Hoitenga

Rep. Michele Hoitenga (R-Mich.), blocked Stop the Cap! and a handful of other reporters and locked down her Twitter account from being publicly accessible after claiming to receive death threats after being questioned about her bill to block community broadband projects in her state.

“[I] had to capture profiles who were threatening me and my family and the horrific vulgarity being used,” Hoitenga claimed on her Facebook page. “I’ll have a statement in a bit. The safety of me and my family comes first.”

Hoitenga is the author of House Bill 5099, which would completely ban municipal broadband in Michigan if it becomes law.

Stop the Cap! was blocked within hours of sending her four tweets in an effort to engage her in a discussion about her bill. For the record, at no time were we either threatening or vulgar. (Some of her constituents are unhappy about the bill, however, based on responses on her Facebook page.)

It was the first time Stop the Cap! was blocked by any Twitter user, and we were surprised it was a public official.

I looked at those “37 providers.” There are only 2 serving residential customers – one telco and one cableco. Others are business-only or NA

— Stop the Cap! (@stopthecap) October 17, 2017

BTW, did you know the phone and cable companies receive taxpayer subsidies already in the form of PILOT agreements, other incentives?

— Stop the Cap! (@stopthecap) October 17, 2017

In our area, there are some communities with muni-broadband because incumbent telco won’t upgrade and cableco won’t expand. People are happy

— Stop the Cap! (@stopthecap) October 17, 2017

You are trying to “solve” a problem that doesn’t actually exist. Local communities only explore public broadband when they lack alternative.

— Stop the Cap! (@stopthecap) October 17, 2017

Rep. Michele Hoitenga (R-Manton) doesn’t care much for community broadband, so she introduced a bill in the Michigan legislature that is as stark as it is short:

House Bill 5099:

The bill is remarkable for its brevity — most proposed community broadband ban bills avoid outright bans, preferring to use forced complicated referendums or operational limitations that usually make municipal broadband projects untenable. But Rep. Hoitenga’s bill leaves no doubt she wants private cable and phone companies left unmolested by publicly funded alternatives. Although the Michigan Republican chairs the House’s Communications and Technology committee, she appears confused about the difference between upload and download speeds. Her bill would define a “qualified” internet service as one offering at least 1/10Mbps service. Yes — 1Mbps download speed and 10Mbps upload speed.

Ars Technica’s Jon Brodkin asked Rep. Hoitenga about the oddity of the language in her bill:

When asked about this on Twitter, Hoitenga said she would have to “speak with the attorneys who wrote the bill” to determine whether the listed speed was a mistake. “I will speak with the attorneys who wrote the bill. They changed the language I submitted but will ask why they changed it,” Hoitenga wrote.

Rep. Hoitenga

Rep. Hoitenga used her Twitter account to promote and defend her bill, pointing out the district she represents had “37 providers” to choose from — a fact she gleaned from an online AT&T Yellow Pages directory. Stop the Cap! investigated that claim and found the majority of the providers cited did not offer internet access to members of her district, provided service only in adjacent communities, or sold commercial internet services to businesses only. In fact, for the overwhelming majority of her constituents, there are only two providers to choose from — AT&T or Comcast. Both are top donors to Rep. Hoitenga’s campaign, but more on that later.

Michigan has never been a hotbed of community broadband initiatives, despite having uneven broadband service in suburban and rural areas across the state. Michigan law already includes several significant roadblocks for public broadband projects, notes Lisa Gonzalez from the Institute for Local Self-Reliance:

“Michigan already has a significant state barrier in place; municipalities that wish to improve connectivity must first appeal to the private sector and can only invest in a network if they receive fewer than three qualifying bids. If a local community then goes on to build a publicly owned network, they must comply with the terms of the RFP, even though terms for a private sector vendor may not be ideal for a public entity.

“Nevertheless, several communities in Michigan have dealt with the restrictions in recent years as a way to ameliorate poor connectivity. They’ve come to realize that their local economies and the livelihood of their towns depend on improving Internet access for businesses, institutions, and residents.”

Although Rep. Hoitenga’s bill offers the possibility for “public-private” partnerships, her bill would bring a significant chilling effect because the proposed law fails to define how such partnerships should be structured.

Rep. Hoitenga told Stop the Cap! the bill would put a stop to tax dollars being spent on broadband service, something she felt was unwarranted. We asked the Michigan representative, “Did you know the phone and cable companies receive taxpayer subsidies already in the form of PILOT agreements, and other incentives?” which received the non-sequitur response that her office’s phones were ringing constantly with callers praising her new bill.

But that isn’t what Rep. Hoitenga told her Facebook fans.

“Many individuals have reached out to my office in regards to HB5099; with the belief that I am attempting to limit broadband expansion,” Hoitenga wrote. “This could not be further from the truth. One of my main goals as the Chair of the House Communications and Technology committee is to make internet access more easily obtainable. This legislation does indeed prevent cities from using tax dollars to subsidize ISPs; especially without a vote of the people. While at first glance government operated networks may sound like a good idea, the argument in support of them crumbles with an in depth look into the financial and long-term investment side of implementing such a network.”

So we remain unsure if the wave of phone calls Hoitenga referenced were in support of her proposed bill or opposed to it. Either way, the Michigan representative mischaracterized her own three-paragraph bill by claiming it would prevent cities from using tax dollars for internet service, “without a vote of the people.” But no provision for such a vote exists or would be allowed by her existing bill. Hoitenga’s bill also clearly makes internet access less obtainable, especially in communities where a for profit provider does not exist and a community is seeking to provide an alternative.

Hoitenga later states communities may not need to worry about internet accessibility because, “there is also a package of bills in the senate regarding Small Cell Technology (which also attempts to reduce barriers),” she wrote. That provision is backed by AT&T, which is currently one of the two ISPs serving her district.

She then picks up familiar talking points distributed by public broadband opponents:

“There are examples throughout the state and nation of taxpayers being on the hook for failed networks. There is also concern that some of these networks are in towns where employee pensions are severely underfunded, causing layoffs and cutting services, yet there seems to be money for high risk broadband investments. It’s time to address these issues.

She also cited a 2017 study critical of municipal broadband networks authored by University of Pennsylvania Law School Professor Christopher Yoo and co-author Timothy Pfenninger. Neither author or Rep. Hoitenga disclosed the group that produced the study is funded by AT&T and Comcast, among other large telecom companies and their respective lobbying organizations.

After opening a dialogue with the Michigan representative, she did not take kindly to questions or criticism about her bill, and summarily blocked Stop the Cap! from seeing her Tweets or communicating with her further — the first time anyone has blocked our group on Twitter. Shortly after that, she changed her Twitter channel to be viewable by invitation only, limiting her potential audience to her 284 current followers. At the moment, the only social media outlet that seems to be still open to communicating with Rep. Hoitenga is Facebook, where she is taking heat from her constituents about her bill.

The Michigan representative has been behind several controversial bills introduced in the current session of the Michigan House, including a proposal to allow concealed pistols to be carried in public and a ban on Sharia law being practiced in the United States.

Her top donors for the current legislative session include:

#2 – Telecommunications Association of Michigan PAC, $3,000
#4 – AT&T Michigan, $1,500
#11 – Comcast Corp. & NBC Universal, $500

4GCommunity.org, a non-profit provider of unlimited 4G LTE wireless internet service, is ending the service by Nov. 30, 2017 for “circumstances beyond the organization’s control.”

The service cost $250 for the first year, which included a mobile hotspot device, and $168 each year thereafter, which means many subscribers that started in the past year may lose some or all of their annual fee as the service closes down.

The company e-mailed its members this morning:

Dear 4GCommunity.org Members,

We are saddened to inform you that due to circumstances beyond the organization’s control the Internet connectivity benefit of membership will be ceasing no later than November 30, 2017. It may be sooner, so please begin looking for other Internet connectivity options right away.

The member online support center will remain a resource through this time next year. Member and support team volunteers will be providing their general assistance through the online support center to assist with questions about basic home computing, networking, and related technologies. It can be accessed through the Support Center page of the website, or directly at: https://4gcommunityorg.happyfox.com/

Respectfully yours,

Support Team

Sprint was 4GCommunity’s 4G service provider, and was potentially not enthusiastic about the partnership.

4GCommunity.org is one of several non-profit groups that have taken advantage of an agreement made years earlier with Clearwire, a company acquired by Sprint in 2013.

Non-profit groups offering inexpensive 4G wireless internet service are exploiting a loophole in a 2006 contract agreement between Clear (now owned by Sprint) and Educational Broadband Service licensees.

In 2006, Clearwire reached an agreement to lease wireless spectrum earmarked for Educational Broadband Service (EBS) providers including Mobile Citizen and Mobile Beacon. In return for the use of those frequencies, Clearwire agreed to sell wireless internet service on its WiMAX network at rock bottom prices to those two providers, their non-profit affiliates and dues-paying members. As a result, more than 1,800 nonprofits, 429 schools, and 61 libraries signed up for service at prices averaging $10 a month. A few of those non-profits creatively exploited a loophole in the agreement which guaranteed access “as long as you are a user, recipient or beneficiary of a non-profit programs or services, but not thereafter.” That provision was interpreted to mean non-profit groups attached to either Mobile Citizen or Mobile Beacon could resell the service to their own members.

A groups have turned up, including 4GCommunity.org, typically offer access to unlimited 4G LTE data on Sprint’s network for an annual fee. 4GConnection effectively charged only $14 a month after the first year. The service has been especially popular with those within Sprint coverage areas, but outside of range for DSL or cable broadband. It also attracted a large number of RV owners and frequent travelers looking for portable internet access.

Sprint and other wireless companies have had experience with all kinds of resellers before. Historically, many of those providers offering unlimited data have been suddenly notified their contract to resell service was canceled or modified, usually after the carrier discovered a surge in traffic and usage it did not originally expect.

4GCommunity did not reveal the specific reasons for the decision to cancel its internet offering, but does suggest the termination is connected to Sprint. The decision is causing customers to scramble to find a new service provider. Selling low-cost internet plans that depend on one of the four major carriers has proven a risky business for providers and customers, because a carrier can put a provider under just by canceling a service agreement.

4GCommunity obviously understood the risks of having their provider drop them, placing this warning (emphasis theirs) in their service agreement:

You understand your support and membership in the organization is not a guarantee of any particular benefit for any duration of time.  You understand you are supporting an organization mission.  You understand we reserve the right to cancel any Internet connectivity Service as a member benefit at any time without notice, for any reason.  You understand that your membership charges may not be refunded or prorated if the Internet connectivity benefit is terminated or modified regardless of reason at any time.   

Customers may be less forgiving, especially if they recently paid several hundred dollars for a year of service that may not be refunded.

Similar resellers still appear to be offering service, but potential customers should be cautious and not assume other service provision contracts won’t be similarly canceled. A customer could be out up to $679 if a service later disappears.

• Calyx Institute – Membership costs $500 the first year, which includes wireless mobile hotspot service. The renewal rate is $400.
• Freedata.io – First year prices range from $449 – $679 for three different tiers of service offering different hotspot devices (currently showing as out of stock) and different options to access 3G service, which can be more reliable in rural/fringe reception areas. The service has also been battling with its small business payment processors, which suggests this is a very small operation.
• PCs for People & Connectall.org – Provide service to those below the 200% poverty level or currently enrolled in an income-based government assistance program. Proof of income required.

One of the few remaining unlimited wireless data providers unlikely to be affected by these developments is Unlimitedville, which offers a variety of expensive plans that correspond to the carrier providing the service. The “Yellow” plan, powered by Sprint, is $99 a month. The “Pink” plan, powered by T-Mobile, is $149 a month. A “Blue” plan offering service from AT&T costs $199 a month, and a “Red” plan using Verizon’s network is $249 a month. All of the plans are free of caps and speed throttles and offer 4G LTE data without hotspot restrictions, but require a one-time $99 “membership fee.”

Pai

WASHINGTON (Reuters) – The U.S. Federal Communications Commission’s chairman said Tuesday the agency does not have authority to revoke broadcast licenses, despite suggestions from President Donald Trump.

Ajit Pai, a Republican who was named chairman of the telecommunications regulator in January, broke days of silence by rejecting Trump’s tweet that the FCC could challenge the license of NBC after stories Trump declared were not true.

“Under the law, the FCC does not have the authority to revoke a license of a broadcast station based on the content,” Pai said at a forum. “The FCC under my leadership will stand for the First Amendment.”

The First Amendment of the U.S. Constitution guarantees freedom of speech and freedom of the press.

Democrats had been pushing Pai to denounce Trump’s suggestion that broadcast licenses could be threatened following reports by NBC News that his secretary of state, Rex Tillerson, had called him a “moron” after a discussion of the U.S. nuclear arsenal.

“With all of the Fake News coming out of NBC and the Networks, at what point is it appropriate to challenge their License? Bad for country!” Trump tweeted last Wednesday.

Trump and his supporters have repeatedly used the term “fake news” to cast doubt on media reports critical of his administration, often without providing any evidence to support their case that the reports were untrue.

Any move to challenge media companies’ licenses, however, would likely face significant hurdles.

The FCC, an independent federal agency, does not license broadcast networks, but issues them to individual broadcast stations that are renewed on a staggered basis for eight-year periods.

Comcast Corp, which owns NBC Universal, also owns 11 broadcast stations, including outlets in New York, Washington, Los Angeles, San Francisco, Boston, Dallas and Chicago.

When reviewing licenses the FCC must determine if a renewal is in the public interest. Courts have held that a station exercising its First Amendment rights is not adequate grounds to challenge a license.

The agency does not issue similar licenses for cable networks such as CNN and MSNBC, or regulate internet news or other websites.

In the early 1970s, then-President Richard Nixon and his top aides discussed using the FCC’s license renewal process as a way of punishing The Washington Post for its coverage of the Watergate burglary that ultimately brought down his presidency.

Reporting by David Shepardson; Editing by Jonathan Oatis

Cable operators that have watched their stocks get pounded after warning their third quarter earnings would reflect an undeniable trend towards cord-cutting are considering dramatically raising broadband-only pricing to $80 or more to protect profits.

Comcast is among the largest cable companies responding to repeated calls from Wall Street analysts to boost broadband pricing, hiking broadband-only rates to around $65 a month after a customer’s $40 promotional pricing offer expires. Charter Communications also hiked prices earlier this year to $65 a month for its entry-level 60 or 100Mbps package, with further rate increases expected in early 2018. But those incremental rate hikes are not enough to satisfy analysts who fear cable’s video earnings losses are already higher than the revenue gained from charging more for broadband service.

In a note to investors, Morgan Stanley said the cable industry’s efforts to jack up prices for those dropping video service have made some progress, noting most companies raised prices by 12% in 2017, establishing a new beachhead rate of $65 a month — the rate broadband-only customers should now expect to pay.

“As video revenue growth is increasingly pressured, leaning on data pricing is tempting to sustain earnings,” said Benjamin Swinburne, a Morgan Stanley analyst in a report.

But recent rate hikes don’t go far enough for some. Prices must rise at least another $15 a month to satisfy Jeffries analyst Mike McCormack and restore industry profits lost from cord-cutting. McCormack notes customers who have not canceled cable television are being insulated from the most dramatic rate hikes impacting cord-cutters, pointing out the average customer with a bundle of services now pays around $49 a month for broadband service — $16 less.

“Cable companies are likely to raise stand-alone broadband pricing in order to combat the EBITDA declines from downsizing,” said McCormack in a report. “This practice is already evident and justified given the lack of a bundling discount. Based on our analysis, we estimate Comcast would need to raise stand-alone pricing to roughly $80 in order to break even from a profitability perspective.”

Swinburne

Jonathan Chaplin, an analyst for New Street Research who has called on the cable industry to double broadband pricing for more than a year, thinks the marketplace is ripe for sweeping rate increases.

“We have argued that broadband is underpriced, given that pricing has barely increased over the past decade while broadband utility has exploded,” New Street said. “Our analysis suggested a ‘utility-adjusted’ ARPU target of ~$90. Comcast recently increased standalone broadband to $90 (including modem), paving the way for faster ARPU growth as the mix shifts in favor of broadband-only households. Charter will likely follow, once they are through the integration of Time Warner Cable.”

Wall Street analysts typically use code language that avoids portraying the marketplace as a monopoly or barely-competitive duopoly, instead preferring to note there is little risk or headwind to prevent operators from boosting prices or using their large market share to their advantage. Chaplin argues that cable television is no longer to profit center it used to be — broadband is.

“In fact, the [free cash flow] lost from subs dropping pay-TV is generally recovered through higher [broadband] pricing,” said Chaplin.

Many analysts also argue that most of the proceeds collected from charging higher broadband prices should be used to buy back shares of stock or returned to shareholders, not used to upgrade or expand service. In fact, Wall Street is currently punishing Altice USA, sending its initial stock price from $30 a share to just $24.49 this week. One of the reasons for the fall is the money its Cablevision unit is spending to replace its coaxial cable network with fiber optics. AT&T’s stock has also suffered as the company continues to spend money on expanding its AT&T Fiber service while combating cord cutting with its U-verse and DirecTV services.