July 2015

Building the broadband of tomorrow

[Commentary] From Scottsbluff (NE) to Omaha (NE), and all across America, our economy is growing and rapidly changing. 21st century connections are allowing businesses to compete and communicate in unique and exciting new ways. One thing is for sure -- Nebraska stands to benefit from the Internet revolution. But in order to reap these benefits, we need to make sure that our businesses and communities have access to the high-tech tools that make success possible. This means ensuring the private sector has both the incentive -- and ability -- to build across the American landscape.

In that spirit, I was proud to welcome FCC Commissioner Ajit Pai to Omaha and showcase the impressive work we are accomplishing in Nebraska. Commissioner Pai and I began his visit by leading a roundtable discussion with several Nebraska telecommunications companies. These businesses are developing high-speed Internet across the state and investing in ways to deploy more broadband. But regulatory uncertainty is holding them back. The building blocks of Internet networks are high-cost projects, often requiring extensive planning and government approval that can take years. The message was clear: It’s time to streamline the permitting process and encourage a framework to reduce regulatory uncertainty. I thank Commissioner Pai for joining me in Nebraska and laying out a concrete plan to address the issues facing businesses across the country. I look forward to working with him and his colleagues as we look to foster sound policies for Nebraska and the American people.

[US Sen Deb Fischer is serving her first term as the senior US Senator from Nebraska]

Public Knowledge Pushes Back on Network Neutrality Rule Ride

Public Knowledge is asking its supporters to make some noise in opposition to Republican-backed legislation that would block the Federal Communications Commission’s implementation of its new Title II-based network neutrality rules, a measure that could be up for vote in the House perhaps as early as the week of July 13.

A rider on a must-pass Financial Services appropriations bill would defund the FCC's enforcement of the new rules, which went into effect June 12. The bill passed the House Appropriations Committee, with rider intact, on June 17. The Washington, DC-based nonprofit public advocacy group said the rider was retaliation for the new rules, which it said the public “clearly demanded.” Public Knowledge said it was hopeful the rider would ultimately be derailed, but it was not relying on hope alone. It called on its supporters to call and tweet their representatives.

Round 1 goes to the lobbyists

In March, the US Senate unanimously approved the most sweeping and direct congressional statement on the evolving technology known as the Internet of Things. The proposal -- formally, S.Res. 110 -- lauded the emerging industry of Web-enabled crock pots, smart thermostats and fitness tracking wristbands. It called for a “strategy for the Internet of Things to promote economic growth and consumer empowerment” and promised to help Silicon Valley “continue to produce breakthrough technologies and lead the world in innovation.” The measure was entirely symbolic. And if it signified anything, it’s the impressive early political sophistication of an emerging industry.

At a time when much of Washington -- and definitely much of Congress -- still isn’t quite familiar with what the “Internet of Things” is, the manufacturers and tech firms hoping to dominate the market have made a concerted push, hiring lobbyists and trying to get legislators to think more about encouragement than regulation.

COMPTEL, industry orgs ask FCC to protect competition in ILEC IP transition

COMPTEL and a group of organizations that represent businesses and competitive Internet service providers have sent a letter to the Federal Communications Commission asking the regulator to include in their technology transitions an order that will protect and promote competition, universal service and public safety while ensuring business and residential customers can get services as telecommunication companies migrate their networks to all-IP.

While COMPTEL and their constituents are not opposed to the IP transition, a chief concern is that businesses and consumers need to be able to get equivalent services at similar prices from a number of providers. Similar to the telecommunication industry's migration of the voice network from analog to digital switching in the 1970s and 1980s, the group says that the transition to IP should provide similar benefits in terms of services and competitive choice for users. "Prior transitions, such as analog to digital, yielded substantial benefits for residential and business users alike--from a technical standpoint the IP transition should likewise yield substantial benefits," the group wrote in its letter. "But the Commission must take action to ensure that network users are better off as a result of technological advances." One of the key elements that COMPTEL and its competitive local exchange carrier member companies such as Windstream and Granite Telecommunications have continued to fight for in the IP transition has been access to wholesale special access services.

Malone: Content Consolidation Coming

Liberty Media chairman John Malone said that he sees consolidation of content companies as inevitable. Malone said that scale economics can apply to content companies as well as distribution firms. “It's all about global scale. If you want to be a meaningful player in most of any of these media communication businesses, you have to think about it," Malone said. Malone told said that other deals are ahead, possibly even including his own assets. “"Whether it makes sense or whether they want to do it? Who knows?" he said.

Malone also praised Netflix CEO Reed Hastings for creating what he called the “random-access” environment for content. While that will drive the need for more programming going forward, Malone added it won’t hurt cable companies like Charter, who sell the needed broadband connections to access that content. “The fact that we have high-speed connection, having something like Netflix is good,” Malone said. “From the video business point of view he's taken a share of viewership, and that might not be good."

TerraCom, YourTel to Pay $3.5M to Resolve Consumer Privacy Violations

The Federal Communications Commission's Enforcement Bureau has entered into a $3.5 million settlement with TerraCom, Inc. and YourTel America, Inc., resolving an investigation into whether the companies failed to properly protect the confidentiality of personal information they received from more than 300,000 consumers. This settlement also resolves the FCC's investigation into YourTel's failure to comply with FCC instructions to remove ineligible Lifeline subscribers which resulted in over-billing of the federal program.

A thorough Enforcement Bureau investigation found that the companies' vendor stored consumers personal information on unprotected servers that were accessible over the Internet. The companies' failure to provide reasonable protection for their customers' personal information -- including names, addressees, Social Security numbers, driver's licenses, and other sensitive information -- resulted in a data breach that permitted anyone with a search engine to gain unauthorized access to the information. The settlement also resolves an investigation into YourTel's failure to timely de-enroll Lifeline subscribers. As a condition of settlement, the companies will pay a $3.5 million civil penalty. The companies will also notify all consumers whose information was subject to unauthorized access, provide complimentary credit monitoring services for all affected individuals, and undertake additional measures to mitigate any potential harm to consumers.

The Invisible (Digital) War

Every day, an invisible war is waged across the planet. Hundreds of gigabits of data bombard servers every second in nonstop digital warfare targeting the free flow of information. These digital disruptions are known as Distributed Denial of Service (DDoS) attacks. The flood of incoming traffic aims to exceed the total bandwidth of connections that a server can handle, thus bringing it down and denying visitors access to any information it holds. An enterprising attacker can infect millions of machines, creating a “botnet” to launch these attacks -- marshaling the resources of computers across the globe and making the origin of his assault almost impossible to trace. There are thousands of DDoS attacks worldwide every day, accounting for roughly one-third of web server downtime.

Outbreaks of DDoS attacks mirror political turmoil in the real world. The Digital Attack Map, a project designed by Google Ideas and the network security firm Arbor Networks, tracks the assaults: DDoS attacks in Ukraine and Russia spiked from almost nothing to as large as 60 gigabits per second during the Ukrainian anti-government protests and Moscow’s subsequent annexation of Crimea in 2013 and 2014. Attacks similarly surged in Israel during 2014’s war in Gaza, with assaults emanating from everywhere from Iran to the United States. Even law-abiding Sweden was hit with a large 80 gigabit per second attack on Dec. 15, 2013, after a group of neo-Nazis attacked an anti-racism rally in the capital of Stockholm.

FCC commissioners disagree over whether Internet access is a “necessity”

When Commissioner Michael O'Rielly of the Federal Communications Commission argued in June that "Internet access is not a necessity or human right," fellow FCC Commissioner Mignon Clyburn took notice. In a speech at a policy conference, she listed numerous reasons why Internet access really is necessary in the modern age. This could be seen as just a debate over semantics. Commissioner O'Rielly doesn't argue that Internet access is unimportant, rather he says the word "'necessity" should be reserved to those items that humans cannot live without, such as food, shelter, and water.

Commissioner Clyburn pointed out that the FCC is required to make sure everyone in the US has affordable broadband access. "Not only is the Internet a necessity today, but Congress actually directed the FCC to ensure that everyone, regardless of income, has access to advanced communications services," she said. "Congress also directed that such access should be affordable... we are mandated to close the digital divide." "Let me warn you, any proposed transition will not come easy, for there are those who publicly proclaim that Internet access is “not a necessity,” Commissioner Clyburn said. "Those who cannot afford broadband can just go to the library, some often say," she continued. "Now, I am proud of the work the FCC has done through our E-rate program to help ensure that our schools and libraries have robust broadband and Wi-Fi. But we should not be satisfied if the library is the sole means by which an entire community can get broadband, particularly when there are no options for connectivity once the library closes for the day."

OTT Password Sharing Carries a Price

The sharing of credentials and passwords for TV Everywhere apps and other types of over-the-top video services will cost the video industry $500 million worldwide in 2015, Parks Associates predicts in a new digital media research that examines video piracy. The report, The Cost of Piracy, found that 6 percent of US broadband homes use an over-the-top (OTT) service that is paid by a person who lives outside the households.

Parks Associates noted that the biggest motivating factor for credential sharing, perhaps unsurprisingly, is economic. Parks’s study, which also takes a look at the copyright implications of new live-streaming services such as Meerkat and Periscope, also found that 20 percent of OTT users aged 18-24 use an OTT video service paid by someone outside the home, the highest of any age group. “Credential sharing has a measurable impact on video services, particularly in the OTT video service area, where young subscribers are active. The impact on OTT video revenues is especially troublesome as OTT providers are investing large sums of money to boost their original content offerings” said Glenn Hower, research analyst at Parks Associates. While credential sharing has a predominant impact on OTT service revenues, it will also “affect pay-TV operators in a similar fashion as they develop and deploy their own OTT and TV Everywhere offerings,” he added

Local TV Management Anticipates More Consolidation, Seeks Greater Revenue Sources

Local TV broadcasting business management anticipates more consolidation moves -- which began about a year ago -- as well as greater emphasis on new digital platforms. Speaking at the Bernstein Future of Media Summit, Nexstar Broadcasting executives believe local broadcast could be whittled down to five or eight big TV station groups over the next three to five years. In 2014, there were 16 big local TV station groups, down from 33 in 2011.

Perry Sook, chairman/chief executive officer of Nexstar Broadcasting, said local TV will continue to be a different business than TV networks -- focused on helping local businesses, producing local content that is “platform agnostic,” as well as serving customers who can't served by “algorithms.” While many local TV executives are expecting low-single-digit-percentage growth for advertising sales, higher double-digit results will come in the way of retransmission revenues and digital revenues in the next several years.