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Kansas City Media Introduces, Explains, and Confuses Google Fiber for the Uninformed

Believe it or not, Google Fiber has not always been headline news in Kansas City. Outside of a few stories in early spring about zoning and installation matters, local media (particularly television) has mostly given back page treatment to Google’s new fiber network since the city was first chosen in March, 2011.

That all changed last Thursday when television, radio, and newspaper reporters flooded a converted yoga studio in midtown Kansas City to attend Google Fiber’s unveiling. Many stations aired live reports on-site and devoted time during their afternoon and evening newscasts to explain what the service is all about, starting with what it will cost — $70 a month for 1Gbps service (or paying a flat $300 for 5/1Mbps service for the next seven years). Adding television brings the final price to $120 a month. Google considers landline phone service a dead-end business, and won’t bundle a telephone option, but customers can use Google Voice to make and receive most calls for free.

http://www.phillipdampier.com/video/KMBC Kansas City Google announces details of Google Fiber service 7-26-12.flv

KMBC reports on the introduction of Google Fiber, what it will cost Kansas City residents, what it means for the city as whole, and when and how service will be installed.  (3 minutes)

Kansas City, Mo., Mayor Sly James said Google Fiber was more of an opportunity than a gift for Kansas City.

“We now have an opportunity to take a giant step and if we don’t it’s all on us,” James said.

KCUR Radio in Kansas City explores some of the public policy and institutional changes Google Fiber can bring the area with the advent of gigabit broadband. Mike Burke, Missouri co-chair, and Dr. Ray Daniels, Kansas co-chair of the Mayors’ Bistate Innovation Team talks about what changes Google Fiber could bring to health care, education, government, and more.  The Mayors’ Bistate Innovation Team recently released a report titled “Playing to Win in America’s Digital Crossroads,” a playbook for capitalizing on ultra-high-speed fiber in Kansas City, Kansas and Kansas City, Missouri. (Some of the specific details discussed in the program turned out to be outdated after last Thursday’s announcement introducing the service.)  (June 6, 2012) (52 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Some in the media seemed disappointed Google spent a considerable amount of time selling the entertainment-oriented element of its service — namely the television lineup and the equipment that comes with it, and less on the educational and transformational nature of gigabit broadband. But many in the audience didn’t need an explanation of what 1,000/1,000Mbps service will mean for them.

Reviewing the coverage shows a predictable response:

  • Those under 30 want it today and won’t think twice about paying $70 to get it;
  • Those running businesses that depend on the web also want it, and are slightly perturbed Google will only sell to residential customers at first;
  • Families with young children want the service because they feel it will be a game-changer for their children’s education and future career;
  • Income-challenged residents are concerned about the cost, but are happy to discover Google has an affordable option for them to participate in the wired world;
  • Older residents seem preoccupied with the price and consider the television lineup even more important than broadband speed;
  • Schools, libraries, health care, and non-profit groups are thrilled with the prospect of getting free or deeply discounted service;
  • Incumbent providers are putting on a brave face, relying on what they feel is excellent customer service, local ties to the communities they service, and a current customer base that may be reluctant to switch.

http://www.phillipdampier.com/video/KCTV Kansas City Introducing Google Fiber 7-26-12.mp4

Google Fiber has arrived in Kansas City, and neighborhoods will compete to see who gets the gigabit broadband service first. KCTV in Kansas City reports. (3 minutes)

Google Fiber’s free 5/1Mbps service is another embarrassment to big cable companies like Comcast which offer less service for more money.

The Kansas City Star needlessly fretted about the remaining digital divide of Internet “have’s” and “have-not’s,” as Google launched a competition between neighborhoods to determine where to install the service first.

So far, many poorer urban core neighborhoods are expressing interest in Google fiber at a slower rate than middle- and higher-income neighborhoods.

It’s important now for efforts to reach out to help the lower-income neighborhoods rally so the access doesn’t become a new dividing line.

The newspaper is concerned by Google’s fiber map showing many minority, inner-city neighborhoods have yet to receive a single commitment from a resident willing to pre-register for the service. But Google is not running a competition to exclude anyone. It is surveying interest to ensure it has a working business model to sustain its fiber broadband operation. Overshadowed by the gigabit broadband announcement is the fact Google is also including a real solution for the income-challenged — an entry-level 5/1Mbps broadband option that will cost just $300 (payable in $25 installments) that guarantees service with no additional payment for seven years.

That is a broadband solution far superior to the afterthought programs on offer from Comcast and a handful of phone companies that only deliver a fraction of the speed, at a higher price, to those who meet a byzantine set of requirements. It is yet another embarrassment for Kabletown, which would not have even offered the service had the government not made it a condition for approving the mega-merger of NBC-Universal and Comcast.

http://www.phillipdampier.com/video/KCTV Kansas City Neighborhoods Compete for Fiber 7-26-12.flv

KCTV visits some of the neighborhoods competing to be the first to get Google Fiber. Reaction from residents varies from those willing to canvas neighborhoods to get people to pre-register to others who will consider switching providers only if the price is right.  (4 minutes)

One Star columnist likened Google Fiber to a public works project that threatened to go bad pitting neighborhoods against one-another, rich against poor:

The more educated, middle- to upper-income neighborhoods in southwest KC and in midtown were signing up for first crack at the service.

Meanwhile, the neighborhoods without as many computers and without the income to afford the $70 or $120 proposed monthly charges for Google Fiber were signing up at far slower rates.

None of that means Google Fiber won’t be a big success.

But let’s not pretend there won’t be winners and losers with this advance in technology.

If Google Fiber narrows that digital gap – and makes more information available more quickly to more people to help boost the economy of KC - that’s all for the good.

However, being able to hook up eight computers in a house so people can be more entertained doesn’t set my world on fire.

Let’s remember Google Fiber is intended to be a for-profit business run by a for-profit corporation. Star columnist Yael T. Abouhalkah might have been more comfortable had he advocated for a community-owned broadband solution committed to serving every neighborhood, everywhere. Google Fiber is not that, at least not now. The alternatives from AT&T and Time Warner Cable have not solved the digital divide either. Giving away effectively-free 5/1Mbps broadband for seven years might.

http://www.phillipdampier.com/video/KCTV Kansas City Fiberhoods 7-26-12.mp4

Google’s Fiberhoods are likely to win fiber service for the more high-tech areas of Kansas City, among the first to pre-register. Google’s Kevin Lo explains those areas most committed to getting the service will also win free fiber connections for their neighborhood’s schools, health care facilities, and public safety buildings.  KCTV reports. (3 minutes)

http://www.phillipdampier.com/video/KCTV Kansas City Benefits of Google Fiber 7-26-12.mp4

KCTV explores what Google Fiber could mean for local schools who can utilize the faster connections for distance and remote learning.  (3 minutes)

http://www.phillipdampier.com/video/WDAF Kansas City Customers Put Google Fiber to the Test 7-28-12.flv

WDAF in Kansas City covers Google Fiber’s weekend “Open House,” inviting residents to experience what gigabit broadband is really like, and letting them see and sample the company’s broadband and television service.  (2 minutes)

http://www.phillipdampier.com/video/KSHB Kansas City Northland business owners react to Google Fiber limitations 7-26-12.mp4

KSHB in Kansas City covers the reaction of local business owners elated and frustrated by the arrival of Google Fiber, which will open the door to new online innovation once Google begins selling to commercial customers (and if you are lucky enough to work in a Google Fiberhood.)  (2 minutes)

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6 University Towns Will Get Gigabit Broadband Through New Public-Private Partnership

Six college towns will benefit from the nation’s first multi-community broadband gigabit deployment, thanks to $200 million in capital funding to get the broadband networks off the ground.

The Gigabit Neighborhood Gateway Program leverages local government, universities, private capital, and the public to jointly support and foster the development of new fiber optic networks.

The new program claims it will offer competitively-priced super-fast broadband through projects that will cover neighborhoods of 5,000-10,000 people and communities up to 100,000 in size.  Selection of the six winning communities will be announced between this fall and next spring.

“Gigabit Squared created the Gigabit Neighborhood Gateway Program to help select Gig.U communities build and test gigabit speed broadband networks with speeds from 100 to 1000 times faster than what Americans have today,” the company said in a statement.

“The United States is behind in the world for Internet speed,” said Mark Ansboury, Gigabit’s president and co-founder. “The goal is to help get us out front for a platform of innovation.”

That platform is certainly not forthcoming from the country’s largest broadband providers, who according to Ansboury have been pulling back on wired infrastructure upgrades in recent years, shifting focus to more profitable wireless networks.

Gigabit Squared defines the next generation of broadband Internet in terms of speed, declaring 2,000Mbps (2Gbps) as the target to achieve.

The winning projects will be sponsored by Gig.U members, which include:

  • Arizona State University
  • California Institute of Technology
  • Case Western Reserve University
  • Colorado State University
  • Duke University
  • Florida State University
  • George Mason University
  • The Georgia Institute of Technology
  • Howard University
  • Indiana University
  • Michigan State University
  • North Carolina State University
  • Penn State University
  • University of Alaska – Fairbanks
  • University of Arizona
  • University of Chicago
  • University of Colorado – Boulder
  • University of Florida
  • University of Hawaii
  • University of Illinois
  • University of Kentucky
  • University of Louisville
  • University of Maine
  • University of Maryland
  • University of Michigan
  • University of Missouri
  • University of Montana
  • University of Nebraska – Lincoln
  • University of New Mexico
  • University of North Carolina at Chapel Hill
  • University of Oklahoma
  • University of South Florida
  • University of Virginia
  • University of Washington
  • Virginia Tech
  • Wake Forest University
  • West Virginia University

Blair Levin, executive director at Gig.U, believes private American telecom companies will always be constrained from delivering world class broadband comparable to South Korea or Japan because of Wall Street opposition to the investment required to construct them. In the eyes of investors, today’s slower networks, in their estimation, do just fine.

Gig.U believes that they have a solution, at least for towns with a sizable university system that can serve as host of the next generation broadband network:

First, any community that wants its residents to have access to a network that delivers world-leading bandwidth can do so. The barrier is not technology or economics. The barrier is organization; specifically, organizing demand and improved use of underutilized assets, such as rights of way, dark fiber, or in more rural areas, spectrum. The responses identified a multitude of ways local communities can improve the private investment case by lowering investment and risk, and increasing revenues for private players willing to upgrade or build new networks without budget outlays from the local government.

Second, the responses confirmed that university communities have the easiest organizing task and greatest upside. Their density, demographics and demand make the current economics more favorable for an upgrade than other communities. For example, the high percentage of the population in university communities living in multiple dwelling units makes the economics of an upgrade far more favorable than for communities composed largely of single-family homes. With the growing importance of Big Data for the economy and the society, university communities are the natural havens for such enterprises to be born and prosper. Through the Gig.U process, our communities are already exploring more than a half-dozen paths to achieve an upgrade; paths that will be replicable for others and will deliver a major step forward in providing America a strategic broadband advantage.

Outside of a handful of upstart private competitors like California-based Sonic.net, most fiber broadband expansion come from private companies like Google — building an experimental fiber-to-the-home network in Kansas City, community-owned broadband services coordinated by local town or city government, co-op telecommunications companies owned by their subscribers, or municipal utilities.

While those efforts are typically committed to the concept of “universal service” — wiring their entire communities — the Gig.U project targets funding only for networks in and around university campuses.

The New America Foundation builds on Gig.U’s premise in its own recent report, “Universities as Hubs for Next Generation Networks,” which argues affordable expansion of broadband can win community support when the public has the right to also benefit from those networks. While Gig.U’s approach suggests the project will target fiber broadband directly to the homes qualified to receive it, the New America Foundation supports the construction of mesh wireless Wi-Fi networks to keep construction costs low for neighborhoods targeted for service.

An earlier project in Orono and Old Town, Maine may afford a preview of Gig.U’s vision, as that collaboration between the University of Maine and private fiber provider GWI is already in its construction phase. For those lucky enough to live within range of the fiber project, broadband speeds will far exceed what incumbents Time Warner Cable and FairPoint Communications deliver. FairPoint has fought similar projects (and GWI specifically) for years.

Will private providers object to the Gig.U effort to win local governments’ favor in the six cities eventually chosen for service? History suggests the answer will be yes, at least to the extent local cable and phone companies demand the same concessions for easy pole access, reduced pole attachment fees, and easing of zoning restrictions and procedures Gig.U project coordinators expect.

Levin has stressed Gig.U projects are based on university and private funding sources, not taxpayer dollars. That may also limit how much objection commercial providers may be able to raise against the projects.

http://www.phillipdampier.com/video/WABI Bangor Orono Maine Getting Faster Service 5-16-12.flv

WABI in Bangor previews the new gigabit broadband network being constructed in Orono and Old Town, Maine.  (2 minutes)

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Inside ALEC: How Corporations Ghost-Write Anti-Consumer State Telecom Legislation

[Stop the Cap! has written extensively about the pervasive influence some of the nation's largest cable and phone companies have on telecommunications legislation in this country.  On the state level, one group above all others is responsible for quietly getting company-ghost-written bills and resolutions into the hands of state lawmakers to introduce as their own.]

The American Legislative Exchange Council (ALEC) is the latest corporate response to campaign finance and lobbying reform — a Washington, D.C.-based “middle man” that brings lawmakers and corporate interests together while obfuscating the obvious conflict of interest to voters back home if they realized what was going on.

ALEC focuses on state laws its corporate members detest because, in many cases, they represent the only regulatory obstacles left after more than two decades of deregulatory fervor on the federal level.  State lawmakers are ALEC’s targets — officeholders unaccustomed to a multi-million dollar influence operation.  The group invites lawmakers to participate in policy sessions that equally balance corporate executives on one side with elected officials on the other.  Consumers are not invited to participate.

ALEC’s telecom members have several agendas on the state level, mostly repealing:

  • Local franchising and oversight of cable television service;
  • Statewide oversight of the quality of service and measuring the reliability of phone and cable operators;
  • Consumer protection laws, including those that offer customers a third party contact for unresolved service problems;
  • Universal service requirements that insist all customers in a geographic region be permitted to receive service;
  • Funding support for public, educational, and government access television channels;
  • Rules governing the eventual termination of essential service for non/past due payments;
  • Local zoning requirements and licensing of outside work.

But ALEC is not always focused on deregulation or “smaller government.” In fact, many of its clients want new legislation that is designed to protect their position of incumbency or enhance profits.  Cable and phone company-written bills that restrict or ban public broadband networks are introduced to lawmakers through ALEC-sponsored events.  In several cases, model legislation that was developed by cable and phone companies was used as a template for nearly-identical bills introduced in several states without disclosing who actually authored the original bill.

ALEC specializes in secrecy, rarely granting interviews or talking about the corporations that pay tens of thousands of dollars to belong.  Corporate members also enjoy full veto rights over any proposal or idea not to their liking, and aborted resolutions or legislative proposals are kept completely confidential. More often than not, however, legislators and corporate members come to an agreement on something, and the end product ends up in a central database of model bills and resolutions ready to be introduced in any of 50 state legislatures.

Many do, and often these proposed bills are remarkably similar, if not identical. That proved to be no coincidence.  In July 2011, the Center for Media and Democracy was able to obtain a complete copy of ALEC’s master database of proposed legislation.  The Center called it a stark example of “corporate collaboration reshaping our democracy, state by state.”

National Public Radio takes an inside look at the American Legislative Exchange Council and how it works to help major corporations influence and change state laws. (October 29, 2010) (8 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

ALEC’s Corporate Telecom Members

ALEC defends itself saying it does not directly lobby any legislator.  That is, in fact true.  But many of its corporate members clearly do.  AT&T is one of ALEC’s most high profile members, serving as a “Private Enterprise Board” member, state corporate co-chair of Arkansas, California, Connecticut, Louisiana, Mississippi, and Texas (all AT&T service areas), a member of the Telecommunications and Information Technology Task force, and “Chairman” level sponsor of the 2011 ALEC Annual Conference (a privilege for those contributing $50,000).

AT&T’s lobbying is legendary, and is backed with enormous campaign contributions to legislators on the state and federal level.

But AT&T isn’t the only telecommunications company that belongs to or supports ALEC:

  • CenturyLink (also including Qwest Communications), “Director” level sponsor of 2011 ALEC Annual Conference ($10,000 in 2010)
  • Cincinnati Bell
  • Comcast, State corporate co-chair of Georgia, Minnesota, Missouri and Utah and recipient of ALEC’s 2011 State Chair of the Year Award
  • Cox Communications, “Trustee” level sponsor of 2011 ALEC Annual Conference ($5,000 in 2010)
  • Time Warner Cable, State corporate co-chair of Ohio, “Director” level sponsor of 2011 ALEC Annual Conference ($10,000 in 2010)
  • Verizon Communications, Private Enterprise Board member and State corporate co-chair of Virginia and Wyoming

ALEC supporters among trade groups and astroturf/corporate-influenced “non profits”:

  • National Cable and Telecommunications Association, ALEC Telecommunications and Information Technology Task Force member
  • Free State Foundation (think tank promoting limited government and rule of law principles in telecommunications and information technology policy)
  • Heartland Institute, Exhibitor at ALEC’s 2011 Annual Conference, Telecommunications and Information Technology Task Force member, Education Task Force member, Commerce, Insurance and Economic Development Task Force, Financial Services Subcommittee member and Energy, Environment and Agriculture Task Force member

ALEC’s Ready-to-Introduce Legislation

The two most pervasive pieces of legislation ALEC’s telecom members (especially AT&T) want as a part of state law are bills to strip local authority over cable systems and hand it to the state government and the elimination or excessive micromanagement of community broadband networks:

This model bill for increased cable competition strips most of the authority your community has over cable television operations and transfers it to under-funded or less aggressive state bodies. Although the bill claims to protect local oversight and community access stations, the statewide video franchise fee almost always destroys the funding model for public, educational, and government access channels.

These municipal broadband bills are always written to suggest community and private players must share a "level playing field." But bills like these always exempt the companies that actually wrote the bill, and micromanage and limit the business operations of the community provider.

Legislators: Bring the family to Mardi Gras World on us, sponsored by America's largest telecommunications companies.

WHYY Philadelphia’s ‘Fresh Air’ spent a half hour exploring who really writes the legislation introduced in state legislatures. When ALEC gets involved, The Nation reporter John Nichols thinks the agenda is clear: “All of those pieces of legislation and those resolutions really err toward a goal, and that goal is the advancement of an agenda that seems to be dictated at almost every turn by multinational corporations.” (July 21, 2011) (32 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Unfortunately, state lawmakers are not always sophisticated enough to recognize a carefully crafted legislative agenda at work.  National Public Radio found one excellent example — the 2010 Arizona immigration law that requires police to arrest anyone who cannot prove they entered the country legally when asked.  America’s immigration problems remain a major topic on the agenda at some ALEC events, curious for a corporate-backed group until you realize one of ALEC’s members — the Corrections Corporation of America — America’s largest private prison operator, stood to earn millions providing incarceration services for what some estimated could be tens, if not hundreds of thousands of new prisoners being held on suspicion of immigration violations.

CCA was in the room when the model immigration legislation, eventually adopted by Arizona’s legislature, was written at an ALEC conference in 2009.

Bring the Kids, Stay for the Corporate Influence

Getting legislators to attend these seminars isn’t as hard as it might sound.

In January, we reported members of the North Carolina General Assembly, who showed their willingness to support telecom industry-written bills when it passed an anti-community broadband initiative in 2011, were wined and dined (along with their staff) by ALEC at the Mardi Gras World celebration in New Orleans.  Rep. Marilyn Avila (R-Time Warner Cable), who introduced the aforementioned measure, brought her husband to Asheville to enjoy a special weekend as the featured guest speaker at a dinner sponsored by North Carolina’s state cable lobbying group:

The North Carolina Cable Telecommunications Association reported they not only picked up Marilyn’s food and bar bill ($290 for the Aug. 6-8 event), they also covered her husband Alex, too.  Alex either ate and drank less than Marilyn, or chose cheaper items from the menu, because his food tab came to just $185.50.  The cable lobby also picked up the Avila’s $471 hotel bill, and handed Alex another $99 in walking-around money to go and entertain himself during the weekend event.  The total bill, effectively covered by the state’s cable subscribers: $1,045.50.

Rep. Avila with Marc Trathen, Time Warner Cable's top lobbyist (right) Photo by: Bob Sepe of Action Audits

ALEC makes it easy because it pays the way for lawmakers and families to attend their events through the award of “scholarships”:

The organization encourages state lawmakers to bring their families. Corporations sponsor golf tournaments on the side and throw parties at night, according to interviews and records obtained by NPR.

[...] Videos and photos from one recent ALEC conference show banquets, open bar parties and baseball games — all hosted by corporations. Tax records show the group spent $138,000 to keep legislators’ children entertained for the week.

But the legislators don’t have to declare these as corporate gifts.

Consider this: If a corporation hosts a party or baseball game and legislators attend, most states require the lawmakers to say where they went and who paid. In this case though, legislators can just say they went to ALEC’s conference. They don’t have to declare which corporations sponsored these events.

Reporter John Nichols told NPR ALEC’s focus on state politics is smart:

“We live at the local and state level. That’s where human beings come into contact more often than not,” he says. “We live today in a country where there’s a Washington obsession, particularly by the media but also by the political class. … And yet, in most areas, it’s not Washington that dictates the outlines, the parameters of our life. … And so if you come in at the state government level, you have a much greater ability to define how you’re going to operate.”

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Back to Kansas City: Google Fiber Now Going in the Ground; TV Service Also Announced

Nearly one year ago, Google selected Kansas City, Kansas as the first city to “Think Big With a Gig,” a gigabit fiber to the home broadband network that would shatter misconceptions that Americans don’t need lightning-fast broadband speeds.

In the original announcement, early 2012 was slated to be the target date for the service to become available in at least some areas of the city.  After months of wrangling with utility companies and the city government, Google began burying the first fiber lines earlier this month.  This week, it filed for permission with both Kansas and Missouri officials to compliment its forthcoming broadband service with a complete cable-TV package as well.

Google’s fiber project now has incumbent operators on both sides of the Missouri and Kansas Rivers concerned about forthcoming competition from the search engine giant, especially after Google announced it would wire both the Kansas and Missouri sides of the city.

Greater Kansas City is primarily served by Time Warner Cable and AT&T, but smaller cable operators also offer service in some areas.  Google is considering a competitive cable package with video on demand.  It is expected to wrap up licensing negotiations with programmers within a month or two, and some of its contracts allow Google to sell cable service outside of the Kansas City area, a potentially interesting development should Google want to provide an Internet-based cable system to subscribers in other cities.

We have collected several media reports on the Google project in Kansas City to bring readers up to date:

http://www.phillipdampier.com/video/WDAF Kansas City Gigabit Challenge Offers Google-Friendly Ideas 12-6-11.flv

WDAF in Kansas City reports on some of the submissions to Google’s Gigabit Challenge — a competition to consider how to leverage 1,000Mbps broadband. (12/6/11 — 2 minutes)

http://www.phillipdampier.com/video/WDAF Kansas City Why is Google Fiber Set Up Taking so Long 1-18-12.flv

WDAF reports on what is holding up the Google Fiber project.  It turns out local utilities have been harder to deal with than originally thought.  (1/18/12 — 3 minutes)

http://www.phillipdampier.com/video/KMBC Kansas City Google Begins Fiber Installation In KCK 2-6-12.flv

KMBC reports Google is ready to break ground on its new fiber network.  (2/6/12 — 2 minutes)

http://www.phillipdampier.com/video/KCTV Kansas City Google Starts Laying Fiber 2-18-12.mp4

KCTV says Google started laying fiber this week.  The new service is on the way.  (2 minutes)

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House Approves 5-Year Moratorium on New Wireless Taxes, But Existing Fees Will Remain

The House on Tuesday approved a five-year moratorium on new wireless taxes to keep states and localities from padding cell phone bills with new fees for wireless services.

The non-controversial measure easily won bipartisan support and passed quickly on a voice vote with just one member of Congress rising to oppose the measure.

The Wireless Tax Fairness Act, sponsored by Representative Zoe Lofgren, a California Democrat and Trent Franks, an Arizona Republican, was heavily backed by the wireless industry.  The legislation doesn’t stop local and state governments from imposing existing taxes, but would keep new taxes off cell phone bills if the measure becomes law.  AT&T and Verizon spent heavily to promote the bill, noting customers are cutting back their cell phone and data plans in response to increasing taxes which run as high as 23% in some states.

Historically, state and local governments have seen cell phones as a luxury item, and have targeted them with taxes to help sustain government budgets.  But as consumers increasingly turn to cell phones as landline replacements, the days of such technology being used mostly by the well-heeled are well past.  Lofgren sees the burden of cell phone taxes on Californians, who have dropped traditional landline services in favor of smartphones and wireless broadband.

“We need to encourage the development and adoption of wireless broadband, not tax it out of existence,” said Lofgren.

An identical Senate companion bill was introduced by Senators Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine), where it also seems to be getting bipartisan support.

Taxes on wireless services now meet or exceed those charged for alcohol and tobacco in several states.

Rank State State-Local Wireless Rate State-Local Sales Tax Rate Federal Rate
(USF)
Combined Federal-State-Local-Rate
1 Nebraska 18.64% 7.00% 5.05% 23.69%
2 Washington 17.95% 9.00% 5.05% 23.00%
3 New York 17.78% 8.25% 5.05% 22.83%
4 Florida 16.57% 7.25% 5.05% 21.62%
5 Illinois 15.85% 9.00% 5.05% 20.90%
6 Rhode Island 14.62% 7.00% 5.05% 19.67%
7 Missouri 14.23% 7.23% 5.05% 19.28%
8 Pennsylvania 14.08% 7.00% 5.05% 19.13%
9 Kansas 13.34% 8.13% 5.05% 18.39%
10 Texas 12.43% 8.25% 5.05% 17.48%
11 Maryland 12.23% 6.00% 5.05% 17.28%
12 Utah 12.16% 6.80% 5.05% 17.21%
13 South Dakota 12.02% 5.96% 5.05% 17.07%
14 Arizona 11.97% 7.20% 5.05% 17.02%
15 DC 11.58% 5.75% 5.05% 16.63%
16 Tennessee 11.58% 9.25% 5.05% 16.63%
17 Arkansas 11.07% 8.38% 5.05% 16.12%
18 Oklahoma 10.74% 8.45% 5.05% 15.79%
19 North Dakota 10.68% 6.00% 5.05% 15.73%
20 California 10.67% 9.25% 5.05% 15.72%
21 New Mexico 10.52% 7.60% 5.05% 15.57%
22 Kentucky 10.42% 6.00% 5.05% 15.47%
23 Colorado 10.40% 7.56% 5.05% 15.45%
24 Indiana 9.84% 7.00% 5.05% 14.89%
25 South Carolina 9.52% 7.25% 5.05% 14.57%
26 North Carolina 9.43% 7.75% 5.05% 14.48%
27 Minnesota 9.38% 7.71% 5.05% 14.43%
28 Mississippi 9.08% 7.00% 5.05% 14.13%
29 New Jersey 8.87% 7.00% 5.05% 13.92%
30 Georgia 8.57% 7.50% 5.05% 13.62%
31 Vermont 8.50% 6.50% 5.05% 13.55%
32 Wisconsin 8.34% 5.55% 5.05% 13.39%
33 New Hampshire 8.18% 0.00% 5.05% 13.23%
34 Ohio 7.95% 7.13% 5.05% 13.00%
35 Wyoming 7.94% 5.50% 5.05% 12.99%
36 Iowa 7.91% 6.50% 5.05% 12.96%
37 Massachusetts 7.81% 6.25% 5.05% 12.86%
38 Hawaii 7.75% 4.00% 5.05% 12.80%
39 Alabama 7.45% 7.25% 5.05% 12.50%
40 Michigan 7.27% 6.00% 5.05% 12.32%
41 Maine 7.16% 5.00% 5.05% 12.21%
42 Connecticut 6.96% 6.00% 5.05% 12.01%
43 Alaska 6.69% 2.50% 5.05% 11.74%
44 Virginia 6.56% 5.00% 5.05% 11.61%
45 Louisiana 6.28% 9.00% 5.05% 11.33%
46 Delaware 6.25% 0.00% 5.05% 11.30%
47 West Virginia 6.23% 6.00% 5.05% 11.28%
48 Montana 6.03% 0.00% 5.05% 11.08%
49 Idaho 2.20% 6.00% 5.05% 7.25%
50 Nevada 2.08% 7.91% 5.05% 7.13%
51 Oregon 1.81% 0.00% 5.05% 6.86%
US Simple Average 9.87% 6.38% 5.05% 14.92%
US Weighted Average 11.21% 7.42% 5.05% 16.26%

[For flat monthly taxes and fees, average monthly consumer bill is estimated at $48.16 per month per CTIA - The Wireless Association.]

Source: Committee on State Taxation, 50-State Study and Report on Telecommunications Taxation, May 2005. Updated July 2010 by Scott Mackey, Kimbell Sherman Ellis LLP using state statutes and regulations.

The taxes levied are supposed to pay for everything from school funding to law enforcement to 911 services.  Some states impose 911 surcharges that local municipalities also charge themselves.  The free-for-all takes an even bigger bite as consumers adopt more expensive plans that include wireless data.

How much consumers would save with the passage of the legislation is unclear, because existing taxes are not impacted.  The measure also does nothing to stop the wireless industry from adding bill padding fees they conjure up themselves.

But the wireless industry still calls the House passage a “crucial step toward providing wireless subscribers with some much needed relief.”

http://www.phillipdampier.com/video/Cell Phone Taxes 11-3-11.flv

WKRG in Mobile, Ala. reports cell phone taxes are reaching an all-time high.  Nearby viewers in Pensacola, Fla. probably weren’t too happy to learn Florida is rated the 4th highest-taxed-state.  The Wireless Tax Fairness Act may prevent taxes from rising further, but it won’t stop existing fees.  Also included: Rep. Franks’ statement on the House floor introducing the bill and urging fellow members to support it.  (3 minutes)

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Money Talks: More Dollar-a-Holler Advocacy for AT&T from the NAACP

Crumpton

NAACP national board member and former Missouri Public Service Commission member Harold Crumpton believes that combining AT&T and T-Mobile will create 100,000 new jobs, despite the fact both companies have promoted “cost savings” from eliminating redundant services and winning “increased efficiencies.”

That’s code language for layoffs, and it has been that way with every telecommunications merger in the last decade.  But Crumpton prefers to deny reality in a guest opinion piece published today in the St. Louis Post-Dispatch:

Most mergers result in — and pay for themselves with — job losses and higher prices. Not this one.

If, to use the government antitrust lingo, there is a “relevant product market” for this merger, it would be “jobs” because jobs are the No. 1 product of the broadband factory. The AT&T and T-Mobile merger is structured as an engine of job creation — yielding 100,000 new jobs by delivering on President Obama’s call for a national high-speed broadband network. That’s far more jobs than would be lost because of AT&T and T-Mobile overlaps.

Ironically, AT&T announced the repatriation of 5,000 call center jobs and pledged not to terminate call center employees because of the merger. Two hours later, without warning to AT&T, the Justice Department filed its suit. Suffice to say that President Obama, our greatest champion of job creation, was not well-served that morning.

How will AT&T produce all these new jobs? By creating the first national next-generation high-speed (4G) mobile network. The merger is what will make the network possible, and it will do that by aggregating and redeploying spectrum T-Mobile can’t use for 4G. In this way, the network would reach 55 million more Americans than 4G currently reaches.

AT&T couldn’t have argued the case better.  Oh wait.  They have, in the company’s advocacy package mailed to the NAACP and dozens of other groups who receive the company’s financial support.  Those talking points inevitably end up in the guest editorials penned by Crumpton and others.

While the bloom is clearly off the rose of the AT&T/T-Mobile merger, thanks in part to consumer groups and the U.S. Department of Justice who filed a lawsuit to stop it, AT&T is still flailing about trying to find some way to get the deal done, if only to avoid the outrageous break-up fee self-imposed by the telecommunications giant if the deal falls apart.  AT&T’s promise to bring an end to the obnoxious practice of offshoring their customer support call centers — if the merger gets approved — has been compared with blackmail by some customers who have spent an hour or more negotiating with heavily accented customer support agents that companies like Discover Card routinely mock.

AT&T promises customers a solution to the "Peggy Problem" if their merger with T-Mobile gets approved.

It clearly wasn’t enough to move critics of the deal to reconsider — AT&T could voluntarily hire American workers who speak the language of their customers for the benefit of those customers with or without a merger with the fourth largest wireless carrier in the country.

Crumpton argues President Obama was not well served by the Justice Department.  Consumer groups argue T-Mobile and AT&T’s customers will not be well-served if this merger ever happens.

As Stop the Cap! has repeatedly argued, both AT&T and T-Mobile will construct 4G mobile broadband networks in all of the places where the economics to deploy those networks makes sense.  No more, no less, no matter if AT&T and T-Mobile are two companies or one.

Crumpton might as well have argued the merger would deliver 4G service to Sprint customers as well.  It’s the same disconnected logic.

Crumpton thinks AT&T’s high-priced, heavily-capped 4G network will somehow solve the pervasive problem of the digital divide — the millions of poor Americans who can’t afford AT&T’s prices.  Incredibly, Crumpton’s answer is to allow one of the most price-aggressive, innovative carriers in the country favored by many budget-conscious consumers to be snapped up by the lowest rated, if not most-hated wireless company in the country.

It just doesn’t make sense.  But it does make dollars… for the NAACP, which receives boatloads of corporate money from AT&T.  It’s no surprise the pretzel-twisted logic that drives merger advocates like Mr. Crumpton comes fact-free.  The money makes up for all that.

“The NAACP stands ready to work with the public and private sectors to ensure that every American has an equal opportunity to participate in and benefit from this awesome ‘broadband revolution,’” Crumpton writes.

We can only hope that is true.  The NAACP can get started by admitting publicly it receives substantial support from AT&T and it will either agree to remain neutral in corporate advocacy issues to avoid conflicts of interest, or return AT&T’s money.  After all, it sounds like they need it to build the digital divide-erasing 4G network Crumpton is purportedly so concerned about.

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U.S. Department of Agriculture Announces $103 Million in Broadband Grants/Loans

The U.S. Department of Agriculture has announced more than $103 million in federal grants and loans to 16 states to help expand broadband, or high-speed, Internet access to unserved and underserved areas of rural America:

Community Connect Grantee Community State Award Amount
R&S Communications LLC Vina Town Alabama $570,800
Crystal Broadband Networks, Inc. Birdsong Town Arkansas $570,800
Cable Partner.Net Inc. Whelen Springs Town Arkansas $570,800
Karuk Tribe Orleans California $1,141,870
Crystal Broadband Networks, Inc. Heidelberg Kentucky $576,400
Crystal Broadband Networks, Inc. Yellow Rock Kentucky $583,400
Inter Mountain Cable Inc. Endicott Kentucky $993,339
Nexus Systems Inc. Manifest Louisiana $1,116,505
Nexus Systems Inc. Larto Louisiana $1,116,505
Plateau Wireless LLC Olean Town Missouri $570,800
Plateau Wireless LLC Brumley Town Missouri $570,800
Arizona Nevada Tower Corporation Gabbs City Nevada $1,046,798
Crystal Broadband Networks, Inc. Stafford Village Ohio $570,800
Wichita Online Inc. Cornish Town Oklahoma $494,000
Wichita Online Inc. Tushka Town Oklahoma $480,000
Wichita Online Inc. Leon Town Oklahoma $481,000
Scott County Telephone Cooperative Flat Top Virginia $1,500,000
Crystal Broadband Networks, Inc. Panther West Virginia $571,900
Infrastructure Loan Awards
Wabash Telephone Exchange Illinois $21,867,000
The Hemingford Cooperative Telephone Co. Nebraska $10,280,000
Coleman County Telephone Cooperative Inc. Texas $22,540,000
Vernon Telephone Cooperative Wisconsin $24,143,000
Dubois Telephone Exchange Wyoming $11,391,000

The providers involved offer a mix of technology, ranging from traditional cable companies like Inter Mountain Cable and Crystal Broadband Networks — to Wireless ISPs like Wichita Online, serving southwestern Oklahoma, to rural telephone company DSL provided by companies like Hemingford Cooperative Telephone and the Coleman County Telephone Cooperative.

What most rural providers have in common are much-higher prices for slower speed service over what urban customers pay, and a regular need for resources to update capacity and the number of potential customers served.  Most of these grants and loans are expected to cover some of those costs.

Ouch. Rural Americans pay substantially higher prices for broadband service than city-dwellers do. This is current pricing from Inter Mountain Cable, which serves parts of rural Kentucky.

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Kansas’ Law Allowing AT&T to Deregulate Itself Means Higher Phone Bills Are Imminent

Earlier this year, Gov. Sam Brownback (R-Kansas) signed legislation into law that allows AT&T to deregulate itself, and its rates, at will.  Kansas ratepayers are about to pay the price for that law as basic phone rates are expected to increase as much as $84 a year for residents that have few alternatives.

AT&T wants to eliminate price caps on landline service, which currently limit pre-tax prices to $15.70 in rural areas, $16.70 in larger Kansan cities with enhanced local calling areas.  After AT&T won similar deregulation in Oklahoma, Texas, Missouri and Arkansas, AT&T has been regularly raising basic phone rates, which are now $5 to $7 more a month for basic service than before deregulation.

AT&T intends to divert much of the additional revenue away from upkeep of its landline network, which in several states it has won the right to abandon in rural areas, and use the money to enhance its cell phone network instead.

AT&T spokesman Aaron Catlin told The Wichita Eagle AT&T intends to supply communities currently bypassed by AT&T DSL with heavily usage capped, and much more expensive, 3G wireless broadband instead.

AT&T currently sells that service for $60 a month with a 5GB usage limit and an overlimit fee of $50 per gigabyte.

Catlin told the Eagle AT&T was excited with the possibilities, although rural Kansans facing those prices might not be.

“A lot of bad things are going to happen long-term,” Steve Rarrick, an attorney for the Citizens’ Utility Ratepayer Board told the newspaper. “Over time, they (customers) are going to see their phone bills go up. That’s been the experience of other states.”

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Time Warner Cable Acquires NewWave Communications Systems in Tenn., Ky.

Phillip Dampier June 14, 2011 Consumer News, Time Warner Cable 10 Comments

Time Warner Cable will acquire cable systems in western Tennessee and Kentucky owned by NewWave Communications for $260 million in cash, the company announced this morning.

Some 70,000 subscribers are affected by the sale, expected to close in the fourth quarter of this year.  It marks Time Warner’s first entry into the state of Tennessee, currently dominated by Comcast and Charter Cable.  In Kentucky, Time Warner already serves around 100,000 customers.

The transaction will make NewWave Communications, already a tiny cable operator, even smaller as it plans to continue serving 80,000 customers in Arkansas, Illinois, Missouri, and South Carolina and those formerly served by Avenue Broadband in Indiana and Illinois.

Time Warner’s cash deal increases speculation the company also remains interested in acquiring Insight Communications, another cable operator up for sale with systems in the same region served by NewWave.  Time Warner Cable favors large regional operations serving contiguous territories.  But if a bidding war erupts, CEO Glenn Britt has warned the company won’t pay a premium price for mergers and acquisitions.

NewWave’s subscribers have been through a lot in the last decade.  Many were originally served by aging cable systems owned and operated by Charter Cable, who sold them to NewWave with mixed results.  NewWave’s public image is tarnished to some degree by some of its vocal, disaffected customers.  The company endures a “NewWave Communications Sucks” Facebook page and blog posts like, New Wave Communications: The Worst ISP in America.  The most frequent complaints: poor service and oversold broadband slowing down in the evenings.

Competition for NewWave is primarily from the phone companies, often AT&T and Frontier Communications.

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Big Cable Still Singing the Same Song After All These Years: A Memorial Day Retrospective

The thin horizontal line found in this chart represents the rate of inflation. The individual bars show just how high Tennessee cable operators raised their rates from 1986-1989, when deregulation allowed them to charge "sky is the limit" prices. (click to enlarge)

On this Memorial Day, we thought it might be a good time to look back to years past when legislators were forced to deal with a deregulated cable industry that immediately went on a rate hike spree that was unprecedented even for oil companies.

In 1984, cable television companies won the right of complete rate deregulation, arguing government involvement in the cable business was retarding investment, harming innovation, and killing jobs.  By keeping the cable industry free of government regulation, the industry promised improved service, more innovation, and even the potential for more competition.  The importance of this drive to deregulation was underlined with a flood of campaign contributions from some of the biggest players in the industry.

In the mid-1980s, that lineup included the National Cable Television Association (NCTA), the cable industry lobbying group led by James Mooney.  Tele-Communications, Inc. (TCI)’s John Malone — dubbed Darth Vadar of a Cable Cosa Nostra by then Sen. Albert Gore, Jr., and an assortment of cable industry executives from companies like Warner-Amex, Sammons Cable, Cablevision, and a variety of other operators large and small.

TCI would later become AT&T Cable and then eventually evolve into today’s Comcast.  Warner-Amex is today Time Warner Cable.  Sammons joined dozens of other medium-sized multiple cable system operators in selling out to larger players — in this case TCI.  Cablevision sold off most of its systems outside of the metropolitan New York City region to companies like Time Warner Cable.

After winning near-complete deregulation, Americans saw the start of a relentless series of rate increases Tony Soprano would not have attempted.  Called “price adjustments” or a benign “pricing reset” by cable lobbyists, what used to be an average rate for basic cable amounting to just over $11 per month rapidly increased to $16, $19, $25, $29, $35, $45, $50, $55, and now today’s frequently seen $60 threshold for a basic cable package.

What used to be an exciting new product in the late 1970s and early 1980s was now rapidly becoming a highly consolidated handful of corporate empires that promised to be money machines for shareholders.  At one point, adding up the number of corporate entities that were parented under TCI, including local and regional cable systems, programming distributors, cable networks, and other entities generated a printout more than six feet in length.

The mid-to-late 1980s were the cable industry’s glory years, with unfettered rate increases sometimes resulting in more than doubling customer bills.  Members of Congress got an earful from irate consumers who noticed even with the higher prices, the quality of service received deteriorated markedly.  Many cable systems simply left an answering machine on their service and support line.  Others left local cable offices locked and closed for business.

There were many reasons for the deterioration:

  • Investors saw the best possible returns buying and selling existing cable systems, not investing -in- them;
  • Some cable systems changed hands 3-4 times in just a few years, leading to staffing shortages, billing chaos, and confusion;
  • Some small operators saw no need to invest in aging cable systems when their value was skyrocketing during the consolidation era.  They waited for a buyout offer and cashed out of the business;
  • There was no enforcement agency capable of stopping the abusive business practices;
  • There was almost no competition.

Before becoming part of the Comcast empire, Tele-Communications, Inc. (TCI) was the nation's largest cable operator. Later known as AT&T Cable, the company was eventually sold to Comcast.

Competition in the cable industry was a rarity in the 1980s, but a handful of communities did have more than one cable operator, with lower rates and better service the result.  But pressure from investors forced most of these competitive anomalies to either divide into respective monopoly service territories, or forced one company to sell their business to the other.  Competition and rate wars were bad for business.

The satellite dish industry was the only national competitor to cable television at this time.  Before DirecTV and DISH, rural and suburban homeowners erected often enormous backyard satellite dishes of up to 12 feet in diameter.  Capable of receiving hundreds of channels with better picture quality, home satellite offered an experience somewhat familiar to those with large rooftop antennas.  Rotate the dish slightly and enjoy two dozen or more channels on each respective satellite.  More than three million Americans eventually installed satellite dishes, even with the entry cost of installation and assembly, which could run several thousand dollars.  For rural Americans, it often meant the difference between some television and none at all.

Never tolerant of competition, the satellite industry came under a withering attack on all fronts:

  • Cable programming was scrambled and either unavailable to satellite dishowners at any price, or sold at prices similar to what cable subscribers would pay, even though home dishowners owned and maintained their own equipment;
  • Most cable networks at that time were either owned outright or tacitly subject to cable industry pressure not to sell programming at steep discounts;
  • Premium cable channels often sold programming to satellite dishowners at prices higher than those paid by cable subscribers;
  • Home dishowners were required to purchase their own decoder box outright, at a cost exceeding $300 — an enormous price at a time when most people paid less than $20 a month for basic cable service;
  • Cable companies encouraged or defended town zoning laws which required would-be dishowners to purchase expensive permits, hide their dishes from view (and sometimes viewable signals in the process), or ban their use outright;
  • In the case of networks owned by TCI, consumers with satellite dishes often had to buy the programming from their nearest TCI cable system and be billed by them.  So much for avoiding the cable company.

Then-Sen. Albert Gore, Jr. (D-Tenn.) got into the fight against unregulated cable when cable rates in his home state of Tennessee more than doubled.

The worst abuses, and corresponding distortions from the cable industry, occurred from 1987-1992.  More than a dozen pieces of legislation attempted to correct the over-deregulation of the industry, but campaign contributions to both parties meant years of failed attempts.  Some of the worst anti-consumer officials included Sen. Tim Wirth (D-Colorado) who happened to represent the state where the vast majority of large cable companies were headquartered at that time, Sen. Daniel Inouye (D-Hawaii), who read industry talking points and was skeptical about stories of cable abuse, and Sens. Bob Packwood (R-Washington) and Bob Dole (R-Kansas) who didn’t like government regulation and thought the abuses would be self-correcting if consumers cancelled service.

Many of the heroes of the cable fight of the last generation remain familiar names.  Sen. Albert Gore, Jr. (D-Tennessee) was perhaps the industry’s greatest foe.  He began the fight as a congressman in the mid-1980s and carried the battle all the way through 1993, when he became vice president under the Clinton Administration.  Other notables included Sen. Wendell Ford (D-Kentucky), who is a far cry from today’s two senators in Kentucky.  Ford heard complaints about Kentucky cable companies almost daily.  Sen. Howard Metzenbaum (D-Ohio), who wasted no time calling the cable industry an outrageous unregulated monopoly. Sen. John Danforth (R-Missouri) railed against the cable industry and was instrumental in helping pass legislation in 1992 that finally ended the worst abuses.

What the cable industry promoted and defended in 1987 for cable television will haunt you when you consider they are appealing for the same types of “hands-off” policies for broadband today.  Only now they are joined by the nation’s largest phone companies.  In the early 1990s, the telephone companies were threatening to compete with the cable industry and the two were considered foes.  But once an industry player becomes well-established, they defend their right to raise rates, restrict service, and retard any additional competition.

To give you a taste of what the abuses were like, and the industry’s efforts to excuse them, we present coverage of a Senate hearing held in November, 1989 pitting cable industry titans against would-be competitors and government officials from towns and cities trying to deal with a cable “bad actor” in their midst.  Some of the most interesting parallels come in the very last video as you watch Chuck Dawson, representing consumers and independent satellite dealers, detailing the schemes by the cable industry to kill off any threats.  Pay particular attention as he discusses the lies the industry will tell to predict the imminent failure of its then-newest competitor — the home satellite dish industry.  It’s a game plan they’ve used again fighting off community broadband.

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