Three years ago, comedian John Oliver brought a ton of attention to his HBO show Last Week Tonight by discussing Net Neutrality and calling the appointment of a former cable company lobbyist as chairman of the FCC “the equivalent of needing a babysitter and hiring a dingo.”
After Oliver’s campaign to flood the FCC web site with comments proved to be the equivalent of a DDoS attack, Tom Wheeler was quoted at a press conference as saying, “I would like to state, for the record, that I am not a dingo.” He then proceeded to prove his point by reclassifying internet service providers as common carriers and making Net Neutrality the law of the land.
Three years later, Wheeler is out, the FCC has a new chairman, and… well, guess what?
Meet Ajit Pai, former attorney for Verizon Communications and blatant opponent of every single pro-consumer policy Tom Wheeler promoted over the last three years. Pai talks a good game about how he wants to “foster innovation” and “protect consumers”, but his voting record speaks for itself.
Pai opposed net neutrality rules and, after (President Donald) Trump’s victory, said those rules’ “days are numbered.” He also opposed lower rate caps for inmate calling, rules designed to give TV consumers cheaper alternatives to rented set-top boxes, rules that protect the privacy of ISP customers, an update to the 31-year-old Lifeline phone subsidy program to help poor people buy Internet service, a speed increase in the FCC’s broadband standard, an investigation of AT&T and Verizon charging competitors for data cap exemptions, and preemption of state laws that restrict expansion of municipal broadband.
Basically, Pai opposed any FCC rule that did not directly benefit Comcast, AT&T, and Verizon, and if one of the ISPs complained about a rule, Pai complained along with them.
As FCC chair, Pai has wasted no time rolling back a number of pending consumer protections. Pai’s FCC issued a stay on data security regulations that were intended to protect customers’ private data from security breaches. It cut down transparency rules that would have required ISPs be clear about usage caps and hidden fees. It also shut down an inquiry into zero-rating policies by ISPs — an inquiry Wheeler began before his resignation, as he suggested zero-rating “might restrict consumer choice, distort competition, and hamper innovation.”
For those considering dumping traditional cable TV for online video services, the end of that zero-rating inquiry will be very important in the coming months. Comcast and AT&T, two of the largest ISPs in the U.S. (and two of Pai’s biggest fans), have consistently used data caps and zero-rating policies as a means to promote their own video services at the expense of everyone else’s.
Here’s how it works:
Comcast sells internet packages that come with data limits; each customer can only transfer 1 terabyte of data per month. Want to watch something on Netflix, Amazon Prime, Hulu, YouTube, Sling TV, or Playstation Vue? That counts against your limit. If you go over 1 TB, you get hit with overage charges, to the tune of an extra $10/month for every 50GB you use. If you’re okay with 720p video, that 1 TB cap might not be such a big deal. If you have a 4K TV, however, and want to stream 4K video, you’ll use more than 11 GB of data per hour.
You can get unlimited internet from Comcast and not have to worry about data overages — but it will cost you an additional $50/month. Don’t want to pay that charge? You’re at the mercy of Comcast’s data meter, and its accuracy is questionable at best.
The only service that doesn’t count against your data cap? Comcast’s own Stream TV. If you watch your cable TV channels through Stream TV, you won’t have to worry about overages. With Sling TV and PlayStation Vue, you would — unless you pay that extra $50/month for unlimited internet. That makes Stream TV cheaper than competing services, giving Comcast an unfair advantage over them.
AT&T, meanwhile, likes to tell people in its commercials that “the price you see is the price you pay”.
As you might expect, that’s not exactly true. AT&T’s $30/month internet package comes with a fairly large caveat:
You have to get another AT&T service — either TV service or wireless phone service, depending on where you live — in order to get that $30/month price for your internet. And guess what? It still comes with a 1TB data cap!
If you can’t read that fine print, it says:
Unlimited data allowance may be purchased separately for an add’l $30/mo., or maintain TV & Internet on combined bill and receive Unlimited Internet data ($30 value) at no add’l charge.
So you can get your $30/month internet if and only if you get DirecTV or UVerse TV (which is reportedly being phased out) in a bundle with it. Otherwise, your AT&T internet bill is $60/month.
How does that affect your TV choice? Let’s compare prices:
- AT&T Bundled Internet ($30) + UVerse TV ($50) = $80
- AT&T Bundled Internet ($30) + DirecTV Choice ($60) = $90
- AT&T Unlimited Internet ($60) + PlayStation Vue Core Slim ($35) = $95
- AT&T Unlimited Internet ($60) + Sling TV Blue+Orange ($40) = $100
By forcing customers to bundle in order to get unlimited internet, AT&T is giving its own TV services an unfair advantage over its competition. Its pricing policies are specifically designed to dissuade customers from getting TV elsewhere, even if competitors are offering packages that customers actually want.
As for DirecTV NOW, AT&T’s online TV service, it doesn’t count as a “qualifying service”, but hey, guess what? DirecTV NOW is zero-rated. Sling TV and PlayStation Vue are not. Because as former AT&T CEO Ed Whitacre once said:
“Why should they be allowed to use my pipes? The Internet can’t be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!”
And now, thanks to the hands-off policies of Ajit Pai, AT&T can make that vision a reality. Either competing video services will have to pay extra to get zero-rated, which would result in higher prices for streaming consumers — assuming Comcast and AT&T would even allow other video services to be zero-rated, because Pai’s FCC certainly won’t force that issue — or the customers themselves will have to pay more for their internet service in order to get the video services they want. Either way, Comcast and AT&T can use their oligopoly positions to extract more money out of customers without improving their experience.
Meanwhile, Spectrum, the new cable Voltron formed by the merger of Charter, Time Warner Cable, and Bright House Networks, is still prohibited from instituting usage caps for seven years as part of a deal with Tom Wheeler’s FCC to approve the merger. That might change, though, as a corporate-funded conservative group is petitioning the FCC to let Spectrum weasel out of that agreement — and Ajit Pai is amenable to it.
As then-Commissioner Pai wrote in 2016, this condition is neither “fair” nor “progressive.” Instead, he called this “the paradigmatic case of the 99% subsidizing the 1%,” as it encourages Charter to raise prices on all consumers in response to costs stemming from the activities of a “bandwidth-hungry few.”
That’s a peculiar response to this issue, given that cable companies admitted four years ago that broadband usage caps have nothing to do with network congestion, which blows the entire notion of “fairness” out of the water. How exactly is it fair to Netflix, Amazon, Hulu, YouTube, Sling, Sony, Crunchyroll, Fubo TV, Curiosity Stream, or any number of other streaming video services that their video counts against ISPs’ data caps, while the ISPs’ video does not? All data caps and zero-rating do is suffocate competition in the video market and force customers to choose between paying more for what they actually want or remaining tied to cable and satellite TV services just to save a few bucks. Comcast doesn’t even lose that much money when customers cut the cord, thanks to its broadband monopoly.
Besides, it’s not as if Comcast ever cared about those customers. Comcast officials are perfectly content with their company being the most despised company in America, because their quarterly profits allow them to be. The bottom line is all that matters to big ISPs like Comcast, AT&T, and Spectrum, and if hiking prices 40% over the course of five years and buying off a few politicians helps boost those profits, they’ll do it, because they have a captive audience. The internet is becoming less of a luxury and more of a necessity to the daily lives of Americans. They need access, so they’ll pay for it, and thanks to the monopolies ISPs have built throughout the country, customers are stuck giving money to corporations that will gladly gouge them as much as possible.
And the stooge that will let Comcast and AT&T gouge away like that… is Ajit Pai.
Ajit Pai is regulatory capture personified. He serves corporations, not consumers, because he knows if he gives corporations what they want for the next five years, one of those corporations will hire him. It worked for Michael Powell, and it will work for Pai, too. ISPs are not only gushing about Pai; they’re paying writers to write opinion pieces convincing the public that Pai will be “putting consumers first”, when it’s clearly obvious that he is not. The fact that big cable and telecom companies like Pai so much should be a clear sign that consumers are about to get screwed.
So go ahead and melt the FCC’s servers again by submitting as many comments as possible to FCC.gov/comments. Just don’t expect Ajit Pai to listen to a word you have to say. The future livelihood of this particular public servant depends on ignoring the public he’s supposed to serve.