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CNBC (Comcast)’s Magic Box of Tricks and Traps: The Hit on Tumblr Founder David Karp Debunked

Uh oh... deer in headlights moment for Tumblr founder David Karp.

Uh oh… deer in headlights moment for Tumblr founder David Karp.

Net Neutrality opponents today made hay about an underwhelming, sometimes stumbling debate performance by Tumblr founder David Karp, who was inexplicably CNBC’s go-to-guy to explain the inner machinations of the multi-billion dollar high-speed Internet connectivity business.

TechFreedom, an industry-funded libertarian-leaning group spent much of the day hounding Karp about his “painful, babbling CNBC interview.”

“Those pushing #TitleII have NO FREAKING CLUE what it means,” tweeted TechFreedom’s Berin Szoka.

BTIG Research devoted a whole page to the eight minute performance, where Karp faced interrogation by two CNBC hosts openly hostile to Net Neutrality and another that expressed profound concern the Obama Administration would over-enforce Net Neutrality under Title II regulations. CNBC is owned by Comcast, a fierce opponent of mandatory Net Neutrality.

“Given the importance of Net Neutrality and the central role played by Tumblr’s Karp in getting us to this point, we thought it was very important for everyone to watch his interview earlier today on CNBC in its entirety,” wrote Rich Greenfield, noting the “best parts” (where Karp appeared like a deer frozen by oncoming headlights) were encapsulated into an extra video clip.

Greenfield referred to a Wall Street Journal piece in February that suggested access means everything when it comes to D.C. politics:

“In a lucky coincidence, Tumblr Chief Executive David Karp, who attended the meeting in New York, found himself seated next to Mr. Obama at a fundraiser the following day hosted by investment manager Deven Parekh.

Mr. Karp told Mr. Obama about his concerns with the net-neutrality plan backed by Mr. Wheeler, according to people familiar with the conversation. Those objections were relayed to the White House aides secretly working on an alternative.”

That was sufficient for some to imply Karp was a powerful influence over the president’s sudden pronouncement last November that strong, all-encompassing Net Neutrality was the was to go.

CNBC’s hosts grilled Karp, asking him to prove a negative, set up false premises for Karp to defend, and repeatedly cut his answers off. At the same time, Karp was clearly unprepared and often did not have his facts in order.

Stop the Cap! sorts it all out.

http://www.phillipdampier.com/video/CNBC Tumblr Net Neutrality 2-24-15.flv

Nobody’s shining moment on the Net Neutrality debate on CNBC featuring an unprepared David Karp, founder of Tumblr vs. the B-team at CNBC – lackeys with an agenda who can’t wait to interrupt. Truth comes in last place. (8:18)

CNBC Claim: “If you talk to AT&T’s Randall Stephenson, he will say right now they have more capital expenditures than any company in America … and if you turn it into a utility it will not be profitable to continue investing like that.”

Fact: AT&T does invest heavily in its network but also enjoys very healthy returns on that investment. In 2014, AT&T was expected to end the year spending about $21 billion, primarily on its highly profitable wireless network. Last week, USA Today published a list of the top 12 companies in the Standard & Poor’s 500 that boosted capital spending by 40% or more in the past 12 months and spent at least 15% of revenue on capital expenditures. AT&T was not on it. Outside of claims from telecom companies and their lobbyists, there are no plans by the FCC to turn broadband into a regulated utility.

Karp Claim: “There is a tremendous amount of throttling going on right now.”

CNBC Question from Alternate Universe of Fair, Balanced Journalism:

CNBC Question from Alternate Universe of Fair, Balanced Journalism: “In general, do you think heavy-handed government regulation is a good thing or a bad thing for an industry?”

Fact: “Throttling” is not well-defined here. There is intentional throttling among certain wireless companies, usually under the guise of “fair access policies” and usage caps, and there is throttling as a side effect of congestion in two areas: backbone connectivity among certain ISPs and wholesale traffic handlers and last mile congestion among providers, especially those offering DSL in rural areas, where multiple customers share access to a limited capacity middle mile network. There is no evidence that any significant wired providers are intentionally throttling the speeds of services except as part of a fair access policy or a purposeful lack of investment in network upgrades.

CNBC Claim: “You have a monopoly because it is really expensive to build the pipes so you have not had multiple people who will build pipes to the door.”

Fact: The capital cost required to offer wired broadband service to each home is a clear deterrent for many providers, but not an insurmountable one as Google and community-owned providers have demonstrated. The cable industry won early protection from competition in exclusive franchise agreements that calmed investor fears that the enormous cost of wiring communities for cable might not be repaid if a competition war broke out. AT&T later fought for and won statewide franchising agreements and considerable deregulation in many states where it provides U-verse, arguing regulatory burden reduction would enhance competition. But the same large cable and phone companies that achieved deregulation for themselves have lobbied heavily to regulate and banish community-owned providers from getting off the ground by encouraging the passage of restrictive state laws making such competition nearly impossible.

CNBC Question: “In general, do you think heavy-handed government regulation is a good thing or a bad thing for an industry?”

Our reply: Really?

Karp: I think a bright line rule that sort of spells out these foundational principles that we believe in… I think the Bill of Rights is a good thing… even without getting into the weeds, spelling out something like the First Amendment that says this is a truth that we believe… (cut off).

CNBC: I don’t see how that is an answer at all comparing this to the Bill of… I understand the Bill of Rights but… has there been a problem up to this point where you feel that people… that Net Neutrality has been violated.

Karp: We’ve had instances where companies like Comcast have tried to block whole protocols and shut off consumers access to new innovative parts of the Internet.

Traffic congestion problems on many major ISPs were limited to Netflix traffic, until Netflix began paying for peering connections with problem ISPs.

Traffic congestion problems on many major ISPs were limited to Netflix traffic, until Netflix began paying for peering connections with problem ISPs.

Fact: In 2007, Comcast installed new software or equipment on its networks that began selectively interfering with some of Comcast’s customers’ TCP/IP connections. The most widely discussed interference was with certain BitTorrent peer-to-peer (P2P) file-sharing communications, but other protocols were also affected. The case led to an effort by the FCC to introduce open Internet traffic rules in 2010 which Comcast later defeated in court. At no time did Comcast completely block access – it simply impeded it, reducing customer speeds only while using those services.

A CNBC host then challenged Karp to prove a negative on AT&T’s plans to pull back investment in its network expansion.

“How has it been disproven that he’s not actually going to pull in on his buildout of more infrastructure?”

Fact: On Nov 7, 2014 – a week before President Obama unveiled his support for strong Net Neutrality policies – AT&T announced at least $3 billion in capex reduction (or “pull in” to quote CNBC) for 2015 in a press release on its acquisition of Mexico Wireless Provider Iusacell:

AT&T’s VIP-related capital investment levels will peak in 2014, as the company has said previously. As a result, AT&T expects its 2015 capital expenditure budget for its existing businesses to be in the $18 billion range. This will bring the company’s capital spending as a percent of total revenues to the mid-teens level — consistent with its historical capital spending levels.

Even after AT&T CEO Randall Stephenson was announcing cutbacks in capex, his office was releasing press releases claiming a major expansion of AT&T’s gigabit fiber upgrades for U-verse, claims Stop the Cap! have found to be grossly exaggerated.

Stephenson made the mistake of putting the cart in front of the broadband horse, making it impossible to credibly claim he was reducing his capex budget because of a Net Neutrality policy that had not even been announced yet.

CNBC Claim: “It doesn’t mean someone will pay for it if they are losing money as a result.”

Fact: None of the providers mentioned by CNBC have lost any money provisioning broadband service. In fact, broadband is becoming the new profit center of the industry, netting higher revenue after adjustments for cost than any other part of the cable package.

Another exchange:

CNBC: “If you look at Netflix traffic, sometimes it is 80 percent of the network’s nighttime load.”

Karp: “The consumers are paying for it and Netflix is already paying for it.”

CNBC: “I am not a Netflix user and it ticks me off I have to subsidize everybody that is doing that. Why do I have to pay for that?”

Fact: The CNBC host is being disingenuous and inaccurate. Although Netflix traffic can constitute 80% of the evening traffic load, the customers accessing Netflix paid both Netflix and their ISP for that traffic. Whether or not the CNBC host uses Netflix or not is irrelevant. Assuming she is a Comcast or Time Warner Cable customer, last mile congestion that could impact her enjoyment of the Internet was never an issue under DOCSIS 2, has been rendered a non-issue under the current DOCSIS 3 standard, and will remain a non issue going forward.

The traffic dispute between Comcast and Netflix only affected Netflix viewing. The CNBC host need not subsidize Netflix or anyone else. Netflix offers free peering services and equipment to any ISP that wants it. Comcast refused to take part, demanding financial compensation instead. It then raised rates on customers anyway. Her beef is with Comcast, not Netflix.

HissyFitWatch: Bell Loses Net Neutrality Case, Threatens to Bury Complaining Consumers In Legal Fees

The first "bricks of paper" arriving from Bell's attorneys in the case of Bell v. Ordinary Canadian consumers

The first legal “bricks of paper” arriving from Bell’s attorneys in the case of Bell v. Ordinary Canadian consumers arrived at the home of Jean-François Mezei of Pointe-Claire, Que.

A Manitoba university student and consumer groups who won their case against Bell’s preferential treatment of its mobile streaming video service are now being threatened with demands they personally cover Bell’s legal expenses as the phone company appeals the ruling in court.

The dispute involves Bell Mobile TV Service — a $5/mo optional add-on that allows Bell’s mobile customers to stream up to 10 hours of video programming, some of it from Bell-owned television networks like CTV, without it counting against the customer’s usage cap. Each additional hour costs $3. The service prices usage based on time, not data usage, which lets Bell stream very high quality video to customers. Competitors like Netflix do not have this option and their customers are billed based on the amount of data consumed, which is around 800 percent higher than what Bell Mobile TV charges.

University of Manitoba graduate student Benjamin Klass filed a complaint with the Canadian Radio-Television and Telecommunications Commission (CRTC) in 2013 accusing Bell of violating Net Neutrality and creating an anti-competitive marketplace for online video. ​Twelve of the 43 channels available on Mobile TV — including CTV, TSN and The Movie Network — are owned by Bell Media, a subsidiary, like Bell Mobility, of the media behemoth BCE.

Klass alleged the practice was a clear violation of Canada’s laws governing broadcasting: “No Canadian carrier shall, in relation to the provision of a telecommunications service or the charging of a rate for it, unjustly discriminate or give an undue or unreasonable preference toward any person, including itself, or subject any person to an undue or unreasonable disadvantage.”

The CRTC agreed with Klass and in late January ruled in favor of Klass’ complaint, giving Bell and Quebec-based Vidéotron (which offers a similar service) until the end of April to close them down in their present form.

BCE, the parent of Bell Mobility, told the CBC it was “shocked” by the CRTC’s ruling, suspecting the complaining groups mislead regulators into thinking Bell favored its own content over others.

“There’s a hint here that the government believes Bell Mobile TV delivers only Bell Media content,” spokesman Jason Laszlo said. “They should know we offer mobile TV content from all of Canada’s leading broadcasters in English and French.”

Bell_Mobility logoLaszlo added Bell-owned content only comprises 20% of Bell Mobile TV programming and that the ruling would deprive more than 1.5 million current Bell Mobile TV subscribers from getting the service after the spring deadline to shut it down.

The CRTC and consumer groups argue that is beside the point.

“At its core, this decision isn’t so much about Bell or Vidéotron,” CRTC chair Jean-Pierre Blais said at a breakfast luncheon in London, Ont., in late January. “It’s about all of us and our ability to access content equally and fairly, in an open market that favours innovation and choice. The CRTC always wants to ensure ­— and this decision supports this goal ­— that Canadians have fair and reasonable access to content. It may be tempting for large vertically integrated companies to offer certain perks to their customers. But when the impetus to innovate steps on the toes of the principle of fair and open access to content, we will intervene.”

Consumer group OpenMedia says Bell’s motivation isn’t to create a level playing field or provide customers with more options for online video. It’s about artificially inflating the cost of accessing services like Netflix and other independent video companies that are innovating away from the traditional pay television package.

“Bell is doing everything in its power to make the Internet more like cable TV,” said OpenMedia campaigns manager Josh Tabish. “They want the power to pick and choose what we see by forcing competing services into a more expensive toll lane online.”

Klass (Image: CBC)

Klass (Image: CBC)

Bell’s legal strategy going forward is an homage to the one American wireless companies used for years to avoid Net Neutrality.

Bell Mobility argues that Bell Mobile TV is a broadcasting service, not a telecommunications service and therefore doesn’t fall under the jurisdiction of the Telecommunications Act.

Since the CRTC was not receptive to that argument, Bell is taking the matter to the Federal Court of Appeal, asking it to overturn the CRTC ruling and grant the company court and legal costs paid for by the Canadian consumers that brought the original complaint.

Jean-François Mezei of Pointe-Claire, Que. is among them and has been the unhappy recipient of several parcels containing “bricks of paper” from FedEx he suspects is just the beginning.

Mezei has been tweeting about ongoing developments in the case, and asked Bell, “how come you have no press release bragging about how Bell Mobility is suing individual citizens who participated in [the CRTC complaint]?”

Klass told CBC News he hasn’t yet made up his mind how to respond to the court filing, but admitted it is unnerving.

“In that regard, it really strikes me as a method of intimidation,” he said. “Right off the bat, it has a chilling effect. It appears that Bell is simply pursuing the argument, that it unsuccessfully made to the CRTC, through the court.”

West Virginia Legislature Won’t Consider Any Bill That Could Offend Frontier, GOP Delegate Claims

frontier loveThe Republican leadership of West Virginia’s House of Delegates is alleged to have quietly placed a ban on considering any bill that could potentially offend Frontier Communications, frustrating state lawmakers attempting to introduce broadband improvement and consumer protection measures.

In a press release posted to his Facebook page, Delegate Randy Smith (R-Preston) complained that the House GOP leadership told him his two broadband-related bills waiting for consideration would “go nowhere because it would hurt Frontier.”

“Frontier has its hands in the state Capitol,” Smith said in the release obtained by the Charleston Gazette. “The company knows how to play hardball with the legislative process.”

When asked to name names of those obstructing his broadband-related measures, Smith declined, at least for now.

“It was one individual,” Smith said. “He said leadership wouldn’t support this because they feel like it’s targeting Frontier. If it comes to the point I have to, I’ll give names. I know you’re wanting names.”

Last December, Smith’s frustration with Frontier boiled over.

Smith

Smith

“For too long, West Virginia has lagged behind other states when it comes to accessible computer technology and infrastructure,” Smith said. “We’ve been offered excuses about our state being too mountainous for improving conditions here. But it’s not the state’s rugged terrain holding us back. Although a few areas of the state have a choice of service providers, most are stuck with whatever Frontier decides is enough. And not only do I receive complaints about their service, there are multiple grievances about how they bill their customers. We can, and must, do more to create competition to drive the quality of services up and drive costs down.”

“This is not a Republican or Democrat issue. This is a West Virginia issue,” Smith said. “And we need to catch up to other states in the 21st century.”

For the first time in 80 years, Republicans won a majority in the House of Delegates, pledging to transform West Virginia into a “business friendly state.” But even Smith, an assistant majority whip for the new Republican leadership, seemed stunned by the willingness to grant Frontier de facto veto power over telecom-related legislation.

Last week he learned his two broadband bills were essentially dead on arrival, because they would not be supported by Frontier.

  • HB2551, co-sponsored by 10 GOP delegates, would prohibit Internet providers from advertising broadband service as “high-speed Internet” unless the company offered a download speed of 10Mbps or higher. The majority of West Virginia experiences real world speeds far slower than that from Frontier;
  • HB2552, intended to address chronic billing problems by Frontier, would allow Internet customers to take billing disputes to Attorney General Patrick Morrisey’s office, if the state Public Service Commission refuses to review their complaints.
Speed tests on Frontier's "High-Speed Max" Internet service aren't high speed at all.

Speed tests on Frontier’s “High-Speed Max” Internet service aren’t high speed at all.

When Smith’s accusations went public in the pages of the Gazette, Republican leaders scrambled to deny his allegations.

House Majority Leader Daryl Cowles (R-Berkeley) told the Gazette House Republicans have no “blanket position” against bills that Frontier opposes.

“There’s no policy by leadership that these bills should move or shouldn’t move based on who’s supporting them or who doesn’t,” Cowles said. “It sounds like Randy is frustrated. He, like many out there, are frustrated by their Internet speeds and service.”

“I was told Friday that there’s no way those bills were going to run,” Smith countered.

Frontier won’t deny its disapproval of Smith’s bills.

“We’re the only provider that chooses to serve much of rural West Virginia, and we see the legislation as having a negative effect on further development of rural broadband services,” said Frontier spokesman Dan Page.

Frontier customers in West Virginia are among the company’s most vocal critics nationwide, complaining about unavailability of DSL, billing errors, poor service, and most common of all: selling service and speed the company cannot consistently deliver. A statewide class action lawsuit against Frontier for failing to provide advertised speeds has attracted hundreds of Frontier customers. The suit maintains Frontier has engaged in “false advertising,” a violation of the state’s Consumer Credit and Protection Act.

Smith introduced the two broadband measures partly out of his own frustration with the company.

Cowles

Cowles

“I regularly conduct speed tests on my Internet connection and the results are laughable,” Smith told his mostly rural constituents. “I’ve had download speeds of around 0.20Mbps. No wonder they’re called Frontier. Those are the kinds of speeds you’d expect on the American frontier in the 17th century.”

Smith recognized some members of his own party will take Frontier’s side over his.

“Of course, my bills don’t go over well with some members of my own party,” Smith said. “But right is right and wrong is wrong.”

On cue, Cowles rushed to Frontier’s defense.

“Frontier has been trying to spend money to upgrade service, but it hasn’t been easy for those guys,” Cowles said. “We’re trying to expand broadband and improve the speeds everywhere we can. We try to nudge Frontier when we can, push them when we can, while we respect their investment.”

A considerable part of that “investment” came at the cost of U.S. taxpayers. Last fall, the U.S. Department of Commerce’s inspector general announced an investigation into how Frontier spent a $42 million federal stimulus grant in the state. The inspector general is reviewing thousands of pages of documents turned over by the company. Critics contend Frontier spent the stimulus funds to defray the cost of a statewide fiber network Frontier now owns and controls.

Cowles told the Gazette that despite the media attention on the issue, he remained unsure if Smith’s bills would ever reach the House floor for consideration.

At least three House members — two Republicans and one Democrat — work for Frontier.

CenturyLink Threatens to Pull Plug on Idaho Schools Broadband Network, Cutting Off High Schools Statewide

Broadband... by Boss Hogg.

Broadband… by Boss Hogg.

CenturyLink has given the state of Idaho until Sunday to come up with as much as $4.2 million or it will cut off Internet access to more than 200 Idaho public high schools, potentially leaving some without Internet access for the rest of the school year.

State officials in Boise warned school officials they are on their own if the statewide Idaho Education Network (IEN) goes dark on Sunday, leaving administrators scrambling for alternative Internet Service Providers in a state dominated by CenturyLink.

Senate President Pro Tem Brent Hill told nearly 200 Idaho public school trustees Monday that the state’s broadband project will go dark Feb. 22. Districts will need to carry out their own emergency plan immediately if they want broadband access for the rest of the school year.

“This is terrible. We apologize,” said Senate president pro tem Brent Hill, speaking to nearly 200 public school trustees on Monday.

“You need to have a plan in case Internet is shut off on Sunday,” added Will Goodman, technology chief for the state Department of Education. “You need to be prepared if that plan goes into place for the rest of the school year.”

Syringa Networks sued Idaho in late 2009, arguing the state illegally blocked it from the $60 million broadband contract to favor the politically connected Education Networks of America and CenturyLink. Gov. C.L. “Butch” Otter’s administration made certain the request for bids was tailored towards the ultimate winners — close friends of Otter and Idaho’s political class. The cronyism did not extend into the courtroom, however, and after several years of legal back and forth, a judge affirmed what many suspected: the contract was illegal and declared void.

followthemoneyState law prohibits using taxpayer dollars to pay for illegal contracts, and CenturyLink has kept the network running without payment in hopes their friends in the state legislature will bail IEN out. But after months of inaction, CenturyLink announced that without immediate payment, it will cut off the network this weekend.

The prospect of hundreds of high schools losing all Internet connectivity led to seething editorials in some state newspapers.

“Students were faux poster-children on what turned out to be just another example of putting the well-connected on the public dole, while simultaneously lauding the result,” wrote the editors of the Twin Falls Times-Union. “Contracting is broken in Idaho. Corruption is too easily accepted as day-to-day business.”

The newspaper advocates writing off IEN and starting over by giving control of broadband connectivity back to local communities across Idaho, where corruption does not predominate:

The IEN is a pile of rubble. It can’t be salvaged. Only a total rebuild will suffice.

Tell the districts that rely on IEN to go find a provider. Take that $4 million sitting in the bank, targeted for the providers, and start a reimbursement fund for schools. Let local officials run it. The courts will figure out what the providers are owed for the past service. Idaho has failed and, with its culture of corruption, can’t be trusted.

As of this afternoon, it seems the state legislature is preparing to force taxpayers to cover the costs of schools switching to alternative providers. Idaho officials have approved a nearly $3.6 million stopgap measure to maintain broadband connectivity for the rest of the school year by using other providers, assuming they can be found.

http://www.phillipdampier.com/video/KTVB Boise Idaho lawmakers approve 3-6M for broadband access 2-17-15.flv

KTVB in Boise reports Idaho taxpayers will be on the hook to cover public school Internet costs after CenturyLink pulls the plug on a statewide educational broadband network this weekend. (2:28)

Bell Canada Customer Called a “Slut” and “Bitch” in E-Mail by Angry Customer Service Representative

Phillip Dampier February 17, 2015 Bell (Canada), Consumer News, HissyFitWatch 1 Comment
Bell customer Leticia Chartier  (Photo: Judith Plamondon, QMI Agency)

Bell customer Leticia Chartier (Photo: Judith Plamondon, QMI Agency)

A Bell Canada customer complaining about a spike in her television and broadband bill from $72 to $105 was called a “slut” and a “bitch” in an email after she didn’t give the representative high marks for the online customer support chat experience.

Leticia Chartier’s new customer promotion apparently expired and her efforts to secure an explanation of her new rate was met by a shrug by Bell’s customer service. The online agent curtly told her to contact a different department. But before terminating the chat, Bell’s representative, identified as Mohamed Boutallaka, suddenly remembered the customer would be invited to score his performance in a survey after the chat window closed.

Chartier told QMI Agency he begged her not to give him a bad grade for his performance.

Chartier responded favorably to his request, or so she thought, scoring his performance “pretty good,” but explaining her rating wasn’t a criticism of the agent’s performance, just his lack of empowerment to help her resolve the issue.

Not good enough.

A few minutes after submitting the survey, the representative dispatched a scathing e-mail to her personal e-mail address on file with Bell.

bell bad“You’re a bitch Leticia and a real slut,” read the e-mail, which Chartier provided to QMI Agency.

Chartier immediately contacted Bell to complain about the email, but she says nobody at the company is taking the matter seriously.

“The supervisor who I spoke to on the phone apologized, but she never called me back to follow-up,” Chartier said.

After some research on Facebook, Chartier was reassured to discover Boutallaka works out of Bell’s call center… in Morocco.

“At least I know he won’t come to my place.”

A Bell Canada spokesman stopped short of promising the agent in question would be disciplined or fired. He only promised an internal investigation would begin over the incident.

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