Broadband for America is the product of the nation's largest phone and cable companies.

Broadband for America has begun assaulting the airwaves with a high-priced advertising campaign claiming that “broadband is leading the [economic] recovery” but is threatened by “1930s telephone regulations,” urging Congress to get involved to stop broadband reform.

The 30 second ads blanketed cable and several Sunday morning news shows yesterday.

What the ads don’t mention is Broadband for America is actually one giant front group backed by large phone and cable companies.  In a study released last fall, Stop the Cap! found virtually every single “coalition” member, including so-called “independent consumer advocacy groups,” do substantial business with, or have received significant financial contributions or board assistance from companies including AT&T, Verizon, and Comcast.

Well-financed by the telecommunications industry it directly represents, Broadband for America seeks further deregulation and wants Congress to stop the FCC from enacting broadband reforms ranging from “truth in marketing” and billing to Net Neutrality.

The “honorary co-chairs” of the group are Michael Powell, the same Bush Administration FCC chairman that badly bungled the FCC’s approach to broadband policy thrown out in the courts earlier this year, and former Congressman Harold Ford, Jr., who left public service for a very lucrative career in “dollar-a-holler” advocacy and working as a lobbyist for the economic-vampire investment bank Goldman Sachs (something Broadband for America left out of his online biography.)

Broadband for America, a telecom-backed astroturf group, is running these advertisements promoting the agenda of AT&T, Verizon, and Comcast to try and stop broadband reform policies.  (1 minute)

A new report published by the Federal Communications Commission this week finds Americans are being ripped off by their broadband providers who promise speeds 50 percent faster than they actually receive.

In a generically named report, “Broadband Performance,” the FCC finds Americans love spending increasing amounts of time on the Internet, but face providers making bogus marketing claims for speeds they’ll never actually receive.

In 2009, average [...] advertised download speeds were 7–8 Mbps, across technologies. However, FCC analysis shows that the median actual speed consumers experienced in the first half of 2009 was roughly 3 Mbps, while the average (mean) actual speed was approximately 4 Mbps. Therefore actual download speeds experienced by U.S. consumers appear to lag advertised speeds by roughly 50%.

[...] The “up to” speed, however, does not provide an accurate measure of likely end-user broadband experience. That experience depends on multiple factors, including the actual speed that consumers realize, taking into account the impact of network congestion; and other metrics like the availability of the network, latency, jitter and packet loss. In other words, consumers need a better, publicly agreed upon measure of broadband performance that reflects the network operation and end-user experience.

No surprises here - the FCC found fiber delivered the fastest broadband speeds with wireless and satellite service delivering the slowest

Providers in several countries have been called to account for marketing claims that never seem to be realized by customers.

For years, providers have relied on the weasel words “up to” to escape charges of outright misrepresentation of their products.  The FCC doesn’t believe the status quo properly informs consumers about true broadband speeds, especially when comparison shopping.

Some of the widest gaps between advertised and actually delivered speeds came from telephone company DSL service.  Many phone companies define their maximum speeds based on theoretical maximums, not the actual average speeds encountered by customers.  While some providers claimed up to 10Mbps service, they only actually delivered up to 3Mbps to many customers.

The report recommends new disclosures, including average actual speeds delivered to customers, what kind of speeds customers can expect during peak usage times, and what speeds consumers will encounter while using certain online applications.

Speeds can make all the difference for certain classes of broadband users, also defined in the FCC report:

➤ Advanced. These consumers use large amounts of data and tend to use the highest quality voice, video, and other cutting-edge applications.

➤ Full media. These consumers are moderately heavy users of broadband and mobile applications, seeking to access high-quality voice, data, graphics, and video communications but, typically not in the most cutting-edge forms.

➤ Emerging multimedia. These consumers utilize some video and graphical content but still see the Internet primarily as a way to communicate and access news and entertainment in a richer format than found in offline content.

➤ Utility. These consumers are largely content to access the Internet for basic news, communication, and basic entertainment.

The New America Foundation thinks the gulf between promises and reality has grown so large, it’s time to bring “The Schumer Box” to broadband.  Named after Sen. Chuck Schumer (D-NY), the “Schumer Box” was made a part of every credit card application and cardholder agreement.  It breaks out in large print fact-based disclosures to consumers about what kind of service and pricing to expect.  The Foundation wants consumers to have truth-in-labeling introduced for Internet users who will be able to comparison shop providers more effectively.

One consumer group wants a credit card-style disclosure of broadband speeds and policies

While the FCC’s findings may not reach the level of credit card-style disclosures, the agency does recognize there is a significant problem with providers misrepresenting their broadband speeds.

The report also found consumers are increasing their amount of monthly usage, often correlated to the speeds they receive.  Those with the fastest broadband accounts consume the most (and typically also pay the most for service).  Those with slower speeds consume less.

That finding supports the contention among many consumer groups that today’s speed-based broadband tiers fairly compensate providers for customer usage.  Those who use the most pay the most for the fastest speeds. Those who use the least pay lower prices for lower speed tiers.

The agency also rated fiber to the home America’s fastest broadband technology, followed by cable broadband, then DSL service, and finally wireless/satellite-delivered service.

The firebrand Rep. Alan Grayson (D-Florida), normally a plain-spoken kind of guy, has managed to tie himself into a human pretzel over the issue of Net Neutrality.  In less than a week, he’s adopted every side of the issue as his own.

Grayson shocked many of his supporters last week when he signed on with AT&T, Verizon, and Comcast to pressure the Federal Communications Commission not to regulate Internet principles like Net Neutrality.

Grayson’s increasingly high profile in the Democratic party and his hero status among many progressives made his allegiance to big telecom stick out like a sore thumb.  Liberal blogs immediately blasted Grayson’s decision to side with the “you can’t use my pipes for free” crowd.  Some bloggers called his position “curious” while others accused him of selling out.

Grayson has been engaged in damage control ever since.

His letter to the FCC echoed earlier letters from Democrats hostile to broadband reform (but receptive to campaign contributions from the phone and cable companies).  But Grayson insists he has been misunderstood.

The Orlando Democrat told the Huffington Post that he is in favor of Net Neutrality and that his alliance with the telecom industry is a coincidental case of “strange bedfellows.”

“I say in the letter that I support the policy of Net Neutrality. I don’t know how I could be more explicit than that,” he told HuffPost. “There is a question, though, of how to reach that conclusion, and it’s a legitimate question. My own feeling is that we should not allow a matter like this to be resolved by regulation, because regulations can be changed very easily. We saw this all the time with the Bush administration. I think it is preferable to have the principle of net neutrality enshrined in statute.”

Grayson

Grayson’s position does not make sense to many Net Neutrality advocates who do not understand why Grayson cannot be supportive of both regulatory reform and legislative changes.

“I think Grayson is mistaken to think that good Net Neutrality legislation could come out of this Congress. And certainly he’s mistaken to think that good Net Neutrality legislation would come out of the next Congress,” said Tim Karr of Free Press.

Karr told HuffPost he hoped Grayson would note conservative bloggers are in love with the congressman’s position on Net Neutrality and rethink his position. “Given that Grayson is considered a progressive lion in the House of Representatives, that the people who routinely vilify him are now seeing him as a champion should make him think twice,” he said.

Grayson argues that getting the FCC to reform broadband and make Net Neutrality a formal agency directive would be a waste of time because Republicans would simply throw it out the next time they occupy the White House.

For many Net Neutrality advocates, that kind of defeatist attitude is symbolic of a problem Democrats have long faced — the impression they’ll cave-in when challenged by Republicans.

Marvin Ammori, a law professor at the University of Nebraska:

“What he’s implying is that Republicans actually do what they want to do and implement the policies they want and Democrats don’t,” said Ammori. “It sounds like they’re unwilling to change regulations because they’re worried Republicans will change them back… It just highlights that Republicans are willing to change the law and Democrats aren’t.”

Perhaps most upsetting to Net Neutrality supporters is Grayson’s belief that many phone and cable companies support Net Neutrality, at least how they define it.

Ammori thinks that is nonsense, and easily dismissed as lip service when one considers the actions of the telecom industry.

“If they supported Net Neutrality, we’d have it by now,” he said. “They’ve spent hundreds of millions fighting against Net Neutrality… This is part of their pitch: ‘We don’t plan on blocking anything on the Internet. We just want the right to do so’… He’s essentially crediting their PR claims.”

Grayson faced questions about his position on MSNBC about his Net Neutrality views, and was lectured by progressive talk show host Cenk Uygur.  Grayson called the FCC “a fundamentally corrupt organization.”  (2 minutes)

Phillip Dampier to Chairman Genachowski - Don't Be Verizon's Sucker

Julius Genachowski was played.

The chairman of the Federal Communications Commission hopefully just learned a valuable lesson about the corporations he’s dealing with.  Big telecom companies will be your friend and working partner until they get close enough to stick you with their knives.

Genachowski got it right in the back, betrayed by the companies he shepherded into secret backroom talks, ostensibly to find a non-regulatory solution to Net Neutrality.  While talks were underway, a few major players were quietly stalling for time to construct their own “private agreement” on Net Neutrality, threatening to up end the FCC’s Net Neutrality agenda into the toilet.  The rest were never really interested in anything less than total capitulation on the concept of Net Neutrality (I’m talking to you, AT&T).

And the merry-go-round goes round and round….

The FCC chairman was outmaneuvered from day one, even as he was willing to ignore his biggest supporters who believed he was honest about an open, pro-consumer FCC.

Stop the Cap! reader Dave noted the secret backroom talks between the bully boys and the FCC chairman’s chief of staff Ed Lazarus had collapsed late last week.  Extraordinary pressure from ordinary Americans helped torpedo those talks, as did the realization some of the participants were dealing behind the backs of their hosts.

Now that Verizon and Google have accomplished their Judas moment, the chairman of the FCC is just a tad angry in the papers:

“Any deal that doesn’t preserve the freedom and openness of the internet for consumers and entrepreneurs will be unacceptable,” Genachowski said at a recent press conference.

Some of Genachowski’s allies at the FCC hinted they were hardly surprised at the developments.

Commissioner Michael J. Copps has been around long enough to know better.  He was skeptical negotiations would deliver more than lip service and he was right.  With today’s announcement of a partnership on policy between Google and Verizon, Copps remained unimpressed, and issued a terse reaction:

“Some will claim this announcement moves the discussion forward. That’s one of its many problems. It is time to move a decision forward—a decision to reassert FCC authority over broadband telecommunications, to guarantee an open Internet now and forever, and to put the interests of consumers in front of the interests of giant corporations.”

Maybe it’s time for Chairman Genachowski to listen more to fellow commissioners like Mr. Copps and less time trying to negotiate with Verizon and AT&T.

It’s near impossible to find a consumer group not on big telecom’s payroll that likes any of these recent developments.  Their consistent message — stop trusting big corporations with America’s Internet future.  Do your job, stand up for Net Neutrality, and don’t cave in.

Public Knowledge: Google Sold You Out

Since late last year, we’ve been pushing the Federal Communications Commission (FCC) to place its authority to protect broadband consumers on firm legal ground. But faced with pressure from the largest cable and telephone companies, the agency has failed to act. Who is filling the void left by the FCC? Some of the world’s largest corporations.

Late last week, news broke that a traffic management agreement had been reached between Google and Verizon. This agreement would, among other things, allow Verizon to prioritize applications and content at whim over its mobile broadband network. In the absence of clear FCC authority, we can expect to see more deals like this in the near term. The largest telephone and cable companies and the largest web companies will carve up the Internet as they see fit, deciding who gets access to the Internet’s fast lane while the rest of us are stuck in the slow lane.

We’ve reached a critical crossroads—the time for FCC action is NOW. Private negotiations with industry players have failed. Public concern has reached a fever pitch. And some of the largest corporations on the web are lining up to put an end to the open Internet as we know it. The course of action couldn’t be more clear: the FCC needs to do the right thing and protect broadband users.

Free Press: Google – Don’t Be Evil

“Google and Verizon can try all they want to disguise this deal as a reasonable path forward, but the simple fact is this framework, if embraced by Congress and the Federal Communications Commission, would transform the free and open Internet into a closed platform like cable television. This is much worse than a business arrangement between two companies. It’s a signed-sealed-and-delivered policy framework with giant loopholes that blesses the carving up of the Internet for a few deep-pocketed Internet companies and carriers.

“If codified, this arrangement will lead to toll booths on the information superhighway. It will lead to outright blocking of applications and content on increasingly popular wireless platforms. It would give companies like Verizon, Comcast and AT&T the right to decide which content will move fast and which should be slowed down. And it will destroy the open Internet as a platform for small business innovation and job creation, cementing companies’, like Google’s, dominant market power online.

“Still worse, this deal proposes to keep the FCC from making rules at all. Instead of an even playing field for everyone, it proposes taking up complaints on a case-by-case basis, or even leaving it up to third-party industry groups to decide what the rules should be. The only good news is that neither of these companies is actually in charge of writing the rules that govern the future of the Internet. That is supposed to be the job of our leaders in Washington.

“Congress and the FCC should reject Verizon and Google’s plans to carve up the Internet for the private benefit of deep-pocketed special interests, and move forward with policies that preserve the open Internet for all. This begins with the FCC reasserting its authority over broadband to ensure it can protect the open Internet and promote universal access to affordable, world-class quality broadband.

“The Internet is one of our nation’s most important resources, and policymakers everywhere should recognize that the future of our innovation economy is far too important to be decided by a backroom deal between industry giants.” — Free Press Political Adviser Joel Kelsey (See more here.)

Newspapers  Say ‘Enough is Enough’

The San Francisco Chronicle

[...]Public interest and consumer groups didn’t feel like they had much of a say in the commission’s discussions, and they surely won’t feel like they had much of a say in whatever proposal Google and Verizon bring to the table. This is a huge problem – the future of the Internet belongs to the public, not just a few companies.

The ideal solution would be for Congress to step in and provide a framework for net neutrality – preferably one that keeps the public interest at heart, not the demands of dominant Internet companies and carriers.

That’s what the commission would prefer. It’s considering getting around the breakdown in negotiations by reclassifying broadband under a more heavily regulated part of telecommunications law, but the large cable and telephone companies will almost certainly sue. Congressional action would prevent this ugly scenario and its uncertain outcome.

And any proposal that Google and Verizon come up with will have to be approved by Congress. It would certainly serve the public interest better if Congress gathered input from more than just two companies and created a proposal of its own.

Unfortunately, Congress hasn’t shown much appetite for net neutrality legislation in the past, and we’re not optimistic about the near-term future. So it’s time for the commission to do the right thing and reclassify broadband.

Yes, that will mean lawsuits. It will mean that net neutrality has a precarious future. But it has a precarious future right now, and the public can’t afford to wait.

The Los Angeles Times

[...]Genachowski is right about the need for enforceable rules that prevent broadband providers from blocking or slowing access to websites and services they don’t favor. So far there have been only a few such incidents on DSL and cable-modem networks. But Internet service providers are itching to create a toll lane to deliver content and services from companies that have the resources to pay for better access to consumers. If that toll lane crowds out the free and open Internet that’s been a breeding ground for innovation and creativity, the whole economy will suffer.

[...]A major problem for the commission is that its authority to adopt such rules isn’t clear. Genachowski had hoped that the talks with Internet service providers and Web companies would yield a consensus on a bill Congress could quickly pass to grant the FCC clear but limited authority over broadband access. The breakdown of those talks complicates matters, and suggests that Genachowski may have to rethink his plan to enforce Net neutrality by bringing 21st century broadband providers under rules originally designed for 20th century telephone services. Whatever route it takes, though, the commission should move now.

Cenk Uygur of The Young Turks show explains the implications of Google & Verizon’s deal for both progressives and conservatives if big corporations get to take control of America’s Internet.  (6 minutes)

Despite some denials last week that Verizon and Google were not married and cohabitating their political agendas, the two giants announced a shared vision of the Internet’s future — one that does not “purposely throttle or block content,” but reserves for themselves a new, super speed Internet for the two companies and their closest corporate friends that will make blocked websites the least of America’s broadband problems.

For Internet enthusiasts, the deal is nothing less than a complete sellout of one of the founding visions of the Internet – content judged on its merits, not on the deep pockets backing it.  It’s a complete betrayal of Net Neutrality and broadband reform by Google, which has some of the deepest pockets around and has apparently forgotten the story of its own founding — a story that would likely be impossible on an Internet envisioned by Big V & G.

The Five Biggest Lies About Google and Verizon’s Net Neutrality Proposal

Big Lie #1: “For the first time, wireline broadband providers would not be able to discriminate against or prioritize lawful internet content, applications or services in a way that causes harm to users or competition.”

That is a distinction no longer worth the difference should the two providers succeed in developing a special fast lane for their content partners.  If you don’t have the admission price or a favored pass to belong to the golden magic superhighway, not being purposely blocked or throttled on a clogged free lane offers little comfort when your start-up cannot compete with the bully boys that can outspend you into submission.

Both companies seek to invest millions in what is essentially a toll highway, incentivized by the potential returns offered by deep pocketed content producers willing to pay the toll.  With Wall Street following that money, those left behind on the slow lanes will find providers increasingly uninterested in throwing good money into necessary upgrades to keep the “free lane” humming.  The Internet that results will resemble the difference between a Chicago public housing project and the Ritz-Carlton.

Big Lie #2: “Reasonable” Network Management

The partnership’s declaration of support for its definition of  “reasonable” traffic management has more loopholes than Lorraine Swiss cheese.  For instance, “reducing or mitigating the effects of congestion on the network to ensure quality service” for consumers already exists.  It’s called “upgrading your network.”  Now, it could also mean classic Internet Overcharging schemes like usage limits, speed throttles applied to all “free lane” content, or billing schemes that “mitigate” congestion by charging extortionist pricing for broadband usage.  Using vague notions of “accepted standards” could be defined by any group deemed by Google and Verizon to be “recognized.”  Both have enough money to influence the very definition of “accepted standards.”

You don’t need a policy that reads like a credit card agreement to manage traffic on a well-managed, consistently upgraded broadband network.  Nothing prevents either company from providing such a network, but with no oversight and pro-consumer reform, nothing compels them to provide it either.

Big Lie #3: This preserves the open Internet.*

(*- excluding wireless broadband access to the Internet.)  As an increasing number of consumers seek to migrate some of their Internet usage to wireless networks, it’s more than a little unsettling Google and Verizon would exempt these networks from most of the “consumer protections” they have on offer.

Big Lie #4: The FCC gets its coveted authority to oversee the Internet.

Not really.  In fact, this agreement shares more in common with corporate interests that want less regulation and oversight, not more.  The suggested framework graciously grants the FCC the right to sit and listen to complaints, but strips away… permanently… any authority to pass judgment on the cases they hear and write regulations to stop abuses.

Clauses like “parties would be encouraged to use non-governmental dispute resolution processes” must give the arbitration industry new hope.  Already out of favor in many quarters, this proposal is tailor-made to bring a new Renaissance for “out of court arbitration” that heavily favors the companies that bind consumers and other aggrieved parties to using it.  The arbitration industry is no stranger to contributing to the right people to make them the only reasonable choice for dispute resolution.

Verizon and Google want nothing less than the right to define how their Internet will work — from the applications you can effectively use, the speed throttle you are forced to endure on the free lane, to the enormous bill you’ll receive for using those non-favored websites.

Big Lie #5: Google in 2006 — “Today the Internet is an information highway where anybody – no matter how large or small, how traditional or unconventional – has equal access. But the phone and cable monopolies, who control almost all Internet access, want the power to choose who gets access to high-speed lanes and whose content gets seen first and fastest. They want to build a two-tiered system and block the on-ramps for those who can’t pay.”

Google has come a long way, baby — in the wrong direction.  Demanding Google “not be evil,” something hundreds of thousands of Americans have already said today, is becoming so commonplace as to be cliché.  Still, being for Net Neutrality one day and throwing that concept overboard the next is the ultimate flip-flop.  When money talks louder than doing right by the millions of users who made both companies what they are today represents the ultimate betrayal.  Let’s make sure they realize it.

Bloomberg News reports consumers will be stuck with higher broadband bills, especially if they dare to watch online video, on a broadband platform envisioned to saddle Americans with toll highways for Internet content.  (4 minutes)

http://www.phillipdampier.com/video/CNBC Google Joint Internet Policy 8-9-10.flv

CNBC echoed concerns about the Verizon-Google deal and its implications for the future of Internet applications.  (4 minutes)

Read the Verizon-Google Proposed Framework below the jump…

… Continue Reading

FCC Chairman Julius Genachowski needs another calcium supplement to stand up against powerful broadband interests. Let's send him one.

When citizens get active and get involved, they can make a difference.  That’s true even with giant corporations like Verizon Communications.

FCC Chairman Julius Genachowski has been straying as of late.  In 2009, his nomination to chair the Commission came with a lot of promises he’s now threatening to break with the American people:

• to make the FCC more open and accountable to the public interest;
• to promote and expand broadband to underserved Americans;
• to protest the open Internet with strong Net Neutrality protections.

Genachowski watched Comcast use the federal courts to invalidate much of his agency’s authority over broadband because of flawed policies and bad compromises made by the previous administration.  Providers lived with that arrangement until it inconvenienced them.  Then they sued… and won.

History teaches us that making the same mistakes all over again will bring similar results.

Chairman Genachowski is wrong to think brokering secret, back room deals with major corporate broadband providers will solve America’s broadband issues.  Verizon, AT&T, Google, Comcast, and the other players do not answer to the FCC — they answer to their stockholders and Wall Street.  While corporate deals are struck behind closed doors, it is you and I that face living with the results and we don’t even have a seat at the table.

I, for one, am not interested in living in a broadband gated community with AT&T working the front gate.

Genachowski has apparently forgotten he is supposed to be working for the American people, not for America’s broadband duopoly. Not too long ago, Genachowski’s office hinted it might be prepared to cave on meaningful broadband reform.  Outraged citizens flooded the FCC and told him to grow a spine and stand up for our interests and he followed through announcing broadband reform was finally on the way.

It’s time to send the chairman another calcium supplement:

• Retweet this act.ly petition to demand that Genachowski accounts for his inaction.
• Answer these two questions to get the FCC to work for you and not AT&T.
• Learn more about getting involved in the fight to win Net Neutrality protections.

This fight is far from over.

Is Rahm Emanuel the consigliere to a deal to sell out broadband consumers to big telecom companies like AT&T, Verizon, and Comcast?

White House Chief of Staff Rahm Emanuel is said to so afraid of big phone and cable companies donating millions to Republican candidates, he told agencies like the Federal Communications Commission to go along with Verizon, AT&T, and Big Cable’s demands for an end to Net Neutrality and other pro-consumer broadband reforms.

That is the rumor industry expert Dave Burstein is hearing about the prospects of broadband reclassification actually happening at the FCC this year.

It seems Verizon’s CEO Ivan Seidenberg has become a frequent guest at the White House, appearing 16 times since President Obama took office.  Seidenberg is behind the notion that saddling giant telecommunications companies with Net Neutrality will force those firms to flood Republicans with unprecedented campaign contributions.  That’s fascinating news, especially since most politicians claim campaign contributions never make any difference in how they vote on issues.  Perhaps Verizon is just being extra charitable this year.  The Republicans, who fall lock-step in support behind the nation’s largest phone and cable companies, will be delighted to accept.

With politicians like Rahm Emanuel involved, the fix may already be in.  Rule number one in politics is to always follow the money.  Rule number two is that many politicians will always take the money and vote against their constituents’ best interests unless voters are paying attention.  When a politician is forced to weigh the consequences of accepting a fat check from a corporation and voting with them or infuriating their constituents to the point of potentially losing the next election, they’ll vote with their constituents.

Meanwhile, telecom companies are engaged in a divide-and-conquer strategy, with Verizon recently making gestures to Google, one of Net Neutrality’s strongest  proponents.  Burstein thinks that unless public interest groups and the public-at-large don’t force an end to these insider deals, Net Neutrality and other broadband reforms will become little more than a voluntary agreement not to be too evil (until they redefine ‘evil’ as ‘good’ and do it anyway):

Julius (Genachowski) has already agreed to almost everything [telecom lobbyists] really want, including loopholes wide enough to carry 350 TV channels. [Stifel Nicolaus] says there is still some opposition so that nothing is final and that the public interest groups are ready to assail Julius. Meanwhile, Verizon and Google are discussing a separate peace that will make the FCC irrelevant.

This one is about power and money, not principle. The likely outcome is an agreement that will allow everyone to say noble things, will allow Julius to look himself in the mirror, and will essentially have no substance.  I hope I’m wrong.

Bloomberg News reviews the regulatory landscape with the FCC’s secret weekend meetings to find a deal on broadband rules.  (2 minutes)

For consumer groups like Free Press and Public Knowledge, already furious over secret backroom negotiations between FCC officials and the nation’s large phone and cable companies, any deal that culminates in providers being allowed to tamper with Internet traffic, choosing favorites along the way, is tantamount to a deal with Tony Soprano.

Tim Karr from Free Press wrote a guest editorial in the Seattle Times Sunday warning there is a corporate deal in the making to take over the Internet:

On the one side, elected officials and regulators have heard from millions of citizens demanding that Washington protect this rule that preserves the Internet’s open architecture.

On the other is a lobbying juggernaut that seeks to dismantle online openness so that phone and cable companies can rebuild the Internet as a gated community that serves their bottom line.

The problem is that policymakers aren’t holding the line for the public. They seem content simply to cut a deal between companies with the most political and economic clout.

If that doesn’t worry you, it should.

Because the deal they’re cutting is over who ultimately wins control of online information. And it goes without saying that you’re not in the running.

Google, Verizon, AT&T and others are reportedly nearing consensus on an agreement that could radically redesign the Web, allowing the carriers to build priority access lanes that admit only large companies that can pay the toll.

Where will that leave the rest of us? Stranded on the digital equivalent of a winding dirt road, with slower service, fewer choices and limited access.

Here’s the kicker. The Federal Communications Commission, the one agency tasked with protecting your interests online, may be poised to sign off on this plan. The agency is reportedly convening closed-door meetings with these companies to strike a deal that would let Internet providers implement a “paid prioritization” scheme.

According to The Washington Post, the FCC’s chief of staff wanted to “seize an opportunity to agree on ways that carriers could “manage traffic” on their networks.

If recent articles by Amazon and AT&T execs are any indication, paid prioritization would allow carriers to ransom access to their customers to the highest bidder. AT&T’s top lobbyist, James Cicconi, wrote that such extortion was “not only necessary but in the best interest of consumers.”

Don’t believe it. The beauty of the open Internet is that anyone with an idea has a chance to take on giant corporations without first having to bribe network owners for access. Net neutrality is the rule that guarantees this openness.

It’s because of Net neutrality that great ideas like YouTube (which began in an office above a pizzeria in San Mateo) and Twitter (which grew out of a daylong brainstorming session among podcasters) blossomed to revolutionize how we connect and communicate with one another.

The paid prioritization deal under consideration wouldn’t allow for the next YouTube. And the next Twitter would likely never make it off the drawing board.

This scheme would let companies like Comcast and AT&T favor their own video services, voice applications and social media. It would let Verizon build a wide moat around its Internet fiefdom, insulating itself from competition by upstart innovators that want to show consumers how things can be done better and more cheaply.

Columbia Law Professor (and Free Press board chairman) Tim Wu has said that letting carriers choose favorites is “just too close to the Tony Soprano vision of networking: Use your position to make threats and extract payments. This is similar to the outlawed, but still common, ‘payola’ schemes in the radio world.

“If allowing network discrimination means being stuck with AT&T’s long-term vision of the Internet,” Wu concludes, “it won’t be worth it.”

Should any of this come to pass, it will mark the end of any credibility for FCC Chairman Julius Genachowski, who will have sold out to the interests of big telecom and, more importantly, proved himself little more than another inside-the-beltway-liar.  The implications for the Obama Administration’s credibility on broadband issues are devastating.

It was Genachowski himself who promised this would be the most open FCC ever and that he would see to it that the open principles of the Internet were safeguarded.  It’s more than a little difficult to see that happening while Genachowski’s staff secretly meets with telecom lobbyists to conclude a deal that will turn over control of Internet traffic to a broadband duopoly.

Kyle "What Broadband Problem?" McSlarrow

In Kyle McSlarrow’s world, the only broadband problem is the one invented by the Federal Communications Commission when it claims that service is not being deployed to all Americans on a “reasonable and timely” basis.  The head of the National Cable and Telecommunications Association (NCTA), the cable industry’s lobbying group, has declared today’s broadband a U.S. “success story that keeps getting better.”

Writing in the group’s “CableTechTalk” blog, McSlarrow tells his readers that 95 percent of Americans already have broadband service available to them that meets the 4Mbps minimum speed standard proposed by the FCC, so where is the big problem?

McSlarrow’s interest in the economics of rural broadband is ironic considering the cable industry routinely bypasses rural Americans.  Where cable lines do predominate, meeting the FCC’s anemic 4Mbps minimum speed standard is not the biggest problem — cost is.  Where cable lines don’t reach, speed is an issue for many wireless and DSL subscribers.  For others, broadband service is not available at any price.

McSlarrow plays cable’s advantage on speed issues to promote minimum speeds higher than those sought by phone companies like AT&T and Verizon.  Of course, cable broadband does not rely on antiquated copper wire telephone networks.  In rural areas, many of these networks are held together with minimal investment.  DSL at any speed can be a luxury when available.

McSlarrow’s recognition that most of rural America will continue to be served by telephone companies doesn’t stop the cable industry from seeking an advantage over their nearest competitors by advocating for reduced subsidies for rural areas and policies that guarantee no potential competitor can ever see a dime in government broadband money.

Because the report plainly acknowledges that there is no reasonable business case to be made for extending broadband facilities to many of the unserved homes.  So instead of viewing the report’s finding as an indictment of broadband providers, it’s  perhaps better read as a statement of principle by the Chairman and two commissioners that, in their opinion, broadband already should be universally available, and, if there is no business case for that universal deployment, the government may have to step in to achieve it. So far as that goes, we agree.  For example, we support the report’s call to action on specific items that will speed broadband deployment to unserved communities.  Immediate FCC action on Universal Service Fund (USF) reform and pole attachment policy is critical to connecting unserved areas.

As explained in comments we filed last week, our industry strongly supports the USF reforms recommended in the National Broadband Plan (NBP).  To fund the FCC’s broadband USF proposals, we recommend adopting our proposal – filed in a November 2009 rulemaking petition – to reduce subsidies in rural areas where ample phone competition exists.  The sooner the Commission reduces unnecessary funding in the existing high-cost support program, the sooner it can direct funding to broadband deployment and adoption.

McSlarrow’s comments neglect to tell the whole story about what the NCTA actually wrote in its comments filed with the FCC:

The 4Mbps/1Mbps standard reflects today’s marketplace reality that most consumers choose not to purchase the highest speed tiers that are offered by their broadband provider. By setting a standard based on the services actually purchased by consumers, the Plan strikes the appropriate balance – not so low that it deprives consumers of the ability to purchase a service that meets their needs and not so high that it will require a significant infusion of new government funding.

Second, based on this definition of broadband, the Plan found that the vast majority of Americans – 95% of households – already have access to broadband, and that 80% of those consumers live in geographic areas served by two or more providers. For these areas where broadband has already been deployed, there is no basis for any increase in support; indeed, as NCTA has demonstrated, in many of these areas there is no basis for any high-cost support at all.

Consequently, the only areas that should see an increase in the support they receive are those areas that do not have broadband and qualify for CAF support, i.e., areas where there currently is no business case for private investment in broadband facilities.

In Great Britain, speeds promised don't match speeds delivered. The FCC is studying whether the same is true in the United States.

McSlarrow is disingenuous about Americans’ interest in improved broadband.  It’s not surprising many do not choose the highest speed tiers available from telephone and cable providers when one considers the premium prices charged for that service.  Some NCTA members charge $99 for 50/5Mbps service, which in other countries like Hong Kong sells for a fraction of that price.  One need only consider Google’s plan to deliver 1Gbps service to a handful of American communities.  It’s easier to count the communities that were not interested in this super-fast service.

The cable industry can afford to relent on a 4Mbps minimum speed standard for downloading as virtually all cable broadband providers already offer “standard service” plans well above that rate.  The cable industry’s own “lite” plans, usually 1.5Mbps or less, are not exactly the industry’s most popular.  Americans will choose higher speed service at the right price.

Broadband availability figures have become an important political issue, which is why controlling broadband mapping is so important to cable and phone companies.  Being able to offer that “95 percent of Americans already have access,” a figure in dispute by the way, can make a big difference in the debate.  As Stop the Cap! readers have seen repeatedly, broadband maps that depict broadband service as widely available in many areas actually is not, especially from phone company DSL service, which depends heavily on the quality of the existing infrastructure.

Most importantly, the NCTA seeks a new, even stricter standard for broadband funding under Universal Service Fund reform that would immediately deny money to any applicant that cannot prove there is no chance for any private investment in broadband.  As we’ve seen from broadband improvement applications filed under the Obama Administration’s broadband stimulus program, cable and phone companies routinely object to most proposals, claiming “duplication” of existing broadband service even in areas they have chosen not to provide service.  The NCTA would have us set the bar even lower, allowing any private entity to kill funding projects based solely on their claimed interest in providing the service themselves.

One sensitive spot the FCC did manage to hit was taking providers to task for advertising broadband speeds they don’t actually provide to customers.  While DSL speeds vary based on distance from the telephone company’s central office, cable broadband speeds vary depending on how many customers are online at any particular moment.  The cable industry’s shared access platform can create major bottlenecks in high-use neighborhoods, dramatically reducing speeds for every customer.  While some cable operators are better than others at re-dividing neighborhoods to increase capacity, others won’t spend the money to upgrade an area until service becomes intolerable.  That means consumers sold 10Mbps service may actually find it running at less than half that during evening hours.

A sampling of British cable and telephone company DSL providers, all of which aren't giving their customers what they are paying for.

McSlarrow’s view is there isn’t a problem there either — the FCC is relying on old data:

The key statistics in the report are drawn from Form 477 data for December 2008, data that was out of date when it was released earlier this year and is now 18 months old.  Broadband providers have made two subsequent Form 477 filings (with another one scheduled in a few weeks), so the reliance on stale data is frustrating.

Equally troubling is the Commission’s repetition of the NBP’s claim that “actual” broadband speeds are only half of “advertised” speeds.   After the NBP was released, we submitted an expert technical report demonstrating that the comScore data used was deeply flawed.  Since then, cable and telco ISPs have been working constructively with Commission staff on a hardware-based testing regime that should produce more accurate results.  Given the hard work that has been devoted to produce accurate speed measurements, it is disheartening that the 706 Report chose to perpetuate the NBP’s flawed speed data conclusions.

Finally, some of the data relied on in the 706 Report is not publicly available.  The report relies extensively on a cost model created for the NBP, but that model hasn’t been released, making it impossible to validate its results.  The Commission also repeatedly refers to an FCC staff report on international trends, but that report also has not been released.

The frustration McSlarrow writes about is shared by cable subscribers stuck in overloaded neighborhoods where service does not come close to marketed speeds.  The FCC is conducting an independent speed analysis that goes beyond speedtest data, and the results will be forthcoming.  In other countries where similar speed claims have not met reality, providers were usually found culpable for promising service they didn’t deliver.

Just ask Ofcom, the British regulatory agency charged with addressing this dilemma.  Earlier today they released evidence that 97 percent of UK broadband customers were not actually getting the speeds they were promised, and the gap between marketed speed and actual speed was growing. Will things be any different for American providers who use fine print to disclaim their bold marketing promises about speed?  Time will tell.

Finally, McSlarrow’s concerns about withheld data is ironic enough to call it a “pot to kettle” moment.  As those challenged with broadband mapping can attest, nobody keeps raw data about broadband availability and speeds closer to the vest than cable and telephone companies.

Of course, the ultimate agenda of the NCTA is to defend its industry’s record in broadband service, which means reducing any broadband challenges into little more than whining by Americans who don’t know how good they have it.

Qwest provides local service in 14 states in the Midwest and West.

Antitrust regulators have given the green light for CenturyLink to proceed with its buyout of Qwest Communications, but Qwest executives on their way out are hardly complaining about the deal.

Stop the Cap! has reviewed recent filings with the Securities and Exchange Commission and learned the proposed deal will bring almost $110 million in bonuses and golden parachutes for seven senior Qwest executives, some of whom will leave Qwest as a consequence of the merger.

Qwest CEO Ed Mueller will receive the largest amount: nearly $43 million — $10.8 million in cash he can spend now and $32 million in stock which he can sell later.  Mueller has already made a mint as CEO of Qwest, getting a five percent raise in his base salary to $12 million dollars in 2009, a nine percent boost in his performance bonus — $2.5 million, nearly $250,000 towards personal use of the Qwest corporate jet fleet, and $7.6 million in new stock awards.  While Mueller won, some 2,800 Qwest employees lost — their jobs.  As part of broad cost cutting moves, Qwest eliminated 8.5 percent of its workforce in 2009.  That helped the company achieve an increase in profits of 2 percent despite a 9 percent loss in revenue for the year.

Most of the generous compensation packages were part of the executives’ employment agreements which guaranteed golden parachute payouts and stock options in the event of a merger.  Those employee agreements were well-positioned to pay off for the executives, as Qwest’s “for-sale” sign had been public knowledge for years.

Last week, the Federal Trade Commission determined the deal between CenturyLink and Qwest did not bring any antitrust issues to the table.  But the deal still faces a review from state regulators and the Federal Communications Commission.  Qwest shareholders will have their say August 24th in a special shareholder meeting to vote on the deal.  Qwest has already been negotiating with significant shareholders who have sued the company, claiming the deal did not adequately compensate Qwest’s investors.  Sixteen of those lawsuits have since been quietly settled on undisclosed terms.

Meanwhile, opposition to the merger has come from smaller independent phone companies, consumer groups, labor unions, and some of Qwest’s competitors who rely on Qwest’s facilities to bring services to customers.  The Communications Workers of America is the largest union expressing concerns about the deal and has filed to intervene in public service commission proceedings regarding the merger in four states: Arizona, Colorado, Iowa and Minnesota.  Those are the only four states in Qwest’s 14 state territory receptive to hearing the union’s point of view, according to the CWA.  The others have oversight agencies that exist little beyond rubber-stamping the requests of the companies they oversee or have commission members who are openly hostile to unions.

Despite the opposition, most analysts believe the deal will win approval because CenturyLink only has a limited presence in most of Qwest’s service areas, which are in the mountain west and desert south.

Craig E. Moffett joined Sanford C. Bernstein & Co. as the Senior Analyst for U.S. Cable and Satellite Broadcasting in 2002.

Craig Moffett, a Wall Street analyst with Sanford Bernstein, is sounding the warning bells that if AT&T and Verizon assign usage caps to their forthcoming LTE wireless broadband services, they will never provide suitable competition for American consumers.

The implications of Internet Overcharging schemes in wireless broadband go well beyond the two companies’ broadband offerings.  Investors expect either AT&T or Verizon to attempt a buyout of DirecTV in the coming months, hoping to pair the satellite service with broadband packages delivered by DSL, fiber, or wireless broadband.  Because many DirecTV subscribers are located in rural areas where even DSL service is often not available, wireless broadband networks would be the most likely means of reaching customers, but not with onerous usage caps.

“If LTE networks are going to be usage-capped, then the last pretense that LTE networks can be positioned as a substitute for terrestrial broadband would seem to be gone,” Bernstein told his clients. “And if LTE can’t be offered as a replacement for wired broadband, then the notion of an out-of-region bundle of DirecTV and LTE is no more.”

Unlike earlier broadband technologies, WiMax, LTE, and other 4G broadband platforms can deliver far more data to subscribers at reduced costs.  With the increased efficiencies offered by the faster networks, carriers can provide customers with considerably more wireless broadband service, unlike heavily capped 3G networks, most of which are limited to 2-5GB of monthly usage before the penalty rates or speed throttles kick in.  While completely unlimited service is unlikely until capacity increases, there is plenty of room to allow customers to access 4G networks without thinking twice about everything they do on them.

Sprint is betting its comeback on its virtually-unlimited Clear WiMax 4G service, now becoming available in an increasing number of cities across the country.  Marketed as a replacement for wired broadband, Sprint is hoping customers will flock back to the carrier, especially if AT&T and Verizon’s 4G LTE offerings are capped.

But AT&T and Verizon have both made noises about usage capping their LTE offerings, if only to increase revenue.  These profit raising Internet Overcharging schemes come despite efforts by the Obama Administration to dramatically increase wireless spectrum available for wireless broadband services.  Dave Burstein from DSL Prime says Federal Communications Commission chairman Julius Genachowski is betting the farm on wireless broadband being the best chance for increased broadband competition.

“The heart of the U.S. broadband plan is to release more spectrum – enough for 10-20 networks like Verizon’s LTE now building – and pray that will be enough competition in five to seven years to check price increases,” Burstein writes.

Making wireless an important substitute for DSL requires raising bandwidth caps from today’s typical 5-10 gigabytes to several times as high as LTE makes the cost reasonable. If Verizon follows AT&T with an abusively low cap of 2-5 gigabytes and Sprint etc. don’t clobber them, the whole broadband plan falls apart because that’s not enough for competition in the future.

I doubt Julius understands this, because he would be doing everything in his power to avoid low caps. It’s just one more strike against “affordable” broadband, like the recent Comcast and Verizon price increases. People need to laugh out loud when Genachowski says “affordable” while tolerating continuous price increases.

Dave Burstein, DSL Prime

While wireless broadband can deliver access to many Americans who have never had broadband service before, it’s not well-positioned to compete for customers seeking to use the next generation of high bandwidth Internet applications.

None of the current wireless services are suitable for high quality video streaming of HD TV shows and movies, a crucial application for many broadband users. Burstein also notes large uploads are painfully slow on Clear’s WiMax network because of limited upstream speeds, but he expects improvements in time, assuming carriers expand with demand.  If not, as more users pile on the next generation wireless networks, their suitability for high bandwidth services becomes even more questionable.

“How much wireless could compete with landlines, especially as all cable connections are moving to 50 meg, was a crucial question for the broadband plan,” Burstein writes. “The consensus of several good engineers is that 4G competes fine with DSL if not many people expect video or other high-bandwidth apps. Wireless certainly can’t keep up if many people want to watch their TV over the net, so it’s only a partial substitute.”

As for AT&T and Verizon, Moffett suspects both may have to take a pass on DirecTV, consumed with fighting against broadband reclassification and Net Neutrality policies in Washington.  Taking on a second battle to run another dog and pony circus to gain regulatory approval for a buyout of DirecTV may be more than they’re willing to deal with at the moment.