TIME broadband

Report: You Could Be Overpaying For Your Data Plan

GAO Report Data Usage
An iPhone 5 streaming video from Netflix during a demonstration of the new Google ChromeCast at an event in July 2013. Bloomberg via Getty Images

Internet providers are swapping their unlimited data plans for usage-based plans on both mobile and at-home Internet, but consumers aren't aware of how much data they're burning up

Lost amidst usage-based pricing and ISPs, MBs and GBs, many U.S. customers are unaware of just how much data they consume, and they are in turn purchasing plans with unnecessarily robust allowances, according to a new report.

The findings come by way of a preliminary report released Tuesday by the U.S. Government Accountability Office (GAO). The GAO conducted a survey about usage-based plans (UBPs), in which consumers pay for a capped amount of data. Such plans are offered by various Internet service providers (ISPs) of wireless and wireline (e.g. at-home broadband) services, including AT&T and Comcast, among others. Consumer focus groups and interviews with top ISPs and industry experts revealed that customers may tend to overestimate data usage of common activities, or on the other hand, underestimate usage and unknowingly exceed data caps.

One wireless provider interviewed by the GAO indicated that only a small percentage of users are on 500 megabytes-per-month or smaller data plans, while half of North American wireless customers use fewer than 102 megabytes per month, according to a report by ISP research firm Sandvine.

Additionally, all wireless ISPs interviewed and over half of wireline ISPs surveyed by the GAO offer usage-based plans to various extents. Users who exceed their data caps on such plans can be fined up to $15 per 1GB of additional data or experience throttled-down connection speeds. An AT&T spokeswoman told TIME 97 percent of the company’s DSL customers don’t exceed their monthly data plan, but Sandvine’s report suggests that more customers will do so in the future, as cord-cutting users depending on the Internet as a TV replacement are already consuming roughly 212 GB of data per month, close to many existing data allowances.

But even users with unlimited wireline plans are subject to restrictions, especially if they’re consuming massive amounts of data.

“Last year we discovered a small number of residential customers [of Verizon's un-capped Internet plan] consuming many terabytes of data each month with their home connections – far exceeding usage levels ever intended for Verizon’s home broadband service,” a Verizon spokesman told TIME in an e-mail. “To put this in context and just for example, these are customers who would have to watch over 4,000 hours, or 166 days-worth of non-stop HD movie viewing over a month’s time to equal their usage levels.”

Verizon—which does not have wireline broadband caps—subsequently requested those customers to move to a business grade service, a move that could be seen as generous, considering some ISPs are slashing unlimited at-home Internet altogether. Verizon came under fire in March when a spokesman inadvertently suggested it would cap its FiOS fiber broadband service, before later posting that it was a miscommunication. In 2011, AT&T implemented monthly limits for its home broadband subscribers. Recently, Comcast announced that it may roll out a wireline data plan with monthly allotments, a suggestion that’s facing harsh criticism as ISPs claim non-unlimited wireline plans may be more fair.

“Explosive Internet use has driven the need for broadband allotments to continue to invest in a sustainable network,” an AT&T spokeswoman told TIME. A Comcast spokesman confirmed to TIME that the company believes the capped approach is more flexible, allowing those who use more broadband can pay more, and those who use less can pay less.

The GAO report indicated that customers had “strong negative reactions” to usage-based pricing on wireline Internet plans. Though the preliminary findings didn’t elaborate on specific reasons for consumers’ harsh reactions, the congresswoman who requested the report—California Democrat Anna Eshoo—warns that capped Internet plans could discourage users from watching Netflix and Amazon Prime, thus encouraging customers to subscribe to more expensive cable TV packages offered by the very same companies potentially switching to capped Internet plans.

“Data caps, particularly when they’re applied discriminatorily, could have the same damaging effect on the free and open Internet as we know it,” Eshoo told the National Journal.

The consumers surveyed by the GAO, however, expressed fewer negative sentiments to wireless mobile plans with usage-based pricing, a trend that’s grown increasingly popular as wireless providers drop unlimited mobile data plans. Major players like AT&T have taken that leap, cutting its unlimited mobile data plan offerings to new customers in 2010 while marketing the change as one that would save customers money. Reports have estimated that 44% of AT&T’s customers are still grandfathered into the unlimited data plans—potentially a lot of overpaying customers, if not all are big data users.

Still, the unlimited wireless data plans that remain on the market are laced with fine print. Sprint and Verizon, two wireless providers that haven’t eliminated their unlimited mobile data plans, announced in May and July respectively they would throttle speeds for some unlimited data plan holders, a sort of data “prioritization,” as Sprint called it. These are among the “loopholes” customers fear their providers will use to overcharge them, according to the GAO report. Still, most customers’ understanding of their basic data use remains clouded, the GAO report suggests.

So just how much data does certain activities use? Online shopping and general surfing is one of the least data-heavy activities, contrary to popular belief, according to the GAO’s report. Meanwhile, video streaming like Netflix is known to be a data hog.

Here are a few wireless data consumption estimates for common smartphone activities to keep in mind:

Smartphone Data Consumption
AT&T
TIME technology

Comcast, AT&T Say They’re Not Big Enough Yet

Comcast
The Comcast Corp. logo is seen as Brian Roberts, chairman and chief executive officer of Comcast Corp., right, speaks during a news conference at the National Cable and Telecommunications Association (NCTA) Cable Show in Washington, D.C., U.S., on Tuesday, June 11, 2013. Bloomberg—Bloomberg via Getty Images

At a Senate hearing ahead of major merger melees

Two of the biggest players in the telecom industry faced off against a public interest group, a trade group and a satellite company at a Senate hearing Wednesday in a debate that will help set the stage for upcoming battles over the future of broadband, television and streaming video.

The hearing comes just as federal regulators are staffing up to review two mammoth mergers: One between Comcast and Time Warner Cable, and another between AT&T and DirecTV. To some degree, the hearing was only ceremonial: Congress won’t have any direct say over whether federal regulators approve or deny the mergers. But political winds in Washington can affect regulators’ moods, and the back-and-forth gave members of the Senate Committee on Commerce, Science and Transportation a chance to publicly speak their minds on the mergers.

While the discussion at the hearing was unflaggingly respectful, it touched, just below the surface, on what has become a fiercely ideological war with regard to the future of TV, with each side presenting a vision incompatible with the other’s.

Comcast and AT&T argued that massive consolidation in the telecom industry is good for consumers, good for innovation, and good for the free market. They warned that if the government does not allow the mergers to go through, incumbent telecom companies would no longer be able to invest in basic Internet infrastructure, leaving consumers to pay more for fewer Internet and TV options.

Representatives from advocacy group Public Knowledge, a TV writer’s guild, and satellite TV company Dish made the opposite case. They said that recent consolidation in the telecom industry has been terrible for consumers, driven up prices and driven down the quality of customer service. They also said the lack of competition has squashed innovation and investment in broadband infrastructure.

At the center of the discussion was Americans’ shifting TV-viewing habits. When Americans want to watch TV, they’re increasingly bypassing traditional set-top boxes, instead opting for their smartphones, tablets, and laptops. Online video consumption grew by 71% in the U.S. between 2012 and 2013, according to Nielsen.

That trend has been the driving force behind skyrocketing broadband subscriptions—a major cash cow for cable companies and for telecom companies that offer services faster than DSL. AT&T’s revenue from its U-Verse high-speed broadband business was up 29% from last year according to a recent quarterly report, for example. Comcast, which already has more than 21 million broadband subscribers, says the broadband business is one of its fastest-growing offerings.

That so many Americans are streaming more video online has also made online TV and video content companies, like Netflix, YouTube and Vimeo, fundamentally dependent on telecom companies’ pipes to reach customers. Public Knowledge’s Gene Kimmelman argued that no online video streaming company can exist without going through broadband providers like AT&T and Comcast, whose services are necessary to deliver streaming content to consumers. That sets up a potential problem, as Comcast could be incentivized not to carry Netflix or YouTube content as quickly as its own video offerings (Comcast owns NBCUniversal, a major content production company).

“Everyone who wants to make the online video system works needs to make a deal with Comcast,” he said.

Also addressed during the hearing was many Americans’ frustration at having to pay large bills for pay-TV—bills that have risen faster than inflation—to receive hundreds of channels. The non-profit consumers rights group, Consumers Union, has said that at least two-thirds of pay-TV customers [PDF] would prefer to pay less for a handful of programs that they actually watch. The disconnect between these two methods—known as “bundling” versus “a al carte”—is at the heart of the future of online video.

“The younger generation doesn’t want to spend $120 for 500 channels,” said Jeffrey Blum, a senior vice president of Dish, the second-largest satellite company in the country after DirecTV. But fixing the problem, he said, requires going up against incumbent telecom companies, like Comcast, AT&T and Verizon, which rely on bundling to underwrite their pay TV services, and would lose out if most Americans simply cut their pay-TV bill and began streaming shows online. Popular networks like ESPN would also lose out; in the current system, the telecom companies pay them large fees to redistribute their content.

Still, Blum said, there is already “too much power in the hands of too few” in the broadband space. A combined Comcast-Time Warner Cable “will have the incentive and ability to stifle competition,” he said.

Both Cohen and AT&T’s senior executive VP John Stankey dismissed concerns about anticompetitive behavior. In previous testimony before Congress, Comcast’s executive VP David Cohen has said that the merger between Comcast and Time Warner Cable will not affect competition since the companies do not currently compete in any geographic region, and that Comcast has “only to gain” from more people streaming video online. The more demand there is for online video, “the more demand there is for our broadband service,” he said at a previous hearing.

In February, Comcast made a bid to buy Time Warner Cable for $45 billion; in May, AT&T’s bid for DirecTV was worth $48.5 billion. Neither deal has yet to pass regulatory muster.

Both Cohen and Stankey also reiterated their companies’ commitment to the Federal Communication Commission’s now-defunct rules on “net neutrality,” the notion that broadband providers treat all content that passes over their pipes equally. While both expressed their opposition to some public interest groups’ hopes that the telecom industry would be recategorized as a “Title II” industry, giving the FCC much more regulatory control over broadband, they said they supported the FCC’s newly proposed net neutrality rules.

Those rules have come under fire because they allow broadband companies to redirect some content to a “fast lane,” while relegating most content to a slower, regular lane. Cohen said that while he “didn’t understand” what “fast lanes and slow lanes” even were, he said it was a non-issue. “We don’t have any,” he said. “We don’t have any plans to develop any.”

TIME Technology and Media

Netflix Will Stop Shaming Verizon on Streaming Speeds

Netflix Ends Messages Blaming Verizon
The logo of Netflix, the biggest driver of Internet bandwidth, is displayed on an iPhone. Bloomberg—Getty Images

Company still maintains that Verizon is to blame for slow buffering

Netflix said Monday it would stop displaying a message that blames Verizon for slow buffering speeds, five days after Verizon issued a cease and desist letter.

The streaming service still maintains that Internet providers are to blame for slow speeds. But the company said in a blog post that the “small scale test” in which it told consumers about that on screen will stop June 16 while Netflix evaluates “rolling it out more broadly.”

“Some broadband providers argue that our actions, and not theirs, are causing a degraded Netflix experience,” the company said. “Netflix does not purposely select congested routes. We pay some of the world’s largest transit networks to deliver Netflix video right to the front door of an ISP. Where the problem occurs is at that door — the interconnection point — when the broadband provider hasn’t provided enough capacity to accommodate the traffic their customer requested.”

Though Netflix inked a deal with Verizon to improve streaming speed in April, the public finger-pointing set off a public relations battle between the two companies. And Netflix published of an ISP Speed Index that lists Verizon delivering content at the lowest speeds in the U.S. Netflix says the Index is intended to inform users of their Internet speeds, but the messages that followed—“The Verizon network is crowded right now”—led Verizon to cry foul and dismiss it as a “PR stunt.”

“There is no basis for Netflix to assert that issues with respect to playback of any particular video session are attributable solely to the Verizon network,” Verizon said in the cease and desist letter. “As Netflix knows, there are many different factors that can affect traffic on the Internet.”

TIME Net neutrality

8 Things You Should Know About Net Neutrality

Federal Communications Commission Proposes New Open Internet Rules Tom Wheeler
Federal Communications Commission (FCC) Chairman Tom Wheeler listens during a news conference after an open meeting to receive public comment on proposed open Internet notice of proposed rule-making and spectrum auctions on May 15, 2014 at the FCC headquarters in Washington. Alex Wong—Getty Images

As the Open Internet debate intensifies, here's a guide to the FCC, net neutrality, and what's at stake for the future of the Internet

For many years, net neutrality was a relatively obscure policy topic that mostly preoccupied phone and cable companies, D.C. telecom lawyers, Open Internet activists and a handful of tech firms and startups. Compared to major national issues like the economy, national security, healthcare and immigration, net neutrality barely registered a blip on the American consciousness.

Those days are over.

Over the last three weeks, net neutrality has become front page news across the country, after a U.S. plan to update its Internet regulations was leaked to the press. The Internet exploded in commentary, tens of thousands of people called and emailed the FCC, the nation’s largest Internet and broadband companies weighed in, dozens of U.S. lawmakers registered their views, and protestors established an encampment outside the FCC’s D.C. office.

On Thursday, the FCC passed a crucial hurdle advancing the public comment process that will ultimately lead to new net neutrality rules. Four demonstrators had to be dragged away after disrupting the proceedings. Let’s take a take a step back and examine what this whole kerfuffle is about.

1. What is net neutrality?

Net neutrality is the idea that the Internet should be an open platform, and broadband companies shouldn’t be able to interfere with your right to access content and services online. Another way of putting this is that broadband giants like Comcast, Verizon, and AT&T shouldn’t be able to block or discriminate against certain content — especially rival content — as it enters your home and reaches your computer.

Net neutrality advocates believe that all Internet users should have unfettered access to the Internet, just like all Americans have the right to travel anywhere in the 50 states without a passport. Without this open access, which many Internet users take for granted, startups like Google, Twitter and Facebook might never have flourished, net neutrality advocates argue.

2. Why is net neutrality important now?

The FCC’s net neutrality policies have been in limbo since a federal court struck down most of the agency’s 2010 open Internet order in January. That order prohibited broadband providers like Comcast and Verizon from blocking traffic like Skype or Netflix or putting them into an Internet “slow lane.”

Without such protections, net neutrality advocates fear the Internet could turn into a two-tiered system — or worse, something akin to cable TV with premium bundles and packages.

3. What is the FCC and what does it do?

The Federal Communications Commission is an independent federal agency overseen by Congress that regulates all communications “by radio, television, wire, satellite and cable” throughout the country. As such, the FCC has broad regulatory authority over corporate giants like CBS, AT&T, Comcast, DirectTV, among many other companies. The agency is also responsible for managing the nation’s wireless spectrum — the radio airwaves that make our smartphones and tablets connect to each other and the Internet.

In recent years, the FCC has increasingly focused on Internet access, both wired and wireless, which has become a crucial communications medium. Among the most important FCC mandates are promoting competition, innovation and media diversity in order to advance the public interest. The FCC is an independent agency, which means the White House can’t tell it what to do.

4. How is the FCC organized?

The FCC is led by five commissioners who are appointed by the president and confirmed by the Senate for five-year terms. The president appoints one of the commissioners to be chairman of the commission, which is usually split along party lines 3-2, depending on who is in the White House. Historically, the FCC chairman has had broad power to determine the agenda’s agency.

The current FCC chairman is Tom Wheeler, a Democrat and former venture capitalist who served as the top cable and wireless lobbyist two decades ago, and raised hundreds of thousands of dollars for Obama’s presidential campaigns. The two other Democratic commissioners are Mignon Clyburn, a former public official from South Carolina, and Jessica Rosenworcel, a lawyer and former senior Senate staffer. The two Republican commissioners are Ajit Pai, a former senior FCC official and Michael O’Rielly, a former senior Congressional staffer.

5. What just happened?

On Thursday, the FCC approved what’s called a “notice of proposed rulemaking” (NPRM) on party lines making Wheeler’s draft open Internet proposal available for public review, and triggering four months of public comment. The proposal seeks public input on the best way to ensure the Internet stays open, and to prevent broadband companies from blocking or discriminating against rival services, especially startups, potentially harming innovation.

Wheeler’s draft opens the door to so-called “paid prioritization,” in which broadband providers could strike special deals with Internet companies for preferential treatment. Commissioners Clyburn and Rosenworcel both oppose such special deals, and offered their views in statements on Thursday. Commissioners Pai and O’Rielly oppose regulating the Internet-based on free-market principles and said as much in their own statements.

6. Why are net neutrality advocates upset?

Open Internet advocates argue that strong net neutrality rules are essential in order to ensure that the Internet remains the open, dynamic platform that has spawned a generation of technological innovation and generated billions of dollars in economic growth — much of it coming from tech startups. As a presidential candidate, Obama famously declared that he would “take a backseat to no one in my commitment to network neutrality,” and vowed to appoint FCC commissioners who felt the same way.

Many net neutrality advocates feel burned by Obama. And they weren’t amused when he chose Wheeler, who once served as a top industry lobbyist, as president of the National Cable Television Association (NCTA) and later as CEO of the Cellular Telecommunications & Internet Association (CTIA), to be FCC chairman. Wheeler insists he supports open Internet principles, but many net neutrality advocates are still skeptical. “Tom Wheeler spoke passionately about the open Internet, but his rousing rhetoric doesn’t match the reality of his proposal,” says Craig Aaron, president and CEO of Free Press.

7. Why are broadband providers and their allies upset?

Net neutrality advocates want the FCC to reclassify broadband companies under the Title II “common carrier” provisions of the Communications Act that have governed traditional phone companies for decades. Such reclassification, which Wheeler says he’s considering, would subject the broadband companies to tighter regulation. The broadband giants oppose such reclassification with every fiber of their being.

“Reclassification of broadband Internet access offerings as Title II — telecommunications services would impose great costs, allowing unprecedented government micromanagement of all aspects of the Internet economy,” twenty-eight CEOs including Lowell McAdam of Verizon, Randall Stephenson of AT&T, Robert Marcus of Time Warner Cable, and Brian Roberts of Comcast, wrote in a letter to the FCC. “Under Title II, new service offerings, options, and features would be delayed or altogether foregone. Consumers would face less choice, and a less adaptive and responsive Internet.”

8. How will the process work moving forward?

The FCC vote to approve the NPRM triggered a four-month comment period for the public to weigh in: 60 days (until July 15) to submit initial comments and another 57 days (until September 10) for reply comments. The agency is seeking input on several crucial questions including whether the FCC should prohibit paid prioritization completely, whether the new rules should apply to mobile broadband service, and whether the agency should reclassify broadband service under Title II “common carrier” principles.

The FCC has encouraged the public to participate in the process. Interested parties can submit their comments here, or at Docket 14-28: “Protecting and Promoting the Open Internet.” Recent public comment filings can be found here. Email comments are also accepted at openinternet@fcc.gov. (Remember, you’ll be filing a document into an official FCC proceeding, and any information submitted, including names and addresses, will be publicly available via the web.)

TIME Newsmaker Interview

Al Franken Says FCC Proposed Rules Are “The Opposite of Net Neutrality”

Sen. Al Franken has become one of the most outspoken proponents of the proposed regulations, which would require ISPs to treat all Internet traffic the same, and tells TIME his knowledge of 'net neutrality' sets him apart from his congressional colleagues

Senator Al Franken has a pretty good idea of what the term “net neutrality” means—and that, he says, puts him head-and-shoulders above many of his colleagues in the U.S. Congress.

“We literally have members of Congress—I’ve heard members of the House—say, ‘We’ve had all this innovation on the Internet without net neutrality. Why do we need it now?’” he told TIME in an interview last week. “I want to say, ‘Come on, just try to understand the idea. Or at least just don’t give a speech if you don’t know what you’re saying. Please—it hurts my head.”

Since coming to the Senate in 2009, Franken has been among the most outspoken proponents of so-called net neutrality rules, which require Internet service providers to treat all internet traffic—no matter the content or who produced it—equally. Under such rules, big broadband providers, like Comcast or Verizon, would be prevented from blocking or hampering consumers’ access to certain content, or prioritizing access to other content.

Franken’s colleagues who “don’t understand” the idea of net neutrality argue that the internet has been a bastion of innovation and investment for decades without such rules on the books. But the landscape of the internet has changed over the last decade, with once-tiny internet start-ups growing and consolidating into massive enterprises like Google, Amazon, and Comcast (the biggest internet service provider in the country). Franken argues that under such circumstances, net neutrality rules are necessary to protect tiny start-ups, which might become the next YouTube or Twitter, from being blocked by its now enormously powerful competition.

“The idea of net neutrality is not to have the government ‘regulate the internet,'” Franken said. “It’s to keep the internet open, so that we still have the innovation and investment we’ve had in the past.”

The Federal Communications Commission (FCC) is now considering new net neutrality rules, which have been roundly panned by consumer and open internet advocates, including Franken. The proposed rules would allow content companies to purchase better delivery speeds and quality from Internet service providers, which, Franken said, “is the opposite of net neutrality.”

The new rules will create a “fast lane” and a “slow lane” on the internet—those in the fast lane will pay a premium for the opportunity, giving an advantage to Internet startups with deep pockets. “That’s pay for play,” Franken said, echoing the sentiments he put into a public letter to FCC Chairman Tom Wheeler last week. “That’s antithetical to net neutrality.”

The net neutrality discussion comes at a time when the television industry is undergoing a revolution. As the line blurs between watching traditional cable programming, like AMC’s “Breaking Bad,” on your living room TV, and watching premium programming, like Netflix’s popular show “House of Cards,” on your laptop or tablet, how the Internet is regulated will affect how—and for what price—TV is piped into your home, too.

Having come from the front lines of the television industry—Franken was a writer and performer for Saturday Night Live for more than three decades—the issue is particularly dear to his heart. Net neutrality rules would make it illegal for a cable TV and broadband company like Comcast, which owns NBC Universal and the rights for all its programming, from making its own video content stream more quickly over broadband than video from competing cable programmers or Internet-only upstarts, like Netflix or Amazon.

Franken has also been an outspoken critic of the proposed merger between Comcast and Time Warner Cable, two of the three biggest broadband providers in the country. The merger will make it harder for independent TV producers to survive, he argued; if the combined Comcast-Time Warner Cable company, which will control at least a third of the American cable market, doesn’t want to rebroadcast your show, you’re toast. (TIME magazine is owned by Time Warner, which separated from Time Warner Cable in 2009.)

On Wednesday, Franken spent a few minutes talking to TIME about the misunderstood concept of net neutrality, the cable companies’ merger, and the future of the internet. This interview was edited for length and clarity.

Why should the public care about the Comcast and Time Warner Cable merger or the net neutrality rules?

They should care [about the merger] because it’ll affect their cable bill, their bill for their Internet, and what kind of service they get. When you have the biggest cable provider buying the second biggest cable provider, you end up getting a big company—a behemoth—that cares even less about customer service. I’m not the first one to notice that Comcast is already pretty famous for providing bad service. And [the public] should care [about both the merger and net neutrality rules] because when you have competition, you have innovation. YouTube was invented in a pizzeria in San Mateo because you had net neutrality in place. They didn’t have to pay Comcast so people could see it.

How does the Comcast-NBC Universal merger in 2010, which you also opposed, affect the proposed merger today?

When [Comcast was] buying NBCU, they explicitly said, ‘We’re not broadening our distribution. This vertical integration is okay because we’ve still got other competitors.’ They named Time Warner Cable as their primary competitor. The CEO of Comcast Brian Roberts actually said that—he said, ‘There might have been motivation to over charge, but the existence of Time Warner Cable will keep us honest.’ And now they’re saying the opposite. They’re saying, ‘Time Warner Cable is not a competitor. We don’t compete with Time Warner Cable at all.’ They are absolutely contradicting everything they said four years ago.

The discussion about the merger is happening at the same time that the FCC is considering new net neutrality rules. How does one inform the other?

Comcast would love to keep the focus on TV, but the bigger issue here is broadband. This merger would be the first largest broadband provider in the country acquiring the third largest. Between them, they’ll control 40% of the internet broadband market, and data shows that about 30% of the people in this country have only one choice of broadband provider in their area. This would give [the new combined company] tremendous leverage in the market. What’s going to happen when one company has that kind of power?

Are the new net neutrality rules that FCC Chairman Tom Wheeler will propose next week consistent with what President Obama promised in 2007?

I believe [Obama] pledged to appoint FCC commission that would honor net neutrality and keep net neutrality as law. The latest proposed rules by Wheeler—what he’s really talking about is creating a fast lane where people can pay to have their content treated unequally. That’s not net neutrality. That’s pay for play. That’s antithetical to net neutrality.

So what should be done instead?

To my mind, you have to say that internet is telecommunications. That’s all you have to do. That’s the response to the courts. [In January, a DC court threw out the FCC’s net neutrality rules on the grounds that the FCC’s jurisdiction ended at “telecommunications.”] So you say, it’s telecommunications, and then FCC has the power to enforce net neutrality and continue to try to solve network management problems and we continue to have the kind of innovation that we’ve had, that has made the internet what it is.

TIME Internet

This Is AT&T’s Plan to Smother Google Fiber

A view shows the AT&T store sign in Broomfield, Colorado
Rick Wilking / REUTERS

AT&T says it wants to explore ways to offer gigabit broadband service to 21 U.S. cities -- in a direct challenge to Google Fiber -- but some skeptics aren't buying it

AT&T’s plan to examine ways to deliver gigabit Internet service to 21 U.S. cities was greeted with skepticism on Monday, as some prominent critics accused the broadband giant of misleading consumers.

AT&T’s initiative is the latest evidence that Google’s Fiber project is spurring major broadband providers to at least pay lip service to gigabit speeds, which are 100 times faster than regular U.S. Internet connections.

AT&T’s announcement, which did not actually contain a pledge to build out gigabit service anywhere, comes two weeks after the company said it wants to offer super-fast Internet service to six North Carolina cities, and two months after Google said that it was considering expanding its gigabit initiative to the North Carolina communities of Charlotte, Chapel Hill and Raleigh-Durham.

“Communities that have suitable network facilities, and show the strongest investment cases based on anticipated demand and the most receptive policies will influence these future selections and coverage maps within selected areas,” AT&T said in a press release.

Not everyone is convinced. Shortly after AT&T’s announcement, three veteran tech policy journalists, Stacey Higginbotham at Gigaom, Jon Brodkin at Ars Technica, and Karl Bode at DSL Reports, urged skepticism about the broadband giant’s plans. Each reporter used some variant of the phrase “before you get too excited” to emphasize that AT&T hasn’t actually promised to build anything.

“Hey AT&T, enough with the gigawashing!” Higginbotham wrote. She pointed out that in her home market of Austin, Texas, AT&T isn’t even delivering on the gigabit promises it’s already made. Given that fact, “Ma Bell should have some explaining to do before these 21 cities get too excited about their hoped-for gigabit service,” Higginbotham wrote.

Brodkin, at Ars Technica, pointed out that AT&T — by its own admission — says that the “expanded fiber build is not expected to impact AT&T’s capital investment plans for 2014.” That seems odd, because laying fiber lines — or buying them from existing dark fiber owners — is very capital-intensive. It also raises the question of why AT&T hasn’t moved to boost broadband speeds earlier, if the necessary investment is so trivial.

Bode, at DSL Reports, was even harsher, calling AT&T’s announcement a “big fat bluff” that constitutes another example of what he calls “fiber to the press release.” In other words, AT&T is using the groundswell of national interest in gigabit broadband speeds to promote its existing service, despite the fact that the broadband giant has yet to deliver what it previously promised.

“We’re in the heart of the age of ‘fiber to the press release’ and 1 Gbps mania, where all you need to do is simply mention 1 Gbps and you get a ticker-tape parade and a statue in the town square without having to deliver a single byte,” Bode wrote. “AT&T’s certainly counting on that reaction from the press and public.”

For years, major broadband companies have insisted that consumers neither need nor want gigabit Internet speeds. Now that Google has demonstrated that there is intense demand for super-fast broadband service, AT&T is singing a different tune. But until AT&T actually delivers on its existing gigabit promises, it’s worth taking the company’s announcements with a dose of skepticism.

TIME Netflix

This Is Why Netflix Just Got So Blazingly Fast

The Netflix company logo at Netflix headquarters in Los Gatos, Calif., on April 13, 2011.
The Netflix company logo at Netflix headquarters in Los Gatos, Calif., on April 13, 2011. Ryan Anson—AFP/Getty Images

Newly released data shows Comcast's web subscribers are seeing faster connections while streaming video on Netflix after a deal between the tech giants boosted the connection speed by an average 65 percent between January and March

Comcast Internet subscribers are continuing to see dramatic improvement in Netflix performance following a deal in which the streaming video company agreed to pay for a direct connection to the nation’s largest broadband provider, according to data released on Tuesday.

“This month’s rankings are a great illustration of how performance can improve when ISPs work to connect directly to Netflix,” Netflix spokesperson Joris Evers wrote in a company blog post. “In the U.S., the average speed on the Comcast network for Netflix streams is up 65 percent from 1.51Mbps in January to 2.5Mbps in March.”

The agreement, which was struck in February, intensified the already-heated debate about “net neutrality,” the principle enshrined in the now-defunct U.S. Open Internet rules that prohibited major Internet service providers like Comcast, Time Warner Cable, and Verizon from playing favorites with certain online services at the expense of rivals. Comcast is currently seeking regulatory approval for its proposed $45 billion purchase of Time Warner Cable.

As high-bandwidth services like Netflix have exploded in popularity — during evening hours the service accounts for as much as one-third of all Internet traffic, according to industry estimates — the broadband companies are increasingly demanding compensation in exchange for direct connections to improve performance. Faster speeds mean better video quality and fewer interruptions for Netflix viewers.

(MORE: Netflix vs. Comcast ‘Net Neutrality’ Spat Erupts After Traffic Deal)

Comcast jumped six spots higher on the list — leapfrogging Time Warner Cable, Verizon, AT&T U-verse and other providers — and its customers are seeing the best Netflix performance in 16 months. The performance boost comes after a precipitous decline in Netflix speeds for Comcast subscribers that began last fall, leading to numerous complaints about service quality.

By striking a paid-peering interconnection agreement with Comcast, Netflix gained a direct connection to the broadband giant’s network, bypassing bandwidth providers that operate as third-party intermediaries between residential broadband companies like Comcast and Time Warner Cable and Internet firms like Netflix and YouTube. Financial terms of the deal were not disclosed, but many Wall Street analysts don’t believe it will have a material impact on Netflix’s bottom line.

Nevertheless, Netflix CEO Reed Hastings complained bitterly about having to pay “an arbitrary tax” to Comcast in order to improve service for customers, and urged federal regulators to include paid peering agreements in the new net neutrality rules currently under development by the Federal Communications Commission. Such agreements were not covered by the FCC’s 2010 Open Internet order, which was struck down by a federal judge in January.

Hastings called for the FCC’s new rules to prevent service providers like Comcast from “charging a toll for interconnection to services like Netflix, YouTube, or Skype, or intermediaries such as Cogent, Akamai or Level 3, to deliver the services and data requested by ISP residential subscribers.”

Internet service providers, Hastings said, “must provide sufficient access to their network without charge.” That suggestion is fiercely opposed the nation’s largest ISPs, which for years have complained that they are obliged to deliver high bandwidth content — which often competes with their own video offerings — over the infrastructure they’ve spent billions of dollars to build. Both Verizon and AT&T have acknowledged that they are seeking to extract similar fees from Netflix in order to improve service for customers.

Google Fiber, the tech giant’s gigabit fiber broadband service, remains by far the fastest U.S. provider of Netflix streaming video, with average performance of 3.60Mbps, according to Netflix. Google has already launched fiber initiatives in Kansas City, Austin and Provo, and last month announced plans to work with nine more metro areas to expand the service.

Netflix says its ISP speed index is “based on data from the more than 44 million Netflix members worldwide who view over 1 billion hours of TV shows and movies streaming from Netflix each month. The listed speeds reflect the average performance of all Netflix streams on each ISP’s network and are an indicator of the performance typically experienced across all users on an ISP network. A faster network generally means a better picture quality, quicker start times and fewer interruptions.”

TIME broadband

AT&T Aims to Beat Google Fiber in Gigabit Broadband Race

A view shows the AT&T store sign in Broomfield, Colorado
Rick Wilking / REUTERS

North Carolina has become the latest battleground in the competition to bring gigabit Internet speeds to consumers

Four years after Google launched a not-so-subtle campaign to shame U.S. Internet service providers into improving their broadband service, North Carolina has become the latest front in the battle to offer consumers gigabit Internet speeds.

Telecom giant AT&T plans to offer super-fast Internet service to six North Carolina cities at speeds 100 times faster than regular connections, the company announced on Thursday. AT&T’s announcement comes less than two months after Google said that it was considering expanding its gigabit Fiber initiative to the North Carolina communities of Charlotte, Chapel Hill and Raleigh-Durham.

AT&T’s plan to offer gigabit Internet speeds in the Tar Heel state is the latest indication that Google’s effort to push giant Internet providers toward improving their service is working. Last year, Google announced plans to build out gigabit fiber service in Austin, Tex. One day later, AT&T said that it, too, wanted to offer gigabit Internet service in Austin.

AT&T’s North Carolina proposal — which still must be ratified by the six communities involved — comes one year after the North Carolina Next Generation Network (NCNGN), a group formed by local municipalities in conjunction with local universities including UNC and Duke, asked for proposals from companies interested in offering gigabit Internet service to communities in the state’s Triangle and Piedmont Triad regions.

“All of the participants in the NCNGN project are encouraged by AT&T’s interest to deliver ultra-fast bandwidth to the Research Triangle and Piedmont regions,” Tracy Futhey, Chair of the NCNGN Steering Committee and Vice President of Information Technology at Duke University, said in a statement.

AT&T appears to have gotten the jump on Google — for now. “AT&T’s proposal is the only one being recommended for approval at this time but our communities remain active in discussions with other vendors,” NCNGN program director Elise Kohn told WRALTechWire.

(MORE: Google Is Making a Major Play to Provide Your Internet)

For years, expanding U.S. broadband service has been a national priority. But despite the fact that U.S. researchers developed the Internet, the U.S. has fallen behind in broadband speeds and penetration compared to other developed countries. A recent study by networking giant Akamai ranked the U.S. eighth in global average connection speeds.

Many large Internet providers have insisted that Americans don’t want or need gigabit broadband service, but that’s starting to change, as cities across the U.S. move aggressively to upgrade their Internet networks to boost economic growth and provide increased opportunity for citizens.

“Obviously Google has been this catalyst for AT&T and others to respond to what they’ve done in Kansas City and Austin,” Jeff Heynen, a Wake Forest-based analyst with Infonetics Research, told the Raleigh-based News & Observer. “Here’s an opportunity really for AT&T and Time Warner to respond and get ahead.”

In Texas, AT&T began rolling out its Austin gigabit offering in December. Google has yet to launch its service, because it is still navigating bureaucratic hurdles and assembling the necessary permits. (Needless to say, AT&T wasn’t thrilled about the prospect of giving Google access to the 20% of Austin utility poles that it owns.) In the meantime, other Austin players including Time Warner Cable and a local firm called Grande Communications, are moving to boost their Internet speeds.

“To be honest, we wouldn’t have launched a 1Gbps service unless we didn’t see it happening in the market,” Matt Murphy, president of Grande Communications, a small Austin cable operator, told CNET. “Google has definitely stirred things up in Austin. And when we saw AT&T and Time Warner Cable answering that threat, we knew we had to do something too in terms of speeds and pricing.”

Like North Carolina, Austin is a prime example of how the prospect of Google’s gigabit entry into the marketplace is prompting competitors to improve their services. That, after all, was a crucial part of Google’s strategy. “Google isn’t even offering service in town yet, and already parts of Austin are getting better broadband,” Stacey Higginbotham, a respected tech reporter at Gigaom and Austin resident, wrote in a recent post. “That’s cool.”

TIME deals

Critics Call Comcast’s Time Warner Cable Deal ‘Unthinkable’

The Comcast Center, home to Comcast's corporate headquarters, in Philadelphia
The Comcast Center, home to Comcast's corporate headquarters, in Philadelphia. William Thomas Cain—Getty Images

Federal regulators must now determine whether the proposed $45 billion merger would stifle competition or harm the public interest

Comcast’s proposed $45 buyout of Time Warner Cable is “unthinkable,” a coalition of more than 50 public interest groups wrote in a letter to U.S. regulators on Tuesday. The merger, which would combine the two largest cable companies in the country, would harm competition while offering no “tangible benefits” to consumers, according to the groups, which urged regulators to block the deal because it would give Comcast too much market power.

The letter, which was signed by Public Knowledge, Free Press, Consumers Union, the New America Foundation and other prominent consumer advocacy groups was sent to Attorney General Eric Holder and Federal Communications Chairman Tom Wheeler 24 hours before a senior Comcast executive is set to testify about the deal before Congress Wednesday.

The Justice Department, along with more than two dozen state attorneys general, is examining the proposed merger to ensure it doesn’t violate antitrust law. The FCC, meanwhile, is charged with ensuring that the deal serves the public interest. Critics say the merger would concentrate too much market power in the hands of a single corporate giant, potentially harming competitors and the broader public interest.

“The Comcast-Time Warner Cable merger would give Comcast unthinkable gatekeeper power over our commercial, social and civic lives,” the groups wrote. “Everyone from the biggest business to the smallest startup, from elected officials to everyday people, would have to cross through Comcast’s gates. Given these clear and present dangers and the complete lack of any tangible benefits, it’s clear that the union of the nation’s No. 1 and No. 2 cable companies is not good for competition or in the public interest.”

Comcast says that the deal isn’t anticompetitive because it doesn’t currently compete with Time Warner Cable for customers in any of the same geographic markets. (Over the last few decades, the nation’s largest cable TV companies have divided up the U.S. by city and region so that the major players now dominate their respective areas. For example, Comcast controls Philadelphia, Chicago and Boston, while Time Warner Cable is dominant in New York City, Dallas and Los Angeles. Time Warner Cable was spun off from TIME parent company Time Warner in 2009).

However, critics of the deal warn that the merger could give Comcast unprecedented “monopsony” power — which is one buyer with many sellers, as opposed to “monopoly” power, which is one seller with many buyers — in the market for programming. Such monopsony power could mean downward pressure on prices for consumers, but only if Comcast chose to pass those savings on to them. That seems unlikely. “We’re certainly not promising that customer bills are going to go down or even increase less rapidly,” Comcast executive vice president David L. Cohen told reporters when the deal was announced.

Mark Cooper, director of research at the Consumer Federation of America, wrote in a report about the deal released Tuesday that Comcast could use its new monopsony power to “increase its profits by paying less for the goods and services it buys and charge more or gain market share for its own products by using its buyer power.” Such market power could ultimately harm consumers, according to Gene Kimmelman, president and CEO of Public Knowledge, because it would enable Comcast to “demand less than market prices for programming. Programmers will seek to make up lost revenues by increasing prices to other distributors, harming the ability of smaller distributors to compete and raising prices to consumers.”

(MORE: Comcast Set For Grilling Over Time Warner Cable Deal)

Even still, Cooper says the fact that Comcast and Time Warner Cable don’t currently compete for cable customers illustrates the lack of competition that already exists in the market — even before the proposed merger.

“Far from excusing the merger from antitrust and Communications Act scrutiny,” Cooper wrote, “the fact that Comcast and Time Warner do not compete head-to-head merely reminds us of the sad state of horizontal competition in the video distribution markets that they dominate in their local areas — broadband Internet access and multichannel video.”

The lack of competition created by decades of industry consolidation has created a situation where the dominant companies have little incentive to improve broadband speeds and service. The World Economic Forum recently ranked the United States 35th out of 148 countries in Internet bandwidth. In the U.S., Comcast and Time Warner Cable, the two largest cable providers, ranked 15th and 16th, respectively, in customer satisfaction among 17 television service providers, according to a recent study by Consumer Reports. Meanwhile, the cost of cable subscriptions has significantly outpaced inflation, Consumer Reports found.

“Both Comcast and Time Warner Cable rank very poorly with consumers when it comes to value for the money and have earned low ratings for customer support,” says Delara Derakhshani, policy counsel at Consumers Union. “A merger combining these two huge companies would give Comcast even greater control over the cable and broadband Internet markets, leading to higher prices, fewer choices, and worse customer service for consumers.” She added: “The FCC and Department of Justice should stand with consumers and oppose this merger.”

Federal policymakers at the Justice Department and the FCC are now confronted with a difficult decision: Should the two largest cable companies in the country be allowed to merge, creating a media and communications giant of unprecedented scope and scale? In a context where the U.S. lags behind other industrialized countries in broadband speeds, does the merger benefit consumers? Last year, the Obama administration declared that “the delivery of fast, affordable and reliable broadband service to all corners of the United States must be a national imperative.” Regulators must now decide if Comcast’s proposed merger with Time Warner Cable advances that agenda.

TIME deals

Comcast Faces Senate Grilling on Time Warner Cable Deal

David Cohen, Executive Vice President, Comcast Corporation, speaks during the 2013 Women in Cable Telecommunications Signature Luncheon at Walter E. Washington Convention Center on June 10, 2013 in Washington, DC.
David Cohen, Executive Vice President, Comcast Corporation, speaks during the 2013 Women in Cable Telecommunications Signature Luncheon at Walter E. Washington Convention Center on June 10, 2013 in Washington, DC. Larry Busacca—Getty Images for WICT

Comcast's executive vice president testified before the Senate Judiciary Committee on Wednesday to defend a $45 billion merger with Time Warner Cable

Comcast’s campaign to convince U.S. officials that its proposed $45 billion purchase of Time Warner Cable will benefit consumers kicked into high gear on Wednesday, when a senior executive from the corporate giant appeared before a key Congressional committee.

The proposed merger, which would combine the two largest cable companies in the U.S. and create an unprecedented entertainment and communications colossus, is fiercely opposed by many consumer advocacy groups.

Critics of the deal say the merger would concentrate too much market power in the hands of a single media giant, potentially harming competitors and offering scant benefits for consumers. On Tuesday, more than 50 public interest groups sent a letter to the Justice Department and the Federal Communications Commission in which they called the deal “unthinkable” and urged U.S. regulators to block it.

The intense debate about the proposed merger underscores the rapid changes sweeping across the media landscape as broadband Internet service becomes the signature communications medium of the 21st century. Tens of millions of Americans communicate, conduct business, and consume content using Internet-based technologies like email, instant messaging, video chat, social networks, voice-over-IP phone service, and streaming entertainment options like Netflix, Amazon and Spotify.

Federal approval of the deal would amount to a resounding triumph for Comcast CEO Brian Roberts, whose father founded the company in 1963 by buying a 1,200-subscriber cable TV company in Tupelo, Miss. for $500,000. Comcast, which now employs 136,000 people and has a market value of $130 billion, already owns NBCUniversal, one of the crown jewels of the entertainment industry, after buying the company from industrial conglomerate General Electric.

On Wednesday, Comcast executive vice president David L. Cohen testified before the Senate Judiciary Committee, and argued that the deal won’t harm competitors or consumers. On the contrary, Cohen said the deal is actually great for consumers, who will benefit from faster Internet speeds, enhanced broadband services, and improved user interface technology. Comcast has also pledged to extend its “net neutrality” commitment to Time Warner Cable customers, and expand a program that pushes broadband access in low income areas into Time Warner Cable markets.

(MORE: Comcast’s Time Warner Cable Deal is ‘Unthinkable,’ Critics Say)

Several lawmakers have expressed concern about the deal, including Sen. Al Franken (D—Mn.), a member of the Judiciary Committee. “I have serious reservations about this proposed transaction, which would consolidate the largest and second largest cable providers in America,” Franken wrote in a recent letter to regulators. “Unfortunately, a handful of cable providers dominate the market, leaving consumers with little choice but to pay high bills for often unsatisfactory service. I am concerned that Comcast’s proposed acquisition of Time Warner would only make things worse for consumers.”

On Tuesday, Comcast filed its 180-page Public Interest Statement with the FCC, which is charged with ensuring that the deal serves the public interest. “We expect a rigorous review as we’ve had in our previous deals, and believe an objective weighing of the significant public interest benefits that are offered by this transaction and the lack of competitive concerns should lead to approval,” Cohen wrote in a corporate blog post.

If the deal is approved, Comcast would command nearly 40% of the high speed wire line broadband Internet market in the U.S. Critics say that allowing one company to control the pipes bringing high-speed Internet access into the homes of four out of ten U.S. broadband subscribers would give Comcast an alarming amount of power over consumers and competitors alike. (Time Warner Cable was spun off from TIME parent Time Warner in 2009.)

Cohen dismisses such concerns. “This transaction is all about increasing competition and creating more consumer benefit as a result of gaining additional scale,” he said in a recent interview with C-SPAN. Comcast says that the deal isn’t anticompetitive because the two companies don’t compete for cable customers in the same markets. “Customers will still have the same number of video, broadband, or phone options before the deal as after it,” Cohen wrote in the blog post.

Comcast says the deal will help it address competitive threats not just from traditional phone and satellite firms like AT&T, Verizon, DirecTV, and DISH, but also from Internet companies like Netflix, Amazon, Apple, Yahoo, Google, and Facebook. “Internet and device companies, with newfound global scale, also are competing aggressively in the video marketplace and in the larger broadband value circle,” Cohen wrote, pointing to initiatives like Google Fiber, Apple TV, and Amazon’s recently announced Fire TV set-top box.

One thing that Comcast is not promising is lower prices for consumers. “We’re certainly not promising that customer bills are going to go down or even increase less rapidly,” Cohen told reporters when the deal was announced. The implication of this statement is that any cost savings that Comcast is able to achieve, either through increased scale or enhanced buying power, would go directly to the company’s bottom line or be invested back into the business.

It’s possible, but by no means certain, that such investment will benefit consumers, through advances in broadband speed and technology. But the people most likely to benefit from of any enhancement of Comcast’s already formidable competitive position in the marketplace will surely be the company’s shareholders.

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