Rhode Island politicians and some local television stations are celebrating a $21.7-million federal stimulus grant awarded to a non-profit consortium of educational, governmental and health-care organizations to construct a new fiber optic network that some claim will help “improve broadband service” for Rhode Island residents.

Unfortunately for residents of the Ocean State, the proposed network of 339 miles of fiber cable represents an example of “look, but don’t touch.”

The OSHEAN (pronounced ‘Ocean’) project is yet another example of an institutional network that is strictly off-limits to residential homeowners, unless they happen to use the service at an area school or library.

But politicians who appear at announcement ceremonies to celebrate stimulus awards, and the media that covers them, far too often sell the benefits of such projects to residents who can’t ultimately use the service their tax dollars are helping to fund.

Many parts of Rhode Island already receive access to fiber service from Verizon FiOS, which represents another reason to keep consumers out.

“Verizon would object strenuously if this stimulus grant allowed OSHEAN’s network to be available to anyone who wants access,” writes our reader Mike who lives in Providence.  “So to keep Verizon and other providers quiet, the network promises not to directly wire any residence or individual business who wants access.”

Instead, the network will predominately benefit Brown University, the City of Providence, Lifespan hospitals, the Rhode Island Division of Information Technology, the University of Rhode Island and the U.S. Naval War College.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WPRI Providence Providence RI to get statewide fiber optic network 10-17-10.flv[/flv]

Here is WPRI-TV in Providence misleading viewers about the benefits of a broadband stimulus award, suggesting it will somehow improve residents’ Internet service.  (1 minute)

A controversial proposition on the ballot to extend a 1970 telecommunications tax to cell phones and “digital phone” service that largely did not exist when the tax was originally enacted has created a war of words between Chula Vista, Calif., mayor Cheryl Cox and the cable company that bears her last name (but no relation) — Cox Cable.

The proposed tax extension would broaden the types of telecommunications services that are subject to it, including Cox Cable’s “digital phone” service and broadband.  Cox officials appeared at city council meetings to oppose the tax, saying it would result in higher bills for customers.

But when Cox went on the air with “informational ads” the mayor accused of undermining support for Proposition H, Cox and the cable company started trading barbs in the local media.

Now the controversy has drawn the attention of San Diego’s local ABC affiliate.  On Monday, Mayor Cox accused Cox Cable of punishing the city by withdrawing free Internet access at the end of the year for City Hall, public libraries, and public safety agencies including the fire and police departments.

Mayor Cox called the timing of Cox’s announcement suspicious, coming the same day she did an interview complaining about Cox on San Diego’s KGTV-TV.

Under the terms of Cox’s franchise agreement with the city, Chula Vista was supposed to receive free Internet service through 2019, but now the cable company is reneging on the deal, a charge Cox Cable vigorously disputes.

Mayor Cox

With Chula Vista’s current budget crisis, the cash-strapped city is weighing the $30,000 a year it will cost to obtain the service at Cox Cable’s business rates, which could cause the city’s 1,012 computers, most available to the public, to lose access Jan. 1st.  Mayor Cox is also concerned the police department will lose its own connection, which it uses to communicate with other police departments and the Department of Justice.

The tax at the center of the debate, known as the City’s Utility Users’ Tax or U.U.T., amounts to 5 percent and is charged primarily to landline telephone customers.  Because of the way the tax ordinance was worded in 1970, technology changes that have taken place since have allowed more residents to escape paying the tax by switching to cell phone service or “digital phone” Voice Over IP service offered by Cox Cable or other broadband providers.

As a result, potential revenue earned from the tax has dropped over the years, especially as residents disconnect landline service.  With Chula Vista facing a $4 million deficit in the city budget, city officials are looking for new revenue sources.

Proposition “H,” before local voters Nov. 2nd, would keep the rate at 5 percent, but extend the tax to other telecommunications services, including:

• Wireless communications
• Text Messaging
• Prepaid/Postpaid telecommunications
• Private communication services
• Paging
• VoIP
• Toll free numbers

“Proposition H is all about continuing to fund the services we all benefit from: maintaining streets and parks, keeping libraries open, and the police protection and fire services that keep us safe,” Mayor Cheryl Cox wrote in a recent guest editorial in the San Diego Union-Tribune.

City officials are warning that without the estimated $5.6 million in estimated revenue from the tax, the city will have to cut services to cover the budget shortfall or raise other taxes.

Like many cash-strapped communities and states who have watched tax receipts plummet from dramatically lower property tax collections and increases in funding mandates, Chula Vista is trying a combination of budget cuts and tax increases to cover the difference.  But local voters are in no mood for tax increases, and last year rejected a proposal to raise the area’s sales tax by one percent.

Judging from the well-organized opposition campaign, local voters may be on track to disappoint the city a second time.

Mayor Cox’s editorial advocating approval of the tax extension even met resistance from the newspaper it was printed in:

But business and taxpayer organizations question that claim and contend the long-term tax hike could be much bigger than 5 percent as new communications devices come to the fore. They argue Chula Vista hasn’t done enough to shore up its finances long-term to deserve voter support of a tax increase.

On balance, we agree. While city leaders have overseen some $40 million in budget cuts and eliminated 259 jobs, they mostly have been AWOL on one of the most crucial issues in modern government finance: the extreme cost of public employee pensions.

[…]This framing of the debate is not fair to Chula Vista taxpayers who now cover the entire cost of pensions that allow city firefighters and police officers to retire at age 50 with 90 percent of their final annual pay and general employees to retire at age 60 with 90 percent of annual pay.

These policies must be recognized as unsustainable and then be drastically changed. Only when that happens will Chula Vista’s leaders have the credibility to ask voters to raise their own taxes.

Vote no on Proposition H.

The San Diego South Chamber of Commerce ridiculed the tax as a “dash for cash” and many area small business associations are also opposed.

While the debate rages, the mayor’s office accused Cox Cable of being too cute by half by pretending to be a “neutral” party.  The cable company claimed its ads were “informational” and did not take a position either for or against the proposition.

But KGTV notes the ad only mentions groups opposed to the tax — no supporters, and ends with the tagline, “Proposition H: It’s not what it seems.”

An expenditure report obtained by 10News shows Cox Communications spent more than $2,400 on the Proposition “H” ad and additional literature. The report also lists money going towards Proposition H opposition. A Cox spokesman said they wanted to choose “neutral” but had to chose between “support” and “opposed” on the filing.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Chula Vista Debate 10-20-10.flv[/flv]

Three reports from KGTV-TV San Diego trace the dispute over the tax over the last few months.  Also included is a portion of a video from a taxpayer’s group opposed to the telecom tax.  (13 minutes)

After weeks of delays, Time Warner Cable says it will finally open access to ESPN’s multi-channel streaming service Monday, Oct. 25th.  The service will be available to Time Warner Cable subscribers, and is free of charge.

ESPN’s streaming service was included in a deal signed in early September between the cable company and Disney-ABC, which owns the sports network.

Time Warner Cable has been working with ESPN’s website technical staff to build and test the online verification system that is the foundation of Time Warner Cable’s implementation of TV Everywhere.  The cable company plans to offer a library of on-demand video and live streams of many cable channels free of charge, but only to authenticated, current customers.

It is all part of an effort by the cable industry to stop cable customers from canceling their cable-TV subscriptions.  An increasing amount of online content produced by cable networks is expected to eventually be placed behind the TV Everywhere system.  Existing cable subscribers will get access to streamed live channels and on demand programming for free, but non-subscribers will be locked out.  Cable networks can decide how much of their programming will be a part of the project, but cable industry insiders predict there will be increasing pressure on them to keep most of their shows off the open Internet.

While the channels will be free-to-stream for subscribers now, several cable networks are exploring whether to charge cable companies extra programming fees for online viewing rights.  If that becomes popular, online viewing options may eventually carry monthly fees of their own.

ESPN says most of its online streaming will contain no advertising until the network builds enough viewers to justify selling ads targeting online audiences.

Verizon Inc. reached a similar agreement with Disney in October for its FiOS TV service. The originally planned launch date for Verizon customers was Jan. 18th, but if authentication tests with Time Warner Cable are successful, FiOS customers may get access much sooner.

The Free UTOPIA website reports that a provider-backed front group is once again trying to pack meetings with their members to oppose UTOPIA – Utah’s municipal broadband network.

Several UTOPIA member cities are gearing up to start taking votes on the new Utah Infrastructure Agency designed to help fund new construction of the network. The Utah Taxpayers Association is trying to get people to show up at these meetings to protest the UIA and try and kill it. In their effort to do so, they continue to distort, twist, and outright lie in their efforts to rile people up.

First off, the UIA bonds are not an unconditional loan. They are funds that will be secured by payments from subscribers. If there aren’t enough subscribers to secure repayment, the money doesn’t get touched. You would think that such an arrangement would be acceptable to an organization that purports to represent taxpayers as it clearly shifts the burden from the taxpayers as a whole to the subscribers. Attempting to characterize the UIA as a big grab-bag is a big lie.

UTA claims UTOPIA is currently running a $20 million deficit, but Free UTOPIA points out part of that “deficit” may include the original seed money required to construct the network, which came in the form of bonds.  Like any start-up venture, UTOPIA’s initial infrastructure costs create operating losses until those costs are paid back.  A financial feasibility study prepared by Design Nine and released last week projects UTOPIA could report positive net income by 2018, with revenue increasing dramatically going forward.

UTA receives financial support from both Comcast and Qwest.

As fiber advocates have noted, start-up costs and the time it takes to pay them off are one reason why so few commercial providers want to invest in fiber.  Commercial providers often demand a return on investment within five years, while many municipal projects consider fiber a longer-term investment that can pay additional dividends for communities that may not always appear on a balance sheet.  Dividends like high technology start-ups, better paying jobs, better health care and education, and eventually additional revenue for the community that stays in the community.

The UTA has repeatedly claimed the UTOPIA project is veiled in secrecy, yet the project’s feasibility study is published on UTA’s own website.  What is secret is exactly how much money Comcast and Qwest pay UTA and its president Howard Stephenson.  Neither company will disclose exactly how much they have spent on UTA beyond contributions directed to Stephenson himself, documented here.

Provider-backed front groups like UTA routinely misinform their members about the benefits of municipal broadband, often to the point of demagoguery not supported by the facts.  Free UTOPIA reports broadband evangelism can make dramatic inroads among opponents of such public works projects:

The Utah “Taxpayers” Association thought it would get an upper hand with a BBQ in Orem just before the city council voted on a new construction bond. Unfortunately for them, the plan backfired when UTOPIA made a surprise appearance at the event with their “mobile command center” and started actually talking directly with the meeting attendees, many of whom had no opinion of UTOPIA yet and came to get more information. According to my sources, about half of the 250 or so attendees ended up registering their interest in UTOPIA services, a major coup for the network that upstaged their most vocal opponent.

Apparently what convinced a lot of the undecideds was the UTA’s refusal to disclose who pays their bills. That lack of transparency translated directly into looking like they have something to hide (hint: it’s Qwest and Comcast dollars) and left many looking at their fantastic claims skeptically. I’d like to say that there were some talking points to address, but an eyewitness account called it so much kool-aid drinking, a series of incomprehensible rants filled with insinuation, innuendo, insults, and no concrete addressable facts. In contrast, UTOPIA discussed their new business plan with individual residents and offered demonstrations of how well the service can work. Truth has power and it wasn’t on the UTA’s side.

Judging from comments left on UTOPIA’s website, the most controversy seems to be why it takes so long to extend service to more neighborhoods:

“Please finish laying fiber in Orem! We live virtually a quarter mile from the cutoff. We are stuck with Comcast’s horrible routing, and inconsistent speeds, Qwest’s DSL which doesn’t work due to damaged lines they are unwilling to repair, or wireless that never works. Please save us. I have been waiting for years.”

Utah fiber advocates are strongly encouraged by Free UTOPIA to repeat earlier successes and attend upcoming town meetings to present a more informed view about the benefits of fiber networks.

Centerville meets tonight (October 19) at 7PM, Orem is October 26 at 6PM, and Payson is October 27 at 6PM.

All meetings are at the city halls of each respective community.

With continued inaction at the Federal Communications Commission, some stakeholders in the Net Neutrality debate continue to file comments with the Commission trying to find a “third way” to bring about guarantees for online free speech and access while softening opposition to “network management” technology that allows providers to manipulate broadband traffic.

Among such filers is the Communications Workers of America, which seeks a “middle-ground approach” to protecting a free and open Internet.

The CWA has always maintained its feet in two camps — with consumers looking for improved broadband and with the communications companies that employee large numbers of the union’s members, who will build out those networks and provide service.

The union shares our annoyance with FCC Chairman Julius Genachowski for his complete inaction on broadband policy thus far.  In short, the Commission keeps stalling from taking direct action to reclassify broadband as a telecommunications service, restoring its ability to oversee broadband policy lost in a federal appeals court decision earlier this year.

The CWA used a piece by David Honig from the Minority Media and Telecommunications Council (MMTC) to echo its own position:

MMTC isn’t alone in being frustrated with the FCC’s disappointing attitude toward real action this past year. In a recent interview with the Wall Street Journal, FCC Chairman Julius Genachowski expressed impatience with the glacial pace of policymaking at his Commission. Although he mentioned that the FCC, under his direction, has implemented some notable reforms, he conceded that “there is still a lot to do.”

Unfortunately, regardless of how earnest the Chairman is in his desire to move forward with the business of policymaking, his actions speak much louder than his words. Indeed, his yearlong pursuit of network neutrality rules — first via a traditional rulemaking proceeding and, most recently, via an effort to reclassify broadband as a telecommunications service — has cast a long and almost suffocating pall over many of the items that the Chairman wishes to act upon. His inaction on civil rights issues — especially EEO enforcement — is just one example of how paralyzed the agency has become.

Recent news that Congress will not move forward to address the regulatory questions that currently vex the Commission (e.g., whether the FCC has authority to regulate broadband service providers) could embolden the Chairman to adopt the sweeping regulatory changes for broadband that he proposed earlier this year. Doing so in the absence of Congressional action would only invite immediate legal challenges that would mire the FCC in litigation, appeals, and remands for years to come.

To put it plainly, the FCC is stuck. Although it recently adopted some promising orders related to broadband (e.g., new rules for accessing new portions of wireless spectrum called “white spaces” and for enhancing access in schools and libraries), the Commission has failed to move forward with implementing core provisions of its monumental National Broadband Plan.

The union last week also submitted its latest round of comments requested by the Commission, this time to broaden its position on a proposed compromise.  We’ve delineated which of the proposals we believe are primarily pro-consumer (in green), pro-provider (red), and which fall straight down the middle (blue):

• First, wireline broadband Internet access providers (“broadband providers”) should not block lawful content, applications, or services, or prohibit the use of non-harmful devices on the Internet.
• Second, wireline and wireless broadband providers should be transparent regarding price, performance (including reporting actual speed) and network management practices.
• Third wireline broadband providers should not engage in unjust or unreasonable discrimination in transmitting lawful traffic.
• Fourth, broadband providers must be able to reasonably manage their networks through appropriate and tailored mechanisms, recognizing the technical and operational characteristics of the broadband Internet access platform.
• Fifth, the Commission should take a case-by-case adjudication approach to protect an open Internet rather than promulgating detailed, prescriptive rules.

The first and third principles are strongly pro-consumer, although as we’ve seen, providers have a tendency to want to define for themselves what is “harmful,” “unjust,” or “unreasonable” and impose it on their customers.  We’ve seen provider-backed front groups argue that the concept of Net Neutrality itself is all three of these things.  Any rules must be clearly defined by the Commission, not left to open interpretation by providers.

The second principle cuts right down the middle.  Consumers deserve an honest representation of broadband speeds marketed by providers (not the usual over-optimistic speeds promised in marketing materials), and transparency in price — especially with gotchas like term contracts, early cancellation penalties, overlimit fees, etc.  But providers can also go to town with abusive network management they’ll market as advantageous and fair, even when it is neither.  Just ask customers of Clear who recently found their “unlimited” wireless broadband service, marketed as having no speed throttles, reduced in speed to barely above dial-up when they used the service “too much.”  Clear says the speed throttles are good news and represent fairness.  Customers think otherwise, and disclosure has been lacking.

The fourth and fifth principles benefit providers enormously.  Network management itself is neither benevolent or malicious.  The people who set the parameters for that management are a different story.  A traffic-agnostic engineer might use such technology to improve the quality of services like streamed video and Voice Over IP by helping to keep the packets carrying such traffic running smoothly, without noticeably reducing speeds and quality of service for other users on that network.  There is nothing wrong with these kinds of practices. There is also nothing wrong with providing on-demand speed boosts on a pay-per-use basis, so long as the network is not oversubscribed.

But since providers are spending less to upgrade their networks, providers may seek to exploit these technologies in a more malicious way — too stall needed upgrades and save money by delivering a throttled broadband experience for some or all of their customers.  If customers can be effectively punished for using high bandwidth applications, they’ll reduce their usage of them as well.  That’s good for providers but not for customers who are paying increasing broadband bills for a declining level of service.

Some examples:

• Customers using high bandwidth peer-to-peer applications can have their speeds throttled, sometimes dramatically, when using those applications;
• Internet Overcharging schemes like usage caps, overlimit fees, and “fair access” policies can discourage consumers from using services like online video, file transfer services, and new multimedia-rich online gaming platforms like OnLive, which can consume considerable bandwidth;
• Preferred content can be “network managed” to arrive at the fastest possible speeds, at the cost of other traffic which consequently must be reduced in speed, meaning your non-preferred traffic travels on the slow lane;
• Providers can redefine levels of broadband service based on intended use, relegating existing packages to “web browsing and e-mail” while marketing new, extra-cost add-ons for services that take the speed controls off services like file transfer and online video, or changes usage limits.

The CWA runs the Speed Matters website, promoting broadband improvements.

It is remarkable the CWA seeks to allow today’s indecisive Commission to individually adjudicate specific disputes, instead of simply laying down some clear principles that would not leave a host of loopholes open for providers to exploit.

Big players like Comcast, AT&T, and Verizon have plenty of money at their disposal to attract and influence friends in high places.  If the Commission thought Big Telecom’s friends in Congress were breathing down its neck about telecom policy now, imagine the load it will be forced to carry when these companies seek to test the Commission’s resolve.

Opponents of Net Neutrality claim broadband reclassification will leave providers saddled with Ma Bell-era regulation.  But in truth, the FCC can make their rules plain and simple.  Here are a few of our own proposals:

1. Network management must be content-agnostic.  “Preferred partner” content must travel with the same priority as “non-preferred content;”
2. Providers can use network management to ensure best possible results for customers, but not at the expense of other users with speed throttles and other overcharging schemes;
3. Providers can market and develop new products that deliver enhanced speed services on-demand, but not if those products require a reduction in the level of service provided to other customers;
4. Customers should have the right to opt out of network management or at least participate in deciding what traffic they choose to prioritize;
5. Providers may not block or impede legal content of any kind;

In short, nobody objects to providers developing innovative new applications and services, but they must be willing to commit to necessary upgrades to broaden the pipeline on which they wish to deliver these services.  Otherwise, providers will simply make room for these enhanced revenue services at your expense, by forcing a reduction in your usage or reducing the speed and quality of service to make room for their premium offerings.

The industry itself illustrates this can be done using today’s technology.

The cable industry managed to accomplish benevolent network management with products like “Speed Boost” which delivers enhanced, short bursts of speed to broadband customers based on the current demand on the network.  Those speed enhancements depend entirely on network capacity and do not harm other users’ speeds.

Groups like the CWA need to remember that compromise only works if the terms and conditions are laid out as specifically as possible.  Otherwise, the player with the deepest pockets and closest relationships in Washington will be able to define the terms of the compromise as they see fit.

And that’s no compromise at all.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/CWA Larry Cohen on the Open Internet Jobs and the Digital Divide 9-14-10.flv[/flv]

Communications Workers of America president Larry Cohen outlined the union’s position on Net Neutrality before the Congressional Black Caucus Institute on Sept. 14, 2010.  (2 minutes)