Back in 2006, Alaska Senator Ted Stevens emphatically declared that the Internet was not a truck, but rather a series of tubes.  That’s why Net Neutrality was such a bad idea, get it?

Senator Ted Stevens Infamous “Series of Tubes” Speech from 2006.  (11 minutes)

Fundamentally misunderstanding technology and the Internet is not exclusively the domain of an ex-senator from the State of Palin, however.

North Carolina State Senator David Hoyle (D-Gaston County) managed to illustrate he didn’t know what he was talking about either.

Hoyle’s pretzel-like logic, in opposing municipal fiber broadband projects in the state, is that fiber optics could be obsolete within five years, so we shouldn’t even bother with them:

“You know the technology’s changing daily. Five years, ten years from now … wireless could replace most of fiber optics of coaxial cable or, or copper even. Might become not totally obsolete, but their ability to, uh, you know, to fund the debt service from the hard assets they had to put into the ground.”

If one extends that reasoning to his good friends in the cable and telephone industry — if fiber is potentially obsolete in five years, what about the phone company’s copper wires and the cable company’s coax?  Copper wiring was used for telegraphy starting in the 1830s and is still the backbone of today’s telephone networks.  Coaxial cable was invented in 1880 and still runs into virtually every cable subscriber’s home.  The first commercial application for a fiber optic communications system came in 1977.  In fact, most experts believe fiber optics will be the platform for America’s telecommunications network for at least the next quarter century.  The cable industry promotes its own use of fiber, and forward thinking phone companies like Verizon are relying on fiber to the home networks to stay relevant for the future.

Sen. David Hoyle (D-NC)

Fiber optic has all of the advantages:

• SPEED: Fiber optic networks operate at high speeds – up into the gigabits and still rising
• BANDWIDTH: large carrying capacity, and growing larger as advances continue
• DISTANCE: Signals can be transmitted further without needing to be “refreshed” or strengthened.
• RESISTANCE: Greater resistance to electromagnetic noise such as radios, motors or other nearby cables.
• MAINTENANCE: Fiber optic cables costs much less to maintain, and upgrades can occur without disturbing existing cable — just switch the laser technology used.

The costs to construct fiber networks, which used to be in the thousands of dollars per household, is now well under $1,000 for companies like Verizon.  Keeping happy customers and having the ability to market phone, broadband, and television services across an all-fiber network open new revenue streams which help defray initial expenses.  Fiber is an investment in the future.

Why isn’t wireless going to make fiber networks obsolete?

Allocating sufficient spectrum to support today’s high bandwidth applications is a practical impossibility, especially considering the politics and in-fighting from current spectrum holders to keep their allocations.  Spectrum is a limited resource, which guarantees limited competition, limited bandwidth, and higher prices.  While wireless applications will continue to be an important part of our communications future, it is unlikely they’ll be the favored method to support high bandwidth content in the near term.  Considering the implications of all of the new cell sites required to provide blanket coverage, it may never survive the inevitable howls of protest from neighborhoods who have to live with the eyesores.

Senator Hoyle opened his mouth and stupid fell out.  He’s not just wrong — his comments also carry implications for his constituents.

The City of Gastonia, along with Gaston County jointly filed an application alongside 35 others here in North Carolina seeking to get Google’s 1 Gigabit Fiber Optic to the Home Network.

How do city officials feel about their representative in the state legislature actively trashing fiber networks?  I will have that answer for you soon.

Senator David Hoyle (foreground, with back to camera) tells meeting fiber could be obsolete within five years.  (25 seconds)

Report on Today’s Legislative Meeting

Sen. David Hoyle (D-NC)

As I have been reporting here, the moratorium on municipal broadband is alive and well in the legislative halls of Raleigh.  Senator David Hoyle (D-Gaston), sponsor of last year’s consumer atrocity HB1252, is back again asking Senator Daniel Clodfelter (D-Mecklenburg County) for a vote May 5th on a proposed moratorium for municipal broadband projects.  Hoyle is not running for re-election.

While no new legislation has surfaced yet, several legislators continue to hint that a new bill is forthcoming.  Be assured any such legislation will be designed to protect today’s monopoly/duopoly marketplace for broadband service in North Carolina.

Senator David Hoyle calls on the legislative committee to introduce and vote for a moratorium on municipal broadband projects in North Carolina. (April 21, 2010) (1 minute, 30 seconds)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Meeting Highlights:

Senator Daniel Clodfelter (D-NC)

• Senator Clodfelter opened the meeting stating that he “wants to focus on revenue issues/financing, not whether or not high speed Internet is a good thing.”

• Heather Fennell, from the research division at the General Assembly gave a presentation citing laws that govern cities, the original lawsuit that established precedent for cities to construct municipal fiber networks, what cities have them, and who pays the taxes on different systems.

• Vance Holloman, Deputy Treasurer-State and Local Finance Division spoke next.  He assured the committee and attending audience that North Carolina’s existing municipal systems are in good standing and he expected they would be able to pay down debts incurred from initial construction and deployment costs.  Holloman added the Local Government Commission, which has to approve the financing of these systems, believed these projects represent “solid economic development investments.”  Holloman’s strong presentation should have encouraged legislators to favor economic development from fiber optic broadband, but we had a strong sense several members had already made up their minds made up to oppose these projects.  You will have to convince them to reconsider.

• The next part of this session divided 50 minutes between private commercial providers and municipalities to share their views.

The commercial providers went first, beginning with attorney Marcus Trathen from the law firm Brooks/Pierce.  Today, he was representing the North Carolina Cable Communications Association (NCCCA).  Trathen has also appeared at prior meetings representing the interests of Time Warner Cable.

Trathen’s presentation was about as expected – talking points loaded with misrepresentations and misinformation.  Trathen told the committee the industry does not object if cities build private networks for internal communications (how generous), but doesn’t want those networks competing with NCCCA members.

Kelli Kukura, NC League of Municipalities

Suddenlink Communications’ Bill Paramore and AT&T lobbyist Herb Crenshaw also spoke, speaking in glowing terms about investments already made to improve service in the state.  Crenshaw claimed AT&T is providing U-verse service in North Carolina after spending $1.2 billion dollars on system upgrades, an amount some have questioned (a 2007 press release pegged it at $350 million.)  Of course, North Carolina’s cable and broadband customers who were promised savings from all this “robust competition” have instead been stuck paying annual rate increases that more often than not exceed the rate of inflation.

Next up were the municipalities.

Kelli Kukura from the North Carolina League of Municipalities started by challenging industry propaganda designed to downplay the benefits of municipal broadband.  Kukura noted at least 30 North Carolina communities enthusiastically applied for Google’s proposed 1 gigabit fiber to the home network, illustrating intense interest in fiber networks.  Google has also been an active proponent of municipal broadband, Kukura noted, reminding legislators the search engine giant defended the rights of municipalities seeking to deploy next generation broadband networks.

Among the communities that have their own municipal systems, job growth grew by an average of 6.4 percent.  Kukura cited broadband success stories in Bristol, Virginia and Wilson, North Carolina.

Salisbury small businessman Brad Walser, owner of Walser Technology Group testified that North Carolina community’s new municipal broadband network Fibrant would meet his company’s needs for broadband capacity not available from commercial providers.  Walser noted Salisbury is suffering from an unemployment rate exceeding 14 percent.  Advanced broadband, he believes, could help the city attract new businesses that will help create new, high paying jobs.  Fibrant is expected to launch later this year.

EPB provides broadband service for residents in Chattanooga, Tenn.

Some of the strongest testimony came from Colman Keane, senior strategic planner for municipally-owned EPB Telecom. Keane traveled all the way from EPB’s home in Chattanooga, Tennessee to share his experiences confronting a telecommunications industry hostile to the prospect of facing a new competitor.  Keane has seen and heard the industry arguments all before, noting Chattanooga heard the exact same scare stories legislators in Raleigh were hearing today.  Chattanooga also faced a proposed one year moratorium and a blizzard of industry-backed lawsuits, all which were won by the city.

The benefits of fiber optic broadband in Chattanooga include dramatically-improved broadband speeds as well as a more efficient power grid made possible from smart meters that help Chattanoogans reduce their peak power usage, saving money.  I want to thank Colman for making the long journey on behalf of consumers in North Carolina.

• Finally, Raleigh community activist and former city council candidate Octavia Rainey spoke out against municipal broadband, which concerned me.  Rainey spent her time seated with the telecom lobbyists, and her presentation illustrated the impact of astroturf efforts to co-opt good-hearted consumers into the industry cause. I hope to establish a dialogue with Ms. Rainey to share our information with her and learn more about how she reached her views on this subject.  More to come.

The complete hearing of the Revenue & Laws Committee of the North Carolina Legislature on the issue of the financial implications of municipal broadband, chaired by Senator Daniel Clodfelter (D-Mecklenburg County) (April 21, 2010) (2 hours, 8 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

[Octavia has a long history of community involvement in Raleigh, trying hard to improve her neighborhoods and life in general for area residents, something she is to be applauded for doing.  I suspect Ms. Rainey has formed her views on municipal broadband in part from her close working relationship with AT&T, who has a long history trying to make friends with various community groups in part to win favor for their corporate agenda.  In this case, Octavia admits AT&T's Cynthia Mitchell and her have become "great partners."  AT&T provided support in building an area playground and also paid for lunch for volunteers working on the project, adding the company wanted to be a part of the Raleigh community.  There is nothing wrong with that, of course, but one wonders if the conversation also drifted into AT&T's talking points along the way.

Ms. Rainey also praised AT&T for delivering free Internet service to 290 Raleigh-area families last fall, which would make it ironic if she didn't support municipal broadband, which has a proven track record of erasing the digital divide and lowering prices for hard-pressed consumers.  These are the people that need some fact-based information about the true benefits of municipal broadband.  -- Phillip Dampier]

Today was expected, but disappointing nonetheless.  Hoyle actually suggested that fiber networks may be obsolete in five years and we may be moving to wireless.  If that were true, why is he hellbent on a moratorium and the banning of such networks at the industry’s behest?  Why would the telecommunications industry be concerned about “obsolete fiber networks?”  The only thing obsolete here are the broadband networks owned by big cable and phone companies Hoyle wants to preserve and protect.

Rep. Pryor Gibson (D-NC)

Rep. Pryor Gibson, who we noted is a manager for Time Warner Cable Construction agreed to recuse himself from this issue after it became a point of contention and sat in the back corner of the room.

All of your e-mails and calls have been getting through to the legislators.  This kind of attention makes them nervous and I ask you to continue.  I can assure you that we here at Stop the Cap!, along with Communities United for Broadband, Broadband for Everyone NC, and Save North Carolina Broadband are going to ratchet up attention on this issue.

WHAT YOU CAN DO TO HELP

Continue writing and calling the legislators below and asking them to oppose a moratorium on municipal broadband.  Make plans on May 5th to come to Raleigh and be part of the crowd that opposes the moratorium.  I will post meeting details as they develop.

Please thank the legislators we have identified on this committee as friends of our cause:

• Sen. Daniel T. Blue, Jr. Wake Dan.Blue@ncleg.net (919) 733-5752 Democrat (919) 833-1931 Attorney
• Sen. Fletcher Lee Hartsell, Jr. Cabarrus, Iredell Fletcher.Hartsell@ncleg.net (919) 733-7223 Republican (704) 786-5161 Attorney
• Sen. Josh Stein Wake Josh.Stein@ncleg.net (919)715-6400 Democrat (919)715-6400 Lawyer
• Rep. Paul Luebke (Co-Chair) Durham Paul.Luebke@ncleg.net 919-733-7663 Democrat 919-286-0269 College Teacher
• Rep. Jennifer Weiss Wake Jennifer.Weiss@ncleg.net 919-715-3010 Democrat 919-715-3010 Lawyer-Mom

The rest of the lot either doesn’t support North Carolina consumers or have not yet made their views known on this issue.  We must pin them down and identify those elected legislators that represent the people versus those representing big cable and phone interests.  Be sure to tell them you will interpret any support for a moratorium on municipal broadband to mean they are opposed to competition, opposed to lower prices for consumers, opposed to job creation and economic growth, and obviously for the cable and phone interests that will stop at nothing to keep these systems from being built.

Ask them how they could possibly support keeping North Carolina 41st in the country in broadband rankings, why they are against reducing the 11.2 percent unemployment rate (10th worst in the country) in North Carolina, and how they can justify a vote that guarantees exactly more of the same.  If you are from a city that applied for Google Fiber, remind your legislator passing this kind of hostile moratorium delivers a strong message this state is not serious about the next generation of broadband, and Google should look elsewhere.

Above all, note now that they understand the true implications this moratorium will have on constituents, you are confident there is no way they could ever support such a bad idea.  Their delivery of a strong “no” vote reminds you why you supported them in the last election and will consider doing so again in the next.

Always be polite, professional, and persuasive in your correspondence, but deliver a clear and firm message that supporting a moratorium is completely unacceptable.  Finally, be sure to ask them to get back in touch with you regarding their position on this issue as soon as possible.  Then let us know!

• Sen. Daniel Gray Clodfelter (Co-Chair) Mecklenberg Daniel.Clodfelter@ncleg.net (919) 715-8331 Democrat (704) 331-1041 Attorney
• Sen. Peter Samuel Brunstetter Forsyth Peter.Brunstetter@ncleg.net (919) 733-7850 Republican (336) 747-6604 Attorney
• Sen. David W. Hoyle Gaston David.Hoyle@ncleg.net (919) 733-5734 Democrat (704) 867-0822 Real Estate Developer/Investor
• Sen. Samuel Clark Jenkins Edgecomb, Martin, Pitt Clark.Jenkins@ncleg.net (919) 715-3040 Democrat (252) 823-7029 W.S. Clark Farms
• Sen. Jerry W. Tillman Montgomery, Randolph Jerry.Tillman@ncleg.net (919) 733-5870 Republican (336) 431-5325 Ret’d school teacher
• Rep. Harold J. Brubaker Randolph Harold.Brubaker@ncleg.net 919-715-4946 Republican 336-629-5128 Real Estate Appraiser
• Rep. Becky Carney Mecklenberg Becky.Carney@ncleg.net 919-733-5827 Democrat 919-733-5827 Homemaker
• Rep. Pryor Allan Gibson, III Anson, Union Pryor.Gibson@ncleg.net 919-715-3007 Democrat 704-694-5957 Builder/TWC contractor
• Rep. Dewey Lewis Hill Brunswick, Columbus Dewey.Hill@ncleg.net 919-733-5830 Democrat 910-642-6044 Business Exec (Navy)
• Rep. Julia Craven Howard Davie, Iredell Julia.Howard@ncleg.net 919-733-5904 Republican 336-751-3538 Appraiser, Realtor
• Rep. Daniel Francis McComas New Hanover Danny.McComas@ncleg.net 919-733-5786 Republican 910-343-8372 Business Executive
• Rep. William C. McGee Forsyth William.McGee@ncleg.net 919-733-5747 Republican 336-766-4481 Retired (Army)
• Rep. William L. Wainwright Craven, Lenoir William.Wainwright@ncleg.net 919-733-5995 Democrat 252-447-7379 Presiding Elder

The future of North Carolina’s economic growth is at stake here.

In the last two installments I covered the North Carolina legislators that had a hand in HB1252/S1004, legislation that would have severely curtailed municipal broadband projects in this state, and how they were involved in bringing the bills to the floor. I am now going to focus on some powerful, long term state senators, who have a very influential vote on the Senate floor.

R.C. Soles (D-Brunswick, Pender & Columbus Counties) has served for 17 terms. Soles, as he is not a co-sponsor or sponsor, does carry great influence in the Senate and can gather votes. Soles took a lot of money from the cable/telecom industry in 2008, $7500 in total. From Embarq he took $2000, Time Warner $1000, AT&T PAC $4000, and from the Sprint/Nextel PAC he took $500.

Senator Tom Apodaca (R-Buncombe, Henderson and Polk Counties) is a four term senator who also took a bundle of money from the cable/telecom industry in 2008. In total he received $12500 in contributions. Embarq gave $3000, Time Warner $2500, AT&T PAC $4000, Sprint/Nextel PAC $1000, and AT&T Mobility Employees PAC $2000. There was also a suspicious contribution from one “Jasie Barringer.” Barringer is listed as a housewife and self employed, but in reality she is more likely the chairman of RH Barringer Beverage Distributors (Anheuser-Busch), which is well known to me as it’s here in Greensboro. They also appear to have used a business address for the contribution, which is illegal in North Carolina. I will be filing a complaint with the State Board of Elections.

Senator Dan Clodfelter (D-Mecklenburg County/City of Charlotte), is the six term senator who sits with with Sen. Hoyle of the Revenue Laws Joint Sub-Committee, where they are trying to direct HB1252/S1004. Clodfelter also took a lot of money from the cable/telecom industry, $10250 in total. Embarq contributed $1500, Time Warner $2250, AT&T $2000, NC Cable PAC $2500, Sprint/Nextel PAC $500, NC Association of Broadcasters $500 and NC Broadcast PAC gave $1000.

There are a few other influential legislators in the House and Senate, but they are a little harder to track because of their positions of power. Speaker of the House, Rep. Joe Hackney and President Pro Tempore of the Senate Marc Basnight hold a considerable amount of power and influence, and receive a lot of money from everyone. This makes it a little harder to track. Basnight received $18500 in contributions from the cable/telecom industry and Speaker Hackney received $21000 in contributions.  While this is a lot of industry money, it’s not out of proportion from what they receive from every industry PAC that contributes to their campaign coffers.

If you have not read the first two installments here at Stop the Cap!, they can be found here and here. I will follow up when the first quarter reports become available for 2009.

It’s important to note that in all three articles, acceptance of political contributions in no way implies criminal activity.  It does imply that money from big donors can create a climate of influence with legislators.  This is the culture of politics, whether it is in North Carolina, Washington, or your local city council. Until we can remove the influence of industry PAC money on elected officials, the lobbies for these industries can continue to have the upper hand on the common citizen and what is good for us, unless we stand up and make our voices heard.

The information gleaned from here in North Carolina underlines this point, and I encourage you to review campaign finance reports to investigate why an elected official would be so insistent on standing against consumer and constituent interests.  Not every legislator that accepts contributions automatically means they will not stand with their constituents.  Many will.  But for those who do not, this can help explain why.  Should you require assistance locating, searching, or investigating the tricks of the campaign finance trade, feel free to contact me.

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

The audio from this morning’s conference call to introduce the legislation follows at the bottom of the page. Participants were: Rep. Eric Massa (D-NY), Ben Scott, policy director of Free Press, and Phillip Dampier, founder of StoptheCap!

WASHINGTON, D.C. – Today Congressman Eric Massa formally introduced the Broadband Internet Fairness Act, H.R. 2902. The drafting of the bill was prompted by thousands of constituents and industry experts who voiced their concerns in regard to the outrageous increase in fees proposed by broadband providers.

In April, when Time Warner Cable in Rochester announced that they would begin overcharging customers based on their bandwidth usage, a group of doctors approached Congressman Massa and informed him that if the proposal was enacted, they would be forced to raise rates on their patients. Time Warner’s new program would have raised the cost of their current unlimited internet plan from $50 per month to $150 per month, tripling customers’ monthly bill. The proposed increase in rates gouges customers and limits competition between internet video sites and cable networks that offer identical content. The intended result of this increase would be to reduce the public’s internet usage and send customers back to cable television.

The Broadband Internet Fairness Act will prevent the monopolistic rate increases of broadband companies by promoting the interests of broadband customers. Specifically the bill:

·    Requires internet service providers (ISPs) to submit plans to the Federal Trade Commission (FTC), in consultation with the FCC if they plan to move to a usage-based plan;

·    Prohibits volume usage plans if the FTC determines that these plans are imposing rates, terms, and conditions that are unreasonable or discriminatory;

·    Sets up public hearings for plans submitted to the FTC for public review and input;

·    Only affects internet providers with 2 million or more subscribers;

·    Imposes penalties for broadband ISPs that ignore these rules;

“Access to the internet has become a critical part of our economy and we can’t let corporate giants limit the public’s access to this important tool,” said Congressman Eric Massa. “The Broadband Internet Fairness Act is all about protecting consumers from outrageous internet overcharges and giving the public a voice in this process. I have taken lots of time to work on this bill and have consulted with my constituents and industry experts. Now the hard work of passing this bill begins.”

“Cable providers want to stifle the internet so they can rake in advertiser dollars by keeping consumers from watching video on the Internet.  But so long as Americans can’t choose which cable channels they want to pay for, I don’t think cable operators should be able to determine consumers’ monthly internet usage. Additionally, charging based on a bandwidth usage is a flawed model when the cost of usage is totally out of line with the price. Consumers are much better served by plans based on the speed of the connection rather than amount of bandwidth used. Competition is crucial to our economy and I refuse to let monopolistic corporations dominate the market and gouge my constituents.”

Conference Call to Introduce HR 2902 – the Broadband Internet Fairness Act – Washington, DC & Rochester, NY – June 17, 2009 (26 minutes)
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Rep. Eric Massa (D-NY) introduces pro-consumer legislation designed to stop Internet Overcharging schemes.

Congressman Eric Massa (D-New York) will formally introduce the Broadband Internet Fairness Act (H.R. 2902) this morning on a nationwide conference call with rep0rters.

Rep. Massa is joined by two organizations that helped to bring about the bill’s creation – Stop the Cap!, an all-consumer advocacy group opposed to Internet Overcharging schemes and service limits, and Free Press, a national, nonpartisan organization working to reform the media and promote universal access to communications.

Rep. Massa introduced the bill after hearing an outpouring of complaints from constituents in his home district in western New York.  Time Warner Cable’s Rochester division announced plans to implement an Internet Overcharging scheme on residential customers on April 1st which would dramatically raise rates on broadband service from $50 per month to $150 per month for continued access to unlimited service.  Other subscribers faced the prospect of a severely curtailed broadband service with limited usage allowances and overlimit fees for exceeding them.

“Access to the internet has become a critical part of our economy and we can’t let corporate giants limit the public’s access to this important tool,” said Congressman Eric Massa. “The Broadband Internet Fairness Act is all about protecting consumers from outrageous internet overcharges and giving the public a voice in this process. I have taken lots of time to work on this bill and have consulted with my constituents and industry experts. Now the hard work of passing this bill begins.”

The Broadband Internet Fairness Act will prevent the monopolistic rate increases of broadband companies by promoting the interests of broadband customers.  Specifically the bill:

• Requires internet service providers (ISPs) to submit plans to the Federal Trade Commission (FTC), in consultation with the FCC if they plan to move to a usage-based plan;
• Prohibits volume usage plans if the FTC determines that these plans are imposing rates, terms, and conditions that are unreasonable or discriminatory;
• Sets up public hearings for plans submitted to the FTC for public review and input;
• Only affects internet providers with 2 million or more subscribers;
• Imposes penalties for broadband ISPs that ignore these rules.

Phillip Dampier, a consumer writer from Rochester, New York created a website in 2008 to combat Internet Overcharging schemes.  Stop the Cap! is an all-consumer, all-volunteer website combating Internet Service Providers attempting to impose arbitrary usage limits, unwarranted and overpriced “consumption billing,” and extra fees and penalties on broadband subscribers.  The site has been visited by more than 100,000 people in the past year, particularly during Time Warner Cable’s proposed Internet Overcharging trial.

“When word of Time Warner Cable’s plan reached us in western New York on April Fool’s Day, we had to verify this wasn’t simply a bad joke,” Dampier said.

Phillip Dampier

“The Internet Overcharging scheme Time Warner Cable was proposing would have tripled our broadband bill for the exact same level of service we enjoyed as loyal Road Runner customers since 1998, when the service first became available in Rochester,” Dampier said.

“At a time when the economy is hurting, and our family already spends more than $175 a month on Time Warner Cable services, asking us to pay at least $275 a month was way out of line,” he added.

Dampier’s website quickly mobilized Time Warner Cable customers in all of the cities chosen for the proposed trial.

“People from New York, North Carolina, and Texas may not always agree on everything, but we found common ground with our friends in Austin, San Antonio, Beaumont, and the Triad region of North Carolina in absolute opposition to these pricing schemes,” Dampier said.

Media attention on the story, particularly in Rochester, was relentless.  One news anchor said few issues had provoked as much outrage from viewers than Time Warner Cable’s proposed pricing changes for Internet service.

In mid-April, Time Warner Cable CEO Glenn Britt announced that the company was “shelving” its pricing experiment until customers could be “educated” about the benefits.  Since that time, Time Warner Cable officials have continued to make public statements praising what they call “consumption-based billing.”

Dampier believes that means Time Warner Cable will be back for more.

… Continue Reading

Rep. Eric Massa (D-NY), Phillip Dampier, founder of Stop the Cap!, and Ben Scott, Policy Director of Free Press, will participate on a national conference call Wednesday morning to discuss the “Broadband Internet Fairness Act,” legislation that would protect consumers from excessive Internet overcharges.

The “Broadband Internet Fairness Act” would give the government explicit authority to prevent broadband providers from overcharging for Internet access.

DATE: Wednesday, June 17
TIME: 11:30 a.m ET/8:30 a.m.PT
SPEAKERS:
Rep. Eric Massa (D-N.Y.)
Ben Scott, policy director, Free Press
Phillip Dampier, founder, StoptheCap.com

To join the conference call, dial (888) 792-8352, Access Code 15549429

A recording of the conference call will be available after the event is concluded.

Additional information will be forthcoming shortly.

Beaumont & Golden Triangle, Texas residents were the first to face Time Warner Cable Internet Overcharging experiments.

For awhile there, it seemed like nobody in the Golden Triangle on the Gulf Coast of Texas was paying attention to the fact their region was the nation’s guinea pig for Internet Overcharging schemes.  How wrong we were.

Stop the Cap! reader Mark, who lives just north of Beaumont in the city of Silsbee, had been fighting a one man battle against not one, but two providers serving his community of 7,400 — Time Warner Cable and AT&T.  Mark may exemplify the average consumer in the Golden Triangle, unaware that their broadband service had been subjected to Internet Overcharging experiments until the bill arrived in the mail.  Both providers have a track record of not always disclosing such schemes to their customers when trying to sign them up for service in southeastern Texas.

Both providers have used the area for pricing experiments, providing paltry usage allowances and charging steep overlimit fees for exceeding them.

Mark’s problems began when he unknowingly set himself up to be overcharged later.  Originally a Time Warner Cable customer, Mark decided to give AT&T’s Elite DSL package a try, primarily because it was less expensive than Road Runner service and supposedly faster as well.  AT&T claims their Elite DSL service in Silsbee provides up to 6Mbps down/768kbps up speed for $35 a month, compared with Time Warner Cable’s Golden Triangle Road Runner, providing (at the time) 5Mbps down/384kbps up speed for $44.95 a month.

“After DSL was installed, we discovered we were too far from the [phone company facilities] to get Elite speed, and instead of informing us about the problem, they switched us to Basic service speed, which is up to 768kbps down/384kbps up, and never bothered to tell us,” Mark writes.

The bill Stop the Cap! reader Mark received showing $73 in Internet Overcharging penalties (click to enlarge)

After Mark’s family felt AT&T was too slow to meet their needs, they ventured back to Time Warner Cable for Road Runner service.  The salesperson offered a “welcome back” discount, and mentioned nothing about the fact Time Warner Cable had implemented an Internet Overcharging scheme on the residents of the Golden Triangle region.  Instead of his old service priced at $44.95 a month for unlimited use, his new standard service was priced at $54.95 a month, and was limited to 20GB of usage per month before a $1/GB overlimit penalty kicked in.

When the first bill arrived showing his family exceeded that amount, it was quite a shock.  In addition to the $54.95 charge for “Roadrunner Residential”, there was a $73.00 fee entitled, “Road Runner Select Plan Additional Usage.”  (They also nickle and dimed him $0.99 for a “Paper Invoice Fee.”)

This was the first time Mark had encountered an “additional usage” overlimit fee, so he called Time Warner Cable to investigate.  Despite what the salesperson had sold him on, and online promotions were still selling to attract new customers, Mark learned for the first time Time Warner Cable changed pricing.  The Golden Triangle Division of Time Warner Cable implemented an Internet Overcharging scheme in June 2008, but only applied it to new customers.  Had Mark never left Time Warner Cable for AT&T, he would have never been an unwilling participant in the experiment to extract an extra $73 from his wallet.

Because he returned to Time Warner Cable after the “experiment” commenced, he was stuck.

Mark was angry.  He contacted the Better Business Bureau (BBB), the Federal Trade Commission, and the Federal Communications Commission to complain about unfair business practices, improper disclosure of the Internet Overcharging scheme, and abusive pricing.

Time Warner Cable's 4/7/09 letter in response to a Better Business Bureau complaint regarding Internet Overcharging schemes implemented in the Golden Triangle, Texas (click to enlarge)

The most productive response came from Time Warner Cable, responding to the BBB complaint Mark had filed.  In addition to giving the standard talking points about Internet Overcharging schemes, Alberto Morales, Southwest Division Customer Advocate for Time Warner Cable, suggested the company would do a better job of training salespeople to disclose “the disclaimer regarding the consumption based billing when processing a new Roadrunner order.”  Morales also issued a one time credit for the $73 in overlimit fees charged to Mark’s account.

Mark recognized the language of the letter for what it was — propaganda from a cable broadband provider looking to cash in at the expense of their customers.  Among the dubious reasons given in the letter:

It’s also recognized that the Internet was not designed to handle the mass amounts of video that are now being consumed, therefore there is a risk that service speeds could slow down dramatically.  Video over the internet is an interesting and growing phenomenon.

So are Internet Overcharging schemes, but few would call them “interesting.”  Using the company’s own logic, Time Warner Cable should not be placing video on their own customer website, much less embark on a grand experiment called TV Everywhere to stream enormous amounts of video at broadband speeds to their customers.  Now that is interesting.  The “Internet brownout” theory of slowdowns and outages can occur when a provider chooses to pocket profits instead of keeping up with required investments to maintain their broadband network.  Time Warner Cable CEO Glenn Britt disputes there is a problem with Time Warner Cable’s network as-is, telling a conference sponsored by Sanford Bernstein in May that, “I’m very comfortable with our plant… I don’t see a need for a massive upgrade.”

By implementing the Roadrunner Select Plan (where a customer can choose the level of speed they desire for their internet use), each level has its own cap of bandwidth consumption allowance per month.

Of course, customers cannot choose the one plan that has been an outstanding success for Time Warner Cable since its inception – the one they have right now (or had in the Golden Triangle prior to the “experiment”), unless they were willing to pony up 300% more for the same level of service, based on the last proposal Time Warner Cable introduced before temporarily “shelving the plan” due to customer outrage.

In the Golden Triangle, the maximum amount of usage was 40GB per month, followed by “the sky is the limit” $1/GB overlimit penalties.

Morales claimed that only “5% of users actually exceed their limit.”  But 100% of the Golden Triangle’s customers were left waiting for the arrival of a “gas gauge” measuring their usage, something they would now be required to check daily if they wanted to be sure not to exceed the paltry level of “bandwidth allowance” they were granted.

Time Warner Cable's follow-up letter of 4/29/09, in response to Mark's complaints that he was never told about the Internet Overcharging plan which subjected him to a 20GB monthly limit and $73 in overlimit penalties. (We assume the June 6, 2009 reference is a typo and should have read 2008) (click to enlarge)

Mark wasn’t sold by any of the arguments Morales was making.  That’s because he read Time Warner Cable’s own shareholder documents, as he had been accustomed to doing since he bought shares himself.  They told a very different story — one he shared in a letter to Morales:

“In 2007, Time Warner made $3,730 million dollars on high speed data alone, and then had to turn around and spend $164 million to support the cost of the network,” Mark writes. “In 2007, total profit on high speed data was $3.566 BILLION dollars.”

He adds, “in 2008, Time Warner made $4,159 million dollars on high speed data alone, and then spent just $146 million to support the cost of the network, a decline from the year past.  Total profit in 2008 on high speed data: $4.013 BILLION dollars.”

Mark realized “it cost Time Warner 11% less money to keep their network running in 2008 than in 2007.”

He also knew Time Warner Cable’s experiment in his city was done where the only alternative was his AT&T DSL service, which hardly offered comparable competition.

In a follow-up letter responding to Mark in late April (after the four city experiment was shelved), Time Warner Cable made it very clear their position was firmly planted in the ground:

“There are no plans to deviate from the consumption based billing plan.”

The company also elected to blame the customer for not understanding that an Internet Overcharging scheme had been introduced in the first place.

“When a customer goes online at www.roadrunneroffers.com, a disclaimer appears on the page with the first sentence including the following, “Subject to change without notice.  Some restrictions may apply.  Installation fees may apply.” This information is in view for anyone to read before proceeding with an order entry.

The fact this kind of disclaimer is, in the company’s view, sufficient notice for implementing Internet Overcharging schemes, is hardly adequate.

“We eventually dropped them again,” Mark writes. “We thought a usable slower Internet was better than a faster one we were not going to use.”

Mark realized Time Warner Cable’s business practices and models aren’t a good fit for the way he feels companies should treat their customers, and he dumped his Time Warner Cable stock and did what so many customers have also chosen to do: use the one word Time Warner Cable did seem to understand during their Internet Overcharging experiment:  C A N C E L.

As long as broadband providers continue to believe that Internet Overcharging schemes are the best way to protect their business models and leverage even more profits from their broadband division, action on every front, from legislative to direct consumer protest and refusal to do business with such companies remain the best course of action.

Stop the Cap! will continue to help deliver that action, along with a consumer education campaign that doesn’t require focus group testing to sell, because it’s based on common sense and not dollars.

Still to Come: Mark takes his battle to AT&T and gets an upper level AT&T retention agent to mark his account “exempt” from Internet Overcharging fees and penalties.  Perhaps you can, too!