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Christmas in August: Calif. Allows AT&T to Fine Itself and Keep the Money

att400California’s Public Utilities Commission (CPUC) couldn’t get cozier with AT&T if they moved regulators into the phone company’s plush executive suites.

In a 3-2 decision, the CPUC has given California phone companies that cannot manage to keep their wireline networks in good order an early Christmas, allowing the companies to effectively fine themselves for bad performance and keep the money.

Although the CPUC adopted a series of “automatic fines” for companies with chronic service problems (AT&T is by far the largest offender), it completely negated any sting by allowing companies to skip the fine by demonstrating they’ve invested at least twice the amount of the penalty in their networks. That is an expense AT&T’s bookkeepers can manage to document in minutes just by highlighting AT&T’s investments in other parts of the state. AT&T can argue investments in gigabit fiber in southern California or wiring fiber to business parks and cell sites improves service reliability for at least some customers.

CPUC president Michael Picker isn’t in any hurry either, helpfully offering AT&T and other phone companies two years to complete the investments that will cancel their fines:

In support of a request to suspend the fine, carriers may propose, in their annual fine filing, to invest no less than twice the amount of their annual fine in a project (s) which improves service quality in a measurable way within 2 years. The proposal must demonstrate that 1) twice the amount of the fine is being spent, 2) the project (s) is an incremental expenditure with supporting financials (e.g. expenditure is in excess of the existing construction budget and/or staffing base), 3) the project (s) is designed to address a service quality deficiency and, 4) upon the project (s) completion, the carrier shall demonstrate the results for the purpose proposed. Carriers are encouraged to review their service quality results to find appropriate target projects to invest funds.

Consumer advocates have accused AT&T of underinvesting in their wireline facilities for years. Because the CPUC does not require the investment be specifically targeted to correcting problems that prompted the fine, phone companies can continue to allow high cost/low profit rural infrastructure to deteriorate while targeting service-improving investments in more profitable or competitive service areas.

Steve Blum from Tellus Venture Associates, who has closely tracked telecom public policy matters in California for years, called it the most cynical decision he’s ever seen from the CPUC:

Fines, it seems, are just another cost of doing business for telecoms companies and don’t matter anyway. So why not let them keep the money?

Boiled down, that’s CPUC president Michael Picker’s rationale for establishing new telephone voice service level requirements backed up by a swinging schedule of penalties and then saying but we’ll let you keep the money if you invest it in infrastructure or pay staff. Or something. Anything.

Picker

Picker

Commissioner Mike Florio called the Picker’s proposal “unenforceable.”

The CPUC’s own staff has documented the troubling condition of landline service in the state. A staff report published in September 2014 showed the largest phone companies in the state — AT&T and Verizon (later sold to Frontier Communications) — that control 88% of landlines in California never met the CPUC’s minimum standard of repairing 90% of “out of service” trouble tickets within 24 hours during 2010-2013.

In 2010 and 2011, AT&T and Verizon needed an average of 110 hours to repair 90% of outages. That is 4.5 days. In 2012 and 2013, repair time marginally improved to an average of 72 hours (3 days). That is three days without any phone service or the ability to call 911, something the CPUC staff said compromised public safety.

AT&T and Verizon have papered the CPUC’s walls with “corrective action reports” over the years explaining why they failed to meet CPUC standards and what actions they planned to take to improve compliance. The staff report found those reports never resulted in improved compliance.

Commissioner Catherine Sandoval submitted an alternative plan of simple fines and a reporting system that gives equal weight to outages occurring in areas served by independent phone companies like Citizens Telecommunications Company of California (d/b/a Frontier) and SureWest Telephone (d/b/a Consolidated Telephone). Picker didn’t bother to hold a vote on Sandoval’s proposal, instead bringing his own proposal to the commission that approved it on a 3-2 voice vote. Florio and Sandoval voted no.

Despite the easy out, the state’s phone companies are still complaining the fine system was unnecessary because the free market was best equipped to manage service outages. If customers don’t like their provider, they can switch, assuming there is another provider available in the large rural and mountainous parts of the state.

Meet North Carolina’s Sen. Thom Tillis (R-ALEC/Time Warner Cable)

Tillis was honored in 2011 as ALEC's "Legislator of the Year" and received an undisclosed cash reward.

Tillis was honored in 2011 as ALEC’s “Legislator of the Year” and received an undisclosed cash reward.

Back when we first became aware of Republican member of the North Carolina legislature Thom Tillis around 2010, he was hard at work building his political future just as Republicans were poised to take control of the state legislature for the first time since the days of Reconstruction. Despite running unopposed in 2010, Tillis raised more money from cable and phone companies than any other lawmaker in the state, depositing $37,000 before knowing he would be the next Speaker of the North Carolina House of Representatives in January 2011. To celebrate, AT&T, Time Warner Cable, and Verizon each gave Tillis $1,000 just a few weeks before the swearing-in ceremony. It was money well spent, if you were a cable or phone company doing business in North Carolina.

Tillis left the legislature in 2015 to become the junior U.S. Senator from North Carolina. The telecom industry made sure to keep the campaign contributions flowing, if only to give their thanks for Tillis’ unwavering support for their agenda. Tillis doesn’t care much for his rural constituents still waiting for something better than dial-up internet access and as long as his campaign coffers remain bulging with corporate contributions, he doesn’t think he has much to fear from the state’s voters either. After all, he survived accusations from a resigning House Finance chairman that he had a secret business relationship with Time Warner Cable.

Raleigh’s The News & Observer felt it was their duty to mention Tillis in their editorial pages anyway, taking him to task for “cheering a loss for North Carolina consumers last week after a federal appeals court upheld a cable company protection law that he supported as state House speaker in 2011.”

The newspaper is talking about North Carolina’s infamous anti-public broadband bill that was literally constructed by lobbyists working for Time Warner Cable. The law effectively made it impossible for community broadband providers to bring their much-needed service to adjacent communities that have waited more than a decade for companies like Time Warner Cable, AT&T, CenturyLink and others to offer internet access in rural and underserved parts of the state.

Tillis personally helped shepherd the corporate protection bill, designed to shield incumbent cable and phone companies from community competition, through the state legislature, supporting it every step of the way. It would become law in 2011 and rural broadband in North Carolina hasn’t gotten any better since. In fact, it’s almost stagnant. But Tillis cannot say the same thing about his campaign bank accounts, which continue to bulge with corporate donations now in excess of $11 million.

An effort by the Federal Communications Commission to pre-empt the state law failed in a federal appeals court, much to the delight of Thom Tillis, something the newspaper calls an “insult” to North Carolinians looking for a better deal.

“Today’s ruling affirms the fact that unelected bureaucrats at the FCC completely overstepped their authority by attempting to deny states like North Carolina from setting their own laws to protect hard-working taxpayers and maintain the fairness of the free market,” Tillis said in a statement. Cough, cough.

The newspaper’s response:

Translation: Time Warner and other companies, thank goodness, will retain control of the market without having to worry about towns competing with them and thus will be able to charge people whatever the market will bear.

For Tillis to say the court ruling, which should be appealed, is a triumph for taxpayers is preposterous. It’s a setback. The “free market” he backs is one free of competition from municipal broadband services that offer a better product at a lower price.

Google Fiber Puts Expansion on Hold as It Contemplates Wireless Instead

google fiberFurther expansion of Google Fiber appears to be on hold as the company contemplates moving away from fiber to the home service towards a wireless platform that could provide internet access in urban areas for less money.

The Wall Street Journal today reports Google parent Alphabet, Inc., is looking to cities to share more of the costs of building faster broadband networks or using cheaper wireless technology to reach customers instead.

Six years after Google first announced it would finance the construction of fiber to the home networks, the company has made progress in wiring just six communities, many incompletely. Progress has been hampered by infrastructure complications including pole access, permitting and zoning issues, unanticipated construction costs, and according to one Wall Street analyst, the possibility of lack of enthusiasm from potential subscribers.

Google’s recent acquisition of Webpass, a company specializing in beaming internet access over fiber-connected wireless antennas between large multi-dwelling units like apartments and condos appears to be a game-changer for Google. Webpass was designed mostly to service urban and population dense areas, not suburbs or neighborhoods of single-family dwellings. Webpass’ reliance on wireless signals that travel between buildings removes the cost and complexity of installing fiber optics, something that appears to be of great interest to Google.

Google Fiber is planning a system that would use fiber for its core network but rely on wireless antennas to connect each home to the network, according to a person familiar with the plans. Alphabet chairman Eric Schmidt said at the company’s shareholder meeting in June that wireless connections can be “cheaper than digging up your garden” to lay fiber. The only question is what kind of performance can users expect on a shared wireless network. Google’s plans reportedly do not involve 5G but something closer to fixed wireless or souped-up high-speed Wi-Fi. A web video on Webpass’ website seems to concede “you get best speeds with a wired connection.”

Even Google's wireless technology solutions provider Webpass concedes that wired broadband is faster.

Even Google’s wireless technology solutions provider Webpass concedes that wired broadband is faster.

Former Webpass CEO Charles Barr, now an Alphabet employee, argues wireless solves a lot of problems that fiber can bring to the table.

“Everyone who has done fiber to the home has given up because it costs way too much money and takes way too much time,” Barr said.

Barr’s statements are factually inaccurate, however. Fiber to the home projects continue in many cities, but if they are run by private companies, chances are those rollouts are limited to areas where a proven rate of return is likely. Large incumbent phone and cable companies are also contemplating some fiber rollouts, at least to those who can afford it. Many of the best prospects for fiber to the home service are customers in under-competitive markets where the phone company offers slow speed DSL and cable broadband speeds are inadequate. Rural communities served by co-ops are also prospects for fiber upgrades because those operations answer to their members, not investors. Community broadband projects run by local government or public utilities have also proven successful in many areas.

subBut like all publicly traded companies, Google must answer to Wall Street and their investors and some are not happy with what they see from Google Fiber. Craig Moffett from Wall Street research firm MoffettNathanson has rarely been a fan of any broadband provider other than cable operators and Google Fiber is no different.

“One can’t help but feel that all of this has the flavor of a junior science fair,” Moffett said of Google Fiber, pointing out the service has managed to attract only 53,000 cable TV customers nationwide as of December. Moffett concedes there are significantly more broadband-only customers signed up for Google, but that didn’t stop him from suggesting Google Fiber has had very little impact on increasing broadband competition across the country.

Analysts suggest Google Fiber is spending about $500 per home passed by its new fiber network. But that is a fraction of the $3,000+ per customer often spent by cable operators buying one another.

Google’s wireless deployment will likely take place in Los Angeles, Dallas, and Chicago according to people familiar with the company’s plans. Less dense cities slated for Google Fiber including San Jose and Portland, Ore., may never get any service from Google at all, but they are likely to hear something after a six month wait.

Google is also reportedly asking cities if the company can lease access on existing fiber networks. Another tactic is requesting power companies or communities build fiber networks first and then turn them over to Google to administer. The latter seems less likely, considering there are successful public broadband networks operating on their own without Google’s help.

Sixth Circuit Court of Appeals Reverses FCC Rule Allowing Public Broadband Expansion

6th CircuitA federal appeals court has reversed an effort by the Federal Communications Commission to pre-empt state laws restricting municipal broadband expansion in Tennessee and North Carolina, ruling the FCC exceeded its authority by interfering with both states’ rights to define the boundaries where the community broadband networks can and cannot operate.

In a near-unanimous decision (with some minor dissent from one judge), judges from the Sixth Circuit Court of Appeals found the FCC exceeded their authority.

“The FCC order essentially serves to re-allocate decision-making power between the states and their municipalities,” the court ruled. “This is shown by the fact that no federal statute or FCC regulation requires the municipalities to expand or otherwise to act in contravention of the preempted state statutory provisions. This preemption by the FCC of the allocation of power between a state and its subdivisions requires at least a clear statement in the authorizing federal legislation. The FCC relies upon § 706 of the Telecommunications Act of 1996 for the authority to preempt in this case, but that statute falls far short of such a clear statement. The preemption order must accordingly be reversed.”

In other words, the court ruled that the FCC’s belief that Section 706 of the Telecommunications Act of 1996 allowed it to pre-empt state broadband laws goes too far. The judges opined Congress would have to rewrite the law to clearly state it was acceptable for the federal branch of government to overrule how a community or state decides to draw boundaries for public utilities.

EPB is the municipal utility in Chattanooga, Tenn.

EPB is the municipal utility in Chattanooga, Tenn.

The ruling will have an immediate impact on plans by municipal utility EPB in Chattanooga and city-owned provider Greenlight in Wilson, N.C., to expand service outside of their respective service areas. EPB has been working inside the Tennessee legislature to overturn or change the current broadband law but has been unsuccessful so far. Comcast and AT&T have lobbied the Tennessee legislature to keep municipal competitors from expanding, even where neither company offers service.

“Ultimately, Tennessee’s broadband gap is a problem for Tennesseans, and we need a Tennessee solution,” said David Wade, president of EPB. “We will continue to work with the growing number of state legislators and grassroots citizens interested in removing the barriers that prevent EPB and other municipal providers from serving our neighbors in surrounding areas who have little or no access to broadband. We are further encouraged by Commissioner Randy Boyd’s interest in addressing the lack of broadband in rural areas. As the head of the Tennessee Department of Economic and Community Development, he is especially well positioned to join with state lawmakers in addressing this challenge on behalf of Tennesseans.”

Greenlight announces gigabit service for Wilson, N.C.

Greenlight announces gigabit service for Wilson, N.C.

North Carolina’s law was effectively drafted by Time Warner Cable, who shepherded the bill through the Republican-controlled state legislature, making huge political campaign contributions along the way, eventually winning enough votes to see the bill become law.

The ruling is a serious blow to FCC chairman Thomas Wheeler, who made municipal broadband expansion one of his active agenda items at the FCC. Wheeler believed the two state laws were not supposed to inhibit rural broadband expansion. Critics of the laws contend they were written and lobbied for by the same incumbent cable and phone companies that could eventually face competition from public broadband networks.

“Let’s be clear: industry-backed state laws to block municipal broadband only exist because pliant legislators are listening to their Big Cable and Big Telecom paymasters,” said Michael Copps, a former FCC commissioner. “This decision does not benefit our broadband nation.”

Wheeler

Wheeler

Wheeler tacitly agreed, saying today’s decision “appears to halt the promise of jobs, investment and opportunity that community broadband has provided in Tennessee and North Carolina.”

“[Since 2015], over 50 communities have taken steps to build their own bridges across the digital divide,” Wheeler said in written comments. “The efforts of communities wanting better broadband should not be thwarted by the political power of those who, by protecting their monopoly, have failed to deliver acceptable service at an acceptable price.”

The ruling can be appealed to the U.S. Supreme Court, and the FCC has an excellent chance of getting the high court to overturn today’s decision. Rulings issued by the Sixth Circuit were reversed by the Supreme Court 24 out of the 25 times they were reviewed in the five annual terms starting in October 2008 and ending in June 2013 — the highest number of any federal appellate court during that time period.

Broadband activists can also return to the two state legislatures and urge that the broadband laws be modified or repealed. Wheeler seems ready to join the fight.

“Should states seek to repeal their anti-competitive broadband statutes, I will be happy to testify on behalf of better broadband and consumer choice,” Wheeler said. “Should states seek to limit the right of people to act for better broadband, I will be happy to testify on behalf of consumer choice.”

Pre-Empting Moronic Broadband Law Means Everything to Rural North Carolina

greenlightThe community of Pinetops, N.C. has finally got 21st century gigabit broadband, but no thanks to a state legislature so beholden to Time Warner Cable, it let the cable giant write its own law to keep potential competitors away.

The passage of H129 was almost a given after Republicans regained control of both chambers of the state legislature in 2011 for the first time since 1870. The bill made it almost impossible for any of the state’s existing community-owned broadband networks to expand out of their immediate service areas. It also discouraged any other rural towns from even considering starting a public broadband network to solve pervasive broadband problems in their communities.

It was not the finest moment for many of H.129’s supporters, who had to explain to the media and constituents why the state’s largest cable operator needed protection from potential competition and more importantly, why public officials were catering to the corporate giant’s interests over that of the public.

"I wish you'd turn the camera off now because I am going to get up and leave if you don't," said Rep. Julia Howard

“I wish you’d turn the camera off now because I am going to get up and leave if you don’t,” said Rep. Julia Howard

Rep. Julia Howard (R-Davie, Iredell) found herself losing her cool when WNCN reporters in Raleigh caught up with her and confronted her with the fact her campaign coffers had been filled by the state’s largest telecom companies. She didn’t have an answer for that. Moments later, she appeared ready to flee the interview.

“I wish you’d turn the camera off now because I am going to get up and leave if you don’t,” Howard told the reporter.

Rep. Marilyn Avila was so close to Marc Trathen, then Time Warner Cable’s top-lobbyist in the state, we decided five years ago it would be more accurate to list Time Warner Cable as her sole constituent. Avila’s name appeared on the bill, but it was readily apparent Time Warner Cable drafted most of its provisions. The nearest city in Avila’s own district wanted no part of H129, and neither did many of her constituents.

The bill managed to pass the legislature and after becoming law effectively jammed up community broadband expansion in many parts of the state.

It would take the Federal Communications Commission to pre-empt the legislation on the grounds it was nakedly anti-competitive and prevented broadband improvements in communities major telecom companies have ignored for years.

As a result of the FCC’s actions, the community of Pinetops now has access to gigabit broadband, five years late, thanks in part to Rep. Avila who got a $290 dinner for her efforts and was honored as a guest speaker at a cable industry function in recognition of her service… to Time Warner Cable.

Rep. Avila with Marc Trathen, Time Warner Cable's top lobbyist (right) Photo by: Bob Sepe of Action Audits

Rep. Avila with Marc Trathen, Time Warner Cable’s top lobbyist (right) Photo by: Bob Sepe of Action Audits

Greenlight, Wilson’s community-owned fiber to the home provider, switched on service in the community this spring to any of the 600 Pinetops homes that wanted it, and many did.

“We just love it!” said Brenda Harrell, the former acting town manager.

In fact, Greenlight is now delivering the best broadband in Edgecombe County, and deploying fiber to the home service was hardly a stretch for Greenlight, which was already installing fiber optics to manage an automated meter infrastructure project. The only thing keeping better broadband out of the hands of Pinetops residents was a law written by an industry that loathes competition and will stop it at all costs. Time Warner Cable didn’t bother to offer service in the community even after its bill became law and residents endured years of unreliable DSL or dialup access instead. Talk about a win-lose scenario. Time Warner Cable got to keep its comfortable cable monopoly while many families had to drive their children to businesses miles away just to borrow their Wi-Fi signal to finish homework assignments.

Faster broadband is likely to be transformative for the quiet rural community. Current town manager Lorenzo Carmon sees more than nearby fields of sweet potatoes and soybeans. With gigabit fiber and cheap local housing, Pinetops could become a bedroom community for upper income professionals now living in Greenville, a university town heavily populated by doctors, students, and high-tech knowledge economy workers. If and when they arrive, they’ll find a tech-ready community, right down to the local Piggly-Wiggly supermarket, which now has fiber fast internet service too.

pinetopsPinetops offers proof of the obscenity of bought-and-paid-for-politicians supporting corporate protectionism that harms people, harms education, harms jobs, and leaves rural communities with no clear path to the digital economy of the 21st century. Legislation like H129, which continues to be enforced in more than a few U.S. states, needs to be pre-empted nationwide or even better repealed by state legislators.

But North Carolina’s legislature still isn’t getting the message. They are outraged the FCC outsmarted Time Warner Cable and them, and are now wasting time and resources to have the FCC’s pre-emption overturned in court, evidently so that rural North Carolina can continue to tough it out with DSL indefinitely. That’s political malpractice and North Carolina voters need to show the door to any elected representative that cares more about the interests of a giant cable company than what is good for you and your community. Reps. Avila and Howard don’t have to live with 3Mbps DSL, so why should you?

“If the private sector is not providing the services, the government has to step in,” said Carmon. “The internet is just like electricity. You can’t live without it.”

We couldn’t agree more.

Hillary Clinton’s Broadband/Tech Policies: Aspirational, Bureaucratic, and Often Vague

(Editor’s Note: In keeping with the changes introduced by the latest “AP Stylebook 2016,” as much as it pains us, starting today we will refer to the “internet” in lowercase.) 

clintonThe internet.

“I have a plan for that.”

High tech jobs.

“I have a plan for that.”

Facilitate Citizen Engagement in Government Innovation.

Yes, Democratic presidential candidate Hillary Clinton has a plan for that, too. Whatever “that” is, there is essentially a four-year plan.

Hillary Clinton’s Initiative on Technology & Innovation” runs 15 pages and immediately reminds readers of the menu at Cheesecake Factory. There is literally something for everyone. It’s surprisingly robust for someone who professed she didn’t understand much of the email controversy she entangled herself in while serving as Secretary of State and admittedly doesn’t know how to work a fax machine. The question is, if voters choose Mrs. Clinton as the next president of the United States, how can they be sure her administration will achieve those promises, starting with a commitment to bring internet service to 100 percent of the country.

opinionBelieve it or not, there are organizations out there that track just how many of these pledges are actually kept during each administration, and surprisingly the track record is better than you might think. Politifact’s Obameter shows the Obama Administration achieved the majority of its tech policy objectives, compromised on a few others, and broke its promise on just one: Requiring companies to disclose personal information data breaches.

After almost two decades of telecommunications deregulation, President Obama turned plenty of attention to internet issues in the last two years of his second term. His de-facto enforcer turned out to be FCC Chairman Thomas Wheeler, who has been tenaciously dismantling years of an industry-fueled “trust us, we know best” regulatory policy framework partly established during the (Bill) Clinton Administration. An exception to the usual revolving door of regulators taking well paid jobs in the private sector after leaving government, Wheeler has gone the other way — leaving the private sector as a former telecom lobbyist and venture capitalist to serve as FCC chairman during Obama’s second term. He’s a huge improvement over former chairman Julius Genachowski, who was typically resolute on telecom issues until he wasn’t.

Politifact's Obameter gives high marks to President Obama for delivering on his tech issues platform.

Politifact’s Obameter gives high marks to President Obama for delivering on much of his tech issues platform.

Many progressives looking to keep or even build on Wheeler’s willingness to check telecom industry power are unsure whether Hillary Clinton will be tenacious like Sen. Elizabeth Warren or get up close and personal with big telecom companies, like former Tennessee congressman Harold Ford, Jr., who still serves as honorary chairman of the industry front group Broadband for America.

Progressives with long memories do not fondly recall the first Clinton Administration’s willingness to compromise away or abandon major policy positions it seemed steadfast on during two campaigns. After the 1992 election, Knight-Ridder Newspapers compiled a list of 160 specific commitments made by Bill Clinton. As he approached the end of his first term, the newspaper chain found Clinton managed to achieve 106 of them — a surprising 66% success rate. The reason for the perception-reality gap? Many of those commitments involved low-key, barely noticed policy changes or were originally so broadly defined as to make them achievable based on even the thinnest evidence of change.

The George W. Bush administration managed worse under a perpetual cloud of post Bush v. Gore partisanship and a change in priorities after 9/11, leading to a failure to deliver on most of his policy positions and pledges, according to CBS News. But the Bush Administration’s love of deregulation was well-apparent at the FCC during his two terms in office under FCC chairmen Michael Powell (now a top cable industry lobbyist) and Kevin Martin. Some of those deregulation policies have been reconsidered during the Obama Administration, and some voters are wondering if that will stay true should Mrs. Clinton be our next president.

Many of Clinton’s pledges on tech issues are bureaucratic crowdpleasers that have little immediate relevance or understanding outside of Washington. There are expansions in various federal programs, appointments of new federal overseers to keep a lookout for burdensome regulations on the state and local levels, and a variety of programs to expand broadband at a growing number of “anchor institutions” (not your home or business) through the use of public-private partnerships. It is worth noting many similar projects have already been up and running for at least a decade. Some of these anchor institutions cannot afford to pay the ongoing cost of getting service from these projects, and many are already served more than adequately, with capacity to spare. As we reviewed Mrs. Clinton’s tech policy positions, it also became clear the greater the scope and likely cost of any single pledge, the more vague it seemed to be, especially regarding the money required to pay for it and how its success will be measured.

America's rural broadband problem.

America’s rural broadband problem.

In particular, Mrs. Clinton is promising to “finish the job of connecting America’s households to the internet, committing that by 2020, 100 percent of households in America will have the option of affordable broadband that delivers speeds sufficient to meet families’ needs.”

Left undefined: what is “affordable,” what speeds are “sufficient” to meet families’ needs, and what technologies will be used to deliver it. Mrs. Clinton is satisfied with “directing federal agencies to consider the full range of technologies as potential recipients—i.e., fiber, fixed wireless, and satellite—while focusing on areas that lack any fixed broadband networks currently.” In other words, doing exactly the same thing they already do today.

Satellite internet access, as it now exists, often performs much slower than the FCC’s definition of broadband – consistent download speed of 25Mbps. Most Americans subscribed to traditional DSL service don’t receive true broadband speeds either. Since satellite internet technically reaches the continental United States already, there will be plenty of ways for Mrs. Clinton to “declare victory” on this pledge without allocating the billions needed to provide quality wired or high-speed wireless broadband to still-unserved rural America.

Mrs. Clinton also proposes a new “model digital communities” grant program that will “leverage the $25 billion Infrastructure bank she plans to establish” to facilitate access to high-speed internet. Again, much of this proposal is left woefully undefined. Structured properly, this could be used to develop high-tech cities with high-speed service such as in Kansas City (Google) or Chattanooga (EPB Fiber). These could offer a road map for other communities. The problem is finding the money to build such networks. Private providers will argue they already have advanced networks that don’t require public tax dollars, so these projects are unnecessary. Local governments might admit if they don’t secure similar federal funding that “model cities” get to help cover some of the costs, they won’t proceed. Others may philosophically object to having the federal government meddling in overseeing local projects. Some others might prefer the money be simply spent to wire up rural communities that don’t have any access at all and call it a day.

Put it (almost) anywhere.

Put it (almost) anywhere.

The Clinton campaign is also sure to attract fans among the country’s wireless carriers because her campaign promises to review regulatory barriers the phone and cable companies deal with, particularly pole access, zoning and cell tower issues, streamlining small cell placement, and continued promotion of “climb/dig once” policies which encourage placing fiber and/or conduit in trenches whenever/wherever a utility performs upgrades or outdoor maintenance. Oh, and she’s for 5G spectrum allocations as well. None of this, pardon the pun, is groundbreaking either.

Clinton is more specific supporting the Obama Administration’s Net Neutrality policy, backed by Title II authority, allowing the FCC latitude to manage abusive ISP behavior in a barely competitive marketplace. But she stops well short of criticizing companies about some of their current abusive, anti-consumer policies. She has nothing to say about data caps or zero rating, pricing or poor service, and doesn’t lament the sorry state of competition in the American broadband marketplace.

Clinton’s policy positions seem to suggest the federal government will have to help multi-billion dollar phone and cable companies get over their Return On Investment anxieties by subsidizing them to encourage rural broadband or enhancing outdated infrastructure. We’d prefer a position that moves this country towards universal broadband service, even if it comes at the price of short-term profits at the nation’s top ISPs. It would be useful to see some politicians stand up and suggest Comcast and AT&T, among others, are not entirely paragons of virtue, and they need to do more to solve this pervasive problem. That is something their customers already understand. In return for the billions in profits they earn annually in a de facto duopoly, they should be willing to devote more energy towards network expansion and less on cooking up schemes like data caps/zero rating and the usual share buybacks, dividend payouts, acquisitions and executive compensation. Asking nicely doesn’t seem to work, so now it’s time to tell them.

Although we’ve been a bit tough on Mrs. Clinton, we have not forgotten her likely opponent, Donald Trump, so far lacks any coherent summary of his tech policies. We do know he opposes Net Neutrality because he believes it is an Obama-inspired “attack on the internet” in a “top-down power grab.” Trump believes Net Neutrality will somehow be used to “target conservative media.” That makes about as much sense as saying pistachio is a liberal ice cream flavor. Trump’s team has a lot of work to do before November.

Cable Industry Frets Over FCC’s “Artificial Competition” Requirement in Charter Merger

loophole_breakfast_of_lawyers_smallA condition imposed by the Federal Communications Commission requiring newly merged Charter-Time Warner Cable-Bright House to expand service into at least two million new homes already served by another cable or phone company already offering High Speed Internet is causing heartburn for smaller cable and phone companies that fear government-mandated competition in their service areas.

FCC chairman Thomas Wheeler has long believed that cable operators could compete against one another for customers, driving down prices for consumers while forcing service improvements. One of the conditions approving the Charter deal could have put Wheeler’s theory to the test, but not if Charter can help it.

Charter CEO Thomas Rutledge implied that he will continue to shield fellow cable operators from unwanted competition.

“When I talked to the FCC, I said I can’t overbuild another cable company, because then I could never buy it, because you always block those,” Rutledge said at last month’s MoffettNathanson Media & Communications Summit. “It’s really about overbuilding telephone companies.”

It seems unlikely Charter will ever directly overbuild one of its friends in the cable industry, especially important ones like Comcast, Cox, and Cablevision. Smaller independent cable companies don’t feel as secure, which is why the trade group that represents many of them, the American Cable Association, has tried to get the FCC to back off.

charter twc bh“The overbuild condition imposed by the FCC on Charter is stunningly bad and inexplicable government policy,” ACA president Matthew Polka said in a statement. “On the one hand, the FCC found that Charter will be too big and therefore it imposed a series of conditions to ensure it does not exercise any additional market power. At the same time, the FCC, out of the blue, is forcing Charter to get even bigger.”

The FCC probably crafted the deal conditions to force Charter to compete with other cable operators, because one million of those new customer locations must be where at least 25Mbps broadband service is already available. That protects many phone companies still offering DSL as an afterthought, because most don’t offer speeds anywhere close to 25Mbps. But the FCC left several counter-intuitive loopholes in the language that Republican FCC commissioner Ajit Pai says lends credibility to the ACA’s argument.

“Unless Charter chooses to exclusively overbuild areas served by Comcast, which I find highly unlikely, Charter’s increased broadband market share will come at the expense of smaller competitors,” Pai wrote in comments about the proposal.

unitelNotably, Charter is allowed to buy up other small telecom companies and count up to 250,000 of their customers towards the one million new homes served requirement. If those are small rural cable companies, that means the FCC is allowing Charter to grow even larger instead of providing more competition. Charter could also choose to overbuild municipal broadband providers and co-ops, especially in areas next to existing Charter/TWC/Bright House systems. That would harm the FCC’s current interest in removing roadblocks to publicly owned broadband networks. Enthusiasm for such networks could be dampened if Charter is willing to wire the area at their own expense.

Rutledge’s announcement is sure to make life uncomfortable for a number of rural phone companies that have invested in fiber network upgrades and now face the potential of Charter taking away customers that are helping to pay off those upgrades.

An unintended consequence of the FCC’s various loopholes could place a heavy burden on independent telephone companies that invested in network upgrades for faster broadband even as wealthier and larger phone companies are protected from that competition by delivering frustratingly slow DSL.

One potential target for a Charter overbuild could be UniTel, headquartered in Unity, Maine. UniTel offers residential customers in Albion, Dixmont, Newburgh, Thorndike, Troy, and Unity broadband speeds up to 1 gigabit. Unity is located between Bangor and Portland — both served by Time Warner Cable (now Charter).

Phone companies like UniTel call the FCC’s mandate “artificial competition” that could put it and other rural independent phone companies into financial distress. UniTel has a speed edge over anything Charter plans to offer customers in the immediate future as it deploys fiber to the home service, but television is another matter. One of the benefits of being a large cable company is volume-discounted pricing for cable television networks. Smaller independent operators cannot compete when wholesale television programming discounts are calculated in, allowing larger companies to undercut smaller ones with lower pricing.

UniTel officials criticized the FCC for creating deal conditions that Charter will exploit to the detriment of improving rural broadband service.

“Rather than allow New Charter to unilaterally narrow the scope of the buildout condition to meet its own business objectives, UniTel respectfully urges that the Commission should act to narrow the scope of any buildout condition, not to meet the private business objectives of New Charter, but rather to meet the public policy objectives of universal service in rural areas,” the company argued in its filing with the FCC.

A handful of rural telecom associations generally agree with UniTel and want the FCC to retarget Charter’s buildout requirements to fixing the rural broadband problem by expanding into unserved service areas instead.

Digital Sub-Channels, Cost-Cutting Cause Havoc for Adjacent Market Cable-TV Carriage

wbngTime Warner Cable subscribers in Otsego County, N.Y. have been able to watch WBNG-TV, the CBS affiliate in Binghamton, since there has been a cable company called Time Warner Cable. But as of yesterday, that is no longer the case. In Baxter County, Ark.,  Suddenlink customers suddenly lost KARK (NBC) and KTHV (CBS), two stations from Little Rock, after the cable company decided it would henceforth only carry KYTV (NBC) and KOLR (CBS) instead. Part of the problem for subscribers is those two stations are located in Springfield, Missouri, a different state.

Time Warner Cable wasted no time yanking WBNG off the lineup of their Oneonta and Cooperstown cable systems. WBNG received a letter informing them of the decision on June 16. Two weeks later, the channel was replaced with WKTV from Utica, which is a secondary affiliate of CBS (WKTV has been an NBC affiliate for decades, but through the use of digital subchannels, WKTV has managed to lock down affiliations with CBS, NBC, CW, and Me-TV). Time Warner argues Otsego County is in the Utica television market, such as it is, so there is no reason to spend more to put Binghamton stations on the lineup as well.

Oneonta, N.Y. is located between Binghamton and Utica.

Oneonta, N.Y. is located between Binghamton and Utica.

karkAnother cable company with cost-cutting fever is Altice-owned Suddenlink, which stopped carrying the two Little Rock-based broadcast stations in northern Arkansas on June 7, leaving KATV (ABC) as the only central Arkansas-based news outlet on the cable provider’s Mountain Home-area system.

The decision to drop the two Little Rock channels was made at the corporate level, local employees told The Baxter Bulletin, and the Mountain Home office had no input in that decision and were not allowed to talk about it.

The mayor of Mountain Home sure is, however.

“We’ve had a lot of people calling in, coming by the office,” Mayor Joe Dillard told the newspaper. “Several have been in a couple times. I do not understand why we got two of our main channels in the state taken away.”

An authorized Suddenlink spokesperson finally admitted it was about the money.

“In recent years, local broadcast station owners have begun asking for increasingly larger amounts of money in exchange for allowing us to renew contracts to carry their stations,” said Gene Regan, senior director of corporate communications for Suddenlink. “To help keep down the costs of providing services to our customers, we have made the decision to drop out-of-market stations that duplicate network affiliations with other existing in-market stations.”

That policy has been gradually implemented in a growing number of Suddenlink-served communities, which are often exurban or rural towns located between two larger metropolitan areas. These are the areas most likely to receive multiple network affiliates from different nearby cities.

mountain homeSuddenlink has standing orders from Altice to look for savings wherever possible, but none of those savings are returned to subscribers. The loss of the stations has not reduced anyone’s cable bill and Suddenlink recently moved TBS and INSP — a Christian cable network — to a more costly Expanded Basic tier. In place of the two networks dropped from the Basic package are home shopping networks that actually make Suddenlink money – Evine Live and Jewelry TV.

“I’m disappointed,” Anna Hudson of Bull Shoals told the newspaper. “I have friends in Little Rock, in Batesville. I like to know what’s going on in Arkansas, not in Missouri. It doesn’t help when the Legislature is in session, that will not be covered by the Springfield stations.”

America’s 5G Revolution Comes By Giving Wireless Industry Whatever It Wants

Wheeler

Wheeler

FCC chairman Thomas Wheeler today told an audience at the National Press Club that 5G — the next generation of wireless networks — “is a national priority, and why, this Thursday, I am circulating to my colleagues proposed new rules that will identify and open up vast amounts of spectrum for 5G applications.”

Wheeler’s proposal, dubbed “Spectrum Frontiers,” is supposed to deliver wireless connectivity as fast as fiber optic broadband, and in Wheeler’s view, will deliver competitive high-speed access for consumers.

“If the Commission approves my proposal next month, the United States will be the first country in the world to open up high-band spectrum for 5G networks and applications,” said Wheeler. “And that’s damn important because it means U.S. companies will be first out of the gate.”

Central to Wheeler’s 5G proposal is opening up very high frequency millimeter wave spectrum — for unlicensed and licensed data communications. Wheeler named two in his speech: a “massive” 14GHz unlicensed band and a 28GHz “shared band” that will allow mobile and satellite operators to co-exist.

“Consider that – 14,000 megahertz of unlicensed spectrum, with the same flexible-use rules that has allowed unlicensed to become a breeding ground for innovation,” Wheeler said.

5g“Sharing is essential for the future of spectrum utilization. Many of the high-frequency bands we will make available for 5G currently have some satellite users, and some federal users, or at least the possibility of future satellite and federal users,” Wheeler noted. “This means sharing will be required between satellite and terrestrial wireless; an issue that is especially relevant in the 28GHz band. It is also a consideration in the additional bands we will identify for future exploration. We will strike a balance that offers flexibility for satellite users to expand, while providing terrestrial licensees with predictability about the areas in which satellite will locate.”

The CTIA – The Wireless Association, America’s largest mobile carrier lobbying and trade association, is all for opening up new spectrum for the use of their members — AT&T, Verizon Wireless, Sprint, T-Mobile, among others. They just don’t want to share it. Ironically, they are calling on the FCC to regulate who gets access to what frequencies and what services can use them. They’d also appreciate federal rules restricting or preempting local officials responsible for approving where new cell towers can be located, and some form of price regulation for backhaul services would also be nice:

First, we need the right rules for high-band spectrum based on a time-tested regulatory framework. It must strike a reasonable balance for licensed and unlicensed use while promoting investment with clear service and licensing rules. We should avoid experimenting with novel spectrum sharing regimes or new technology mandates.

Second, we need the right rules to help build our 5G infrastructure. Traditional spectrum travels many miles, depending on large cell towers to transmit signals. In contrast, high-band spectrum – capable of carrying greater amounts of data –travels meters, not miles and will require the deployment of thousands of new small cells the size of smoke alarms. This network evolution requires a new infrastructure approach, and Congress, the FCC and states must streamline and simplify local siting and rights of way rules.

Wheeler recognizes that 5G services will work very differently from the 3G and 4G networks we’ve used in the past.

ctia

CTIA is the wireless industry’s biggest lobbyist and trade association.

“5G will use much higher-frequency bands than previously thought viable for mobile broadband and other applications,” Wheeler said. “Such millimeter wave signals have physical properties that are both a limitation and a strength: they tend to travel best in narrow and straight lines, and do not go through physical obstacles very well. This means that very narrow signals in an urban environment tend to bounce around buildings and other obstacles making it difficult to connect to a moving point. But it also means that the spectrum can be reused over and over again.”

In other words, think about 5G as an initially limited range wireless network that may turn out to be best suited for fixed wireless service or limited range hotspots, especially before network densification helps make 5G service more ubiquitous. The wireless industry doesn’t think Wheeler’s vision will be enough to resolve capacity issues in the short term, and is calling on the FCC to release even more low and mid-band spectrum in the 600MHz range that can travel inside buildings and offer a wider coverage area.

Wheeler’s recognition that 5G’s shorter range signals will likely require a massive overlay of new infrastructure has also opened the door for the CTIA to call on the FCC to revisit local zoning and antenna placement rules and policies, with the likely goal of preempting or watering down local authority to accept or reject where cell phone companies want to place their next small cell or cell tower. Wireless companies are also expected to push for easy access to utility poles, time limits to approve new cell tower construction applications, and pricing regulation for fiber lines needed to connect 5G infrastructure to backhaul networks.

Cell tower camouflage failure.

Cell tower camouflage failure.

On the issue of backhaul — the connection between a cell tower and the wireless carrier’s network, the FCC is planning a pro-regulatory “anchor pricing” approach to benefit wireless companies. Consumers can also relate to being overcharged for slow speed Internet access with little or no competition, but the FCC is only acting for the benefit of the wireless companies for now — the same companies that would undoubtedly complain loudly if anchor pricing was ever applied to them.

“Lack of competition doesn’t just hurt the deployment of wireless networks today, it threatens as well to delay the buildout of 5G networks with its demand for many, many more backhaul connections to many, many more antennae,” complained Wheeler. “Before the end of this year the Commission will take up a reform proposal – supported by the nation’s leading wireless carriers, save one – that will encourage innovation and investment in Business Data Services while ensuring that lack of competition in some places cannot be used to hold 5G hostage.”

While Wheeler’s goals are laudable, there are stunning examples of hypocrisy and self-interest from the wireless industry. Yet again, the industry is seeking regulatory protection from having to share spectrum with unlicensed users, existing licensees, or competitors.  No letting the “free market” decide here. Second, there are absolutely no assurances the wireless industry will deliver substantial home broadband competition. Verizon and AT&T will be effectively competing with themselves in areas where they already offer wired broadband. Is there a willingness from AT&T and Verizon to sell unlimited broadband over 5G networks or will customers be expected to pay “usage pack”-prices as high as $10 per gigabyte, which doesn’t include the monthly cost of the service itself. Offering customers unlimited 5G could cannibalize the massive profits earned selling data plans to wireless customers.

Cactus or cell tower

Cactus or cell tower

Upgrading to 5G service will be expensive and take years to reach many neighborhoods. Verizon’s chief financial officer believes 5G wireless will be more cost-effective to deploy than its FiOS fiber to the home network, but considering Verizon largely ended its deployment of FiOS several years ago and has allowed its DSL customers to languish just as long, 5G will need to be far more profitable to stimulate Verizon’s interest in spending tens of billions on 5G infrastructure. It does not seem likely the result will be $25/month unlimited, fiber-like fast, Internet plans.

Although the mobile industry will argue its investment dollars should be reason enough to further deregulate and dis-empower local officials that oversee the placement of cellular infrastructure, it would be a tremendous mistake to allow wireless carriers to erect cell towers and small cells wherever they see fit. Most small cells aren’t much larger than a toaster and will probably fit easily on utility poles. But it will likely spark another wave of pole access controversies. The aesthetics of traditional cell tower placement, especially in historical districts, parks, and suburbs, almost always create controversy. The FCC should not tip the balance of authority for tower placement away from those that have to live with the results.

The mobile industry doesn’t make investments for free, and before we reward them for investing in their networks, let’s recall the United States pays some of the highest mobile service prices in the world. The industry argues what you get in return for that $100+ wireless bill is better than ever, an argument similarly used by the cable industry to justify charging $80 a month for hundreds of channels you don’t watch or want. Therefore, incentives offered to the wireless industry should be tied to permanent pro-consumer commitments, such as unlimited 5G broadband, better rural coverage, and the power to unbundle current wireless packages and ditch services like unlimited texting many customers don’t need. Otherwise, it’s just another one-sided corporate welfare plan we can’t afford.

Slow Broadband = Low Usage, Finds New Study

kcl-logoHow much you use the Internet is often a matter of how fast your broadband connection is, according to a new study.

King’s College London researchers found a clear correlation between bad broadband and low usage rates, as customers avoided high bandwidth apps like online video because they were frustrating or impossible to use. One analyst said the findings show rural areas are being “deprived of the full benefits of broadband.”

One of Britain’s most used apps is the BBC iPlayer, which streams live and on-demand programming from multiple BBC radio and television networks. It is a well-known bandwidth consumer, using a significant proportion of a customer’s broadband connection to deliver up to HD-quality video streams. The study found users in South Ayrshire, Ards, the Isle of Wight, the East Riding of Yorkshire, North Down and Midlothian were among the areas where people used iPlayer the least. It wasn’t because they didn’t want to. Those areas were identified by Ofcom, the British telecom regulator, as receiving some of the worst Internet speeds in the UK. Conversely, areas with robust broadband, including London, south Gloucestershire and Bristol, showed above average usage.

Dr. Sastry

Dr. Sastry

“It is clear that high-speed broadband is an important factor in the use of bandwidth-intensive applications such as BBC iPlayer,” said Dr. Nishanth Sastry, a senior lecturer at King’s College London and the lead researcher. “With technological advancements, it is likely that more services important to daily life will move online, yet there is a significant proportion of the population with inadequate broadband connections who won’t be able to access such services.”

Ian Watt, a telecommunications consultant with the analyst Ovum, said broadband speeds must get higher to assure users can watch HD video and simultaneously share their Internet connection with other members of the household.

“Recent Ovum research indicated a speed of 25Mbps was an appropriate target access speed to provide a high quality experience for video services,” Watt said. In the United States, 25Mbps is the current minimum speed to qualify as broadband, according to the most recent FCC definition.

The findings may also explain why U.S. broadband providers only capable of delivering relatively low-speed Internet access report lower average usage than those capable of providing service at or above 25Mbps. Those offering the fastest speeds are also the most likely to attract higher volumes of Internet traffic as customers take advantage of those speeds.

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