Daily Digest 4/21/2018 (DOJ Investigating AT&T and Verizon Over Collusion)

All 2.2 billion people who use Facebook will soon see changes to their privacy settings, in response to a sweeping new privacy law in Europe — but American users won't see exactly the same thing as their European counterparts. That difference between the EU law and Facebook's agreement for US users manifests itself in a couple of ways. The most notable of these are policies that apply to children ages 13 to 15. (Technically, no one younger than 13 is supposed to have a full Facebook account anyway.) Under GDPR, parents or guardians have to give their explicit approval before teens of that age can see ads based on their interests on Facebook or its sister network Instagram. In the United States, since there is no comparable GDPR law, Facebook is going to give teens the option not to be served ads based on their interests, but it won't ask for parental consent.

More than two-thirds of New York City's 3.1 million households have just one or two broadband providers offering service to their homes, according to a new "Truth in Broadband" report issued by the city government. The report comes as NYC pursues a lawsuit against Verizon alleging that it hasn't met its broadband deployment obligations. There's only one Internet service provider offering home broadband service at 13.54 percent of the city's 3,114,826 households, meaning that nearly 422,000 households have just one "choice." Another 55.44 percent of NYC households—nearly 1.73 million in all—have two broadband providers. The remaining 31.02 percent (more than 966,000 households) have at least three broadband providers.

Apparently, the Justice Department has opened an antitrust investigation into potential coordination by AT&T, Verizon and a telecommunications standards organization to hinder consumers from easily switching wireless carriers. In Feb, the Justice Department issued demands to AT&T, Verizon and the GSMA, a mobile industry standards-setting group, for information on potential collusion to thwart a technology known as eSIM, apparently. The technology lets people remotely switch wireless providers without having to insert a new SIM card into a device. AT&T and Verizon face accusations that they colluded with the GSMA to try to establish standards that would allow them to lock a device to their network even if it had eSIM technology.

The investigation was opened about five months ago after at least one device maker and one wireless carrier filed formal complaints with the Justice Department, apparently. At the heart of the investigation is whether the nation’s biggest wireless carriers, working with the GSMA, secretly tried to influence mobile technology to unfairly maintain their dominance, in a way that hurt competition and consumers and hindered innovation in the wider mobile industry.

[Speech] Over the last three-plus years, the Commission has rightly focused its time and energy to ensure that next-generation, or 5G, networks come to fruition. Why is this so important? It’s about a global race to be the first among many competing nations to 5G. Leading the world in 5G will allow U.S. companies to help shape its future growth, standards, and capabilities – all of which have a tremendous impact on our future economic success. The alternative means that we would be dictated to by other regimes, many of which can’t be fully trusted, don’t believe in capitalism, don’t believe in freedom, don’t believe in fair play, don’t believe in the role of the individual over the government, and rebuke American leadership. The bottom line is simple: we seek not to set industrial policy but to prevent others from doing so against our interests. 

The Federal Communications Commission has signaled the next spectrum band it is seriously eyeing to free up for advanced telecommunications. The Wireless Telecommunications, International, Public Safety and Homeland Security bureaus said April 19 that it was instituting a temporary freeze on applications for new or modified fixed satellite service earth stations and fixed microwave stations in the 3.7-4.2 GHz spectrum bands (C-band) to "preserve the current landscape" as it looks into possibly allowing mobile broadband and more "intensive" fixed use. The fact that the public notice was issued by four different bureaus suggests the band's future is clearly in play. The freeze also will prevent speculators from trying to get in under the wire if the band is indeed opened up. But in a nod to cable operators who use the band for thousands of receive-only earth stations, has also opened a 90-day window where for current users of earth stations to file or register or license those or modify their current registration or license. That will also give the FCC a better idea of who is in the band, and where as it explores opening it up to others. 

AT&T’s chief executive, Randall Stephenson, attacked the Justice Department’s lawsuit to block its merger with Time Warner, saying that a combined company would be no different from the Silicon Valley giants that make and distribute video content. As the last witness for the defense in the Justice Department’s legal battle against AT&T’s $85.4 billion deal to buy Time Warner,  Stephenson portrayed the 140-year-old phone giant as being in an existential crisis and in need of the deal with Time Warner to compete against tech companies. He called the blockbuster merger a “vision deal” that would allow AT&T to better match up against Facebook, Amazon, Apple, Netflix and Google, which he referred to as “F.A.A.N.G.” “The F.A.A.N.G. are all focused on premium video,” Stephenson said, comparing the proposed merger to the businesses of tech giants. “All of them are vertically integrated.” AT&T has a lot of data about the habits of its 100 million wireless customers and 25 million pay-TV customers from its DirecTV and U-verse services. But the company wants the must-have content from Time Warner's HBO, CNN, TBS, Warner Bros. and other assets around which to sell advertising, Stephenson said.

Stephenson also shared details about a new streaming service called AT&T Watch, which will not include any sports channels, but be sold for $15 a month. 

The Federal Communications Commission faced skeptical questioning from judges about a rule change that made way for Sinclair Broadcast Group’s proposed acquisition of Tribune Media, raising the possibility of turmoil for the $3.9 billion deal.  Judges at the US Court of Appeals for the DC Circuit, hearing a challenge April 20 to the change, questioned why the FCC had reinstated a rule allowing owners of some TV stations to count just part of their audience when tallying holdings against a national limit of 39 percent. The issue is important to Sinclair’s proposed purchase of Tribune, which would leave it covering 72 percent of U.S. households -- or about 45 percent when counting half the audience as allowed under the embattled rule. One judge on the three-judge panel likened the FCC’s continuing the audience-counting discount, which is based on limitations from an obsolete broadcast technology, to keeping a moribund body on life support. Most signs point to an FCC loss in the case, possibly a unanimous one, which sets up a race for Sinclair to close before the decision comes out.

[Commentary] The FCC chairman has done much to advance his deregulation agenda but there’s one conspicuous exception — the local TV ownership rule that prevents ownership of two top-four stations in a market. To put such combos together, you have to get what amounts to a waiver and that can be costly and time consuming.

Federal Communications Commission Chairman Ajit Pai announced that the following items are tentatively on the agenda for the May Open Commission Meeting scheduled for Thursday, May 10, 2018:

Enforcement Bureau Action – The Commission will consider an enforcement action.
Transforming the 2.5 GHz Band – The Commission will consider a Notice of Proposed Rulemaking that would allow more efficient and effective use of 2.5 GHz spectrum by increasing flexibility for existing Educational Broadband Service (EBS) licensees and providing new opportunities for educational entities, rural Tribal Nations, and commercial entities to access unused portions of the band. (WT Docket No. 18-120)
FM Translator Interference Rules – The Commission will consider a Notice of Proposed Rulemaking which proposes to streamline the rules relating to interference caused by FM translators and expedite the translator complaint resolution process. (MB Docket No. 18-119)
Broadcast License Posting Rules – The Commission will consider a Notice of Proposed Rulemaking seeking comment on whether to streamline or eliminate certain rules which require the physical posting and maintenance of broadcast licenses and related information in specific locations. (MB Docket Nos. 18-121, 17-105)
Hearing Designation Order – The Commission will consider a Hearing Designation Order.