Hultquist

Hank Hultquist, AT&T’s federal regulatory vice president, is taking questions on broadband Internet policy in an upcoming Washington Post piece.

Here is your chance to question AT&T about broadband issues ranging from Internet Overcharging schemes like usage caps and rationing experiments, Net Neutrality, U-verse and DSL broadband expansion, and AT&T’s involvement in the public policy arena.

AT&T is currently seeking major changes to the $8 billion Universal Service Fund that helps subsidize phone service for rural Americans.  AT&T wants to see that fund expanded to subsidize broadband improvements, which will directly benefit AT&T as it is among the top recipients of USF funds.  With 16 million current broadband customers and a service area that extends into the often-rural midwest and southern parts of the country, AT&T could receive a windfall in federal funds to pay for broadband service it doesn’t provide many areas today.

But what kind of broadband service will AT&T offer?  The company recently concluded a trial limiting use of its AT&T DSL service to customers in Beaumont, Tex., and Reno, Nev.  AT&T claims it is currently analyzing the results of that trial, and could bring usage limits on all of its customers.  Feel free to pose your own questions in the comments section of the Washington Post article (reg required) or sending an e-mail to Cecilia Kang (kangc@washpost.com) no later than Friday morning.

Scott Cleland, who runs the dollar-a-holler, broadband-industry funded astroturf group Net Competition already has his question in:

Shouldn’t those broadband Internet users (consumers or big businesses), who use the most bandwidth and benefit the most from faster more ubiquitous broadband, contribute relatively more to the Universal Service fund than those consumers and businesses that use much less bandwidth? Isn’t that the basic fairness principle that has long undergirded the current Universal Service fund, which is based on long distance usage/minutes?

Scott Cleland
Chairman, NetCompetition.org an eforum supported by broadband interests

Do you want to pay the higher broadband bills that Cleland advocates?

Kang promises to include as many of your questions as possible and post the Q&A early next week.

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Dingell

Rep. John Dingell has told FCC Chairman Julius Genachowski to drop broadband reform because the Michigan Democrat has not received a detailed reply to his letter about the matter sent back in May.  The Hill reports Dingell doesn’t like to be kept waiting for responses to his “Dingell-grams.”

“I find it wholly frustrating that Chairman Genachowski, after nearly two months, still has not responded to my questions about the classification of broadband Internet access services,” Dingell said in his letter.

Dingell added that he has “serious concerns about the FCC’s proposed course of action” and that Congress has “intense interest” in Genachowski’s plans.

In his May letter, Dingell had said he doubts Genachowski’s plan despite his support for network neutrality rules, which the FCC hopes to enact under the authority it would gain through its administrative maneuver.

“I feel Chairman Genachowski’s responses to my questions would be invaluable in informing the debate on the matter,” Dingell wrote this week.

He said the FCC should not proceed with Genachowski’s proposal to boost its power over Internet service providers through a regulatory maneuver known as “reclassification.” In his original letter, Dingell expressed “grave concern” that Genachowski’s plan risks reversal by the courts, putting “at risk significant past and future investments, perhaps to the detriment of the Nation’s economic recovery and continued technological leadership,” he wrote at the time.

Dingell’s days of putting his constituents first are well past.  He is the longest currently-serving Congressman and the third longest serving Congressman in the history of the country.  These days, having Washington officials bow before him is a much higher priority.  In a petulant letter sent to the chairman on July 20th, Dingell puts a deadline, in bold, for Genachowski’s reply.

Genachowski is probably wasting paper and time responding, considering Dingell already made public his opposition for broadband reform back in May when he wrote, “I have strong reservations about the course the commission is presently taking.”  Dingell said he’s worried that Genachowski’s proposal would be struck down in court, puts at risk “significant” past and future investments and could even “paralyze” other regulatory initiatives.

The reasons for his opposition amount to little more than concern trolling.  The telecommunications industry already challenges virtually every controversial policy enacted by government in the courts, threatens to slash investment in providing broadband service to those they’ve shown little interest in serving before, and do not deserve credit for “technological leadership” as the United States falls further behind others in broadband rankings.  The only threat to the national economic recovery from some cable and phone companies is another rate increase eating away at already tight budgets for most Americans.

Dingell’s latest noise opposing broadband reform brought praise from the U.S. Telecom Association, a group run by and for major broadband providers.  That should not be a surprise either, considering the USTA is Dingell’s 14th largest campaign contributor, donating $9,000 so far this congressional term.

Telecommunications interests who oppose pro-consumer broadband reform are among Dingell’s biggest contributors (in order of ranking):

Open Secrets reminds us this is a big money, high stakes fight with special interests pouring tens of millions into an all-out effort to stop meaningful broadband reform:

Since the start of the 2008 election cycle, telephone utility companies have given $12.7 million to federal candidates and party committees and spent $118.7 million on lobbying. Current lawmakers have collected $37.9 million from the industry, with Republicans collecting 51 percent of that.

The computers and Internet industry has spent even more money politicking and has leaned a little more heavily toward Democrats, giving current members of that party 60 percent of their nearly $50 million in total contributions. The industry has also spent $331.4 million on lobbying since 2007.

As the top all-time donor to federal politics, AT&T may have an especially strong standing on Capitol Hill. The company’s employees and political action committee have given $22.6 million since 1989 to current lawmakers through their candidate committees and leadership PACs, with 52 percent of that going to Republicans.

Verizon, too, is considered a “Heavy Hitter” for its extensive contributions over the years to federal political candidates. Current lawmakers have collected $9.2 million from Verizon’s employees and political action committee since 1989, with Democrats receiving 51 percent of that.

[...]

Here are the current lawmakers to bring in the most through their leadership PACs and candidate committees from telephone utility companies since 1989:

Opposing broadband reform that ultimately helps your constituents in return for campaign contributions and praise from groups like the USTA is business as usual in Washington.  Dingell’s outburst shows he’s forgotten exactly who he is supposed to be representing in this debate — his Michigan constituents, facing ever-increasing broadband bills.

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Broadband providers with a vested interest in keeping the marketplace a comfortable (for them) duopoly want you to believe everything is great in American broadband.  They would have you believe there is little room for improvement, despite the ongoing drop in America’s global broadband rankings and the ever-increasing price for the service.

Google’s announcement this spring that it was looking for a few great communities to provide 1 gigabit broadband service at competitive rates caused a firestorm… of interest.  Over 1,100 communities have applied for the service and more than 200,000 consumers have nominated their towns and cities for Google Broadband.  Apparently there is plenty of room for improvement after all — from coast to coast and in every state.

The small dots refer to local government applications for the service, the large dots indicate places where more than 1,000 individuals nominated their community.

Communities Applying for Google’s Think Big With a Gig Project

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Kyle "What Broadband Problem?" McSlarrow

In Kyle McSlarrow’s world, the only broadband problem is the one invented by the Federal Communications Commission when it claims that service is not being deployed to all Americans on a “reasonable and timely” basis.  The head of the National Cable and Telecommunications Association (NCTA), the cable industry’s lobbying group, has declared today’s broadband a U.S. “success story that keeps getting better.”

Writing in the group’s “CableTechTalk” blog, McSlarrow tells his readers that 95 percent of Americans already have broadband service available to them that meets the 4Mbps minimum speed standard proposed by the FCC, so where is the big problem?

McSlarrow’s interest in the economics of rural broadband is ironic considering the cable industry routinely bypasses rural Americans.  Where cable lines do predominate, meeting the FCC’s anemic 4Mbps minimum speed standard is not the biggest problem — cost is.  Where cable lines don’t reach, speed is an issue for many wireless and DSL subscribers.  For others, broadband service is not available at any price.

McSlarrow plays cable’s advantage on speed issues to promote minimum speeds higher than those sought by phone companies like AT&T and Verizon.  Of course, cable broadband does not rely on antiquated copper wire telephone networks.  In rural areas, many of these networks are held together with minimal investment.  DSL at any speed can be a luxury when available.

McSlarrow’s recognition that most of rural America will continue to be served by telephone companies doesn’t stop the cable industry from seeking an advantage over their nearest competitors by advocating for reduced subsidies for rural areas and policies that guarantee no potential competitor can ever see a dime in government broadband money.

Because the report plainly acknowledges that there is no reasonable business case to be made for extending broadband facilities to many of the unserved homes.  So instead of viewing the report’s finding as an indictment of broadband providers, it’s  perhaps better read as a statement of principle by the Chairman and two commissioners that, in their opinion, broadband already should be universally available, and, if there is no business case for that universal deployment, the government may have to step in to achieve it. So far as that goes, we agree.  For example, we support the report’s call to action on specific items that will speed broadband deployment to unserved communities.  Immediate FCC action on Universal Service Fund (USF) reform and pole attachment policy is critical to connecting unserved areas.

As explained in comments we filed last week, our industry strongly supports the USF reforms recommended in the National Broadband Plan (NBP).  To fund the FCC’s broadband USF proposals, we recommend adopting our proposal – filed in a November 2009 rulemaking petition – to reduce subsidies in rural areas where ample phone competition exists.  The sooner the Commission reduces unnecessary funding in the existing high-cost support program, the sooner it can direct funding to broadband deployment and adoption.

McSlarrow’s comments neglect to tell the whole story about what the NCTA actually wrote in its comments filed with the FCC:

The 4Mbps/1Mbps standard reflects today’s marketplace reality that most consumers choose not to purchase the highest speed tiers that are offered by their broadband provider. By setting a standard based on the services actually purchased by consumers, the Plan strikes the appropriate balance – not so low that it deprives consumers of the ability to purchase a service that meets their needs and not so high that it will require a significant infusion of new government funding.

Second, based on this definition of broadband, the Plan found that the vast majority of Americans – 95% of households – already have access to broadband, and that 80% of those consumers live in geographic areas served by two or more providers. For these areas where broadband has already been deployed, there is no basis for any increase in support; indeed, as NCTA has demonstrated, in many of these areas there is no basis for any high-cost support at all.

Consequently, the only areas that should see an increase in the support they receive are those areas that do not have broadband and qualify for CAF support, i.e., areas where there currently is no business case for private investment in broadband facilities.

In Great Britain, speeds promised don't match speeds delivered. The FCC is studying whether the same is true in the United States.

McSlarrow is disingenuous about Americans’ interest in improved broadband.  It’s not surprising many do not choose the highest speed tiers available from telephone and cable providers when one considers the premium prices charged for that service.  Some NCTA members charge $99 for 50/5Mbps service, which in other countries like Hong Kong sells for a fraction of that price.  One need only consider Google’s plan to deliver 1Gbps service to a handful of American communities.  It’s easier to count the communities that were not interested in this super-fast service.

The cable industry can afford to relent on a 4Mbps minimum speed standard for downloading as virtually all cable broadband providers already offer “standard service” plans well above that rate.  The cable industry’s own “lite” plans, usually 1.5Mbps or less, are not exactly the industry’s most popular.  Americans will choose higher speed service at the right price.

Broadband availability figures have become an important political issue, which is why controlling broadband mapping is so important to cable and phone companies.  Being able to offer that “95 percent of Americans already have access,” a figure in dispute by the way, can make a big difference in the debate.  As Stop the Cap! readers have seen repeatedly, broadband maps that depict broadband service as widely available in many areas actually is not, especially from phone company DSL service, which depends heavily on the quality of the existing infrastructure.

Most importantly, the NCTA seeks a new, even stricter standard for broadband funding under Universal Service Fund reform that would immediately deny money to any applicant that cannot prove there is no chance for any private investment in broadband.  As we’ve seen from broadband improvement applications filed under the Obama Administration’s broadband stimulus program, cable and phone companies routinely object to most proposals, claiming “duplication” of existing broadband service even in areas they have chosen not to provide service.  The NCTA would have us set the bar even lower, allowing any private entity to kill funding projects based solely on their claimed interest in providing the service themselves.

One sensitive spot the FCC did manage to hit was taking providers to task for advertising broadband speeds they don’t actually provide to customers.  While DSL speeds vary based on distance from the telephone company’s central office, cable broadband speeds vary depending on how many customers are online at any particular moment.  The cable industry’s shared access platform can create major bottlenecks in high-use neighborhoods, dramatically reducing speeds for every customer.  While some cable operators are better than others at re-dividing neighborhoods to increase capacity, others won’t spend the money to upgrade an area until service becomes intolerable.  That means consumers sold 10Mbps service may actually find it running at less than half that during evening hours.

A sampling of British cable and telephone company DSL providers, all of which aren't giving their customers what they are paying for.

McSlarrow’s view is there isn’t a problem there either — the FCC is relying on old data:

The key statistics in the report are drawn from Form 477 data for December 2008, data that was out of date when it was released earlier this year and is now 18 months old.  Broadband providers have made two subsequent Form 477 filings (with another one scheduled in a few weeks), so the reliance on stale data is frustrating.

Equally troubling is the Commission’s repetition of the NBP’s claim that “actual” broadband speeds are only half of “advertised” speeds.   After the NBP was released, we submitted an expert technical report demonstrating that the comScore data used was deeply flawed.  Since then, cable and telco ISPs have been working constructively with Commission staff on a hardware-based testing regime that should produce more accurate results.  Given the hard work that has been devoted to produce accurate speed measurements, it is disheartening that the 706 Report chose to perpetuate the NBP’s flawed speed data conclusions.

Finally, some of the data relied on in the 706 Report is not publicly available.  The report relies extensively on a cost model created for the NBP, but that model hasn’t been released, making it impossible to validate its results.  The Commission also repeatedly refers to an FCC staff report on international trends, but that report also has not been released.

The frustration McSlarrow writes about is shared by cable subscribers stuck in overloaded neighborhoods where service does not come close to marketed speeds.  The FCC is conducting an independent speed analysis that goes beyond speedtest data, and the results will be forthcoming.  In other countries where similar speed claims have not met reality, providers were usually found culpable for promising service they didn’t deliver.

Just ask Ofcom, the British regulatory agency charged with addressing this dilemma.  Earlier today they released evidence that 97 percent of UK broadband customers were not actually getting the speeds they were promised, and the gap between marketed speed and actual speed was growing. Will things be any different for American providers who use fine print to disclaim their bold marketing promises about speed?  Time will tell.

Finally, McSlarrow’s concerns about withheld data is ironic enough to call it a “pot to kettle” moment.  As those challenged with broadband mapping can attest, nobody keeps raw data about broadband availability and speeds closer to the vest than cable and telephone companies.

Of course, the ultimate agenda of the NCTA is to defend its industry’s record in broadband service, which means reducing any broadband challenges into little more than whining by Americans who don’t know how good they have it.

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Qwest provides local service in 14 states in the Midwest and West.

Antitrust regulators have given the green light for CenturyLink to proceed with its buyout of Qwest Communications, but Qwest executives on their way out are hardly complaining about the deal.

Stop the Cap! has reviewed recent filings with the Securities and Exchange Commission and learned the proposed deal will bring almost $110 million in bonuses and golden parachutes for seven senior Qwest executives, some of whom will leave Qwest as a consequence of the merger.

Qwest CEO Ed Mueller will receive the largest amount: nearly $43 million — $10.8 million in cash he can spend now and $32 million in stock which he can sell later.  Mueller has already made a mint as CEO of Qwest, getting a five percent raise in his base salary to $12 million dollars in 2009, a nine percent boost in his performance bonus — $2.5 million, nearly $250,000 towards personal use of the Qwest corporate jet fleet, and $7.6 million in new stock awards.  While Mueller won, some 2,800 Qwest employees lost — their jobs.  As part of broad cost cutting moves, Qwest eliminated 8.5 percent of its workforce in 2009.  That helped the company achieve an increase in profits of 2 percent despite a 9 percent loss in revenue for the year.

Most of the generous compensation packages were part of the executives’ employment agreements which guaranteed golden parachute payouts and stock options in the event of a merger.  Those employee agreements were well-positioned to pay off for the executives, as Qwest’s “for-sale” sign had been public knowledge for years.

Last week, the Federal Trade Commission determined the deal between CenturyLink and Qwest did not bring any antitrust issues to the table.  But the deal still faces a review from state regulators and the Federal Communications Commission.  Qwest shareholders will have their say August 24th in a special shareholder meeting to vote on the deal.  Qwest has already been negotiating with significant shareholders who have sued the company, claiming the deal did not adequately compensate Qwest’s investors.  Sixteen of those lawsuits have since been quietly settled on undisclosed terms.

Meanwhile, opposition to the merger has come from smaller independent phone companies, consumer groups, labor unions, and some of Qwest’s competitors who rely on Qwest’s facilities to bring services to customers.  The Communications Workers of America is the largest union expressing concerns about the deal and has filed to intervene in public service commission proceedings regarding the merger in four states: Arizona, Colorado, Iowa and Minnesota.  Those are the only four states in Qwest’s 14 state territory receptive to hearing the union’s point of view, according to the CWA.  The others have oversight agencies that exist little beyond rubber-stamping the requests of the companies they oversee or have commission members who are openly hostile to unions.

Despite the opposition, most analysts believe the deal will win approval because CenturyLink only has a limited presence in most of Qwest’s service areas, which are in the mountain west and desert south.

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Connected Texas is well-connected -- to AT&T and Verizon, charge critics.

Texas Agriculture Commissioner Todd Staples in under fire for choosing Connected Nation, a telecom industry-financed mapping group, to draw broadband availability maps for Texas.  Connected Nation has close financial and organizational ties to the nation’s largest telecommunications companies, several of which have also contributed heavily to Staples re-election campaign.

Critics contend Staples should have never chosen Connected Nation for the project, especially when two of its biggest backers — AT&T and Verizon, both made substantial campaign contributions towards his re-election.  Staples also owns small amounts of stock in both companies, according to a report published yesterday in the Dallas Morning News.

The Texas mapping project has been condemned by smaller Internet service providers for leaving them off the map altogether while providing plenty of details about large phone and cable company offerings.  For consumers shopping for broadband service, who is on the map may have a considerable influence over which provider they pick.

“They hit the big guys,” James Breeden, founder of LiveAir Networks, which covers rural parts of Central Texas told the Morning News. “I didn’t even know they were putting together a broadband map until I saw it on the news and went ‘Oh.’ Then I logged in and went, ‘Oh, really!’ ”

Staples

He said he couldn’t find his company or two nearby providers on the map. Some areas didn’t show the correct distributor. Others named one when none existed. “The map is just off. It’s not technically accurate,” he said.

As Stop the Cap! reported earlier, maps produced by Connected Nation are notorious for favoring the telecommunications companies that back the mapping group, in addition to being just plain inaccurate. But more importantly, their maps downplay broadband availability problems and conveniently serve the industry’s position that America doesn’t have a broadband problem.  Connected Nation maintains tight control over the raw data, citing provider confidentiality agreements.  That makes reviewing the data for accuracy impossible.

“It’s a scandal, a total scandal,” Art Brodsky, communications director of Public Knowledge, a public interest group that follows digital culture said in the Morning News piece. A longtime critic of Connected Nation, Brodsky has tracked the nonprofit since Kentucky officials accused it of overestimating broadband availability several years ago. The agency that grew into Connection Nation started there in 2001.

Brodsky said nondisclosure agreements make it difficult to see who really benefits from the mapping process.

The controversy has become campaign fodder for Democratic Ag Commissioner candidate Hank Gilbert, who has been bashing Staples in the press for spending taxpayer money to produce maps that benefit his campaign more than the people of Texas.

“Staples and … [the Agriculture Department] are willing to let a bid go to a company with such close ties to the telecom industry,” said Vince Leibowitz, Gilbert’s campaign manager. “That means they’re not doing their job as a consumer protection agency.”

Other groups given the opportunity to apply either were not given enough advance warning, or simply never heard anything back from the state.

Five other organizations responded to the Agriculture Department’s request for proposals. Luisa Handem of the Austin nonprofit Rural Mobile & Broadband Alliance said her group never heard back.

“We didn’t think the process was transparent,” she said. “We’re not even sure they looked at our application.”

The Agriculture Department restricted the opportunity to nonprofits, based on its interpretation of federal law. The agency told the University of Texas at Austin it could apply, but officials didn’t think they could complete the proposal in a month. The Agriculture Department said the federal government set the timeline.

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Netflix is coming to Canada.  Sort of.

Canadians will be able to sign up for Netflix’s on-demand video streaming service beginning this fall, but will Canadians be interested in using the unlimited service on their usage-limited broadband accounts?

Netflix is not planning on bringing its rental-by-mail service to Canada, instead relying exclusively on streaming its library on-demand over the Internet. Netflix currently licenses streaming rights for over 17,000 titles in its 100,000 plus library.  How many of those titles with be licensed for Canadian subscribers is not yet known, nor is an exact price for the service.  Netflix will launch for English-speaking Canadians at the outset, with French to come later.  This is the first time Netflix is making its service available outside of the United States.

But many Canadians are questioning the value of Netflix in their heavily-usage-limited country.  Most Canadian ISPs have either chosen or been forced to limit subscribers’ broadband usage.  Even ISPs that want to offer unlimited service find flat rate wholesale pricing nearly impossible to get because of Bell’s stranglehold on the market.  Cable providers like Rogers have implemented their own usage limits to boost revenue and keep costs down.

For Canadians living under an average usage cap of 40-60 gigabytes per month, adding streaming video will only eat their allowance that much faster.

“Netflix and the Canadian press covering this story have ignored the reality of bit-capped Canada,” writes Stop the Cap! reader Jeffrey from Calgary.  “I would be paying $75 a month for a broadband account and be limited in how I could use the service.  The CRTC (Canada’s equivalent of the Federal Communications Commission) has been in the providers’ pockets for years and this is why high bandwidth services bypass Canada or risk failure if offered here.”

Rogers, one of Canada's biggest cable companies, also happens to own one of the largest chains of video rental stores: Rogers Plus

Jeffrey believes Canada’s largest broadband providers, including Bell, Rogers, Shaw, Telus, and Vidéotron will never allow Netflix.ca to gain the kind of foothold it has in the United States.

“These companies all own or control Canada’s cable, IPTV, and satellite TV services, all of which are threatened by an American company like Netflix,” Jeffrey notes. “They’ve already got universal usage limits on their accounts, but these guys will also run to the CRTC and Canadian government to throw up roadblocks over everything from copyright and licensing issues to Canadian content rules and the initially ignored Québécois.”

Jeffrey believes more than anything else, Internet Overcharging schemes will serve their role in keeping would-be competitors under control.

“In Canada, we already had the debate about who gets to use our pipes for free,” he says. “Thanks to the CRTC, only the providers get to use them for free.  Everyone else pays a usage tax to them which fattens their bottom lines while stunting the growth of Canadian broadband.”

In Quebec, it’s much the same story.  Asperger notes Zip.ca, a Canadian rent-by-mail service, can get him 20 new DVD releases a month for around $25.  If he signed up for Netflix, anything beyond five DVD’s a month would put him over his limit forcing him to “pay and pay, and then pay some more.”  With Canadian ISP’s increasing their penalty rates for exceeding usage allowances, the overlimit fee could easily exceed the cost of just sticking with Zip.ca’s by-mail service.

Or, for many Quebecers, the next best alternative is Bibliothèque et Archives nationales du Québec, which offers an enormous collection of DVD’s that can be checked out for free.

Canadian press accounts of Netflix’s imminent entry into Canada have largely ignored the limits Canadian Internet providers impose on their subscribers, something readily noted by readers who comment on those stories.  Canadian consumers are well aware of their usage limits, and they avoid services that could expose them to even higher broadband bills.

Those who use their Internet service heavily, unaware of overlimit fees up to $5 per gigabyte, will be educated by bill shock when their next bill arrives in the mail.  After that, no more Netflix.ca for them.

Still, Netflix.ca will probably deliver a challenge to the already-stressed Canadian video rental market where Blockbuster and Rogers Plus duke it out for a dwindling number of renters.  Price cuts have not stopped the erosion of interest in DVD rentals, and Blockbuster is mired in more than $900 million in debt, trying to avoid bankruptcy.

The Canadian Radio-television Telecommunications Commission's support of industry-promoted Internet Overcharging schemes may limit Netflix's success in Canada.

If Netflix’s streaming library, mostly of titles two or more years old, is deemed sufficient by many Canadians, it could also cause a wave of cancellations of premium movie channels and other cable services.

The Ottawa Citizen reports some analysts believe Netflix.ca will cause an earthquake in the Canadian entertainment marketplace.

Carmi Levy, an independent technology analyst based in London, Ont., believes Canadians can expect a major entertainment industry shakeup this fall.

Levy says Netflix will sound the death knell for movie-rental services such as Blockbuster and Rogers Video and will force a pricing war among traditional cable and satellite TV providers who will be forced to scramble to keep customers.

“Netflix is not some Johnny-Come-Lately to the market. Even though they are new to Canada, they have been so successful in the U.S. that only a Canadian living underneath a rock wouldn’t be aware of their brand,” Levy said. “It’s the most seismic change to the content distribution system landscape that we have seen. It forces the incumbents to change their business model.”

Levy said the arrival of Netflix will allow casual TV watchers to cut their satellite and cable TV bills in favour of Netflix’s all-you-can-eat monthly offering. He said the $9 U.S. a month charged by the company was carefully thought out and he expects to see a similar price on the service later this year.

Click here to view the embedded video.

CBC News discussed the introduction of Netflix Canada and how it will work with Netflix vice president Steve Swasey.  (5 minutes)

Click here to view the embedded video.

CTV News and its Business News Network ran four reports on the impact usage caps might have on the service, what kinds of titles will be available, and what it means for Canada’s entertainment businesses.  (12 minutes)

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Lee, Massachusetts is located in broadband sparse western Massachusetts

Mark Williams is the kind of customer Time Warner Cable would normally love to have.  He wants the complete, super deluxe Time Warner triple play — cable, digital phone, and especially broadband service for his home-based business.

Time Warner wants Williams to have their service, too — but for a price.  Instead of charging the regular $35 installation fee, the cable company wants him to pay $12,000 to install his service, because, they claim, Williams’ driveway is 100 feet too long.  Time Warner says the $35 dollar installation fee is only for homes within 200 feet of the nearest utility pole.  Williams home is 300 feet away.  He doesn’t mind paying something extra to cover the additional 100 feet, but not $12,000.

The town of Lee, Berkshire County, in western Massachusetts, managed to wrangle a franchise agreement from Time Warner Cable that entitles every home and business to cable service if electric and telephone service are already available.  That’s unique for many smaller communities, who routinely have cable service available in town, but not in outlying areas.  Cable companies hate wiring rural density neighborhoods, where the costs to wire comparatively few homes takes too long to earn back from the few subscribers they can reach.

But Time Warner found themselves a loophole — a “long driveway” clause in the franchise agreement that allows them to charge more for installing service to homes set far back from the road.

Now, according to the Berkshire Eagle, Lee’s representative to the Five Town Cable Television Advisory Committee is calling out Time Warner, claiming they are misinterpreting the town’s franchise agreement and wants the Lee Board of Selectman to start imposing fines against the cable company if they don’t relent within 30 days.

Malcolm Chisholm says the real reason Time Warner wants to charge $12,000 is because Williams’ home is roughly a half-mile away from the closest Time Warner Cable subscriber, not because his driveway is too long.

“We just want to put pressure on them,” Chisholm said. “We’re just trying to get them to follow the agreement.”

Chisholm said Time Warner Cable “won’t talk to us” about Williams’ situation. The Eagle was also unable to get a response from officials at the company’s regional office in Albany, N.Y.

The newspaper decided that since Time Warner Cable wasn’t responding to its private inquiries, it would air its views on the editorial page.

If a Lee resident moved into a cave in October Mountain State Forest, Time Warner Cable might be justified in charging him $12,000 to run cable there so he watch the Red Sox on NESN and keep up with the Kardashians on VH-1. But the $12,000 the cable giant wants to charge a resident who lives near the Tyringham line is preposterous, and beyond that provides the latest evidence of the desperate need for expanded broadband service throughout the rural Berkshires.

Because Mark Williams lives roughly a half-mile away from the closest Time Warner subscriber, his installation fee escalates from the standard $35 to $12,000, which may as well be $120,000 it is so devoid of logic. Mr. Williams appears to be an eager customer too, one who wants the entire cable/Internet package Time Warner is regularly flogging.

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A major owner of apartment complexes in 13 states in the southeast and south-central United States has a deal for you, whether you like it or not.

Mid America Apartment Communities, which maintains a portfolio of 42,252 apartments, is requiring its residents to purchase cable television from providers like Comcast or they’ll find the $40 month cable fee tacked on their rent, water, or refuse collection bill.  They call it a wonderful savings opportunity for their residents.  But a Stop the Cap! investigation followed the money and discovered the real benefits are in kickbacks paid to Mid America by participating cable companies.

Mid America is extending the policy to all of its apartment complexes over the coming months, notifying residents about its new CableSaver program through flyers.  Enrollment in the program is automatic for new residents, and will take effect for existing residents upon the renewal of their annual lease agreement.

Known as “bulk buying,” apartment complexes can receive preferential discounts for their residents if they commit to mandatory cable service for each apartment.  In Chattanooga, residents of Mid America’s Hamilton Pointe, Hidden Creek, Steeplechase, and Windridge Apartments were notified this month they’ll be compelled to spend $40 a month for Comcast’s Digital Starter Package.

Mid America owns apartment complexes in 13 states. All of them will find the CableSaver program coming their way sooner or later.

The mandating of cable service is not going down well with every resident, particularly those who purchased satellite TV equipment or who have service with other providers like AT&T’s U-verse or Verizon FiOS.  While Mid America isn’t banning competing cable services from serving its complexes, residents will still be forced to pay for cable service in addition to whatever their current provider charges.

Lydia Ramirez of Chattanooga lives in a Mid America Apartment Communities property.  She told WDEF-TV News, ”We told them that we are not interested in this but they say it’s mandatory. And so here we are.”

Ramirez just had Dish Network installed but says she’s been told she will have to pay for Comcast cable, too, if she renews her lease.  She said, ”We don’t want Comcast and we feel that should be our choice instead of them making it mandatory.”

Instead of being allowed to choose satellite or other cable providers, Ramirez says being forced to go with Comcast is kind of like being told you can only grocery shop at Food Lion.  Ramirez adds, “I don’t see how they can do that. I think we as tenants have an option to choose what cable company we want to go with.”

Some renters in Houston, Texas have been there and done that.  Late last year, KPRC-TV reported residents at The Reserve at Woodwind Lakes got a deal they couldn’t refuse.  A letter from the front office promoted an exciting new offer: It reads the complex “has teamed up with a cable company to bring you an exclusive offer that will allow you to enjoy expanded basic service at a greatly reduced rate.”  Sounds great until you get to the second line of the letter, which uses language only a credit card company could love:

“If you have not yet chosen to opt in, the reduced rate of $40 will be added to your water and trash bill once your renewal takes effect.”

Text of a flyer delivered to Houston-area renters at a Mid America complex

In other words, your “choice” to “opt in” is neither.

Mid America is selling this mandatory cable program as a real money-saver.  But we discovered it’s actually a real moneymaker for Mid America, who earns compensation from kickbacks paid by cable companies in return for cramming cable service down renters’ throats.

Kickbacks for cable is nothing new in the rental business.  Complex owners used to routinely make exclusive deals with providers to deliver service to residents, often through contracts that kept competitors out.  But a 2007 FCC ruling made such exclusive arrangements illegal.  A Federal Court of Appeals agreed: cable companies cannot have exclusive rights to provide service in apartment buildings that they wire.  But complex owners and cable operators discovered an enormous loophole — complex owners can force residents to pay mandatory cable fees as part of their rent so long as they did not bar would-be competitors from also providing service.  But given that renters would already be paying for service, it is unlikely they’d choose another and pay double or more for duplicated cable service.

Cable companies like Comcast enter into these agreements because they provide guaranteed revenue for minimal cost, thanks to “install it once” cable wiring and bulk billing.  Since many renters are also young — renting their first apartment after leaving home — establishing a relationship with those customers may make them customers for life.  Cable companies can also use the program as an opportunity to sell add-on services to renters, such as broadband, digital phone, and premium channel packages.

But why would a company like Mid America want to alienate at least some of their renters who do not want to be forced to pay for cable service?  The answer is easily found in Mid America’s publicly disclosed financial reports — Mid America makes a healthy profit from the CableSaver program.

Mid America owns apartment complexes in these states

Mid America’s quarterly 10-K filing with the Securities and Exchange Commission shows the company is earning so much money from cable companies like Comcast, it has broken the revenue out into a new section of its financial report.

In the first quarter of 2010, as Mid America introduced its CableSaver program, the company reported earning $1.3 million dollars in revenue from cable kickbacks.  The company tells investors its new mandatory cable program will become an important source of new revenue for the complex owner:

“We continue to develop improved products, operating systems and procedures that enable us to capture more revenues. The continued roll-out of ancillary services (such as re-selling cable television), improved collections, and utility reimbursements enable us to capture increased revenue dollars.”

It’s all a part of a profit-making strategy to increase shareholder value and stick residents with increasing costs to deliver fatter profits.  Renters might be interested to know the company has more in store for them in the coming months:

Our goal is to maximize our return on investment collectively and in each apartment community by increasing revenues, tightly controlling operating expenses, maintaining high occupancy levels and reinvesting as appropriate. The steps taken to meet these objectives include:

• [...] developing new ancillary income programs aimed at offering new services to residents, including telephone, cable, and internet access, on which we generate revenue;
• implementing programs to control expenses through investment in cost-saving initiatives, including measuring and passing on to residents the cost of various expenses, including water and other utility costs.

Unfortunately for residents, short of moving, there is no escaping these fees. Some residents have contacted their member of Congress or the FCC to complain about the loophole that allows a complex owner to charge for cable service residents don’t always want. Another way to send a message is to tell Mid America you will not do business with them until they make the CableSaver program truly optional. If the company stands to lose more money than it receives from cable company kickbacks, it may choose to amend its policies.

Click here to view the embedded video.

We have four reports on this story, courtesy of WDEF-TV Chattanooga, Tenn., and KPRC-TV in Houston, Texas  (10 minutes):

1. The FCC bans exclusive cable contracts forcing renters to buy service from one provider.  (KPRC-TV 10/31/2007)
2. Can Complex Choose Your Cable Company? In Houston, Mid America Forcing Renters to Buy Comcast Cable.  (KPRC-TV 1/7/2010)
3. Four Chattanooga Area Apartment Complexes Make Comcast Cable Mandatory for Renters. (WDEF-TV 7/12/2010)
4. AT&T U-verse Arrives in Chattanooga (But Won’t Be Too Attractive to Mid America Residents). (WDEF-TV 4/30/2010)

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Craig E. Moffett joined Sanford C. Bernstein & Co. as the Senior Analyst for U.S. Cable and Satellite Broadcasting in 2002.

Craig Moffett, a Wall Street analyst with Sanford Bernstein, is sounding the warning bells that if AT&T and Verizon assign usage caps to their forthcoming LTE wireless broadband services, they will never provide suitable competition for American consumers.

The implications of Internet Overcharging schemes in wireless broadband go well beyond the two companies’ broadband offerings.  Investors expect either AT&T or Verizon to attempt a buyout of DirecTV in the coming months, hoping to pair the satellite service with broadband packages delivered by DSL, fiber, or wireless broadband.  Because many DirecTV subscribers are located in rural areas where even DSL service is often not available, wireless broadband networks would be the most likely means of reaching customers, but not with onerous usage caps.

“If LTE networks are going to be usage-capped, then the last pretense that LTE networks can be positioned as a substitute for terrestrial broadband would seem to be gone,” Bernstein told his clients. “And if LTE can’t be offered as a replacement for wired broadband, then the notion of an out-of-region bundle of DirecTV and LTE is no more.”

Unlike earlier broadband technologies, WiMax, LTE, and other 4G broadband platforms can deliver far more data to subscribers at reduced costs.  With the increased efficiencies offered by the faster networks, carriers can provide customers with considerably more wireless broadband service, unlike heavily capped 3G networks, most of which are limited to 2-5GB of monthly usage before the penalty rates or speed throttles kick in.  While completely unlimited service is unlikely until capacity increases, there is plenty of room to allow customers to access 4G networks without thinking twice about everything they do on them.

Sprint is betting its comeback on its virtually-unlimited Clear WiMax 4G service, now becoming available in an increasing number of cities across the country.  Marketed as a replacement for wired broadband, Sprint is hoping customers will flock back to the carrier, especially if AT&T and Verizon’s 4G LTE offerings are capped.

But AT&T and Verizon have both made noises about usage capping their LTE offerings, if only to increase revenue.  These profit raising Internet Overcharging schemes come despite efforts by the Obama Administration to dramatically increase wireless spectrum available for wireless broadband services.  Dave Burstein from DSL Prime says Federal Communications Commission chairman Julius Genachowski is betting the farm on wireless broadband being the best chance for increased broadband competition.

“The heart of the U.S. broadband plan is to release more spectrum – enough for 10-20 networks like Verizon’s LTE now building – and pray that will be enough competition in five to seven years to check price increases,” Burstein writes.

Making wireless an important substitute for DSL requires raising bandwidth caps from today’s typical 5-10 gigabytes to several times as high as LTE makes the cost reasonable. If Verizon follows AT&T with an abusively low cap of 2-5 gigabytes and Sprint etc. don’t clobber them, the whole broadband plan falls apart because that’s not enough for competition in the future.

I doubt Julius understands this, because he would be doing everything in his power to avoid low caps. It’s just one more strike against “affordable” broadband, like the recent Comcast and Verizon price increases. People need to laugh out loud when Genachowski says “affordable” while tolerating continuous price increases.

Dave Burstein, DSL Prime

While wireless broadband can deliver access to many Americans who have never had broadband service before, it’s not well-positioned to compete for customers seeking to use the next generation of high bandwidth Internet applications.

None of the current wireless services are suitable for high quality video streaming of HD TV shows and movies, a crucial application for many broadband users. Burstein also notes large uploads are painfully slow on Clear’s WiMax network because of limited upstream speeds, but he expects improvements in time, assuming carriers expand with demand.  If not, as more users pile on the next generation wireless networks, their suitability for high bandwidth services becomes even more questionable.

“How much wireless could compete with landlines, especially as all cable connections are moving to 50 meg, was a crucial question for the broadband plan,” Burstein writes. “The consensus of several good engineers is that 4G competes fine with DSL if not many people expect video or other high-bandwidth apps. Wireless certainly can’t keep up if many people want to watch their TV over the net, so it’s only a partial substitute.”

As for AT&T and Verizon, Moffett suspects both may have to take a pass on DirecTV, consumed with fighting against broadband reclassification and Net Neutrality policies in Washington.  Taking on a second battle to run another dog and pony circus to gain regulatory approval for a buyout of DirecTV may be more than they’re willing to deal with at the moment.

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Your Friendly Internet traffic cops Time Warner Cable and Comcast paid for research that suggests those Internet speed slowdowns are your fault (or at least not theirs).

A study from MIT suggests that broadband speed test results that show “real world” broadband speeds far below what your provider promises are actually better than you think, and if they’re not — it’s not your provider’s fault.  The paper, Understanding Broadband Speed Measurements, finds slow Internet speeds are often your problem, because you run too many applications on your computer, visit inaccurate speed measurement sites, use a wireless router, or have run into an Internet traffic jam outside of the control of your ISP.

The research comes courtesy of MIT’s Internet Traffic Analysis Study (MITAS) project, financially backed by some of North America’s largest cable and phone companies — Clearwire, Comcast, Liberty Global (Dr. John Malone, CEO), and Time Warner Cable in the United States, Rogers Communications and Telus in Canada.  Those providers also deliver much of the broadband speed data MITAS relies on as part of its research.  Additional assistance came from MIT’s Communications Futures Program which counts among its members Cisco, an equipment manufacturer and promoter of the “zettabyte” theory of broadband traffic overload and cable giant Comcast.

The study was commissioned to consider whether broadband speed is a suitable metric to determine whether an ISP provides good or bad service to its customers and if speed testing websites accurately depict actual broadband speeds.  Because Congress and the Federal Communications Commission have set minimum speed goals and have expressed concerns about providers actually delivering the speeds they promise, the issue of broadband speed is among the top priorities of the FCC’s National Broadband Plan.

“If you are doing measurements, and you want to look at data to support whatever your policy position is, these are the things that you need to be careful of,” Steve Bauer, technical lead on the MIT Analysis Study (MITAS) told TG Daily. “For me, the point of the paper is to improve the understanding of the data that’s informing those processes.”

Bauer’s 39 page study indicts nearly everyone except service providers for underwhelming broadband speeds:

While a principal motivation for many in looking at speed measurements is to assess whether a broadband access ISP is meeting its commitment to provide an advertised data service (e.g. “up to 20 megabits per second”), we conclude that most of the popular speed data sources fail to provide sufficiently accurate data for this purpose. In many cases, the reason a user measures a data rate below the advertised rate is due to bottlenecks on the user-side, at the destination server, or elsewhere in the network (beyond the access ISP’s control). A particularly common non-ISP bottleneck is the receive window (rwnd) advertised by the user’s transport protocol (TCP).

In the NDT dataset we examine later in this paper, 38% of the tests never made use of all the available network capacity.

Other non-ISP bottlenecks also exist that constrain the data rate well below the rate supported by broadband access connections. Local bottlenecks often arise in home wireless networks. The maximum rate of an 802.11b WiFi router (still a very common wireless router) is 11mbps. If wireless signal quality is an issue, the 802.11b router will drop back to 5.5mbps, 2mbps, and then 1 mbps. Newer wireless routers (e.g. 802.11g/n) have higher maximum speeds (e.g. 54 mbps) but will similarly adapt the link speed to improve the signal quality.

End-users also can self-congest when other applications or family members share the broadband connection. Their measured speed will be diminished as the number of competing flows increase.

The study also criticizes the FCC for relying on raw speed data that does not take into account the level of service being chosen by a broadband customer, claiming many service providers actually deliver higher speed service than their “lite” plans advertise.

In short, it’s everyone else’s fault (including yours) for those Internet speed slowdowns.

Ultimately, the report’s conclusion can be summed up in three words: change the subject.  It’s not slow broadband speeds that are the problem — it’s the lack of understanding about what you can accomplish with the speeds you do get from your ISP:

In the next few years, as the average speed of broadband increases, and the markets become more sophisticated, we expect that attention may shift towards a more nuanced characterization of what matters for evaluating the quality of broadband services. Issues such as availability (reliability) and latencies to popular content and services may become more important in how services are advertised and measured. We welcome such a more nuanced view and believe it is important even in so far as one’s principal focus is on broadband speeds.

One thing the paper does effectively deliver at top speed are industry talking points, particularly the one that says less regulation is better (underlining ours):

Our hope is that progress may be made via a market-mediated process that engages users, academics, the technical standards community, ISPs, and policymakers in an open debate; one that will not require strong regulatory mandates. Market efficiency and competition will be best served if there is more and better understood data available on broadband speeds and other performance metrics of merit (e.g., pricing, availability, and other technical characteristics).

These kinds of research reports are often tainted by the industry money that pays for them.  Researchers and universities routinely deliver industry-pleasing, sober-sounding studies in return for considerable financial contributions, grants, and other forms of underwriting.  This report lacks full disclosure about who is helping to pay for it — North America’s largest cable operators, who also deliver much of the data MITAS relies on for their research.

Ask yourself how much longer these companies would be writing checks to MIT had they delivered a report implicating them in false advertising of speeds they do not deliver or for relying on inadequate upstream providers to handle their Internet traffic?  The report pulls any and all punches delivered to the companies who finance it — a clear sign of bought-and-paid-for research in action.

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Alltel's logo, in use before 2006

Alltel Wireless is back.  Two years after Alltel was bought by Verizon Wireless, some 900,000 customers in Georgia, Illinois, North and South Carolina, Ohio and Idaho not included in the transition to Verizon will remain Alltel customers under new management.

For many customers, that suits them just fine.  In fact, with an increasing number of complaints from the 13.2 million former Alltel customers forced into a shotgun cellular wedding with Verizon or AT&T, many wish they could have the choice to return to Alltel themselves.

The demise of Alltel is another classic example of a telecommunications deal that made sense (and dollars) for Wall Street and a handful of Alltel executives, but left thousands of employees out in the cold in the unemployment line and customers coping with broken promises and higher bills.

It’s a story familiar to most of our readers, because the game plan for most telecom mergers and acquisitions delivers all of the benefits to a select few and ends up costing consumers plenty.  That these deals get almost routine approval from the Federal Communications Commission is ironic, considering that same agency commissioned studies that unsurprisingly found increased consolidation and lack of competition in the wireless marketplace.

The end of Alltel is a great example of what happens when an industry achieves near-total deregulation. Lobbyists sell deregulation as directly benefiting consumers with increased competition, more innovation, and lower prices.  In reality, from broadcasting to broadband, deregulation sparks escalating rounds of mergers, acquisitions, and buyouts.  Wall Street doesn’t want increased competition — it wants fewer options, less costly innovation, and higher prices to sustain profits.  When Wall Street speaks, most of these companies listen.

Since 1996, when the Telecommunications Act was passed, more than two dozen telecommunications companies have been swallowed up in mergers and buyouts.  Consumers find themselves with new providers and higher bills.  But not everyone is hurting from laissez-faire tele-economics.  For a handful of top executives, the result has been riches beyond their wildest dreams.  Even when they are forced out through merger deals, the golden parachutes that follow brings tears of joy.  Just ask Alltel’s last CEO — Scott T. Ford — he said goodbye to Alltel in 2007 with a parting bonus of nearly $150 million dollars.

Alltel’s History — Keeping It In the Family

Alltel’s history in the telephone business traces all the way back to 1943, with the formation of the Allied Telephone Company of Little Rock, Arkansas.  Back then, telephone service in the U.S. was mostly a monopoly of AT&T and several smaller independent phone companies. Allied’s business began as a pole and wiring provider for those phone companies.  In 1983, Alltel – the traditional phone company – was created from a merger between Allied Telephone and Mid-Continent Telephone.  In 1985, Alltel Wireless service began from its first cellular system in Charlotte, N.C.  In less than a decade, the wireless division would expand service in smaller cities and towns across mid-America and the south, often where larger carriers didn’t want to provide service.

Just about everything in the telecommunications industry changed with the passage of the 1996 Telecommunications Act, signed into law by President Bill Clinton.  The law that promised to open the doors to better service and more competition actually deregulated most of the industry into an “anything-goes” circus of money-fueled mergers, buyouts, and consolidation.  Important consumer protections were discarded along the way.

The implications of the Act were well understood by corporate executives in the industry, and companies spent millions to lobby for its passage.  They considered it a down-payment for better days to come.  The biography of Alltel’s then-CEO Joe T. Ford noted the passage of the law changed everything, even leading to a violation of an agreement he made with his son when he was only 12 years old:

Scott T. Ford, the president and chief executive officer of the Alltel Corporation, made his first business deal at the age of 12 with his father, Joe T. Ford. The two agreed that Scott would never work at Alltel. Joe wanted to spare his son what he himself had endured since coming to work for his father-inlaw, Hugh Wilbourne Jr., in 1959. After the passage of the Telecommunications Act of 1996, however, the Fords rethought their agreement, and, at age 35, Scott Ford became executive vice president of Alltel. Within two years he was appointed CEO, following in the footsteps of his grandfather Wilbourne, who formed Allied Telephone Company in 1943 in Little Rock, Arkansas.

All that hard work by earlier generations was about to pay some serious dividends in a laissez-faire telecommunications world.

Beebe literally drew his own road map depicting his idea of success - remaining on top after a flurry of mergers and ongoing industry consolidation

The Dot.com Boom… for Some

At the end of the 20th century, the telecommunications industry was in the middle of the dot.com boom.

The impact of the 1996 Telecom Act did fuel change among traditional telecom companies.  While some new players were wildly upgrading networks and building fiber optic networks to sustain the dot.com book, most of the traditional phone and cable companies were spending their time and attention on mergers and leveraged buyouts.  The Baby Bell-AT&T empire that was broken up in the mid-1980s was nearly restored to its former glory with super-sized Verizon and AT&T.  Independent phone companies which operated for a century were suddenly the targets of buyouts, now consolidated by regional players like CenturyTel, Embarq, Alltel and Citizens.

Alltel didn’t just buy up other independent phone companies.  It also bought wireless providers and soon merged its landline and wireless divisions into a single company.  This was the era when the “full service phone company” was trendy — capable of delivering local, long distance, and wireless service all from one company, usually on one bill.

Alltel’s executives, like then-Alltel group president Kevin Beebe, delivered presentations to Wall Street bankers like Credit Suisse/First Boston promoting Alltel and its made-for-consolidation balance sheet.  He literally drew his own road map showing his route to success, depicting himself on top after successive mergers with smaller players.

Unfortunately, the high-powered, cash rich days of the dot.com deal were about to end.  By the start of the new century, it was all over.  An oversupply of infrastructure was built to support web-based businesses that would never launch.  Many of those already in business shuttered their virtual doors.  Venture capital for telecommunications projects dried up.  But there was still plenty of money to be made in wireless, and Alltel did obtain financing to launch mergers and buyouts with as many small cell phone providers as possible.  By the early 2000s, the mentality in the telecommunications business was “small is bad.”  The only path to success was to buy your competition, or be bought by them.

The business of mergers and acquisitions earned countless millions for Wall Street banks, who charged fees to help structure the deals and usually helped finance them.  Executives always won, even if a merger brought an end to their career at the company.  Golden parachutes kept the top floor happy.  The only losers were the soon-to-be-ex-employees and middle management declared redundant and escorted from the building.  They were the “cost savings” promoted as a benefit of the merger months earlier.  Meanwhile, customers were stuck dealing with the transition changes, service interruptions, and the eventually higher bill that always result from reduced competition.

During the first half of this decade, it was Alltel doing the acquiring — spending fortunes to acquire other regional wireless phone companies:

• 2002: Alltel acquires 700,000 wireless customers from CenturyTel Inc. in Arkansas, Louisiana, Michigan, Mississippi, Texas and Wisconsin for $1.5 billion.
• 2003: Alltel purchases wireless properties in Mississippi from Cellular XL.
• 2004: Alltel acquires wireless properties from MobileTel, U.S. Cellular and TDS Telecom.
• 2005: Alltel merges with Western Wireless Corp., acquires wireless properties from Public Service Cellular, certain wireless assets from Cingular and exchanges properties with U.S. Cellular of Chicago to meet divestiture requirements related to Alltel’s merger with Western Wireless Corp. Alltel agrees to purchase Midwest Wireless for $1 billion in cash.

Despite the shopping spree, Alltel’s executives like Beebe continued to let it be known Alltel itself was “well-positioned for wireless consolidation” — available for a buyout… for the right price.  By 2006, Alltel had become the fifth largest telecommunications company in the country, with operations in 34 states.  Thanks to lengthy roaming agreements with Sprint and Verizon Wireless, Alltel could deliver national service even from a regional network.

Alltel also enjoyed a satisfied customer base, thanks to innovative calling plans and services that were unheard of from other cell companies.  In 2006, it introduced the popular My Circle calling plan, which allowed customers to make unlimited wireless calls to up to ten numbers, regardless of whether they were landlines or other Alltel wireless customers.  That same year, U Prepaid was introduced, which included unlimited calling and text messaging to a pre-designated number — perfect for those needing to call home.  Alltel prepaid customers could also roam on many other carrier’s networks without paying enormous roaming fees.

Alltel Sells Out Its Landlines

Until the 1996 Telecom Act, most publicly-owned telephone companies were considered a safe utility stock.  In rural communities, many of the phone companies that established service where AT&T’s Bell System did not have been around since the 1890s.  Often owned by a family or cooperative, these independent phone companies popped up when Alexander Graham Bell’s telephone patents expired.  The companies were hardly growth hotbeds, traditionally serving communities that saw little growth and lots of expenses from the wide-open country they had to wire.

After deregulation, venture capital moved aggressively into the wireless and cable sectors.  For the first time, many rural phone companies faced competition from rural cellular providers and cable companies experimenting with “digital phone” service delivered over cable television lines.  But unlike the phone company, these providers were not required to deliver service to everyone.  Most of these services would only challenge the phone company in population centers within towns and villages, that also happened to be where most of their customers lived and worked.

The business model was changing.  As rural phone companies began losing customers to cable and wireless providers, some of them looked to mergers and acquisitions to reduce costs and improve revenues to keep revenue stable, even as customers disconnected.  To maintain interest and  investment from stockholders, many traditional publicly-held phone companies began paying shareholders increased dividends, which attracted attention from Wall Street.

On July 11, 2004, one independent phone company set a new bar for dividends and probably changed the long term business models of rural phone companies for years to come.  Citizens Communications Corporation, as part of a corporate re-shuffle, announced the resignation of its then-CEO Leonard Tow, changed its name to Frontier Communications, and announced an incredible one-time payout of a $2 dividend for every share of common stock, and an ongoing annual $1 dividend, payable every quarter.

With a payout like that, investors began demanding increasing dividends from other phone companies, Alltel included.  To pay that kind of dividend, you need revenue, and slow-growth rural phone companies cannot just generate millions in new revenue selling voicemail, long distance plans, and caller-ID.  That kind of money comes from new lines of business, such as broadband, or from cash-generating mergers and buyouts.

Broadband required millions of dollars in new investments, increasing short term costs and having to wait several years to see a return.  Mergers and acquisitions delivered fast cash and instant results — short term benefits Wall Street loves to see.

So while phone companies continued to lose landline customers at rates up to 7 percent per year, another round of frenzied consolidation through mergers and buyouts erupted.

For Alltel, already established with a strong wireless division, seeing the long term prospects of trying to sustain its landline business as it lost customers seemed pointless.  In December 2005, Alltel announced it was dumping its 3,000,000 landline customers, combining them with another 500,000 customers of Irving, Texas-based Valor Communications in a $9.1 billion dollar tax-free deal to create a new independent landline company — Windstream Communications.

Alltel would henceforth be a wireless phone company-only, and a much richer one at that.  Unfortunately, despite its ranking as America’s fifth largest wireless provider, Alltel still remained a regional player, far behind its fourth largest rival T-Mobile.  With a dwindling number of wireless companies to acquire, speculation grew Alltel itself would soon become a takeover target.

Click here to view the embedded video.

KLRT-TV in Little Rock covered the announced acquisition of Alltel by Goldman Sachs on May 20, 2007 in these three reports.  (15 minutes)

Goldman Sachs Moves In

Within two years, Alltel’s independence would come to an end.  In 2007, Alltel formally opened an auction to sell the company’s wireless assets to the highest bidder.  But in a surprise move, company executives suddenly canceled the auction and accepted a $26 billion leveraged buyout takeover offer from TPG Capital and the buyout arm of Goldman Sachs.  Now, Wall Street investment bankers would own and control Alltel outright.

Speculation in the financial press about why Alltel canceled the auction and didn’t even entertain other bidders for the company raised eyebrows at the time.  The windfall payouts to Alltel’s executives disclosed in later Securities & Exchange Commission filings may have had something to do with it.  Company executives won the equivalent of the Powerball Lotto:

• CEO Scott T. Ford received nearly $150 million dollars.
• Richard Massey, former chief strategy officer and general counsel walked away with almost $50 million.
• Alltel Chief Operating Officer Jeff Fox cleared more than $70 million.
• C.J. Duvall, who was EVP of human resources earned nearly $10 million.
• Kevin Beebe, group president of operations went home with more than $60 million.

That’s quite a haul for the top floor executives at Alltel heading for the exits.

But Goldman Sachs had no intention of running its own phone company for long.  Analysts predicted the investment bank would hold onto Alltel for a year or two in hopes of selling it at a premium to one of the other wireless carriers, probably AT&T or Verizon.

That’s exactly what happened, except it only took seven months.

Click here to view the embedded video.

Bloomberg News took an in-depth look at the 2007 Alltel acquisition by Goldman Sachs and ongoing wireless consolidation. (Corrected Video) (5 minutes)

Verizon Takes Over – The Dog & Pony Approval Circus

With the collapse of the banking sector in 2007 and 2008, Goldman Sachs needed to get rid of assets to raise money.  The subprime mortgage mess left banks with $386 billion in asset writedowns and credit losses.  By putting Alltel up for sale, Goldman would earn $28.1 billion, enough to pay off the loans financing Alltel’s buyout months earlier, and even come out ahead.

The buyer, Verizon Wireless, sought to combine Alltel’s rural cell tower network with its own to expand coverage and pick up a stronger presence in middle America.

In the high stakes, high cost consolidation of telecommunications in the United States, what few regulatory hurdles Verizon would face getting the deal approved meant bringing forth the dog and pony show from Verizon’s lobbyists.  The Federal Communications Commission could alter or even kill its deal.  To make sure that didn’t happen, Verizon counted on the usual assortment of “dollar a holler” advocacy groups, heavy lobbying in Congress, and other friendly allies to help get the deal approved.

Unsurprisingly, Verizon can always count on help from free market allies and alleged community service groups with whom it has a financial relationship or contributes executive talent to serve on their boards.  Most of these have no involvement in telecommunications matters, except when it interests or impacts Verizon.  Suddenly they spring to action, conveniently submitting similar comments supporting whatever Verizon had on the agenda before the FCC.

Click here to view the embedded video.

KLRT and KTHV-TV in Little Rock, Ark., where Alltel was headquartered, ran a series of reports explaining the impact the Verizon-Alltel merger would have on Alltel’s service and jobs in Little Rock. (23 minutes)

Selected Members of the Verizon Friendship Crew Filing Comments Supporting the Verizon Purchase of Alltel (click the names to read their letters to the FCC):

• Institute for Policy Innovation
• Communications Consumers United
• Native American Television
• ASPIRA Association
• Organization of Rural Education
• The Free State Foundation (Political)
• U.S. Hispanic Chamber of Commerce
• U.S. Pan Asian American Chamber of Commerce
• Pacific Research Institute
• Small Business and Entrepreneurship Council
• National Hispanic Council on Aging
• Women Impacting Public Policy
• American GI Forum
• U.S.-Mexico Chamber of Commerce
• Hispanic Alliance for Prosperity Institute
• Latino Coalition
• Consumers for Competitive Choice (Astroturf)
• Dominican American National Roundtable
• National Black Chamber of Commerce
• National Indian Council on Age
• Freedom Works Foundation (Political and Associated With Corporate Lobbying)
• American Association of Peoples with Disabilities
• U.S. Cattlemen’s Association
• League of United Latin American Citizens

Alltel's service areas were carved up between three major providers - Verizon, AT&T, and ATN

Click here to view the embedded video.

Bloomberg News considered the business/industry implications of the Verizon-Alltel merger in these reports. (9 minutes)

Consumers Get Broken Promises & More Expensive Service

The benefits list of what Verizon promised to bring Alltel customers was heavily redacted in FCC filings as “highly confidential.”  What was promised, in public, was that Verizon would deliver improved service to Alltel customers who could continue with their existing service plans..

What consumers really got were major headaches, bad service, and much higher bills.  Former Alltel customers continue to tear up Verizon Wireless’ support forums with page after page of complaints.  As one former Alltel customer puts it, “we are the abandoned children of the redheaded stepchild.”

Some readers of Stop the Cap! shared their own experiences with the Alltel sale. Penny writes:

I first had Midwest Wireless that was bought out by Alltel which was just bought out by Verizon. With each switch I had to change my phone because something on the new system would not work on my old “previous provider” cell phone. Verizon has yet again said that for the “data charges” I can not block anything as my cell phone is too old and that I need to get a “Verizon” phone. My phone is not even a year old.

Enough about phones, data charges, rude customer service. You want to talk about dishonesty and unfair practices…just say Verizon.

In May I called and asked what I should do about leaving for a trip in which I would go out of my phone zone. The customer assistant that I talked to informed me that to avoid roaming charges I should temporarily switch to a national plan. I asked several times if I would be able to go back to my previous plan and was promised that I could set the start and end date for the new national plan. Well can you guess what they did? Yep they did the old bait and switch and from what I know about law….or what I thought about law was that this practice is illegal. Verizon started the new plan almost after I got back from my trip and plus would not set me back to my old plan. So now I had over 2 times the old bill plus roaming charges and less minutes. All I can say is my last call to Verizon was asking when my contract was up and what the termination fee is. By the way the $200 might be well spent.

Penny was switched away from her grandfathered Alltel plan to a new Verizon service plan, and potentially also ended up with a brand new two year contract, without new phones to accompany it.  Any Verizon customer on a grandfathered service plan should never consider allowing a customer service representative to make substantial plan changes — you could lose your old plan.  Grandfathered customers can make certain changes from the Verizon website (adding text plans, changing calling features on phones, etc.) without terminating their existing plan, but be cautious.  Once you lose an old plan, you may never get it back.

Steve, another Stop the Cap! reader, writes:

I was with Alltel for 15 to 20 years and a very happy customer — never a problem. Then Verizon took over and it has been a problem ever since. First off let me tell you that we are truck drivers and travel all over the US. We were in Texas when our laptop died so we went and bought a new one.  Our Alltel air card would not work in the new computer. This was at the time when Verizon was taking over, so we had to go to Verizon and get a new air card. By the way we had unlimited with Alltel. The sales person in Verizon sold us a new card and got us on the road again. From that day forward we have had to visit a Verizon store about our bill every month. Last month was the final straw. We did not like the 5 gig limit to begin with and did not trust it so we were watching it closely so we thought. When the MB’s got up near 4100 we called Verizon and they said you are no where near your 5 gig. Well when the bill came in it said we used over 8 gig and instead of our bill being 200.00 it was over 400.00 for the month . Since this has happened we have already dropped their phone service and may have to drop the Internet and pay the penalties.

Verizon's wireless modem

Steve ran into the problem former Alltel customers frequently encounter when traveling or moving outside of their old Alltel service area.  Many Verizon representatives are not well trained about their new Alltel customers.  Until the transition is complete, many Alltel customers still use equipment that gives priority to Alltel’s network first.  If not correctly provisioned, equipment may not work properly outside of areas where Alltel had service.

Click here to view the embedded video.

Alltel and Verizon were accused of bill cramming in the state of Florida — subjecting customers to monthly charges for “free” ringtones and other services.  The Florida Attorney General’s office ordered refunds for all affected Floridians.  Cell phone companies have an incentive to allow these services to get away with loading up customers’ bills with unauthorized charges — they receive a cut of the action.  WTVT-TV in Tampa reports.  (3 minutes)

Verizon’s 5GB usage cap also includes a steep overlimit penalty.  We’ve seen reports that customers who use service around the country do not immediately see correct numbers for data usage.  That can cause a sudden traffic spike as usage from other areas finally shows up on one’s account.  Verizon customers should have the ability to opt-out from overlimit penalties.  When their 5GB is used up, they should be presented with a screen that requires them to acknowledge they wish to continue using the service and face the consequences on their bill.

Verizon’s tricks and traps for Alltel customers always pay off for Verizon, almost never for customers:

1. Verizon is doing everything possible to get Alltel customers to “upgrade” their service to Verizon plans so they can get them away from Alltel’s legacy plans offering more features for less money.  Once a customer renews a contract with a new Verizon phone or makes a significant change to their service plan, they are switched to a new Verizon plan… often including tricks and traps.  Unlimited texting costs extra on Verizon, as do many other features.  Customers who mistakenly buy what they thought was a comparable service plan learn the errors of their ways when the $1,100 Verizon bill arrives a month later.  Forgetting to add text and data plans can be an expensive mistake on Verizon’s network.
2. Dangling a free or discounted phone upgrade for former Alltel customers often also requires an “upgraded” service plan… from Verizon.  If you want a new subsidized phone, you may lose your old Alltel plan.
3. In many areas, Alltel phones gravitate towards Alltel’s legacy cell network.  That means the phone will choose a weaker cell tower formerly operated by Alltel instead of a closer Verizon cell site.  A roaming/software upgrade normally would correct this and help route calls to the best possible cell site, but customers overwhelmingly complain that doesn’t happen with Alltel-provided phones.  Customers are encouraged to choose a new Verizon phone instead… with a new Verizon service plan.

Click here to view the embedded video.

This former Alltel customer in North Carolina was charged $400 for an unjustified early termination fee when his service switched to Verizon Wireless as part of the merger.  Despite repeated calls, Verizon-owned Alltel turned his account over to a collection agency. Verizon told him to pay off the Alltel collection agency account and they’d credit him $400.  He paid and then Verizon refused to credit his account and turned him over to their collection agency who started calling him at work.  They also ruined his credit.  It took WTKR-TV in Hampton Roads, Virginia airing this story on the 6 o’clock news to get Verizon’s attention after seven months.  (2 minutes)

Things are even more complicated in areas where the FCC has forced Alltel to divest its wireless assets and not transfer them to Verizon.  In most areas, those customers will shortly discover they are becoming part of AT&T’s wireless family, as AT&T bought the majority of those divested markets.  AT&T, however, does not operate with the same wireless standard Alltel and Verizon do.  AT&T phones work on the GSM standard while Alltel and Verizon work on CDMA.  For the time being, AT&T will simply operate the existing CDMA network Alltel used to own, but eventually every affected customer will get a free upgrade to a new GSM phone.  That upgrade better come quick for frequent travelers who are former Alltel customers switched to AT&T.  They’ll find getting service from AT&T outside of their home areas difficult on a network that uses an entirely different standard.  AT&T will likely have to maintain roaming agreements with Verizon for former Alltel customers until conversion is complete.

Click here to view the embedded video.

KELO and KSFY-TV, both in Sioux Falls, South Dakota, informed South Dakota’s former Alltel customers they’d soon have AT&T as their cell phone company, making Apple’s iPod available in stores in the state for the first time. (3 minutes)

A handful of customers won’t end up with either Verizon or AT&T.  In parts of Wisconsin, Element Mobile will take control of their Alltel account. But nearly a million customers will find their former Alltel service is now provided by… Alltel?

The Return of Alltel Wireless

McGill

Allied Wireless Communications Corp., which is staffed by former Alltel employees, has acquired the remaining leftover pieces of Alltel’s network, including its name, for $223 million dollars.  The all-new Alltel will have the same logo and calling plan features the old Alltel offered, and for 900,000 customers, it will be as if they never left.

“We feel like it’s putting the bank back together here in Little Rock,” Wade McGill, chief administrative officer for Alltel Wireless and AWCC told RCR Wireless. The original Alltel Corp. was headquartered in Little Rock, Ark., before being acquired by Verizon Wireless for $28 billion in early 2009. As part of the acquisition, Verizon Wireless was forced to divest some markets, a majority of which were acquired by AT&T Mobility for $3 billion, with most of the rest picked up by what will remain Alltel.

The company will have extensive roaming agreements for nationwide coverage and will focus on maintaining high quality customer care.

“The ability to retain the brand was key in these markets and you can’t underestimate the value of that,” McGill noted, adding that more than 50% of its current customer base have been Alltel customers for more than six years.

“We need to have a laser focus on the customer experience and being local,” McGill explained, citing a common mantra of rural carriers forced to compete against large, nationwide operators. “That’s how we want to think about our plans moving forward. … I think our plan is to grow organically at first and just focus on providing excellent customer service and support.”

But that doesn’t preclude Alltel from starting to expand operations to other parts of the country, perhaps even in areas now taken over by Verizon.

The new Alltel will remain a CDMA provider with plans to move to the LTE standard, which will deliver a 4G-like experience.

Going Back to the Future

In the end, many of the 13 million former Alltel customers probably wish they could have their old Alltel back, too.

Instead, they got wheeled and dealed away, first by an investment bank/casino that later used taxpayer dollars to bail itself out of its own greed, then by Verizon and AT&T who promise a future of higher bills and poorer service for many trapped in two year contracts. Too often, what’s in the best interests of consumers are an afterthought in these kinds of transactions, even today. Despite the FCC’s own findings that wireless competition is shrinking in a consolidating wireless world, they still found a way to green light deals like this that reduce competition even further.

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Google today launched a new website which could become a major advocacy center to promote fiber broadband service across America.

Google Fiber for Communities opened with a thank you message for the enormous number of submissions it received for its experimental 1Gbps fiber broadband network.  Google expects to announce the winning application(s) for its experimental  network sometime this year.

But in the meantime, Google also acknowledges what big telecom companies keep trying to downplay and dismiss — “people across the country are hungry for better and faster broadband access.”  That is… better and faster service than their current provider is willing to supply.

The new website provides hints as to its greater purpose:

1. The name itself.  Notice “communities” is plural.
2. The site intends to mobilize for fiber networks across the country, starting with lobbying for pending federal legislation that would require installation of fiber conduit as part of federal transportation projects.
3. The site’s links heavily promotes municipal broadband advocates and organizations, including the National Association of Counties, the National Association of Telecommunications Officers and Advisors, the Fiber to the Home Council, the Baller Herbst Community Broadband Page, the Broadband Properties Municipal Fiber Portal, and Muni Networks.  Outside of the Fiber to the Home Council, which has some big telecom company members and isn’t above advocating for their interests, the rest of the list suggests Google advocates that communities do for themselves what their local phone and cable companies won’t do — deliver world class broadband service at non-duopoly prices.

Stop the Cap! shares many of these goals with Google, as we are strong advocates for community fiber-based broadband, and believe additional competition is highly needed in America’s broadband marketplace to break up an anti-consumer duopoly that delivers slow broadband service (or none at all) at the highest prices companies can get away with.  Thanks to Stop the Cap! reader Jerry here in Rochester for sending word.

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Inouye

Three senior Democrats on the Senate Commerce Committee have characterized the Federal Communication Commission’s national broadband expansion plans as inadequate — firmly rooting America as second class citizens in a global broadband market.

In three separate letters to FCC Chairman Julius Genachowski, the senators criticized the chairman’s plan for broadband targets set too low, both in vision and in speed.

Genachowski’s plan calls for Americans to have universal access to at least 4/1Mbps service no later than 2020, a goal Genachowski described as “an aggressive target.”

But in a letter obtained by CQ, Senator Daniel Inouye (D-Hawaii) noted that such speed goals were set low in comparison to other countries, many of which are on target to achieve 100Mbps broadband well before 2020.

“What is the FCC’s rationale for a vision that appears to be firmly rooted in the second tier of countries?” Inouye wrote.

Begich

Senator Mark Begich (D-Alaska) wanted to know how Genachowski settled for 4Mbps download speed, noting that seemed to him to be too modest.

In fact, speed goals in the National Broadband Plan were a major point of contention in the National Broadband Plan, with lobbyists from AT&T and Verizon pushing hard for the lowest possible speed goals.  That is because they are the largest traditional landline providers saddled with aging copper wire networks which provide broadband to most rural Americans through DSL.  Most Americans living outside of major population centers rely on phone company-delivered DSL service typically speed rated at 768kbps-3Mbps.  Because DSL service is distance sensitive, a speed target of just 4Mbps requires a considerably lower investment than a target of 20Mbps or higher.  It is likely 100Mbps service, outlined as a goal for at least 100 million Americans, will first be achieved through fiber and cable networks in large cities, and not from phone company DSL service.

The difficulty for rural Americans to achieve a fair shake in broadband was highlighted by Senator Byron Dorgan (D-North Dakota).  He cited his state’s poor ranking — 42nd in broadband speed, as evidence Americans in rural states suffer with considerably lower quality broadband service.  The FCC’s National Broadband Plan, Dorgan fears, may only recreate the digital divide, only with different levels of speeds.

Dorgan

If 100 million Americans can access broadband services at 100Mbps, a rural speed target of 4Mbps will make new, high bandwidth-dependent Internet services just as off-limits to rural America as basic broadband is today in many areas.

Genachowski promised to review broadband speed targets every four years, making adjustments when necessary to be certain rural Americans receive broadband service comparable to urban areas.

But with the wide disparity in speed goals for urban and rural America, that may be impossible in the short term, especially as telecom industry lobbyists continue to pressure Congress for less regulation and no government mandates.

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Rep. James Boles Jr. of Moore County seen yawning as the North Carolina Legislature worked long hours to close the session for the year. (Photo: Charlotte Observer photographer Corey Lowenstein)

A bill to temporarily ban municipal broadband projects in North Carolina went down in flames early Saturday after a marathon 19-hour closing session of the legislature allowed a handful of pro-consumer legislators to finally corner and kill the bill.  But that victory would not have come without a coordinated effort by consumers and communities across the state vociferously objecting to legislation designed to protect the duopoly of phone and cable service offered by Time Warner Cable, AT&T, and CenturyLink.

This was the fourth attempt by big telecom companies to get state legislators to do their bidding.  It’s almost as if they want to work harder to stop competitors from delivering service than they work at delivering it themselves.  North Carolina is ranked 41st out of 50 states in broadband adoption. Significant areas of the state are not served by any broadband provider, and broadband speeds experienced by customers in North Carolina are among the slowest in the country.

This year’s battle was among the most difficult because its biggest backer, retiring Senator David Hoyle (D-Gaston), was considered a heavyweight in the legislature, serving in the North Carolina Senate for 18 years.

The drama that would eventually wind its way to the bill’s demise began late Friday evening in an overnight session of the state legislature.

Catharine Rice from the SouthEast Association of Telecommunications Officers and Advisors (SEATOA) is our tour guide through the winding, treacherous waters of a North Carolina legislature in its final hours of the session for the year:

Saturday morning, July 11, at 5 a.m., the NC House of Representatives killed Senator Hoyle’s (D-Gaston) attempt  to force a moratorium on municipalities seeking to provide their communities broadband service. This was the industry’s 3rd (actually 4th) attempt to stop municipalities from providing superior broadband infrastructure to the communities.

Rep. Luebke

The bill died on Saturday after a one-two punch. First, the House Ways & Means Committee had refused to hear S1209 since June 8, under the hands of Committee Chair-Rep. Faison (D-Orange, Caswell), when it crossed from the Senate to the House. Then late Friday evening, the House itself added an amendment to its Study Authorization Bill (SB900) permitting, but not requiring, the Revenue Laws Study Committee to study the laws and circumstances surrounding municipalities providing broadband service to their communities, but dropping all other terms of S1209, mainly  the moratorium. The Senate concurred with House bill 900 unanimously later in the evening (9:49pm) and it was enrolled for review and signature by the Governor. (See Sections 7.5 (a) and (b) here)

Ten minutes later, Sen. Clodfelter introduced H455, a bill whose effect would have changed the approach of the House’s version of the municipal bbnd study. With H455, Senator Clodfelter gutted a House kidney awareness bill, and poured into it the “study” portion of S1209 (Hoyle’s Anti-Muni broadband bill), changing the House version by setting a date certain when the study (and recommended legislation) would have to be completed (March 2011), and increasing the number of seats on the subcommittee from 12 to 14, adding assigned seats for telephone coops and the NC County. The House version did not mandate a study, but made it optional, did not specifically authorize the committee to recommend legislation, and set the seats for the subcommittee at 12, naming 8 with an additional four unassigned seats. Clodfelter’s H455 contained two other sections, one addressing a fluke in sales tax refunds for MI-Connection, the Mooresville-Davidson muni broadband system.

Around 2:45 Saturday morning, on Rep. Paul Luebke’s (D-Durham) motion, the House denied concurrence with the Senate on H455 (96 to deny, 1 to allow). At 3:45 a.m., the House approved a Senate/House conference committee report for the purpose of keeping only one section of H455, (effectively deleting H455′s changes to the House study version of S1209). H455 (here) now provides a state sales tax refund status for Davidson and Mooresville’s MI-CONNECTION system, status the two towns would have if individually providing cable service, but from which they were disqualified by having  joined together to provide broadband cable  service.  On a vote of 91 to 6, the House approved the Senate/House conference report. At 4:55 a.m. the Senate concurred with that report and it was enrolled for the Governor’s attention.

Source: SpeedMatters/CWA

Bottom line, the effort to place a moratorium on consideration for new municipal broadband projects in the state is dead for 2010.  The next opportunity big telecom has for another anti-consumer bill is in January 2011.  At least the North Carolina legislature passed some additional ethics and government reform measures that will give consumers even more tools to fight the next battle:

• It toughens penalties for illegal campaign donations above $10,000.  As we’ve seen repeatedly, big campaign contributions can make all the difference when legislators throw their constituents’ interests under the bus.  Big phone and cable interests are among the most generous contributors, making it easy to find one or more members willing to carry their legislative agenda forward;
• Requires board and commission members to account for campaign fundraising activities for elected officials who appointed them.  A case of mutual back-scratching, powerful legislators can often find places for their special interest friends and supporters to serve on state commissions and boards.
• Expands personnel information that must be released to the public about state employees.  We saw the implications of conflicts of interest in the legislature this past session when one member contemplating municipal broadband bans also happened to be one of Time Warner Cable’s engineering contractors.  More information, this time about past work by state employees, prevents these kinds of conflicts from staying secret.

Please thank Reps. Faison and Luebke for their hard work to stop the broadband moratorium.  It’s unfortunate Rep. Faison’s efforts to bring better broadband to Caswell County, part of his district, were unsuccessful.  But at least Caswell County leaders won’t face a broadband moratorium should they wish to renew their efforts to provide broadband service where CenturyLink will not.

Click here to view the embedded video.

Why we fight.  Communities like Salisbury, N.C., can now move forward on their own municipal broadband projects.  Back in May, WBTV-TV in Charlotte highlighted Fibrant, the community’s answer to bad service from incumbent providers.  (4 minutes)

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When phone companies like Verizon decide to throw their rural customers under the bus by selling them off, shareholders and executives rake in windfall bonuses, sometimes in the millions.  Now a New York assemblyman and a state senator want ratepayers to get a 40 percent cut of the action.

Assemblyman Richard Brodsky (D-Westchester), is the primary sponsor of Assembly Bill A02208 — An Act Requiring the Public Service Commission to Conduct an In-Depth Public Interest Analysis of Proposed Mergers by Telephone Corporations and Other Telecommunications Services Providers.  A companion New York Senate Bill, S7263, was introduced by Sen. Brian X. Foley (D-Blue Point/Long Island).

The legislation would compel phone companies engaged in the practice of mergers, acquisitions, and sales to share 40 percent of the proceeds with New York’s landline phone customers.

The legislation came as a result of watching Verizon systematically sell off parts of its phone empire to third party companies like FairPoint Communications, Hawaiian Telcom, and Frontier Communications.  More than five million customers have been switched away from Verizon to other companies, most of which have gone bankrupt as a direct result of the sales.

Brodsky

Both Brodsky and Foley don’t want to see New York residents face similar consequences.  They are particularly concerned about Verizon’s upstate operations, particularly in rural areas outside of cities like Buffalo, Binghamton, Rochester, Syracuse, Albany, and northern New York.  In the upstate region, Verizon has constructed fiber to the home service under its FiOS brand in urban and suburban regions where it operates, but has made few changes in the countryside.  As Verizon customers from Washington to North Carolina suddenly find themselves served by Frontier, why couldn’t the same thing happen in communities like Sodus in Wayne County, Penn Yan in Yates County, or just about anywhere in northern New York?

Verizon’s business plan has evolved over the last ten years.  Company president Ivan Seidenberg previously declared the landline business dead, and the company has turned its attention to delivering fiber-based video, phone and broadband services to the major population centers within its service areas.  Because rural customers cost too much to serve with similar packages of services, Verizon has begun selling them off to independent phone companies that still see revenue from copper wire landline service.

Verizon claims it has no plans to sell any of its operations in New York, but Brodsky and Foley want insurance that if they change their mind, no ratepayers in New York will face what happened in northern New England or Hawaii when the companies taking control ended up in Bankruptcy Court.

“It’s a ratepayer protection bill for upstate New York,” Brodsky said.

Brodsky said if Verizon were to sell operations, consumers will not be left with inferior service.

Forcing companies to share proceeds of sales to ratepayers who ultimately indirectly bankroll most of these deals is not unprecedented in New York.  Electric and gas utilities are often required to send refunds or issue credits when they sell assets.  Ratepayers of Rochester Gas & Electric received several compensation checks after the sale of the Ginna nuclear power plant in Ontario, New York to Constellation Energy Group in 2004.

Verizon could also be compelled to reinvest proceeds earmarked for consumers in the company’s infrastructure, such as paying for broadband improvements or upgrading lines.

The legislation would only impact companies earning more than $200 million in gross annual revenue from New Yorkers.  Currently, that means the legislation would only impact Verizon and Frontier Communications.

Not surprisingly, Verizon is vehemently against the proposed legislation and is fighting tooth and nail to kill it in Albany.

Foley

Jim Gerace, president of Verizon’s New York region, told the Albany Times-Union the Brodsky legislation was bad for Verizon and anti-business in general.  Gerace predicted companies would not want to do business in New York because they’d fear similar profit-sharing legislation could eventually target them.

“I’m convinced this is going to have a chilling effect on all businesses,” Gerace said. “They’re sending a very dangerous message to all businesses. It just compounds the state’s woes.”

But the Public Service Commission is intrigued by the legislation and is reviewing it.  If enacted, it could make a mass sell-off of rural landlines untenable in New York.

A02208 passed the Assembly by a wide margin — 103-34 and is now awaiting final action in the Senate.  It narrowly passed the Senate Rules Committee June 16th by a 13-10 vote.

If you want to see the bill passed, consider contacting your New York State senator and asking them to support the immediate passage of S7263.  Let them know you do not want phone deals to be cut at your expense, leaving you with a second-class provider.  If Verizon wants to sell off your community, they owe consumers a piece of the action.  It’s time that phone mergers, acquisitions and sell-offs actually benefit the consumers that ultimately pay for them and live with the results.

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For more than a year, Stop the Cap! has been covering the issue of broadband mapping, warning against allowing incumbent telecommunications companies from being able to control or influence statewide maps that show who has broadband, and who does not.  A perfect example of why we repeatedly call out telecom-connected groups like Connected Nation being granted a piece of the mapping action can be found this weekend in a guest editorial published in the Fort Worth Star-Telegram written by Todd Baxter, vice president of government affairs and general counsel for the Austin-based Texas Cable Association — the Texas cable lobby:

Newly released maps show that broadband — high-speed Internet — is widely available in Texas. They also underscore that the broadband stimulus program has been ill-conceived and poorly executed by the federal government.

That’s because the federal government put the cart before the horse.

It gave out more than $270 million of your money to a dozen projects in Texas before actually determining where current broadband operators provide service. Common sense would say to find out where broadband is, or isn’t, available before spending the money.

The feds also should better define “underserved,” since the money is intended to help both unserved and underserved areas. It sounds like a riddle — how many broadband providers have to serve a household before it isn’t considered “underserved”? So far that riddle has no answer, and it is costing you, the taxpayer, a lot of money.

Without the data or the definition, how can the federal government make sure it is spending taxpayer money wisely and where it is really needed?

Now that we have the maps, we can see that more than 99 percent of all Texans can access some form of broadband, whether wired, wireless or mobile, from more than 123 providers. Yet — without this information — the federal government awarded hundreds of millions in grants and loans to the Texas projects, with possibly more to come before the broadband stimulus program wraps up in September.

The Texas Cable Association formally objected to seven of the dozen Texas projects when in the application stage, because the areas addressed are already covered by existing broadband providers. We don’t believe the areas are unserved or underserved.

Just a few weeks ago, the Texas Agriculture Commissioner Todd Staples, with great fanfare, unveiled the current state of broadband in Texas.  Connected Texas, a subsidiary of Connected Nation joined forces with the state government to perform a broadband census across the state, based on voluntary information provided confidentially by existing service providers.  The result was the stunning “achievement” that 97 percent of Texas already had broadband access, quite a revelation to the scores of consumers who aren’t served by cable companies and cannot get DSL service from the phone company, even if the Broadband Map of Texas says they can.

Texas Broadband Map (click to enlarge)

Kelly from Childress, located in the Texas panhandle, is a perfect example.  She writes Stop the Cap! to tell us how thrilled she was to see the phone company had finally brought DSL service to her street just on the outskirts of town.  She had nagged everyone she could for more than three years about her lack of broadband.  The cable company offered service, if she paid $9,300 for installation of an extended cable line to reach her.  The phone company, despite serving her neighbors less than 1/2 mile away, said she was not “qualified” to receive DSL service.  Today, her husband and two kids do access broadband service, albeit from the equivalent of the broadband black market.  Her nearest neighbor has rigged a souped up Wi-Fi system that allows her family to share the neighbor’s DSL account.  A directional antenna mounted on the roof of each home provides line-of-sight access.  They split the cost of the account and Kelly, an accomplished baker, keeps her neighbors well-supplied with some great pies in gratitude.

Connected Texas collected the information about where broadband service was supposedly available in Texas

Texas has a well-deserved reputation for neighbors helping neighbors to solve problems they’ve long since decided the government can’t, won’t, or shouldn’t solve for them.  Now that neighborly spirit has taken a high-tech approach to share broadband.

With the release of the new broadband map, Kelly thought the days of sharing accounts was over, and she called the phone company to sign up for service.  But, in no surprise to us, broadband availability to her home changed only on paper, not in reality.  No, she was told, she could not sign up for DSL service today or tomorrow for that matter — the company had no plans to extend service her way… indefinitely.

For others, the map is inaccurate because it shows service from dominant cable and phone companies, but ignores the competition.  Regular Stop the Cap! reader Michael Chaney noted, “I know for a fact this map is inaccurate. They show no fiber to the home coverage in Cedar Park, Williamson County, even though I’ve had residential fiber service for almost two years.”

In 2009, Public Knowledge released a report highly critical of Connected Nation, the group responsible for broadband mapping across many states.  Among the findings:

In order to be effective, a national broadband data-collection and mapping exercise should be conducted by a government agency, on behalf of the public, with as granular a degree of information as possible and be totally transparent so that underlying information can be evaluated.

Connected Nation is none of those and represents none of those characteristics. It is an organization sponsored by the telephone and cable companies and represents their interests in deciding what data to collect and how information should be displayed. They are quite up front about their company sponsorship and, in fact, believe it is an asset, if in a way counter to solid public policy.

It would be a setback for our broadband policy if Connected Nation were to take a prominent role in broadband mapping and data collection if it continues on its present policy course because the organization does not represent wise public policy and because it distorts its results.

Kentucky Gov. Steve Beshear (D) was correct in April, 2008, when he vetoed a $2.4 million appropriation for Connect Kentucky, which until then had received almost $7 million from the commonwealth. Beshear said that the program was being rejected for state financing because it had asked for funds “without specifically identifying any services to be rendered to the state or providing for any oversight, control or performance measures relative to the services being rendered.”

The group’s close association to incumbent cable and telephone company interests were easily apparent just from the national organization’s board which has 12 outside directors, eight of whom are well known cable and phone company lobbyists or those with direct interests in the industry:

• James W. Cicconi – AT&T senior executive vice president-external and legislative affairs
• Steve Largent – CTIA – The Wireless Association president and CEO
• Joseph W. Waz – Comcast senior vice president, external affairs and public policy counsel
• Larry Cohen – Communications Workers of America president. CWA is in frequent agreement with telecom companies on policy issues.
• Thomas J. Tauke – Verizon executive vice president for public affairs, policy and communication
• Walter B. McCormick – United States Telecom Association president
• Kyle E. McSlarrow – National Cable and Telecommunications Association president
• Grant Seiffert – Telecommunications Industry Association president. (The members are the equipment makers who sell their gear to the telecom industry.)

These individuals, and others, are listed as “national advisors” on the Connected Nation Web site. They are listed as “directors” in their filing with the Kentucky Secretary of State.

The implications of allowing incumbent service providers to influence broadband mapping can be seen in Baxter’s editorial.  If Texas cable and phone companies can declare broadband service available even in areas where it is not, they can then argue against broadband stimulus projects to expand availability as an unnecessary waste of taxpayer money.  The answer to Baxter’s riddle is, unfortunately, too often “none.”  Areas that declare access to wireless broadband, cable and DSL often have access to none of these options.  The cable company doesn’t wire that Texas ranch located too far away from the phone company for DSL and is in an area that just can’t get a good wireless signal.

In smaller communities in rural Texas, efforts by local entrepreneurs to launch needed local broadband services often meet fierce opposition from incumbent interests who declare communities already served, backed up with a map that shows coverage, and therefore should not be allowed to receive stimulus funding.  Often, objections from existing providers effectively disqualifies stimulus applicants and the result is a continued blockade for rural broadband.

The dividend Connected Nation hands to the Texas Cable Association is the political argument that there is no broadband problem in Texas — nearly 100 percent of homes can already access it.  That means broadband stimulus is, in the eyes of the cable lobby, just another federal government giveaway — wasteful spending of tax dollars.  Just look at the Texas Broadband Map and see for yourself.

The Texas Department of Agriculture failed the people of Texas by relying on a group with a vested interest in not finding a broadband availability problem.  And even worse — taxpayers nationwide effectively picked up the $3 million dollars in grant money given to Connected Nation for its map.  That’s a waste of tax dollars that Baxter didn’t bother to bring up.  Somehow I knew he wouldn’t.

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Although not too far from Winston-Salem and Greensboro, Caswell County has a population of just over 23,000 people

In a painful display of callous disregard for the broadband needs of rural North Carolina, where half the state’s population lives, nine Republicans and two Democrats on the House Public Utilities committee voted down a bill to deliver service to 60 percent of Caswell County that currently goes without.

HB2067, introduced by Rep. Bill Faison (D-Orange/Caswell) would have allowed the rural county to provide broadband service to unserved residents and businesses.  What Rep. Faison did manage to put in HB2067 was initiative towards 21st Century technology.  The bill would have authorized Caswell County to install better technology, both up and down, where Centurylink offers slow DSL as the only option.  In introducing the bill, Faison explained that recent broadband data showed only 40 percent of Caswell County had access to broadband.

Already suffering from the exodus of textile jobs that used to provide an economic base for the area, the failure to obtain broadband has proven disastrous to the work of the county’s 21st Century Group, trying to restore Caswell County’s economy with a higher-tech future.  Six years of work was blocked by CenturyLink — the local phone company and 11 legislators, who told residents they don’t deserve anything better than they already have (which is often nothing.)

Without HB2067, Caswell County cannot even apply for federal stimulus broadband grant funds because the state law doesn’t provide specific authority to deliver the service.  Faison’s bill would correct that oversight and encourage public/private partnerships to get busy bringing broadband to the region.

CenturyLink and its top lobbyist Steve Brewer would hear none of it — Goliath was afraid that David would install better technology and force Centurylink to upgrade or hit the road.

Brewer was given more than half the available time for discussion about the proposed bill to fill the ears of committee members with half-truths.

CenturyLink, Brewer claimed, was more than willing to work with the county to provide the kind of speed its business park needed, yet failed to mention its long history of refusing to expand service to unserved areas.  Brewer’s claim that 70 percent of Caswell County is served by CenturyLink doesn’t mean the company offers broadband to all of those customers.  His further claim that 90 percent of those areas include equipment that is “DSL capable” also doesn’t mean those areas are providing the service today, just that they could… someday.  Many factors can disqualify a potential customer from getting DSL service, especially in rural areas where line quality is not always the best.

Bartlett Yancey House Restaurant and Gallery, a famous landmark in Caswell County.

Faison sought to explore exactly what Brewer defined as “broadband” service.  Brewer claimed DSL service offered anywhere from “1.5 to 6Mbps,” admitting speeds decline with distance and is untenable more than three miles from the telephone company switch facility.

Of course, Caswell County’s large rural expanse puts many of the unserved beyond the maximum distance DSL can work without additional equipment.  Many rural areas that can get DSL are typically offered between 768kbps-3Mbps service.  Caswell County is so rural, it met the Rural Utility Service’s (RUS) classic definition of an underserved community.  That allowed the county to technically qualify for first round federal broadband grant funding.

Unfortunately, legislators are not always as informed as they need to be to recognize statements riddled with loopholes and asterisks.

For instance, Rep. Daniel McComas (R-New Hanover) asked whether he could get high speed Internet over a phone line.  Although Brewer answered yes, what qualifies as “high speed” was left unanswered, as was exactly how many Caswell County residents requested DSL service, only to be refused by CenturyLink.  Yes, you can get DSL broadband over a phone line — but that doesn’t mean you will in Caswell County.

“The only definition of high speed Internet in North Carolina is from a statute from 10 years ago,” Faison noted. “You would have to admit that what was high speed Internet 10 years ago is not high speed Internet today.”

Just as the call for a vote was made, Brewer delivered an uninvited closing argument — probably unnecessary since no consumers were invited to speak on the issue.  If you don’t have broadband in Caswell County, 11 legislators on that committee weren’t interested in hearing from you anyway.

Brewer said the bill was completely unnecessary, because “federal broadband grants were no longer available,” and besides, it was unfair competition for the county to deliver broadband service better than what CenturyLink provides.  Of course, broadband grants -are- still available from the RUS, and few on the committee probably understood the irony of a phone company demanding that Caswell County not be allowed to deliver quality broadband service CenturyLink refuses to provide.

The substitute Committee bill would have protected CenturyLink from their fears of "unfair" competition by not allowing the county to build out broadband service where CenturyLink already provides it if it was not better service, but the company remained adamantly opposed to the county providing broadband service even in areas where they refuse to deliver it themselves for fear they would have to offer real broadband to Caswell County.

CenturyLink also claimed the county would have ‘secret insider information’ about CenturyLink’s every move through the permit process.  The glacial pace of the phone company’s broadband expansion is hardly a secret to the residents who live there.  Besides, permits are not required for the phone company to work in their own right-of-way.  Unlike cities who control the rights of way in their corporate limits, the state owns and controls the rights of way going through the unincorporated parts of the County.  Brewer’s comments were intended to scare legislators, not inform them.  It was a flat out lie.

The vote illustrates the disconnect many in the state legislature have about broadband.  Most of those in favor of the of the bill were Democrats mostly from rural sections of the state.  Two of the “no” votes came from Democrats in urban Mecklenburg County, which includes the city of Charlotte.  Representatives Beverly Earle and Becky Carney already have several choices for broadband service where they live.  Shame on them for condemning their rural neighbors in the north to a broadband backwater.

Mecklenburg County legislators were sure in a big hurry a few years back to do the bidding of AT&T, opening the doors to their kind of competition with statewide video franchising.  U-verse, which is available in parts of Charlotte, was supposed to put a stop the relentless rate increases and deliver competition.  So far, they’ve managed to sign up around 13,000 residents out of a potential 4 million plus in North Carolina, and the rate hikes just keep on coming.

The Republicans on the committee voted lock-step against the bill, even those from rural regions of the state.  Most of them are grateful recipients of big telecom money or are not running for re-election.  None of them can be bothered to ponder better broadband for their constituents unless it comes from a company cutting them a campaign contribution check.

When the vote was over, AT&T’s lobbyist Herb Crenshaw warmly shook McComas’ hand and congratulated him for a job well done. AT&T’s next check to McComas’ campaign fund will likely be bigger than the $500 he collected during the first quarter of this year.

The hit job on the broadband needs of rural Caswell County was complete.

The Members of the House Public Utilities Committee Voting Against Better Broadband for Caswell County & The Reasons Why
…and these amounts are just from the 1st quarter of 2010!

Rep. Harold J. Brubaker (R-Randolph) — Big Bucks Brubaker ran to the bank with $4,000 from AT&T, $4,000 from CenturyLink, $2,000 from Time Warner Cable, and $2,000 from Verizon.

Rep. Hugh Blackwell (R-Burke) — Blackwell accepted $500 from AT&T and $250 from Time Warner Cable.

Rep. Becky Carney (D–Mecklenburg) — AT&T and Time Warner Cable both cut checks for $500 each for Ms. Carney.

Rep. Beverly Earle (D-Mecklenburg) — She’s nice at half the price, with a grateful CenturyLink cutting a check for $250.

Rep. W. Robert Grady (R-Onslow) — Zippo.  He’s not running for re-election.

Rep. Jim Gulley (R-Mecklenburg) — Nada.  He’s not running again either.

Rep. Julia Howard (R–Davie/Iredell) — She gets around.  AT&T found her $500, CenturyLink provided a cool $2,000, and Time Warner Cable did even better with $2,500.

Rep. Linda Johnson (R-Cabarrus) — A double mint.  AT&T $500, Time Warner Cable $500.

Rep. Daniel McComas (R-New Hanover) — AT&T gave him $500, Time Warner Cable doubled that with $1,000.

Rep. Tim Moore (R-Cleveland) — Walking around money — AT&T $500, Time Warner Cable $500.

Rep. Wil Neumann (R-Gaston) — AT&T $500, but thanks to this year’s hefty rate hike, Time Warner Cable could afford $1,000 for Mr. Neumann.

Representatives Who Supported Rural North Carolina’s Need for Better Broadband, Voting For HB2067

Rep. Bill Faison (D-Orange, Caswell)

Rep. Kelly Alexander, Jr. (D–Mecklenburg)

Rep. Angela Bryant (D–Nash, Halifax)

Rep. Pricey Harrison (D-Guilford)

Rep. Marvin Lucas (D-Cumberland)

Rep. Nelson Cole (D-Rockingham)

Totals for 2010 (so far) for Telecom Contributions in the North Carolina General Assembly

AT&T $72,740

CenturyLink $51,750

Time Warner Cable $20,450

Verizon $10,500

(All figures are from the North Carolina State Board of Elections website, from candidates filings.)

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The sequel to this story could be written from a jail cell.

The guilty pleas just keep on coming in a two-year old prosecution of a wireless broadband scheme that never delivered much service, but ripped off taxpayers to the tune of more than two million dollars.  This week, the president of Mountain State College, who has been employed there for more than 35 years, owned up to hiding facts from prosecutors in his role as chairman of the board of the now-defunct Sequelle Communications Alliance, Inc.

Alan Michael McPeek of Parkersburg, 63, plead guilty Wednesday to obstruction of justice charges in federal court, admitting he misled a criminal investigation reviewing fraud allegations against the company.

Sequelle, a publicly funded project to establish wireless Internet service in the mid-Ohio Valley region, received a $3.295 million loan in 2002 from the U.S. Department of Agriculture, a $600,000 grant from West Virginia’s Development Office and another $400,000 in loans from the Mid-Ohio Valley Regional Council and a bank.

For that funding windfall, the mid-Ohio Valley got several towers ready for wireless antennas, a website that didn’t get updated much beyond the fall of 2000, some software to administer the project, and nothing else.

Instead, federal prosecutors charged some of Sequelle’s officers and several Ohio-based subcontractors of laundering loan and grant funds as seed money and salaries for a new for-profit venture designed to market an “Internet in a box” concept to other rural areas seeking wireless Internet service.

Prosecutors particularly focused on the USDA loan, which required the money “to be used solely for the project specifically described in the application to furnish or improve broadband services in rural areas … in the states of Ohio and West Virginia.”

Like many federal grants and loans, this one prohibited using the money to pay salaries, utilities, and basic office expenses.  Prosecutors would later learn Sequelle’s principal founder and former CEO Heidi Ditchendorf Caroline Laughery laundered loan money through a sub-contractor who kicked back at least $250,000 she used as a salary. McPeek’s guilty plea came in part because he knew about it.

Another grant from Ohio was paid on the promise Sequelle would provide at least 45 high paying jobs within three years.  That never happened.

Laughery

Worst of all, many of the grant and loan applications asked whether any officer in the company had been convicted of a felony or was a defendant in any criminal case.  Laughery answered no to both.  Had government officials verified that information they would have discovered Laughery was previously convicted in 1987 on two counts of felony wire fraud — based on her embezzlement of more than $130,000 of customer funds and securities during her employment at Merrill Lynch.

Laughery didn’t want to bring up those bad memories, so she left her Merrill Lynch years off Sequelle’s website documenting her prior experience.

Prosecutors have been successful in bringing those responsible for this caper to justice:

• Laughery was sentenced in April to 18 months in prison and ordered to pay $850,000 in restitution.
• Sub-contractor R. Scott Truslow plead guilty to conspiring to commit money laundering and is now spending six months under home confinement and ordered to pay nearly $550,000 in restitution.
• Charges are still pending against a second sub-contractor.

McPeek faces up to five years in prison when sentenced in October.  He was released on a $10,000 unsecured bond pending sentencing.

Laughery’s attorney, Michael Callaghan, claimed in 2008 that the project failed because technology marched ahead of the project.

“All the money that the government is alleging was stolen actually went into the development of Internet (infrastructure),” he told a West Virginia reporter. “My client worked for a year-and-a-half without pay because she believed in this project. The concept was great, but the technology developed faster than the project did. Technology moves fast. Technology businesses fail every day.”

Tapdancing your way around money laundering charges can move fast as well.

Click here to view the embedded video.

WTAP-TV Parkersburg has this report on McPeek’s plea.  (1 minute)

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The bill is pending in the House Ways and Means Committee, whose chairman, Rep. Bill Faison, sees the moratorium as an attempt to protect the powerful cable monopoly. Faison, a Democrat who represents Orange and Caswell counties, is meeting Wednesday with representatives of the telecommunications industry and local government leaders to discuss options.

Senator David Hoyle (D-Gaston) couldn’t get his Senate bill the time of day in the North Carolina House, so he attached it to a popular House bill to extend the e-NC Authority — North Carolina’s initiative to promote better broadband.  Now a good bill is infected, like a virus, by Hoyle’s tireless work on behalf of Time Warner Cable.

Hoyle, who has cashed checks from the cable and phone lobbies for years, is proud of sticking it to consumers in his state.

“I want my bill passed. They want their bill passed. So, if they want theirs, they’re going to have to take up mine,” Hoyle told WRAL-TV.

Hoyle, who plans to retire at the end of his term, faces no consequences from Gaston County voters, so he doesn’t care if his bill effectively protects incumbent cable companies who have raised their rates far above the rate of inflation for years.  Hoyle wants a one year moratorium to stop local communities from building their own broadband networks to improve service to residents and deliver lower pricing.

One community that escaped Time Warner’s relentless rate hiking is Wilson, where a municipal broadband project called Greenlight effectively forced a red light on Time Warner’s plans to increase rates in the community earlier this year.  Wilson was the only city we could find in the state where rates remained the same, and residents have Greenlight and city officials to thank for that.

Hoyle and his friends at the cable company are outraged at the thought of North Carolina communities stopping the rate hike gravy train.  After all, less money for Time Warner equals less money for campaign contributions to friendly politicians.

“Do we, as government, want to get in competition with private enterprise and my answer to that is no, and I am passionate about that,” Hoyle said.

If only his constituents could afford to pay him enough to be passionate about their interests.

Rep. Bill Faison, (D-Orange), is among the lawmakers sponsoring the broadband stimulus bill, which was a sure thing until Hoyle got his hands on it.  Faison called Hoyle’s amendments anti-competitive and pro-rate increase, both bad for North Carolina consumers.

“I decide what gets put on the agenda,” Faison told the Charlotte Observer. “It’s unlikely that any bill with a moratorium in it has a chance of getting through the House.”

Hoyle’s strenuous efforts to perform legislative gymnastics on behalf of cable and phone companies have not gone unnoticed by Faison.  He suggested Hoyle’s latest move represented an “interesting political maneuver,” but he doesn’t intend to sit still for it.  Faison and other pro-consumer legislators are meeting this week to consider how to strip Hoyle’s nonsense out of HB1840 and shove it in the nearest trash can.  For comparison purposes, here is the original bill.

Consumers show no love for Time Warner.  Charlotte residents had choice words for their cable company when they learned it was behind the push to stop municipal competition:

◊ Time Warner is about to pay for being jerks to their customers, and it’s high time.

◊ Time Warner cable: I hope they rot. It’s about dang time that municipal governments started providing free broadband to their citizens. The fact that multiple households need their own wireless routers, broadcast on different channels, is a totally inefficient use of technology. Companies like TW Cable want to keep citizens constrained, which runs totally opposite to the promise of the Internet. Find out which boneheads in the Senate are pushing for this and vote them out. They’re clearly more interested in money from the cable companies than in serving their constituents.

◊ For cable to argue unfair competition is laughable when they operate a virtual monopoly.

◊ Instead of fighting this legislation, why doesn’t Time-Warner Cable focus on making its service so reliable and reasonably priced that no city or county will seriously consider managing this themselves? I find it hard to believe any local government could actually run this type of technology more efficiently than a company with TWC’s resources can, but the threat of competition helps keep TWC on their toes. P.S. I lost my TWC signal for 90 minutes this past Sunday right in the middle of the US Open and Brazil-Ivory Coast World Cup game. Nice.

A vote on the House measure is imminent, so North Carolina consumers should be contacting the House Committee members listed below and urge them not to allow any part of Hoyle’s language to remain in HB1840.

Click here to view the embedded video.

WRAL-TV in Raleigh discusses Hoyle’s language and how it ended up in a broadband stimulus request bill.  (2 minutes)

House Ways and Means/Broadband Connectivity Committee

This article contains the following correction since original publication: Our original article did not fully explain the bill to which Sen. Hoyle attached his municipal broadband moratorium. For clarification purposes, that bill is HB1840, legislation to extend the authority of the e-NC Authority. Our original article carried WRAL-TV’s language that said the bill provided for “$5 million in federal stimulus to help provide high-speed Internet access in parts of the state.” While that would be nice, it wasn’t an accurate characterization the bill’s intent.  Our apologies for the error.

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Seoul, the capital city of the Republic of Korea

Seoul, the capital of the Republic of Korea, is the world’s most wired city with some 95 percent of residents enthusiastic users of the world’s fastest broadband networks.

While Americans cope with a broadband duopoly that holds us back, the 100Mbps world of broadband has already arrived in Korea, at prices a fraction of what Americans pay for service — with no limits.

A full 95 percent of households in South Korea have broadband internet access – the highest in the world. Singapore is second to South Korea, with broadband connection in 88 percent of homes. The U.S. ranks 20th, with broadband connection in 60 percent of homes.

Although densely populated cities in Korea, where residents live in multi-dwelling units, makes wiring fiber optic broadband easy, that’s not the only reason why South Korea is so far ahead of the United States.

Koreans consider broadband an essential part of life, a representation of their sense of freedom, as well as a tool to help Korea’s development in a global economy.

Click here to view the embedded video.

ABC’s ‘Good Morning America’ visited Seoul to learn how the world’s most wired city has been transformed by universal, inexpensive, super-fast broadband.  (5 minutes)

Click here to view the embedded video.

ABC’s Juju Chang sat down for an interview with Yongmann Park, chairman of Doosan Corporation, one of Korea’s successful business conglomerates.  (2 minutes)

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A $24 million federal grant proposal to install 600 miles of fiber optic cable across the southern tier of New York has advanced to the “Due Diligence Phase” of federal review, making it a serious contender for approval.

The application for the “middle mile” project was submitted jointly by the Southern Tier East and Southern Tier Central Planning Development Boards to create a fiber-based backbone to facilitate so-called “last mile” projects which deliver connections directly to consumers and businesses.  If built, the project will make connectivity available to all-comers, from wireless providers trying to reach the most rural homes to cable and telephone-based broadband providers delivering enhanced speeds and service.

The Shequaga Falls, visible from W. Main Street in Montour Falls, exemplifies the terrain of many Southern Tier communities in New York.

Broome, Delaware, Otsego, Chemung, Steuben and Schuyler counties would be served by the fiber network if constructed.

The southern tier of New York, mostly defined as west to Lake Erie and east to Binghamton, is particularly lacking in broadband, in part because of very difficult terrain.  Steep sloping hills rising 1,000 feet or more, created from glacial movements, combine with level hilltops representative of the Appalachian Plateau.  In most of these areas, fields and pastures crown the high points while cropland and communities locate on the level valley floor.  Getting broadband to residents and farms involves winding cables around the hills through communities like Bath, Corning, Elmira, Hornell, Watkins Glen-Montour Falls, and Wayland.  Even larger communities like Binghamton and Ithaca have plenty of landscape to navigate.

Inside immediate town and city centers, broadband is usually provided by Time Warner Cable, Frontier Communications, Verizon, or one of several independent phone companies.  Where 30mph speed limits predominate, broadband is likely available.  Once the speed limit returns to 55mph, service becomes more spotty.

Prior efforts to expand broadband availability included:

• Public/Private Partnerships: Cooperative efforts to ease the way for private providers to extend service into previously unserved areas.  This had limited success, particularly when sufficient return on investment could not be achieved within a set time frame.  Most private providers will not wire sparsely populated areas because of the time it takes to recoup wiring and pole costs.
• Aggregation of Demand: This technical-sounding term simply means bringing neighbors together and getting them to jointly commit to sign up for broadband service if a provider will agree to extend service to their neighborhood.  This can achieve success in areas where a provider is assured of getting his initial investment back.  A few of these efforts have even shared or split the financing of some construction costs.  Mike McNamara of Haefele Cable Television, an independent cable provider serving 4,700 residents in rural sections of Tioga County, noted “last mile” access can be expensive, costing about $12,000 for them to extend cable service per mile.

The blue color represents areas in this section of the Southern Tier where no broadband service is available. (click to enlarge)

A decision on the grant is expected by September.

Click here to view the embedded video.

WETM-TV in Elmira explains the plan to expand broadband service throughout the Southern Tier of New York, if a grant can be awarded.  (1 minute)

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Obama

President Obama signed a memorandum this morning that will free up 500Mhz of government and privately-owned spectrum over the next decade to double the amount of wireless broadband capacity in the United States.

The Obama Administration claims the newly available spectrum will throw a rescue line to overburdened wireless networks that are facing a spectrum crunch.  The White House estimates wireless data usage will explode — growing between 20 and 45 times in the next five years.

President Obama:

Few technological developments hold as much potential to enhance America’s economic competitiveness, create jobs, and improve the quality of our lives as wireless high-speed access to the Internet.  Innovative new mobile technologies hold the promise for a virtuous cycle — millions of consumers gain faster access to more services at less cost, spurring innovation, and then a new round of consumers benefit from new services.  The wireless revolution has already begun with millions of Americans taking advantage of wireless access to the Internet.

Expanded wireless broadband access will trigger the creation of innovative new businesses, provide cost-effective connections in rural areas, increase productivity, improve public safety, and allow for the development of mobile telemedicine, telework, distance learning, and other new applications that will transform Americans’ lives.

In practical terms, the reallocation of spectrum could spark a battle between the current spectrum holders — often government agencies and private UHF television stations — and the government.  Parts of the plan will require Congressional approval, a sure-fire guarantee that wireless providers will have to write some more checks to their astroturf and sock puppet friends to help sell the benefits of the plan to a wary Congress.

Since most of the spectrum would likely be sold at auction, the proceeds could deliver the administration a tidy sum to either reduce the federal budget deficit and/or fund broadband initiatives.

But what might seem at first like a win-win might not turn out that way in the end.

We have the following concerns:

Past spectrum auctions have largely benefited incumbent wireless carriers, especially companies like AT&T and Verizon who have the deep pockets that guarantee successful bids at auctions.  Both wireless carriers are not actually using all of the spectrum they already acquired in earlier auctions and have essentially warehoused those frequencies, particularly in rural areas, to keep them out of the hands of other companies that could deliver service.  FCC requirements that auction winners actually utilize their acquired spectrum have been so lax as to be laughable.  Carriers can easily satisfy FCC requirements building only in urban areas and leaving large swaths of the countryside unserved. The FCC must set rules that auction winners use their allotments in both rural and urban areas, or face fines or forfeiture.

Setting aside some frequency blocks for smaller providers and would-be competitors is critical.  In today’s mobile wireless marketplace two companies are superpowers and then there is everyone else.  Both AT&T and Verizon have the resources to outbid virtually anyone.  Allowing blocks of frequencies to be reserved exclusively for new competitors would bolster competition and give consumers more choices.  Those frequencies must be sold in a block that is identical nationwide — not leftover spectrum running through several frequency bands.

Providing additional spectrum for wireless broadband isn’t a problem, but with complaints about wireless service providers growing, along with consumers’ bills, now is the time to reform wireless for the benefit of consumers.  Let’s make it a “win” for everyone.

Click here to view the embedded video.

Bloomberg News explains the controversy behind the transfer of spectrum from the government and broadcasters to the mobile broadband industry.  (2 minutes)

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Mehlman

A telecom industry front group acknowledged today American broadband in the last decade has not won any awards for speed or price, but if you just give the industry ten more years of deregulation, there will be more competition than ever to change that.

For the Internet Innovation Alliance’s Bruce Mehlman, the cable and phone companies have done a fine job bringing broadband to Americans, especially considering the industry is only ten years old.  If you leave things the way they are today, the next decade will bring even more competition from phone and cable companies, he promises.

But consumer groups wonder exactly how a duopoly will ever deliver world class service in the next ten years when it has spent the last ten hiking prices on slow speed broadband and now wants to limit or throttle usage.

This afternoon, National Public Radio’s All Things Considered tried to referee the broadband debate, pondering whether America is a world leader in broadband or has just fallen behind Estonia.  Reporter Joel Rose was perplexed to find two widely diverging attitudes about broadband, each with their set of numbers to prove their case.

On one side, consumers and public interest groups like Consumers Union and Free Press who believe deregulation and industry consolidation has created a stagnant broadband duopoly that only innovates how it can get away with charging even higher prices.

On the other, the phone and cable companies, the groups they finance, and their friends on Capitol Hill who believe there isn’t a broadband problem in the United States to begin with and government oversight would ruin a good thing.

Compared with other nations, the United States has continued to see its standing fall in broadband rankings measuring speed, price, adoption rates, and quality.  When East European countries and former Soviet Republics now routinely deliver better broadband service than America’s cable and telephone companies, that story writes itself. Embarrassed industry defenders prefer to confine discussion of America’s broadband success story inside the U.S. borders, discounting comparisons with other countries around the world.

For Rep. Joe “I Apologize to BP” Barton (R-Texas), it’s even more simple than that.  Even questioning the free market is downright silly.

“As everybody knows, if it’s not broke, don’t fix it,” Barton said at a March congressional hearing to discuss broadband matters. “And y’all are trying to fix something that in most cases isn’t broke. Ninety-five percent of America has broadband.”

Industry-financed astroturf and sock puppet groups readily agree, and dismiss industry critics.

Bruce Mehlman, co-chair of the industry-supported Internet Innovation Alliance, which opposes more regulation, acknowledges that the story of broadband in the U.S. is a classic glass-half-full, glass-half-empty predicament. Still, he says he thinks broadband adoption in the U.S. is going pretty well considering broadband has only been available for 10 years.

“For the optimist, you’d say within a decade we’ve seen greater broadband deployment than you saw for cell phones, than for cable TV, than for personal computers,” Mehlman says. “It’s one of the great technology success stories in history.”

Mehlman says Americans don’t need more government intervention to make broadband faster and cheaper. “We haven’t yet and that’s in the first decade,” he says. “In the second decade, the marketplace is only going to be that much more competitive.”

Kelsey

The problems go further than that, however.

Derek Turner, research director for the public interest group Free Press, told NPR broadband rankings tell an important story. “For the providers to try to say that there’s no problem, it’s merely just a smoke screen,” he says.

Providers would prefer to measure their performance against each other instead of comparing themselves with foreign providers now routinely providing better, faster, and cheaper service than what American consumers can find.  They have to, if only because of those pesky international rankings illustrating a wired United States in decline.

Joel Kelsey at Consumers Union tells NPR there is an even bigger question here — what role broadband plays in our lives.

Because 96 percent of Americans can only get broadband from a duopoly — the phone or cable company, the only people truly singing the praises of today’s broadband marketplace are the providers themselves and their shareholders.  Consumers see a bigger problem — high prices, and particularly for rural consumers, slow speeds.

“If you talk to [the] industry,” Kelsey says, “they think of broadband as a private commercial service akin to pay TV or cable TV.”

On the other hand, Kelsey says, “There’s a lot of folks who think it is an essential input into this nation’s economy — an essential infrastructure question.”

National Public Radio reporter Joel Rose dived into the battle over broadband numbers between consumer groups and industry representatives. Is America’s broadband glass half-full or half-empty? (June 28, 2010) (4 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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Shapiro

Yesterday, Stop the Cap! reviewed a report from Robert J. Shapiro and Kevin Hassett suggesting “heavy users” should pay 80 percent of the costs to upgrade and expand broadband service to help lower prices for Internet access among America’s poor.  But what might have read to some as a scholarly assessment of challenges confronting American broadband is, in reality, propaganda produced by Sonecon, a Washington, D.C.-based lobbying firm hired by AT&T to sell their corporate agenda to the American public, interest groups, and Congress.

Beltway Economics – Buying Credentialed “Experts” to Back Discredited Policies

The dirty little secret of Washington power politics is that money buys attention, access, and all too often votes.  What began as a cottage industry to help facilitate communications between private business and political Washington has grown into a monstrosity that now largely controls the agenda, giving the upper hand to those who can outspend their rivals.  Since all too often those rivals are consumers who don’t bring money to play the game, they don’t even get a seat at the table.

Few people start a career thinking they’ll ultimately wind up prostituting their good name and resume to the highest bidder.  For many inside the beltway, what may have begun as a well-intentioned career in public service too often ends working for one of countless “public strategy firms” that help special interests get their way. Their impact on the debate is pervasive, especially when Congressional allies are on board: using suggested witnesses at Congressional hearings that lock out true consumer groups, reading lobbyist-provided talking points during floor debates, quoting from industry-sponsored reports sold as “independent research,” and gratefully accepting any accompanying campaign contribution checks along the way.

Most D.C. lobbying firms rely on recognized names who maintain a high profile in Washington power circles even years after leaving the public sector.  When selling an agenda, it helps if the person doing the sales pitch already knows the person being sold.  That’s why so many ex-Congressmen, deciding they’ve gotten used to living in Washington and want to stay, find new careers and a much bigger paycheck working as lobbyists.  But elected office isn’t a requirement.  Even those appointed to positions in the public sector can turn those lean government pay years into an income bonanza once that administration leaves office.

Robert J. Shapiro has come a long way from his early days in progressive politics found him in positions at several liberally-minded groups like the Progressive Policy Institute and the Progressive Foundation.  He advised several Democratic presidential candidates, including Al Gore, John Kerry, Bill Clinton, and Barack Obama.  Bill Clinton appointed Shapiro the U.S. Under Secretary of Commerce for Economic Affairs during his second term in office.

Unfortunately, although that title looks great on a business card and future resume, the pay is downright lousy.  Besides, his temp job would end with the Clinton Administration’s departure.

Shapiro combined his credentials with years of networking into Sonecon, LLC — a D.C. lobbying firm that pays dividends from its grateful clients, including AT&T.  Sonecon describes itself as “an economic advisory firm that provides in-depth analyses and unique insights into changing economic conditions in the United States and around the world and the impact of government policies on those conditions….”

Sonecon Knows Its Place

But just a little digging reveals Sonecon is really just another cog in the wheel of corporate campaign strategy and messaging.  Among the services promised to its clients (underlined emphasis ours):

• [Sonecon] works extensively with a network of affiliated firms (read that other lobbyists, astroturf groups, and think tanks) to help design and execute message campaigns;
• Sonecon plays an influential role in shaping public policy debates. We identify economic risks and opportunities created by recently proposed or enacted laws and regulations. By outlining the risks and opportunities associated with these changes, Sonecon enables business and government decision makers to react in a timely and appropriate way.  One recent example: Our reports on proposed new FCC regulations effecting broadband providers focused on broadband access issues for lower income households.
• As part of our services, Sonecon principals and advisers take part in strategic public relations campaigns designed to promote the firm’s work in the media, Congress and Executive Branch.  Well-informed, credentialed, and highly credible spokespersons, our team members are available for special appearances as well as ongoing communication campaigns.

Sonecon’s involvement in this particular ongoing communications campaign was made considerably easier by CNET’s sloppy editorial policy which effectively handed free media to AT&T without adequate disclosure of Shapiro’s agenda.  A simple Google search would have given CNET ample evidence that Shapiro and his firm were performing work on behalf of its clients — the telecommunications industry, especially AT&T.  This is not CNET’s first lapse.  On June 3rd, they provided column space for Robert Hahn to bash the FCC for involving itself in data plan pricing.  Only they never disclosed the fact Hahn is associated with the Technology Policy Institute (TPI), a phone and cable industry-backed think tank.  Even Comcast managed to disclose that association in their company blog.

In March, Shapiro appeared on an industry-backed panel to oppose broadband reform (from left, Robert Crandall-Brookings Institution, Walter McCormick-USTelecom, Lee Rainie-Pew Internet and America Life Project, Robert Shapiro-Georgetown Center for Business and Public Policy, and Joseph Waz, Comcast)

The unfortunate part of this story is that Sonecon and Shapiro have also infested the current debate over the National Broadband Plan.  This past March, Shapiro joined forces with the aforementioned TPI and its benefactors AT&T, Verizon, Comcast, Time Warner Cable, and the cable lobbying group NCTA to appear at a half-day “event” at the National Press Club to whine about broadband reform’s impact on industry investment and broadband expansion.  To underscore the economic investment threat, the sponsors were only willing to provide a continental breakfast for participants.  Leave us deregulated or else American broadband will resemble this stale pastry and ersatz “orange juice”-flavored beverage.

Such events happen easily in Washington with a swipe of a corporate credit card.  If consumers still had money, they could hire firms like Sonecon to represent their interests in these beltway policy debates.  But then hard-hit Americans don’t even have credit cards to spare these days, thanks to earlier lobbying efforts that allowed banks to use the economy as their personal casino.  Shapiro played his part in this too, writing a January 2008 report, “American Jobs and the Impact of Private Equity Transactions” that advocated for big Wall Street private equity leveraged buyouts, playing down the typical wholesale job losses that followed:

The data strongly suggest that private equity operations have solid, positive effects on U.S. employment, a finding consistent with the general role that private equity transactions play in the American economy. Private equity funds identify inefficient companies or subsidiaries, leverage those companies’ assets to borrow much of the financing to purchase them outright or to purchase a controlling interest, reorganize their operations and management, and run the enterprises as privately-owned entities.

Friends Until the End… Of the Contract

True to word, Shapiro did work extensively with a network of affiliated firms.  Many of the sources in his report are other groups also working for the industry or dependent on it.

The challenge here is that industry and government experts now expect that broadband bandwidth demand will continue to rise rapidly with the fast-expanding use of video and audio applications, and that consequently broadband providers face an extended period of significantly higher investments to accommodate this growing bandwidth demand.

[...]Another estimate cited by David McClure, the head of the U.S. Internet Industry Association, and John Ernhardt, Senior Manager of Policy Communications for Cisco Systems, projects that the long-term investments required to keep up with rising bandwidth demand could cost providers an additional $300 billion over 20 years, on top of their trend level investments.

Recently, the FCC broadband task force suggested that the additional investment requirements, including wiring every household with fiber, may well reach $350 billion.

The U.S. Internet Industry Association is a trade association for service providers like AT&T and Verizon.  A Verizon executive serves on its board.  Its mission includes working “to enhance your existing legislative and regulatory resources, giving your company a stronger voice over a wider range of issues — and at a reduced cost.”

Cisco Systems, principal advocate of the theory of the Internet traffic tsunami, makes its living selling equipment to manage the “exaflood” to the same industry that it pals around with in public policy debates.

Kevin Hassett co-authored the Sonecon report

And where does Shapiro’s estimated price tag of $350 billion come from?  His proclaimed source, the FCC broadband task force, is only half the story.  In fact, this cost estimate came from service providers, equipment manufacturers, and trade associations/lobbyists, among others¹.  That part didn’t make it into Shapiro’s report  — maybe he ran out of room.

Therein lies the basic problem with sock puppet research.  The credibility of any industry-funded study is questionable before the first copy even gets published.  Common sense dictates that a firm’s longevity is directly tied to its performance for clients.  Producing research that questions the strategy a company hires you to push is a one-way ticket to bankruptcy.  It doesn’t matter what credentials one brings to the table, money always speaks louder, especially in Washington.

Shapiro’s co-author, Kevin Hassett, is a political polar opposite, having served as an economic adviser to John McCain’s 2000 presidential campaign and Director of Economic Studies at the very-business-friendly American Enterprise Institute.  The potential friction between the two was eased by the ultimate incentive: big piles of bipartisan telecom cash.

In the end, Sonecon has done its client’s bidding — fixing facts to subjectively argue that unlimited, flat-rate broadband has to go. Their evidence is as flimsy as can be — assumptions that overcharging some people for Internet service will guarantee upgrades and cheaper pricing for others.

If you believe that, you’ll also believe Shapiro and Hassett wrote this report for free.

¹Federal Communications Commission. FCC Task Force on the National Broadband Plan Presentation to the FCC: September Commission Meeting (Slide 45)

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