Fuhr

Joseph P. Fuhr Jr. is a real helper. An economics professor at Widener University and a researcher for the Coalition for the New Economy, Fuhr spent time pondering America’s current debt crisis and impending “fiscal cliff” and has come up with some ideas on how to solve it, starting with ending support for community-owned broadband networks. He shared his findings in a guest column printed the Tallahassee Democrat.

“Generally, [these networks] add to the debt load of the municipality that runs them, a burden that certainly has come true in Florida,” Fuhr warns.

Ask most people where the government spends too much and many will suggest corporate welfare, the military, Medicare/Medicaid, or outdated government programs that have outlived their usefulness. Professor Fuhr thinks the gristle that must go comes from about 100 “government-owned broadband networks,” which he labels as “GONs.”

Perhaps that acronym is partly wishful thinking, because Fuhr does not see much use for municipal or public utility broadband, even in areas still waiting for large phone and cable companies to provide the service.

“Of course, not all Floridians are fortunate, not all have access to high-speed broadband, and they should,” writes Fuhr, despite the fact commiserating with the broadband-less does nothing to extend the service to those still using dial-up connections. “However, this service is one that the private sector is able and willing to provide given the correct incentives.”

Incentives. Like taxpayer-funded tax breaks, grants, and rebates?

Fuhr has no problem advocating for taxpayer-funded incentives for private corporate broadband providers, but he opposes directly funding an independent, community-owned broadband service. But it really should not come as a surprise. Fuhr’s sudden interest in cutting public broadband to save us from falling off the fiscal cliff is not really by random chance.

Although readers of the Democrat will probably never learn the “Coalition for the New Economy” is actually a front group largely funded by AT&T, Time Warner Cable, and other telecom industry players that have to compete with community broadband providers, our readers now do.

Rep. Gerry Connolly (D-Va.) is fed up with Verizon Communications. The company handles most of the region’s 911 calls and has performed that task poorly in the last few years, argues Connolly.

“The whole purpose of 911 is that when you need it, it works,” Connolly told WUSA-News.

After several high profile 911 failures during significant storm events, Connolly and a few other congressmen are demanding Verizon resolve its 911 problems or face an intervention from the Federal Communications Commission.

The elected officials want Verizon to voluntarily comply, but if they won’t, all suggest it is time for the FCC to strengthen regulations and oversight to assure residents they will be met with a 911 operator when they call instead of a busy signal or nothing at all.

Verizon countered it takes its role in handling calls to 911 seriously, and when an issue arises, the company is quick to investigate, correct and apply any lessons learned across their system.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WUSA Washington Gerry Connolly Va- Democratic Congressman critical of Verizon for its 911 performance 12-6-12.flv[/flv]

WUSA reports Connolly has grown tired of repeated failures with Washington, D.C.’s 911 system, handled by Verizon Communications. He wants the company to make changes to increase the service’s reliability, especially during storms when demand on the 911 system is greatest. (2 minutes)

Ford, Jr. (D-The Green Room)

Harold Ford, Jr., a former Democratic congressman from Tennessee and John Sununu, former governor of New Hampshire, are unhappy with an Op-Ed piece written by David Cay Johnston in the New York Times that calls out the telecom industry for high prices and and an uncompetitive marketplace.

Ford, who can usually be found in the green room of various cable news networks waiting to deliver his pro-industry messages on behalf of front groups like Broadband for America, says that 93 percent of Americans are happy as can be with their broadband Internet service.

Sununu joined Ford in some less-than-factual arguments about the state of American broadband:

Second, nearly 90 percent of all Americans can choose from two or more wireline competitors and at least three wireless broadband providers, most of whom now provide some of the fastest 4G LTE broadband networks in the world. Meanwhile, new fiber optic, satellite and wireless choices keep emerging.

Third, during the past four years, broadband providers invested $250 billion in the nation’s broadband infrastructure, while other industries sat on their cash.

Fourth, unlike many other consumer products, the monthly prices for broadband Internet have remained relatively constant, while average speeds have increased by 900 percent or more. Free-standing broadband service is now routinely available for $20 to $30 a month.

That is playing fast and loose with the truth. In reality:

• Most Americans have one cable and one phone company to choose from, not “two or more.” Wireless broadband providers offer service with a cap so low, it can almost never provide a suitable replacement for wired broadband service. Although AT&T and Verizon Wireless have growing 4G LTE networks, neither carrier has provided universal access to LTE speeds. T-Mobile and Sprint are only getting started. The fiber optic choices that are emerging these days are primarily from community-owned providers Ford’s industry friends vehemently oppose. AT&T does not offer fiber to the home service and Verizon effectively suspended expansion of its FiOS fiber network several years ago.  Wireless choices are now shrinking because of mergers and acquisitions and satellite broadband remains a painful experience regardless of the provider;
• Most that the investment made in “broadband” is focused on expanding wireless 4G service. That investment allowed both AT&T and Verizon to pay Uncle Sam dramatically lower tax bills — AT&T even collected a refund. Home broadband expansion has been far less expansive;
• Monthly broadband bills have not remained constant — they are rising, and more rapidly than ever. Speeds enjoyed by average customers have not increased by 900 percent, only some top speeds that are priced well out of range for most Americans. The price both quote for free-standing broadband is for “lite” service, often so slow it no longer even qualifies as “broadband.” Often, that budget service also comes with usage caps, sometimes as low as 5GB per month.

Sununu and Ford close:

Fortunately, very few policy makers in either party have endorsed the kind of heavy-handed regulations that Mr. Johnston’s arguments seem to imply — regulations that would only stifle investment and truly put America at risk of falling behind.

America has already fallen behind, and will remain in decline as long as regulators and Congress listen to a handful of telecommunications companies speaking from their sock puppet front groups and handing out campaign contributions to elected officials to keep things exactly as they are today.

Comcast continues to advertise its phone service as offering “unlimited nationwide talk,” when in reality the company will hang up on any customer who consistently spends more than two hours, forty-five minutes a day on the phone.

That may sound like a lot of talking, but for one blind customer in Chambersburg, Pa., it is a raw deal.

“They should tell you right off the bat it’s not unlimited,” said Mindy Hartman. “It’s really something that has to be addressed across the industry. Comcast is not the only company who has done this to people.”

Hartman received a phone call from Comcast Security warning her she exceeded their usage cap of 5,000 minutes per month. That was news to Hartman, who told the Chicago Tribune she specifically asked Comcast about any calling limits before signing up, and company representatives repeatedly told her there were none.

Comcast assured Hartman, ‘Oh, no, you can talk on the phone 24/7 if you want. We have no caps.'”

Comcast Security warned Hartman if she tried, the company will promptly cut her off. In fact, Comcast is ready with the scissors right now if Hartman does not reduce her calling immediately.

Comcast claims its 5,000 minute cap is mentioned in the fine print, effectively rendering the company’s prominent claims of “unlimited calling” moot.

“I’m blind, and most people don’t look at that when they’re told by customer service it’s unlimited,” Hartman told the newspaper. “It was nice they had the courtesy to call me, but I wasn’t very happy when they called.”

Hartman wants Comcast to fully disclose its call limit and provide customers with access to the number of minutes customers have used during each month, so they can manage their calling.

Phillip “It’s hard to trust a group that so spectacularly flip-flopped on Internet policies when its benefactor AT&T changed its tune” Dampier

When Republican FCC Commisioner Ajit Pai turned up last week at a telecom symposium to warn a more activist FCC could ruin broadband providers’ efforts to charge consumers more money for less service, he was speaking to a very friendly audience.

The conservative Phoenix Center, which ran the event, has been spewing out industry-friendly “research reports” for years that attempt to justify the country’s sky-high broadband pricing. It also promotes a “hands-off” mindset on industry oversight, calling it common sense and consumer-friendly.

Unfortunately for the group and its supporting authors, it has a serious credibility problem — exposed as an industry-funded “think tank” operating as a mercenary research arm for AT&T and other phone companies. In fact, the same group that today generates endless research condemning Net Neutrality had a very different position in 2004 when it published an Op-Ed entitled, “Net Neutrality: Now More Than Ever.”

What changed? Its benefactor. In 2004, AT&T was a competing long distance carrier fighting local phone companies. Today it –is– one of those phone companies. With its Baby Bell owners controlling AT&T’s purse-strings starting in 2006, the Phoenix Center dutifully flip-flopped to maintain continuity with the ‘new AT&T,’ strongly opposed to most forms of broadband regulation.

So it comes as no surprise the Phoenix Center continues pumping out cheerleading “research reports” that attempt to bolster credibility to forces opposing Net Neutrality and supporting an Internet Overcharging free-for-all with the help of usage billing and caps.

One particular bit of nonsense that completely ignores marketplace reality came in Phoenix Center Chief Economist Dr. George Ford’s report, “A Most Egregious Act? The Impact on Consumers of Usage-Based Pricing.”

For example, Ford argues:

A prohibition of differential pricing renders a single price that lies between the low price for the restricted service and the high price for the unrestricted service. Therefore, prohibitions against usage based pricing forces some consumers to pay more for services they do not want or use, while others are allowed to pay less for services they do. The prohibition, in effect, results in a transfer of wealth from one group of consumers to another, and profits are also reduced. Overall consumer welfare is diminished, even though some consumers are better off.

We’re number one… in prices, even with the increasing prevalence of usage-based pricing Ford believes benefits consumers. (Image: CRTC)

But Ford completely ignores the current conditions in today’s broadband market that have made it easy for providers to promulgate an unpopular end to flat rate, unlimited broadband in favor of a highly-flawed, usage-based billing policy:

1. Ford ignores the broadband market is essentially a duopoly for most consumers and effectively a monopoly in rural America. That gives providers what they call “pricing power,” the ability to increase prices at will and change pricing models because consumers are dependent on the service and have limited options to take their business elsewhere;
2. The only “transfer of wealth” involved here is from consumers to providers. While profits soar and costs drop, Ford complains that those using the service more are somehow subsidized by lighter users, when it fact providers enjoy a 90-95% gross margin on broadband. As Time Warner Cable CEO Glenn Britt admitted, the most significant cost attributed on the cable company’s balance sheet for broadband comes from its backbone traffic costs, which are minuscule in contrast to the increasing prices the cable company charges for its broadband service;
3. Consumer welfare is reduced primarily from the high costs charged by providers, made possible by scant competition that would otherwise drive prices downwards, not from expenses associated with broadband traffic;
4. Ford is careful not to advocate for a true usage-based billing system that would be a revenue nightmare for his benefactors. In a strict usage-based pricing model, customers would pay a small fee for infrastructure, support, and equipment expenses and a variable charge based on actual usage. But no provider in the United States advocates for this system. Instead, providers force consumers into tiered broadband plans that include different usage allowances the vast majority of customers will either not exhaust or will exceed, which raises profits even higher with usage overlimit penalties. With no unused usage rollover, most customers are in the same position Ford claims will diminish consumer welfare: paying for service they do not want or use;
5. Most consumers favor unlimited, flat use plans even if they could save money with a usage-constrained pricing model. Since keeping customers happy with a more expensive unlimited plan they like instead of a lower priced plan they don’t want would seem to enhance provider profits. But Ford ignores this reality, perhaps understanding providers are actually laying the groundwork to broadly monetize Internet usage. Whether a provider adopts usage-based billing or a strict cap on usage, which is growing in most households, the inevitable result is still the same: more profits, less cost from constrained usage. Inevitably this will force customers into higher-priced, higher-profit upgrades that deliver a higher usage allowance, again something consumers simply do not want. This is already a reality in the wireless marketplace, and is well-acknowledged by both AT&T and Verizon Wireless.