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FCC Hammers Comcast For Deception and Unreasonable Internet Practices

WASHINGTON, August 1 – The Federal Communication Commission’s enforcement action against Comcast can be seen either as a limited response to a company’s deceptive practices, or a sweeping new venture by the agency into regulating internet policy.

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WASHINGTON, August 1 – The Federal Communication Commission’s enforcement action against Comcast can be seen either as a limited response to a company’s deceptive practices, or a sweeping new venture by the agency into regulating internet policy.

In ruling against Comcast on Friday, the agency ordered the company to “disclose the details of its discriminatory network management practices,” “submit a compliance plan” to end those practices by year-end, and “disclose to customers and the [FCC] the network management practices that will replace current practices.”

At issue in the decision was whether Comcast had engaged in “reasonable network management” practices when it delayed and effetively blocked access to users of BitTorrent, a peer-to-peer software program.

Although BitTorrent had already settled its complaints with Comcast, FCC Chairman Kevin Martin said that FCC action was necessary because the complaint had been brought by Free Press and Public Knowledge, two non-profit groups. The FCC did not impose a fine.

Martin said that he viewed the agency’s decision to punish the cable operator as a quasi-judicial matter: a “fact-intensive inquiry” against a specific company that it found to have “selectively block[ed]” peer-to-peer traffic.

That interpretation would make the FCC action more limited. A statement by AT&T Senior Vice President Jim Cicconi – that “the FCC decided to handle the matter on its own unique facts, setting a wise precedent for dealing with such complaints on a case-by-case basis” — supported that interpretation.

On the other hand, Martin acknowledged that the order against Comcast did set a precedent for future action against other network operators. And he said that the agency had authority to hear and resolve any such complaints of network neutrality violations.

Net neutrality generally refers to legislation or regulation that would bar Bell companies and cable operators from expediting the internet delivery of favored business partners’ content – or blocking the content of rivals. The issue has become a political hot potato in the general election.

The ability for the FCC to become the venue for such future complaints would suggest a more sweeping interpretation of the action. On a Friday conference call, pro-Net neutrality advocates pushed that view, calling it a “bellweather case” and or, as Public Knowledge President Gigi Sohn said, “a landmark decision.”

A Net neutrality critic at the Progress and Freedom Foundation (PFF), a free-market think tank, called the decision “quite intrusive.”

In asserting that it had jurisdiction over Comcast and its practices, the FCC declared that it will “exercise its authority to oversee federal Internet policy in adjudicating this and other disputes regarding discriminatory network management practices.”

“In second-guessing reasonable network management techniques (with no notice or guidelines in place) that benefit the overwhelming number of broadband subscribers in America, the FCC has inexplicably elevated the interests of a few bandwidth hogs over everyone else,” said Klye McSlarrow, CEO of the National Cable and Telecommunications Association.

In a statement, a Comcast spokeswoman said the company was grateful that the commission did not impose a fine, but raised “significant due process concerns” with the decision.

The Republican Martin teamed up with the commission’s two Democrats in favoring an order against Comcast. The other two Republicans dissented, and signaled the concern that the FCC would become a forum for technical engineering disputes that it was not competent to resolve.

All three Republicans, including the dissenting Deborah Taylor Tate and Robert McDowell, emphasized the need for greater transparency about network and speed tier management by carriers.

“I must also stress the importance of disclosure and transparency by all internet providers,” said Tate. “Consumers must be able to know what they are paying for and getting. Comcast must do better.”

Of the two ways to look at the decision — sweeping or limited — Martin’s own statements emphasized the narrower reading of the FCC’s action. He and the agency emphasized consumer-focused concerns raised by Comcast’s behavior.

“Would you be OK with the post office opening your mail, deciding they didn’t want to bother delivering it, and hiding that fact by sending it back to your stamped ‘address unknown – return to sender?’” Martin asked. “That is exactly what Comcast was doing with their subscribers’ internet traffic.”

The six “findings” articulated by the Friday speech at the agency dealt extensively with the allegedly invasive, intrusive and deceptive aspects of Comcast’s “deep packet inspection.” (See findings here.)

The fact that no fine was levied against Comcast was a sign, Martin said in an interview, of the agency’s cautious approach.

Martin also argued that the FCC’s action was necessary to forstall legislation requiring Net neutrality. “Failure to act here” — in a case where Comcast has exhibited so much bad faith, Martin said — “would have reasonably led to the conclusion that new legislation and rules are necessary.”

Attempting to further restrict the scope of the decision, Martin said that the order does not address pricing, economic regulation, the requirement that carriers share their communications wires, or whether or not carriers may prioritize a particular class of software.

For example, cable operators could prioritize internet telephone service, so long as they didn’t discriminate against a competitor’s service at their expense of their own service.

By contrast, the pro- and anti-Net neutrality advocates emphasized the more seminal aspects of Friday’s decision.

“This is the Bush administration FCC saying that the FCC has the power to protect internet users,” said Public Knowledge’s Sohn, calling it “the most significant decision for the public interest” in 20 years.

Marvin Ammori, general counsel at Free Press, called the decision “bellwether case legally” because the FCC ordered Comcast not only to stop its deceptive practices, but to stop its unreasonable practices, he said.

“It is sweeping in that it is a process and a procedure that [the FCC] will follow” in future cases, he said.

Barbara Esbin, senior fellow at PFF, agreed that the decision was sweeping, but disagreed that it was a good outcome. “If the commission is correct, they have taken a very small step in a narrowly focused case against one operator,” she said.

“I don’t agree,” Esbin continued. “I think this is quite intrusive, and will create an unacceptable degree of uncertainty among companies and network engineers as to what is and is not permissible, and will require the FCC to continually make decisions on engineering practices in real time.”

Documents and Articles Referenced by this Article:

Drew Clark is the Editor and Publisher of BroadbandBreakfast.com and a nationally-respected telecommunications attorney at The CommLaw Group. He has closely tracked the trends in and mechanics of digital infrastructure for 20 years, and has helped fiber-based and fixed wireless providers navigate coverage, identify markets, broker infrastructure, and operate in the public right of way. The articles and posts on Broadband Breakfast and affiliated social media, including the BroadbandCensus Twitter feed, are not legal advice or legal services, do not constitute the creation of an attorney-client privilege, and represent the views of their respective authors.

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Steve Lacoff: A New Standard for the ‘Cloudification’ of Communications Services

The cloudification of communications services makes it easy to include voice, data, SMS, and video within any existing service.

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The author of this Expert Opinion is Steve Lacoff, general manager of Avalara for communications

The line of demarcation between what has traditionally been considered a telecommunications service was once very clear. It was tangible – there were wires, end points, towers, switches, facilities. Essentially, there was infrastructure required to relay voice or data from point A to point B.

Today that line is fuzzy, if not invisible. The legacy infrastructure remains, but an industry of cloud-based services that don’t require the physical connections has exploded. Voice, data, SMS, and video conferencing can now be conveniently delivered OTT. Enabled by simple API integrations, businesses can embed just one of these services or a complete communications platform-as-a-service (CPaaS) into an app, service, or product.

Cloudification is a game changer

This “cloudification” of communications services makes it easy to include voice, data, SMS, and video within any existing application, product, or service. These are essential components for many business models.

Consider these services we have come to rely on in our daily lives: food or grocery delivery, ride services, and business and personal communications. These require multiple methods of communication with shoppers, drivers, co-workers, watch party groups, and external business partners.

The exciting news is there is no end in sight. Use cases will continue to evolve and growth will continue to skyrocket. The scale cloud delivery accommodates is massive. These untethered, easy to embed communications services are a critical differentiator for both business-to-business and business-to-consumer buyers, and the lifeblood of the businesses providing both the end user subscriptions and the APIs.

In fact, one industry juggernaut saw H1 YoY video application service demand grow nearly 600% in 2020.

Not surprisingly, as business demand for these services increases smaller CPaaS players continue to enter the market to quickly snag market share. According to a recent IDC study, “the global market revenue for CPaaS reached $5.9bn in 2020, up from $4.26bn in 2019, and is expected to reach $17.71bn by 2024.”

Merger and acquisition activity is aligned with this hockey stick growth forecast. Large telcos, SaaS providers, and even other CPaaS providers are all on the hunt. Whether they want to add additional features to punch up their products or eliminate the competition in a very tight, nuanced market, the end game is clear – as the market expands, the players will ultimately contract leaving only the most competitive offerings.

Don’t let communications tax take you by surprise

One of the least understood risks when adding cloud-based voice, data, SMS, or video conferencing to an existing product or service is new eligibility for and exposure to the complex world of communications taxation. Making mistakes can get costly very quickly.

Here are some of the key pitfalls to keep an eye on:

  • Expanded nexus: Understanding communications tax nexus is different – and exceptionally more complicated – than sales tax. There are approximately 60,000 federal, state, local, and special taxing jurisdictions, each with uniquely complex rules that tend to change at their own pace. Rules are very different for each service.
  • More complex calculations: The more communications services you provide via API, the more complicated communications taxes will be. Each feature can be taxed at different rates in each individual jurisdiction, or the whole bundle can be taxed at one rate. It’s critical to monitor monthly to avoid audit issues.
  • Maintaining overall compliance: Just as tax rates and rules need to be maintained, so must tax and regulatory filing forms in each jurisdiction. Some of these are very long and require significant detail.  They must be filed in a timely, accurate cadence to avoid additional audit risk.

Bottom line: Don’t assume, be prepared! As these communications services become more pervasive a larger swath of technology providers will find themselves liable for communications tax. The more your business falls behind, the more it can cost you.

It pays to be proactive and prepared. Tax and legal advisory experts can help determine your level of risk, and tax and compliance software providers can help you keep up with changing rules and regulations. Don’t underestimate the ongoing value of networking with peers who are either struggling to answer the same questions or have already overcome the hurdles you’re facing today.

Steve Lacoff is General Manager of Avalara for Communications. With a focus on data, VoIP, and video streaming, Steve has spent 15 years in various product and marketing leadership roles in communications and technology industries, including Disney’s streaming services and Comcast technology solutions. Steve now drives business strategy on today’s changing industry landscape and associated tax impacts. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Jonathan Marashlian: The Legal Landscape Emerging for Robocalls Under the TRACED Act

The biggest risk is likely to come through enforcement actions by state attorneys general and civil litigation, says Marashlian.

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Jonathan Marashlian, Managing Partner of Marashlian & Donahue, LLC, The CommLaw Group, is the author of this Expert Opinion

Requirements for voice service providers emerging from the TRACED Act and the Federal Communications Commission orders that followed have changed the risks and threats to voice service providers.

Voice service providers have just passed some major milestones: Certifying SHAKEN and/or robocall mitigation in the FCC database and refusing calls from unregistered upstream providers. Does that mean it is time to kick back and relax?

Not at all. The legal landscape in the new STIR/SHAKEN era is much larger and more diverse than mere technical compliance with FCC requirements.

We are already seeing clear and unmistakable signs that compliance with the bare minimum requirements established by the FCC—implementing STIR/SHAKEN and robocall mitigation plan procedures—is insufficient to mitigate the myriad of business risks arising from the government onslaught against the scourge of illegal robocalling.

Reading the tea leaves, the biggest risk or threat is likely to come through enforcement actions by state attorneys general and civil litigation initiated by private parties. Wherever the legal landscape provides the opportunity to recover damages, class action plaintiff’s lawyers and attorneys for large enterprise consumers of voice services, such as call center operators, are certain to seize upon those opportunities.

‘Know your Customer’ rules come to the telecom industry

We anticipate that questions around the meaning of and extent to which the “Know Your Customer” requirements apply in different contexts will ultimately be answered through litigation and enforcement, and less so through the FCC regulatory rulemaking process. Questions around damages and who is or can be held responsible for originating, passing, or terminating illegal robocalls are also going to be fleshed out by regulatory enforcement and private litigation.

Perhaps the most significant risk, even more so than the FCC, are the federal and state consumer protection laws that are being developed around robocall mitigation. Starting with the Federal Trade Commission (FTC), where the FTC’s strict “known or should have known” standard is applied to hold voice service providers accountable for illegal robocallers using their networks.

Many service providers and telecom consultants pore over FCC regulations to try and understand the requirements. Is that sufficient? Are there other things they need to worry about?

FCC regulations are a good starting point and, telecommunications providers should stay abreast of updated regulations and releases. However, FCC regulatory compliance alone may not be enough to defend an action if provider’s face the FTC and state attorneys general’s “known or should have known” standard or the creative, evolving litigation strategy of the plaintiff’s bar.

Marriott filed a lawsuit in federal court against unknown perpetrators, “John Does,” who made illegal robocalls misusing Marriott’s name. Why would Marriott do that? What’s the point?

This is sheer speculation, but as often turns out, the actual perpetrators who harmed Marriott likely will be insolvent or outside the reach of Marriott. By using “John Does,” Marriott preserves its ability to amend its complaint to implead carriers and providers that carried or transported the fraudulent traffic.

Marriott could rely on the FTC’s “known or should have known” standard to show underlying carriers are the “John Does” that profited from bad actors (now insolvent or extra-judicial). It’s unlikely Marriott would commence this litigation without a strategy outside positive public relations for pursuing bad actions; rather, the “John Does” will likely turn out to be carriers of bad traffic who settle Marriott’s claims.

The Call Authentication Trust Anchor Working Group issued Caller ID Authentication Best Practices, which the FCC published and endorsed as voluntary measures. Then the Fourth Report and Order on Robocall Prevention mandated affirmative obligations to prevent service providers from originating robocalls. It seems like momentum is building toward holding service providers responsible for knowing their customers and the nature of their calls.

Based on recent trends, there is certainly momentum in that direction and Know Your Customer will likely continue to grow in importance. Thus, providers should ensure they have a good KYC policy in place, particularly as new risks emerge, and scrutiny grows. However, as discussed above, this appears largely driven by the FTC and state attorney general actions.

Of note, the Industry Traceback Group in July 2021 published a Policies and Procedures booklet with a best practices section. All voice service providers should review the booklet, and particularly the best practices. Accountability will keep mounting and the weakest link—the weakest KYC policy—will be the first to break, and that provider will be accountable and “holding the bag.”

Jonathan Marashlian is Managing Partner of Marashlian & Donahue, PLLC, The CommLaw Group, a full-service telecom law firm located in the Washington, D.C., area catering to businesses operating in and around the dynamic and diverse communications and information technology industries. Their clients include providers of VoIP, wireless and traditional telecommunications services, SaaS-based and cloud computing technologists and Internet-of-Things application and network vendors. The CommLaw Group has formed a Robocall Mitigation Response Team to help clients achieve the level of compliance needed to avoid the emerging threats of litigation and regulatory enforcement. Jonathan S. Marashlian may be reached by email or by phone at 703-714-1313.

A prior version of this piece was published on October 6, 2021, on TransNexus. This lightly-edited Expert Opinion is reprinted with permission. Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Mike Harris: Investing in Open Access Fiber Optics is Investing in the Future

Chattanooga’s municipal broadband network has delivered $2.7 billion in social and economic benefits during its first decade.

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The author of this Expert Opinion is Mike Harris, the co-founder of SiFi Networks.

In the United States, most Internet Service Providers are privately owned companies who have established copper network infrastructure exclusively for their own use, forcing customers into often unreliable, unsustainable internet package deals. But in 2010, the small city of Chattanooga, Tennessee invested in an early publicly owned fiber optic network.

As the co-founder of open-access telecom company SiFi Networks, I believe that investments in similar open-access infrastructure will help bridge community divides and futureproof a city’s economic and social prosperity.

According to a study by Bento Lobo, department head of finance and economics at the University of Tennessee, Chattanooga’s municipal broadband has delivered over $2.69 billion worth of social and economic benefits during its first decade. With a population of just 185,000, imagine the potential savings for a city the size of New York.

So, how did Chattanooga achieve this and what were the city’s motivations?

Motives behind the madness

In 1969, Chattanooga was dubbed America’s dirtiest city. A post-industrial wasteland, it entered the late twentieth century with a stagnant economy, declining population and high levels of unemployment following the closure of its large manufacturing factories. It’s not surprising that decades later publicly owned utility company, EPB, chose to invest in its residents’ future.

EPB began replacing the underground copper wiring — originally established to exclusively handle telephone calls — with fiber optic cables feeding connectivity to the entire community. Fiber optic networks are vastly superior to copper because they can transport data using photons travelling at the speed of light. Previous infrastructure uses electrons capable of less than one per cent of that speed.

Where before Chattanooga was perceived as an underdeveloped, low-income area, suddenly businesses were moving in, employment was growing, and more adolescents were graduating from high school. Is it about time for other cities to follow suit?

Why other cities should follow suit

Internet connectivity is a human right much like water, electricity and gas utilities. Yet 21 million U.S. citizens are still living without reliable broadband according to the Pew Charitable Trusts. Research also shows that 40 percent of schools and 60 percent of healthcare facilities outside metropolitan regions lack internet download speeds of at least 25 Megabits per second (Mbps) and upload speeds of at least 3 Mbps. This is the acceptable speed defining a reliable broadband connection.

As the Chattanooga model demonstrates, the solution is the establishment of fiber optic infrastructure. With fiber networks, EPB offers residents and businesses gigabit speeds of up to 1,000 Mbps, or 1 Gigabit per second. In hindsight, with this capacity Hamilton County was well equipped to deal with the 75 percent increase in total volume of bandwidth being used per day during the pandemic, with residents being forced to work and educate from their homes.

These gigabit speeds also allow for a high degree of network responsiveness necessary for establishing a smart grid system. Most US cities use standard grid systems, which rely on consumers informing a service when they have a power outage or system failure.

Smart grids establish a two-way communication network using digital devices and automation so that service providers are notified immediately when problems occur. EPB’s Hamilton County smart grid, for example, can quickly re-route power around storm damage decreasing outages by 40 per cent in minutes, according to Lobo’s study. He estimates Chattanooga’s consumers will save $20.6 million per annum simply from avoiding spoilage and loss of productivity due to power outages.

Saving money, saving livelihoods

EPB has more than proven that fiber networks are a socioeconomic investment benefitting everyone, not just those lucky enough to live in a fiber area. Better, faster connectivity will enable businesses in all neighbourhoods to thrive, creating job opportunities. During the ‘gig decade’ (2011-2020), EPB’s fiber network directly supported the creation or retention of approximately 9,500 jobs in Hamilton County, luring the migration of global corporations like Volkswagen. The U.S. Bureau of Labor Statistics has reflected this, stating Hamilton County’s unemployment rate being 4.7 percent as of November 2020, compared to the U.S. overall percentage of 6.7.

Chattanooga at night

The social benefits don’t stop here. A study by South Australia’s premier, Jay Weatherill, correlated gigabit networks with improved support for police and fire communications, wastewater management, traffic control and medical diagnostics. These are all features of SiFi Networks’ FiberCity and if Chattanooga has demonstrated anything, it is that fiber networks improve residents’ quality of living above all else.

FiberCity — the next step?

Chattanooga has demonstrated the importance of staying connected. To this end, becoming a SiFi Networks FiberCity could be the next step for cities across the US.

Privately financed networks, like SiFi Networks’, are often the best option to guarantee necessary funding for construction, maintenance and expansion of fiber infrastructure. Municipalities wouldn’t have to rely on taxpayer’s dollars, which can instead be diverted to healthcare, education and other social entities. During a period of continuous technological evolution, FiberCities have one simple mission: to combine advantages of Chattanooga’s gigabit speeds with futureproofed smart city services across the U.S.

Mike Harris is a successful entrepreneur and technologist, having previously founded Total Network Solutions Ltd in 1989, which he later sold to UK telecoms giant British Telecom in 2005. He subsequently co-founded SiFi Networks and is a current investor in the company. He is also the chairman and owner of the New Saints Football Club in Wales, UK. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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