Verizon and the Cable Industry Could Destroy the Internet as You Know It

Verizon and the Cable Industry Could Destroy the Internet as You Know ItGuest blogger Art Brodsky, Communications Director of publicknowledge.org, writes:

When AT&T last year tried to take over T-Mobile, the threats to smartphone users were fairly obvious. The second-largest company in the country was trying to eliminate a competitor and consolidate its power. Lots of people saw the danger and got angry. The Justice Department, Capitol Hill and, remarkably, the Federal Communications Commission (FCC) saw the same threats to consumer welfare and to competition and scotched the deal.

But a funny thing happened while the AT&T-T-Mo fight was going on. No, not the solar flare of an issue with the Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA), as important and thrilling as it was. No, what happened is that on December 2nd, Verizon and the biggest cable companies made their own filing with the FCC which was, in its way, just as dangerous as that AT&T move, but much more subtle.

Verizon snuck under the radar for a while, but with the AT&T deal and SOPA/PIPA out of the way, the deal is now getting the spotlight it deserves. Here’s the deal. Verizon will pay $3.6 billion for spectrum that the largest cable companies, Comcast, Time Warner, and Bright House bought 10 years ago for $1 billion less. At the time, the cable companies said they wanted to get into the wireless business, but then decided not to. The spectrum Verizon will get from the cable companies will only pad its holdings as the biggest wireless company with the most spectrum. If this part of the deal goes through, the potential for more wireless competition from some big companies goes away.

At the same time, Verizon and the big cable companies worked out some side deals. The details are still confidential, but the outlines go like this: Verizon wireless will agree to sell cable high-speed Internet landline services, and the cable companies will sell Verizon’s wireless service. Also, all the companies will get together in something called a Joint Operating Entity (JOE) to develop new technology for a cable/wireless interface, and for other products or processes.

The basic outline is clear. Verizon and the cable industry (Cox later joined in the club) are dividing up the Internet access world. For the most part, cable gets the landline business. Verizon will still offer its fiber optic FiOS service, but stopped the build-out and is concentrating on selling to the customers it already passes. Verizon reported that five million subscribers are now getting the service. FiOS passes about 18 million homes — about half of Verizon’s landline service territory.

But if a consumer wanders into a Verizon wireless store — and there are many around the country — the push will be to buy the local cable company’s broadband product (not the normal Verizon landline if the store is within Verizon’s landline territory). In fact, Verizon is pulling back from the old Digital Subscriber Line (DSL) service, which goes over the normal copper network. The company just announced that anyone wanting to buy DSL will also have to buy regular phone service — no standalone DSL for you. That should serve to drive people away from both fairly quickly. When someone subscribes to cable, they will get the pitch for Verizon Wireless. Nice, huh?

Verizon has removed a potential wireless competitor — the cable companies — and will consolidate its hold on the business as the company with the most spectrum and biggest customer base. Verizon is trying all sorts of tricks to win regulatory approval, including offering to sell off some of its spectrum. Don’t be fooled. It’s all smoke and mirrors, in part because whenever AT&T or Verizon sell spectrum as part of a larger deal, it usually turns out that each buys the other’s leftovers, starving Sprint and the newly freed (from the clutches of AT&T) T-Mobile.

It wasn’t supposed to turn out this way. In 1996, Congress approved a far-reaching bill that set cable and telephone companies against each other. The hope at the time was that consumers would benefit from having two huge industries each competing for consumer dollars for phone, data, and video.

Over the years, however, industries have found it easier to collude than to compete. This deal, if approved, would create a new telecom cartel that would have consumers at its mercy. That’s why my group, Public Knowledge, along with Media Access Project, New America Foundation Open Technology Initiative, Benton Foundation, Access Humboldt, Center for Rural Strategies, Future of Music Coalition, National Consumer Law Center, on behalf of its low-income clients, and Writers Guild of America, West filed with the FCC to block the deal.

It’s known as Docket 12-4 at the FCC, if you’re keeping score at home.

This was the short story. But here’s a much longer explanation if you’re interested.

One analyst has said the Verizon/cable deal changes the telecom industry as we know it. He’s right. If this goes through, it would grant more power to the powerful, solidifying industry positions and putting consumers behind a big, giant eight ball. It’s time to tell the FCC and your members of Congress to make sure this doesn’t go through.

It’s a shame we have to go through this drill again. It wasn’t our choice to pick another fight. The only problem is that big industry never, ever quits in its quest for domination.

CC licensed Flickr photo by openfly

Article Written by

Guest Blogger is from all sorts of different times and places. Guest Blogger is usually less mysterious than James Bond, but often more mysterious than Austin Powers. Guest Blogger has a knowledge base that is as vast as space, and as timeless as infinity. Guest Blogger is sometimes me, and Guest Blogger is sometimes you.

  • johnwerneken

    deja vu all over again. When three or more business people gather, a conspiracy against the public interest inevitably results. This was said centuries ago….

    • Jschnfl32

       greed …greed ….greed

    • Zach

      It bears repeating.

  • http://profiles.google.com/rysliv ryan haz

    more are starting to upload more videos and becoming youtubers, give us more upload speed..

  • Kyle Polansky

    I hope Verizon is able to improve it’s fiber network even more. Just 2 nights ago I had an internet outage for about 30 minutes. I was going insane trying to get a signal, thinking it was a hardware malfunction at my end, until some of my neighbors reported the same issue. I have had lots of connection issues with FIOS, I’m already on my 3rd router that Verizon has sent me, because of our connection not working. Overall, I’m pretty happy with the speeds, about 25-30 Mb/s Down/Up. However, Google Fiber would be even better at 1Gb/s.

    I don’t own a mobile phone, because I don’t agree with Verizon’s mobile packages. They want to charge about the same price per month for a mobile package, as my home fiber costs. However, the huge deal breaker is that you are limited to only 10GB a month. Plus, mobile speeds are no where near as fast as my fiber. Sure, mobile phones probably don’t use more than a TB of data each month like my residential connection, but I shouldn’t be charged over $10,200 per month for 1TB of data. What’s even worse is that with a 3G hotspot costs the same $80 per month, but you are limited to only 5GB. Chances are you would use a hotspot more anyways, because you usually use laptop computers with it.

    In my personal opinion, Verizon is trying to break the internet, or just take advantage of their customers. There’s no reasons why there should be such low limits on mobile data. In order for the internet to thrive, these limits need to be removed. Google has a great concept with ChromeOS, but without mobile data, it’s a lot less useful, and data prices are more expensive than the actual hardware.

    What Verizon should do, is offer reasonable prices, per person or family, for all the Verizon internet they want. This would include, a static IP residential IP, with unlimited data for home, mobile, hotspot, public wifi, and anywhere else that verizon offers service. The static IP would help prevent against IP ban evasion, and allow easier DNS configurations to residential IPs. Along with the unlimited data, it shouldn’t be throttled, to an extent. I understand Verizon would probably need to upgrade it’s routing backbone to handle 1Gb/s speed at every connection, but for example at night time hours when Verizon doesn’t have much traffic, why throttle the connection? Same thing with mobile, there shouldn’t be a reason to throttle people if they use more data than you want them to. I think if Verizon had a plan like this, and priced it at around $100 per person a month, or like $250 per month for a family, they would have the power to pretty much kill (in a good way) the internet industry. Sure people might complain that the prices are a bit high, but anyone that has hit a data cap or waited for a slow connection would probably agree with me. No more data caps and no worries of un-necessary throttling. I think the best ISP is the one that gives customers what they really want, not just the one that overcharges so much that they buy out the competition.

  • Arg2you

    Remember when they said our cable bills would decrease a few years ago? I have not seen it happen- not only have I not seen it  happen but they increased again three months ago- I have comcast as my service provider for the internet- I do not have TV thank goodness for Hulu and Crackle or we would go without- I pay 25. dollars more than those whom have phone service for my internet but I dont want the phone service through Att or comcast or verizion- or T mobile- or cricket .. I have boost and have had boost for about three years or so give or take and if I cant afford it I can call them and shut it down without a fee- I like that. I am not surprised by this deal nor am I surprised by anything a lot of these companies are doing now days- I rarely trust any of them nor do I really like them much. I do like that they have to compete against each other for business, its the only way we get deals- I thought there was a law aganist monopoly’s but I was wrong. Look at the new papers or the news we get- The only reason I get the local paper is some chick talked me into it even after I told her it was slanted and opinionated and never really the facts, some of its true but for the most part its all just some ones opinion-
    I hope this deal does not go through however with the goverment having issues of its own, like how to pay for the programs it has in place while providing help to other nations, while figuring out the economy and the gas situtaion not to mention north korea and iran while china watches and other eastern countries attempt to control the extremiest in their corners- well, I guess that means its up to the nine people whom read this..

  • http://twitter.com/jwisetio J Wise

    smh

  • johnwerneken

    It’s not a sin to seek profit…profit just means
    that on the whole what you did won approval, and produced more value than it consumed.
    Good things. The conspiracy comment is sarcastic, both in the original and on
    repetition. Seeking enough information to make prifit likely is a natural
    business activity. Unfortunately business people are not morally perfect and if
    left to themselves are likely to arrange things for their mutual benefit, even
    as doing so betrays all the principled support of competition free markers etc.
    One thing government is needed for is restraint of monopolies.

    • http://beorh.wordpress.com/ Scáth Beorh

      ‘We’re Beatrice.’