What’s up with… Twitter, Canadian telco M&A, US broadband benefit abuse

TelecomTV Staff
By TelecomTV Staff

Oct 28, 2022

  • Twitter is now run by the Chief Twit
  • Canada’s telcos get another M&A red light
  • ISPs have been taking advantage of customers and the federal government’s broadband relief efforts in the US

In today’s industry news roundup: Elon Musk has, he believes, freed the bird (at a cost of $44bn); Rogers, Shaw and Quebecor find mediation frustrating; ISPs have been exploiting vulnerable customers and ripping off the government in the land of the free; and more.  

Elon Musk has completed the $44bn acquisition of Twitter, a move that takes the company into private ownership, and has made a number of immediate changes. First, he updated his Twitter profile description to ‘Chief Twit’, sent a message to advertisers to tell them he loves humanity and that all the negative reports about how he views advertising were mostly wrong and then, according to Reuters, sacked the chief executive Parag Agrawal, chief financial officer Ned Segal, and legal affairs and policy chief Vijaya Gadde, before reportedly installing himself as interim CEO (one wonders what investors in SpaceX and Tesla think of that further dilution of his time and attention). He then tweeted “the bird is freed”. This sounds like fun for him, but he has also noted that he plans to cut the Twitter payroll, leaving the company’s 7,500 staff wondering if they will still have a job by the end of this year. His latest tweet says “let the good times roll”. If only. 

In Canada, the proposed CAN$20.4bn acquisition by Rogers Communications of Shaw Communications, first announced in March 2021, looks no closer to reaching a favourable conclusion. The Canadian operators had hoped to overcome opposition to the ordeal from the country’s Commissioner of Competition by agreeing to offload Shaw’s Freedom Mobile operations to Videotron, a subsidiary of Quebecor, a move that would help allay fears that Rogers would command too much mobile sector power if it subsumes Shaw. But as part of a competition tribunal process, Rogers, Shaw and Quebecor have been in a mediation process with the Commissioner of Competition to allay any fears and find a suitable agreement for all. However, “the mediation did not yield a negotiated settlement,” the operators noted in this announcement issued late on Thursday. “We are disappointed with this outcome… the Bureau's unwillingness to meaningfully engage unduly delays lower wireless prices for Canadian consumers.” It’s not known whether further mediation talks will be held or if the standoff between the operators and the regulator will head to court and end in litigation. This has turned out to be a long and messy affair and it isn’t over yet. 

When the Covid-19 pandemic first hit the US, the telecom industry regulator, the Federal Communications Commission (FCC), quickly introduced the Emergency Broadband Benefit programme (EBB), a targeted relief to give “low-income” citizens a US$50 a month discount on their broadband bills. It was a good and timely idea but bureaucratic and complex. Basically, the federal government gave money to internet service providers (ISPs) and telcos which, in turn, allocated the benefit to qualified customers – and that’s where the problems started. ISPs and telcos determined those who qualified for the relief, and some comms companies immediately constructed practically impenetrable bureaucratic thickets around the money (that the government had given them) and made the process of ‘qualification’ to get the 50 bucks a month discount a Kafkaesque nightmare. To make things even worse, in acts of cruel cynicism, some also deliberately devised ways to exploit vulnerable subscribers by pushing applicants for the benefit onto more expensive service plans that would kick-in once the relief payment contract, which they had been compelled to sign, had expired. Quite quickly as part of the US government’s Infrastructure Bill, the EBB became the Affordable Connectivity Program (ACP) and the $50 a month relief was reduced to $30 a month. Now, two years later, and after instigating an avalanche of complaints, the FCC has found that “dozens” of broadband providers ripped off the process for millions of dollars – and mightily exploited their subscribers in the process. According to the crusading newspaper, The Washington Post, (the one that broke the Watergate scandal that brought down President Richard Nixon back in the 1970s), the worst offending comms companies were in Alabama, Ohio, Oklahoma and Texas. The Post is now conducting its own investigation into the allegations of fraud and is sending the evidence it finds to the FCC. This has revealed that companies, such as T-Mobile US-owned Assurance Wireless, exploited the ACP to cajole pensioners and vulnerable individuals and families to contact them for expensive services they hadn’t requested and did not need. Elsewhere, AT&T told some of its premium service subscribers who had fibre connectivity providing 1Gbit/s broadband services that they would qualify for the subsidy only if they signed a new contract for a service that was 66% slower and subject to monthly data capping. While the incidence of fraud seems to have been widespread (and the US Congress too is now mounting an investigation into malpractices), the ACP overall was successful and more than 14 million US households benefited from it. Nonetheless, it seems to be apparent that some powerful de facto regional monopoly broadband suppliers have been central to the ongoing investigation. To paraphrase Shakespeare’s Hamlet, “Something is rotten in the state of Alabama, and Ohio and who knows where else?" Well, we’ll find out.

Despite the ongoing political farce that is convulsing “The Mother of Parliaments” and has opened up the governance of the UK to global ridicule, much of the real, routine and serious work of the many, various and less histrionic parliamentary committees continues as normal. There are five different types of committees: standing committees, subcommittees, select committees, joint committees, and the Committee of the Whole. Each consists of a small number of members of parliament from the House of Commons, or peers from the House of Lords, or a mix of both, appointed to deal with particular areas or issues. One such committee is the Business, Energy and Industrial Strategy (BEIS) Committee, which is trying to encourage the government to take a firmer stand against the abuse of power by big tech companies and pass controlling legislation that will have real teeth. The committee wants the immediate publication of the Digital Markets Bill which, in May this year, was announced in the very last Queen’s speech to be introduced by the late Elizabeth II. Before the government turned itself into a three-ring circus and brought on the clowns, it had accepted that existing laws to regulate competition were not up to the task of reining in the “entrenched market power held by a small number of digital firms”. It, therefore, proposed the creation of a digital markets unit (DMU) within the Competition and Markets Authority (CMA). However, for the past six months, the bill was left to languish and nothing has been done – until now. This week, the chair of the BEIS committee, Darren Jones, MP for Bristol North West, commented: “The Competition, Consumer and Digital Markets bill has wide support and should be prioritised, especially given the difficulty the government currently has at passing other laws which are more controversial.” (Note to the right honourable member: That’s because the government spends so much of its time having custard-pie fights in the Commons chamber). Meanwhile, the CMA has given a thumbs up to the bill which, in addition to addressing big tech’s blatant and all-too-frequent anti-competitive behaviour, will also beef-up consumer rights: The CMA will now "carefully consider and respond to the committee’s recommendations in due course". So, no particular hurry then. The central tenet of the BEIS committee’s argument is that fines that have been levied on big tech in the past have been derisory and thus completely ineffective as the companies regard the financial penalties as just another cost of doing business and just carry on regardless. It says the new legislation should permit the imposition of fines of up to 10% of a big tech company’s global annual income. Critics say that such a fine might sting a bit, but the penalty should be high enough to make big tech CEOs cry bitter tears – of course, that would apply only if any of them actually have working tear ducts.

- The staff, TelecomTV

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