of net neutrality rules say repeal will give internet providers too much power. Credit Cindy Ord/Getty Images for Comcast

So Whom Do You Trust?

The answer, like so many these days, is politically charged. The repeal reflects the conservative backlash against government regulation, which has been a hallmark of the Trump administration.

Tim Wu, a law professor at Columbia University who is credited with coining the phrase “net neutrality,” said the repeal plan not only rolls back the Obama-era rules, it goes further. It specifically permits broadband carriers to block media content, Mr. Wu said, an added power which was not the case during the administration of George W. Bush.

“An allowance of blocking is really pretty shocking.” Mr. Wu said in an email.

Yet if government is in retreat, then consumers are left to trust the behavior of the internet-access companies like Charter and AT&T. In their filings with the F.C.C., the companies have claimed that faith would be well founded. Market incentives, Charter told the F.C.C., push the companies to provide the best service to its customers, catering to consumer demand.

Charter said it voluntarily adheres to net neutrality principles, and will continue to do so. “We do not block, throttle, or otherwise interfere with the online activity of our customers,” the company said.

But a weakness in the free-market argument, industry analysts say, is that in some regional and rural markets, households have only one internet provider available to them. That undermines the theory that competition will protect consumers.

Roger L. Kay, an independent technology analyst, predicted that larger bills — not content blocking — would be the most likely result. If the big internet and media companies will have to pay their carriers more for high-speed services, the expenses will trickle down to households.

Consumers, Mr. Kay said, “will end up paying higher prices for essentially the same service.”

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Net Neutrality Hits a Nerve, Eliciting Intense Reactions

But none of that has overshadowed the heated reaction to the agency’s proposal.

“There doesn’t seem to be middle ground on this issue,” said John Beahn, a lawyer at Skadden Arps who specializes in regulation.

At the center of the debate is whether telecom companies like AT&T and Verizon should be able to charge internet sites for delivering their data to consumers’ homes. In 2015, the F.C.C. voted to prohibit those charges, in a policy often called net neutrality.

But Mr. Pai, a Republican nominated for the chairmanship by President Trump, said the regulations were heavy-handed and prevented telecom companies from pursuing new business models. His proposal, by stripping away the existing rules, would allow telecom companies to charge websites to deliver their data at higher speeds.

In a speech on Tuesday, Mr. Pai addressed some of the concerns that have been voiced since he released his proposal, pointing specifically to comments by celebrities like Cher and Kumail Nanjiani of “Silicon Valley.” He said their tweets warning that his rules would lead to authoritarianism and a handout to big cable companies were “utterly absurd.”

“I’d like to cut through hysteria and hot air and speak in plain terms about the plan,” Mr. Pai said, adding that the plan would bring back the regulation-free policy that helped the internet thrive. He said big tech companies might be a bigger threat to online speech than telecom companies.

The proposal is expected to be approved at a meeting of the five F.C.C. commissioners on Dec. 14. The two other Republican commissioners have already expressed their support for Mr. Pai.

The 2015 rules also elicited strong interest. The F.C.C. site was overwhelmed with comments after a monologue from the late-night host John Oliver went viral online. Some people who wanted the stronger rules blocked the driveway of the chairman at the time, Tom Wheeler, to try to persuade him to change the agency’s plan.

Video

What Is Net Neutrality?

The F.C.C. voted to dismantle rules that require internet providers to give consumers equal access to all content online. Here’s how net neutrality works.

By AARON BYRD and NATALIA V. OSIPOVA on Publish Date November 21, 2017. Photo by Michael Bocchieri/Getty Images. Watch in Times Video »

Big web companies like Google and Netflix played activist roles as well, supporting the stronger rules. They argued that telecom companies should not be able to split sites into fast lanes and slow lanes, because that would allow them to become a sort of gatekeeper for information and entertainment. In addition, they say, it would hurt start-ups without the money to pay for the faster lanes.

Mr. Pai, who opposed the rules as a commissioner in 2015, gave broad outlines of his plans early this year. For months, comments to the F.C.C. website piled up, to more than 20 million. President Barack Obama’s clean power plan, perhaps his biggest policy change at the Environmental Protection Agency, attracted 4.3 million comments over six months.

But the intensity has increased even more since Mr. Pai released the details of the proposal — perhaps in part because few people expected him to try to strip all of the existing rules.

“We never expected this,” wrote Craig Moffett, an analyst at the research firm MoffettNathanson.

Lawmakers, celebrities, founders of start-ups and consumers have continued to hash out the debate into this week.

Conservative groups like FreedomWorks and the Competitive Enterprise Institute praised the rollback. The radio host Rush Limbaugh defended Mr. Pai’s plan on Monday in an online post. He dismissed concerns by supporters of the rules, whom he described as liberal “millennials and tech bloggers.”

“What the tech bloggers and the left don’t like is that there are options and that there is a freedom in the marketplace and that people can choose superior service if they’re willing to pay for it,” Mr. Limbaugh said. “And if somebody’s willing to pay for superior service, the providers had better provide it.”

Public interest groups like Free Press and organizations like Mozilla, the nonprofit behind the popular Firefox browser, said they were prepared to file suit against the plan as soon as the vote on Dec. 14.

“The action hit a nerve because the internet is central to the vast majority of people’s daily lives, and so people were very eager to understand what was happening over the weekend,” said Denelle Dixon, chief legal officer for Mozilla.

The reaction from the biggest tech companies, however, has been noticeably subdued. Instead of forceful pleas from their executives, like those in years past on this issue, they are largely speaking through their trade group, the Internet Association, which has expressed disappointment over Mr. Pai’s plan.

“Internet companies are firm supporters of the 2015 Open Internet Order and will continue our push for strong, enforceable net neutrality rules going forward,” said Noah Theran, a spokesman for the Internet Association. “We are reviewing the draft order and weighing our legal options.”

Taking their place are start-ups such as Airbnb, Twitter and Reddit, which joined dozens of smaller start-ups on Monday warning Mr. Pai that the rules would hurt innovation and the economy.

Sorting out the real individual commenters from fake or automated accounts is far more tricky. The F.C.C. said it did not have the resources to investigate every comment on its site.

Eric Schneiderman, the New York attorney general, said that after a six-month investigation, his office had found that the identities of tens of thousands of state residents were fraudulently used to post comments to the F.C.C.

“If law enforcement can’t investigate and (where appropriate) prosecute when it happens on this scale,” Mr. Schneiderman said, “the door is open for it to happen again and again.”

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Congress Moves to Strike Internet Privacy Rules From Obama Era

Republican lawmakers and the new chairman of the F.C.C., Ajit Pai, have said the privacy rules were onerous and unfairly strapped regulations on telecom carriers, but not on web companies such as Facebook and Google that also provide access to online content.

“It is unnecessary, confusing and adds another innovation-stifling regulation,” Senator Jeff Flake, Republican of Arizona, said this month when he introduced the resolution to overturn the rules using the Congressional Review Act procedure that lets Congress overrule new agency regulations.

The Senate’s vote was a victory for giant telecommunications and cable companies. The F.C.C. chairman under the Obama administration, Tom Wheeler, had declared that broadband would be regulated more heavily, by categorizing the service in the same regulatory bucket as telephone services, which are viewed as utilities.

That move acknowledged the importance of the internet for communications, education, work and commerce and the need to protect online users, Mr. Wheeler had said.

Under the internet privacy rules that Mr. Wheeler passed, apart from broadband providers having to ask permission to track browsing and other online activities of a user, the companies were also required to use “reasonable measures” to secure consumer data against hackers. The privacy rules were scheduled to go into effect at the end of this year

Broadband providers had balked and ramped up lobbying against the rules. Comcast and other broadband providers created the lobbying group 21st Century Privacy Coalition, led by a former Federal Trade Commission chairman, Jon Leibowitz, to defeat the broadband privacy rules.

“We appreciate today’s Senate action to repeal unwarranted F.C.C. rules that deny consumers consistent privacy protection online and violate competitive neutrality,” the cable industry lobby group, NCTA-The Internet & Television Association, said in a statement on Thursday.

With Republicans now in charge across the government, AT&T and Comcast are also poised to benefit from further deregulation. Since the presidential election, the companies have pushed the new Republican-led F.C.C., lawmakers and the White House to roll back net neutrality, the requirement that broadband providers give equal access to all content on the internet, saying the rules hamper their ability to invest in new networks and jobs.

The F.C.C. chairman, Mr. Pai, has also talked with Republican allies in Congress about privacy and broadband classification. Mr. Pai has already chipped away at more than a dozen regulations, including aspects of net neutrality and the program, known as Lifeline, that provides subsidies for broadband users in low-income households.

Consumer groups warned that internet users would suffer from the changes. The Federal Trade Commission, the consumer protection agency, is barred from overseeing broadband providers, so without the F.C.C. privacy rules, the federal government will be a weaker watchdog over internet privacy, supporters of the regulations said.

“Senate Republicans just made it easier for Americans’ sensitive information about their health, finances and families to be used, shared and sold to the highest bidder without their permission,” said Senator Edward J. Markey, Democrat of Massachusetts.

Democrats had taken to the Senate floor on Wednesday and Thursday to warn that without the rules, broadband providers will now have free range to peer into their customers’ lives. A company like AT&T or Sprint can tell the time people wake up by when they check the clock on their phone, or see where users go to lunch or whom they visit. By tracking a user’s browsing of medical websites, a carrier can also determine if that person might have an illness.

The Senate’s action also signaled a philosophical shift on tech regulation. Lawmakers and Mr. Pai have said regulations should be created only when there is proof of harmful activity. They also argue that the telecom industry competes with internet firms such as Facebook and Google for access to online content, so any rules should also include those companies. Republicans have said the F.T.C. should be the watchdog for all online privacy.

But Democratic regulators have said the key difference is that consumers do not have many choices for broadband access, which makes them vulnerable to data collection by internet service providers.

“Subscribers have little or no competitive choice as to which provider to use,” said Terrell McSweeny, a Democratic commissioner of the F.T.C. Yet broadband providers “know our identities, and their position gives them the technical capacity to surveil users in ways that others cannot.”

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Broadband Providers Will Need Permission to Collect Private Data

Privacy groups applauded the new rules, which they said brought the United States more in line with European nations that have moved aggressively to protect their citizens’ online privacy.

“For the first time, the public will be guaranteed that when they use broadband to connect to the internet, whether on a mobile device or personal computer, they will have the ability to decide whether and how much of their information can be gathered,” said Jeffrey Chester, executive director of the Center for Digital Democracy.

The outcry from industries that depend on online user data was also swift. Cable lobbying groups called the rules a result of “regulatory opportunism,” while the Association of National Advertisers labeled the regulations “unprecedented, misguided, counterproductive, and potentially extremely harmful.”

Even with the new rules, online privacy remains tricky. Many people have been lackadaisical about what information they give up online when they register for websites or digital services. The convenience of free services like maps also appeals to people, even though they give companies access to personal information. And some people unknowingly forgo their privacy when allowing apps or other services to track their location or follow their browsing across websites.

The F.C.C. rules also have their limits. Online ad juggernauts, including Google, Facebook and other web companies, are not subject to the new regulations. The F.C.C. does not have jurisdiction over web companies. Those companies are instead required to follow general consumer protection rules enforced by the Federal Trade Commission. That means Google does not have to explicitly ask people permission first to gather web browsing habits, for example.

AT&T, Verizon and Comcast will also still be able to gather consumers’ digital data, though not as easily as before. The F.C.C. rules apply only to their broadband businesses. That would mean data from the habits of AT&T’s wireless and home broadband customers would be subject to the regulations, but not data about AT&T’s DirecTV users or users of the HBO Now app, which would come with the merger with Time Warner, for example.

The companies also have other ways to collect information about people, including the purchase of data from brokers.

AT&T, which has criticized the privacy regulations for internet service providers, would not comment on how the rules would affect its proposed purchase of Time Warner. But it emphasized the benefits of ads that allow for free and cheaper web services.

“At the end of the day, consumers desire services which shift costs away from them and toward advertisers,” said Robert W. Quinn Jr., AT&T’s senior executive vice president for external and legislative affairs. “We will look at the specifics of today’s action, but it would appear on its face to inhibit that shift of lower costs for consumers by imposing a different set of rules on” internet service providers.

Comcast said that the rules were not needed and that the F.C.C. did not prove that broadband providers were hurting consumers.

For over two decades, internet service providers “and all other internet companies have operated under the F.T.C.’s privacy regime and, during that time, the internet thrived; consumer privacy was protected,” said David L. Cohen, Comcast’s senior executive vice president.

Major broadband providers will have about one year to make the changes required by the new rules; the companies must notify users of their new privacy options in ways like email or dialogue boxes on websites. After the rules are in effect, broadband providers will immediately stop collecting what the F.C.C. deems sensitive data, including Social Security numbers and health data, unless a customer gives permission.

The new rules are among a set of last-ditch moves by Mr. Wheeler to make the F.C.C. a stronger watchdog over the broadband industry. Since he was appointed F.C.C. chairman in 2013, he has tried to open the cable box market in an effort to promote streaming videos, among other actions. Mr. Wheeler is entering what are probably the last few months of his tenure at the agency, as he is not expected to be reappointed by whoever becomes the next president.

The F.C.C. proposed the broadband privacy rules in March. That followed the reclassification of broadband last year into a utilitylike service, a move that required broadband to have privacy rules similar to those imposed on phone companies.

Once the rules were proposed, the F.C.C. immediately faced a backlash. Cable and telecom companies created a lobbying group called the 21st Century Privacy Coalition to fight off the regulations. The group is led by Washington heavyweights like Jon Leibowitz, the former chairman of the F.T.C., and former Representative Mary Bono, Republican of California. Henry A. Waxman, former chairman of the House Energy & Commerce Committee and a Democrat, was also hired by the 21st Century Privacy Coalition and wrote an op-ed article in The Hill to protest the rules.

Even some web companies protested the proposed rules. Google said in comments filed to the F.C.C. this month that the regulations should not include web browsing, because that does not necessarily include sensitive personal information.

“Consumers benefit from responsible online advertising, individualized content, and product improvements based on browsing information,” wrote Austin Schlick, Google’s director of communications law.

In the end, the objections had little effect on the F.C.C.

“Hopefully, this is the end of what has been the race to the bottom for online privacy, and hopefully the beginning of a race to the top,” said Harold Feld, senior vice president at Public Knowledge, a nonprofit public interest group.

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F.C.C. Approves Net Neutrality Rules, Classifying Broadband Internet Service as a Utility

Before the vote, each of the five commissioners spoke and the Republicans delivered a scathing critique of the order as overly broad, vague and unnecessary. Ajit Pai, a Republican commissioner, said the rules were government meddling in a vibrant, competitive market and were likely to deter investment, undermine innovation and ultimately harm consumers.

“The Internet is not broken,” Mr. Pai said. “There is no problem to solve.”

The impact of the new rules will hinge partly on details that are not yet known. The rules will not be published for at least a couple of days, and will not take effect for probably at least a couple of months. Lawsuits to challenge the commission’s order are widely expected.

The Faster the Internet, The Fewer the Choices

Three-quarters of households have the choice of only one broadband provider while only a quarter have at least two to choose from.

The share of homes with

broadband providers

available at each speed

LATEST

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Number of

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Megabits per second downloading

Faster Internet speed

The F.C.C. is taking this big regulatory step by reclassifying high-speed Internet service as a telecommunications service, instead of an information service, under Title II of the Telecommunications Act. The Title II classification comes from the phone company era, treating service as a public utility.

But the new rules are an à la carte version of Title II, adopting some provisions and shunning others. The F.C.C. will not get involved in pricing decisions or the engineering decisions companies make in managing their networks. Mr. Wheeler, who gave a forceful defense of the rules just ahead of the vote, said the tailored approach was anything but old-style utility regulation. “These are a 21st-century set of rules for a 21st-century industry,” he said.

Opponents of the new rules, led by cable television and telecommunications companies, say adopting the Title II approach opens the door to bureaucratic interference with business decisions that, if let stand, would reduce incentives to invest and thus raise prices and hurt consumers.

“Today, the F.C.C. took one of the most regulatory steps in its history,” Michael Powell, president of the National Cable and Telecommunications Association and a chairman of the F.C.C. in the Bush administration, said in a statement. “The commission has breathed new life into the decayed telephone regulatory model and applied it to the most dynamic, freewheeling and innovative platform in history.”

Supporters of the Title II model include many major Internet companies, start-ups and public interest groups. In a statement, Michael Beckerman, president of the Internet Association, which includes Google, Facebook and smaller online companies, called the F.C.C. vote “a welcome step in our effort to create strong, enforceable net neutrality rules.”

The F.C.C.’s yearlong path to issuing rules to ensure an open Internet precipitated an extraordinary level of political involvement, from grass-roots populism to the White House, for a regulatory ruling. The F.C.C. received four million comments, about a quarter of them generated through a campaign organized by groups including Fight for the Future, an advocacy nonprofit.

Evan Greer, campaign director for Fight for the Future, said, “This shows that the Internet has changed the rules of what can be accomplished in Washington.”

Photo

Supporters of net neutrality rallied on Thursday outside the F.C.C. building. Credit Gabriella Demczuk for The New York Times

An overwhelming majority of the comments supported common-carrier style rules, like those in the order the commission approved on Thursday.

In the public meeting, Mr. Wheeler began his remarks by noting the flood of public comments. “We listened and we learned,” he said.

In November, President Obama took the unusual step of urging the F.C.C., an independent agency, to adopt the “strongest possible rules” on net neutrality.

Mr. Obama specifically called on the commission to classify high-speed broadband service as a utility under Title II. His rationale: “For most Americans, the Internet has become an essential part of everyday communication and everyday life.”

Republicans in Congress were slow to react, and initially misread the public mood. Senator Ted Cruz of Texas portrayed the F.C.C. rule-making process as a heavy-handed liberal initiative, “Obamacare for the Internet.”

In January, Senator John Thune, the South Dakota Republican, began circulating legislation that embraced the principles of net neutrality, banning both paid-for priority lanes and the blocking or throttling of any web content. But it would also prohibit the F.C.C. from issuing regulations to achieve those goals. This week, the Republicans pulled back, with too little support to move quickly.

Also at the Thursday meeting, the F.C.C. approved an order to pre-empt state laws that limit the build-out of municipal broadband Internet services. The order focuses on laws in two states, North Carolina and Tennessee, but it would create a policy framework for other states. About 20 states, by the F.C.C.’s count, have laws that restrict the activities of community broadband services.

The state laws unfairly restrict municipal competition with cable and telecommunications broadband providers, the F.C.C. said. This order, too, will surely be challenged in court.

Correction: February 26, 2015
An earlier version of this article misstated the role of the F.C.C. under the new rules in pricing and engineering decisions companies make for their networks. The F.C.C. will not get involved in those decisions; it is not the case that they will get involved.

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