Cablevision characterizes the dispute as a "TV tax" on its subscribers

More than three million Cablevision subscribers in New York, New Jersey and Connecticut are without their local ABC station as another retransmission fee dispute reached an impasse late Saturday night.

WABC-TV, the top-rated television station in New York went dark on Cablevision customer screens Sunday morning, potentially depriving cable customers access to tonight’s Academy Awards telecast.

“If Cablevision is serious about doing right by their customers and returning ABC7 and its programming to them, then they need to act now. The ball is in their court,” WABC-TV president and general manager Rebecca Campbell said in a statement.

The station says it sent Cablevision a new proposal earlier today, but Cablevision had not yet responded.

Cablevision argues it already pays $200 million dollars a year for Disney-owned cable networks like ESPN, and WABC’s request for what the company characterizes as $1 per month per subscriber is too much.

Cablevision is telling subscribers “it is wrong for ABC to demand $40 million in new fees to help pay the salaries and bonuses for top ABC executives” and characterizes the additional fees as a “TV tax.”  That argument might have some sway had Cablevision not recently agreed to some hefty pay raises and bonuses for its own management, while customers faced another rate increase.

Coming just two months after another high profile dispute between the cable operator and Scripps’-owned Food Network and HGTV, some Cablevision subscribers have had enough.

Stop the Cap! reader Jen said she ordered Verizon FiOS for her Long Island home as soon as she heard about the dispute.

“We’ve been here before and I just knew these guys would not get serious about negotiations until after the station was pulled, and I’m tired of them playing with my lineup arguing over who gets my money,” Jen writes.  “Verizon FiOS had a great sign-up offer and they don’t have these bull-headed disputes that drag customers into the middle of the ring to get repeatedly gored.”

Jen’s service was installed Friday, so she’s enjoying tonight’s Oscar telecast while her neighbors might not.

“Maybe we’ll have them over so they don’t have to play around with rabbit ears,” she adds.

Cablevision has been hounded by politicians who are also annoyed with programming disputes.  Cablevision says it would agree to binding arbitration and wants the Federal Communications Commission to intervene.  Both possibilities are highly unlikely, however.

What is likely is the high profile Academy Awards broadband will act as a de facto deadline for the two sides to hammer out a final agreement in time to allow WABC back on the lineup.  Most likely, both sides will settle around the 50-60 cent range for New York’s channel seven.

Click here to view the embedded video.

WABC-TV New York tells viewers Cablevision dropped channel 7 early Sunday morning after negotiations failed to resolve a dispute over fees. (2 minutes)

Click here to view the embedded video.

Cablevision is running this message for subscribers explaining the loss of WABC-TV from the cable lineup. (3 minutes)

Princeton, Kentucky

A cable technician and his supervisor were jailed late last week after a customer dispute escalated into a shoving match between the Mediacom employees and the Princeton, Kentucky police.

Under arrest are Shannon K. Parker, 46, of Indian Avenue, Oak Grove, and 55-year-old Phillip R. Tosh of Centennial Drive.

Police officials responded to a call from 509 North Jefferson Street over an argument between a customer and the cable technician.  When police arrived, they report Parker was using loud, obscene language and refused to follow police instructions to calm down.

Tosh, a Mediacom supervisor, then joined the fracas and reportedly shoved one of the officers attempting to take Parker into custody.

The Times-Leader reports both men were arrested and lodged in the county jail.

Parker was charged with disorderly conduct. Tosh was charged with third-degree assault on a police officer and hindering prosecution or apprehension.

The investigation continues, and other charges are possible, police told the newspaper.

The elusive Dell 10v Netbook promised to new Comcast customers back in August is MIA for hundreds who took advantage of the promotion

Five months after Comcast ran a promotion for new customers including a free Dell 10v netbook, many customers across the country are still waiting to receive the computer.

Back in August, Comcast matched a Verizon FiOS promotion promising a netbook to new customers signing a two-year service contract for a $99 monthly “triple play” package of telephone, broadband, and cable programming.

Visitors to Comcast’s website were offered:

HD Starter Triple Play

NEW SUBSCRIBERS: Get a free Dell 10v Netbook with the HD Starter Triple Play for only $99 a month for 12 months and a 2-year minimum term agreement. Plus, you’ll continue the savings the following year with a price of just $10 more per month.

• Free HD – no HD access fees or equipment fees.
• Over 80 digital cable channels.
• Thousands of On Demand movies and shows.
• Internet downloads up to 15 Mbps, uploads up to 3 Mbps with PowerBoost®.
• Unlimited local and long-distance nationwide calling – rated #1 in call clarity.
• Voice Mail and 12 popular calling features including Caller ID, Call Waiting and more.

The campaign apparently shared something else in common with Verizon’s promotions — customers left high and dry wondering when the promised bonus will arrive.

Customer attempts to contact Comcast have met with a wall of excuses and broken promises, and often still no netbook.  Other customers were told they failed to “qualify” for the promotion for not precisely following the terms and conditions that were never explained to them.

Comcast representatives have told customers they lost out because:

• They failed to return a copy of the signed contract committing to two years’ of service, despite insistence from customers who claimed they had;
• Comcast had two promotions running at the same time that were nearly identical, though one offer did not include a netbook. Customers were told they were signed up for the promotion that didn’t include the netbook.
• Customers had to make three or four consistent payments for service, before the due date, or they would forfeit participation in the netbook promotion.
• The customer waited too long to complain about the missing netbook.
• The customer was now a TV customer, and therefore didn’t qualify for the promotion.
• Tri-Star/Checkmyrebate.com, the third party fulfillment center handling the promotion didn’t receive/rejected the customer’s promotion request.
• They lost the paperwork.

Although some customers began receiving the promised promotion more than 120 days after signing up for Comcast, hundreds more are still waiting, and complaining.  A few managed to obtain service credits up to $299 (the retail cost of the Dell 10v) and told to “go buy your own.”   One Seattle television station intervened to help a Kenmore resident finally secure one in January, despite hopes it would have arrived before Christmas for re-gifting.

Escalating the matter to executive customer service is usually the best way to cut through Comcast’s red tape and secure the promotion customers are entitled to receive.

Darren, a Comcast customer who waited months for the cable company to make good on their offer gave some advice:

I started posting on Facebook and Twitter and immediately received a twitter from @ComcastMelissa and @ComcastBonnie. They told me to email: we_can_help@comcast.com and provide my account information so they can get me my netbook. I received an email from Sherri Carson, (Sherri_E_Carson@cable.comcast.com) at the corporate office – national customer service. On January 7th, 2010 she said “This is going to take about 2 weeks at the most. Sorry, I know you should have received some follow up, but I’m on it.”

The kicker: I emailed her yesterday to say hey, two weeks is almost up and I haven’t heard anything. Here is her response: “You should be receiving your netbook no later than 2/19 at the latest. I will get you a tracking number as soon as I get one. You can check this site in about two weeks.

Just don’t get your hopes too high for a Dell netbook.  Many finally receiving their promotional gift report an Asus Eee PC arrived instead.  Comcast put that in the fine print as well  — it reserved the right to make substitutions.

Click here to view the embedded video.

KING-TV Seattle helped this Kenmore, Washington viewer finally get her promised netbook after signing up for service in August, 2009.  A Comcast executive personally pleaded for her to stay with Comcast, despite the promotion problem, in this report.  (2 minutes)

Negotiations between Scripps and Cablevision continue to drag on in the northeast as New York, Connecticut, and New Jersey Cablevision cable subscribers go without their HGTV and Food Network.

Progress has been incremental at best as Cablevision continues to refuse to accept paying the increased fees Scripps wants.  Cablevision’s declaration that is expects to never carry Scripps programming again doesn’t help.

Meanwhile, Food Network president Brooke Johnson has been running from one news channel to another to talk about Scripps’ position on the dispute, and that “hundreds of thousands” of viewers have complained about the loss of their two networks, a number Cablevision disputes.

Pali Research analyst Richard Greenfield, who covers the cable industry, defended Cablevision, giving credit to the Dolan family that owns Cablevision for standing up to Scripps’ rate increase request.

Greenfield accused Comcast and Time Warner Cable of “essentially rolling over” in their negotiations with Scripps, agreeing to price hikes for their networks, an allusion to Time Warner Cable’s campaign to fight back against programmer price increases.

If those cable companies “had taken a far harder stance with Scripps, Cablevision’s pushback may actually have forced Scripps’ hand,” Greenfield wrote.

Still, most viewers could care less about the power plays between cable and the programmers.  They just want their HGTV and Food Network back.

Click here to view the embedded video.

WCBS-TV New York ran these two reports during their 6pm and 11pm newscasts describing the battle between Scripps and Cablevision, and consumer reaction.  (4 minutes)

Click here to view the embedded video.

Same story, different city as WTNH-TV viewers in New Haven, Connecticut share their views on the dispute.  (2 minutes)

Click here to view the embedded video.

Food Network president Brooke Johnson appeared on CNBC to take questions about the dispute and changing business model of cable TV and programmers.  (5 minutes)

Click here to view the embedded video.

Johnson also turned up on Fox Business News to discuss the dispute, how negotiations are going, and how viewers are reacting.  (6 minutes)

Click here to view the embedded video.

…And Johnson also appeared on Bloomberg News accusing Cablevision of paying themselves top dollar for AMC, a network they own, while refusing to negotiate over a price increase for the “more popular” HGTV and Food Network amounting “to pennies per subscriber.”  (6 minutes)

News Corporation chairman Rupert Murdoch

The days of finding free access to News Corporation’s online content, from Fox News to the New York Post to Sky News are numbered, according to chairman Rupert Murdoch.

Murdoch spent several minutes with Sky News Australia political editor David Speers lamenting the mistake News Corporation made in providing free access to its news stories and content websites, declaring the free ride is about to end with the near-universal introduction of “paywalls” requiring Internet users to open their wallets to read or watch their content.

Murdoch says he wouldn’t mind a substantial decline in web traffic from visitors who currently find his companies’ content through Google news and content searches, claiming advertisers don’t place much value on one-time visits.  He prefers customers willing to pay.

Murdoch suggested most of News Corporation’s content will end up looking similar to today’s Wall Street Journal — a few sentences for free and then an invitation to subscribe to read more.  Videos could cost more.

Murdoch accused Google and other indexing services of “stealing” content, and when asked if he would be willing to request that Google stop indexing his websites, Murdoch replied, “I think we will.”

MSNBC’s Rachel Maddow had fun with that answer last night, pondering how Murdoch will attract audiences to his content when the company refuses to allow search engines to index it.

Click here to view the embedded video.

Rachel Maddow comments on Rupert Murdoch’s apparent plan to ban indexing of his websites’ content by Google. (11/9/09 – 1 minute)

Sky News Australia was in no position to seriously object, as they are partly owned by News Corporation themselves, and Murdoch had little to fear from Speers’ gentle treatment of the media icon.

Among the company’s global media properties:

Phil Kerpen (left) waits his turn while Glenn Beck explains the Marxism connection in Net Neutrality

Glenn Beck, who is America’s biggest argument for mental health parity in health care reform, has turned his paranoid ravings to the subject of Net Neutrality, suggesting the whole concept is one giant government conspiracy to take over the Internet.  To prove the point, he brings on Phil Kerpen, policy director and master astroturfer for “Americans for Prosperity,” which should really be called “Telecom Companies for Prosperity.”

Glenn Beck believes there is a conspiracy by Obama Administration officials, working with “Marxists and Maoists,” to secretly gain control of the Internet through the implementation of Net Neutrality, and to prove it, he brings on a guy whose paycheck depends on the corporate contributions from big telecommunications companies that want him to pretend he represents actual consumers.  The real conspiracy was sitting just six feet away from Glenn, but he missed it because he was too busy rearranging pictures of Mao Tse-Tung and others on his magnetized chalkboard.

Drawing chalk lines and stacking and re-stacking pictures like some sort of deranged episode of The Hollywood Squares doesn’t actually prove a conspiracy, but I’ll take Mao Tse-Tung in the center square to block!

In a remarkably fact free ten minutes, Glenn’s photo album of the guilty got star billing, as he labeled those who personally crossed swords with Beck or Fox News as “Marxists.”  Van Jones, who founded Color of Change, the organization that coordinated an effort to strip Beck of virtually all of his mainstream paid advertisers after Beck accused President Obama of being racist against white America is there.  Rahm Emanuel and Anita Dunn, both of whom referred to Fox News as an arm of the Republican Party are there (Emanuel “is just evil, not a Marxist” according to Beck, while Dunn is a “Maoist.”)  Robert McChesney, who co-founded Free Press, one of many public interest groups fighting for Net Neutrality is there as well.  He’s the ‘real string puller and master conspirator’ here, according to Beck and Kerpen.

At times, this theater of the absurd left Kerpen with an odd look on his face, reduced to simply looking up at Beck, who spent large amounts of two segments on the all-important issue of moving and labeling pictures of his personal enemies around like a 14 year old throwing a temper tantrum.  It’s hard to argue Americans for Prosperity represents the sane position on Net Neutrality after Kerpen’s ten minute Beck Affirmation Session.

Click here to view the embedded video.

Part one of Glenn Beck’s rant on Net Neutrality with Americans for Prosperity’s Phil Kerpen on October 20th (6 Minutes)

When dealing with people not entirely there, sometimes it is safer to just humor them while you seek a graceful exit.  But Kerpen played along with Beck’s label gun, and as we’ve seen all year, co-opted the paranoia among some conservatives that Net Neutrality, the Fairness Doctrine, and President Barack Obama are all conspiring to silence Glenn, right wing talk radio, and sooner or later all dissent.

Beck opens the discussion by fundamentally misunderstanding the very definition of Net Neutrality.

“Net neutrality. This is that everybody should have free Internet, right?,” Beck asks Kerpen.

“Well, essentially. You know, they dress it up the way they dress up a lot of their things. They turn it upside-down by saying that evil corporations, phone and cable corporations are going to block what we can do block or we can say,” Kerpen responds.

In fact, Net Neutrality has nothing to do with giving away free access to the Internet.  It is about preserving the free exchange of ideas that would allow Glenn, and anyone else, to talk about whatever they want online without fear a broadband provider would interfere with their content, slow access to it, block it, or charge extra to make sure it gets through to people at reasonable speeds.

Beck tried to conflate Net Neutrality with a government plan to give away access to everyone at taxpayer expense.

“I don’t remember anybody saying in the 1930s that everybody had a right to radio and we gave away free radios for the government. And I don’t remember anybody in the ’50s everybody deserved a free television, but that’s where we’re headed now. So that neutrality – I want to get to that later on in the week,” Beck said.

Perhaps Beck will educate himself on Net Neutrality by that time.

Kerpen knows better, but he’s paid to distort the issue.  Stop the Cap! consumers encountered Americans for Prosperity in North Carolina this past summer who were duped to show up to support state measures restricting municipal broadband projects in the state.  They thought they were there to support a-la-carte cable programming options and to oppose Obama Administration “emergency powers” to control the Internet.  Upon learning the true nature of the legislation at hand, a number of them ended up on our side.  They hate big telephone and cable monopolies too.

Americans for Prosperity is largely funded by corporate interests, which makes it unsurprising they would echo their talking points.

Kerpen’s fear factory that Net Neutrality represents a way for government to demand balance on websites is laughable, but then we know better.  For a crowd that already believes in the basic construct of Glenn Beck’s world view, it’s entirely believable.  That’s a shame, because it is Net Neutrality that ultimately will protect their access to Glenn’s online content without blockades or extortionist pricing from broadband providers.

Click here to view the embedded video.

Part two of Glenn Beck’s rant on Net Neutrality with Americans for Prosperity’s Phil Kerpen on October 20th (5 Minutes)

"I think these are radical consumer groups," says Larry Kudlow

CNBC host Larry Kudlow engaged in on-air lovemaking with the wireless phone industry in a shameless segment decrying Net Neutrality.  His guest, Chris Guttman-McCabe, vice president of regulatory affairs at CTIA – The Wireless Association, was strictly in friendly territory as Kudlow tossed him softballs.  It was an industry talking point Blitzkrieg on consumers from start to finish:

Kudlow: Potential government control of the Internet: is Net Neutrality going to limit investment and innovation and even customer service?

Reality: Saying Net Neutrality is “government control” of the Internet is like saying safety inspections are “government control” of the food industry.  Without Net Neutrality, big cable and phone company providers will be the ones controlling the Internet.  Will Net Neutrality really limit investment, or continue the Internet success story that investment and innovation has already produced before providers demanded you pay more.  As for impacting customer service, that’s about as valid as claiming Net Neutrality will cause snakes to hide in your bed.

Guttman-McCabe: It’s a perfect storm of usage.  If we’re forced to deliver every bit all the time you’re going to lead to some form of commoditization of the product.

Reality: Gasp!  We can’t have that!  For those who may miss the meaning, commoditization refers to a perfect storm of competition, with providers generally competing on price because their products are of similar scope and quality.  Providers cannot extract higher pricing in such environments, because consumers won’t pay.  In the wireless industry’s eyes, Net Neutrality forces them to actually deliver the service they promise in their marketing materials.  You, as a consumer, get to choose the applications and services you wish to use and pay accordingly.  The market they want is to closely control and manage the content you use on their networks, blocking or impeding “unauthorized” services that don’t have a relationship with, or approval from, your wireless phone company.  Consumers actually want every bit delivered all the time, and providers are throwing a hissyfit because of it.

Kudlow: If you’re forced to deliver every bit all the time and meet the demands of these radical consumer groups, what happens to the profits of the deliverers?  The profits that are supposed to go into the investments to expand the broadband delivery?

Reality: Radical consumer groups?  Attacking real consumer groups that represent what consumers actually want, while providers stomp their feet when forced to deliver, doesn’t solve “the problem.”  And what of the profits?  That’s a good question Guttman-McCabe isn’t prepared to fully answer.  The enormously profitable broadband industry, in general, earns billions and invests a small percentage of that back into expanding their networks.  As our readers have learned on the wired broadband side, the logical assumption that providers will at least maintain a level percentage of revenue going back into network infrastructure isn’t always the case.  Instead, some providers raise prices and limit service, blaming “increased demand.”  Kudlow could ask providers what percentage of their revenues go into network expansion, and whether that has changed in the last ten years.  Of course he doesn’t.

Kudlow (to Guttman-McCabe): …obviously you’re not from the telephone company or the cable company, what’s your meat in the game here, who are you representing?

Reality: The CTIA has among its members AT&T, Cox, and Verizon.  Guttman-McCabe’s meat is paid for by all three, and many other industry members who belong to the group.  Who does CTIA not represent?  Consumers.

Guttman-McCabe: (Here come the shiny keys of distraction and misinformation, folks) I posit a question.  Are they (Google) allowed to cache their content closer to the customer to provide a better service under these Net Neutrality rules?

What about this pen -- will it be allowed under the new Net Neutrality rules?

Reality: Yes!  Having redundant and strategically placed content delivery servers is a widespread, industry-accepted practice not harmed by Net Neutrality.  Akamai delivers vast quantities of video content from regionally placed servers.  Cable operators will be able to place servers to deliver TV Everywhere to their customers wherever they like, if they so choose.  Net Neutrality does not compel web providers to run everything from a central server farm.  It would, however, tell broadband providers they cannot identify and artificially slow that content delivery down just because they don’t like it on their networks.  Big difference.

Guttman-McCabe: Is the Amazon Kindle, which is basically a wireless (single purpose) device — is that allowed to exist under the new Net Neutrality rules?  I think these are some of the questions that will come out as the Commission considers these new rules.

Reality: Yes!  Mr. Boots, your cat, will also be allowed to exist under Net Neutrality rules if he happens to jump on your keyboard while you access web pages.  Your wireless picture frame, which receives digital images to display on your bookcase will also be allowed to exist even if it cannot be used to play World of Warcraft.  I’m certain Guttman-McCabe and his friends will concern troll their way through the debate by throwing up lots of non-germane “concerns and questions” that they know have no relationship to the matter at hand.  They are well paid to do so.

Kudlow, of course, doesn’t challenge his guest on any of these issues, because he seems in perfect agreement with the industry position.  The shameless segment wraps up with the ominous notice that Net Neutrality has a long way to go and the CTIA has a “lot of educating to do.”  I’ll bet.

Larry Kudlow is the host of CNBC’s The Kudlow Report (M-F, 7pm/ET).

Click here to view the embedded video.

Larry Kudlow interviews Chris Guttman-McCabe, vice president of regulatory affairs at CTIA – The Wireless Association on Net Neutrality (9/21/09) (4 minutes)

AT&T: 'Google is violating the Net Neutrality tenets we spend millions to make sure don't become law.'

AT&T sent a letter late last week to the Federal Communications Commission calling out Google Voice, the free adjunct Voice Over IP service being tested by Google, for blocking calls to certain high cost telephone numbers.  Robert W. Quinn, Jr., Senior Vice President of AT&T’s Federal Regulatory office complained that AT&T has been forced to complete those calls while Google Voice does not, suggesting that might be the equivalent of a Net Neutrality violation, if not an outright violation of call completion requirements established by the Commission.

These days, almost anything can be defined as a Net Neutrality violation.  If I was a vegetarian and I blocked meat products from my home, I’d probably get a letter from AT&T’s counsel too.

At issue here is the exploitation of a loophole that was established by telecom regulators to provide extra financial support to rural community telephone companies.  When a person places a long distance call, part of the charge is paid to the company that connects the call from the long distance network to the recipient’s telephone line.  The fees long distance companies pay vary depending on the size of the community and the length of the call.  Small rural areas enjoy a higher call completion fee than urban areas do.

Some enterprising individuals discovered the fees being paid to rural phone companies were higher than the actual costs to provide the service.  Traditionally, that extra money was used by rural phone companies, often independent or customer-owned cooperatives, to keep their service costs down and to maintain their equipment.  Long distance carriers didn’t care because the number of calls to these rural communities was comparatively small.

But what would happen if a company set up a telephone number to receive lots of calls that would otherwise never be made to such rural communities?  The result could be a financial windfall.  That possibility persuaded a few rural phone companies to let third parties offer international calling, conference calling and adult phone chat services for no charge beyond whatever the customer has to pay to make the long distance call.  In return, the phone company kicks back a significant portion of the extra income they earn from “call completion fees” to the service providers.

AT&T, among others, got wind of this arrangement and flipped out, complaining they were paying an ever increasing bill from rural phone companies hosting these services.  Anyone with an unlimited long distance plan could call these numbers for free and stay connected for hours at a time.

Unsurprisingly, AT&T blocked calls to these services for a period in 2007, refused to pay for some prior charges, and sued several phone companies.

AT&T/Cingular spokesperson Mark Siegel told Ars that the reason the company has decided to start blocking these services is because high volumes of calls to similar services are costly, and the cost of those calls aren’t passed on to the customer. “We have to pay terminating access for every minute the person is on the line,” Siegel explained. “Typically these companies run them through local exchange companies that charge high access rates, so we end up paying high access charges.”

The FCC intervened and said phone companies cannot arbitrarily block customer access to phone numbers, and the blocks were removed.  Today, the free international long distance calling services are basically gone, but free conference calling lines and adult sex chat services remain, and Google Voice has now discovered the perils of connecting calls, for free, to these services.  So now they have blocked access as well.  Google Voice beta testers report calling blocked numbers results in perpetual busy signals.

AT&T pounced in a letter to the FCC:

Numerous press reports indicate that Google is systematically blocking telephone calls from consumers that use Google Voice to call telephone numbers in certain rural communities.  By blocking these calls, Google is able to reduce its access expenses. Other providers, including those with which Google Voice competes, are banned from call blocking because in June 2007, the Wireline Competition Bureau emphatically declared that all carriers are prohibited from pursuing “self help actions such as call blocking.” The Bureau expressed concern that call blocking “may degrade the reliability of the nation’s telecommunications network.” Google Voice thus has claimed for itself a significant advantage over providers offering competing services.

But even if Google Voice is instead an “Internet application,” Google would still be subject to the Commission’s Internet Policy Statement, whose fourth principle states that “consumers are entitled to competition among network providers, application and service providers, and content providers.” This fourth principle cannot fairly be read to embrace competition in which one provider unilaterally appropriates to itself regulatory advantages over its competitors. By openly flaunting the call blocking prohibition that applies to its competitors, Google is acting in a manner inconsistent with the fourth principle.

Ironically, Google is also flouting the so-called “fifth principle of non-discrimination” for which Google has so fervently advocated (Net Neutrality). According to Google, non-discrimination ensures that a provider “cannot block fair access” to another provider. But that is exactly what Google is doing when it blocks calls that Google Voice customers make to telephone numbers associated with certain local exchange carriers. The Financial Times aptly recognized this fundamental flaw in Google’s position: “network neutrality is similar to common carriage because it enforces non-discrimination . . . Google is arguing for others to be bound by network neutrality and, on the other hand arguing against itself being bound by common carriage,” which leaves Google with an “intellectual contradiction” in its argument.

Richard Whitt, Washington Telecom and Media Counsel for Google, fired back a response on the Google Policy Blog countering AT&T’s arguments:

Google Voice’s goal is to provide consumers with free or low-cost access to as many advanced communications features as possible. In order to do this, Google Voice does restrict certain outbound calls from our Web platform to these high-priced destinations. But despite AT&T’s efforts to blur the distinctions between Google Voice and traditional phone service, there are many significant differences:

• Unlike traditional carriers, Google Voice is a free, Web-based software application, and so not subject to common carrier laws.
  
• Google Voice is not intended to be a replacement for traditional phone service — in fact, you need an existing land or wireless line in order to use it. Importantly, users are still able to make outbound calls on any other phone device.
• Google Voice is currently invitation-only, serving a limited number of users.

AT&T is trying to make this about Google’s support for an open Internet, but the comparison just doesn’t fly. The FCC’s open Internet principles apply only to the behavior of broadband carriers — not the creators of Web-based software applications. Even though the FCC does not have jurisdiction over how software applications function, AT&T apparently wants to use the regulatory process to undermine Web-based competition and innovation.

The HissyFit is on, and it’s almost entirely beside the point.  Once again, Net Neutrality is being used as a convenient flogging tool, this time by a company that spends millions to oppose it, yet sanctimoniously demands others should comply with its founding principles.  While the systematic blocking of telephone numbers may echo the kinds of concerns Net Neutrality protection is designed to address, it’s not as on point as AT&T would have you believe.

Google Voice isn’t even close to being a replacement for telephone service.  It’s not even openly available to the public.  AT&T would have had a stronger argument complaining about MagicJack, the dongle that lets you make unlimited long distance calls for $20 a year.  They go beyond just blocking some of the conference calling services — they actually redirect calls to a recording encouraging customers to instead use one of their own partners instead.

Dan Borislow, inventor of MagicJack says “it is not illegal for us to block calls to [conference calling numbers.]  We have invited other conference calling companies to interconnect to us for free, so we can complete our customers’ calls to them.”

Google’s public policy response isn’t as satisfying as it could have been either, and uses some weak arguments in rebuttal.  Much more important and on point is finding a way to address call completion fee loopholes through a change in telecommunications policy.  The telecommunications landscape has fundamentally changed in ways that existing rules could not have anticipated.  Addressing that issue would provide immediate relief to both AT&T and Google Voice without dragging consumer interests into a telecom policy cat fight.

Unfortunately, that’s a point far too fine for many media types, bloggers, and the sock puppets to understand (or desire to), and the campaign of Waving Shiny Keys of Distraction will carry on, and may have been AT&T’s intention in making such an argument in the first place.

Who dares break the most sacred Ark of the Cable Covenant?

In March 2000, two cable magnates sat down for the cable industry equivalent of My Dinner With Andre.  Fine wine, beautiful table linens, an exquisite meal, and a Monopoly board with pieces swapped back and forth representing hundreds of thousands of Canadian consumers.  Ted Rogers and Jim Shaw drew a line on the western Ontario border and agreed to stay on their respective sides of it.  Ted and Jim divvied up each others cable interests, swapping Rogers’ systems west of Ontario with Shaw’s systems east of the provincial line. Thus was born the Ark of the Cable Covenant, with its founding principle: Thou shalt not compete or intrude in my territory.

The only question left at the end of the meal was who was going to pick up the check.  You did.

And so it was.  Since 2000, Shaw Communications has kept its operations west of Ontario, Rogers stays in Ontario and points eastward.  A very nice state of affairs, as long as you are not a Canadian consumer looking for competitive relief from high prices and lousy service.

Shaw Raids Ontario

But in July there was heard a great rumbling across the prairies and into the verdant forests and rolling hills of southwestern Ontario.  What was that sound?  Who were these cowboy hat wearing hordes riding across the lands to the shores of Lake Ontario carrying saddle bags stuffed with cash?  Why look, Calgary-based Shaw is staging a $300 million dollar buyout raid on Mountain Cablevision, Ltd., a 41,000 subscriber independent cable company based in Hamilton, Ontario.

But what of the sacred agreement?  Ted Rogers passed away in December, leaving Shaw to rhetorically ask, “What agreement? Do you know anything about an agreement?”

Indeed, there is no honor among thieves and cable executives seeking the spoils of a highly uncompetitive industry.  Rogers was shocked to discover an invasion on their turf, and they responded with a torrent of attorneys to block the deal, as Canwest News Service notes:

“Shaw is bound by the restrictive covenant which prohibits Shaw from building or acquiring any broadband wireline cable business in Ontario, Quebec or Atlantic Canada,” Rogers argued in court documents released Thursday.

Thankfully for Shaw, Ontario courts do not typically recognize “covenants” as sacred documents not to be broken.  Justice Frank Newbould on the Ontario Superior Court of Justice rejected the de facto non compete agreement and said Rogers had not proven any irreparable harm from the sale, dismissing Rogers’ “proof” as “speculative in the extreme.”

Of course, you realize this means war.

Tim Pinos of Cassels, Brock & Blackwell LLP is Rogers’ lead lawyer on the file. Shaw’s intentions are clear, he said Friday: “Shaw desires to re-enter Eastern Canada and acquire cable systems.”

Aside from picking a competitive fight with Rogers, an expansion east would pit Shaw against smaller but powerful players, such as Videotron, which is owned by giant Quebecor Inc., and commands a near-monopoly in Quebec.

With the agreement shattered, Rogers is likely casting its eyes westward, observers say.

Earlier this week, Edward Rogers was appointed to the role of deputy chairman of the company his father built. He moves from heading up Rogers Cable and will also oversee new operational responsibilities, including strategic acquisitions.

Unfortunately for consumers, some sacred agreements will remain unbroken.  Namely the one that keeps companies like Shaw and Rogers from competitively wiring communities already served by each other and competing head to head.  That simply wouldn’t do.  It would ruin a perfectly delightful meal.

“It helps no one if broadband subsidies flow to ‘overbuilders’….” Matt Polka, American Cable Association CEO

“We will have government-created competition.” Cable One senior vice president and chief sales and marketing officer Jerry McKenna

America’s cable companies are having fits of anxiety over $7.2 billion dollars in broadband stimulus money that isn’t just going to fall into their laps.  “There are a lot of strings on that money,” one executive told Multichannel News this week in a piece that truly feels for the plight of the nation’s cable operators, concerned that billions of dollars could end up stimulating competition in the rural broadband marketplace.

The horror.

Granted, there are some concerns with some specific conditions which will likely represent little or no impediment to big regional telephone companies, and those like Frontier Communications, which specialize in servicing rural customers (and will likely apply for a substantial amount of broadband stimulus money), but will potentially lock out a lot of “mom and pop” operators.

Among them are requirements that a “first lien” be granted to the Rural Utilities Service, a USDA government-run administrator of the broadband program.  That has some banks, which small providers would likely use to finance some up front construction costs, up in arms.  A first lien would leave the government first in line for any asset recovery from a failed project, not the bank.

But some small providers are also upset with a requirement that any completed projects be held within that provider’s portfolio for a minimum of 10 years.  That provision, according to government officials, was added to prevent bottom feeder “flippers” from creating new companies tailor-made to fit broadband grant criteria, receive substantial amounts from the government to build projects, and then quickly sell them to the highest bidder when complete, pocketing the profits.

But the overwhelming concern expressed by 70% of cable operators surveyed by the American Cable Association at their ACA Independent Show held in late July is the fear of competition.

Many small-operator executives said that they feared the broadband stimulus would create competition — one said the money would go to “charlatans who would ruin the business.”

Cable One senior vice president and chief sales and marketing officer Jerry McKenna, who after his panel session at the show said that his MSO will likely apply for two or three broadband projects, was even more direct.

“We will have government-created competition,” he said.

As a result of the realization that free government money was simply not going to fall from the sky into their hands, many of the nation’s cable operators have stomped their feet and thrown fits, finally resulting in more than half declaring they were either not likely or absolutely certain they would not apply for a penny.  It’s their hope the federal government will see a dearth of applications, assume the process is too onerous, and dramatically loosen up the rules.

“If they get an overwhelming number of applications, the administration will see this [program] as a success,” American Cable Association director of regulatory affairs Ross Lieberman said at the show. “If there are not that many applicants, if there is no incumbent interest, we can expect changes to this program.”

Changes have already been made at the behest of lobbyists, who are now given a freer reign to pursue broadband policies more amenable to their clients.  Also changed are the definitions of what constitutes an underserved or unserved area, and with the broadband mapping project at risk of being run by the providers themselves, those definitions could eventually become meaningless anyway.

But providers fearing an “overbuilder,” a competing company that strings its own cables and provides true competition, need not panic just yet.  As they nail bite about the decision to apply or not apply for broadband stimulus money, risking if they don’t a competing provider may, the government has graciously provided a 30 day window for incumbent providers to submit a formal challenge of other applicants for up to 30 days after the deadline.

Every application will be publicly posted online at BroadbandUSA.gov.