9 ms·

FCC urged to investigate Verizon’s statements on utility rules

129 points by jconley 12y ago

rayiner 12y ago
Unsurprisingly, it's Bruce Kushnick that's doing the urging: https://www.google.com/search?q=kushnick&sourceid=ie7&rls=com.microsoft:en-US:IE-Address&ie=&oe=&rlz=&gws_rd=ssl#safe=off&rls=com.microsoft:en-US:IE-Address&q=kushnick+rayiner+site:news.ycombinator.com https://www.google.com/search?q=kushnick&sourceid=ie7&rls=co.... [1] The irony of the article is that it's kind of right in a way that really undermines the whole premise of the argument. Suppose that Verizon did use "Title II money" (i.e. revenues from rate increases on wireline subscribers) to fund FiOS deployment. That may very well not be kosher according to the rules, but that just goes to show that the rules are ridiculous. Should we launch a federal investigation to see if Apple subsidized iPhone development by increasing Mac prices? I like Ars, but they've been beating an anti-telco trumpet recently that's totally detached from reality. Ars paints telecom service as this cash cow, but the fact of the matter is that nobody in the U.S. is making money on fiber on deployments of any substantial scale. It's not clear that Verizon is even earning a positive return on the thousands of dollars per household it has invested in FiOS in many markets: http://www.businessweek.com/magazine/content/11_13/b4221046109606.htm http://www.businessweek.com/magazine/content/11_13/b42210461... (In the PNW: "He estimates the project will end up having cost Verizon $4,000 per connected home. Moffett calculates the present value of acquired subscribers at $3,200 each. That would give FiOS a negative $800 net present value per customer.") Wall Street wants Verizon to get out of the wireline business entirely, and it's precisely because there's little return on the billions in required investments, coupled with the regulatory swamp that is Title II. [1] Kushnick's whole shtick is that there's some rate that's okay for a telecom carrier to charge, and any price increase beyond that rate is a "subsidy" from the public to the carrier. Hence, Verizon raising rates on its own customers to pay for its fiber network is some sort of questionable act. Applying Kushnick logic to another industry: if Apple raises prices on Macs and uses that cash to bankroll iPhone development, well that's something that requires a federal investigation.
- zorpner 12y ago
  Applying Kushnick logic to another industry: if Apple raises prices on Macs and uses that cash to bankroll iPhone development, well that's something that requires a federal investigation. This isn't a good analogy -- if Apple had been granted use of public goods (rights-of-way, airwaves, and local/regional monopolies on service) in exchange for guarantees of service, raising their prices on such a service to fund another segment of the company would absolutely require investigation.
  - rayiner 12y ago
    Verizon paid for its wireless spectrum, it lost its local monopolies pursuant to the 1996 deregulation, and in most places, it pays the local power company for access to utility poles. E.g. here in Baltimore, it's BGE that owns the poles, not Verizon.
    - zorpner 12y ago
      I've been part of an ISP startup -- go find out what happens if you try to pay the local power company for access to utility poles. A de facto monopoly is still a monopoly. You can't "purchase" a public good like a segment of the wireless spectrum and do with it whatever you please. Exclusive access to that segment can be granted to you in exchange for money by the government, and it comes with many conditions.
      - rayiner 12y ago
        > You can't "purchase" a public good Sure you can. Indeed, one of the dominant theories of contemporary economics is that market failures in public goods should be handled by turning them into property rights and privatizing them.
        zorpner 12y ago
        Take my statement as shorthand for "I don't believe that it's possible to purchase a public good and the economic theory that public goods should be privatized is legitimate only insofar as it would lead to desirable revolution". I'm happy to disagree, though -- it's not exactly a settled question and I doubt either of us are going to convince the other during this conversation.
forrestthewoods 12y ago
But those aren't contradictory statements at all? Title II let Verizon charge more for phone service which was used to fund broadband. Verizon also says that Title II for broadband would harm additional investment for broadband. Both statements can easily be true. (emphasis can) There's nothing "red-handed" about this.
- deleted 12y ago
  [deleted]
- jconley 12y ago
  The alleged red-handed part is that Verizon used Title II to build out fiber lines under the guise it was improving its telephone service, but was actually using the fiber for broadband services which it does not want regulated under Title II. Sounds like the proverbial "having your cake and eating it too".
higherpurpose 12y ago
They should do the same with AT&T: https://www.techdirt.com/blog/netneutrality/articles/20150108/10422129635/att-plays-legal-pattycake-with-ftcfcc-jurisdiction-common-carrier-law-just-so-it-can-pretend-limited-data-service-is-unlimited.shtml https://www.techdirt.com/blog/netneutrality/articles/2015010...
xnull1guest 12y ago
The Net Neutrality 'debate' is an example of politics I'm beginning to see all the time in the United States. A real problem is presented along with a single problematic solution from which voters, with as much or little influence they actually have, and their representatives are asked to select the 'lesser of two evils'. The real discussion is not whether the country's big media duopoly should be forced to conduct their business model like a public utility or not, but whether a duopoly is healthy at all. If communication infrastructure requires few large investors and centralized ownership it is a natural monopoly and should be managed as such (and in fact resold on a market of small service providers a la the UK's internet and American power). If it does not, let anti-trust law hammers fall. Comcast and Time Warner consistently collect the very worst consumer reviews (Comcast was the worst of all corporations for year running). They are both larger and more predatory than Ma Bell was leading up to 1984.
- warfangle 12y ago
  > resold on a market of small service providers a la the UK's internet and American power And American wired telephone service (infrastructure owners must allow competitors to lease that infrastructure).
- rayiner 12y ago
  You have to put the telecom debate in the proper historical context. It's not some sui generis issue. It's part of a broader debate about how much involvement government should have in regulating services. There was a time when the government told trucking companies how much they could charge for a shipment. The overwhelming trend since then has been to deregulate industries if possible, or replace heavy-weight regulations (rate setting, etc) with lighter-weight ones. Full-on Title II represents 1970's-style regulation that neither party wants to go back to, which is why the debate is between no action at all or "Title II with heavy forebearance." People talk about regulating telecom like the power company, but the trend over the last 30 years has been to deregulate the power companies as much as possible. NB: The UK example is a poor one. British Telecom was originally a government entity, and was "privatized" under agreements that made clear that they would be subject to constraints. In contrast, since 1996, the telecoms have invested tens of billions of dollars in capital under the premise that the industry was deregulated.
evanpw 12y ago
It seems like the issue is that regulated utilities are not really private companies, though we like to pretend they are. The segment of Verizon that provides voice service is effectively a government agency, and if they make money, the rest of the company is not allowed to use it for something else. I'm a pretty free-market guy, but this seems worse than having phone service just be publicly run. This is the worst of both worlds.
DannyBee 12y ago
So, a lot of folks are missing the point, which is that the investigation asks for perjury charges. Verizon swears up and down in FCC filings it is not a title II common carrier FOR THE FIBER LINES (it always has been for PSTN). But in it's statements to state regulatory commissions and it's franchise agreement with states/municipalities state specifically that it is upgrading/building THE FIBER LINES under Title II. This is because Title II allows them to do so without getting further permission/process from the state. You can't tell the FCC one thing, and state regulatory agencies the other. The rest of this filing should have been removed. Press statements/etc are pretty much irrelevant, and they should stick to the simple facts. Anything else will just be fodder for arguing over when it doesn't matter. For those wondering about perjury, there are a number of federal perjury statutes (the most general that i'm aware of being 18 USC 1621, http://www.law.cornell.edu/uscode/text/18/1621 http://www.law.cornell.edu/uscode/text/18/1621). If you tell the federal government something, and it includes the words "I declare under penalty of perjury, ....", and you are knowingly misrepresenting something in that document, you have committed a felony. (In the case of tax returns, it's at least two felonies, since there is also a specific tax return perjury statute, and in either case it doesn't matter whether you owe the IRS money or not)
- rhino369 12y ago
  But Verizon definitely provides a Title II service over those fiber lines, telephone service. It is required to. It doesn't really advertise it, but you can buy it. In Fios areas the entire telephone system is replaced by a single FTTH. Verizon is a common carrier, Title II, telephone provider. Currently its ISP service is not a Title II service. The FCC common carrier rules are about services not the underlying network technology. The statements aren't even contradictory, let alone so obviously contradictory that they were knowingly lying.
  - DannyBee 12y ago
    "But Verizon definitely provides a Title II service over those fiber lines, telephone service. It is required to. It doesn't really advertise it, but you can buy it. In Fios areas the entire telephone system is replaced by a single FTTH. Verizon is a common carrier, Title II, telephone provider." Sure, but it then claims to use Title II to do upgrades to it's ISP service capacity on those licenses, which is ... contradictory. If the agreements, etc, said "we will perform necessary upgrades to telephone service over fiber lines under Title II, all others will be under Title X", that would be different. But they don't. The claim it all falls under Title II. So they are definitely contradictory.
datashovel 12y ago
Abraham Lincoln was not just a great president, but could probably be considered a psychic in many circles: “I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . . corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.”
- datashovel 12y ago
  In a strange way this makes me very optimistic about the future. That in the age of free-flowing information, we can find and (hopefully) snuff out these egregious attempts to take advantage of the system.
  - delucain 12y ago
    But, have we (the US)? We're a good solid decade or two into the age of free-flowing information, and we are trending the other direction in a frighteningly fast pace. The middle class is gone. More wealth is getting concentrated to the top than ever before in our country's history. And all the while, we have the least productive congress in history whose re-election is entirely dependent on the handouts given by those corporations that Abraham Lincoln warned us about. The few bills that are being passed are often written by those very corporations. We've lost the representation in our government. The Republic is no longer for the people by the people. The Republic is lost.
    - datashovel 12y ago
      I have the impression that we (humanity) have just gotten our feet under ourselves in terms of how to utilize technology and the internet to really make a difference and make real progress in fighting back against these kinds of things. 20 years is only a tiny blip on the map of the entire history of civilization. Unfortunately that probably means you and I will maybe only see the beginnings of what the world will be like 1000 years from now, but the initial signs (to me) are very encouraging.
adwf 12y ago
I mentioned the same thing the other day [1]. I don't quite get why telecoms providers who are running ISP services over their lines are not already regulated by the same standard. A phone call is an analogue audio message sent over phone lines - guaranteed transit. An early modem was also an analogue audio message sent over phone lines - guaranteed transit. Nowadays, we simplify a few phases and have pure digital IP telephony and internet access - not so guaranteed. But it's still the same thing... [1] https://news.ycombinator.com/item?id=8857793 https://news.ycombinator.com/item?id=8857793
superbaconman 12y ago
I for one think we should put this off for another 5 years minimum. I've been seeing lots of little guys pop up around my area, and I know network equipment is about to get a lot better. I'd rather pay more for my internet than fuck up an entire tech sector.
- zanny 12y ago
  They need to at least stop ISPs from manipulating smaller state agencies and local authorities into keeping competition out. There needs to be some blanket policy opening up fiber laying to anyone capable and willing, in addition to the dissolution of (I'd prefer all) spectrum ownership to enable more wireless deployment and adoption.

129 points by jconley 12y ago

Unsurprisingly, it's Bruce Kushnick that's doing the urging: https://www.google.com/search?q=kushnick&sourceid=ie7&rls=com.microsoft:en-US:IE-Address&ie=&oe=&rlz=&gws_rd=ssl#safe=off&rls=com.microsoft:en-US:IE-Address&q=kushnick+rayiner+site:news.ycombinator.com https://www.google.com/search?q=kushnick&sourceid=ie7&rls=co.... [1] The irony of the article is that it's kind of right in a way that really undermines the whole premise of the argument. Suppose that Verizon did use "Title II money" (i.e. revenues from rate increases on wireline subscribers) to fund FiOS deployment. That may very well not be kosher according to the rules, but that just goes to show that the rules are ridiculous. Should we launch a federal investigation to see if Apple subsidized iPhone development by increasing Mac prices? I like Ars, but they've been beating an anti-telco trumpet recently that's totally detached from reality. Ars paints telecom service as this cash cow, but the fact of the matter is that nobody in the U.S. is making money on fiber on deployments of any substantial scale. It's not clear that Verizon is even earning a positive return on the thousands of dollars per household it has invested in FiOS in many markets: http://www.businessweek.com/magazine/content/11_13/b4221046109606.htm http://www.businessweek.com/magazine/content/11_13/b42210461... (In the PNW: "He estimates the project will end up having cost Verizon $4,000 per connected home. Moffett calculates the present value of acquired subscribers at $3,200 each. That would give FiOS a negative $800 net present value per customer.") Wall Street wants Verizon to get out of the wireline business entirely, and it's precisely because there's little return on the billions in required investments, coupled with the regulatory swamp that is Title II. [1] Kushnick's whole shtick is that there's some rate that's okay for a telecom carrier to charge, and any price increase beyond that rate is a "subsidy" from the public to the carrier. Hence, Verizon raising rates on its own customers to pay for its fiber network is some sort of questionable act. Applying Kushnick logic to another industry: if Apple raises prices on Macs and uses that cash to bankroll iPhone development, well that's something that requires a federal investigation.

zorpner 12y ago
Applying Kushnick logic to another industry: if Apple raises prices on Macs and uses that cash to bankroll iPhone development, well that's something that requires a federal investigation. This isn't a good analogy -- if Apple had been granted use of public goods (rights-of-way, airwaves, and local/regional monopolies on service) in exchange for guarantees of service, raising their prices on such a service to fund another segment of the company would absolutely require investigation.
- rayiner 12y ago
  Verizon paid for its wireless spectrum, it lost its local monopolies pursuant to the 1996 deregulation, and in most places, it pays the local power company for access to utility poles. E.g. here in Baltimore, it's BGE that owns the poles, not Verizon.
  - zorpner 12y ago
    I've been part of an ISP startup -- go find out what happens if you try to pay the local power company for access to utility poles. A de facto monopoly is still a monopoly. You can't "purchase" a public good like a segment of the wireless spectrum and do with it whatever you please. Exclusive access to that segment can be granted to you in exchange for money by the government, and it comes with many conditions.
    - rayiner 12y ago
      > You can't "purchase" a public good Sure you can. Indeed, one of the dominant theories of contemporary economics is that market failures in public goods should be handled by turning them into property rights and privatizing them.
      - zorpner 12y ago
        Take my statement as shorthand for "I don't believe that it's possible to purchase a public good and the economic theory that public goods should be privatized is legitimate only insofar as it would lead to desirable revolution". I'm happy to disagree, though -- it's not exactly a settled question and I doubt either of us are going to convince the other during this conversation.

forrestthewoods 12y ago

But those aren't contradictory statements at all? Title II let Verizon charge more for phone service which was used to fund broadband. Verizon also says that Title II for broadband would harm additional investment for broadband. Both statements can easily be true. (emphasis can) There's nothing "red-handed" about this.

deleted 12y ago
[deleted]
jconley 12y ago
The alleged red-handed part is that Verizon used Title II to build out fiber lines under the guise it was improving its telephone service, but was actually using the fiber for broadband services which it does not want regulated under Title II. Sounds like the proverbial "having your cake and eating it too".

higherpurpose 12y ago

They should do the same with AT&T: https://www.techdirt.com/blog/netneutrality/articles/20150108/10422129635/att-plays-legal-pattycake-with-ftcfcc-jurisdiction-common-carrier-law-just-so-it-can-pretend-limited-data-service-is-unlimited.shtml https://www.techdirt.com/blog/netneutrality/articles/2015010...

xnull1guest 12y ago

The Net Neutrality 'debate' is an example of politics I'm beginning to see all the time in the United States. A real problem is presented along with a single problematic solution from which voters, with as much or little influence they actually have, and their representatives are asked to select the 'lesser of two evils'. The real discussion is not whether the country's big media duopoly should be forced to conduct their business model like a public utility or not, but whether a duopoly is healthy at all. If communication infrastructure requires few large investors and centralized ownership it is a natural monopoly and should be managed as such (and in fact resold on a market of small service providers a la the UK's internet and American power). If it does not, let anti-trust law hammers fall. Comcast and Time Warner consistently collect the very worst consumer reviews (Comcast was the worst of all corporations for year running). They are both larger and more predatory than Ma Bell was leading up to 1984.

warfangle 12y ago
> resold on a market of small service providers a la the UK's internet and American power And American wired telephone service (infrastructure owners must allow competitors to lease that infrastructure).
rayiner 12y ago
You have to put the telecom debate in the proper historical context. It's not some sui generis issue. It's part of a broader debate about how much involvement government should have in regulating services. There was a time when the government told trucking companies how much they could charge for a shipment. The overwhelming trend since then has been to deregulate industries if possible, or replace heavy-weight regulations (rate setting, etc) with lighter-weight ones. Full-on Title II represents 1970's-style regulation that neither party wants to go back to, which is why the debate is between no action at all or "Title II with heavy forebearance." People talk about regulating telecom like the power company, but the trend over the last 30 years has been to deregulate the power companies as much as possible. NB: The UK example is a poor one. British Telecom was originally a government entity, and was "privatized" under agreements that made clear that they would be subject to constraints. In contrast, since 1996, the telecoms have invested tens of billions of dollars in capital under the premise that the industry was deregulated.

evanpw 12y ago

It seems like the issue is that regulated utilities are not really private companies, though we like to pretend they are. The segment of Verizon that provides voice service is effectively a government agency, and if they make money, the rest of the company is not allowed to use it for something else. I'm a pretty free-market guy, but this seems worse than having phone service just be publicly run. This is the worst of both worlds.

DannyBee 12y ago

So, a lot of folks are missing the point, which is that the investigation asks for perjury charges. Verizon swears up and down in FCC filings it is not a title II common carrier FOR THE FIBER LINES (it always has been for PSTN). But in it's statements to state regulatory commissions and it's franchise agreement with states/municipalities state specifically that it is upgrading/building THE FIBER LINES under Title II. This is because Title II allows them to do so without getting further permission/process from the state. You can't tell the FCC one thing, and state regulatory agencies the other. The rest of this filing should have been removed. Press statements/etc are pretty much irrelevant, and they should stick to the simple facts. Anything else will just be fodder for arguing over when it doesn't matter. For those wondering about perjury, there are a number of federal perjury statutes (the most general that i'm aware of being 18 USC 1621, http://www.law.cornell.edu/uscode/text/18/1621 http://www.law.cornell.edu/uscode/text/18/1621). If you tell the federal government something, and it includes the words "I declare under penalty of perjury, ....", and you are knowingly misrepresenting something in that document, you have committed a felony. (In the case of tax returns, it's at least two felonies, since there is also a specific tax return perjury statute, and in either case it doesn't matter whether you owe the IRS money or not)

rhino369 12y ago
But Verizon definitely provides a Title II service over those fiber lines, telephone service. It is required to. It doesn't really advertise it, but you can buy it. In Fios areas the entire telephone system is replaced by a single FTTH. Verizon is a common carrier, Title II, telephone provider. Currently its ISP service is not a Title II service. The FCC common carrier rules are about services not the underlying network technology. The statements aren't even contradictory, let alone so obviously contradictory that they were knowingly lying.
- DannyBee 12y ago
  "But Verizon definitely provides a Title II service over those fiber lines, telephone service. It is required to. It doesn't really advertise it, but you can buy it. In Fios areas the entire telephone system is replaced by a single FTTH. Verizon is a common carrier, Title II, telephone provider." Sure, but it then claims to use Title II to do upgrades to it's ISP service capacity on those licenses, which is ... contradictory. If the agreements, etc, said "we will perform necessary upgrades to telephone service over fiber lines under Title II, all others will be under Title X", that would be different. But they don't. The claim it all falls under Title II. So they are definitely contradictory.

datashovel 12y ago

Abraham Lincoln was not just a great president, but could probably be considered a psychic in many circles: “I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . . corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.”

datashovel 12y ago
In a strange way this makes me very optimistic about the future. That in the age of free-flowing information, we can find and (hopefully) snuff out these egregious attempts to take advantage of the system.
- delucain 12y ago
  But, have we (the US)? We're a good solid decade or two into the age of free-flowing information, and we are trending the other direction in a frighteningly fast pace. The middle class is gone. More wealth is getting concentrated to the top than ever before in our country's history. And all the while, we have the least productive congress in history whose re-election is entirely dependent on the handouts given by those corporations that Abraham Lincoln warned us about. The few bills that are being passed are often written by those very corporations. We've lost the representation in our government. The Republic is no longer for the people by the people. The Republic is lost.
  - datashovel 12y ago
    I have the impression that we (humanity) have just gotten our feet under ourselves in terms of how to utilize technology and the internet to really make a difference and make real progress in fighting back against these kinds of things. 20 years is only a tiny blip on the map of the entire history of civilization. Unfortunately that probably means you and I will maybe only see the beginnings of what the world will be like 1000 years from now, but the initial signs (to me) are very encouraging.

adwf 12y ago

I mentioned the same thing the other day [1]. I don't quite get why telecoms providers who are running ISP services over their lines are not already regulated by the same standard. A phone call is an analogue audio message sent over phone lines - guaranteed transit. An early modem was also an analogue audio message sent over phone lines - guaranteed transit. Nowadays, we simplify a few phases and have pure digital IP telephony and internet access - not so guaranteed. But it's still the same thing... [1] https://news.ycombinator.com/item?id=8857793 https://news.ycombinator.com/item?id=8857793

superbaconman 12y ago

I for one think we should put this off for another 5 years minimum. I've been seeing lots of little guys pop up around my area, and I know network equipment is about to get a lot better. I'd rather pay more for my internet than fuck up an entire tech sector.

zanny 12y ago
They need to at least stop ISPs from manipulating smaller state agencies and local authorities into keeping competition out. There needs to be some blanket policy opening up fiber laying to anyone capable and willing, in addition to the dissolution of (I'd prefer all) spectrum ownership to enable more wireless deployment and adoption.