January 2014

Federal Communications Commission Chairman Tom Wheeler indicated that he'd be watching closely as AT&T rolled out a new offering called Sponsored Data, which promises to keep certain mobile browsing from counting against your monthly data cap but which has raised the ire of network neutrality advocates.

Sponsored Data makes it possible for companies to subsidize your use of their online services by paying AT&T a separate fee. While the plan frees up more data per month for AT&T's customers, Internet advocates fear that content creators will be at a disadvantage if they can't afford to pay up. "My attitude is, let's take a look at what this is," said Chairman Wheeler. "Let's take a look at how it operates. ... If it interferes with the operation of the Internet ... if it develops into an anti-competitive practice ... if it does have some kind of preferential treatment given somewhere, then that is cause for us to intervene." “I’ve been talking about what I call the regulatory seesaw. If there are good things happening the marketplace, if there is competition, then the commission doesn’t have to do much. But it can (tilt) as well.” The current Open Internet Order, he said, “is designed to encourage competition, is designed to be different for wireless than from wire, and it makes it clear that if there are untoward things impacting things to the network, undermining innovation, then the commission should move.” Wheeler framed his thinking in terms of the new realities of regulation. “The old regulatory model was ‘We pretty much know where things are going. There are few hothouses that produce advancements, like Bell Labs; we can track those and fit those into policy.’ It was a very proscriptive model.” But now, he said, changing is happening so fast, “Even the wisest and best intentioned people can’t sit around being proscriptive. But what you can do is say you want to have an environment that encourages innovation and holds true to a set of values and maintains authority to deal with protection of those values.”

Wheeler's comments don't do much to clarify his cryptic positions on network neutrality; the agency head has previously voiced his support for the "open Internet" but has left open the prospect of letting Internet providers create a tiered system where some types of traffic enjoy an advantage over others. Critics worry that such a system would make it harder for startups to enter the market.

Wheeler’s fellow commissioners also declined to make any quick decisions. “I don’t want to pass regulatory judgment right now,” said FCC Commissioner Mignon Clyburn. “We need to let things develop,” agreed Commissioner Ajit Pai. “The FCC shouldn’t a priori declare business models out of bounds.” While all the commissioners support an open Internet, none would commit on what direction the FCC might take on its network neutrality rules if the DC Circuit Court strikes all or part of them down. “The prudent thing to do is wait and see,” said Commissioner Jessica Rosenworcel.

More lending companies are mining Facebook, Twitter and other social media data to help determine a borrower's creditworthiness or identity, a trend that is raising concerns among consumer groups and regulators.

Lending companies -- some of which are backed with venture funding from Google Ventures, the venture-capital arm of Google, and Accel Partners, an early Facebook investor -- are looking at potential problems such as whether applicants put the same job information on their loan application as they posted on LinkedIn, or if they shared on Facebook that they had been let go by an employer. A small business that draws negative reviews on eBay also could undermine its chances of getting more credit, lending companies say. The practice is being used largely by startups that grant smaller loans, but the concept seems likely to spread. Fair Isaac, which provides the credit scoring used in more than 90% of lenders decisions, says it is weighing possibilities for incorporating social media. "There could come a time where certain social media could be predictive and we're looking at that, but it isn't yet," said Anthony Sprauve, senior consumer-credit specialist at FICO. Consumer advocates say the trend increases the chance borrowers, including small businesses, will be unfairly denied credit or saddled with higher interest rates based purely on their social media presence. They say federal laws haven't kept up with the trend, leaving borrowers exposed. Regulators are watching the trend and trying to determine whether to police financial institutions' use of online data in credit scoring, officials say.

The Justice Department filed a motion that would prevent plaintiffs in one of the recent federal cases involving the National Security Agency from learning more about its surveillance activities.

“Plaintiffs have made clear their intentions to seek discovery of this kind of still-classified information, concerning targets and subjects, participating providers, and other operational details of the challenged NSA intelligence programs,” the motion stated. It continues to say disclosure of those programs “could cause exceptionally grave damage to national security.” Conservative activist Larry Klayman is the plaintiff in two lawsuits brought against the Obama Administration. He charges that the NSA’s program violates the First, Fourth and Fifth amendments.

T-Mobile said it added 800,000 of the industry's most lucrative phone customers in the last three months of 2013, capping a remarkable turnaround year for a carrier that for years bled millions of customers to rivals.

Overall, T-Mobile added 869,000 so-called postpaid subscribers in the fourth quarter, up 34% from the third quarter and a significant departure from 515,000 customer losses during the same period last year. Of those additions, 69,000 involved tablets or other devices aside from phones. Total customer additions were 1.6 million for the quarter, bringing total additions in 2013 to 4.4 million. T-Mobile's postpaid "churn," or the percentage of customers leaving the carrier, dropped to 1.7% in the fourth quarter from 2.5% a year earlier. T-Mobile has mounted a flamboyant bid to win customers by doing away with much criticized standbys like service contracts and international data fees, while offering high-end phones like the iPhone and upgrading to faster next-generation network service. In a profanity-laced presentation at an industry conference in Las Vegas, T-Mobile Chief Executive John Legere said the bulk of his company's new customers were coming from AT&T and Sprint, and a smaller but growing number were beginning to join from Verizon. "We are either going to take over this whole industry, or these bastards are going to change," Mr. Legere said.