A California federal judge has rejected a class action case against Comcast for allegedly hiding modem fees as high as $15 a month when signing up new customers.

In 2010, Athanassios Diacakis made several calls to Comcast inquiring about cable service as a new customer. Diacakis claims several Comcast representatives offered a bundle of broadband, television and phone service for $99 a month. When he asked Comcast about any other charges, company representatives eventually admitted there was a $25 installation fee, but never mentioned any modem rental fees.

After Comcast installed service, Diacakis began receiving Comcast bills that included a previously undisclosed monthly modem fee of $10 and an extra “lease charge” of $5 a month associated with his broadband service.

Diacakis alleged in his complaint charging $15 a month for cable modem equipment was “outside and in excess of the specifically quoted bundled service” package he ordered.

As Below Your Means points out, renting a cable modem may be harmful to your wallet.

The plaintiff sought class certification to force Comcast to refund some or all the modem fees charged customers from 2007 to the present. His first effort failed in January 2012 on grounds of insufficient evidence. His amended complaint was rejected May 3 on similar grounds.

United States District Judge Saundra Armstrong ruled Diacakis failed on two separate occasions to produce convincing proof Comcast was actively deceiving customers with undisclosed modem fees.

Judge Armstrong wrote that Diacakis should have come to court with evidence beyond the spoken promises of a handful of Comcast salespeople the plaintiff identified only by their first names. She was swayed by Comcast’s arguments:

As Comcast correctly points out, the only evidence offered by Plaintiff regarding Comcast’s alleged practices consists of his limited personal experience in speaking with “Heather,” “Steve” and another unidentified Comcast representative in August 2010. There is no evidence that Comcast has employed any policy, custom or practice of intentionally failing to inform potential Triple Play subscribers that they will be subject to separate modem fees. To the contrary, the record presented thus far shows that Comcast trains and instructs its employees to inform customers and potential customers about all applicable charges, including those for leased equipment.

[...] As noted, he has made no showing that the representations or omissions during those calls were made pursuant to a standardized script or marketing practice. Indeed, there is no evidence that anyone other than Plaintiff was allegedly misinformed about the modem fees.

Armstrong also faulted Diacakis for not independently locating, scrutinizing, and verifying Comcast’s print or television advertising before he filed a lawsuit seeking to represent every customer paying them:

Comcast argues that Plaintiff is not an adequate representative because there is no evidence that he or anyone else was misled by its marketing and advertisements for the Triple Play package. Plaintiff does not dispute that he lacks such evidence. In addition, Plaintiff admitted during his deposition that he did not review any advertisements before contacting Comcast in August 2010 about bundling his services. Since Plaintiff could not have been harmed by any allegedly misleading advertising, he cannot adequately represent a class member who claims to have been harmed by Comcast’s alleged marketing program.

Other stories of interest:

1. Judge Dismisses Hidden Cable Modem Fee Lawsuit Against Comcast
2. Time Warner Cable Faces Class Action Suits in NY, NJ Over Modem Fees
3. Bright House Boosts Speeds, Prices, Cable Modem Fees
4. Supreme Court Indirectly Torpedoes Settlement Between Comcast & Philadelphia Customers
5. AT&T Overbilling Class Action Lawsuit Shut Down; Forced Into AT&T-Inspired Arbitration

Phillip “I Shop Online” Dampier

Last week, JCPenney launched their nationwide redemption tour, apologizing to millions of ex-customers that fled the former retail giant, begging them to come back.

It took over a year for JCPenney to get the message that “disciplining” and “re-educating” customers to accept the wisdom of everyday higher prices with few sales and almost no coupons was hardly the door-busting success “miracle worker” CEO Ron Johnson originally had in mind. The ex-Apple executive was rewarded a $52.7 million signing bonus to take over JCPenney’s tired leadership and in return he dragged sales down 28.4% from the year before, with same store sales down 32%. Johnson’s new vision also steamrolled one-third of JCPenney’s online business.

The day those results became known, he confidently showed Wall Street he did not dwell in the reality-based community: “I’m completely convinced that our transformation is on track!” (For Kohl’s benefit anyway.)

Johnson also believed in a “less is more” philosophy in human resources, overseeing layoffs of 13 percent of the company’s workforce last April, with another 350 let go in July.

Despite the fact his all-new, rebooted vision of JCPenney was about as popular as bird flu, he stayed, even as customers and employees didn’t.

It wasn’t that the company didn’t know customers had a problem with all this. Many complained about the radical, unwanted changes at JCPenney, particularly middle-aged professional women representing one of the stores’ most important business segments. Company executives simply didn’t listen.

A year later, some of the same analysts that cheered JCPenney’s crackdown on discounting now wonder if the company will survive 2013. Many fretted about the real possibility the last customer to brave the “new era” of JCP might forget to turn the lights out when they left for good. Others were mostly furious the board let Johnson go.

Despite the tragic consequences, the conventional wisdom on Wall Street remains: Alienating customers with a revamp nobody asked for and “everyday pricing” designed to boost profits every day was not the problem, how Johnson implemented the strategy was. He just didn’t educate customers enough.

We see the same warped thinking in the broadband marketplace, particularly with usage caps, consumption billing, junk fees and the general ever-increasing price of broadband itself.

On providers’ quarterly results conference calls, the regular questions challenging leaders of the industry are not about providers charging too much for too little. The real concern is that your ISP is leaving too much ripe fruit on the tree:

• Where is the revenue-boosting usage caps and consumption billing, Time Warner Cable?
• Comcast: can’t you raise prices further on those recent speed increases to maximize additional revenue?
• Verizon: why are you spending so much on fiber broadband upgrades customers love when that money could have gone back to shareholders?
• AT&T: Is there anything else you can do to exploit your market share and make even more money from costly data plans?

The best ways a consumer can reward a good broadband provider include remaining a loyal customer, paying your bill on time and upgrading to faster speeds as needed. For Wall Street, the growing demand for broadband is a sign there is plenty of wiggle room for at-will rate increases, new fees and surcharges, contract tricks and traps, customer service cuts, and monetizing usage wherever possible. After all, you probably won’t cancel because the other guy in town is doing the same thing.

This is what sets the broadband marketplace of today apart from most retailers: consumers don’t have 10-20 other choices to take their business to if they are fed up.

Comcast or AT&T? Both charge a lot and have usage limits on their broadband service for no good reason. Your other alternatives? A wireless provider charging even more with an even lower usage cap. Or you can always go without.

While providers may tell you there is a healthy, competitive broadband marketplace, Wall Street knows better. When Time Warner Cable recently announced it would dramatically curtail new customer promotions and concentrate on delivering fewer services for more money, nobody bothered asking whether this would result in a stampede to the competition. What competition?

Although Google is delivering much-needed, game-changing competition in a tiny handful of cities, most Americans will not benefit because the best upgrades and lowest prices are only available where Google threatens the status quo. A larger number of municipalities are done putting their broadband (and economic) future in the hands of the phone and cable company and are building their own digital infrastructure for the good of their communities.

For everyone else, we can dream that one day, someday, the cable and phone company most Americans do business with will be forced to run their own JCPenney-like apology tour for years of abusive pricing and mediocre “good enough for you” broadband with unwarranted usage limits. Time Warner Cable went half way, but until competition or oversight forces some dramatic changes, we should not count on providers to actually listen to what customers want. They don’t believe they need to listen to earn or keep your business.

Other stories of interest:

1. Time Warner Cable’s Broadband Pricing Game: Special Wall-Street-At-Home Edition
2. Craig “Data Cap” Moffett Leaves Sanford Bernstein Wall Street Firm to Start His Own
3. Wall Street Journal’s Distorted Views on Broadband Only See the Industry’s Point of View
4. Time Warner Cable Loses 15% of Their Analog Cable Customers; News on Broadband Caps, Pricing
5. Time Warner Cable Pulling Back Hard on Promotions: New Customers Will Pay More for Less

Giant telecommunications companies and their lobbyist friends are gushing their approval for President Obama’s latest pick — Tom Wheeler — to head the Federal Communications Commission. What do they know that consumers don’t?

AT&T

I’ve known Tom Wheeler for many years, and he is an inspired pick to lead the FCC.  Mr. Wheeler’s combination of high intelligence, broad experience, and in-depth knowledge of the industry may, in fact, make him one of the most qualified people ever named to run the agency.

Mr. Wheeler will face daunting challenges at the FCC.  Already the pace of technological change is clashing with outdated laws, antiquated rules, and approaches more rooted in the past than the present.  The dedicated career staff at the FCC are grappling with these challenges now.  If the pace of change is to continue, along with the investment and job creation that fuel it, the mission of the FCC in the 21st Century must be re-examined, and its rules and methods modernized.  In this situation, I can think of no nominee more talented or whose leadership skills are more needed. Moreover, Mr. Wheeler will be joining a complement of fellow commissioners who are equally formidable and well suited for this important moment in the FCC’s history.

On behalf of AT&T, I’d like to congratulate Tom Wheeler on his nomination. We look forward to working with him once he is confirmed by the Senate. I also want to congratulate Mignon Clyburn, who will take over as interim-chair of the FCC. She’s an experienced and independent policymaker, passionate about public service, who will lead the agency over the coming months with a steady hand.

– Jim Cicconi, Senior Executive Vice President

National Cable & Telecommunications Association (NCTA) — America’s largest cable industry lobbyist

We congratulate Tom Wheeler on his nomination as Chairman of the Federal Communications Commission. With his significant experience in both the private and public sector, Tom is an exceptional choice to lead the Commission during a time when the telecommunications marketplace is experiencing significant innovation and incredible change. We welcome the appointment of Mignon Clyburn as interim chairman as she is a distinguished and able public servant. We will continue working closely with the entire Commission as they tackle important issues facing America’s dynamic media, technology and telecommunications landscape.

– Michael Powell, NCTA President & CEO and Former FCC Chairman

Comcast/NBC

We congratulate Tom Wheeler on his nomination as Chairman of the Federal Communications Commission.  His vast knowledge of the communications industry, as well as his proven leadership, will be invaluable as the Commission sets its course for our nation’s digital future.  We applaud President Obama’s nomination and we look forward to working with the Commission under Tom’s leadership.

Further, we commend the President’s appointment of Mignon Clyburn as Acting Chair of the FCC.  She has distinguished herself in her service as a Commissioner over the past three and a half years, and has demonstrated that she is well-suited to lead the agency.  She works passionately and tirelessly to ensure that the best interests of all Americans are given serious consideration in each matter before her.  We congratulate Chairwoman Clyburn on her well-deserved appointment as the first female chair of the FCC and look forward to continuing to work with the FCC under her leadership.

As current FCC Chairman Genachowski departs, we wish him the best and thank him for his very successful Chairmanship that has ensured the US remains the leader in the global communications marketplace.

– Comcast CEO Brian Roberts

Telecommunications Industry Association

He has the proven ability to transcend a broad range of industry perspectives to reach balanced outcomes.

– Grant Seiffert, president

CTIA – The Wireless Association — America’s top wireless industry lobbyist

Tom has a deep understanding of communications issues, a passion for hard work and creative thinking, a diverse background that spans the realm of the Internet world and a keen understanding of how mobile wireless broadband can drive our economy and innovation.

I can attest to Tom’s commitment to harness the power of communications technology to improve people’s lives, to drive our global competitiveness, and to advance the public interest,” Genachowski said. “The FCC’s role has never been more essential, and with Tom’s deep policy expertise and his first-hand experience as a technology investor, he is a superb choice to advance the FCC’s mission of promoting innovation, investment, competition, and consumer protection.

Other stories of interest:

1. Change We Can Believe In? Cable/Wireless Industry Lobbyist Will Now Head FCC
2. FCC Commissioner Mignon Clyburn Calls North Carolina’s H.129 A “Broadband Barrier”
3. “Future FCC Chairman” Tom Wheeler’s Fruit Doesn’t Fall Far from Big Telecom’s Tree
4. Former Head of Cable Lobby Could Be Romney’s Pick for FCC Chairman
5. FCC Chairman Opens Wireless Industry Convention Mouthing AT&T Talking Points

Wheeler

President Barack Obama will shortly nominate a former top cable and wireless industry lobbyist as his choice to represent the interests of the American people at the Federal Communications Commission.

Thomas Wheeler, who has been a telecom industry insider for at least 30 years and today serves as a venture capitalist, will have enormous influence over how the FCC manages the public airwaves, broadband, and wireless spectrum.

The Wall Street Journal reports this afternoon that President Obama may make a formal announcement as early as this Wednesday, with current FCC commissioner Mignon Clyburn serving as interim chair until Wheeler is seated.

Wheeler is expected to take a more industry-friendly attitude at the FCC. As Stop the Cap! noted after reviewing several years of Wheeler’s personal blog, the future FCC chairman would have approved the merger of AT&T and T-Mobile, considers Google, Apple and other technology companies challenging telecom public policy part of a “Silicon Valley mafia,” and praised AT&T’s chief lobbyist as a visionary that could define the wireless industry’s future.

Wheeler’s regulatory philosophy offers that mergers and acquisitions present an opportunity for regulators to impose certain temporary conditions on deals, offering the best opportunity to influence a short-term regulatory outcome. But such preconditions are often mild, quickly expire, and are predictable for the companies involved. When Comcast sought merger approval for its deal with NBCUniversal, one concession was to sell discounted Internet access for poor families — a service Comcast had earlier plans to offer but withheld as a bargaining chip during merger approval talks.

Other stories of interest:

1. Verizon Appoints New Head Lobbyist for New York and Connecticut
2. “Future FCC Chairman” Tom Wheeler’s Fruit Doesn’t Fall Far from Big Telecom’s Tree
3. Our Big Fat Telecom Monopoly: “Competition is So ’90s”; Michael Copps vs. Big Telecom
4. Start the Countdown Clock on Julius Genachowski’s Departure from the FCC
5. The Industry<->Regulator Revolving Door Keeps Turning; Former FCC Boss in as Top Cable Lobbyist

Comcast says gun stores need no longer apply to purchase ad time on their cable systems.

The Lake County (Fla.) Commission is calling Comcast’s decision to no longer accept advertising from businesses that promote gun sales “discrimination,” and they are calling on the Florida legislature to pressure the cable operator to change its mind.

Local gun shops in central Florida are angry Comcast has stopped accepting their advertising and say the operator has an advertising monopoly that guarantees their ads will not be seen.

“I’ve advertised over 20 years with Comcast,” Carey Baker of Peterson’s Gun Shop told WFTV. ”My business has no other choice. I can’t advertise on any other cable company.”

Both Time Warner Cable and Comcast have ceased running advertising from gun shops after the Sandy Hook Elementary School shootings in Connecticut. Comcast said they simply adopted a pre-existing policy already in place at NBC after buying the network.

Many broadcast stations and networks also maintain restrictions on gun or ammunition-related advertising, some banning those commercials outright, others approving them on a case-by-case basis.

Some commissioners said the cable operator’s decision was just as unacceptable as not allowing a gun shop owner to eat in a local restaurant. But another commissioner dissented, claiming Comcast has the right to run its business as it pleases.

The matter of cable advertising is completely unregulated, and attempts by state or local governments to enforce ad content policies would likely be challenged in the courts by affected cable operators.

But Baker says local municipalities do retain some leverage, as they can deny the renewal of a cable franchise to those no longer seen serving the best interests of the community.

WFTV in Orlando talks with Carey Baker, owner of a local gun shop that can no longer advertise on Comcast Cable.  (2 minutes)

Other stories of interest:

1. Comcast-NBC Merger Outlook: Chances Better Than Even It’s a Go, Says Standard & Poor’s Analyst
2. FCC Commissioner Meredith Baker Approves Comcast-NBC Merger, Wins Job at Comcast
3. Jon Stewart Rips FCC Commissioner’s Move to Comcast
4. Comcast Buys Universal Orlando Theme Park: +$1 Billion Headed for Latest Acquisition
5. Comcast-NBC Deal: Hulu’s Free Online Video Days Could Be Numbered

Wheeler

Tom Wheeler has a blog.

The presumptive leading candidate for America’s next chairman of the Federal Communications Commission also has a major conflict of interest problem, with at least 30 years of working directly for the business interests of the cable and telephone companies he may soon be asked to oversee in the public interest. Wheeler is the former president of the National Cable & Telecommunications Association (NCTA) — the nation’s largest cable industry lobbying group and past CEO of the Cellular Telecommunications & Internet Association (CTIA) — the AT&T and Verizon-dominated wireless trade association. Today Wheeler serves as a managing director at Core Capital Partners, a Washington, D.C.-based venture capital firm that invests in these and other industries.

In more than 60 articles in the last six years, Wheeler has written of his trials and tribulations with federal regulators who simply refuse to see telecom industry wisdom on spectrum management, the legacy telephone network, obstinate broadcasters, outdated regulations, mergers and acquisitions, and the amazing story of private Wall Street investment and its wisdom to naturally shape America’s telecommunications landscape by “letting the marketplace work” unfettered by oversight and consumer protection laws.

Almost entirely absent in Wheeler’s writings is any interest in the plight of ordinary consumers that do business, often unhappily, with the companies Wheeler used to represent. America’s love of many-things Apple and Google, two runaway success stories heavily invested in the digital economy and well-regarded by more than a few consumers, are scorned by Wheeler as part of the “Silicon Valley mafia.”

Wheeler is the consummate Washington beltway insider, a lifelong lobbyist well-positioned to walk through the perpetually revolving door between the public and private sector. Even worse, he has maintained warm regards for not one, but two telecom industry lobbying giants — the cable and wireless industry trade associations that have daily business before the FCC. Whether Wheeler can stand up to his former best friends is open for debate. Wheeler wrote in one blog entry he remains in awe of AT&T’s chief lobbyist, Jim Ciccioni, who he called “one of the smartest and shrewdest policy mavens in the capital.”

Wheeler’s blog makes it clear he would have supported the 2011 attempted merger between AT&T and T-Mobile, with a few temporary token pre-conditions. He heaped scorn on antitrust regulators for missing an opportunity the merger approval could have had on reshaping the American wireless marketplace. Less is more in Wheeler World.

D.C.’s perpetually revolving door keeps on spinning.

Like outgoing FCC chairman Julius Genachowski, Wheeler is a longtime Obama loyalist and was involved in Obama’s 2008 election campaign.

Wheeler relays to C-SPAN’s Brian Lamb in a 2009 interview that who you know in Washington can mean a lot. After Obama entered the 2008 race, Wheeler connected to Obama through a friend — Peter Rouse, who had recently accepted the position of Obama’s chief of staff.

“I picked up the phone one day and there was a message from Barack Obama that he wanted to talk about some issues related to technology,” Wheeler described. “Things began to develop. We got really interested in the potential of this person and the opportunity that he represented for a transformational moment in American history, and we decided that Iowa was the place.”

Wheeler and his wife Carol (employed by the National Association of Broadcasters, itself a lobbying group) had the financial resources in place to put their D.C. jobs on hold and spend six weeks in the Region 2 Obama election office in Ames, Iowa.

After Obama won the election, Lamb predicted Wheeler might find himself at the FCC. Instead, Obama’s college friend and money-bundler Julius Genachowski won the position.

Wheeler’s chances of succeeding Genachowski improved dramatically in mid-April after receiving the written support of several public policy advocates. One of them was Susan Crawford, whose recent book, Captive Audience: The Telecom Industry and Monopoly in the New Guilded Age, railed against many of the policies supported by the largest telecommunications companies Wheeler professionally represented in his roles at the NCTA and CTIA. Some consumer groups wrote President Obama directly, strongly recommended a change from the ‘business as usual’ revolving door:

During his election campaign, President Obama pledged “to tell the corporate lobbyists that their days of setting the agenda in Washington are over.” Yet the president is reportedly considering a candidate for the next FCC chair who was the head of not one but two major industry lobbying groups. After decades of industry-backed chairmen, we need a strong consumer advocate and public interest representative at the helm. It’s time to end regulatory capture at the FCC and restore balance to government oversight.

Those consumer groups have plenty to worry about if Tom Wheeler becomes the next head of the FCC. Stop the Cap! has found several quotes from his blog which paint a picture of a potential FCC chairman devoted to industry interests:

Close Wireless Retail Stores to Save Money and Kill Jobs: “Sprint announced plans to close eight percent of its over 1,500 company-owned retail outlets. Why stop there? Why does it make sense for wireless carriers to operate more stores than Sears and Macy’s combined?”

Wireless network redundancy is a waste of money — an interesting sentiment in light of major wireless network failures during Hurricane Sandy and insufficient capacity during the terrorist attack on the Boston Marathon last week: “The history of the U.S. wireless industry is a network-centric history that wasted untold billions of dollars building duplicative networks and advertising ‘mine is better than yours.’”

The failed merger of AT&T and T-Mobile represented a missed opportunity in Wheeler’s view.

WiMAX is King of the World?: “Back in the mid-1990s new digital technology called Personal Communications Service (PCS) was forecast to be the death knell of the cellular industry. It seemed all anyone could talk about was the “smaller, cheaper, lighter” handsets that would perform feats beyond the capabilities of analog cellular. Now in the mid-2000s the differentiator is speed and throughput and WiMAX is the new hot technology.”

Who needs free over the air television when only 10-15 percent of the country watches?: “What is the purpose of continuing the local TV broadcasting model when between 85 and 90 percent of American homes are connected to cable or satellite services?”

AT&T and Verizon will save us from the Great Recession, except for the fact they laid off “redundant” workers: “In the midst of the first shrinking of global economic growth in almost 70 years, the wireless industry represents what must be the largest non-governmental stimulus program in the world. Wireless is an economic recovery triple play.”

Those mooching broadcasters got their spectrum for free when Verizon and AT&T had to pay real money: “The setting for these theatrics is the digital conversion for which broadcasters lobbied so hard for. Yes, they won new spectrum – which they got for free while all other were paying billions – but getting what they asked for also brought something no one ever imagined. Broadcasting ceased to be broadcasting. Going digital meant that what used to be about moving atoms is now about moving bits.”

We need to verify broadcasters use their spectrum the way we define it or we might take it away: “But threatening a shootout at the OK Corral in order to ‘hang on to every last hertz of spectrum’ is an invitation to irrelevance and proof that the spectrum needs to be assigned to parties that think digitally and see themselves as a part of the solution to the spectrum crisis. Opportunity is knocking for the broadcasters; we’ll see if anyone is at home.”

Cicconi

Reduced quality of service is worth it, even if it means shutting down wired telephone service or increasing interference for wireless users: “It is time to abandon the concept of perfection in spectrum allocation. The rules for 21st century spectrum allocation need to evolve from the avoidance of interference to interference tolerance. We’ve seen this evolution in the wired network; it’s now time to bring the chaotic efficiency of Internet Protocol to wireless spectrum policy. What the FCC’s TAC is proposing is that we officially wean ourselves from the old wireline switched circuit world to embrace the reality of IP and its benefits. It’s time to start down the same road with spectrum allocation.“

Did you know your mobile bill is lower than ever and sending data wirelessly costs next to nothing? How much is your limited data plan costing you again?: “As wireless rates have plunged for both voice and data such regulation has less impact than it did in the wireline era anyway. When each connection required an analog circuit, the cost of such a connection, and the return on that investment was a more logical nexus than today’s digital networks where the incremental cost of a packet of information approaches zero.”

AT&T’s propaganda supporting its attempted merger with T-Mobile was brilliant. Those pesky consumer groups and their meddling, truth-telling agenda ruined everything. When Americans think of rural wireless broadband, the first company that comes to mind is T-Mobile, right?: “The most important times in any merger approval process are the first two weeks when the acquiring company gets to define the discussion and the last four weeks when the concerns raised by others and the analysis by the government congeals to define the issues to be negotiated in the final outcome. AT&T shot out of the blocks brilliantly, framing their action in terms of the spectrum shortage and President Obama’s desire to provide wireless broadband to rural areas. Over the coming months those who were caught by surprise, as well as those who would use the review process to gain their own advantages, will have organized to present their messages.”

Wheeler sends a Hallmark card to AT&T’s most powerful lobbyist: “AT&T’s recent negotiations with the FCC on the Net Neutrality/Open Internet issue provide an insight into how the company deals with such a complex issue. Jim Cicconi, AT&T’s Senior Executive Vice President, is one of the smartest and shrewdest policy mavens in the capital.”

What do they know about it?

AT&T’s Jim Cicconi is the go-to-guy for determining future wireless policy, not the FCC: “Randall Stephenson may be channeling Theodore Vail, but Jim Cicconi sits astride a process that could determine the future of wireless policy, first for AT&T and then by extension for everyone else. Quite possibly the result of this merger decision will be far wider than the merger itself. At the end of the day we may be talking about a new era of wireless policy based on the Cicconi Commitment.”

The Justice Department just proved it does not understand regulatory concepts governing relentless corporate telecom mergers because it decided Americans should have at least four wireless companies to choose from, not three: “Thus, the long-term impact of the Justice Department’s decision would appear to be the growing irrelevance of traditional telecommunications regulatory concepts on mobile broadband providers.”

Wheeler lacks the realization wireless providers are moving to usage pricing for fun and profit, not because of spectrum shortages: “Having walked away from taking the easy money, will the Congress remain as committed as they were to selling spectrum? What will be the light at the end of the tunnel for wireless carriers who see their spectrum capacity being consumed by huge increases in demand? Will the resulting shortage mean that usage based mobile pricing becomes a demand dampening and profit increasing tool?“

We don’t need free over the air television. Just tell free viewers to subscribe to cable like everyone else: “I’ve been mystified why broadcasters have declared jihad against the voluntary spectrum auction. Getting big dollars for an asset for which you paid nothing while still being able to run your traditional business over cable (the vast majority of its reach anyway) and maintain a broadcast signal at another point on the dial seems a pretty good business proposition – unless you really are serious about providing new and innovative services and need all that spectrum.”

You don’t deserve free Internet access either, because it hurts the corporate business plans of other providers: “Competition among networks for customers has put the consumer in the enviable position of being told they won’t have to pay for access to Internet services. “Free It,” the advertisements of British network operator “3″ proclaim to promote their unlimited data plan, for instance. The policies that created wireless network competition have trapped operators between holding market share and giving away capacity for ever-increasing data demands. So long as there is one carrier willing to offer its capacity at a low price (or for free), the other carriers must play along thus bringing those who run networks to loggerheads with those who use the networks.”

(Image courtesy: FCC.com)

Google and Apple are privacy invaders that collect your personal data as part of a great Silicon Valley mafia: “If wireless carriers are truly going to become “operators” participating in the broader ecosystem their focus needs to shift from running networks to managing the information created by the 21^st Century’s digital networks. The Silicon Valley mafia hijacked that information, but they could quite possibly be in the process of blowing their escape with the goods by exposing what they were really up to.”

We need a “voluntary” auction of the public airwaves with a subjective standard for what represents their “best use” (ie. the way the wireless industry defines it): “For almost four decades I have listened to businesspeople tell government policy makers to “let the marketplace work.” There is no more effective marketplace than a voluntary auction where everyone is free to decide whether to sell, how much to sell, and at what price to sell. The marketplace for wireless spectrum has spoken through its explosion; now it’s time for the marketplace to be able to decide the best use of spectrum. There is no doubt that some broadcasters will opt to use their spectrum in innovative ways [my firm, Core Capital Partners, has invested in such a belief]. Bully for the broadcast entrepreneurs! The FCC should be encouraging and rewarding of entrepreneurial initiative. Just as clearly, however, some broadcasters will choose other options. It is essential that we get on with offering that option quickly so we can nip the spectrum crunch in the bud, spur innovation, stimulate investment, create jobs, and continue American leadership in wireless services.”

Coming Clean: Wheeler ran astroturf operations that pretended to represent the interests of consumers but actually were little more than corporate sock-puppetry: “In the early days of cable television a cabal of Hollywood and broadcast interests combined to convince the Federal government to deny cable its competitive advantage of more channel choices for consumers. Corporate lobbyists told Congressmen and Senators how cable would mean the end of “free TV” unless it was stopped or controlled. Then these same groups recruited real people – the so-called “grassroots” – to back up their claims. Such lobbyist-organized grassroots efforts were the Standard Operating Procedure (SOP) of political organizing – I know because I used to do it.”

The alliance between Verizon and a cabal of cable companies selling each others’ products is pro-competition: “A TV subscription service like the one Apple is proposing is the heart of what cable is all about. And whatever Google is doing, they aren’t in every TV just for the heck of it. The Mongols of Silicon Valley have been behaving just like their 13^th and 14^th century predecessors. Using new technology to their advantage, the Mongols of the Middle Ages sent invasions in every direction. Soon they had the largest contiguous empire the world has ever seen.  Sound familiar? It may be a case of “my enemy’s enemy is my friend,” but a cable-wireless alliance is an exceedingly logical response to the impending attack. Cable operators have program distribution rights (or leveraged access to them) and Verizon has the high-speed wireless network to deliver to the growing number of mobile devices. Both these players can help each other confront the coming onslaught.”

Other stories of interest:

1. FCC Chairman Julius Genachowski’s Roadshow: Now He’ll Headline the Cable Industry’s Big Splash
2. FCC Chairman Mouths Telecom Industry Talking Points on Usage Pricing, “Innovation”
3. FCC Chairman Opens Wireless Industry Convention Mouthing AT&T Talking Points
4. The Wall Street Journal’s Revisionist History: AT&T Isn’t the Problem, the Government Is?
5. The Fat Lady Sings: What Happens Next Now That AT&T-Mobile Merger Deal is Dead

Aereo plans to expand to nearly two dozen cities in the coming year.

Viewers of NBC’s Nightly News with Brian Williams learned an upstart online streaming video competitor seeking to help Americans control their cable bills is probably an illegal pirate operation that doesn’t pay for the programming that parent company Comcast-NBC pays hundreds of millions to produce.

On Tuesday Aereo bypassed the network television gatekeepers suing to shut the service down and bought a full-page ad in the New York Times to remind the country it is winning its case in court:

In addition to free spectrum and advertising revenues, the networks got very lucrative retransmission fees from these providers. And so, for many, broadcast television is now offered in expensive fixed bundles or packages. Yet many millions of Americans continue to use antennas to get broadcast TV.”

Despite the corporate media firewall that keeps positive reports about the competition off the nightly news, the little streaming company that could is having an impact.

In the last two weeks, virtual hysteria has broken out among major network officials who are threatening to pull the plug on free over the air TV if their multi-billion dollar operations are not granted immediate protection from a startup that rents out dime-sized antennas in New York City to stream local television stations.

Chase Carey from Fox said he’ll put the Fox Network behind a pay wall if Aereo keeps it up.

Leo Hindery who oversees a private equity firm and has a history with both cable and broadcast networks called Aereo tawdry and a “pissant little company” run by a man who helped launch the Fox Network and now threatens to ruin the broadcast television business model for everyone else. (Bloomberg News) (5 minutes)

Is media consolidation influencing the evening news?

A combination of networks and other big media interests are now preparing to take their battle to Congress, warning lawmakers the very concept of free over the air television is in peril if companies like Aereo are allowed to operate.

Why are they so threatened? Aereo effectively bypasses the “retransmission consent fees” that broadcasters now charge pay television providers for permission to carry their channels and networks. As advertising revenue declines from reduced viewing numbers and equipment that offers viewers a fast forward through ads, the broadcasters have found gold charging monthly fees to cable, satellite, and telephone company TV systems for each subscriber. Ultimately, consumers pay these fees through higher cable and satellite bills.

Aereo receives over the air signals from individual antennas and makes that programming available for online streaming. No retransmission consent fees are required, Aereo argues, because they are just serving as an antenna farm. Only one stream per antenna is allowed, they note, so the company is not mass-distributing programming.

The battle between broadcasters and Aereo is now turning up in news reports that have tried to walk a fine line between the positions of the executives at the networks suing Aereo and the streaming service itself. Not every news outlet is managing the balancing act successfully.

NBC News aired this incomplete report about Aereo on its evening newscast on April 9th. What is missing? The fact courts have so far sided with Aereo and against the broadcasters’ claims the service is pirating content.  (3 minutes)

The Verge points out NBC News did not make it far before they fell solidly in line behind their corporate owners:

In its piece on Aereo, NBC News included a lengthy explanation of what TV has meant to Americans through the decades. Aereo’s CEO Chet Kanojia is quoted, but only about how the service functions, and there’s nothing from him about the controversy. In contrast, NBC’s story includes a quote from Carey calling Aereo “piracy.” The network news group also tossed in this line: “Aereo doesn’t pay networks for the content they spend hundreds of millions of dollars to produce.”

What NBC didn’t say was that, according to two separate federal courts, Aereo’s service is legal. The ruling by the appeals court upheld a district judge’s decision and was not insignificant. The court allowed Aereo and Kanojia (photographed at right) to continue operating until the lawsuit with the broadcasters is resolved, which could take years. “We were disappointed that NBC News didn’t include a mention about the court decisions,” Virginia Lam, an Aereo spokesperson, told The Verge. “All we ask are that the facts be reported.”

A spokesperson for NBC News disagreed. “The report was a fair and straightforward telling of how the service operates in the changing media environment. It fully explained why Aereo argues that the service is legal, and included an interview with Kanojia. In the interest of full disclosure, it also noted that NBCUniversal, the parent company of NBC News, has filed suit against the service.”

 http://www.phillipdampier.com/video/Bloomberg Broadcasters vs Aereo 4-15-13.flv

Robert Prather, president of local station owner Gray Television, tells Bloomberg News station owners are still trying to figure out what Aereo means for their business models. (3 minutes)

http://www.phillipdampier.com/video/Bloomberg Aereo CEO Responds to Fox Threats 4-17-13.flv

Aereo’s CEO responded today to threats from Fox to turn its network into a pay cable service, suggesting that if Fox wanted to abandon over the air service, someone else might make use of that spectrum.  (3 minutes)

Other stories of interest:

1. HissyFitWatch: Fox TV Threatens Nuclear Option: “Subscription TV” if Aereo Decision Stands
2. Second TV Network Threatening to Sign Off Free Airwaves if Aereo Lives
3. Broadcasters Run to the Courts to Stop Disruptive Video Streaming; Aereo’s Legality
4. Must Fee TV: Broadcaster Consent Fees Will Turn ‘Free TV’ Into ‘Fee TV’ For Cable Subscribers
5. Attack on Your ‘Fast Forward’ Button by Copyright ‘Enforcers’

To many, Provo, Utah might seem an unusual choice to follow on the heels of Google’s earlier announcement its gigabit fiber network was headed to Austin, Tex.

Provo is only the third largest community in Utah — Salt Lake City and West Valley City are bigger — and the community already has a fiber network called iProvo. So why build another one?

Google won’t have to.

But first some background:

iProvo was envisioned a decade ago as a public-private partnership — a fiber to the home network owned by the public with private service providers using it to sell broadband and other services . iProvo taught an early lesson about municipal broadband — large cable and phone companies routinely boycott participation in any network they do not own and control themselves.

In 2003, the president of Qwest’s Utah division made clear their intentions: “Fiber optic’s capabilities are way more than what most consumers need in their homes. Why provide a Rolls Royce when a Chevrolet will do?”

Comcast, the dominant local cable operator, also “went ballistic” according to former mayor Lewis Billings.

iProvo can be yours for just $1.

“One hired a PR firm and a telemarketing company to make calls to citizens,” Billings recalled. “They also placed full-page ads and ultimately hired people to picket City Hall. It was a bruising fight.  My favorite picket sign had a piece of telephone wire taped to it and read that I and one of my key staff members were, ‘a Twisted Pair.’”

With both Qwest and Comcast wanting nothing to do with the project, smaller independent ISPs had to fill the gap. It was a difficult sell, particularly because Qwest and Comcast blanketed Provo residents with a misinformation campaign about the network and pitched highly aggressive retention offers to keep customers with the phone and cable company. iProvo has been in financial distress ever since.

Former Provo city councilwoman Cynthia Dayton remembers being on the council when iProvo was approved and believes the public-private network was a decade before its time.

“Ten years ago it was worth the vote on iProvo,” she told the Daily Herald. It was one of the most difficult decisions but it was for the future.”

More than a year ago, Google noticed the city of Provo issued a request for proposals on what to ultimately do with iProvo.

Google became interested because Provo is seen as a city with hundreds of technology start-up companies and maintains a vibrant tech hub. The city also ranked highly for the enormous value it places on connectivity and community — something the approval and construction of iProvo demonstrated.

Why Provo? Google considers the city’s rankings. (1 minute)

City officials and Google executives began quietly talking more than a year ago about Google buying the public-private network. A key selling point: the city was willing to let the operation go for a steal — just $1.00. In return, Google promised to invest in and upgrade the network to reach the two-thirds of Provo homes it does not reach. Google says iProvo will need technology upgrades in the office, but the existing fiber strands already running throughout the city are service-ready today.

Val Hale, President of the Utah Valley Chamber of Commerce, said a quick “back of the envelope” estimate put Google’s anticipated investment in iProvo network upgrades at $18 million, according to the Deseret News. Unfortunately, taxpayers will still need to pay off about $40 million in bonds the city accumulated for iProvo’s initial construction costs.

Curtis

Current Mayor John Curtis says he has made the best out of a difficult situation.

“We have maximized what we have here today,” said Curtis. “It’s about maximizing what we have. I believe in the long-term it will pay dividends many times greater than what we paid into it, but it’s going to take a while to realize that dream.”

Google promised free gigabit Internet service to 25 local public institutions including schools, hospitals, and libraries. Residential customers will be expected to pay $70 a month for 1,000Mbps service or get 5Mbps broadband service for free up to seven years.

Google’s investment in Provo is anticipated to be far lower than in Austin and Kansas City — cities where it needs to build a considerable amount of fiber infrastructure from scratch. With existing fiber already in place in Provo, Google’s gigabit service will be available by the end of this year, at least six months faster than in Austin.

With reduced construction costs, Google will only ask new customers for a $30 activation fee, far less than the $300 Google will ask Austin and Kansas City residents to pay if they do not sign a multi-year service contract or only want basic 5Mbps service.

Google sees the opportunity to use its fiber network in an ongoing effort to embarrass other broadband providers into investing in speed upgrades.

KSL in Salt Lake City reports Google Fiber is coming to Provo. Last year Google began talking with the city to acquire its iProvo municipal fiber network.  (3 minutes)

KSTU in Salt Lake City reports taxpayers are still on the hook for around $40 million in bond payments to cover the construction costs of iProvo. But Google Fiber will stop other Internet providers from “cheating everyone” says one local Provo resident.  ”[Other ISPs] give you the slowest connection possible and charge you a ridiculous amount for it,” said Haley Cano. (4 minutes)

http://www.phillipdampier.com/video/KTVX Salt Lake City Google Fiber in Provo 4-17-13.mp4

KTVX in Salt Lake had some trouble navigating the difference between a gigabit and a gigabyte, and confused what Google services will be sold and which will be available for free in this report, but the ABC affiliate covered the unveiling with both city and Google company officials on hand.  (2 minutes)

http://www.phillipdampier.com/video/KTVX Salt Lake City Google Fiber Details in Provo 4-18-13.mp4

This morning, KTVX did a better job in this interview with the mayor of Provo and Google’s Matt Dunne, who says Google believes speed matters and current ISPs simply don’t offer enough.  A key factor to attract Google’s interest is a close working relationship with the cities that want the service. (2 minutes)

Other stories of interest:

1. Breaking News: Provo, Utah the Next City Slated for Gigabit Google Fiber
2. Back to Kansas City: Google Fiber Now Going in the Ground; TV Service Also Announced
3. Google Fiber Announces Next Gigabit Fiber City: Olathe, Kansas
4. Austin Media Gushing for Google Fiber
5. AT&T Diverts Salt Lake City 911 Calls to Seattle

Provo, Utah will be the third city in the country to get Google’s gigabit fiber network, in part because fiber infrastructure installed by a defunct provider that ran into money problems is now likely available for Google’s use.

The announcement came from Provo Mayor John Curtis this afternoon.

The choice of Provo was a surprise even to area residents, who speculated the “epic announcement” promised by Provo’s deputy mayor Corey Norman involved the opening of a new Popeye’s Chicken location or a second Red Lobster headed to town. Instead, it is only 1,000/1,000Mbps broadband for a likely price of $70 a month.

Provo’s existing fiber infrastructure, now owned by the local government, was likely a major reason in selecting the city of 115,000 for a Google-style upgrade.

The announcement came a little over a week after Google announced Austin, Tex. as the second stop for Google’s fiber upgrade. The surprise announcement may create waves in the telecom industry that earlier assumed Google was only interested in developing a demonstration project in Kansas City. It is now likely Google has bigger plans than that.

Communities that own, control, or manage their own fiber networks — institutional or available to the public — may be the next to be courted by Google.

Google will face off against Comcast Cable and CenturyLink (formerly Qwest) in the city.

KTVX in Salt Lake City reports Provo is getting ready for “an epic announcement.” It turns out Google’s gigabit fiber network is coming to the city of 115,000.  (2 minutes)

Other stories of interest:

1. Google Fiber Announces Next Gigabit Fiber City: Olathe, Kansas
2. Austin Media Gushing for Google Fiber
3. Back to Kansas City: Google Fiber Now Going in the Ground; TV Service Also Announced
4. Salt Lake City TV Station Puts Broadband Speeds to the Test: Most Don’t Get What They Pay For
5. Abdicating Journalism: Salt Lake City ABC Station Can’t Stop Gushing About Comcast

Comcast: Get a box or lose your cable TV service

Comcast will encrypt the entire lineup of its cable television service, including local channels, starting with two markets in New England and gradually rolling out this summer across all of Comcast’s service areas.

The encryption will obsolete cable reception of QAM signals, which some cable customers use to avoid paying for set-top equipment.

Comcast called FCC approval of its encryption request a victory for consumers because it will “allow us to automate certain system functions and will reduce the need for scheduled in-home appointments, providing greater convenience for our customers.” Comcast also candidly said it will dramatically reduce signal theft and unauthorized viewing by past due customers, which can now be shut off from the cable office instead of dispatching technicians to the home to disconnect service.

Consumer and Comcast customer Brier Dudley begs to differ. In two columns in the Seattle Times, Dudley writes Comcast is tightening the screws on its customers, forcing them to get unwanted equipment that will eventually cost them monthly rental fees set “at market rates.”

Comcast began requiring digital adapters to unscramble digital signals in 2009. Since then, it steadily has been converting more of its system to digital, scrambling more channels and expanding the requirement to use some kind of a cable box or adapter on every TV.

This requirement received the FCC’s blessing last year. The agency agreed to let cable companies scramble all of their channels and require descramblers on every set.

The FCC’s justification was muddled. Scrambling would purportedly prevent stealing content, though the FCC requires conventional television broadcasters to beam their shows freely over the air.

The FCC also made a tortured environmental argument for the move, saying the mandatory adapters allowed cable companies to remotely activate and deactivate service, reducing service calls and their carbon footprint.

Unmentioned is the environmental effect of factories in China making adapters that must be delivered, attached to every TV and continuously plugged in.

Comcast is attempting to mitigate customer anger about the necessary new equipment, offering free boxes for a limited time. But customers might need a road map to find what they qualify for without having to pay an even higher cable bill:

Limited Basic customers with no set top boxes in their homes will be eligible for up to two DTAs (standard definition digital signal adapters), at no charge for two years (five years if you also receive Medicaid), if they request DTAs beginning 30 days before the date of encryption and no longer than 120 days after encryption. New customers, customers who already have DTA devices or those who request them after the offer period will likely be subject to rental fees much sooner, if not immediately;

Customers who subscribe to a higher level of service and receive Limited Basic service on a secondary TV without Comcast supplied equipment are eligible for one device at no charge for one year;

All other customers are subject to Comcast’s new $1.99 per month “additional outlet service charge” for each outlet registered to a DTA. In Seattle, customers who want to watch local channels in HD have to fork over another $2.50 a month for a special HD version of Comcast’s DTA box.

What if you don’t want the extra equipment and return it? Comcast will automatically cancel your cable TV service.

“Customers who do not have digital equipment on their account will not be able to view any channels after Limited Basic channels are encrypted. For this reason, XFINITY TV service will be removed from the account,” warns Comcast. “This may affect multi-product package rates or discounts.”

The encryption will also cripple third-party set-top devices like older versions of Boxee (not compatible with Comcast’s DTA) and TiVo, which will now need a mind-numbing, complicated workaround to keep operating.

Comcast customers will receive written notification as the company gets ready to encrypt service in each area.

Other stories of interest:

1. Comcast Adds $1.99/Mo Fee for Digital Transport Adapters (DTA) That Let Subs Watch Digital TV
2. Comcast Calls $1.99 Charge for Digital Adapters a “Service Fee” to Avoid FCC Complications
3. Comcast’s “All-Digital Migration” Hits Denver – Analog Customers Will Need Digital Boxes Or Face Loss of Channels
4. FCC Allows Cable Companies to Encrypt Entire TV Lineup; Set-Top Boxes for Everyone
5. Prince William County, Va. Residents Furious After Comcast Strips All But 17 Analog Channels Off Cable