“Devastating.”

“Too big to fix.”

“A bad, recurring dream.”

“An oligopoly.”

“A meritless merger.”

These were some of the comments from objectors to T-Mobile and Sprint’s desire to merge the two wireless carriers into one.

Consumer and industry groups filed comments largely opposed to the merger on the grounds it would be anti-competitive and lead to dramatic price increases for U.S. consumers facing a consolidated market of just three national wireless carriers.

Free Press submitted more than 6,000 signatures from a consumer petition opposed to the merger.

“This is like a bad recurring dream,” one of the comments said, reflecting on AT&T’s attempt to acquire T-Mobile in 2011.

The comments reflected consumer views that mergers in the telecom industry reduce choice and raise prices.

The American Antitrust Institute rang alarm bells over the merger proposal it said was definitively against the public interest and probably illegal under antitrust laws. It declared two competitive harms: it creates a “tight oligopoly of the Big 3 and [raises] the risk of anticompetitive coordination” and it “eliminates head-to-head competition between Sprint and T-Mobile.”

The group found the alleged merger benefits offered by the two companies unconvincing.

“The claim that two wireless companies need a merger to expand or upgrade their networks to the next generation of technology is well worn and meritless. The argument did not hold any water when AT&T-T-Mobile advanced it in 2011 and the same is true here,” the group wrote. “The FCC should reject it, particularly in light of the merger’s presumptive illegality and almost certain anticompetitive and anti-consumer effects. Both AT&T and T-Mobile expanded their networks in the wake of their abandoned merger. And T-Mobile became a vigorous challenger to its larger rivals. Sprint-T-Mobile’s investor presentation notes, for example ‘T-Mobile deployed nationwide LTE twice as fast as Verizon and three times as fast as AT&T.’”

“The Sprint-T-Mobile merger is one of those mergers that is ‘too big to fix,’” the group added. “Like the abandoned AT&T-T-Mobile proposal, it is a 4-3 merger. It combines the third and fourth significant competitors in the market, creating a national market share for Sprint-T-Mobile of about 32%. Next in the lineup is AT&T, with a share of about 32%. Verizon follows with a share of about 35%. These three carriers would make up the vast majority (almost 99%) of the national U.S. wireless market with smaller MVNOs accounting for the remaining one percent. These carriers include TracPhone, Republic Wireless, and Jolt Mobile, Boost Mobile, and Cricket Wireless, which purchase access to wireless infrastructure such as cell towers and spectrum at wholesale from the large players and resell at retail to wireless subscribers.”

A filing from the groups Common Cause, Consumers Union, New America’s Open Technology Institute, Public Knowledge and Writers Guild of America West essentially agreed with the American Antitrust Institute’s findings, noting removing two market disruptive competitors by combining them into one would hurt novel wireless plans that are unlikely to be introduced by companies going forward.

Rivals, especially AT&T and Verizon, have remained silent about the merger. That is not surprising, considering T-Mobile and Sprint have forced the two larger providers to match innovative service plans, bring back unlimited data, and reduce prices. A combined T-Mobile and Sprint would likely reduce competitive pressure and allow T-Mobile to comfortably charge nearly identical prices that AT&T and Verizon charge their customers.

Smaller competitors are concerned. Rural areas have been largely ignored by T-Mobile, and Sprint’s modestly better rural coverage has resulted in affordable roaming arrangements with independent wireless companies. Sprint has favored reciprocal roaming agreements, allowing customers of independent carriers to roam on Sprint’s network and Sprint customers to roam on rural wireless networks. T-Mobile only permits rural customers to roam on its networks, while T-Mobile customers are locked out, to keep roaming costs low. Groups like NTCA and the Rural Wireless Association shared concerns that the merger could leave rural customers at a major disadvantage.

Many Wall Street analysts that witnessed the AT&T/T-Mobile merger flop are skeptical that regulators will allow the Sprint and T-Mobile merger to proceed. The risk of further consolidating the wireless industry, particularly after seeing T-Mobile’s newly aggressive competitive stance after the AT&T merger was declared dead, seems to prove opponents’ contentions that only competition will keep prices reasonable. Removing one of the two fiercest competitors in the wireless market could be a tragic mistake that would impact prices for a decade or more.

The American Antitrust Institute reminded regulators:

In 2002, there were seven national wireless carriers in the U.S.: AT&T, Verizon, Sprint, T-Mobile, Nextel, AllTel, and Cingular. In a consolidation spree that began in 2004, Cingular acquired AT&T. This was followed by Sprint’s acquisition of Nextel in 2005—a merger that has been called one of the “worst acquisitions ever.” At the time of the merger, Sprint and Nextel operated parallel networks using different technologies and maintained separate branding after the deal was consummated. The company lost millions of subscribers and revenue in subsequent years in the wake of this costly and confused strategy.

In 2009, Verizon bought All-Tel. This was followed by AT&T’s unsuccessful attempt to buy T-Mobile in 2011 and T-Mobile’s successful acquisition of mobile virtual network operator (MVNO) Metro PCS. The DOJ and the FCC forced the abandonment of the AT&T-T-Mobile deal. Like Sprint-T-Mobile, it was also a 4-3 merger that would have eliminated T-Mobile, a smaller, efficient, and innovative player that set the industry bar high for the remaining rivals.

AT&T’s rationale that the merger with T-Mobile was essential for expanding to the then-impending 4G LTE network technology also did not pass muster. In August of 2014, two years after the abandoned attempt, Forbes magazine concluded that there would have been “no wireless wars without the blocked AT&T-T-Mobile merger.”

Telecom companies in four states will receive almost 50% of the $1.488 billion the FCC has set aside in support to expand rural broadband service in unserved areas of 45 states.

Missouri ($254,773,117.90), California ($149,026,913.20), Oklahoma ($113,599,113.70), and Virginia ($108,923,612.60) were the only states to win more than $100 million each to expand internet access to a total of 257.436 residents, and many of the award winners are planning to offer fixed wireless service.

The FCC claims 713,176 homes and businesses will get internet service over the next six years from 103 different providers as a result of the auction, with half getting the option of 100 Mbps. An additional 19% will have gigabit service available. All but 0.25% will have at least 25 Mbps service available, meeting the FCC’s current broadband definition. Many of the providers will charge substantially for faster speed service, however. Some wireless ISPs offering fixed wireless service currently charge up to $999.95 a month for 100/100 Mbps service.

“The successful conclusion of this first-of-its kind auction is great news for the residents of these rural communities, who will finally be able to share in the 21st-century digital opportunities that broadband provides,” said FCC Chairman Ajit Pai. “By tapping the mechanisms of the marketplace, the Phase II auction served as the most appropriate and cost effective way to allocate funding for broadband in these unserved communities, bringing the highest-quality broadband services to the most consumers at the lowest cost to the ratepayer.”

The winners are a mix of phone, cable, satellite, and fixed wireless companies and several rural utility co-ops. The biggest recipient is Wisper ISP, a Mascoutah, Ill. company awarded over $220 million to expand its fixed wireless service in Arkansas, Illinois, Indiana, Kansas, Missouri and Oklahoma. Other significant auction winners include California’s Cal.net, a fixed wireless provider serving rural areas east of Sacramento as far as South Lake Tahoe and Commnet Wireless, LLC which provides cell service and fixed wireless in rural Arizona, Colorado, Nevada, New Mexico, Utah, and Wyoming.

Providers must build out to 40 percent of the assigned homes and businesses in a state within three years and increase by 20 percent in each subsequent year, until complete buildout is reached at the end of the sixth year.

The Connect America Fund Phase II auction is part of a broader effort by the FCC to close the digital divide in rural America. In addition to the funding that will provided by this auction, the Commission is working toward the launch of a $4.53 billion Mobility Fund Phase II auction to expand 4G LTE wireless coverage throughout rural America. And the Connect America Fund is in the midst of providing over $9 billion over a six-year period for rural broadband in areas served by large carriers.

For more information:

Files

• FCC Public Notice
• FCC News Release
• Attachment A: Winning Bidder Summary
• Attachment B: State Results Summary

Spectrum customers in western New York are reporting overdraft charges and missing funds from their checking accounts that trace back to double-charging by Charter Communications for cable service.

WIVB-TV Buffalo reports Olean resident Michelle La Voie was stunned when an unauthorized debit showed up in her credit union checking account, which appeared to be a double-bill from Spectrum.

The second charge, a duplicate of the $161 payment she made manually, appeared as a “pending charge” on her electronic statement — a charge she did not authorize and a hold on her checking account funds her credit union could not release unless Charter canceled the transaction.

When La Voie called Spectrum’s billing department, she was told it was a computer glitch.

“They informed me that it was a known issue, that payments that had been made on the 19th and the 20th [of August] there was a computer glitch, and there were people being double-charged,” La Voie told WIVB News.

The “glitch” is in fact an “authorization hold” — one that we are experiencing with our August Spectrum bill payment here at Stop the Cap! 

If a customer pays using a debit or credit card, a vendor like Spectrum can place a temporary “hold” on funds. Often, this hold is the full amount of the transaction, which will temporarily make those funds unavailable for withdrawal until either the company and your bank or credit card “settles” the transaction and transfers the funds, or the hold expires, usually after 5-8 days.

In this case, Spectrum or its credit card processor failed to clear the hold after the transaction was settled, meaning affected customers have twice the amount of their cable bill unavailable in their account until the pending charge expires in about a week.

Customers can check to see if this glitch is affecting their account by logging on and looking for something like this:

Pending Charges

Aug 19 2018  TWC * TIME WARNER CABLE   $151.40

Activity Since Last Statement

Aug 28 2018  TWC * TIME WARNER CABLE  $151.40

The presence of both the “pending charge” and the “settled” charge found under current account activity is unusual, because the pending charge should have been canceled at the same time funds were transferred to pay Charter Communications (d/b/a Time Warner Cable). Instead, $151.40 was withdrawn and sent to Charter while an additional $151.40 is remains unavailable for withdrawal because of the authorization hold not being removed. By September 1st, that pending charge will likely expire. But until then, Spectrum has effectively kept $151.40 of your money hostage.

This can become a problem for customers who keep a low balance in their checking account and expect those funds to be immediately available to pay bills or make a cash withdrawal. Because of the extended hold, customers could unintentionally overdraw their checking account, leading to overdraft fees or an automatic draw from a line of credit, if one is attached to your checking account. La Voie had enough money in her account to avoid an overdraft, but she was concerned about those who don’t.

“I asked are you planning to tell customers this so that they can make sure that they are not overdrawn, or having payments declined?  They said no, we don’t have any plans to notify customers,” La Voie said.

In fact, one of her co-workers did incur overdraft fees because of this problem. Her credit union removed the overdraft fees as a courtesy, but not all banks are likely to be that understanding.

Customers can protect themselves by considering using autopay with a credit card, where authorization holds only affect your available credit line, not money in your checking account. For most credit card transactions, the temporary hold has no material impact, and few even notice the hold. But authorization holds can temporarily put a credit card into an overlimit condition if a customer keeps their card nearly “maxed out,” and exceeding your credit limit will damage your credit score and risk your good standing with the credit card issuer.

WIVB in Buffalo reports some customers in western New York are being “double-billed” for Spectrum cable service. (2:06)

AT&T has laid off more than 16,000 employees since 2011, eliminating thousands of customer service positions while transferring others to cheap offshore call centers where some employees earn less than $2 an hour.

The company is rapidly closing call centers and consolidating others in hopes of wringing “deal synergies and cost savings” out of its operations, including DirecTV, acquired by AT&T in 2015.

Altogether, AT&T has closed 44 call centers, according to the Communications Workers of America (CWA), over the last seven years. Four call centers have been closed so far this year, including one in Harrisburg, Pa., that cost 101 jobs, some employed for over a decade. Many other call centers are being radically downsized, but have not yet been closed.

Betsy LaFontaine, a 30-year veteran at an AT&T call center in Appleton, Wisc. told The Guardian her call center has been slashed from 500 employees to less than 30 today.

“They’re liquidating us,” LaFontaine said. “This is not a poor company. On the shoulders of all its employees, we’ve made the company extremely profitable.”

AT&T took over this DirecTV call center.

While workers in Pennsylvania were offered new jobs if they were willing to move… to Kentucky, other workers would have to be willing to move overseas to keep a job with AT&T. As a cost saving measure, AT&T is offshoring an increasing amount of its customer service operation to India, Mexico, and the Philippines where it pays some English-challenged workers less than $2 an hour.

The savings from layoffs and offshoring are helping AT&T buy back shares of its own stock to help investors grow their stock portfolio’s value. The company has spent $16.45 billion on buybacks since 2013, including $419 million in the second quarter of 2018, the most AT&T has spent on buybacks since 2014.

AT&T has also banked at least $20 billion in savings from the Trump Administration’s corporate tax reform program. CEO Randall Stephenson was among the country’s biggest backers of the Trump tax cut program and was a principal member of the Business Roundtable lobbying group, which heavily lobbied Republicans to pass the measure.

According to the Institute on Taxation and Economic Policy, AT&T actually paid an effective tax rate of just 8 percent between 2008 and 2015, despite recording a profit in the United States each year, by exploiting tax breaks and loopholes. But the thought of paying even less was appealing to Stephenson.

When the measure passed, AT&T’s chief financial officer John Stephens shared the good news with shareholders.

“With the passage of tax reform, we see a significant boost to our balance sheet, reducing $20 billion of liabilities and increasing shareholder equity by a like amount,” Stephens said.

Stephenson

AT&T promised if the Trump Administration passed tax cuts and reduced the corporate tax rate to around 20%, AT&T would create 7,000 new middle class jobs paying $70,000-80,000/year. The CWA argues AT&T instead laid off an estimated 7,000 workers. AT&T disputes this, claiming the company hired 8,000 new employees in the United States so far this year and 87,000 over the past three years. AT&T also claims it promised to pay $1,000 bonuses to 200,000 employees over the next year, tied to the tax cuts. In fact, AT&T’s unions negotiated the bonuses with AT&T before the Trump Administration’s tax reform was passed.

For AT&T employees, mass layoffs come without warning. Managers at the Cleveland call center repeatedly calmed employees that its call center, open for decades, was not targeted for closure. Until it was in 2011. Most employees were laid off or offered positions in Detroit, a city two hours away.

Employees feel insecure, despite recruitment campaigns that stress AT&T is a company where stability is part of the job. In reality, an out-of-state executive can decide to close call centers and other AT&T facilities without ever having to face the employees being laid off. Many of those laid off face the prospect of competing in job markets where single, younger employees are willing to accept much less and do not have the same financial obligations veteran AT&T workers have to their families.

AT&T has increased investment in network upgrades with some of its tax savings, but much of that work is farmed out to third-party contractors. AT&T’s much larger investment is in mergers and acquisitions, acquiring Time Warner (Entertainment), Inc., for $85 billion.

Critics of the tax cut plan predicted the money would be spent on almost everything but job creation and investment.

“They can either create new jobs and capex for expansion or they can create greater shareholder wealth through dividends and stock buybacks. There are some other issues to consider, but that’s the main line of reasoning why corporate tax cuts incentivize buybacks and dividends,” Fran Reed, regulatory strategist at FactSet told US News & World Report.

A typical job offer to work in an AT&T call center. Starting salary is $22,880. Maximum pay is $37,518.

History tells the rest of the story. In 2004, a one-time tax holiday to repatriate foreign earnings temporarily cut tax rates from 35% of 5.25%.

“The primary use of the repatriated funds was to increase shareholder payouts, particularly stock buybacks, rather than increase firm investments such as capital expenditures, research and development spending,” said Stephen J. Lusch, associate professor of accounting at the University of Kansas.

In 2011, the Senate Permanent Subcommittee on Investigations found the 2004 tax break did not deliver the promised benefits of increased employment and investment. In fact, the largest recipients of the tax break downsized and collectively fired more than 20,000 employees, while enriching shareholders and executives:

U.S. Jobs Lost Rather Than Gained. After repatriating over $150 billion under the 2004 American Jobs Creation Act (AJCA), the top 15 repatriating corporations reduced their overall U.S. workforce by 20,931 jobs, while broad-based studies of all 840 repatriating corporations found no evidence that repatriated funds increased overall U.S. employment.

Research and Development Expenditures Did Not Accelerate. After repatriating over $150 billion, the 15 top repatriating corporations showed slight decreases in the pace of their U.S. research and development expenditures, while broad-based studies of all 840 repatriating corporations found no evidence that repatriation funds increased overall U.S. research and development outlays.

Stock Repurchases Increased After Repatriation. Despite a prohibition on using repatriated funds for stock repurchases, the top 15 repatriating corporations accelerated their spending on stock buybacks after repatriation, increasing them 16% from 2004 to 2005, and 38% from 2005 to 2006, while a broad-based study of all 840 repatriating corporations estimated that each extra dollar of repatriated cash was associated with an increase of between 60 and 92 cents in payouts to shareholders.

Executive Compensation Increased After Repatriation. Despite a prohibition on using repatriated funds for executive compensation, after repatriating over $150 billion, annual compensation for the top five executives at the top 15 repatriating corporations jumped 27% from 2004 to 2005, and another 30%, from 2005 to 2006, with ten of the corporations issuing restricted stock awards of $1 million or more to senior executives.

Teachout

It may not be a surprise to our regular readers that our biggest audiences, as measured by Google’s analytics, are concentrated in New York City, Albany, and the upstate cities of Rochester-Buffalo-Syracuse — all in New York, closely followed by Washington, D.C., and Southern California. Stop the Cap! is headquartered in Rochester, N.Y., but the broadband issues affecting upstate New York are identical almost everywhere, because companies like Charter and Comcast, AT&T and Verizon dominate in many states.

For the benefit of our New York readers, we would like to take a moment to endorse one candidate for our state’s next attorney general. Who wins this race will have a ripple effect on almost all of our readers, because New York’s long history providing oversight of critical public and private utilities impacts not only on the people living here, but often sets precedents that deliver real benefits to consumers across all 50 states.

New York needs a strong and active attorney general, especially at a time when a pervasive culture of corruption in Washington, D.C. and Albany continues to fester. An attorney general can provide independent oversight and investigate behavior the current Congress and state legislature refuse to do for partisan reasons. Corruption, corporate influence, and pay-for-play politics is a bipartisan problem.

Our last attorney general, Eric Schneiderman, horrified us after revelations he allegedly physically assaulted some of the women he dated while also claiming to be a strong ally for the #MeToo movement. Many of his public policy positions were admirable, but his irresponsible, reckless, and unforgivable behavior reminded New Yorkers how flawed many of our state’s elected officials are. Schneiderman was just the latest to resign over a decade of resignations including a former governor, legislative leaders, aides, and elected officials from Buffalo to Long Island.

What New York needs now is a new generation of not-well-connected politicians that have no interest in joining an insider network of good ‘ole boys (and girls) who cynically cut deals and look the other way for political expediency. We need leaders that pledge loyalty, not to the party they belong to, but to the people they were elected to serve. That means an end to “everybody does it” campaign trolling for corporate cash, friendly (usually secretive) meet and greets with Wall Street, and wink and nod pledges of “understanding” by those taking frequent trips through the revolving door of public office and industry. New York has seen the impact of these practices in major scandals up and down the state involving deep pocketed construction companies, Wall Street banks, wealthy donors, and various well-connected business interests looking for contracts or tax breaks.

This time, there is a candidate that will deliver exactly what New York needs in an attorney general. Zephyr Teachout couldn’t be more independent if she tried. She wrote a book on political corruption, ran against New York’s current governor Andrew Cuomo, has been involved in a number of public policy groups advocating campaign finance reform, sunshine laws, protection from voter suppression, and providing stronger oversight of corporate interests, including a willingness to break up corporate monopolies.

On telecommunications issues, she couldn’t be a stronger candidate:

• She opposed Charter Communications acquisition of Time Warner Cable.
• She is tired of unopposed, competition-killing mergers like AT&T and Time Warner (Entertainment), Inc.
• She favors net neutrality.
• She supports public/municipal broadband, and for spending public money to resolve rural broadband problems.
• She will continue a lawsuit against Charter Communications for failing to meet its obligations to customers.
• She will fight the pervasive and corrosive impact of corporate political contributions and their distortion of public policy.

New York voters have several options to choose from for our next attorney general. Among the Democrats, New York City Public Advocate Letitia James has taken on Charter/Spectrum downstate and railed against Verizon’s broken FiOS commitments in New York City. While she now seems intent on carefully investigating Charter’s performance, that comes a little late. New York City has faced a number of problems with telecom companies breaking their commitments, many while James was in office. Those companies do not seem to be afraid of her. Her campaign platform seems focused on downstate issues that are likely not going to attract significant support upstate.

New York’s primary day is Sept. 13.

Leecia Eve is the establishment favorite for attorney general. Her website says little about her positions, but her resume speaks uncomfortable volumes about her close ties to the Clintons and the D.C. Democrats that enabled the telecom industry’s era of consolidation while doing almost nothing to stop monopoly abuse. Even worse, she is a veteran of D.C.’s revolving door, moving between government and private business in an all-too-familiar game that rarely turns out well for constituents. The deal breaker for us is Eve’s current job — a lobbyist for Verizon New York, New Jersey, and Connecticut. She actually calls that experience a plus. Not for us. There are far better choices.

Sean Patrick Maloney is the first openly gay member of Congress elected from New York. Previously, he was a partner at two global law firms and ran a high-tech business. He is dubbed ‘the upstate candidate’ because he currently represents the 18th district, which includes all of Orange County and Putnam County, as well as parts of southern Dutchess County and northeastern Westchester County. His district includes Poughkeepsie. He is considered to the right of the other candidates, likely reflecting the more conservative upstate views of his district, where Donald Trump won over Hillary Clinton by just under two points in the 2016 presidential election.

Maloney’s campaign positions are thin, mostly focused on blocking Trump Administration policies that impact New York, particularly those on immigration. He also claims he will fight to stop corruption in Albany, but has said little else.

He is, by far, the most strident candidate in the race, reflecting a ‘tough talk’ style, sometimes laced with profanity, that usually doesn’t hurt candidates in New York politics. His message: he won’t take any crap from the president or his supporters.

“I don’t give a f**k what the Trump fans say. That’s not what this is about,” Maloney said in response to a question about Trump supporters’ feelings about his sexual orientation and family. “This is about speaking from the heart. About a family I’ve built for 25 years that’s in the crosshairs of these assholes. And doing something about it.”

He’s also upset about the less-than-robust response from fellow Democrats to rhetorical bomb-throwers on the right during the last two years of Donald Trump’s presidency.

“It feels like the people who are fueled by hate, demagoguery and anger have their sh*t together, and those of us who want to talk about love and hope and inclusion have been hiding in the shadows,” he said. “And it’s time to get out of the shadows and at least defend our ground. But I’d rather even get on offense.”

Maloney’s strong beliefs and style seem better suited to Congress than the state attorney general’s office. Although no stranger to grandstanding, the AG’s office usually spends most of its time reaching private settlements with offenders or taking them to court.

The Republicans have endorsed Keith Wofford for attorney general. His platform is wrapped around the premise the attorney general’s office in New York has been too hostile to companies in New York, essentially extorting settlements and deal conditions that hurt corporate interests while spending too much time on oversight and compliance and not enough time on attracting new businesses and jobs. That’s a philosophy former Oklahoma AG Scott Pruitt (who served as the president’s EPA administrator until his resignation in July) would strongly endorse.

“The business environment here is horrible— and the attorney general has been a big part of that problem,” Wofford writes. “Recent AGs have twisted New York’s laws, strong-armed companies to settle flimsy lawsuits, and used New York companies as a piggy bank. This has driven away jobs and investment. And the cost falls upon all New Yorkers, who are denied jobs and opportunity — because businesses refuse to invest here, or simply leave.”

After two years of the Trump Administration’s scandalous performance allowing corporate foxes to patrol the hen houses, Wofford’s double-down on Trump’s policies is woefully out-of-place.

For all these reasons, Stop the Cap! strongly endorses Zephyr Teachout for New York’s next attorney general. She is right on our issues and will instinctively fight to stop consumer abuse, often before it starts. She will be immune to the influences of corporate cash and the kinds of cozy Albany-insider politics that have allowed corruption to fester for too long.