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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.

AT&T Expands 75Mbps U-verse Speeds in Seven Cities, But You Probably Don’t Qualify to Get Them

Phillip Dampier February 10, 2015 AT&T, Broadband Speed, Competition, Consumer News 2 Comments

75_internet_7_new_cities_blogAT&T Speed Increases to the Press Release are back, and an AT&T installer in Cleveland tells us you probably don’t qualify to get them just yet.

This week, AT&T has announced something less than gigabit broadband (High Speed Internet 75 – up to 75Mbps) for seven of its service areas:

  • Augusta, Ga.
  • Charleston, S.C.
  • Cleveland, Ohio
  • Columbus, Ohio
  • Fort Lauderdale, Fla.
  • Miami, Fla.
  • St. Louis, Mo.

“Introductory prices for the new 75Mbps high-speed speed option start as low as $39.95 a month when bundled with our award-winning U-verse TV and/or U-verse Voice services, and only $74.95 per month as a standalone service,” the company said on its consumer blog.

Laying aside the press release, an AT&T lineman in Cleveland tells Stop the Cap! most people should not expect to immediately qualify for the new 75Mbps speeds.

“Most will not be ready for the new 75Mbps tier except those in apartments or condominiums already served by fiber or other enhanced connections,” the technician tells us. “This is a way to quickly boost speeds on existing high-speed capable connections that already qualified for better speeds. AT&T will eventually broaden coverage, but only as we upgrade our network as a normal course of business.”

Stop the Cap! has found some customers in new housing developments and trailer parks where 75Mbps was introduced late last year have been able to sign up for 75Mbps service, but they are not getting the promised speeds.

“They emphasize it is ‘up to’ 75Mbps, but we barely reach 50Mbps here,” said El Paso resident Sam Kessler, who signed up for 75Mbps service in January. “It is better than what we used to get, but if they ever raise our bundled promotional price, we’ll go back to cable I guess.”

Speeds up to 75Mbps were introduced in December in parts of El Paso, Texas; Monterey, Calif.; Sacramento, Calif.; and Toledo, Ohio. AT&T also has plans to expand High Speed Internet 75 availability to additional U-verse markets.

Stop Paying Regular Price for HBO and Cinemax; Cancel and Rebuy for $10/Month

2000px-HBO_logo.svgAre you still paying $15+ for HBO and $13+ for Cinemax? Stop.

Most major cable television providers are slashing the price for both premium movie channels to protect subscriber numbers from the April introduction of HBO’s standalone video streaming service, likely to be called HBO Go.

Most analysts expect the on-demand service will cost $15 a month for one or both co-owned networks. With Time Warner Cable recently raising the price of HBO to $16.99 a month, the company may have priced itself out of the market.

“Why would I waste my time with HBO from Time Warner Cable when I will be able to get HBO Go for $2 less a month and won’t have to buy their larded-up cable television package,” asks Watertown, N.Y. resident Jeff Kates. “Their greed will cost them when they lose more subscribers than they gain in revenue from the rate hike.”

Comcast has already seen the writing on the wall and this year cut its regular pricing for HBO from $18.95 to $15 — matching the likely price of standalone HBO Go.

In an effort to lock in customer loyalty and avoid accelerating cord-cutting, many major pay television providers are putting one or both Time Warner (Entertainment)-owned networks on sale for much of 2015. These prices are available to any new premium cable subscriber. If your provider will not switch your current subscription to the new promotional rate, cancel one or both channels for a few days (or threaten to cancel service altogether) and then resubscribe at the discounted price.

Here are the current offers:

  • AT&T U-verse: Bundles HBO and a year of Amazon Prime service with a package of mostly local over the air channels for around $40-50 a month depending on the promotion;
  • Charter Cable: Charter’s Triple Play Silver package bundles HBO, Cinemax, Showtime/Movie Channel premium channels into the television package at no extra charge;
  • Comcast: Offers HBO for online sign ups at $10 a month for a year. Comcast attempts to limit the offer to customers who have not subscribed to HBO for the last 120 days, but this condition is usually waived if you threaten to cancel service and switch to a phone or satellite company;
  • Cox: Stingier than others, Cox is offering discounts for just six months, but gives you quantity discounts. Buy 1 premium channel at $10/mo, two channels for $15, three for $20 or four networks for $25 a month. Your choices include HBO, Cinemax, Showtime, and Starz;
  • Time Warner Cable: Now has a sale running for $9.99/mo HBO and the same rate for Cinemax, Showtime, and Starz when ordered online. Current non-premium customers can upgrade from the My Account portal. Current premium channel customers will have to call Time Warner and argue for the discount or cancel HBO and quickly resubscribe;
  • Verizon: Also offers HBO and others at $9.99/mo for the first year.

Satellite services are expected to change their pricing on premium channels sometime this month.

Missouri Representative Introduces Community Broadband Ban Bill to Protect AT&T, CenturyLink

Rep. Rocky Miller (R-Lake Ozark)

Rep. Rocky Miller (R-Lake Ozark)

A Missouri state representative with a track record of supporting AT&T and other telecommunications companies has introduced a bill that would effectively prohibit community broadband competition in a bid to protect incumbent phone and cable companies.

Rep. Rocky Miller’s (R-Lake Ozark) House Bill 437 would strictly prohibit the construction of public broadband networks in any part of Missouri served by a private provider, regardless of the quality of service available or its cost, without a referendum that includes a mandated question observers consider slanted in favor of existing providers.

HB437 would banish community broadband networks as early as September unless services were already up and running. The bill would effectively stop any public broadband network intending to compete against an existing phone or cable company within the boundaries of a city, town, or village offering any level of broadband service. It would also require communities to schedule a referendum on any project budgeted above $100,000, and includes ballot language that implies public broadband projects would duplicate existing services, even if a private provider offers substantially slower broadband at a considerably higher price. (Emphasis below is ours):

“Shall [Anytown] offer [broadband], despite such service being currently offered within Anytown by x private businesses at an estimated cost of (insert cost estimate) to Anytown over the following five-year period?”

Miller’s proposal would also require voters to approve a specific and detailed “revenue stream” for public broadband projects and if the referendum fails to garner majority support, would prohibit the idea from coming up for a second vote until after two years have passed, allowing cable and phone companies to plan future countermeasures.

yay attThe proposed bill also carefully protects existing providers from pressure to upgrade their networks.

Miller’s bill defines “substantially similar” in a way that would treat DSL service as functionally equivalent to gigabit broadband as both could be “used for the same purpose as the good or service it is being compared to, irrespective of how the good or service is delivered.”

In other words, if you can reach Rep. Miller’s campaign website on a CenturyLink 1.5Mbps DSL connection and over a co-op gigabit fiber to the home connection, that means they are functionally equivalent in the eyes of Miller’s bill. Residents voting in a referendum would be asked if it is worthwhile constructing fiber to the home service when CenturyLink is offering substantially similar DSL.

Among the telecom companies that had no trouble connecting to Rep. Miller to hand him campaign contributions: AT&T, CenturyLink, Comcast, and Charter Communications

The Coalition for Local Internet Choice was unhappy to see yet another state bill introduced designed to limit competition and take away the right of local communities to plan their own broadband future.

“The state of Missouri is the latest legislature to attempt to erect barriers to the deployment of broadband networks that are critical to the future of its local economies and the nation, via House Bill 437,” said a statement released by the group. “High-bandwidth communications networks are the electricity of the 21st century and no community should be stymied or hampered in its efforts to deploy new future-proof communications infrastructure for its citizens – either by itself or with willing private partners.”

cell_towerThe group urged the Missouri legislature to reject the bill.

In 2013, Miller hit the ground running in his freshman year to achieve his campaign pledge of “getting the government out of the way of economic development.” In the Missouri state legislature, Miller strongly supported AT&T’s other state legislative priority: deregulation of cell tower placement. Miller traveled around Missouri promoting HB650, an AT&T inspired bill that would strip away local oversight powers of cell sites.

The issue became a hot topic, particularly in rural and scenic areas of Missouri, where local officials complained the bill would allow haphazard placement of cell towers within their communities.

“[The] bill inhibits a city’s ability to regulate cell towers as we have in the past,” Osage Beach city attorney Ed Rucker said. “The process we have in place has worked, and has worked well.”

Had HB650 become law, Osage Beach residents would today be surrounded by six new cell towers around the city, with little say in where they ended up. The bill Miller supported would have also eliminated a requirement that providers repair, replace, or remove damaged or abandoned cell towers, potentially leaving local taxpayers to pick up the tab.

Miller claimed the legislation would allow expansion of wireless broadband across rural Missouri and remove objectionable fees. HB650 would limit municipal fees to $500 for co-locating an antenna on a pre-existing tower and $1,500 for an application to build a new tower. Local communities complained those limits were below their costs to research the impact and placement of cell towers.

“That cost is an inhibitor to broadband,” Miller countered. “It’s beginning to look like the fees are an impediment to the expansion of broadband.”

Miller did not mention AT&T’s interest in cell tower expansion is also connected to its plan to retire rural landline service in favor of its wireless network, saving the company billions while earning billions more in new revenue from selling wireless landline replacement service over its more costly wireless network. The cell tower bill was eventually caught up in a legal dispute after a court ruled the broader bill that included the cell tower deregulation language was unconstitutional on a procedural matter.

Illinois’ ‘Free AT&T from Regulation and Responsibility’ Bill Returns in 2015

Nobody raises phone rates after deregulation like AT&T.

Nobody raises phone rates after deregulation like AT&T.

AT&T’s bill to maximize profits and minimize responsibility to its customers is back for consideration in the Illinois state legislature.

The Illinois Telecom Act is up for review in the spring and AT&T’s team of lobbyists are gearing up to advocate killing off AT&T’s legal obligation to provide low-cost, reliable landline service to any resident that wants service. AT&T says the measure is a reasonable response to the ongoing decline in its landline customer base, but rural and fixed-income residents fear the phone company will walk away from areas deemed unprofitable to serve and force customers to expensive wireless phone alternatives.

Areas in central and southern Illinois are served by a variety of rural phone companies including AT&T and Frontier Communications. Northeast Illinois is the home of metropolitan Chicago, where businesses depend on reliable phone service and the urban poor and senior residents depend on predictably affordable basic landline service.

The state still has as least 1.3 million residential landline customers paying rates starting at $3 a month for basic “Lifeline” service in Chicago to $9.50 a month for rural flat rate service with a limited local calling area. Cell service costs several times more than AT&T’s basic landline rates and signal quality is often challenged in rural areas. In large sections of Illinois where AT&T has elected not to bring its U-verse fiber to the neighborhood service, customers with basic voice calling and DSL broadband service could find themselves eventually disconnected and forced to switch to AT&T’s wireless residential service.

fat cat attAT&T’s Wireless Home Internet plan charges $60/month for 10GB of Internet use, $90/month for 20GB, and $120/month for 30GB. The overlimit fee is $10 per gigabyte. Telephone service is extra.

Customers will need smartphones or hotspot equipment to reach AT&T’s wireless services. Although often discounted or free for those who sign two-year contracts, credit-challenged customers will be required to pay a steep deposit or buy equipment outright.

“Smartphones are wonderful technology but they don’t come cheap and anybody who has traveled across Illinois knows they’re not always reliable,” David Kolata, executive director of Citizens Utility Board, said at a recent news conference. “Traditional home phone service is the most affordable, reliable option for millions of people and we shouldn’t take away that choice.”

The Federal Communications Commission is currently allowing AT&T to experiment with discontinuing landline service in parts of Alabama and Florida. Customers in urban areas are switched to AT&T’s U-verse service, those in rural areas are switched to cell service. Both services are unregulated. If AT&T can sell the Illinois legislature on abandoning its need to serve as a “carrier of last resort,” the company will have the unilateral right to disconnect service, set rates at will, and be under few, if any, customer service obligations.

In states where AT&T won the near-total deregulation it now seeks in Illinois, phone rates quickly soared. In California, AT&T flat rate calling shot up 115% between 2006 and 2013 — from $10.69 to $23 a month. AT&T also raised prices on calling features and other services.

In earlier trials run by Verizon, similar wireless landline replacement devices lacked support for home medical and security alarm monitoring, did not handle faxes or credit card authorizations, and often lacked precision in locating customers calling 911 in an emergency. The equipment also failed during power outages if the customer lacked battery backup equipment.

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