Phillip 'Not Picking Up What Moffett Puts Down' Dampier

Tech, business, and even a few mainstream media outlets have been booking Sanford Bernstein’s Craig Moffett as an independent observer of all-things-broadband, without revealing he literally has a vested interest in boosting profits for the telecommunications industry.

The latest of Moffett’s heavily-slanted ideas appeared over the weekend on ZDNet, where Larry Dignan’s Between the Lines column used one of Bernstein’s “research notes” to provoke readers into a discussion about Internet Overcharging:

Metered broadband access is inevitable and may even be good for adoption of speedy Internet access.

That’s the argument from Bernstein analyst Craig Moffett in a research note. Moffett sets the scene:

• The FCC’s open Internet push allows for metered broadband.
• AT&T has introduced usage caps across its wireline business. DSL customers are limited to 150 GB of monthly consumption. U-Verse subscribers get 250 GB, or the same as Comcast. Users will be charged an extra $10 a month if they exceed the cap and it’s $10 per 50 GB after that.
• AT&T has already introduced tiered wireless plans.
• Time Warner Cable has a few usage based pricing pilots underway.

Moffett

Nowhere in Dignan’s column does he disclose Moffett is a paid Wall Street analyst working for the interests of investor clients of Sanford Bernstein who want to maximize the value of their telecommunications stocks.  Moffett’s long history of statements about industry pricing reflect those interests, which are often very different from those of most consumers.  Moffett’s world view: anything that brings in more revenue is good for shareholders (rate hikes, metered billing), anything that drives down shareholder value is not (infrastructure upgrades, pricing cuts, customer defections).

On that basis, Moffett has been called a “cable stock fluffer” by our friends at Broadband Reports for his relentlessly pro-cable industry commentary, even while ridiculing transformational projects like Verizon’s FiOS fiber to the home network for being “too expensive” and not delivering enough return on shareholder investment.  Consumer Reports delivers the opposite view: high marks for Verizon FiOS, mediocre to lousy marks for most of the nation’s cable operators.

While there is nothing inherently wrong with Moffett doing his job on behalf of his paying clients, using his views outside of that context — particularly when those interests go undisclosed — is journalistic malpractice.

Oh, and Time Warner Cable abandoned their usage-based pricing pilots in 2009 after customers declared war on the cable company.  Those darn customers, ruining the industry’s plans!

The rest of Moffett’s research note doesn’t get much better in the “true facts”-department:

The goal of moving to usage based pricing is not to undermine competition from Netflix (or anyone else… although it certainly wouldn’t be good news for Internet video). And it is most decidedly not to simply “raise prices for broadband” as Public Knowledge or New America would have it (although it might well do precisely that, too). Instead, it is nothing less than to re-align the entire business model of today’s infrastructure providers with the next generation of communications… so that broadband providers might stop fighting against the tide and embrace it instead.

With usage based pricing, broadband providers, and Cable operators in particular, can create an “iso-profit” curve, where the amount they make from a physical connection is about the same whether someone uses that connection for linear video or, alternatively, web video. The goal is not to stifle competition, but instead to create indifference not just to the end state of video by-pass, but indeed for all points along the way. The adoption of usage based pricing would be transformational to the debate for Cable operators, inasmuch as it would essentially indemnify them against all potential outcomes.

Moffett represents his interests, not yours.

Yet some of Moffett’s earlier statements would seem to argue with himself.

For instance, back in March Moffett was making plenty of noise about AT&T’s caps precisely targeting video providers like Netflix:

Moffett believes usage caps have everything to do with stopping the torrent of online video.  He notes AT&T’s caps are set high enough to target AT&T customers who use their connections to watch a considerable amount of video programming online.

“Only video can drive that kind of usage,” Moffett writes.

Moffett has repeatedly predicted any challenge to pay television models from online video will be met with pricing plans that eliminate or reduce the threat:

“[I]f consumption patterns change such that web video begins to substitute for linear video, then the terrestrial broadband operators will simply adopt pricing plans that preserve the economics of their physical infrastructure,” Moffett said. “Of course, any move to preserve their own economics has far-ranging implications. Any move towards usage-based pricing doesn’t just affect the returns of the operators, it also affects the demand of end users (the ‘feedback loop’).”

The only thing usage-based pricing indemnifies is the industry’s confrontation with revenue-eroding cable-TV cord-cutting.  And Moffett knows this, although he would probably give rave reviews to bringing similar usage-based-billing to cable television packages, which would charge you for every show you watched on top of your monthly bill.

These pricing models, already firmly rooted in Canada, have done nothing to bring the “next generation of communications” to our neighbors to the north.  Indeed, Canada’s ranking in broadband continues its decline as large cable and phone companies pocket the profits instead of committing to wholesale upgrades of their networks to deliver the kind of service increasingly common in Europe and Asia.

But the real laugh out loud moment comes last: Moffett’s prediction that AT&T’s usage pricing will increase broadband adoption.  Perhaps that’s true if you prefer telecommunications companies abuse you, but as we’ve documented over the past three years, these pricing schemes never save anyone money — they just increase the price of your service while decreasing the value of it.

T-Mobile has announced it is giving some of its smartphone customers unlimited free calling, when you are within range of a Wi-Fi signal.

This new feature is available on Even More and Even More Plus postpaid rate plans for customers with Wi-Fi Calling-capable phones. Wi-Fi Calling is based on the Smart Wi-Fi application that comes pre-loaded onto many of T-Mobile’s latest smartphones.  It comes from Kineto Wireless, which provides a similar app for Orange UK and Rogers Wireless customers in Canada.

When enabled, T-Mobile customers will see a blue ‘talk bubble’ icon in the status bar.  Once active and running, all voice calls made on your phone while within range of a connected Wi-Fi signal are reportedly not counted against your plan minutes.

Judging from anecdotal reports across the web, T-Mobile customers have been able to add the free calling feature to their accounts as of last Friday.  The fastest route to a quick activation is calling T-Mobile customer service.  Those subscribed to a Family Plan must activate the feature individually for each smartphone on the account.

Wi-Fi Calling is primarily pitched as providing a solid signal where none exists, a helpful feature for T-Mobile customers who find reception less than robust indoors.  Offloading wireless traffic to Wi-Fi benefits T-Mobile as well, reducing demand on its cell towers.

The technology differs from femtocells – small devices that connect with your broadband connection and deliver a 3G wireless signal in your home or office.  Because the Smart Wi-Fi app that powers Wi-Fi Calling is software-based, there is no hardware expense and little customer configuration required.  But Wi-Fi Calling is more restrictive.  A femtocell delivers a 3G signal to any nearby device registered to access it; Wi-Fi Calling only works with phones pre-equipped with the feature.

T-Mobile is also reportedly readying its own femtocell solution for low signal areas.  Their Cel-Fi Microcell is undergoing focus group testing at a price point of a $50 refundable deposit, and a monthly cost of $1.99.

T-Mobile’s website has created some confusion over their Wi-Fi Calling by delivering contradictory information to what customer service representatives are telling customers.  Customer service and an internal company memo suggest the use of the feature does not count against plan minutes, but their website says the opposite.

T-Mobile’s latest innovation begs the question: Would AT&T  — potential future owner of T-Mobile — ever offer Wi-Fi Calling to its customers for free, with no deduction of plan minutes when used?

AT&T femtocell users find the company does deduct plan minutes, unless customers pay for a $19.99/month add-on plan for an unlimited calling option.

Kineto Wireless produced this video explaining how Smart Wi-Fi Calling works, and we’ve included a second video from the company explaining how to access the application from a T-Mobile smartphone.  (6 minutes)

The Rural Mobile and Broadband Alliance (RuMBA) USA released a whitepaper this week concluding that satellite-delivered broadband is more promise than results.

“When measured against the prevailing definition of broadband, satellite technology falls far short of conventional wired and wireless alternatives, mainly due to latency, bandwidth, price, performance and service shortcomings,” the Alliance wrote in a statement.

In other words, everything.

“Given the limitations of satellite Internet service detailed in this report, RuMBA cannot consider satellite a viable solution for rural communities who are increasingly cut off from mainstream America by the lack of access to affordable broadband service,” says Luisa Handem, founder and Managing Director of RuMBA USA.

“There is every indication that America’s reliance on broadband is only going to increase, especially in the areas of business, education, healthcare, government and entertainment, so it is vital that America’s rural communities have all the facts before deciding on broadband access, and delivering those facts is what this paper is about,” says Sascha Meinrath, Director of Open Technology Initiative, New America Foundation.

Among the Key Findings:

• The latency inherent in satellite Internet connections limits their use for standard broadband functions such as Voice over IP (VoIP) and Virtual Private Networks (VPNs).

• The capacity limits of satellite Internet service rule out broadband functionality taken for granted by Americans living in communities served by cable, fiber optic, and DSL services. These functions include automatic software updates, online backup, streaming video, telecommuting, and website hosting.

• Notwithstanding those limitations satellite Internet service is less affordable than wired Internet service.

While Stephen Cobb, author of a whitepaper on the subject, considers satellite Internet access an amazing technology, it has proved to be a poor substitute for ground-based, wired alternatives, including DSL.

More than 20 million rural Americans live without any access to the Internet, despite the country’s growing reliance on broadband service.  Those that do subscribe to satellite service generally report a dismal experience, in part because of a punitive usage limit that dramatically lowers already-slow speeds when exceeded.  Weather disturbances and heavy snow can also disrupt satellite signals, and contract terms often carry hefty termination fees if one cancels before the end of the contract.

Phillip Dampier

Stop the Cap! reader Angela sent us a print-out, by mail, of a recent guest editorial published by the online news site, the Lincoln Tribune.  White, who is 89 and lives in North Carolina was irritated by the piece, written by Kinston, N.C. mayor B.J. Murphy.

“B.J., who was all of 29 when he was elected in 2009, is the first Republican mayor in Kinston since Reconstruction, and after writing pro-cable company nonsense like he did in that [online] paper, he better be the last,” White wrote.  “My mother and father grew up with the same kind of monopoly these cable companies have today, only then it was the damn railroads.  How we ended up electing a mayor who wants us back in that era is beyond me.”

What caught my attention early on skimming the mayor’s views was a single passage early on in his piece:

Municipal broadband, also known as Government Owned Broadband Networks (GONs) is quickly becoming our state’s new enterprise service of choice for cities and towns.

Really?  GONs?  Now I’ve been editing Stop the Cap! since mid-2008, and we’ve covered North Carolina’s broadband landscape extensively, and this is the first time I’ve ever seen community-owned broadband referred to as “Government Owned Broadband Networks.”  A quick Google search reveals why: it’s a loaded term conjured up by corporate-funded, dollar-a-holler groups that oppose public involvement in broadband.  People don’t like “government” they surmise, so let’s relabel these networks accordingly.  Besides, bin Laden is dead and we can’t use him.

In this case, the acronym ‘GONs’ doesn’t even make sense — shouldn’t it be GOBN?  But that wouldn’t sound as demagogic as “gones,” would it?

Your cable dollars pay for consultants who cook up these silly labels, which are not even accurate.  Community-owned broadband need not be a “government-owned” enterprise it all.  Some are public-private partnerships, others are co-ops or run on a not-for-profit basis independent of government.  What they do have in common is the ability to offer better broadband than the “take it or leave it” service many cable and phone companies provide, if they deliver it at all.

After getting past the pretzel-twisted acronym, it’s clear Mayor Murphy is no fan of community broadband.

I believe we should refrain from the temptation to compete with private communications providers on services and infrastructure that we are not equipped to properly manage.

Kinston, N.C.

Who is “we” exactly?  The city of Kinston?  Mayor Murphy must not believe in the talents and abilities of his employees.  Is Mayor Murphy confessing he is in the ironic position of attacking local government while also being an integral part of it?

Most of Murphy’s editorial is a rehash of talking points already delivered by dollar-a-holler groups like the Heartland Institute or something called the Coalition for the New Economy.  The hypocrisy of both “small government” groups calling for more government regulation on certain broadband providers while exempting their corporate friends and backers is lost on them.

Murphy suggests municipal utilities are not well run, and the locals evidently complain regularly about the one serving Kinston.  Are the complaints about service in other towns about companies like Duke Energy and CP&L — private providers — any fewer in number?  Who exactly loves their local gas and electric company?

Murphy concedes “many cities and towns throughout the years have seen voids in service or infrastructure, not easily duplicated by the private sector.  Those areas of service tend to be water, sewer, and sometimes electricity.”

Our rural grandparents lived that life, waiting for electricity and telephone service that private companies refused to provide because it was simply not profitable enough for them to do so.  In fact, NC Public Power was created precisely because private companies wouldn’t deliver electric service in rural North Carolina.  Just 30 years ago, the state allowed municipal construction of generating plants because there were fears private companies lacked the resources to handle the growth in electricity demand.  The Three Musketeers: Mayor Murphy, the Heartland Institute, and the “Coalition” would prefer cities go dark waiting for private capital to show up?  And at what rate of return would they demand from a state in desperate circumstances?  Imagine the complaints rolling in over that.

And so it goes with rural broadband — a service still not reliably available throughout rural communities in Murphy’s state and 49 others.  The problem of rural North Carolina’s pervasive lack of consistent service is so bad, the Golden LEAF Foundation targeted rural broadband development in 69 North Carolina counties, most lacking more than the slowest speed DSL.  Lenoir County, which includes Kinston is not among them.  Perhaps Murphy’s myopic views apply in his local community, but they certainly don’t in large parts of the rest of the state.  Nobody is forcing the mayor to build Kinston a broadband network.  It would be nice if he didn’t advocate away that right for other less fortunate areas.

Golden LEAF Broadband Project (click to enlarge)

Golden LEAF’s initiative, which is just one of several projects in the state, has garnered more than 130 letters of support including approximately 70 from state, county and municipal officials and 12 from middle-mile and last-mile service providers interested in using the fiber network to reach consumers and small businesses.  Part of the project is being funded by federal tax dollars.  Many of the providers eager to connect to that network are private companies, who seem to have no problem hopping on board a fiber backbone paid for, in part, by taxpayer dollars.

Other projects are community fiber to the home networks, designed to support high bandwidth requirements of the digital, knowledge-based economy.  These community providers didn’t appear out of nowhere.  Communities built these networks after incumbent providers refused upgrade requests, repeatedly.  Some communities even open up their existing municipal fiber networks to residential use.

The hue and cry among those opposing community broadband usually begins when these new providers start selling service to the public.  Private providers don’t complain when public networks provide service only to schools, health care facilities, and public buildings.  But when anyone can sign up, the complaints rage from corporate-funded dollar-a-holler groups, the companies themselves, and certain politicians, some who take campaign contributions from the other two.  The talking points are remarkably similar.  Too similar.

Murphy

Mayor Murphy makes an unfortunate comparison in his editorial — to those railroads which made Angela’s hair stand on end.

“His only experience with that monopoly and the barons who ran it came from his American History class and he wasn’t paying attention,” she says.

Government better serves the people by creating the framework for private business to thrive, not by actually owning or competing with private, tax-paying businesses.  Rarely, if ever, will one see two railroad tracks side by side owned by different companies.  Yet, that is what would happen with broadband service in many communities. In many cases, GONs would essentially use taxpayer dollars to build Internet infrastructure on top of that which has already been put in place by private providers.

Uh…

Is the mayor actually promoting a monopoly for broadband?  I suggest the mayor read our earlier piece about the historical plight of Danville, Virginia — a community on the border with North Carolina.  He will learn that those one-railroad-towns desperately wanted a second or third railway serving their community, if only to escape the horrible and expensive service monopolies and duopolies provided in places without sufficient competition.  It took decades to break the railway monopolies up, and consumers and businesses overpaid millions of dollars to robber barons who fixed prices and the type of service communities would receive.  That kind of control could make or break the economy of a town or city.  So it will be with broadband.

Of course, the mayor could suggest we liberalize access to existing broadband infrastructure and allow competitors to sell services on every available network, or allow a community to build one giant fiber optic pipeline on which every provider can deliver service, but we know what his free market friends would say about that.

Boiled down, Murphy’s arguments come from a position of already having access to the broadband resources he needs, wants, and can afford.  That’s a classic example of “I have mine, too bad you don’t have yours”-politics.

That seals the fate of rural North Carolina to an indefinite future of never getting broadband service.

Ten Turkish cities are getting major speed upgrades from their fiber-to-the-home provider Turkcell, which announced this week they are doubling the speed of their basic plan and introducing 1Gbps service.

“Through our investments, amounting to nearly $890 million U.S. dollars over the past three years, Turkcell Superonline has continued to pioneer the fiber-optic era in Turkey,” said Turkcell CEO Süreyya Ciliv.  “Now we are proud to provide a 1,000Mbps Internet speed service in Turkey.”

Superonline General Manager Murat Erkan announced current budget plan customers would get free speed upgrades from 10Mbps to 20Mbps, with no rate change.  Budget plan customers can choose from a usage-limited plan offering 4GB of monthly usage for $18 a month, or unlimited use for $31.

Higher speed unlimited use packages are already available, including 50Mbps for $63 a month and 100Mbps for $126 a month.  The new 1Gbps package is pricey by any consumer’s standard — $634 a month, but even at business rates is a bargain for any company paying for dedicated data circuits. Turkcell even offers a pay-as-you-go Internet package for many of their speed tiers.  Pay $3.17 a month for the connection and around $5 per gigabyte of usage.  On vacation or away for an extended period?  Just pay the connection fee — no usage charges.

Fiber service is currently available in Adana, Ankara, Antalya, Bursa, Istanbul, Izmir, Gaziantep, and Kocaeli.  Two additional cities will be wired by the end of 2011.

For the rest of Turkey, ADSL, bonded ADSL, and some ADSL 2+  service predominates, with speeds ranging from 2-16Mbps.  Unlimited and usage quota packages are available starting at around $18.40 a month.  The first six months of service are provided at a special discounted rate of $6.33.

In comparison, American cable company ISPs charge an average of $40-50 a month for 10/1Mbps service, $50-60 for 20/1Mbps service, and $99 a month for 50/5Mbps service.

Meredith Attwell-Baker sure is.

The exit of Meredith Attwell Baker from her role as a Republican commissioner on the Federal Communications Commission to take a position as a top lobbyist at Comcast is raising eyebrows in Washington and anger in the rest of the country.

Comcast confirmed late today Baker will serve as their new senior vice president of government affairs, a title that can be considerably shortened to “lobbyist.”

The short span between March, when Baker was browbeating regulators over “taking too long” to review the Comcast-NBC merger she supported, and today’s announcement has surprised even some Washington insiders.

Often, those looking for a better paycheck in the private sector will start by working for a D.C. lobbying firm before directly accepting employment with a company whose multi-billion dollar merger deal they affirmed months earlier in their role as a regulator.

Tim Karr at Free Press called today’s announcement more food for the cynics:

With behavior like this it’s little wonder that American people are so nauseated by business as usual in Washington. Inside the Beltway the complete capture of government by industry barely raises any eyebrows. Outside of Washington, people of every political stripe have expressed near unanimous contempt for a system of government that favors powerful corporations at the expense of the many.

An opinion piece in the Los Angeles Times noted Baker’s move raises uncomfortable questions about how legislators and regulators make their decisions. “Are they acting in their constituents’ best interests, or are they burnishing their prospects for a high-paying job on K Street after they leave government?”

The New York Times expanded on Baker’s strong sentiment for the merger:

“The NBC/Comcast merger took too long, in my view,” Ms. Baker said on March 2 in a speech to a communications industry group. Noting that that time was similar to the length of other major merger reviews at the commission, she asked whether those reviews were preventing companies from trying to grow through acquisition.

“My concern is that you might walk away,” she told the communications executives, “and how many other consumer-enhancing and job-creating deals are not getting done today.”

Politico reported that Comcast’s gain was probably a loss for consumers:

“Sometimes the revolving door between government and private industry spins quickly and sometimes it’s on a rocket sled,” Dave Levinthal, communication’s director for the Center for Responsive Politics, told POLITICO. “This transition is as quick as it can possibly get.”

While Baker is not allowed to be an official lobbyist, Levinthal noted that she has many ways to be influential and lobby for her new company in a broader sense.

“It’s a big boon for Comcast,” he said. “They are getting somebody who has unbelievable government experience and know-how” in the communications space. Consumers, he noted, can’t afford to hire someone of a similar stature to advocate for them.

Comcast denied it approached Baker for a job until after their merger deal was approved.  That defense only strengthens suspicions Baker’s vote made her an even more attractive candidate for the cable company, but most pundits guess she would have supported Comcast even without a job offer. Judging from the comment sections of most major media stories covering today’s events, consumers are unhappy. Some called Baker an opportunist, while others used the occasion to bash Republicans for their reflexive support of big cable and phone companies paying off with jobs at the companies they strongly supported while in government positions.

Considering a few former Democratic commissioners have also made a living working for the interests of big cable and phone companies, calling today’s events an exclusively Republican travesty would be wrong.

Baker will report to Kyle McSlarrow, who recently left the National Cable and Telecommunications Association, the cable industry’s top lobbying group, for his own new career at Comcast.

Copps

Federal Communications Commissioner Michael Copps believes that when private companies drop the broadband ball, local communities should have the right to pick it up and run their own community-owned Internet providers.

Copps delivered his remarks yesterday at the annual conference of the SouthEast Chapter of the National Association of Telecommunications Officers and Advisors, a group representing the communications needs and interests of local governments and the communities they serve.

Copps told the audience in Asheville, N.C., broadband is no longer simply a nice thing to have.  It’s now an essential service for many Americans whose work, education, civic involvement, and entertainment increasingly depend on a fast, reliable, and affordable broadband connection.

According to the commissioner, the fact that many communities still don’t have it comes from the mistaken notion that private providers will deliver the service in areas where return on investment requirements are unlikely to be met:

As most of you know, I have been pushing municipal broadband for a long, long time.

When incumbent providers cannot serve the broadband needs of some localities, local governments should be allowed–no, encouraged–to step up to the plate and ensure that their citizens are not left on the wrong side of the great divide. So it is regrettable that some states are considering, and even passing, legislation that could hinder local solutions to bring the benefits of broadband to their communities. It’s exactly the wrong way to go. In this context, too, our previous infrastructure challenges must be the guide.

The successful history of rural electrification, as one example, is due in no small part to municipal electric cooperatives that lit up corners of this country where investor-owned utilities had little incentive to go. Those coops turned on the lights for a lot of people! You know, our country would be a lot better off if we would learn from our past rather than try to defy or deny it.

Copps is now the second FCC Commissioner to defend municipal broadband.  Commissioner Mignon Clyburn has repeatedly expressed similar concerns about private companies trying to restrict public broadband development.

Telefonos de Mexico is known as Telmex, the country's largest telecommunications provider.

Mexico’s largest phone company Telefonos de Mexico SAB is not about to allow themselves to be outgunned by upstart competitors like mobile-phone carrier Grupo Iusacell SA, which is installing fiber to the home broadband service in up to 40 cities offering 100Mbps speeds.  Now they are working on a fiber to the home network of their own, planned to reach up to one million Mexicans by the end of this year.

Mexico’s broadband expansion is coming on all fronts.  Cablevision (no relation to the U.S. company with the same name) is delivering cable broadband service to an increasing number of cities.  But news that consumers will soon have the choice of not one, but two fiber to the home networks has the country buzzing with excitement.

“Fiber-to-the-home is the best technology that exists,” Martin Lara, an analyst at Corp. Actinver SAB in Mexico City told Bloomberg News. “It’s going to be good for the consumer.”

The broadband speeds in Mexico will rapidly exceed those in the United States if the two fiber providers end up in a speed and pricing war .  For now, Telefonos plans on offering packages of 10, 20 and 50Mbps to subscribers.  That may increase to 100Mbps if competitors make an issue about maximum available speeds.  That’s quite a change from traditional DSL packages from Telefonos, which range from 1-5Mbps in most areas.

Upstart Iusacell is Mexico's third largest cell phone provider, but it has big plans for fiber-to-the-home service.

Iusacell, mostly known for its cell phone service, is building its own quad-play of wired fiber broadband, television, and telephone service — wireless and wired.  It’s Totalplay package risks Telefonos’ decades of dominance in the Mexican telecommunications marketplace, so the phone company is investing to compete.  The company’s Telmex landline customers are switching to wireless just like customers in the United States and Canada, so developing an attractive multi-element package is critical to keeping customers.

Mexico’s telecommunications laws are different from those in the United States.  Mexico’s dominant phone company has traditionally been prohibited from offering video services to their customers — a policy designed to protect cable providers and other competitors from heavyweight competition.  Those policies are likely to be revisited as a result of competitive fiber initiatives.  Additionally, Mexican providers have not been required to wire entire communities as part of operating agreements, and many don’t.  Instead, most cable and fiber providers build in lucrative neighborhoods where higher income residents live, often leaving poorer neighborhoods unwired. Foreign investment is also common in Mexico, with American and British companies joining Mexican super-billionaire Carlos Slim in financing and/or building out the advanced networks.

Mexico’s decision to adopt the latest fiber technology straight to customer homes increases questions about why American providers are mostly unwilling to do the same.

Governor Walker

You have to hand it to Wisconsin Gov. Scott Walker.  He wants to push through his legislative agenda come hell or high water.  After creating a national controversy about his battles with the state’s public unions, Walker and his Republican colleagues are in a hurry to ram through their laundry list of legislative initiatives before Wisconsin voters have a chance to potentially recall a number of them.

Among Gov. Walker’s favorites — a telecommunications deregulation bill ghost-written by AT&T.  If such legislation seems familiar to you, it is.  It’s largely the same bill written by and for telecommunications companies that withered in the Democratic-controlled legislature last year.  Now the Republicans hold the majority, and they see measures to strip out rate protection for basic landline service, investigations of consumer complaints, and holding low-rated companies’ feet to the fire as “anti-business and anti-competitive.”

Somehow, bill proponents claim, all of this deregulation will inspire AT&T and other companies to wire rural Wisconsin for broadband service, which would be a remarkable feat considering they’ve not done so in other states where they’ve passed nearly-identical deregulation bills several years ago.  In fact, the bill eliminates any state oversight of broadband matters period, end of story.

Perhaps AT&T’s goodwill will bring broadband to the rural masses.  What are the chances?  Not good, considering the proposed legislation also allows AT&T the right to abandon providing basic telephone service in the same rural areas still waiting for broadband.  Your chances of getting DSL from AT&T are markedly diminished if the company decides to disconnect your phone line, permanently.

“What’s in it for the citizens of Wisconsin?” asked Rob Boelk, president of one Wisconsin chapter of the Communications Workers of America that represents AT&T workers. “If you want to give away the farm, what will you get in return?”

Why campaign contribution checks, of course.

AT&T and other telecommunications companies have donated heavily to legislators in the state, particularly those sponsoring their legislative wishlists.  Walker has made serving the interests of AT&T and the Wisconsin State Telecommunications Association one of his top priorities this spring.

AT&T is delighted.  In fact, they are so confident in their friendship with Walker and the Republican-controlled legislature, they are willing to throw their usual deregulation allies overboard in the bill.  Verizon and Sprint are fiercely opposing AT&T’s bill, despite promoting it in prior years.  At issue are new provisions requiring wireless and VoIP providers to pay higher government fees and also pay access charges for using other companies’ broadband networks (AT&T’s) to complete calls.

At a recent hearing, telecom company executives told members of the state Senate’s Information Technology Committee Senate Bill 13‘s deregulation would bring competitive balance in the industry, wider broadband access and create tens of thousands of jobs.

They didn’t bring any evidence to back up those claims, but bill sponsor Rich Zipperer, (R-Pewaukee) was ready to deliver AT&T’s talking points anyway.  He’s a helper.

“Today’s smart phone world is governed by rotary phone regulations,” Zipperer said. “We have to ensure our telecommunications infrastructure can keep up with market demands.”

Evidently that means upgrading wireless networks, something AT&T is preoccupied with these days judging from their television ads, while ignoring Wisconsin’s rural consumers.

In fact, when similar bills passed in other AT&T states, basic telephone service rates began increasing, sometimes repeatedly.  AT&T wants to push customers into pre-packaged bundles of services, so most of the savings go to those who take all of their telecommunications business to AT&T.  But if all you want (or can afford) is a basic telephone line, price increases are in your future.

The dollar-a-holler groups are out and about

Zipperer called copper wire landlines “ancient technology,” a relevant point if AT&T was delivering something better to every Wisconsin resident.  They are not.  Instead, while their landline network languishes in rural areas, the company is investing in U-verse upgrades in larger cities, setting up the potential for telecommunications have’s and have-no-longer’s.

Some of the accompanying documentation supporting the deregulation bill is also suspect.

We were particularly struck with broadband map data provided by bill proponents showing a bountiful supply of competitive choice for broadband service in Wisconsin. Ironically, their bill also bans the state from getting involved in broadband mapping in the future.  Those who control the maps control the debate over broadband availability.  As usual, provider-influenced maps promise service where none exists or comes with strings attached.

Providers equate wireless broadband as identical to DSL, fiber, and cable Internet service.  Because of that, customers even in “one-bar” towns can “enjoy” wireless broadband from AT&T and Verizon (as long as they keep it under 2-5GB a month with AT&T or under 10GB on Verizon’s mobile broadband plans.)  Sprint, which barely covers rural and suburban Wisconsin, is also considered a player.  So is T-Mobile, despite the fact AT&T wants to buy it.  For most of Wisconsin, the broadband reality is far different.  AT&T is the dominant provider of DSL and U-verse service, Time Warner Cable delivers most of the cable broadband.  In rural areas, a handful of Wireless ISPs deliver service to some areas, but many others have no access at all.

Robust competition?  No.  Will this bill change that?  No.

Wired Wisconsin is wired into AT&T's cash machine.

Deregulation only enhances the trend of landline providers like AT&T allowing their aging landline networks to go to pot.  Providing DSL or wireless broadband to rural Wisconsin requires the same return on investment with this bill as it does without, and these companies have refused to deliver either, using that reasoning, for years.

Despite common sense reality, the dollar-a-holler groups are working overtime with AT&T to push this bill.  Take “Wired Wisconsin,” a group particularly ‘burdened’ with its corporate sponsors (namely AT&T).  Wired Wisconsin is all for the deregulation bill, which they like to call “modernized telecom rules.”  The group’s leader Thad Nation, is a lobbyist who has run several campaigns promoting AT&T’s agenda, including the ironically-named Midwest Consumers for Choice and Competition, TV4Us and Technology for Ohio’s Tomorrow, all creatures of AT&T.

Nation’s lobbying firm explains how it works:

Getting government officials or bodies to do what you want isn’t easy. Government is inherently a slow, bureaucratic entity. When you want elected or appointed officials to change policy, you need a comprehensive plan – and the resources, relationships and quick-thinking to implement that plan.

We come to you with decades of experience in advocacy, moving legislators and engaging state agency leaders to action. Let us help you build and drive an aggressive advocacy agenda.

It’s a tough job, and Nation can be glad he isn’t doing it alone.  The Discovery Institute, which has turned pay-for-play research into an art form, was linked by Wired Wisconsin to “negate the myths and false assumptions” deregulation will bring.  They quote from Connected Nation, another industry connected group.  The only false assumption is that these people do this work for free and their results represent actual independent analysis.

Even if one were to believe AT&T’s claims, fact-checking them is just a few states away, in places like Arkansas, Kansas, or Texas.  None of them are bastions of rural broadband.  They weren’t before AT&T’s lobbying circus came to town and they still aren’t after they left.

Baker

The Wall Street Journal is reporting this afternoon that Republican FCC Commissioner Meredith Atwell Baker, nominated to the FCC in mid-2009, is preparing to leave her duties to take a job with Comcast Corporation, just four months after voting for the controversial merger between NBC-Universal and the nation’s largest cable company — her new employer.

The newspaper reports Baker is expected to announce her departure as soon as this week for an unknown position at the Philadelphia-based cable giant. Comcast declined to comment, a company spokeswoman told the Journal.

This is the latest example of the revolving door that rotates people to and from the industries they regulate as government employees.  Baker was expected to be renominated for another term at the FCC.

Baker’s performance on the Commission was decidedly business-friendly, although at several points she seemed confused about the issues involved.  At a Tech Policy Summit held in January 2010, Baker suggested consumers paying for roaming while using mobile broadband would be an effective solution to ease congestion on wireless data networks.