Last week, T-Mobile’s CEO John Lagere pubicly asked the Electronic Frontier Foundation a straightforward question: “Who the f*** are you anyway, EFF? Why are you stirring up so much trouble and who pays you?”
The question, delivered in a short podcast by the telephone mogul, was in response to a question EFF had asked T-Mobile: Doesn’t your latest video product, called Binge On, violate both the letter and spirit of the Net Neutrality laws?
That attack on EFF was the second part of Lagere’s response. Most commentators agree that it was just a dumb rant. The first part of his response was that Binge On’s software, which selects the best available data-stream for the user, doesn’t violate any Net Neutrality laws at all. That, the EFF says, is a lie.
In the resulting dust-up, T-Mobile has suffered a significant public relations hit and many technology analysts are now aggressively debating whether the company not only violated FCC rules but misled its customers in the process.
But the real question is whether this is actually illegal. If it isn’t, T-Mobile’s new product may be the first step taken by a telecommunications company in a dance several cellphone giants are about to join. Everyone in this industry is looking for a way around the FCC’s Net Neutrality decision and some say T-Mobile may have found one. It’s another round in the fight to keep the Internet alive.
It’s not surprising that T-Mobile would be leading this industry dance. Over the years, the company has won a reputation for running circles around its competition by flaunting industry norms. Its rep is like that of Volkswagen during the 1960s and 70s: not overly fancy, solid, cheap (it was the first and predominant purveyor of the “prepaid” phone) and great at finding alternative ways to get you were you’re going…or calling.
Most of that is only hype, the shine on a well-designed and aggressively sold image. T-Mobile is a major corporation that acts, pretty much, like every other corporation in its industry: trying to maximize profit while minimizing investment. But 60 million people have bought into the “alternative” image, using its prepaid and paid options and making T-Mobile a major industry player.
That prominence makes what the company does with video streaming very important. Video is not only the future of mobile communications but a whole lot of the present. With Netflicks, Hulu, HBO, Showtime and several other entertainment providers streaming television and movie content robustly, the video capability of a cellphone is rapidly becoming a factor when people decide which phone to buy.
So when T-Mobile announced Binge On in November, lots of eyes shifted in Lagere’s direction. What new wrinkle would T-Mobile create in video streaming to beat its competitors? And, given the way news is reported, what will Lagere say in announcing it?
The T-Mobile chief is considered the “bad boy” of the telecommunications industry: he brags constantly, bashes his competitors and critics in a way that makes Donald Trump look like a Sister of Charity and undercuts, circumvents and laterally competes against the rest of the industry. That behavior has conjured the “renegade” rep he so proudly flaunts and the media loves to report on. His announcements are always front page news in the technology press and they are usually positively reported.
But something went very wrong this time around. Industry journalists, “>fed by a superb analysis by EFF staff, realized that Binge On’s “wrinkle” was actually questionable legally and outrageous ethically. EFF analysts charged that T-Mobile was “throttling” or lowering the speed at which all video content is being streamed and not telling the customers it was doing that. In theory, that is what the Net Neutrality decision was developed to prevent.
“There are people out there saying we’re throttling. That’s a game of semantics and it’s bullshit,” Legere said in a video distributed on Twitter. “That’s not what we’re doing.”
Rather, Lagere claims, his company’s software detects the “best speed” at which a device can handle video steams and then adjusts the stream to that speed. They have to do this, he explained, because the time spent using Binge On to stream video isn’t charged to a user’s account provided the content provider signs up for the Binge On program as Netflix or Hulu do. The traffic, the company explains, would be over-whelming so adjusting speeds is the best way to keep content flowing in a suddenly clogged system.
But that’s shell game talk, EFF says, because T-Mobile hasn’t developed sophisticated technology to read device speed at all. It’s just detecting whether the content is video and then slowing it down to a third of the normal video speed. Its analysis proves that. “When Binge On is enabled,” EFF’s report says, “T-Mobile throttles all HTML5 video streams to around 1.5Mps, even when the phone is capable of downloading at higher speeds, and regardless of whether or not the video provider enrolled in Binge On.”
In a word…throttling and the FCC’s rules supposedly make that illegal. But, some analysts believe, it may be just unethical and reactionary and not a violation of the law.
The FCC defines Net Neutrality very clearly. On the Internet, a person purchases service at a particular speed and everything they receive comes in at that speed (or near it) without discrimination. So Netflix can’t make a deal with your provider to stream to your computer faster than someone who doesn’t have that deal. That’s illegal. At the same time, the provider can’t regulate streaming speed (thereby making preferential deals impossible). That’s throttling. That’s so you can get access to, for instance, This Can’t Be Happening without us having to pay your provider money we don’t have. We would disappear and so would millions of other websites.
Based on the evidence we have, T-Mobile is throttling, whether it admits it or not. In fact, companies that haven’t joined the Binge On program are finding their content is throttled just like the participating providers. Youtube, for example, had a fit when it saw the EFF findings because now T-Mobile customers have to pay the normal rate for the time Youtube content is being downloaded but they’re also getting the slower content. “Reducing data charges can be good for users, but it doesn’t justify throttling all video services, especially without explicit user consent.”
That “user consent” is the second issue. T-Mobile also made Binge On a “default” meaning that it’s running unless you opt out of it. But opting out of Binge On involves a complicated process over several screens. Most customers will find themselves challenged in doing that; many won’t even realize they have to do it. So they may experience slower and deteriorated content without realizing why and not knowing they can do anything about it.
The whole mess points up a problem with the FCC’s Net Neutrality decision. While it clearly outlaws preferential deals with companies and throttling of content from people who don’t make those deals, it might actually allow a provider to slow down all content if a customer can opt out of the program.
“It’s not entirely clear whether the no-throttling rule bars throttling programs where users can opt-out (or where they have to opt-in),” Berin Szoka of TechFreedom said explaining that throttling may be legal if the user chooses that.
T-Mobile continues to insist that it’s program doesn’t violate Net Neutrality rules. “T-Mobile is a company that absolutely supports Net Neutrality and we believe in an open and free Internet,” Lagere said in a more recent (and more restrained) blog post. “We want to continue to innovate and bring creative new benefits to market for all of our customers.”
But that may be avoiding the real issue. The FCC never decided that consumers could “opt out” of Net Neutrality because, if that’s allowed, the Internet’s neutrality would be impossible to defend. Networks are unified systems; a crack in a network threatens the entire system. The bottom line is that T-Mobile may have found a loophole in the FCC’s decisions and, if that’s so, the entire industry is going to jump through it.