June 17, 2015 8:37 PM
Today, the Federal Communications Commission (FCC), on a three-to-two vote, found that AT&T violated federal regulations by failing to disclose that it was throttling certain wireless customers on an “unlimited” data plan. The FCC claims AT&T owes a $100 million fine. This announcement follows a lawsuit filed in October 2014 by another federal agency, the Federal Trade Commission (FTC), arguing that AT&T violated federal consumer protection law by throttling its unlimited data plan customers. AT&T has pledged to take both agencies to court to defend itself against these allegations.
By way of background, for many years, AT&T and many other wireless providers offered data plans—used for Internet browsing, email, video, and so forth—on an all-you-can eat, unlimited basis. These plans let customers transmit and receive as much information as they wish, without facing overage charges for downloading too much data.
However, in mid-2010, AT&T stopped offering unlimited data plans to new customers. For existing customers on an unlimited plan, AT&T allowed them to stay “grandfathered” on their old plans. Then, in 2011, AT&T began throttling the throughput—commonly known as “speed”—of its highest users of unlimited data plans. This throttling didn’t stop any customers from using as much data as they wanted, but it did substantially degrade a fraction of AT&T customers’ connectivity.
Had AT&T not told anybody about this throttling, it would clearly run afoul the FCC’s transparency rule, which was issued in 2010 and upheld on judicial review by the Court of Appeals for the D.C. Circuit in 2014.
Yet AT&T did disclose its behavior to customers and the public through various means:
- AT&T issued a press release in 2011, which over 2,000 news outlets covered;
- AT&T included an insert explaining its new policy in the bills of unlimited data customers;
- AT&T posted an informational page on its website explaining the throttling, and linked to this page on the AT&T Wireless homepage;
- AT&T modified its service contract in August 2012 to mention the potential throttling of heavy users;
- AT&T sent text messages to heavy unlimited data users in the months before it began throttling to warn such users that they would face throttling in future months; and
- AT&T sent text messages to heavy unlimited data users after it began throttling, warning such users that their usage was approaching the threshold where throttling would begin and explaining how to change to a different plan to avoid throttling
A majority FCC, however, found that none of these disclosures were enough, because some customers might have missed all of them and simply assumed that “unlimited” meant not only unlimited usage, but unlimited throughput, too. But as dissenting FCC Commissioner Ajit Pai argued in his dissent, unlimited data and unlimited speed aren’t the same—and AT&T never promised its customers they would enjoy both.
April 27, 2015 3:35 PM
CEI responded to the news that the Comcast-Time Warner merger failed. You can read more analysis from CEI's Vice President for Policy Wayne Crews here.
"The deck was stacked against this deal from the beginning: Comcast and Time Warner Cable had to seek permission to merge from not only the Department of Justice, but also the Federal Communications Commission. While the DOJ must win in court before it can block an acquisition, the FCC has unilateral power to send a transaction into regulatory limbo for years before the merging parties get a chance to be heard by an independent federal judge. This process turns the rule of law on its head, and only Congress can fix it."
-- Ryan Radia, Associate Director of Technology Studies
“The collapse of the Comcast-Time Warner merger merely because of the interference of government, not because of actual market rejection, illustrates the overwhelming power of the modern state to undermine the advance of communications technologies and services. These bureaucrats have decided on our behalf to award other communications industry companies a government-granted reprieve from the pressures of competition.”
-- Wayne Crews, CEI Vice President for Policy
April 21, 2015 11:29 AM
The Competitive Enterprise Institute, TechFreedom and a coalition of free-market groups issued an open letter to Members of Congress, urging them to consider amendments to the National Cybersecurity Protection Advancement Act (NCPAA) of 2015. The NCPAA intends to increase cyber security by facilitating greater sharing of potential cyber threats by private companies with each other and with government. But it also raises real privacy concerns because potential Cyber Threat Indicators could include private information like email content or Internet usage history.
“Congress must ensure that agencies can’t strongarm companies into sharing information involuntarily, and that agencies can be held liable for recklessly misusing private data they might receive. And agencies should be barred from using such information for regulatory purposes or for unrelated criminal prosecutions,” said Ryan Radia, Associate Director of Technology Studies at the Competitive Enterprise Institute. “Finally, the existing bill’s blanket immunity for ‘defensive measures’ could encourage unauthorized access to protected computers, potentially endangering innocent bystanders caught in the middle of cyberattacks.”
The letter proposes eight amendments:
March 11, 2015 12:10 PM
Yesterday, Sens. Mike Enzi (R-Wy.), Dick Durbin (D-Ill.), Lamar Alexander (R-Tenn.), and Heidi Heitkamp (D-N.D.) reintroduced the speciously named Marketplace Fairness Act (MFA) in the 114th Congress. The legislation would authorize state tax collectors to reach across borders and tax out-of-state businesses, therein subjecting online retailers to taxation without representation.
Certainly, there are inequities in the way remote sales are taxed, but the MFA’s approach is a cure worse than the disease. It would unfairly burden remote retailers by forcing them to calculate for approximately 10,000 distinct tax jurisdictions—each with their own rates, definitions and tax exemptions—while leaving brick and mortar shops to simply apply and remit tax based on the point of sale. Not much of a level playing field there.
So if not “fairness,” as supporters of the bill claim, what is motivating pro-MFA sentiments?
For the states and localities it’s purely a tax grab. Instead of trimming fat from their bloated budgets, governors and mayors are opting to spend time in D.C. schmoozing congress for the right to tax other state’s businesses. Why deal with disappointing or taxing your own constituents, to whom you are politically accountable, when you can spend the week office hopping on the Hill, collecting pins for your lapel, and topping it all off with an expensed dinner at Cap Grille?
February 26, 2015 4:45 PM
The separation of powers doctrine demands that Congress not tolerate unelected federal agencies going it alone and making binding law.
The Federal Communications Commission (FCC), on a party line vote, has elected to impose so-called net neutrality regulation via a reclassification of the formerly lightly regulated Internet under Title II of the Communications Act.
Somehow, we suddenly need government force to protect the freedom we’ve known online, with a 332-page set of rules no one outside the agency has seen.
Thursday's Federal Communications Commission (FCC) net neutrality conceit should trigger the Congress’ replacement of this rogue agency with something that recognize boundaries, something attuned to the future and reality.
Airwave scarcity and public interest concerns are the causes that long presumably justified telecommunications regulation. But thanks to Thursday's FCC vote, the FCC bureaucracy itself undermined those values with a new regime that will inhibit new infrastructure development and ultimately freedom of speech itself.
Under utility-style micromanagement of the Internet, which is what Title II would allow, the agency will be reenergized as a magnet for political cronyism. The “bad guys” or villainous “gatekeepers” according to net neutrality partisans are the Internet service providers.
But ironically, with net neutrality, there's a much greater chance of there still being an AT&T and Comcast 100 years from now since upstart competing and overlapping infrastructures can scarcely cope with the likes of Title II. (Here’s Comcast’s highly promoted advertisement in support of enforceable net neutrality rules.)
February 3, 2015 4:13 PM
Over the decades I’ve spent in this Heart of Darkness (a.k.a., the bowels of American politics), I’ve learned two lessons that have encouraged the steady politicization of the American economy:
- When the right time comes, I’ll take a principled stand (sadly, too often, once you’re no longer in office); and
- Of course, we know the “right” answer is often to liberalize current rules, but that would be politically naïve, so our goal should be to avert even worse rules (but, of course, sacrificing principle rarely assuages those favoring more government control).
And both lessons seem to have been forgotten in the Republican rush to avert the threatened action by FCC Chairman Tom Wheeler to transform the Internet into a federally regulated utility. Senator Thune, Representative Upton, and Representative Walden have proposed a “compromise” bill that would strip the FCC of its purported authority to reinterpret the Communications Act to consider the Internet as a “public” utility.
Unfortunately, their language concedes perhaps the most dangerous part of such a reclassification: removing the freedom of network owners to price their services. Well, actually not quite: the Republicans would remove providers’ ability to price in ways that some view as “discriminatory.” They explicitly mention pricing policies that might result in “throttling” (like congestion-managed toll lanes?), unreasonable “network management” (as decided by whom?), and “paid prioritization” (like that used for just-in-time transportation services by most transport companies?).
But proponents argue if FCC is left alone, its rules might even be worse. And, indeed, they probably will be—but FCC action would be administrative, reversible by a future administration or via inevitable legal challenge. If Congress—led by erstwhile opponents of net neutrality—accedes to forcing the Internet into quasi-utility status, the losses could be permanent.
Those contemplating this action should reflect on the consequences of similar regulation on an earlier network—the railroads. This was America’s first national network, knitting together then small town and rural America into the national economy. Railroads dramatically lowered transportation costs—changing the economy and resulting in growth in some regions, contraction in others.
January 20, 2015 11:05 AM
Technology policy rarely earns more than a brief mention in the President’s annual State of the Union address to Congress. But tonight, when President Obama delivers his seventh address, he’ll lay out his plans for the Internet in greater detail than any President in recent memory. While the President’s tech agenda has its pros and cons, it generally envisions Washington doing more to oversee the Internet and technology markets. For the most part, this is the wrong prescription.
Obama is expected to focus on three tech policy issues: cybersecurity, broadband, and privacy. The President has delivered major speeches on each of these issues in recent days in locales ranging from the Federal Trade Commission down the street from the White House to Cedar Falls Utility in Iowa.
Cybersecurity is in the headlines in the wake of the cyberattack allegedly committed at the behest of the North Korean regime against Sony Pictures Entertainment. Unlike many roles the federal government now attempts to fill, protecting American companies from state-sponsored cyber terrorism is a legitimate governmental function. Therefore, to improve the state of cybersecurity, the President will call for greater coordination between the private sector and the government—including more information sharing about cyber threats between companies and federal agencies.
The approach Obama has outlined is no cybersecurity panacea, but it’s better than doing nothing, provided companies are held to enforceable promises made to their customers about how and when their information will be shared.
January 14, 2015 9:29 AM
With the start of the 114th Congress comes a fresh opportunity to address the challenges created by a broken government. To kick off this new congressional session, the Competitive Enterprise Institute (CEI) recommends numerous reform proposals to strengthen the U.S. economy, increase transparency, and foster fair and open competition instead of favoring special interests.
CEI’s top policy proposals center on substantive regulatory reforms needed to improve America’s economic health. In 2014 alone, 3,541 new regulations hit the books, and the burden is constantly growing. If federal regulations were a country, their cost would amount to the world’s 10th largest economy.
In addition to reining in burdensome regulations, CEI recommends that Congress continue to conduct fundamental oversight to protect Americans from executive overreach. Over the last six years, federal agencies have sought to usurp power from the legislative branch. Congress has a responsibility to demand honesty and accountability from our leaders and defend the rule of law.
Automated Vehicles Update: Big Feature at CES, California Rules Delayed, Georgia Cautious on RegulationJanuary 9, 2015 12:16 PM
It’s been a few months since I last checked in on automated vehicles (AVs), commonly called driverless cars or autonomous vehicles. Below are some developments of note.
- California misses operations and licensing rule deadline. When the California legislature passed its AV bill in 2012, it ordered that the state Department of Motor Vehicles fully implement it by the end of 2014. While the final rules on testing came into effect in September 2014, the agency announced in late December it would not meet the January 1 deadline to implement its AV operations and licensing rules. AV policy observers have been watching the California rollout closely, given that California is the largest state and a first mover, which means other states are likely to follow its lead. Unfortunately, California’s AV statute is proving burdensome for robocar innovators. As written, it requires that a licensed driver be in the driver seat with the ability to retake manual control at any point following a transition period. Some developers are seeking full automation, where there is no ability for drivers to take manual control. To meet the new California testing regulations, Google was recently forced to add a steering wheel to its latest prototype.
- CES showcases vehicle automation. The annual Consumer Electronics Show just wrapped up in Las Vegas. Ford CEO Mark Fields delivered a keynote address discussing his company’s push toward vehicle automation, among other topics. Fields predicted the first generation of automated vehicles will be on the road within five years. My colleague Wayne Crews, who attended CES, worries that some of the AV policy discussions seem to be trending towards public utility–style common carrier regulation, under the unsupported assumption that AVs will be exclusively or even largely fleet vehicles, at least in the current way we tend to think about fleet vehicles. This would be a huge mistake. Brad Templeton, one of the most interesting thinkers on vehicle automation, also attended CES and offers his thoughts on the AVs showcased here, here, and here. Anyone interested in AVs should be sure to follow Brad’s blog for regular updates.
December 17, 2014 3:13 PM
This week we get to say goodbye to the 113th Congress. For those who believe in free markets and individual liberty, it was a doozy. There were some losses, but also some big wins. One victory in particular is worth noting because the battle involved one of the worst aspects of politics: entrenched and connected special interests, versus one of the best aspects: a pro-liberty grassroots uprising of individuals against cronyism.
Like all so-called vices, gambling has always had its foes, from religious leaders who believe it is evil to public health professionals and social advocates worrying exploitation of young, ill, and poor. For the most part, these interests have been unable to stop the demand for or rise in legal gambling throughout the United States. But when one of the world’s richest men says he’ll spend what it takes to ban Internet gambling, all bets are off.
Intrastate online gambling does not violate federal law: that was the conclusion the department of justice came to in 2011 after two years of consideration. So long as the gambling was not sports related, no federal laws prohibited states from allowing online gambling within their borders. Within the next two years three states, Delaware, New Jersey, and Nevada, began offering licensed and regulated online gambling.
Not long after that, in November 2013, Sheldon Adelson—CEO of Sands Casino—announced his plan to stop the spread of legal online gambling in the U.S. Coming from the man who almost single-handedly funded Newt Gingrich’s 2012 presidential campaign and who donates millions more to members of Congress—it was a threat that nobody considered empty.
- December 23, 2011: DOJ declares no federal law preventing intrastate online gambling
- November 2013: Nevada, New Jersey, Delaware offer legal online gambling
- November 2013: Adelson announces Coalition to Stop Internet Gambling
- March 20, 2014: Draft bill written by Adelson’s lobbyist circulated through Congress—on March 26, Sen. Lindsey Graham (R-S.C.) and Rep. Jason Chaffetz (R-Utah) officially introduce the Restoration of America’s Wire Act (S. 2159, H.R. 4301)