The Best Stories of 2018
— Mark Zuckerberg promised to fix Facebook in 2018. How’d that go?
— Apple hits $1 Trillion; Jeff Bezos hits $150 Billion; Amazon warhouse workers hit $15/hr.
— Elon Musk’s ups and downs
— The biggest mergers of 2018
— Net neutrality ends, SESTA/FOSTA, and more legal news
— Bloomberg’s big blunder
— China’s social credit system and CRISPR babies
— Those we lost in 2018
Host: Leo Laporte
Guests: John C. Dvorak, Owen JJ Stone, Alex Lindsay
Chinese Spy Chips, Microsoft Highs and Lows, Pixel 3 Event Predictions, and More! Bloomberg reports that China used tiny chips to spy on Apple, Amazon, and the US government. Apple and Amazon deny it. How do we know who is right? All the news from the Microsoft Surface event, plus some rumors of what was supposed to be there but wasn’t. Windows 10 update deletes people’s files. What we expect this Tuesday at Google’s Pixel 3 Event. Amazon raises its minimum wage to $15/hr, kills stock options and bonuses. Facebook hacked by “odorless and weightless hackers.” CA passes new laws restoring Net Neutrality and banning bots that pretend to be human. Presidential Alert hits phones nationwide.
Apple has its best Q2 ever, despite analyst predictions. 20 years of iMac. Cambridge Analytica must give US voter his data. Unroll.me foiled by GDPR. NPR buys PocketCasts. Change your Twitter password. Sprint/T-Mobile merger. Net Neutrality vote in the Senate May 9th. Cyber Command gets a promotion.
FCC cancels Net Neutrality and Ajit Pai mocks protesters. Apple’s new iMac Pro costs a minimum of $4999 and goes up from there. Disney buys 21st Century Fox, gaining X-Men, Fantastic Four, and A New Hope, along with a 60% share of Hulu. Google cancels Tango as ARCore picks up steam. As public sentiment against it grows, even Facebook admits that Facebook is bad for you. Uber spies on everybody. Tweet storms made easy. Mirai botnet that took down huge swathes of the internet was built by college kids to cheat at Minecraft. Patreon apologizes. Secret Pentagon UFO program revealed.
Net Neutrality’s demise set for December 14th – lawsuits to follow. Black Friday breaks mobile records. Time’s top 10 gadgets of the year. Jeff Bezos, now worth $100 billion, credits his grandpa’s hairy thumb as inspiration. How to tell if you liked a Russia-sponsored Facebook page. Elon Musk tests the bounds of credibility with his latest battery claims. Uber confesses to hiding a 2016 data breach and paying off the hackers.
Huge pro-Net Neutrality protests planned for this week. The first Tesla Model 3 rolled off the line on Friday. Sexual Harassment in Silicon Valley. The Nokia 3310 Trump/Putin “Caviar” phone costs $2500. the iPhone 8 might use facial recognition instead of Touch ID. Merck shut down by Petya ransomware. The role of government in cybersecurity and privacy. The role of technology and those versed in it in government. Jawbone closes down. Amazon Prime is a great deal, but Prime Day might not be. The Amazon Echo Show is our favorite potentially creepy digital assistant. Apple vs Qualcomm: what it’s all about.
Out of the many lawsuits filed this week against the Federal Communications Commission, just one came from a major Internet service provider: AT&T.
AT&T made no secret of its opposition to the FCC’s net neutrality order, but it was reported last month that trade groups rather than individual ISPs would lead the legal fight against the FCC. That has mostly been the case so far, with AT&T but not other big ISPs like Comcast or Verizon filing suit. Lawsuits have been filed by four consortiums representing cable, wireless, and telecommunications companies. One small provider in Texas called Alamo Broadband sued the FCC as well.
Comcast, when asked if it plans to file a lawsuit, told Ars that it is “referring all questions to NCTA,” the National Cable & Telecommunications Association, which sued on behalf of cable providers. We’ve asked Verizon the same question but haven’t heard back yet. Verizon did sue the FCC over a previous version of its net neutrality rules passed in 2010. Verizon won that case, inadvertently opening broadband providers up to even stricter rules.
AT&T’s lawsuit filed yesterday in the US Court of Appeals for the District of Columbia Circuit objects to the FCC’s decision to reclassify fixed and mobile broadband as common carrier services in order to impose net neutrality rules that forbid blocking and discriminating against traffic. The petition is brief and follows the same script as those filed by trade groups, accusing the FCC of violating the Constitution and Communications Act with an “arbitrary” and “capricious” decision.
Parties suing the FCC will make more detailed arguments later; the initial petitions just get the process started.
We could see more lawsuits this week and next. The rules were published Monday this week. Parties have 60 days after publication to sue but filing within the first 10 days makes it easier to get the judicial circuit of one’s choice. “[I]f multiple petitions for review are filed in different circuits in the first ten days, it will be decided by lottery where the appeal goes,” Public Knowledge Senior VP Harold Feld explains.
FCC chairman Tom Wheeler has announced that the agency will vote on new proposed net neutrality rules next February 26. He made the announcement during a public interview at the ongoing CES event in Las Vegas.
Wheeler said the proposal will be circulated to the commissioners on February 5th, which means that they will have a three week window before the vote.
As far as the proposal is concerned, he didn’t provide details, but did hint that it will reclassify broadband as a Title II utility. He also mentioned that the agency might take a hybrid approach, applying only relevant Title II restrictions to broadband Internet.
Last November President Barack Obama publicly came out in support of net neutrality, asking the regulator to reclassify Internet service as a utility. At that time Wheeler didn’t officially say whether he would support the president’s suggestion, although there were reports suggesting that he’d likely move in a different direction.
He touched upon the issue during the interview, saying, “When the president came out … there was an effort made to say Wheeler and the president are pulling in opposite directions on this,” adding, “But that wasn’t exactly the reality because we’re both pulling in the same directions, which is no blocking, no throttling of applications, and transparency about how we get there.”
However, Wheeler was also quick to add that prioritization may be appropriate in some scenarios, for example, in case of an emergency health alert. “There are instances where priority makes a whole heck of a lot of sense,” he said.
Opponents of net neutrality argue that prioritization of bandwidth is necessary for future innovation on the Internet, and greater regulation will negatively affect the investment in next-generation Internet infrastructure, something which would in turn stifle growth across the entire economy.
Advocates of strong net neutrality rules are calling for the U.S. Federal Communications Commission to reclassify broadband as a regulated utility, but such a move would trigger a lengthy court fight between the agency and broadband providers, some telecom law experts say.
With net neutrality back on the FCC’s agenda in recent weeks, many net neutrality advocates—including digital rights groups Free Press and Public Knowledge—have resurrected their long-time push for the FCC to reregulate broadband as a traditional telecom service as an alternative to FCC Chairman Tom Wheeler’s proposed set of regulations, released in late April, that they view as too weak.
Despite a large public outcry—the FCC has received more than 45,000 public comments in the past month, with many calling for reregulation—some telecom law experts question whether the agency will take that step.
“People at the FCC refer to broadband reclassification as the nuclear option,” said Jonathan Jacob Nadler, a telecom regulation lawyer with the Squire Sanders law firm in Washington, D.C. “It’s just not going to happen.”
The FCC, in a public notice of proposed rules released earlier this month, asked for comment on Wheeler’s proposal, which would allow broadband carriers to engage in “commercially reasonable” traffic management, and also on whether the FCC should reclassify broadband as a common-carrier telecom service subject to utility-type regulations under Title II of the Telecommunications Act.
Is a legal backlash worth it?
But Nadler and some other telecom regulation experts expect a huge legal backlash if the FCC moves toward Title II regulation. “If the FCC were to reclassify broadband as a telecom service, lawyers for the major telcos and cable systems would immediately start lining up in front of the court of appeals and would file petitions for review within minutes after the order was published,” Nadler said.
Broadband providers would argue that reclassification is a “trillion-dollar bait-and-switch,” said Scott Cleland, chairman of the NetCompetition advocacy group supported by broadband providers. Providers would argue that a change in classification would be arbitrary and capricious, the classic language of a challenge to agency regulations.
“Promising an industry light regulation to encourage $1.2 trillion in private risk capital investment, and then after it’s built, breaking that promise, would be the [ultimate] arbitrary and capricious FCC action,” Cleland added. “Expect a tsunami of legal challenges against any FCC reclassification decision in multiple courts pursuing multiple different legal challenges and theories in order to stay and overturn the FCC decision.”
Harold Feld, senior vice president at Public Knowledge, downplayed potential arguments by broadband providers. In a handful of recent Supreme Court cases, justices have suggested the FCC has the authority to change its mind, he noted.
Asked if reclassification would trigger a backlash in Congress, Feld said it might, particularly if Republicans gain majority control of the Senate in elections later this year. But Congress would have a difficult time overturning the rules, he said.
Politics, as usual
“President Obama would still be able to veto any such resolution,” Feld said. “While one does not like to rely on a presidential veto, it is equally foolish to assume that a future Congress will automatically overrule any FCC classification. The tide on this is clearly shifting.”
A Republican Congress would likely attempt to overturn any net neutrality rules, Feld noted. Whether the FCC relies on reclassification or takes another route, it “makes no difference if the Senate flips, so you might as well do what you think is right,” he said.
Net neutrality advocate Marvin Ammori of the Ammori Group law firm also discounted the broadband providers’ chances of overturning reclassification.
“They’ll argue the FCC didn’t provide a reasoned basis for the policy tweak,” he said. “They’re very likely to lose that. Courts would defer to the FCC, and the FCC would win.”
Wheeler has defended his proposal, which uses Section 706 of the Telecom Act, a section giving the agency responsibility for robust broadband deployment, as a quicker way to restore net neutrality rules after the U.S. Court of Appeals for the District of Columbia Circuit struck down an old version of the FCC’s net neutrality rules in January.
The appeals court pointed to Section 706 as a way the agency could find authority for net neutrality rules, and Wheeler has argued that it makes sense to follow the court’s lead after judges there twice struck down the agency’s attempts to enforce net neutrality rules.
The case for reclassification: not a trivial one
Alternatively, reclassification would “not be as straightforward or easy as many assume,” said Berin Szoka, president of free-market think tank TechFreedom. Reclassifying broadband as a utility “would take, best guess, five to 10 years of back and forth between the FCC and courts,” he added.
The agency, to reclassify, would have to find a justification for changing its mind on its decade-old classification of broadband as a lightly regulated information service, Szoka said.
Reclassification would be additionally complex because the agency would also have to draw a line between broadband and other Internet services, Szoka said. The FCC would “have to explain why it should only reclassify broadband and not some edge services, too,” he added.
Like Nadler, Szoka questioned whether the FCC will reclassify broadband. The complexity and likely legal challenges are “all why I don’t think the FCC is serious about Title II,” he said. “I think they’re going through the motions of including it … so they can tell the angry mob outside their gates that they considered this option.”
Some opponents of reclassification have questioned whether the FCC has the authority to reverse a series of decisions in the early 2000s to classify cable broadband, then telecom broadband as an information service. But many telecom law experts say the agency does have that authority, as long as it justifies its reasons for the switch in policy.
Ironically, clear authority for the FCC to change its mind comes from the 2005 Supreme Court case that ruled the FCC had the authority to deregulate broadband and classify it as an information service. In the Brand X case, the Supreme Court ruled that the agency had reasonably interpreted the Telecom Act when classifying cable broadband as a lightly regulated service.
The Brand X case “makes clear that the courts must defer to any reasonable interpretation” of the Telecom Act that the FCC makes, Nadler said. Justice Clarence Thomas, writing for the majority in the Brand X case, also notes that government agencies can change their policies if they have a good reason.
Thomas quoted a 1984 Supreme Court decision in Chevron USA v. Natural Resources Defense Council, a major case in administrative agency authority: “An initial agency interpretation is not instantly carved in stone,” the 1984 decision said. “On the contrary, the agency … must consider varying interpretations and the wisdom of its policy on a continuing basis.”
Heavy broadband users should help shoulder the cost of their traffic, but Verizon Communications does not give preferential treatment to some Web traffic, the company’s CEO said Monday.
Still, Verizon has had its own interconnection discussions with Netflix related to increasing the video provider’s traffic speeds on the broadband carrier’s networks, Verizon Chairman and CEO Lowell McAdam said. Following a Sunday announcement that Comcast and Netflix had reached an interconnection deal, McAdam said his company has had similar discussions with the video provider.
The Comcast and Netflix deal shows “the commercial markets can come to agreement on these to make sure the investments keep flowing,” McAdam said.
McAdam addressed the U.S. Federal Communications Commission’s proposed net neutrality rules during a conference call about the company’s acquisition of Vodafone’s 45 percent stake in Verizon Wireless. The FCC’s move this month to resurrect net neutrality rules should provide “clarity” for the broadband industry, said McAdam, whose company successfully challenged an old version of the regulations in court.
McAdam dismissed concerns that his company would selectively block or slow some Web content. “We make our money by carrying traffic,” he said. “That’s how we make dollars. So to view that we’re going to be advantaging one over the other really is a lot of histrionics, I think, at this point.”
But McAdam suggested that broadband power users should pay extra. “It’s only natural that the heavy users help contribute to the investment to keep the Web healthy,” he said. “That is the most important concept of net neutrality.”
The FCC needs to look at the broad Internet industry, not just broadband providers, when it considers new net neutrality rules, McAdam said. Companies like Netflix, Apple, Microsoft and Google have a role, and “any rules will have to include all of these players,” he said.
McAdam called for the FCC to create “light touch” rules on net neutrality. The FCC needs to consider growing uses of broadband in medicine and other fields, he said. “Everything from health care to telematics to the energy grid need to be balanced with someone who’s trying to watch last year’s episode of [TV show] NCIS,” he said.
McAdam said he’s “encouraged” that the latest FCC effort may bring clarity on net neutrality rules.