Home » Public Policy & Gov’t » Recent Articles:

Approval of AT&T-DirecTV Merger Expected Next Week

The headquarters building of U.S. satellite TV operator DirecTV is seen in Los Angeles, California May 18, 2014. REUTERS/Jonathan Alcorn

The headquarters building of U.S. satellite TV operator DirecTV is seen in Los Angeles, California May 18, 2014. REUTERS/Jonathan Alcorn

WASHINGTON (Reuters) – AT&T Inc’s proposed $48.5 billion acquisition of DirecTV is expected to get U.S. regulatory approval as soon as next week, according to people familiar with the matter, a decision that will combine the country’s No. 2 wireless carrier with the largest satellite-TV provider.

The Department of Justice, which assesses whether deals violate antitrust law, has completed its review of the merger and is waiting on the Federal Communications Commission to wrap up its own, according to three people familiar with the matter.

The FCC, which reviews if deals are in public interest, is poised to approve the deal with conditions as early as next week, according to three other people familiar with the matter.

All the sources asked not to be named because they were not authorized to speak with the media. An AT&T spokeswoman and FCC spokesman declined comment. Justice Department representatives were not immediately available for comment.

AT&T’s merger with DirecTV, announced in May 2014, would create the country’s largest pay-TV company, giving DirecTV a broadband product and AT&T new avenues of growth beyond the maturing and increasingly competitive wireless service.

The deal has been expected to pass regulatory muster in contrast with the rival mega-merger between cable and Internet providers Comcast and Time Warner Cable, which was rejected in April largely over the combined companies’ reach into the broadband market.

The FCC and AT&T have been in negotiations over conditions for the merger for several weeks, the people said, adding that none of the conditions are controversial enough to break the deal.

Those conditions are expected to include assurances that both middle-class and low-income Americans have access to affordable high-speed Internet, including an offering of broadband subscriptions as a standalone service without a TV bundle, according to two of the people.

AT&T has earlier committed to expand access to broadband service in rural areas and to offer standalone Internet service at speeds of at least 6 Megabits per second to ensure consumers can access rival video services online, such as Netflix.

FCC officials are also considering ways to ensure that the conditions are properly enforced in the future, possibly through a third-party monitor, according to the two sources.

The FCC is also weighing how to ensure the merged companies abide by the so-called net neutrality rules, which regulate how Internet service providers manage traffic on their networks.

AT&T has promised to abide by net neutrality principles such as no-blocking of traffic, but is challenging in court the FCC’s newest net neutrality regulations that have expanded the agency’s authority over various deals between Internet providers and content companies.

FCC reviewers are weighing what net neutrality-related conditions to apply to the merger and how to address the possibility that the court throws out the latest rules, the two sources said.

Reported by: Alina Selyukh and Diane Bartz

Chicago Extends 9% Entertainment/Use Tax to Almost Everything You Do Online

handoutStarting Sept. 1, Chicago residents will be paying 9% more for everything from Netflix to income tax filing as city officials impose a recently reinterpreted entertainment/use tax on almost every online subscription content provider, even those peddling adult entertainment.

The Chicago Tribune reports the city’s Finance Department has vastly broadened the reach of Chicago’s amusement and personal property lease transaction taxes to apply the 9% tax to virtually any content that a customer borrows, leases, or subscribes to that is not purchased outright. Buying a CD on Amazon.com would not be subject to the tax but a Spotify subscription allowing you to listen to that same CD as long as your subscription is maintained will be taxed. Buying a digital copy of a movie will not be taxed, but watching it through a subscription service like Apple TV, Amazon, or Netflix will be.

Although some are dubbing it the “Netflix Tax,” it will also apply to cloud storage, paid television programming — including satellite, cable, telephone, and online-delivered content, financial and investment services, and almost anything else accessed online with a paid subscription. Even paying to host a website (or having someone manage it for you) will be subject to the tax.

The expanded tax is part of Mayor Rahm Emanuel’s strategy to deal with Chicago’s huge budget shortfall with fees, fines, and broadening taxes. The city predicts the expanded tax will capture up to $12 million a year from Chicago residents and businesses.

“In an environment in which technologies and emerging industries evolve quickly, the City periodically issues rulings that clarify the application of existing laws to these technologies and industries,” mayoral spokeswoman Elizabeth Langsdorf said in a statement issued Wednesday. “These two rulings are consistent with the City’s current tax laws and are not an expansion of the laws. These ensure that city taxation is uniformly and fairly applied and that businesses are given clear guidance on the applicability of the City’s tax laws to their operations, and they clarify that the amusement tax and personal property lease tax apply to digital services.”

Chicago_TheatreChicago residents have paid the amusement tax on movie tickets, local concerts and sports events since at least 1998. The city collects 5% on live theatrical, musical, and other live cultural performances held in an auditorium, theater, or other space whose maximum capacity (including balconies) is more than 750 persons. A 9% tax applies on all other events, but no tax is collected on religious, charitable, and not-for-profit organizations holding events for fund-raising purposes as long as they limit them to two events per year.

A Netflix spokeswoman confirmed that the company will pass the additional cost to subscribers but said no other details were available.

Critics of the tax contend it will be very easy to avoid through the use of payment services like PayPal, which allow customers to specify an out-of-state address — any out-of-state address, valid or not — in the payment details box, allowing residents to avoid the tax. Others are adding the addresses of out-of-state relatives to their credit cards and will use those addresses when placing orders for online content.

“Since they are not mailing you anything, it doesn’t really matter what address you use, as long as it is outside of the city of Chicago,” one anonymous commenter noted.

Wynne

Wynne

That is exactly what Michael Wynne, a partner and attorney in the Chicago office of the law firm Reed Smith, predicted would happen, noting Chicago is already replete with high taxes and fees and adding more of them would encourage tax dodging. He assumed businesses will also actively avoid the tax, either by moving their offices out of the Chicago city limits or more likely renting a post office box in the suburbs and using it as a billing address.

“Let’s say I sign up for streaming business data in the city but I have offices throughout the country,” Wynne told the newspaper. “I will definitely make sure my billing goes through a different office.”

Wynne believes many Chicago residents may not understand the 9% tax will apply to a lot more than just Netflix. He called the expansion staggering in its breadth in his analysis, excerpted below.

The Unamusing Amusement Tax: It Could Apply to Almost Anything

The Amusement Tax ruling will extend the tax to streaming services for music, movies, games, and the like, as well as satellite TV delivered to a customer located in Chicago. However, the ruling does not impose the Amusement Tax on the same content when it is permanently downloaded by a consumer. The Lease Transaction Tax ruling extends the tax to the online procurement of real estate listings, car prices, stock prices, economic statistics, and “similar information or data that has been compiled, entered and stored on the provider’s computer.” In addition, under the ruling, the Lease Transaction Tax will apply to the online procurement of “word processing, calculations, data processing, tax preparation” and “other applications available to a customer through access to a provider’s computer and its software.” In the ruling, the Department expressly notes that these “examples are sometimes referred to as cloud computing, cloud services, hosted environment, software as a service, platform as a service, or infrastructure as a service.”

reedThe Amusement Tax is imposed on patrons of every amusement within the city. “Amusement” is broadly defined, and it includes “any entertainment or recreational activity offered for public participation or on a membership or other basis,” and “any paid television programming, whether transmitted by wire, cable, fiber optics, laser, microwave, radio, satellite or similar means.”

The Amusement Tax ruling specifically taxes charges paid for the privilege of the following amusements delivered to a patron in the city: (1) “watching electronically delivered television shows, movies, or videos”; (2) “listening to electronically delivered music”; and (3) “participating in games, on-line or otherwise.” As a consequence, streaming a movie, listening to streaming music, or playing a game on a smartphone or tablet will now trigger a 9% tax on the subscription charge for those services if those activities are done at a location in Chicago. Furthermore, the ruling addresses “bundled” transactions, by providing that “unless it is clearly proven that at least 50% of the price” is not for the amusement, the entire charge, except for any separately stated non-amusement charges, is subject to the Amusement Tax. That suggests great care must be paid to invoicing services when including any item that might be construed to be an amusement. The ruling does not differentiate between news, current events, sports, movies, music or other types of television programming. As a consequence, an establishment that charges patrons for access to television programming of any sort, plus other goods and services (e.g., a bar that imposes an admission charge for a pay-per-view event that includes food and beverages) may have to navigate the bundling rules.

The Computer Lease Tax Ruling = 9% on Everything You Borrow, Subscribe, Rent, Lease, or Pay-Per-View Online

Rep. Bob Goodlatte (R-Va.) introduced H.R. 235: the Permanent Internet Tax Freedom Act, which passed in the House of Representatives on June 9th and is heading to the Senate.

Rep. Bob Goodlatte (R-Va.) introduced H.R. 235: the Permanent Internet Tax Freedom Act, which passed in the House of Representatives on June 9th and is heading to the Senate.

The ruling provides examples of when the tax applies, such as when performing legal research or similar on-line database searches, to obtain consumer credit reports, or “real estate listings and prices, car prices, stock prices, economic statistics, weather statistics, job listings, resumes, company profiles, consumer profiles, marketing data, and similar information or data that has been compiled, entered and stored on the provider’s computer.” In the ruling, the Department specifically identifies taxable leases of personal property to include “cloud computing, cloud services, hosted environment, software as a service, platform as a service, or infrastructure as a service.” This is quite an expansion for a concept evolved from taxing agreements for time-sharing on mainframe computers, and that has only been judicially tested once, involving legal research in the city on terminals provided by the legal search provider, in days that preceded the creation of the World Wide Web, and the expansion of fiber-optic networks that made possible the Internet networks relied on to deliver many of the services the ruling now targets. See, Meites v. City of Chicago, 184 Ill. App. 3d 887 (1989). The rulings represent a further evolution of the city’s approach under the Lease Transaction Tax to disregard contract terms and recharacterize transactions to fit its tax code definitions; it is doubtful that any consumer or provider of subscription Internet streaming services thinks they are contracting to lease tangible personal property.

Wynne says Chicago officials have expanded the scope of its tax ordinances to their absolute limit, if not further. He also fears Chicago could give other cities and states ideas for new taxes.

“If any state or local governments were wondering how to tax transactions occurring in the Cloud when legislative authority for such taxation is absent, the Department has just sketched a roadmap,” he wrote.

Wynne believes the time to stop these kinds of taxes is now, before they have a chance to spread, or worse, start being collected.

He writes there are strong arguments that Chicago’s creative reinterpretation of its 9% tax is illegal, running afoul of the Federal Telecommunications Act, the Internet Tax Freedom Act, and federal and Illinois constitutional limits on taxation. But while the rulings are likely to be challenged in court, Chicago officials still expect providers to start handing over the 9% tax proceeds beginning this fall. Those that don’t will run into Chicago’s tax penalty buzzsaw – 12% interest on delinquent taxes, a 25% penalty, and a lengthy bureaucratic process (bring your attorney) dealing with the city’s administrative hearings office.

Rough Day for Internet: Fiber Issues, Amazon/AWS Outage, Vandalism Disrupts Service

WaveLogoSmallWest coast Internet users, particularly those around San Francisco and Sacramento, experienced major disruptions to the Internet last evening into this morning, affecting everything from cable television and phone service to popular online destinations including Amazon.com (and websites hosted by its AWS data service), Tinder, and Netflix.

The range of disruptions led to early media speculation a “coordinated attack” on the Internet was underway on the west coast, but a statement from the Sacramento field office of the Federal Bureau of Investigation this morning clarified it was investigating only a single case of alleged intentional vandalism in the San Francisco area today.

The FBI suspects someone climbed down a manhole in Livermore early this morning and intentionally cut a high traffic fiber line owned by Level 3 and Zayo. This is not the first case of suspected vandalism. At least 10 other fiber line cuts in Fremont, Berkeley, San Jose, Alamo, and Walnut Creek have occurred in the Bay Area over the last year.

http://www.phillipdampier.com/video/USA Today FBI investigating 11 attacks on San Francisco-area Internet lines 7-1-15.flv

USA Today reports the FBI is now investigating the 11th intentional fiber cut in the San Francisco Bay area in 12 months. (1:18)

The hardest hit ISP was Wave Broadband in West Sacramento, Calif. The fiber outage wiped out cable, phone and broadband service for customers across Sacramento, Rocklin, and surrounding communities including Dixon.

livermoreA broader issue yesterday evening also affected customers beyond northern California. Amazon.com and websites using its AWS platform suddenly stopped responding between 5:24pm-6:10pm PT last night. But that issue was later determined to be an unrelated “route leak” from Axcelx, a data center provider in Boston.

Thousand Eyes reports that problem “affected a wide range of services including consumer internet sites like Yelp, Netflix and Match; SaaS services such as HipChat and Jobvite; and financial firms such as Experian and Zions Bank.”

Any report of fiber vandalism concerns security experts, who suggest terrorists could target the highly visible data cables and create massive telecommunications disruptions in the United States.

“When it’s situations that are scattered all in one geography, that raises the possibility that they are testing out capabilities, response times and impact,” JJ Thompson, CEO of Rook Security, told USA Today. “That is a security person’s nightmare.”

http://www.phillipdampier.com/video/KCRA Sacramento Wave Broadband service restored after deliberate act 7-1-15.mp4

KCRA in Sacramento said the telecommunications outages in Sacramento were frustrating for businesses, residents, and local government — all affected by the fiber cut in San Francisco. (2:20)

Fiber cables are also often readily identifiable by their bright orange insulation as well as from warning signs alerting construction crews and others to their presence underground.

downdetect

DownDetector clearly identifies the impact of the fiber outage affecting Wave Broadband in the Sacramento area.

“There are flags and signs indicating to somebody who wants to do damage: This is where it is folks,” said Richard Doherty, research director of The Envisioneering Group, a technology assessment and market research firm. “You often have fiber from several companies sometimes going down the same street or the same trench. One attacker can dig one hole and wipe out service from three companies.”

The FBI is asking for the public’s help in identifying the vandal in the Bay Area. In addition to this morning’s attack, anyone who may have seen anything suspicious in these earlier attacks should contact them at 415-553-7400.

  • July 6, 2014, 9:44 p.m. near 7th and Grayson St. in Berkeley
  • July 6, 2014, 11:39 p.m. near Niles Canyon Blvd. and Mission Blvd. in Fremont
  • July 7, 2014, 12:24 a.m. near Jones Road and Iron Horse Trail in Walnut Creek
  • July 7, 2014, 12:51 a.m. near Niles Canyon Blvd. and Alameda Creek in Fremont
  • July 7, 2014, 2:13 a.m. near Stockton Ave. and University Ave. in San Jose
  • February 24, 2014, 11:30 p.m. near Niles Canyon Blvd. and Mission Blvd. in Fremont
  • February 24, 2014, 11:30 p.m. near Niles Canyon Blvd. and Alameda Creek in Fremont
  • June 8, 2015, 11:00 p.m. near Danville Blvd. and Rudgear Road in Alamo
  • June 8, 2015, 11:40 p.m. near Overacker Ave and Mowry Ave in Fremont
  • June 9, 2015, 1:38 p.m. near Jones Road and Parkside Dr. in Walnut Creek
http://www.phillipdampier.com/video/KXTV Sacramento FBI Sacramento area internet outage result of vandalism 7-1-15.flv

KXTV in Sacramento reports the fiber cuts have immediate security and public safety implications for public officials. But network planners say no fiber cut should have disrupted so many customers and suggest better planning could have spared many from the service outage. (2:23)

D.C. Court of Appeals Announces Expedited Schedule for Net Neutrality Legal Challenges

DC Circuit Court

DC Circuit Court

The U.S. Court of Appeals for the D.C. Circuit has agreed to begin contemplating the legality of the Federal Communications Commission’s Net Neutrality rules on an expedited schedule, with written briefs from the cable and wireless industry challenging the rules due by July 30.

The schedule could allow the court to begin hearing oral arguments about whether Net Neutrality and Title II reclassification of broadband as a telecommunications service are legal as early as late fall, with a decision coming in 2016.

Both sides advocated for the court to make its decision as soon as possible.

To help the judges, the court has ordered all parties to limit the length of their written briefs and avoid using telecom jargon at all costs. The judges expect to read a series of at least 13 written briefs from all parties in the case before oral arguments are heard and has imposed limits ranging from 2,000-33,000 words on each submission to cut the workload.

Those objecting to Net Neutrality are not challenging the FCC’s rules prohibiting blocking of websites, paid prioritization or speed throttling. They are more worried about Title II reclassification, which gives the FCC wide latitude to oversee the broadband business. They are also challenging the vaguely defined “catch-all” general Internet conduct standard which allows the FCC to regulate if providers attempt end runs around specific rules to achieve comparable results. The FCC argues it needs the latitude to respond to a rapidly changing Internet. Internet providers also have a track record of finding and exploiting loopholes, something the FCC wants to limit.

More than 25 Companies Rushing Fiber to the Home Service Across South Africa

TelkomSAMore than two dozen independent broadband providers are busily wiring parts of the Republic of South Africa with fiber to the home service in a rush to relegate telephone company giant Telkom’s DSL offerings into the dustbin of irrelevance.

The pace of fiber broadband expansion is happening so rapidly, Telkom CEO Sipho Maseko has had to warn investors the phone company’s continued dependence on its copper infrastructure could threaten the company’s future. Consumers and businesses are demanding better broadband in a country that has languished under Telkom’s insistence on sticking with copper infrastructure that has delivered slow Internet speeds and stingy data caps for more than a decade.

The Sunday Times notes South Africa’s fiber revolution is delivering speeds up to 1,000Mbps on a network that literally sells itself. Fiber providers deliver speeds 250 times faster than ADSL and are helping make usage caps and usage-based billing a part of South Africa’s past. New fiber builds are announced in neighborhoods, towns, and cities almost weekly, many driven by residents in neighborhoods pooling together to attract competition. Independent contractors are winning a large share of the broadband deployment business, able to string fiber cables less expensively than Telkom and its bureaucracy.

VUMA is a fiber service provider in South Africa, following Google Fiber's "fiberhood" example to expand service.

VUMA is a fiber service provider in South Africa, following Google Fiber’s “fiberhood” example to expand service.

“The rate at which con­sumers are turn­ing to al­ter­na­tives to Telkom to build these net­works is re­mark­able,” the Times editorial states. “Un­til a year ago, [Telkom’s] ab­so­lute dom­i­nance over the ‘last mile’ into homes and busi­nesses seemed set to last for years. No more. Telkom’s core busi­ness is sud­denly threat­ened.”

Maseko

Maseko

The projects are large and small. Sea Point in Capetown, Blair­gowrie in Jo­han­nes­burg, Kloof and Hill­crest in Dur­ban are all working with start-up providers instead of Telkom. Many are convinced Telkom management is either incompetent or has been more interested in the welfare of its executives than its customers, and more than a few are voting with their feet.

The most aggressive stampede to fiber broadband is occurring in rich suburbs and gated communities prevalent in affluent areas. These are the customers Telkom cannot afford to lose and many are unlikely to ever return to what used to be the state-owned telephone company. The Times argues the longer Telkom pretends it still has a monopoly, the worse things are going to be for a company in for a rude shock.

“For the first time, the lum­ber­ing in­cum­bent, which once held an ab­so­lute mo­nop­oly over fixed lines, is hav­ing to com­pete for con­sumers’ at­ten­tion with a range of nim­ble start-ups that prom­ise su­perb broad­band at de­cent prices, and of­ten on an ‘open ac­cess’ ba­sis — mean­ing con­sumers are free to choose Internet Service Providers, and ser­vice providers can get di­rect ac­cess to the infrastructure,” the newspaper writes.

The newspaper scoffed at Telkom’s wasted opportunities and poor management decisions that now threaten its future viability.

Among Telkom’s biggest failures was a $815 million investment beginning in 2007 on an “ill-fated adventure” in the Nigerian wireless marketplace. Telkom said it was “misled” by several Nigerian businessmen into bleeding billions of South African Rand into a wireless company that used CDMA technology in a country dominated by cheap GSM providers. A shaky network of cellular dealers incapable of attracting new customers only made things worse. The venture’s losses were so huge, it attracted the attention of South African legislators who questioned the wisdom of Telkom investing in Nigeria while allowing South African broadband to stagnate from inadequate investment.

When two dozen fiber to the home competitors began installing fiber to the home service in South Africa, Telkom grudgingly has started to compete with fiber builds of their own.

When two dozen fiber to the home competitors began installing fiber to the home service in South Africa, Telkom grudgingly has started to compete with fiber builds of their own. They are likely to face two new national fiber competitors, in addition to the independents, within months.

A year earlier, Telkom also proved less than competent when it entered South Africa’s pay television business. In 2006, Telkom earmarked more than $600 million to be spent on a venture unlikely to win enough customers from dominant MultiChoice to be sustainable. By 2009, Telkom decided to sell most of its stake in the venture at fire sale prices and still found few interested buyers.

Telkom’s management has been accused of gross incompetence, particularly for spending resources on poorly researched business ventures where it lacked experience. The Times asked readers to ponder what South African telecommunications would look like today if Telkom instead spent its almost $2 billion dollars in Nigerian and pay television losses on fiber broadband upgrades inside the country. Since 2006, Telkom preferred to spend as little as possible on network upgrades while trying to convince South Africans to stick with copper-delivered DSL and its variant VDSL, available only in very limited areas. Telkom’s business decisions today still leave most of its customers with no better than 4Mbps DSL.

The question South African business observers are asking is whether Telkom’s new interest in fiber is too little, too late. Mobile operators Vodacom and MTN are planning to build their own competing national fiber to the home networks to compete with Telkom as well.

Charter Asks FCC to Approve Time Warner Cable/Bright House Merger; Stop the Cap! Urges Changes

charter twc bhCharter Communications last week filed its 362 page redacted Public Interest Statement laying out its case to win approval of its acquisition of Time Warner Cable and Bright House Networks, to be run under the Charter banner.

“Charter may not be a household name for all Americans, but it has developed into an industry leader by implementing customer and Internet-friendly business practices,” its statement reads.

The sprawling document is effectively a sales pitch to federal regulators to accept Charter’s contention the merger is in the public interest, and the company promises a range of voluntary and committed service upgrades it says will improve the customer experience for those becoming a part of what will be America’s second largest cable operator.

Charter’s proposed upgrades fall under several categories of direct interest to consumers:

Broadband: Charter will commit to upgrade customers to 60Mbps broadband within 30 months (about 2.5 years) after the deal is approved. That could mean some Time Warner Cable customers will still be serviced with standard speeds of 15Mbps as late as 2018. Time Warner Cable’s Maxx upgrade program will be effectively frozen in place and will continue in only those areas “consistent with Time Warner Cable’s existing deployment plans.” That will leave out a large sections of the country not on the upgrade list. Charter has committed to impose no data caps, usage-based pricing or modem fees, but only for three years, after which it will be free to change those policies at will.

Wi-Fi: Charter promises to build on Time Warner’s 100,000 Wi-Fi hotspots, most in just a few cities, and Bright House’s denser network of 45,000 hotspots with a commitment to build at least 300,000 new hotspots across Charter’s expanded service area within four years. Charter will also evaluate deploying cable modems that also act as public Wi-Fi hotspots. Comcast already offers over 500,000 hotspots with plans for many more, making Charter’s wireless commitment less ambitious than what Comcast today offers customers.

Cable-TV: Charter has committed to moving all Time Warner and Bright House systems to all-digital service within 30 months. Customers will need to lease set-top boxes designed to handle Charter’s encryption system for all cable connected televisions. Among those boxes includes Charter’s new, IP-capable Worldbox CPE and cloud-based Spectrum Guide user interface system.

Video on the Go: Charter will adopt Time Warner Cable’s streaming platform and apps to provide 300 streaming television channels to customers watching from inside their homes (a small fraction of those channels are available while outside of the home). Customers will not be able to watch on-demand recorded DVR shows from portable devices, but can program their DVRs from apps or the website.

Discount Internet for the Poor: Charter references the fact its minimum entry-level broadband speed is 60Mbps so that does not bode well for Time Warner Cable’s Everyday Low Priced Internet $14.99 slow-speed Internet plan. Instead Charter will build upon Bright House Networks’ mysterious broadband program for low-income consumers.

Based on Charter’s initial proposal, Stop the Cap! will urge state and federal regulators to require changes of these terms before approving any merger. Among them:

  1. All existing Time Warner Cable and Bright House service areas should be upgraded to meet or exceed the levels of service offered by Time Warner Cable’s Maxx program within 30 months. It is not acceptable to upgrade some customers while others are left with a much more modest upgrade program proposed by Charter;
  2. Charter must commit to Net Neutrality principles without an expiration date;
  3. Regardless of any usage-cap or usage-based pricing plans Charter may introduce after its three-year “no caps” commitment expires, Charter must permanently continue to offer unlimited, flat rate Internet service at a reasonable price as an alternative to usage-priced plans;
  4. Customers must be given the option of opting out of any leased/provided-modem Wi-Fi hotspot plan that offers a wireless connection to outside users without the customer’s consent;
  5. Charter must commit to a more specific Wi-Fi hotspot program that details towns and cities to be serviced and proposed pricing for non-customers;
  6. Charter must allow customers to use their own set-top equipment (eg. Roku, Apple TV, etc.) to receive cable television service without compulsory equipment/rental fees. The company must also commit to offering discount alternatives such as DTAs for secondary televisions and provide an option for income-challenged customers compelled to accept new equipment to continue receiving cable television service;
  7. Charter must retain Time Warner Cable’s Everyday Low Priced $14.99 Internet plan regardless of any other low-income discount program it offers. If it chooses to adopt Bright House’s program, it must broaden it to accept applications year-round, simplify the application process and eliminate any waiting periods;
  8. Charter must commit to independent verification of customer quality and service standards and adhere to any regulatory guidelines imposed by state or federal regulators as a condition of approval.
  9. Charter must commit to expansion of its cable network into a reasonable number of adjacent, unserved areas by committing a significant percentage (to be determined) of measurable financial benefits of the merger to the company or its executives towards this effort.

Stop the Cap! will closely monitor the proceedings and intends to participate on both the state (New York) and federal level to guarantee any merger provides consumers with an equitable share of the benefits. We will also be examining the impact of the merger on existing Time Warner Cable and Bright House employees and will promote merger conditions that protect jobs and limit outsourcing, especially overseas.

Bright House’s Mysterious Internet Discount Program Charter Wants to Adopt Nationwide

If you can find it.

If you can find it.

A major concern about the merger between Charter and Time Warner Cable and Bright House Networks is the availability of affordable Internet access. That was a major issue for New York regulators contemplating the earlier failed merger attempt between Comcast and Time Warner Cable.

Time Warner Cable offers all subscribers a low-speed budget Internet option called Everyday Low Price Internet for $14.99 a month with no pre-qualifications, no paperwork, and no contract commitment. Although originally designed to appeal to price sensitive DSL customers, it has become Time Warner’s de-facto low-income Internet offering for those who cannot afford Standard Internet service.

According to Charter Communications’ Public Interest Statement filed today with the Federal Communications Commission — its case to win approval of its acquisition of Time Warner Cable and Bright House — the future is not looking too good for Time Warner’s $15 Internet program if the merger is approved. Charter makes a point of stating its entry-level Internet option is 60Mbps service at almost three times that price.

So what will “New Charter” offer more than 10 million cable customers going forward:

New Charter will build upon Bright House Networks’ broadband program for low-income consumers by making a broadband offering available with higher speeds and expanded eligibility while continuing to offer the service at a significant discount, and will begin making the offer available within six months after the transaction closes and offer it across the New Charter footprint within three years of closing.

If you were even aware Bright House offered a discount broadband program, congratulations!

An advocate of affordable Internet service claims Bright House has done an excellent job keeping any mention of the program off its website. In fact, it appears arranging for a visa to visit North Korea is probably slightly easier than getting cheap service from Bright House.

It turns out Bright House does have a modified version of its barely advertised “Lite Internet” plan offering 2Mbps downloads and 512kbps uploads. Anyone can buy that plan for about $20 (with a separate modem fee). Bright House’s Low-Income Internet plan offers the same service for $9.95 a month for up to 24 months.

To qualify, there is an Olympic-style playing field of hoops to jump through, according to Cheap Internet:

1) You must have at least one child qualified for the National School Lunch Program. They need not be enrolled now.

2) You cannot have been a Bright House broadband customer during the last three months. If you are a current customer, you must first cancel and go without Internet service for 90 days (or call the phone company and hope to get a month-to-month DSL plan in the interim.)

3) If you have an overdue bill older than 12 months, you are not eligible until you pay that bill in full.

But it gets crazier.

4) Bright House does not enroll customers in discounted Internet programs year-round. From a Bright House representative:

“We do participate in this particular program, however, it is only around September that we participate in it. This is a seasonal offer that we have which can only be requested from the middle of August to the middle of September, which is when most start up with school again for the year.”

That restriction gets heavy criticism from Cheap Internet.

“Families fall into poverty every day of the year, and poverty-stricken families move from one school district to another every day of the year,” the website writes. “So it’s horribly unfair to tell them they’d qualify for this program if only they had fallen into poverty sometime between the middle of August and the middle of September.”

Time Warner Cable offers $14.99 to anyone without paperwork.

Time Warner Cable offers $14.99 to anyone without paperwork.

But wait, there is more.

Bright House does not take orders for the Low-Income Internet plan over the Internet. That’s right. No Internet sign ups over the Internet. You have to enroll by phone: (205) 591-6880. We dialed it and experienced 30 seconds of… silence. No ringing, no busy signals, nothing. Then an automated attendant picked up looking for a pre-qualification phone number to decide if we are in a Bright House service area. That is as far as we could get. It hung up.

It turns out Bright House sometimes refers to its discount Internet program under another name: Connect2Compete. As both Cheap Internet and Stop the Cap! found, if you visit Bright House’s website and search for either term, you will find absolutely nothing.

Does it seem Bright House lacks enthusiasm selling this option to income-challenged consumers?

The most information available about the discount Internet program Charter wants to bring to Time Warner Cable customers is available on a pretty skimpy third-party website that has no connection to Charter, Time Warner or Bright House. Nothing to be concerned about there!

New Charter promises to improve the program, but Stop the Cap! believes there is a much simpler solution. For $5 more, Time Warner Cable already offers a fine discount option available to anyone, anywhere, for as long as they want it. No paperwork, no complications, no drama. The fact New Charter seems to prefer a different option — one that requires an archaeological dig to unearth needed information — makes us wonder whether they are interested in serving the needy at all.

Gigabit Fever Hits Toronto: Bell Introducing Gigabit Fiber Internet Across Entire GTA

bellBell Canada will invest $1.14 billion to bring gigabit fiber to the home service to more than one million homes and apartments in the Greater Toronto Area (GTA) over the next three years.

It will be the largest fiber build ever attempted in North America, and will serve every home and business in the GTA, beginning with 50,000 homes and businesses that will be upgraded to all-fiber service this summer.

“This is something that quite frankly none of us could have imagined just a few years ago,” Bell Canada president and CEO George Cope said at a press conference this morning. “This will be 20 times faster (than average Internet speeds) and it really is building for the consumer what large, large enterprise would have had just a few years ago for their corporations.”

gtaToronto will be the fastest broadband city in North, Central, and South America when Bell is finished laying 9,000 kilometers of fiber underground and on 80,000 Bell and Toronto Hydro utility poles. At least 27 Bell telephone exchanges will be fully upgraded to 100% fiber service, eliminating huge swaths of older copper wiring. At least 2,400 new jobs will be created, but Bell and Toronto city officials are convinced an all-fiber optic network will attract even more jobs and help broaden Toronto’s digital economy.

Bell’s project in Toronto will be vastly larger than AT&T U-verse with GigaPower, Comcast’s 2Gbps fiber service, and Google Fiber because:

  • It will actually exist, unlike fiber to the press release announcements of phantom fiber upgrades from Comcast and AT&T that serve only a miniscule number of customers;
  • Will not rely on “fiberhoods” and will deliver fiber service to every home and business and every neighborhood across the entire GTA.

No pricing has yet been announced but Bell promised it would be competitive with other gigabit broadband projects in North America. That likely means Toronto residents will pay between $70-100 a month for gigabit service. No details about usage caps or allowances were included in the announcement.

Bell is already upgrading some of its existing Fibe network in other cities to deliver gigabit speeds on a more limited basis in Atlantic Canada (Bell Aliant) and in select cities in Ontario and Quebec as part of a $20 billion network upgrade.

http://www.phillipdampier.com/video/CP24 Bell Gigabit Announcement 6-25-15.flv

CP24 carried this morning’s press conference introducing Bell Gigabit Internet across Toronto. (19:51)

The ISP Defense Squad Attacks Guardian Story on Internet Slowdowns

Phillip "Speaking as a Customer" Dampier

Phillip “Speaking as a Customer” Dampier

Two defenders of large Internet Service Providers are coming to the defense of the broadband industry by questioning a Guardian article that reported major Internet Service Providers were intentionally allowing a degradation in performance of Content Delivery Networks and other high volume Internet traffic in a dispute over money.

Richard Bennett and Dan Rayburn today both published articles attempting to discredit Battle for the Net’s effort highlighting the impact interconnection disputes can have on consumers.

Rayburn:

On Monday The Guardian ran a story with a headline stating that major Internet providers are slowing traffic speeds for thousands of consumers in North America. While that’s a title that’s going to get a lot of people’s attention, it’s not accurate. Even worse, other news outlets like Network World picked up on the story, re-hashed everything The Guardian said, but then mentioned they could not find the “study” that The Guardian is talking about. The reason they can’t find the report is because it does not exist.

[…] Even if The Guardian article was trying to use data collected via the BattlefortheNet website, they don’t understand what data is actually being collected. That data is specific to problems at interconnection points, not inside the last mile networks. So if there isn’t enough capacity at an interconnection point, saying ISPs are “slowing traffic speeds” is not accurate. No ISP is slowing down the speed of the consumers’ connection to the Internet as that all takes place inside the last mile, which is outside of the interconnection points. Even the Free Press isn’t quoted as saying ISPs are “slowing” down access speed, but rather access to enough capacity at connection points.

Bennett:

In summary, it appears that Battle for the Net may have cooked up some dubious tests to support their predetermined conclusion that ISPs are engaging in evil, extortionate behavior.

It may well be the case that they want to, but AT&T, Verizon, Charter Cable, Time Warner Cable, Brighthouse, and several others have merger business and spectrum auction business pending before the FCC. If they were manipulating customer experience in such a malicious way during the pendency of the their critical business, that would constitute executive ineptitude on an enormous scale. The alleged behavior doesn’t make customers stick around either.

I doubt the ISPs are stupid enough to do what the Guardian says they’re doing, and a careful examination of the available test data says that Battle for the Net is actually cooking the books. There is no way a long haul bandwidth and latency test says a thing about CDN performance. Now it could be that Battle for the Net has as a secret test that actually measures CDNs, but if so it’s certainly a well-kept one. Stay tuned.

The higher line measures speeds received by Comcast customers. The lower line represents speeds endured by AT&T customers, as measured by MLab.

The higher line measures speeds received by Comcast customers connecting to websites handled by GTT in Atlanta. The lower line represents speeds endured by AT&T customers, as measured by MLab.

Stop the Cap! was peripherally mentioned in Rayburn’s piece because we originally referenced one of the affected providers as a Content Delivery Network (CDN). In fact, GTT is a Tier 1 IP Network, providing service to CDNs, among others — a point we made in a correction prompted by one of our readers yesterday.

Both Rayburn and Bennett scoff at Battle for the Net’s methodology, results, and conclusion your Internet Service Provider might care more about money than keeping customers satisfied with decent Internet speeds. Bennett alludes to the five groups backing the Battle for the Net campaign as “comrades” and Rayburn comes close to suggesting the Guardian piece represented journalistic malpractice.

Much was made of the missing “study” that the Guardian referenced in its original piece. Stop the Cap! told readers in our original story we did not have a copy to share either, but would update the story once it became available.

We published our own story because we were able to find, without much difficulty, plenty of raw data collected by MLab from consumers conducting voluntary Internet Health Tests, on which Battle for the Net drew its conclusions about network performance. A review of that data independently confirmed all the performance assertions made in the Guardian story, with or without a report. There are obvious and undeniable significant differences in performance between certain Internet Service Providers and traffic distribution networks like GTT.

So let’s take a closer look at the issues Rayburn and Bennett either dispute or attempt to explain away:

  1. MLab today confirmed there is a measurable and clear problem with ISPs serving around 75% of Americans that apparently involves under-provisioned interconnection capacity. That means the connection your ISP has with some content distributors is inadequate to handle the amount of traffic requested by customers. Some very large content distributors like Netflix increasingly use their own Content Delivery Networks, while others rely on third-party distributors to move that content for them. But the problem affects more than just high traffic video websites. If Stop the Cap! happens to reach you through one of these congested traffic networks and your ISP won’t upgrade that connection without compensation, not only will video traffic suffer slowdowns and buffering, but so will traffic from every other website, including ours, that happens to be sent through that same connection.

MLab: "Customers of Comcast, Time Warner Cable, and Verizon all saw degraded performance [in NYC] during peak use hours when connecting across transit ISPs GTT and Tata. These patterns were most dramatic for customers of Comcast and Verizon when connecting to GTT, with a low speed of near 1 Mbps during peak hours in May. None of the three experienced similar problems when connecting with other transit providers, such as Internap and Zayo, and Cablevision did not experience the same extent of problems."

MLab: “Customers of Comcast, Time Warner Cable, and Verizon all saw degraded performance [in NYC] during peak use hours when connecting across transit ISPs GTT and Tata. These patterns were most dramatic for customers of Comcast and Verizon when connecting to GTT, with a low-speed of near 1 Mbps during peak hours in May. None of the three experienced similar problems when connecting with other transit providers, such as Internap and Zayo, and Cablevision did not experience the same extent of problems.”

MLab:

Our initial findings show persistent performance degradation experienced by customers of a number of major access ISPs across the United States during the first half of 2015. While the ISPs involved differ, the symptoms and patterns of degradation are similar to those detailed in last year’s Interconnections study: decreased download throughput, increased latency and increased packet loss compared to the performance through different access ISPs in the same region. In nearly all cases degradation was worse during peak use hours. In last year’s technical report, we found that peak-hour degradation was an indicator of under-provisioned interconnection capacity whose shortcomings are only felt when traffic grows beyond a certain threshold.

Patterns of degraded performance occurred across the United States, impacting customers of various access ISPs when connecting to measurement points hosted within a number of transit ISPs in Atlanta, Chicago, Los Angeles, New York, Seattle, and Washington, D.C. Many of these access-transit ISP pairs have not previously been available for study using M-Lab data. In September, 2014, several measurement points were added in transit networks across the United States, making it possible to measure more access-transit ISP interconnection points. It is important to note that while we are able to observe and record these episodes of performance degradation, nothing in the data allows us to draw conclusions about who is responsible for the performance degradation. We leave determining the underlying cause of the degradation to others, and focus solely on the data, which tells us about consumer conditions irrespective of cause.

Rayburn attempts to go to town highlighting MLab’s statement that the data does not allow it to draw conclusions about who is responsible for the traffic jam. But any effort to extend that to a broader conclusion the Guardian article is “bogus” is folly. MLab’s findings clearly state there is a problem affecting the consumer’s Internet experience. To be fair, Rayburn’s view generally accepts there are disputes involving interconnection agreements, but he defends the current system that requires IP networks sending more traffic than they return to pay the ISP for a better connection.

Rayburn's website refers to him as "the voice of industry."

Rayburn’s website refers to him as “the voice of industry.”

  1. Rayburn comes to the debate with a different perspective than ours. Rayburn’s website highlights the fact he is the “voice of the industry.” He also helped launch the industry trade group Streaming Video Alliance, which counts Comcast as one of its members. Anyone able to afford the dues for sponsor/founding member ($25,000 annually); full member ($12,500); or supporting member ($5,500) can join.

Stop the Cap! unreservedly speaks only for consumers. In these disputes, paying customers are the undeniable collateral damage when Internet slowdowns occur and more than a few are frequently inconvenienced by congestion-related slowdowns.

It is our view that allowing paying customers to be caught in the middle of these disputes is a symptom of the monopoly/duopoly marketplace broadband providers enjoy. In any industry where competition demands a provider deliver an excellent customer experience, few would ever allow these kinds of disputes to alienate customers. In Atlanta, Los Angeles, and Chicago, for example, AT&T has evidently made a business decision to allow its connections with GTT to degrade to just a fraction of the performance achieved by other providers. Nothing else explains consistent slowdowns that have affected AT&T U-verse and DSL customers for months on end that involve GTT while Comcast customers experience none of those problems.

We also know why this is happening because AT&T and GTT have both confirmed it to Ars Technica, which covered this specific slowdown back in March. As is always the case about these disputes, it’s all about the money:

AT&T is seeking money from network operators and won’t upgrade capacity until it gets paid. Under its peering policy, AT&T demands payment when a network sends more than twice as much traffic as it receives.

“Some providers are sending significantly more than twice as much traffic as they are receiving at specific interconnection points, which violates our peering policy that has been in place for years,” AT&T told Ars. “We are engaged in commercial-agreement discussions, as is typical in such situations, with several ISPs and Internet providers regarding this imbalanced traffic and possible solutions for augmenting capacity.”

competitionMissing from this discussion are AT&T customers directly affected by slowdowns. AT&T’s attitude seems uninterested in the customer experience and the company feels safe stonewalling GTT until it gets a check in the mail. It matters less that AT&T customers have paid $40, 50, even 70 a month for high quality Internet service they are not getting.

In a more competitive marketplace, we believe no ISP would ever allow these disputes to impact paying subscribers, because a dissatisfied customer can cancel service and switch providers. That is much less likely if you are an AT&T DSL customer with no cable competition or if your only other choice cannot offer the Internet speed you need.

  1. Consolidating the telecommunications industry will only guarantee these problems will get worse. If AT&T is allowed to merge with DirecTV and expand Internet service to more customers in rural areas where cable broadband does not reach, does that not strengthen AT&T’s ability to further stonewall content providers? Of course it does. In fact, even a company the size of Netflix eventually relented and wrote a check to Comcast to clear up major congestion problems experienced by Comcast customers in 2014. Comcast could have solved the problem itself for the benefit of its paying customers, but refused. The day Netflix’s check arrived, problems with Netflix magically disappeared.

More mergers and more consolidation does not enhance competition. It entrenches big ISPs to play more aggressive hardball with content providers at the expense of consumers.

Even Rayburn concedes these disputes are “not about ‘fairness,’ it’s business,” he writes. “Some pay based on various business terms, others might not. There is no law against it, no rule that prohibits it.”

Battle for the Net’s point may be that there should be.

Cable Companies Demand Satellite Providers Pay Up; Customer Bills Expected to Rise

directvTwo cable industry trade associations have asked the Federal Communications Commission to start collecting more fees from satellite television operators to cover the FCC’s regulatory expenses — a move satellite providers argue will cause consumers to suffer bill shock from increased prices.

The American Cable Association and the National Cable & Telecommunications Association have filed comments with the FCC asking the commission to impose the same regulatory fees on satellite subscribers that cable companies are likely to pay in 2015 — 95 cents a year per subscriber.

The FCC has proposed initially charging satellite operators $0.12 this year per customer, or about one cent a month. The two cable lobbying groups want that 12 cent fee doubled to 24 cents and then raised an additional 24 cents each year until it reaches parity with what cable companies pay.

dish logo“The FCC is off to a good start by declaring that Dish and DirecTV should pay regulatory fees to support the work of the agency’s Media Bureau for the first time and proposing setting the initial per subscriber fee at one cent per month in 2015,” said Matthew Polka, president and CEO of the ACA. “But given the FCC proposes that cable operators pay nearly 8 cents per month, per customer, it must do more, including requiring these two multibillion dollar companies with national reach to shoulder more of the fee burden next year that is now disproportionately borne by smaller, locally based cable operators.”

The satellite industry has filed their own comments with the FCC objecting to any significant fee increases, claiming it will cause consumers to experience bill shock and that satellite companies pose less of a regulatory burden on the FCC in comparison to cable operators.

The ACA counters that even if the satellite companies were required to pay the full 95 cents this year — the same rate small independent cable operators pay — it would add a trivial $0.08 a month to customer bills — less than a 0.4% increase on the lowest priced introductory offer sold by satellite providers.

fccThe ACA reminded the FCC it did not seem too concerned about rate shock when it imposed a 99 cent fee on IPTV providers like AT&T U-verse in 2014 without a phase-in.

DirecTV and Dish argue the FCC has jurisdiction over cable’s television, phone and Internet packages — a more complex assortment of services. Satellite providers currently only sell television service, so charging the same fee cable companies pay would be disproportionate and unfair, both claim.

Despite the sudden introduction of the IPTV fee last year, AT&T managed to use the opportunity to turn lemons into lemonade.

AT&T added a “Regulatory Video Cost Recovery Charge” on customers’ bills after the FCC assessed a 99 cent fee on IPTV services like U-verse in 2014. But AT&T charged nearly three times more than what it actually owed. U-verse customers were billed $0.24 a month/$2.88 in 2014 for “regulatory fee cost recovery.” But AT&T only paid the FCC $0.99 for each of its 5.7 million customers. It kept the remaining $1.89 for itself, amounting to $10,773,000 in excess profit.

This year the FCC expects to collect $0.95 from each U-verse subscriber, a four cent decline.

Search This Site:

Contributions:

Recent Comments:

  • Sora87: I don't know what's worse for Taxes. Chicago or New York. The Least they could do is put the funds from the Tax to pay for a Fiber to the Home broadba...
  • Amilayah: Totally depends on your devices and needs. Older devices need b/g/n network compatibility. Newer ones are best on 5ghz a/c bandwidths. (A/c should be ...
  • Amilayah: Hey dummie! Because what ppl are referring to is an ADD ON service we PAY FOR so that they will be responsible for worry free wifi. Which is what I to...
  • Greg Noblin: My family has an iMac, I use a 5K iMac for my business, we have two girls, 4 iPhones, 2 iPod touches, and 4 iPads and an Apple TV. Today is July 4,...
  • BobInIllinois: Never underestimate the ability of Chicago politicians to keep finding more things to tax, while continuing to increase tax rates on all of the exist...
  • Matt: In Hawaii, meaning there is no real competition. Had the (15/1) plan, and the Standard HD TV all after taxes $142. They were also charging me for the...
  • dawsonfiberhood: Uh, the culprit has been committing dozens of acts, across many states, and nearly simultaneously in widely separated areas. The culprit has been exca...
  • Roy: I'm a Dish subscriber. As best as I could tell, your Dish page covered only corporate issues. Do you have a page that discusses how to score deals f...
  • Phillip Dampier: We have plenty of DoT fiber around here that is black on the pole but is orange running down the pole or at the point it descends underground or into ...
  • Aaron: Outdoor fiber cable doesn't have bright orange insulation. Every buried or aerial fiber I've ever encountered was black, with a thick outer sheath, s...
  • James R Curry: I filed an FCC Open Internet complaint about the 600kbps video throttling back on June 19th. This morning, I received a call from Sprint's executiv...
  • Limboaz: I'd sooner have a root canal without freezing than watch most of the worthless content on Showtime. They put the weird in Hollyweird....

Your Account: