The Real Reason to Worry About the Verizon / Yahoo Deal

Concentrated corporate control of broadband access.

August 1, 2016

Verizon’s purchase of Yahoo is important - but not for the reasons that have been mostly reported.

We have a soft spot in our heart for Yahoo, as Yahoo is part of our collective internet memory.  Today, Yahoo is largely irrelevant - and what we should be talking about (and talking about on campus) is the story of Verizon, Comcast, and concentrated corporate control of broadband.

How much thought should we give to who control our access to the internet?

I think about this question each month when I pay (electronically) my Verizon mobile bill.  This bill, which pays phones for my nuclear family (4 lines), is amongst our largest recurring monthly expenses.

Nobody in my family uses the Verizon network to actually talk on their phones.  Phones are for connectivity.  Phones are for web connected apps, texting, surfing, social networking, and sharing.  Verizon provides access to mobile broadband for all those times (and there are many) when I am out of range of a WiFi signal.

Paying the bill for internet access to Comcast is another big recurring monthly expense - although I have chosen to pay more for the fastest level of access (150 mbps down) available at my location.  (Alas, fiber is not an option - but I wish that it was).

My choice as to where I get access to the internet is very limited.  Verizon is the only local cellular carrier with a strong signal and 4G speeds in my neighborhood.  Comcast has a monopoly on broadband access in my town.  

Do you have choice when it comes to providers of fixed and mobile broadband?  How much choice?

Each month I feel as I’m being ripped off by Verizon, as I need to guess at how much bandwidth my family needs - and pay for peak rather than normal usage.  With Comcast I pay much more per mbps than what the rest of the world pays - as Comcast can charge near monopoly broadband prices.

It is in the context of paying my Verizon bill, and paying and paying my Comcast bill, that I ponder Verizon’s $4.8 billion purchase of Yahoo.

If you have been reading the analysis of the purchase, you know that Verizon wants to find a way to be competitive in the digital (particularly mobile) advertising market.

Verizon, in buying AOL for $4.4 billion last year and Yahoo now, is gaining access to eyeballs and data.  Nowadays, we don’t tend to give Yahoo much thought, but the web properties owned by Yahoo still attract over a billion monthly users - 600 million of which are mobile users.

According to the McKinsey 2015 Global Media Report (a fascinating document), global digital advertising ($147 billion) in 2016 is expected to account for about a third of all global advertising spending.  Mobile ad spending accounts for half of all digital advertising.  

Today, Google and Facebook combined control more than half of the mobile advertising market.  As the NYTimes points out, if Verizon can leverage its Yahoo and AOL purchases and its mobile subscriber reach (over 100 million) to capture just a few percentage points of global digital adverting, then the company would earn billions.  

U.S. bandwidth prices - both fixed line and mobile - are amongst the highest in the world.  Those with the most resources can afford the high cost of speed and gigabytes.  Those with less resources are forced to pay ever higher percentages of their income to access information and participate in digital civic life.

How much we should be worried that the companies that have monopoly control of our access to the internet are also trying to own the content that flows down these pipes is a good question.  I think that we should be worried about any company that controls both access and content - the pipe and the data.

We should be concerned that the deal does nothing to make fast mobile broadband available to greater numbers of our citizens.

Verizon and Comcast (which owns NBC Universal and DreamWorks) claims that they will respect net neutrality laws and not privilege their own content (or degrade other content) - but do you really trust them?

Should we be worried that Verizon will use its data on our mobile behaviors for targeted advertising?  Most definitely.

Does it make sense for Verizon to buy Yahoo at the price they paid?  Sure.  For not much money (relative to Verizon’s size and profitability), the company gains access to lots of users and tons of user data - and buys a seat at the table in the global digital advertising game.

This acquisition should be more worrying to everyone else.

Verizon buying Yahoo does nothing to open up our choice in how we can access the internet.

The deal does nothing to lower the cost of internet access and bandwidth.

And Verizon’s purchase of Yahoo opens the door to another big company that we depend on for internet access to abuse their position of power vis-a-vis our data.

Non-monopoly internet access, data privacy, and net neutrality are issues that all of us in tech (and especially edtech) should care about.

Could regulators use the desire of bandwidth infrastructure providers to get into the content / advertising game to force these companies to play in a more competitive market?

The Verizon purchase of Yahoo should remind us, if only indirectly, that we need to pay attention to who controls our access to the internet.

Concentrated corporate control of internet access should be an issue that we discuss in our classes and on our campuses.

The postsecondary tech community should be leveraging whatever platforms we have to push forward a discussion of the costs of monopoly when it comes to access to bandwidth.

Have you been talking about the Verizon / Yahoo deal on your campus?



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