Lauren Frayer

Internet companies are readying for a showdown with telecoms and a Republican-controlled government over a policy near and dear to their hearts: network neutrality.

Net neutrality basically prevents broadband providers from playing favorites or steering users toward (or away from) particular internet sites. Under rules enacted during the Obama administration, the likes of Comcast and Verizon — which offer their own video services they’d very much like subscribers to use — can’t slow down Netflix, can’t block YouTube, and can’t charge Spotify extra to stream faster than Pandora. Broadband companies hate the net neutrality rules, and they have an ally in new Federal Communications Commission chairman Ajit Pai, who has repeatedly called the regulations a mistake. The government may downgrade federal prohibitions on anti-consumer and anticompetitive actions to voluntary commitments by internet service providers. The internet industry, which considers net neutrality essential for its business, isn’t standing still — and it may be keeping some of its most potent tactics in reserve.

Makan Delrahim, the nominee for chief antitrust cop at the Justice Department, will have his confirmation hearing April 26.

If he is confirmed — and he is expected to be — his philosophies will help shape the corporate competition landscape for the next few years, at a time when mega-mergers like AT&T’s $85 billion acquisition of Time Warner. In an interview, Delrahim declined to address AT&T’s purchase of Time Warner, which is now undergoing regulatory review, or other large deals, saying he would “examine any matter according to evidence and economic analysis.” But he gave other hints of how he might act as the department’s top antitrust official. Specifically, Delrahim, a former lobbyist, said he would not go after a company just because it was big, and would do so only if there were violations of antitrust law. “Just like any other industry, if there is wrongdoing, we would investigate,” Delrahim said. But “federal laws should not be used as a fishing expedition by government.” He also intimated that he was skeptical of antitrust action against intellectual property rights holders. In a 2007 statement, he had warned that cases that blended intellectual property rights with antitrust enforcement could hamper innovation.

The argument that the private sector can do things better, faster and cheaper than government never seems to go out of style. But a new report on AT&T’s strategy for rolling out high-speed Internet service in California underscores what may be the biggest flaw in that argument: When critical infrastructure construction is left entirely to private companies, much of the public gets shortchanged.

In deciding where to build its network, AT&T chooses to “follow the demand for high internet speeds and determine where there are solid investment cases and receptive policies,” and prefers cities that have “established a strong environment for investing.” By their nature, these are likely to be more affluent communities with residents who appreciate the benefits of high-speed communications because they have experience using them. But that also leaves behind communities whose residents don’t voice a demand for the best services because they don’t know what they’re missing—or who don’t have the money to buy the Internet-connected goods and services that put additional revenues in the ISP’s pocket. At its heart, this is a strategy in which the rich get richer—widening, not narrowing, the digital divide. One can’t blame a private company for responding to the profit motive any more than one can blame a dog for drinking from the toilet. But that’s what government regulation is for — to ensure that a private company endowed by government with a largely monopolistic franchise compensate the community for its windfall in part by serving all residents equally.

They've raised prices. They've slowed speeds. But despite their best efforts, the country's biggest cellphone carriers have been unable to kill off the unlimited data plan. Now they're discovering something else: Unlimited data is extremely popular. And it might just be the thing that saves them in an increasingly cutthroat market for wireless services.

After years of trying to shift customers to plans with monthly data caps, companies such as AT&T and Verizon have begun heaping praise on their newest unlimited data plans as consumers have flocked to them. The plans were once common in the industry. But telecom giants stopped selling them as consumer demand for data grew. Many unlimited customers found themselves signing onto metered plans when prices rose, or abandoning their unlimited plans after running into speed limits. Eventually, the number of those on grandfathered unlimited plans dwindled to a handful. In 2015, just 1 percent of Verizon's customers were on unlimited plans.

[Commentary] Silicon Valley wasn’t a happy place when Donald Trump was elected president. Tech companies have thrived on international trade and immigration and see President Trump as hostile to both. While the digital economy is concentrated in liberal, coastal enclaves, President Trump draws his most intense support from the old-economy states of the upper Midwest. Yet as the Nasdaq Composite Index’s first-ever close above 6000 demonstrates, technology has flourished more under President Trump than any other industry, save banking. President Trump has been much less negative for tech than his rhetoric implied. US tech companies are disproportionately exposed to foreign markets and would have been among the first casualties of a trade war. But President Trump has so far restricted his protectionist actions to narrowly focused industries rather than entire countries, and a trade war looks increasingly unlikely. Companies such as Apple Inc. with large stashes of foreign profits would gain big if President Trump cuts the tax rate on such profits. And his antiregulatory appointees are less likely to impose onerous privacy protections on the likes of Google.

Peers have dropped a demand for a minimum broadband speed of 30 megabits per second to be a legal requirement, as the Digital Economy Bill is rushed through parliament before the general election.

The government has pushed for a “universal service obligation” to be part of the legislation, with a benchmark minimum speed of 10Mbps — far lower than the “superfast” level the House of Lords had been demanding. The government has also dropped a 2020 deadline for that threshold to be introduced. The Lords amended the bill in February to raise the minimum obligatory speed to 30Mbps, saying 10Mbps would “unfit for usage in a very short time”. But both the government and Ofcom, the telecoms regulator, have argued that the universal service obligation should be raised over time and introduced by secondary legislation when deemed appropriate.

The biggest reason I’m bullish about [broadcasting] is that broadcasting’s strengths—its values—are timeless. I’m talking about localism, diversity, and public service. I’ll work aggressively to modernize the Federal Communications Commission’s rules, cut unnecessary red tape, and give broadcasters more flexibility to serve their audiences.

[A]t the FCC’s next public meeting on May 18, we will vote on a proposal to start a comprehensive review of the FCC’s media regulations. This morning, I circulated the Public Notice to my fellow Commissioners that would kick off this review. We’ll also explore whether certain rules should be modified to provide regulatory relief to small businesses. And to be clear, while our broadcast regulations will be a critical subject of this proceeding, we will also review rules pertaining to cable and direct broadcast satellite.

In a first-ever analysis, "AT&T's Digital Divide in California" looks at the deployment of fiber-to-the-home (FTTH) service in California by the largest telecommunication company in the state. The findings show that the early deployment of the company’s “gigapower” all-fiber service is concentrated in wealthier communities, relegating lower-income neighborhoods to less advanced technologies that offer markedly slower speeds.

Drawing on newly-released Federal Communications Commission data, the report highlights income-based disparities in service across 71 percent of California, or 56 California counties in which AT&T provides wireline phone and internet service. The report also reveals 42.8 percent of California households – approximately 4.1 million homes – in AT&T’s network do not have access to high-speed broadband from AT&T as defined by the Federal Communications Commission, which classifies this service as a 25 Megabits per second (Mbps) download/3 Mbps upload connection.

[Commentary] Universal Service funding that is supposed to spur broadband development in rural America is padding the bottom line for incumbents who provide lousy service. To change the system overnight at no extra cost, let the subsidy follow consumer choice instead.
[Jonathan Chambers is a partner at Conexon, LLC,]

[Commentary] A proposal from a former Federal Communications Commission staffer would destabilize rural America’s broadband infrastructure and discourage investment. Instead, the Federal Communications Commission should focus on modifying the current Universal Service Fund, according to the CEO of a national association representing rural broadband providers.

[Shirley Bloomfield is chief executive officer of NTCA–The Rural Broadband Association]