We are getting the message out about what will occur Wednesday here in North Carolina and you all are doing a great job writing and calling legislators to let them know not to support a Moratorium on Municipal Broadband Deployment.  But, we need to show up with an army of folks this Wednesday morning to show them we are involved and watching their every move.

Please try to be at the Legislative Office Building, Room 544, 300 North Salisbury Street in Raleigh this Wednesday at 9:30am.

In the original action alert we told you what was at stake.  I wanted to add some information I did not have at the time that makes this all the more interesting.

First, Sen. Daniel Clodfelter (D-Mecklenburg County), who is a co-chair of the Committee is pushing this moratorium because, we are told, he believes that municipal broadband hurts the private sector and will negatively impact state tax revenue.

This is false.

For one, as far as we can tell, a corporation’s tax payments to the state are not a part of the public record, so exactly how Clodfelter does the math escapes us.

What is known is that broadband is a job stimulator, and considering North Carolina’s current broadband ranking is 41st out of 50 states, there is nowhere to go but up.  When businesses consider opening offices or facilities in a state, broadband can be an important deciding factor.  When companies like Time Warner Cable refuse to upgrade their broadband service, few digital businesses are going to consider making North Carolina their new home.

Clodfelter has enjoyed some non-broadband-related growth in his district — namely the brand spanking new $29 million Time Warner Cable headquarters office just constructed in Charlotte, Mecklenburg County.  Ironically, the same company that doesn’t want public dollars going to their potential competitors has no problem taking dollars themselves — the expansion in Charlotte was made possible in part by a Job Development Investment Grant from the State of North Carolina.  Job growth for Time Warner Cable?  Sure.  Job growth for companies that want better broadband?  Not so much.

Time Warner Cable's new $29 million dollar complex in Charlotte was made possible in part by a Job Development Investment Grant from the state government.

Next, Committee member Rep. Pryor Gibson (D-Anson, Union Counties) is, as we pointed out in the last action alert, a Time Warner Cable Contractor — and that was an understatement.  We made a Freedom of Information Act request to obtain additional information about Rep. Gibson’s interests outside his legislative duties.  According to his 2008 Statement of Economic Interest, under Job Title/Employer, Gibson prioritizes:

1. Manager, Time Warner Cable Construction
2. Legislator, NC General Assembly
3. self-employed, builder.

Gibson lists his job titles starting with "Time Warner Cable Contractor" in this Statement of Economic Interest obtained through a Freedom of Information Request (click to see the entire document - PDF)

Yes, he lists his Time Warner Cable job before legislator.  I guess we know whose interests he represents first.

Today, I am filing a complaint with the North Carolina Ethics Commission requesting that Gibson be forced to recuse himself from conversations about cable/telecommunications and that he abstain from any votes on these matters as a direct conflict of interest.  I also have a call into Speaker Joe Hackney’s office to request that he inquire about this issue as well.

It has been two months since the groundswell of support for Google’s Fiber Optic “Think Big With a Gig” Project became the issue for some 1,100 communities across our country, all jockeying to win the search engine giant’s favor.  We need to understand what this proposed moratorium really means for the state of North Carolina.

There was no shortage of applicants in this state, all clamoring for economic boosting, job growing, innovative super fast broadband.  Greensboro, Asheville, Durham and Wilmington were all represented, fully backed by local government officials.  What do 1,100 communities know that Clodfelter doesn’t?  That high speed broadband is America’s next great game-changing infrastructure project, as important as the canal system, railroads, highways, and airports were to past generations.  It’s no surprise those with vested interests in keeping things exactly as they are would fight to stop such projects.  But our legislators should not be enabling them.

What does it mean to Google, when sifting through the thousand plus applications, to find North Carolina’s legislature throwing up hostile opposition to expansive broadband projects?  Google is not going to get into the Internet Service Provider business.  Sooner or later, Google could easily turn such demonstration projects over to a local municipality once the search engine’s public policy agenda is fulfilled.  If this moratorium passes, they can’t do that.  But nothing prohibits them from selling it off to an incumbent provider like Time Warner Cable or CenturyLink.  Both would be more than happy to accept it I’m sure, all while maintaining today’s current high prices made possible from the ongoing broadband duopoly. Then again, seeing how North Carolina seeks to clamp down on broadband innovation, Google may just decide to look elsewhere.

Keep up the good work fighting for better broadband.  Continue writing and calling legislators on the issue and please be there Wednesday to let them know we are watching and that we will hold them to a higher standard then some of them hold themselves.  Be sure to report back what you are hearing in response, and please thank and support those that choose to reject this legislation.

Here again is the information for the membership of The Joint Revenue Laws Study Committee, so get on the phones and write those e-mails!:

(Please send individual messages to members, even if the contents are essentially the same — avoid simply CC’ing a single message to every representative.)

• Sen. Daniel Gray Clodfelter (Co-Chair) Mecklenberg [email protected] (919) 715-8331 Democrat (704) 331-1041 Attorney
• Sen. Daniel T. Blue, Jr. Wake [email protected] (919) 733-5752 Democrat (919) 833-1931 Attorney
• Sen. Peter Samuel Brunstetter Forsyth [email protected] (919) 733-7850 Republican (336) 747-6604 Attorney
• Sen. Fletcher Lee Hartsell, Jr. Cabarrus, Iredell [email protected] (919) 733-7223 Republican (704) 786-5161 Attorney
• Sen. David W. Hoyle Gaston [email protected] (919) 733-5734 Democrat (704) 867-0822 Real Estate Developer/Investor
• Sen. Samuel Clark Jenkins Edgecomb, Martin, Pitt [email protected] (919) 715-3040 Democrat (252) 823-7029 W.S. Clark Farms
• Sen. Josh Stein Wake [email protected] (919)715-6400 Democrat (919)715-6400 Lawyer
• Sen. Jerry W. Tillman Montgomery, Randolph [email protected] (919) 733-5870 Republican (336) 431-5325 Ret’d school teacher
• Rep. Paul Luebke (Co-Chair) Durham [email protected] 919-733-7663 Democrat 919-286-0269 College Teacher
• Rep. Harold J. Brubaker Randolph [email protected] 919-715-4946 Republican 336-629-5128 Real Estate Appraiser
• Rep. Becky Carney Mecklenberg [email protected] 919-733-5827 Democrat 919-733-5827 Homemaker
• Rep. Pryor Allan Gibson, III Anson, Union [email protected] 919-715-3007 Democrat 704-694-5957 Builder/TWC contractor
• Rep. Dewey Lewis Hill Brunswick, Columbus [email protected] 919-733-5830 Democrat 910-642-6044 Business Exec (Navy)
• Rep. Julia Craven Howard Davie, Iredell [email protected] 919-733-5904 Republican 336-751-3538 Appraiser, Realtor
• Rep. Daniel Francis McComas New Hanover [email protected] 919-733-5786 Republican 910-343-8372 Business Executive
• Rep. William C. McGee Forsyth [email protected] 919-733-5747 Republican 336-766-4481 Retired (Army)
• Rep. William L. Wainwright Craven, Lenoir [email protected] 919-733-5995 Democrat 252-447-7379 Presiding Elder
• Rep. Jennifer Weiss Wake [email protected] 919-715-3010 Democrat 919-715-3010 Lawyer-Mom

I receive a considerable amount of e-mail asking me a variety of questions about myself, this site, who backs it, and why we do things the way we do, so it’s time to launch a mailbag column here on Stop the Cap! to answer the mail, especially for those who may have similar questions along the way!

For this first round, I’ve left out the names.  I’ll be changing our Contact form shortly to allow readers to submit future questions here and specify if they want their names used or not during the answers.

Phillip "Where Is My August Vacation?" Dampier

Q. What companies, industries, or groups finance Stop the Cap! and its online efforts?

A. Stop the Cap! receives absolutely zero dollars from any company, industry, group, lobbyist, special interest, foundation, or anything even resembling one.  This website is 100% financed by myself and through individual contributions received from consumers who use the Donate button on the right.  We’re as far away from astroturf one can get.  Plastic grass is not for us.  There are groups out there that share the same consumer protection interests, and those groups will get mentioned here, but I am personally suspicious of any group that receives industry financing.

This site would not exist if Internet Service Providers had not started to abuse their market positions with Internet Overcharging experiments and schemes designed to limit consumers from using what is already a highly profitable service.  Usage caps, overlimit fees and penalties, and Net Neutrality violations like speed throttling are all anti-consumer, designed to reduce industry costs and discourage you from using your broadband service, all while still charging you more.

Q. I have read a few of your articles on Free Press’ Save the Internet website.  What relationship do you have with Free Press?

A. We are allies in the sense that their positions on issues have uniformly agreed with our own.  Great minds think alike, and their consistent pro-consumer positions on telecommunications issues make them a natural ally, particularly considering the higher profile they have, especially in Washington.  Despite attacks from some conservatives and astroturfers, Free Press does not accept industry money either, and is supported with the individual contributions of those who believe in their cause.  Free Press’ scope is also much broader than ours, taking positions on a wider range of issues.  The reprinting of some of our content helps us bring our own issues to the much larger base of consumer activists Free Press has, which has been instrumental in our Calls to Action when we need to reach out to elected officials or other policymakers.

We also have supported the efforts of Consumers Union, Public Knowledge, the Communications Workers of America, and several other public policy groups, but only on the issues where we share agreement.

Q. What is your usual schedule for publishing articles?

A. It has evolved over time, and depends mostly on how much newsworthy material is out there.  During the month of April, when Time Warner Cable was engaged in their Internet Overcharging experiment, articles were published here on a fast and furious basis because of rapid-changing developments.  August is always the slowest month of the year, as people enjoy the vacation time I don’t get.  This month, for example, we’ve broadened coverage to include competition and astroturfing reports that are not directly about Internet Overcharging, but will help us lay a foundation to help fight anti-consumer activities.  States are still being pressured to adopt industry-friendly legislation like statewide franchising.  It helps to point elected officials to concrete reports of just how anti-consumer those kinds of policies have proven to be in other states.

Articles are often not published on Friday and weekends because Friday is traditionally an errand-running day for me, and during the slower summer months, very little happens on weekends.  But if coverage warrants, you may find new content here published late into the evening and all weekend long.

In the morning, story coverage is planned for that day.  Readers’ story tips always get first consideration.  Most days there is a longer article that takes several hours to research and prepare, and at least one or two shorter items.  The average long article takes three to four hours to research, write, review, and publish.  Articles with multimedia content can take much longer.  Shorter articles typically take no more than one hour.  Most articles are published between 12pm-4pm ET.

Articles from our contributing writers will often turn up in the evening hours.  We are always looking for additional writers here.

Q. Why does Stop the Cap! cover Canada and other countries?

A. Internet Overcharging is Internet Overcharging no matter where it takes place.  Our Canadian coverage is extremely important because it illustrates how abusive industry practices can impact broadband service close to home.  Canada is illustrative of what can happen when an industry gets its way with a regulatory authority, which nearly rubber stamps whatever the industry wants to do to their customers.  The fact most Canadians are quite aware of how bad the abusive practices are is also informative to our readers who will get an industry “snowjob” Re-education effort sooner or later to try and convince them these abusive practices are just fine, because they are commonplace (inference: accepted) in other countries around the world, so they should be acceptable here.

Not. A. Chance.

Even in Australia and New Zealand, usage caps are discussed now as temporary necessities based on fiber backbone connectivity shortages, not as long term “solutions” to usage issues.

But most important of all, we have readers in all of these places, and this site’s universal opposition to Internet Overcharging schemes, and the fight to prevent/reverse them, should be a resource for any reader, no matter where they reside.

Q. Sometimes I am confused by some of the jargon on Stop the Cap! about things like “overbuilders” or “throttles,” etc.  What do these things mean?

A. I have covered the cable and satellite television industry since the late 1980s, so I have become comfortable using a lot of the common language other people in this industry use in everyday speech.  I try and avoid being a regular “jargon” offender, but sometimes these terms will slip through.  I am planning a small FAQ on some of the most commonly used industry phrases in the future.  Suffice to say, you can use Google most of the time to find the meaning of most of the industryspeak while waiting for me to write up a cheat sheet.

An “overbuilder” is a competing cable or telephone provider that invades another company’s turf and places their wiring next to the incumbent provider.  The term usually refers to a competitor using the same type of technology (ie. a second cable company or second phone company), but it doesn’t always get used that way.  It is rare to find an overbuilder in all but the largest cities.  Most communities obtain telecommunications services from one cable company, one phone company, and/or wireless phone/mobile phone providers.

A “throttle” refers, for our purposes, to an Internet provider that wants to reduce traffic on their broadband network.  The operator artificially slows down (or ‘throttles’) the speeds of certain online applications one can identify traveling across the network.  In most cases, this means “peer to peer” services like BitTorrent.  Since these applications can sometimes consume a lot of bandwidth in both directions, some providers want to slow them down so they don’t consume a lot of network resources.

Q. Do your write on any other issues?

A. My personal blog, linked on the right, often covers the cable television industry issues that are not specific to broadband, as well as technology, politics, and personal observations.  ConsumerTel focuses on phone company-specific issues.  Both sites are not updated as often as this one, currently because I am waiting for a major software update from the author of our “theme” (the look and feel and layout) which will test on those sites before launching here, and will require me to rethink some of the layout and format of all of these sites.

Q. What future plans do you have for this site?

A. I am working my way back through older content re-doing a lot of “tags” on our older articles so I can reintroduce a “Related Articles” feature that will highlight some of our earlier content that is related to a topic covered more recently.  For that to work well, tags must be more comprehensive.  I also see our multimedia content here is very popular, and I spend a lot of time locating and embedding that content for our readers.  Our embedded players do not always work well for every browser, so work finding better solutions is also underway.  E-Mail notification of new content is an often requested feature, and one currently being explored.  Adjustments to our theme have already been mentioned, and will also be forthcoming.

But overall, the future of Stop the Cap! depends on what the broadband industry does.  If they abandon Internet Overcharging schemes, stop opposing Net Neutrality, and quit abusing consumers, this site closes down and I get to do something else.  Somehow, I doubt we’ll manage to get all three of these goals.  Our future depends mostly on their behavior in the coming months.

The NoChokePoints Coalition has a point.  They are a coalition of public interest groups and providers like British Telecom and Sprint-Nextel that are upset with monopolistic pricing for high speed broadband lines.  Verizon and AT&T “control the broadband lines of almost every business in the United States” the coalition states, and “generates a profit margin of more than 100% for the controlling phone companies.”

“Releasing the broadband economy from the chokehold these huge phone companies have on the special access market will be a catalyst for innovation and investment in the broadband marketplace, something we desperately need,” said Maura Corbett, spokeswoman for the NoChokePoints coalition.

“Every time you send an email, withdraw money from an ATM, or use your wireless phone, your information travels on these high-capacity lines. Excessive pricing and other market abuses by these companies have long been an issue of concern at the Federal Communications Commission (FCC). Nearly five years ago, after many complaints by broadband customers in several FCC proceedings, the Commission began a review of the high-capacity broadband market to determine the changes needed to ensure reasonable prices. Despite ample evidence of excessive pricing, the Commission inexplicably has yet to take any action.”

“The Obama administration, Congress, and the FCC repeatedly emphasize the importance of broadband to our economic recovery and, frankly, it defies explanation that we are still fighting this market abuse,” Corbett continued. “Huge companies like Verizon and AT&T control the broadband lines of almost every business in the United States. The virtually unchallenged, exclusive control of these lines costs businesses and consumers more than $10 billion annually and generates a profit margin of more than 100 percent for the controlling phone companies, according to their own data provided to the FCC. This hidden broadband tax results in enormous losses for consumers and the economy, and this country cannot afford it; especially now.”

NoChokePoints cited four central principles of its campaign to reform the special access market: (1) the special access market is broken; (2) the outgoing Federal Communications Commission made a bad situation worse by failing to address obvious market abuse by these huge phone companies; (3) this unchecked market control continues to slow broadband deployment, compromise innovation and harm our national information economy; and (4) the resulting market failure must be corrected now.

Yes, when one or two providers get together and establish pricing for a product that is way out of line for what it costs to provide, and uses that control to further squeeze every last penny they can from customers, something should be done.

As consumers, we should agree to join the NoChokePoints coalition struggle.  There are several very credible pro-consumer organizations that support the Coalition and its goals.  And consumers like myself shall, mere seconds after:

Member BT (British Telecom) stops throttling UK customer’s broadband connections, and imposing Internet Overcharging schemes on customers through limits on their data consumption.

Member Sprint-Nextel agrees that consumers should be able to request temporary suspension of their wireless data account, currently limited to 5GB of consumption per month, the moment the limit is reached to avoid the potential of paying overlimit fees, if/when applicable.

TW Telecom gets a pass here as they are entirely independent from Time Warner Cable.

Internet Overcharging schemes, monopolistic control, abuse of market pricing, and other anti-competitive behavior should be confronted.  But companies engaged in problematic behavior themselves should not anticipate a great deal of consumer compassion towards their plight, when those consumers often are on the receiving end of that problematic behavior themselves.

This week’s finding from the Pew Internet & American Life Project:

Where competition exists in broadband, prices are significantly lower than in areas where competition does not exist or is limited.

This is, of course, common sense.  But it underlines the importance of broadband competition to control pricing and overcharging schemes.  Broadband prices have been increasing in the United States, along with the number of customers, the revenues earned from those customers, and the loyalty customers to their broadband service.

What has decreased, despite the growth in broadband pricing, revenues, and customers, is some providers’ investments in their own networks to keep up with that growth.  In 2008, Time Warner Cable’s annual report showed interesting results:

“In 2007, TW made $3,730 Million, on high speed data alone, and then had to turn around and spend $164 Million to support the cost of the network. 2007 total profit on high speed data: $3.566 Billion”

“In 2008, TW made $4,159 Million, on high speed data alone, and then had to turn around and spend $146 Million to support the cost of the network. 2008 total profit on high speed data: $4.013 Billion”

“It cost TW 11% less money in 2008, to keep their network running, than in 2007.”

These numbers illustrate the folly of crying poverty when asked why network upgrades aren’t being performed to support evolving growth in usage.  Instead, the meme of “heavy downloaders are costing light users money and slowdowns” is part of the Re-education campaign to justify Internet Overcharging.

Yet broadband prices are continuing to climb even with reduced investments by many providers.  Pew found pricing up across all classes of broadband service, significantly so between 2008 and 2009.  Pressure on revenues from the video side of the cable business are partly responsible as investor demands for profits demand results.  Consumers, responding to a poor economy, have been cutting back on their cable TV package, especially premium channels, pay-per-view, and add-ons of extra channels.  A few are abandoning cable/satellite TV altogether, relying on their broadband connection and online video, a prospect that terrifies those providing traditional cable-like programming packages.

Some 84% of home broadband users see their fast connection as “somewhat important” or “very important.” This increasing reliance on broadband is turning a convenience into a necessary utility.  Yet the industry that provides it is under very little scrutiny and has largely been deregulated, with only limited oversight possible.

The results have been mixed.  Americans living in areas lucky enough to experience robust competition have fast, reliable service at low prices, with only limited efforts to impose Internet Overcharging schemes.

In areas with more limited competition, particularly when those competitors do not provide an equivalent level of service consistently across their service area (fast consistent cable modem service vs. variable, speed-challenged DSL), mischief by the dominant provider is increasingly common.  “Experiments” to increase prices, limit use, require customers to purchase or rent equipment, or impose annual or bi-annual service contracts, and/or  limited advancements in speed are not atypical.

Rural communities, in particular, remain exposed to many challenges — high prices for installation and service, slow/uneven speeds, contracts, and usage allowances are all commonplace.

The Obama Administration intends to spend tens of millions of dollars to improve broadband in the United States.  Unfortunately, many worthwhile projects and ideas are up against schemes from less worthy providers and groups that have teams of lobbyists and connected “interest groups” proposing spending that carries few limitations, little oversight, and loads of loopholes.  In some cases, needed project funds could even be diverted away from new projects altogether.

The Pew Study summarized its findings:

Home broadband adoption stood at 63% of adult Americans as of April 2009, up from 55% in May, 2008.

The latest findings of the Pew Research Center’s Internet & American Life Project mark a departure from the stagnation in home high-speed adoption rates that had prevailed from December, 2007 through December, 2008. During that period, Project surveys found that home broadband penetration remained in a narrow range between 54% and 57%.

The greatest growth in broadband adoption in the past year has taken place among population subgroups which have below average usage rates. Among them:

• Senior citizens: Broadband usage among adults ages 65 or older grew from 19% in May, 2008 to 30% in April, 2009.
• Low-income Americans: Two groups of low-income Americans saw strong broadband growth from 2008 to 2009.
  • Respondents living in households whose annual household income is $20,000 or less, saw broadband adoption grow from 25% in 2008 to 35% in 2009.
  • Respondents living in households whose annual incomes are between $20,000 and $30,000 annually experienced a growth in broadband penetration from 42% to 53%.

"This is not a rate increase, this is about fair pricing for everyone, seriously."

It’s always awful when you wake up with a bad taste in your mouth.  That’s the flavor of industry hacks and sock puppets who spent a good part of yesterday and last night on the attack against Rep. Eric Massa and your consumer interests.  Part of this battle is about engaging those who claim to represent consumers, but actually turn out to be paid by a lobbyist firm or “think tank,” usually located either in or near Washington, DC.  They are typically unwilling to disclose that involvement.  I’m not.  When called out, the typical response ranges from silence to ‘I would be saying the same things even if I didn’t get paid by them.’

Sure they would.

Consumers need to be particularly vigilant about the Say for Pay crowd of sock puppets that arrive in quotations in articles that attack common sense pro-consumer positions, or in the comments  below an online article.

Now you may be asking what in the world is a “sock puppet.”  Craig Aaron at Free Press explains:

Sock puppets, for those unfamiliar with the creatures commonly found inside the Beltway, are mouthpieces who rent out their academic or political credentials to argue pro-industry positions. These pay-to-sway professionals issue white papers, file comments with key agencies, and present themselves to the press as independent analysts. But their views have a funny way of shifting depending on who’s writing the checks. (To be clear, at Free Press we take no industry money.)

Sock puppets and astroturf groups go hand in hand.  If you remember, we’ve exposed a number of these groups that claim they are standing up for consumers, but in reality are paid to sit down and absorb their industry backer’s talking points.  The snowjob that typically follows claims that if you do the pro-consumer common sense thing, such as not allowing Internet Overcharging schemes to rip people off, you’ll destroy the Internet, America, and maybe even freedom itself.  Besides, just look at the “expert credentials” of our guy telling you that.

When you boil it all down, sock puppets are people who feel morally fine with taking money for being willing to assume any position you want them to take.  It’s vaguely familiar to another profession that’s been around for a very long time.  One just has better office space than the other, and better business cards, too.

If you want to explore a perfect example of sock puppetry at work, with a group trying to get public taxpayer money to benefit big telephone and cable companies with few strings attached, check out Craig Aaron’s article on the subject this past January.

In Stop the Cap!‘s history, we’ve debated a representative from Nemertes Research who refuses to disclose who pays for their industry research reports that conveniently say exactly what the telecommunications industry’s positions are on the broadband issues of the day.  We’ve questioned a group that claims that “openness” or “neutrality” of the Internet is irrelevant, and called out the American Consumer Institute Center for Citizen Research (you gotta love the name — it’s a delicious consumery-sounding word salad… with special interest croutons sprinkled all over the top), who applauded Internet Overcharging as a great thing for customers, except they were packed with lobbyists to really satisfy big telecom interests.

Readers of this site should be well-qualified to engage industry propaganda and consumer misconceptions about the fairness of Internet Overcharging schemes.  You’ve gotten the information you need to effectively educate consumers and expose the sock puppetry.  The entire reason this group exists is because we realized the fight is not over, and we’d need an army prepared to combat the Re-education campaign we were promised back in April.  The battle is fully engaged now, and I’ve been happy to see many of you joining conversations on other sites where misconceptions and sock puppets prevail, and helping to educate consumers with facts, not focus group-tested propaganda.

We need many more of you to do likewise.  If your local newspaper runs an article on Rep. Massa’s bill, or our issues, take a look at the article online and look at the comments being left by readers.  Encounter misconceptions?  Help educate people.  Discover a sock puppet browbeating consumers for standing up for common sense reform of the broadband industry?  Defend the consumer’s point of view and don’t allow anyone to berate you with smug, fact-free answers.  Most are unprepared to respond with actual evidence to back their views, just a load of industry rhetoric and evidence-free claims they have expertise you don’t.

… Continue Reading