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FCC Repeals Net Neutrality 3-2 in Party Line Vote

Pai

WASHINGTON (Reuters) – The U.S. Federal Communications Commission voted along party lines on Thursday to repeal landmark 2015 rules aimed at ensuring a free and open internet, setting up a court fight over a move that could recast the digital landscape.

The approval of FCC Chairman Ajit Pai’s proposal marked a victory for internet service providers like AT&T Inc, Comcast Corp and Verizon Communications Inc and hands them power over what content consumers can access.

Democrats, Hollywood and companies like Google parent Alphabet Inc and Facebook Inc had urged Pai, a Republican appointed by U.S. President Donald Trump, to keep the Obama-era rules barring service providers from blocking, slowing access to or charging more for certain content.

Consumer advocates and trade groups representing content providers have planned a legal challenge aimed at preserving those rules.

The meeting was evacuated before the vote for about 10 minutes due to an unspecified security threat, and resumed after law enforcement with sniffer dogs checked the room.

New York Attorney General Eric Schneiderman, a Democrat, said in a statement he will lead a multi-state lawsuit to challenge the reversal. He called the vote “a blow to New York consumers, and to everyone who cares about a free and open internet.”

FCC Commissioner Mignon Clyburn, a Democrat, said in the run-up to the vote that Republicans were “handing the keys to the Internet” to a “handful of multi-billion dollar corporations.”

Shares of Alphabet, Apple Inc and Microsoft Corp moved lower after the vote.

Schneiderman

Pai has argued that the 2015 rules were heavy handed and stifled competition and innovation among service providers.

“The internet wasn’t broken in 2015. We weren’t living in a digital dystopia. To the contrary, the internet is perhaps the one thing in American society we can all agree has been a stunning success,” he said on Thursday.

The FCC voted 3-2 to repeal the rules.

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Consumers are unlikely to see immediate changes resulting from the rule change, but smaller startups worry the lack of restrictions could drive up costs or lead to their content being blocked.

Internet service providers say they will not block or throttle legal content but that they may engage in paid prioritization. They say consumers will see no change and argue that the largely unregulated internet functioned well in the two decades before the 2015 order.

Democrats have pointed to polls showing a repeal is deeply unpopular and say they will prevail in protecting the rules, either in the courts or in U.S. Congress.

FCC Commissioner Jessica Rosenworcel, a Democrat, said in a written dissent released on Thursday that the decision grants internet providers “extraordinary new power” from the FCC.

“They have the technical ability and business incentive to discriminate and manipulate your internet traffic. And now this agency gives them the legal green light to go ahead,” she said.

Several state attorneys general said before the vote they would work to oppose the ruling, citing problems with comments made to the FCC during the public comment period. Other critics have said they will consider challenging what they consider to be weaker enforcement.

Net neutrality supporters had rallied in front of the FCC building in Washington before the vote.

The 2015 rules were intended to give consumers equal access to web content and prevent broadband providers from favoring their own content. Pai proposes allowing those practices as long as they are disclosed.

Michael Powell, a former FCC chairman who heads a trade group representing major cable companies and broadcasters, told reporters earlier this week that internet providers would not block content because it would not make economic sense.

“They make a lot of money on an open internet,” Powell said, adding it is “much more profitable” than a closed system. “This is not a pledge of good-heartedness, it’s a pledge in the shareholders’ interest.”

The chief executive of USTelecom, a lobbying group that represents internet providers and the broadband industry, said in a statement the industry has “renewed confidence to make the investments required to strengthen the nation’s networks and close the digital divide, especially in rural communities.”

A University of Maryland poll released this week found that more than 80 percent of respondents opposed a repeal. The survey of 1,077 registered voters was conducted online by the Program for Public Consultation at the University of Maryland from Dec. 6-8.

Reporting by David Shepardson; Writing by Chris Sanders; Editing by Jonathan Oatis and Meredith Mazzilli

Charter Spectrum Hurrying Out 100 Mbps Speed Upgrades Before Year’s End

Updated 12/15: The speed upgrades for several regions including upstate New York have now launched. You may need to reset your modem to get the new speeds. You should see at least 100/10 Mbps. If that does not work, call or chat with Spectrum and have them reauthorize your modem. If you are on a legacy Bright House or Time Warner Cable plan, you will not get these upgrades until you change to a Spectrum plan. We will have a report up on the home page shortly about additional gigabit speed upgrades likely to launch next week later tonight. — PMD

“By the end of the year, Charter’s flagship speed will be an industry leading 100 megabits per second (Mbps) in virtually every market we serve. In the last year, we increased that speed 66% – from 60 Mbps to an even faster 100 Mbps – at no extra cost to our customers. Additionally, in a growing number of markets, we have begun upgrading that flagship speed to 200 Mbps.” — Charter Communications blog post for Nov. 30, 2017

Charter Communications is hurrying out 100 Mbps speed upgrades to “virtually all” its markets, whether customers were originally serviced by Charter or were acquired from Bright House Networks or Time Warner Cable.

The company has been on a publicity drive to suggest its merger/buyout of BH and TWC was consumer-friendly. Charter also wants to reassure shareholders concerned about the ongoing trend of cord-cutting and customer backlash over rising internet prices that the value of Spectrum’s faster internet service has improved.

Unfortunately, its publicity campaign also flies in the face of an industry push to convince Americans the Obama Administration’s Net Neutrality policies have neutered investments in broadband upgrades, which is exactly what did not happen with the second largest cable company in the country.

“Since 2014, Charter has invested more than $21 billion in [upgrades] including video delivery, more efficient bandwidth management and advanced compression technologies,” Charter wrote. “This investment has enabled us to improve the quality of our video while reducing the bandwidth needed for its delivery. The bandwidth that is made available can then be dedicated to significantly increasing our broadband speeds.”

Several legacy Time Warner Cable markets, particularly in upstate New York, New England, and some markets in the deep south and Rockies are still waiting for the digital television conversion that will free up bandwidth for internet speed upgrades. Albany, N.Y. is nearly complete and Rochester, N.Y. is next on the list.

Sources suggest Charter may find a way to boost speeds in almost all of its markets, regardless of whether digital TV conversions are complete. That would mean communities in these areas would see standard internet speeds rise from 60 Mbps to 100 Mbps at no extra charge. Those who agreed to pay Charter’s $199 upgrade fee for “Ultra” 100 Mbps service would see their speeds rise to as high as 300 Mbps.

A quick check showed no speed changes in the Rochester market as of this afternoon, but that could change before Christmas. Customers can check if they received an upgrade by briefly unplugging their cable modem and resetting it. A speed test will verify whether your areas has received an upgrade. Customers still holding onto a legacy Bright House or Time Warner Cable plan will see no speed changes. This is part of Charter’s effort to convince customers to abandon older plans and switch to Spectrum plans and pricing.

If speed upgrades are not in place by the end of 2017, they will be coming for the remaining Time Warner Cable markets in early 2018.

Meanwhile on Oahu, in Hawaii, Spectrum internet customers are welcoming gigabit internet (introductory price $104.99/mo). Those who don’t want to pay that much also received a free speed upgrade. What was 60 Mbps in the summer increased to 100 Mbps in the fall and as of Dec. 1 is now 200 Mbps. Similar speed increases will be coming to the cities that get gigabit upgrades from Charter. We anticipate all of those cities designated for gigabit service from Spectrum already have substantial competition from gigabit speed fiber to the home service from AT&T or Verizon.

Defenders of FCC’s Ajit Pai Miss the Point on Cutting Broadband Speed Standards

Defenders of FCC Chairman Ajit Pai are rushing to defend the Republican majority’s likely support for an initiative to roll back the FCC’s 25/3Mbps speed standard embraced by his predecessor, Thomas Wheeler.

Johnny Kampis, writing for Watchdog.org, claims that broadband speed standard has had an adverse affect on solving America’s rural broadband gap.

After raising that standard, suddenly those areas with speeds below 10 mbps were lumped into the same group with those who could access speeds of 10-25 mbps, resulting in diminished focus on those areas where the broadband gap cut the deepest.

Raising the standard meant, too, that fans of big government could point to the suddenly higher percentage of the population that was “underserved” on internet speeds and call for more taxpayer money to solve that “problem.”

Kampis is relying on the talking points from the broadband industry, which also happens to support the same ideological interests of Watchdog.org’s benefactor, the corporate/foundation-funded Franklin Center for Government & Public Integrity. The argument suggests that if you raise broadband standards, that opens the door to more communities to claim they too are presently underserved, which then would qualify them for government-funded broadband improvements.

Kampis’ piece, like many of those published on Watchdog.org, distorts reality with suggestions that communities with 50Mbps broadband service will now be ripe for government handouts. He depends on an unnamed source from an article written on Townhall.com and also quotes the CEO of Freedom Foundation of Minnesota, which is closely associated with the same Franklin Center that hosts Watchdog.org. Kampis’ piece relies on sourcing that is directly tied to the organization hosting his article.

In reality, rural broadband funding has several mechanisms in place which heavily favor unserved, rural areas, not communities that already have 50Mbps internet access. ISPs also routinely object to projects proposed within their existing service areas, declaring them already served, and much of the funding doled out by the Connect America Fund (CAF) Kampis suggests is a government handout are being given to telephone companies, not municipalities.

Kampis

Kampis is satisfied free market capitalism will eventually solve the rural broadband problem, despite two decades of lackluster or non-existent service in areas deemed unprofitable to serve.

“So while Pai’s critics denigrate him because his FCC is considering lowering that broadband standard, he’s just correcting an earlier mistake, with the realization that the free market, not big government, will solve the rural broadband gap if given enough time,” Kampis writes. “And returning to the old standards will help ensure that the focus will be placed squarely on the areas that need the most help.”

Kampis suggests that free market solution might be 5G wireless broadband, which can potentially serve rural populations less expensively than traditional wired broadband service. Communities only need wait another 5-10 years for that to materialize, if it does at all.

Kampis claims to be an investigative reporter, but he didn’t venture too far beyond regurgitating press releases and talking points from big phone companies and opponents of municipal broadband. If he had spent time reviewing correspondence sent to the FCC in response to the question of easing broadband speed standards, he would have discovered the biggest advocates for that are large phone companies and wireless carriers that stand to benefit the most from the change.

Following the money usually delivers a clearer, more fact-based explanation for what motivates players in the broadband industry. In this case, the 25Mbps speed standard has regularly been attacked by phone and wireless companies hoping to tap into government funds to build out their networks. Traditional phone companies are upset that the 25Mbps requirement means their typical rural broadband solution – DSL, usually won’t cut it. Wireless companies have also had a hard time assuring the FCC of consistent 25Mbps speeds, making it difficult for them to qualify for grants. AT&T wasn’t happy with a 10Mbps standard for wireless service either.

Incidentally, these are the same companies that have failed to solve the rural broadband gap all along. Most will continue not serving rural areas unless the government covers part of their costs. AT&T illustrates that with its own fixed wireless rural broadband solution, which came about grudgingly with the availability of CAF funding.

The dark money ATM network hides corporate contributions funneled into advocacy groups.

The free market broadband solution is rooted in meeting Return On Investment metrics. In short, if a home costs more to serve that a company can recoup in a short amount of time, that home will not be served unless either the homeowner or someone else covers the costs of providing the service. By wiping out the Obama Administration’s FCC speed standard, more ratepayer dollars will be directed to phone and wireless companies that will build less expensive and less-capable DSL and wireless networks instead of investing in more modern technology like fiber optics.

Mr. Kampis, and others, through their advocacy, claim their motive is a reduction in government waste. But in reality, and not by coincidence, their brand of journalism hoodwinks readers into advocating against their best interests of getting fast, future-proofed broadband, and instead hand more money to companies like AT&T. The Franklin Center refuses to reveal its donor list, of course, but SourceWatch reported the Center is heavily dependent on funding from DonorsTrust, which cloaks the identity of its corporate donors. Mother Jones went further and called it “a dark money ATM.”

Companies like AT&T didn’t end up this lucky by accident. It donates to dark money groups that fund various sock puppet and astroturf operations that avoid revealing where the money comes from, while the groups get to claim they are advocating for taxpayers. By no coincidence, these groups frequently don’t attack corporate welfare, especially if the recipient is also a donor.

New York’s rural broadband initiative is on track to deliver near 100% broadband coverage to all New York homes and has speed requirements and a ban on hard data caps.

Raising speed standards does not harm rural broadband expansion. In New York, Gov. Andrew Cuomo’s broadband expansion campaign is on track to reach the remaining 150,000 homes still without broadband access by sometime next year. His program relies on broadband expansion funding that comes with requirements that insist providers offer internet access capable of at least 25Mbps (with a preference for 100Mbps) for $60 or less and a ban on hard usage caps. Kampis claims the 25Mbps speed standard hampers progress, yet New York is the first state in the nation moving towards 100% broadband availability for its residents at that speed or better.

Chairman Pai’s solution is little more than a gift to the country’s largest phone and wireless companies that would like to capture more CAF money for themselves while delivering the least amount of service possible (and keep money out of the hands of municipalities that want to build their own more capable networks). The evidence is quite clear — relying on the same companies that have allowed the rural broadband crisis to continue for more than 20 years is a stupendously bad idea that only sounds brilliant after some corporation writes a large check.

Unfair Tax Policies Disadvantage New Fiber Competitors, Harm Broadband Expansion

Providers attempting to wire rural communities to offer broadband service or a competitive alternative to cable and phone companies face unfair tax and pole attachment fees that often give the advantage to existing companies and deter would-be competitors.

Those differences have a meaningful impact on rural broadband providers in states like New York, where wiring rural upstate communities is being made difficult by bureaucratic pole attachment fee policies and wide differences in property taxation that give an edge to existing cable giants like Charter Communications while hampering small start-ups with costly and confusing tax policies that slow down broadband rollouts.

The Watertown Daily Times recently published an in-depth special report on the broadband challenges impacting northern New York, where fast internet access has evaded some communities for more than two decades. That lack of access is becoming a critical problem for a growing number of employers who are now considering exiting those communities because companies like Verizon, Frontier Communications and Charter/Spectrum are refusing to provide 21st century broadband service in rural upstate communities.

One example is Tupper Lake Hardware in Tupper Lake, N.Y., which wanted to expand, but considered exiting the area instead after being stuck using satellite internet access because no phone or cable company offered broadband service in the area.

“It came to the point where if you are going to make a $1 million investment, we actually talked about this, we said ‘do we put our money into this place or do we just pick up and move?’” general manager Chris Dewyea told the newspaper. “It is real. It sounds dramatic, but that is the way it goes. The connectivity speed that we had with satellite internet was not good enough, so that is when we started on our journey to get high-speed here.”

Calling Verizon, Frontier, or Spectrum was fruitless, so the company picked up the phone and called… the Empire State Forest Products Association, a group that has tangled with internet connectivity problems in upstate New York before. The group pointed the company to Slic Network Solutions, owned by the independent Nicholville Telephone Company, which has spent the last several years slowly expanding the reach of its fiber optic network in the north country. Slic currently provides service to about 10,000 homes in small communities like Belmont, Lake Placid, Schroon Lake, and Titus Mountain.

Like many fiber overbuilders operating in New York, Slic has to plan its network expansion carefully, as it lacks the financial resources and staff of a company like Verizon or Charter. Slic’s fiber service is in very high demand, because the alternatives are almost always satellite internet access or appallingly slow DSL service from Verizon or Frontier, neither of which have shown much interest in delivering the FCC’s 25Mbps definition of broadband. Charter’s Spectrum service is available only in larger concentrated communities that can meet the cable company’s return on investment property density test. Many rural upstate communities don’t.

“In most of the places, there really was the option of satellite. Some places had DSL but it was usually pretty marginal,” said Kevin Lynch, vice president of technical operations & chief operations officer of Slic Network Solutions. “There are a few areas, but very limited, that might have had Spectrum.”

Slic is one of several small fiber providers operating in New York, each trying to cover territories larger phone and cable companies have ignored for years. Cooperation in commonplace among some companies operating in similar regional areas to keep construction and operating costs down. Some providers share their networks to extend their reach. Most target commercial or institutional users but will lease out their networks for residential providers. Some of the state’s middle mile fiber networks were built with economic stimulus money or through other grant or government programs. Others are privately funded. Many are underutilized but lack the funds to expand.

Westelcom, based in Watertown, counts Slic as one of its partners. Westelcom currently limits its business to commercial accounts in its six county service area, which includes Watertown, Malone, Clayton, Elizabethtown, Ticonderoga and Plattsburgh. But it is willing to provide wholesale access to third-party companies that want to serve residential customers.

One of the biggest and most surprising impediments to serving “last-mile” residential customers isn’t the cost of construction or the return on investment. It’s New York’s tax laws. Current tax policy requires fiber providers to pay taxes on the value of the infrastructure being used, regardless of revenue. At present, that tax rate can cost between $25,000 and $30,000 per fiber route mile. If it takes five miles of fiber to reach only a half-dozen homes, the provider would owe New York over $100,000 in taxes alone, making it impossible to recoup costs and drain the provider’s finances.

The National Conference of State Legislatures, a bi-partisan group, published Property Taxation on Communications Providers: A Primer for State Legislatures in 2015, outlining a legacy of inconsistent and often outdated state and local taxation policies across the United States that treat communications providers differently on issues like property tax. The group points out New York’s tax authorities treat cable and phone companies very differently than upstart fiber providers. Mobile phone companies are taxed differently as well:

The taxation of communications property varies widely in New York. There are several types of property taxes that are applied in varying ways to the communications sector. While New York does not generally tax tangible personal property, the state considers lines, wires, poles, electrical conductors, fiber optic equipment, and related equipment to be real property. Landline companies and cable companies are subject to a real property tax on “Special Franchise” property which is centrally administered and assessed using the reproduction cost method by the Office of Real Property Tax Services (ORPTS). The Special Franchise property tax applies to equipment located on public property. In addition, Nassau County and New York City have a “split roll” which  requires higher taxes on the “utility” class which includes landline telephone companies. Wireless companies and cable companies are assessed locally for their real property (land and buildings,  e.g., towers)

In plainer English, Lynch points out Slic is taxed about $465 per mile per year in St. Lawrence County, which is “significantly higher” than what cable companies like Charter pay, because they are taxed differently.

In the college town of Potsdam, Slic pays more than double the school and property taxes paid by Charter Communications, even though it serves fewer customers and earns much less. That disparity forces providers to target their networks in more dense areas like inside towns and villages, which means more customers per fiber route mile, reducing the bite of the tax man.

“Broadband infrastructure is considered real property, so it is taxed just like a house when it is in the right of way. So when we attach to these poles which are in the public right-of-way, we pay taxes on it and it is based on construction costs,” Lynch added. “There are a certain number of customers we have just to break even on those two operational costs and that does not include any of the other overhead and the content, the electronics and all that.”

After paying New York, Slic then faces the bureaucratic challenge of pole attachment permitting and fees. Every pole on which Slic attaches its fiber wiring is owned by someone else, typically utility companies like National Grid, Verizon, or Frontier. Some poles are jointly owned and maintained by the phone and electric company in the area. Fees and procedures vary in different parts of the state. There is generally a very costly pole attachment application fee and ongoing pole rental fees, which in this part of New York can run $400 a mile, per year.

Lynch said the costs of pole attachment fees alone can account for up to 40 percent of Slic’s expansion budget, and those initial fees can run between $10,000-14,000 per mile. This is why fiber overbuilders frequently decide on coverage areas based on customer commitments to sign up for service if it becomes available. This allows companies like Slic to secure the financing required to provision the service. But money alone doesn’t buy instant access.

“We apply to National Grid or whoever the pole owner is and say, ‘We would like to attach to these 30 poles on this road,’ and do a pole application and pay a fee,” Mr. Lynch explained to the newspaper. “They come out, they look at each pole and they determine if there is space on the pole, do they need to rearrange the electrical wires so they are in compliance with the electrical code, do they need to move down the phone lines. A lot of times these poles are jointly owned. It will be National Grid and Verizon, so they have to coordinate and then there might be a section that has Spectrum on it, so you have three or four companies that have to coordinate this effort.”

The state adds its own layer of bureaucracy with different Department of Transportation regions, regional economic regions, and Department of Environmental Conservation regions, each with its own rules and procedures. It is common for fiber projects to cross from one region into another, requiring additional paperwork and likely delays. If a project has to cross into the Adirondack Park, the rules and permits required to manage that are byzantine.

The result of all this is usually a significant delay in getting started, but once the paperwork is complete and fees are paid, the work can go faster than many realize.

“In these areas where we are constructing right now, Schroon Lake and Belmont and Lyon Mountain, we are building three to five miles of fiber per week. Our next group of projects that has been funded by New York state is 300-plus miles of fiber,” Lynch said. “And when I say three to five miles per week, that is per area.”

Fiber providers would like to see tax fairness and a lot less bureaucracy. The rules in states like New York may eventually leave fiber to the home service at a distinct disadvantage, because wireless networks don’t face pole attachment complications and pay lower taxes because their real property is generally a cell tower and the fiber line that connects to it. As it stands, some internet providers may gravitate towards wireless internet solutions in rural areas instead of fiber just to avoid excessive taxes and the pole attachment bureaucracy. Most homes and businesses prefer fiber optic service when given a choice, but without some changes to tax laws and a more centralized, less bureaucratic approach to pole attachments, fiber optics may never make financial sense in rural upstate New York.

Charter Sues Striking Union Over Alleged Acts of Sabotage; Lobbyist Earns from Both Sides

Phillip Dampier October 16, 2017 Charter Spectrum, Public Policy & Gov't 2 Comments

Members of IBEW Local 3 have been on strike for about seven months. (Image: IBEW Local 3)

Charter Communications is suing the International Brotherhood of Electrical Workers Local 3 alleging its striking members are responsible for repeated acts of vandalism and sabotage of Charter’s cable service Spectrum in the New York City area.

The lawsuit, filed last week in Manhattan Supreme Court, claims union members have cut or damaged cables and other property at least 125 times since the union went out on strike in March.

“The sabotage was done purely out of maliciousness,” Charter’s attorneys allege in the lawsuit. “The saboteurs clearly knew the optimal locations where they could quickly cut cable lines to multiple customers without being harmed or observed, suggesting they are cable technicians who work for Charter.”

A Charter spokesman said the company filed the suit to get union members to stop damaging its equipment.

Union members suggest Charter brings no hard evidence to the table about who is responsible. Union officials have repeatedly denied involvement and have urged those responsible to stop, noting it risks turning Spectrum customers against the union.

Meanwhile, a powerful New York City lobbying firm appears to be getting rich representing Charter Communications while also representing three of the cable company’s biggest critics in City Hall, including New York City Mayor Bill deBlasio.

The Daily News reports the MirRam Group represents the mayor, City Council Speaker Melissa Mark-Viverito and Public Advocate Letitia James. James has been a client since 2013 while Mayor deBlasio hired the company in April to assist him with his re-election campaign. The lobbying firm has collected $150,000 from Charter and its predecessor Time Warner Cable in the last 12 months.

The newspaper reports the terms of the contract require MirRam Group to promote Charter’s business with ‘key public officials’ in city and state government, including monitoring legislative developments that could impact on the cable company in New York. The lobbying firm is also required to “promote Charter’s public policy interests” and is not supposed to “represent other clients on matters adverse to or in conflict with” the cable company’s goals.

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