AT&T beats T-Mobile in latest J.D. Power network quality rankings

J.D. Power released a report on Thursday looking at which of the big four major U.S. carriers provide cellular service with the fewest lost calls, slow downloads, failed texts and other common issues.

As usual, the survey says Verizon has the highest mobile network quality. Verizon’s network had the fewest connection problems among the big four carriers in all six geographical regions that J.D. Power looks at. AT&T came in second place, taking the runner-up spot in all six regions.

Last year, T-Mobile started to take the second-place slot from AT&T in areas such as the Northeast and West. This year, though, AT&T reclaimed it in those regions. One way to explain that: Last summer, when the previous report came out, T-Mobile had been in the process of building a massive network expansion. However, T-Mobile’s been adding millions of subscribers since then, and the reduced network quality could be because its network is starting to show signs of saturation.

JD Power Northeast 2015 Q1

In the northeast region, for instance, Verizon subscribers can expect to see 11 problems per 100 connections; AT&T subscribers will see 13 problems per 100 connections; and T-Mobile lags behind with 16 problems per 100 connections. Last summer’s J.D. Power report suggested that T-Mobile only had 12, and AT&T had 14. Verizon stayed steady with 11 problems per 100 mobile interactions.

In the other five regions, the situation is similar. Verizon even improved its mid-Atlantic performance to take the top spot back from AT&T there. Overall, there have been more issues with network quality in the past six months than before. Out of every 100 network connection, across all four carriers, there is a problem with 13 of them. Last year saw an average of 12 issues per 100 connections.

Network quality isn’t the be-all and end-all for carriers, though. J.D. Power administers surveys looking at customer service as well, and T-Mobile came out on top of that last summer.

Charts for all six regions are available from J.D. Power.

Net Neutrality day is here: a guide to today’s vote

What is the right way to run the internet? After months of pitched debate over so-called net neutrality, the FCC will finally vote on a proposal that will prevent broadband providers from slowing down or speeding up certain websites.

While there’s little doubt about the outcome of the vote, Thursday’s FCC hearing could still bring some surprises. Here’s an overview of how the process will unfold, key issues to watch, and what will happen next.

When is the vote taking place?

The hearing begins at 10:30am ET at the FCC in Washington, where the five Commissioners will vote on two items. The net neutrality proposal is the second item (the first is about municipal broadband – update: which has passed 3-2), and a vote is expected to occur in the early afternoon.

What are they voting on?

The crux of the proposal is new regulations that will replace the net neutrality rules that a court struck down in early 2014. The new rules themselves (contrary to recent rhetoric) are rumored to be 8 pages long and, under FCC convention, are an appendix to a larger document that contains the Commissioners’ positions.

The FCC staff will summarize the key parts of the new rules, but the document itself is not likely to be available to the public for several weeks. This is due to agency protocol, which gives the Commissioners time to add final comments (though the substance of the rules will not change between now and when they appear).

How exactly does the vote take place, and what will be the outcome?

After the staff summaries, each of the five Commissioner will offer their comments in order of seniority. Republican Commissioner Ajit Pai, who has been an outspoken critic, is expected to speak for an hour so this could take some time. They will then take a vote, and hold a press conference.

The outcome will be a 3-2 vote on partisan lines, with the two Democratic Commissioners siding with Chairman Tom Wheeler. (Update: that’s exactly what happened)

What are the key things to watch?

While the outcome of the vote is a sure thing, some key details of the proposal are still unknown. The most high profile of these concerns what the FCC will do about so-called interconnection, and what the rules will do to prevent ISPs from forcing sites like Netflix to pay a toll in return for not having their streams degraded.

There is also the issue of “zero rating,” which is when phone and companies exclude certain apps or services (such as music) from a customer’s monthly data cap. While this violates the general principle of net neutrality, Chairman Wheeler has yet to explain how strictly the new rules will prevent this. (Read my colleague Stacey Higginbottam’s excellent overview of potential loopholes here).

Finally, since much of the recent net neutrality debate has been about theater, it will be worth watching to see how far Commissioner Pai (who has been waging a nasty political and social media campaign against Wheeler) will go to stir the pot during the hearing.

So will the new net neutrality rules go into effect right away?

No. According to Harold Feld of Public Knowledge, the rules only go into effect 30 days after they appear in the Federal Register, which could take a few weeks.

Will there be lawsuits?

Yes, buckets of them. Expect big telecom companies like Verizon or AT&T to sue in the coming weeks. Meanwhile, it’s possible that activist groups on both the right and the left may bring suits of their own.

What will be the effect of the lawsuits?

Feld says, in the event of multiple lawsuits, the first order of business will be for various appeals courts to decide which of them will take the case. After that, the telecom companies are likely to receive a brief stay of the rules until they can file their first round of arguments. At that point, the stay will likely be lifted while the court hears the case.

The court cases are likely to kick off in March or April, and a ruling on whether the new FCC plan is legal will probably come in late 2015 or early 2016. In the meantime, the net neutrality rules will be in effect.

I just can’t get enough of this stuff! Where can I learn more?

Gigaom will have updates on the days proceedings through Thursday. The FCC will have a live stream here (if the internet holds up!).

I’ll be tweeting about it here. Other Twitter accounts to watch are those of Gigi Sohn (FCC lawyer), Commissioner Pai, Public Knowledge’s Feld and Professor Tim Wu (who coined “net neutrality” in the first place).

For political flavor: The New York Times has opined on the FCC’s “wise new rules” here while the Wall Street Journal, on the other hand, hates everything about the FCC (paywall).

This story was corrected at 10:05am to note the court decision was in 2014, not 2013.

Tech and media firms join Twitter in key test of FBI gag orders

A bitter fight between the Justice Department and Silicon Valley is expanding as a diverse group of companies have lined up behind Twitter in a case that will help determine the limits of free speech in the age of Edward Snowden.

On Tuesday, groups ranging from BuzzFeed to Wikipedia to the Guardian filed friend-of-the-court briefs (see below) to support a challenge by Twitter to Patriot Act gag orders. Two other large companies, which are only allowed to refer to themselves as “Corporations 1 & 2,” also filed briefs.

The case, which began when Twitter sued the Justice Department in October, turns on how companies may use so-called “transparency reports” to tell users about government requests for their data.

Twitter claims it has a right under the First Amendment to say specifically how often it receives National Security Letters, while the government counters that companies can only do so in broad strokes lest they jeopardize national security.

In recent years, the FBI has made extensive use of National Security Letters to obtain information about subscribers, while also attaching gag orders to the letters that forbid companies from revealing they have even received a letter in the first place. The Justice Department has issued hundreds or thousands of such letters to companies like Google, Facebook and AT&T.

In its lawsuit, Twitter claims it is an illegal prior restraint of free speech for the government to bar companies from even disclosing that they have received a letter. A group of media companies has now voiced support for that argument:

“Twitter’s proposed transparency report is no less entitled to free speech protections than ‘literature’ or ‘movies,'” said the brief filed on behalf of BuzzFeed, NPR, the Washington Post, PEN America, the Guardian and First Look Media.

The brief reflects the media’s newfound legal interest into what has largely been a tech industry fight, but also shows how digital media companies like BuzzFeed are finally taking up the legal fight for free speech, a burden that has long been borne almost entirely by old-line newspaper companies.

“Corporations 1 & 2”

Meanwhile, a separate filing shows that a phone and internet company are also weighing in on the Twitter case, but in the guise of “Corporations 1 & 2.” The companies (which are likely Verizon and Google or Yahoo) are using the pseudonyms at the direction of a judge, and are muzzled in part because they are already before an appeals court in another national security case over the right to disclose government demands.

The right of internet companies to discuss security letters has become more pressing since 2013 , when leaked documents from Edward Snowden revealed massive surveillance operations by the U.S. government. Those operations rely on obtaining information from tech and phone companies, and have been facilitated by the legal process governing Patriot Act letters, as well as a related process for NSA demands.

In response, companies like Twitter have come to claim that free speech and the public interest give them the freedom to disclose how many NSA and FBI letters they receive in the first place. The companies stress they are not arguing for the right to disclose the contents of the letters, since doing so could jeopardize ongoing investigations, but only the existence of the letters.

The docket also shows that a group of other entities  — the Wikimedia Foundation, CloudFlare, Sonic, Wickr, Credo Mobile and Automattic (publisher of WordPress.com) — filed a brief in support of Twitter.

Here’s a copy of the media companies’ filing with some of the key parts underlined. Note that a key part of the argument turns on whether the federal judge has authority to hear the case in the first place (as the companies argue) or if the case belongs instead in a controversial secret court (as the Justice Department claims).

Media Amicus in Twitter Case

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This article was updated at 12:35pm ET to note that Automatic is the publisher of WordPress.com; an earlier version said “WordPress” (which refers to the software used by the company, WordPress.com). This article was also updated at 1:40pm on Thursday to clarify that it was the Wikimedia Foundation (not Wikipedia) that was on the amicus brief.

AT&T charges $29 for privacy. Time for others to do the same

AT&T just rolled out blazing fast fiber-to-home internet service in Kansas City for $70 a month. But there’s a catch: customers who don’t want the telecom giant spying on their web surfing will have to pay an extra $29.

This is the same pay-for-privacy bargain that AT&T, which is competing with Google Fiber, first offered in Austin, Texas late in 2013. In marketing speak, the company explains that customers will get a better price if they offer up access to their data for use in internet advertising:

“When you select AT&T Internet Preferences, we can offer you our best pricing best pricing on GigaPower because you let us use your individual Web browsing information, like the search terms you enter and the web pages you visit, to tailor ads and offers to your interests.”

For consumers, there’s a lot to think about on both sides of the bargain. On one hand, at nearly $350 a year, the privacy option sure isn’t cheap.

But on the other hand, the discount requires consumers to give up a lot of data. Unlike with other ISPs, customers can’t thwart AT&T ‘s data collection through cookie settings or private browsing since the company is drawing the data right from their fiber connection. (To read more about the prospect of deep packet inspection and other technical aspects, see my colleague Stacey Higginbotham’s post from 2013).

There’s also the question of whether such a bargain should even exist. Is it really fair for AT&T to force consumers to make a deal-with-the-data-devil in the first place?

The answer is yes. While the choice between money and privacy appears stark, the internet has always worked this way. Google, Facebook and others have become giants by giving users a “free” service that, in reality, requires them to pay with their personal information instead.

All AT&T is doing is making the choice explicit, even as it runs the risk of stirring up outrage over making people pay for privacy.

In the future, let’s hope more companies start doing the same. I’ve long argued that it’s time for Facebook to start offering a paid option for its service that would give users more control of the service; I would gladly pay $5 a month or more to be free of the company’s smarmy “privacy check-ups” that purport to offer privacy, but that offer no opportunity to buy privacy from Facebook itself.

At a time when President Obama is contemplating new powers for the Federal Trade Commission to address the misuse of consumer data, it’s high time to consider pay-for-privacy as one of the solutions.

In the meantime, it’s unlikely many people are forking over an extra $29 for AT&T’s opt-out option. But at least the company has made it plain how the game works.

How net neutrality rules can fix Verizon’s supercookie problem

The FCC is on the cusp of proposing new rules for the internet, and it may have a chance to kill two birds with one stone: along with preserving so-called “net neutrality,” the rules could serve to stop the use of “supercookies” that phone carriers like Verizon are using to track their wireless subscribers.

In case you’re unfamiliar, supercookies are akin to regular internet cookies, which advertisers use to create a record of users’ browser activities. The difference is that the supercookies are tied to a users’ mobile device at a network level, and create a permanent customer profile that can’t be deleted. The profiling process not only tracks web browsing, but also app activities, and it can’t be thwarted by using a browser’s “private” or “incognito” mode.

Carriers like Verizon use the supercookies to assemble marketing segments such as “low-income Spanish-speaking moms in the Bronx” (for instance), and offer them to advertisers. While this profiling feature can be a boon to marketers, it has also alarmed privacy advocates, who say supercookies are invasive and point out they are being abused by outside ad companies.

After an outcry, phone giant AT&T said in November that it would stop using supercookies. Its rival Verizon, however, has so far rebuffed calls to cease using the tool, known in the industry as unique ID headers, to tag and track users.

Verizon, which declined to comment for this story, has presumably calculated that the value of the marketing data from supercookies outweighs whatever privacy headaches they create. Most consumers, meanwhile, don’t know or care about cookies in the first place, so it’s unlikely that Verizon will suffer any sort of customer exodus.

Enter Title II

Verizon’s support for supercookies could one day lead to class-action lawsuits, as some have suggested. But in the meantime, the FCC may soon be in position to address the privacy implications of what the company is doing.

The opportunity comes about as a result of the current net neutrality debate, which is widely expected to result in the FCC reclassifying internet providers as so-called “Title II” companies.

The Title II designation is the only legal avenue the agency can use to stop broadband companies from favoring some websites over others, but it also contains important authority for the FCC to protect privacy.

“The critical provision is Section 222, which concerns customers’ proprietary network information,” said Harold Feld, a lawyer and telecom expert with the group, Public Knowledge, in a recent phone interview.

Section 222 is one of a list of rules that Title II imposes on phone companies and other “common carriers,” and serves to restrict companies from using customer communications data for marketing purposes.

According to Feld, however, it’s not certain that the FCC would include Section 222 as part of any reclassification process. Chairman Tom Wheeler has suggested that any action under Title II would include so-called forbearance measures, which could excuse the companies from many of the new obligations.

Feld suggested that if the FCC does choose to implement Title II without Section 222, it could fall back on the more general provision known as Section 201, which requires carriers among other things to act in the “public interest.”

The outcome of the final net neutrality debate, slated for a likely FCC vote on February 26, is far from certain. But the emergence of the supercookie issue could provide another argument for net neutrality supporters to urge the FCC to go-ahead with reclassification.

T-Mobile will pay $90M over bogus charges on customer bills

The FCC on Friday announced a $90 million settlement with T-Mobile, making it the latest phone carrier to pay a penalty for “cramming,” which involves adding unauthorized charges to customers’ bills for subscriptions or “premium” text message services.

Under the terms of the settlement, T-Mobile will pay at least $67.5 million to fund a program for consumer refunds, plus another $18 million to state governments and $4.5 million to the U.S. Treasury.

“Yet again we are faced with a phone company that profited while its customers were fleeced by third parties who placed unauthorized charges on their phone bills,” said Travis LeBlanc, Chief of the FCC’s Enforcement Bureau.  “And once again the FCC is standing up for those customers.  Today’s settlement holds T-Mobile responsible for its billing practices and puts money directly back into the pockets of American consumers.”

The FCC’s press release says current and former T-Mobile customers can apply for refunds at www.tmobilerefund.com, though the website doesn’t appear to be working yet. Once it is up and running, it is likely to mirror a similar site where consumers who were bilked by AT&T over cramming can fill out a claim.

The T-Mobile news comes day after news that Sprint reached a similar cramming settlement with the U.S. Consumer Financial Protection Bureau.

In all the cramming cases, consumers were typically charged $9.99 from third parties such as astrologers or celebrity news sites, often without their consent. According to the FCC, the phone carriers, which earned a cut of the proceeds, effectively looked the other way and continued imposing the charges even though they should have known they were not legitimate.

Netflix wants to hook up with your cable company in 2015

Netflix’s new strategy to take on cable involves becoming best friends with cable: The video streaming service has been working hard to get its app included on set-top boxes of cable, fiber and satellite TV operators, and has been looking to strike deals with major U.S. operators. These deals could not only greatly expand Netflix’s potential audience, but also change how the company deals with both consumers and operators.

Internally, partnerships with TV operators are seen as the next big step for the company. Earlier this year, a Netflix job offer put it this way:

“After having Netflix integrated on every relevant TV, Blu-Ray Player, Streaming Box, and Streaming Stick our new frontier is now cable boxes. We want to reach our current and future members on devices they use most frequently to watch linear TV, cable, and satellite set top boxes. (…) Our mad dash to integrate Netflix into all devices was just the start, now things start to get interesting…”

[company]Netflix[/company] struck deals with a few smaller U.S. cable operators earlier this year, including [company]Suddenlink[/company] and [company]RCN[/company], which all use TiVo’s DVR as their standard set-top box. However, [company]TiVo[/company]-based pay TV boxes are in less than two million U.S. households, according to numbers disclosed in some of the company’s recent financial filings. Roughly 90 million U.S. households subscribe to cable or other forms of pay TV, and more than 73 million subscribe to the biggest five operators alone. That’s why Netflix has been working hard to team up with one of these major operators.

I’ve been told by sources with knowledge of the company’s plans that it is getting closer to finalize and announce a deal with at least one of these major operators. One source told me that an announcement may come as early as early next year, but others have cautioned that an actual deal may not be announced until much later. One of the names that kept coming up in chatter about Netflix’s plans was AT&T, but other alliances are also possible.

Who is Netflix going to partner with?

With around six million subscribers, AT&T currently ranks fifth in the list of the country’s biggest TV service operators. It’s much smaller than Comcast, which has more than 22 million TV subscribers, but it aims to become number two by combining with DirecTV, which it intends to buy for a whopping $48.5 billion.

AT&T has been more progressive than other operators with regards to online video, launching a joint venture called Otter Media with the Chernin Group that is investing in and developing niche video services. But for Netflix, there is another reason to team up with AT&T: The company uses Ericsson’s Mediaroom set-top boxes, which are also being used by Germany’s Deutsche Telekom for its Entertain pay TV service.

Netflix has already built a version of its app for this hardware, and Entertain subscribers have been able to access the app through their set-top boxes since October. That’s an important detail: Netflix likes to custom-build apps for the chipsets of devices on which it is running on to optimize speed and performance. Adapting the app it built for Deutsche Telekom to run on AT&T’s TV boxes should be easy for the company.

But AT&T isn’t the only possible candidate. I’ve heard from industry sources that Netflix has approached a number of U.S. pay TV operators for similar deals. Some of these negotiations have apparently been tied to talks about peering and caching Netflix traffic. Netflix agreed in recent months to pay Comcast, Verizon, Time Warner Cable and AT&T for peering despite publicly insisting that it shouldn’t have to do so; I’ve been told that similar discussions with operators in Europe ended with “broad agreements” that included both peering and set-top box carriage.

Netflix becomes part of your cable bill

Publicly, operators have been all over the map on partnerships with Netflix. Comcast has been the most conservative company, despite having developed a next-generation set-top box that could easily include Netflix’s app. In fact, Comcast’s proposed takeover of Time Warner Cable reportedly killed a partnership between Netflix and Time Warner Cable. Verizon on the other hand has been a lot more Netflix-friendly in recent months, to the point where it even offers new subscribers of its FIOS TV service 12 months of free Netflix as part of a promotional deal.

Pay TV operators have in the past shied away from including Netflix on their set-top boxes because they saw it as a direct competition to some of their core business, which includes reselling premium cable channels like HBO and Showtime.

However, I’ve been told by multiple sources that Netflix may be willing to sweeten the deal for cable companies by using financial incentives, which could include a monthly cut out of the company’s subscription fees. Up until now, Netflix has only paid consumer electronics manufacturers a one-time bounty for helping to sign up new customers, but no recurring fees. In exchange, operators may include Netflix subscription fees in their monthly cable bill. Netflix recently pioneered these kinds of billing relationships in the U.K., but could bring them to the U.S. as well.

Like a cable channel, with some key differences

Netflix executives have long said that they want to become more like HBO. These remarks have generally been seen in the context of Netflix’s original programming initiatives, but Netflix’s attempts to get onto the set-top boxes of major operators show that there is a lot more to this strategy. Netflix executives have realized that there are millions of consumers out there who won’t buy a Roku or Chromecast any time soon and feel most comfortable with the set-top box that’s already in their living room.

That’s why the company wants to be on those boxes; not just an app hidden in the menus most people never access, but right in the channel grid, next to properties like Showtime and HBO. Add a billing relationship to the mix, and subscribing to and watching Netflix may just become as easy as changing the channel to HBO, even for people who are not internet-savvy.

However, even with Netflix cozying up to cable, it wants to maintain one key difference to traditional cable channels: The company still is going to maintain the customer relationship. Consumers will be able to cancel their Netflix subscription any time on the Netflix website, and won’t be locked in to big bundles with two-year contracts.

In other words: Netflix wants to be on your cable box you’ve learned to live with, but not part of the cable bundle you hate so much.

Amazon’s Fire Phone is now cheap: $199 without a contract

The fire sale of the Fire Phone, Amazon’s first smartphone, continues. On Tuesday night Amazon quietly cut the price again, this time bringing the entry-level 32GB model down to $199. That’s for an unlocked phone without a contract.

$41B auction shows net neutrality is no threat to investment

When President Obama called for net neutrality this month, AT&T said the sky would fall. It warned that a policy banning internet providers from giving special treatment to some websites over others would lead companies to stop investing in new network capacity. So much for that.