Stevens

Sen. Ted Stevens death last week in a plane crash has shined a light on increasingly cozy relationships between Alaska’s most powerful politicians and the special interests that court their support.  Winning favor with a politician that can control and direct financial resources from Washington can secure your company millions in taxpayer dollars and legislative favors in America’s most rural state.

When he died, the former Alaskan senator was on his way, as an invited guest, to an isolated lodge owned and maintained for the use of executives at Alaska’s largest broadband provider — GCI.  Time alone in the Alaskan wilderness delivered the ultimate captive audience for those the company sought to influence and Stevens was always a company favorite.

Accompanying Stevens on the doomed flight were GCI’s senior lobbyist Dana Tindall and William D. Phillips Sr., a lawyer, lobbyist and former chief of staff for Mr. Stevens.  Both also perished in the crash.

Even after Stevens was voted out of office after being initially found guilty in a federal corruption trial, special interests like GCI continued to court Stevens, who all-too-willingly mixed business and pleasure — including the ill-fated fishing trip sponsored by the Alaskan telecom company.

Stevens didn’t go quietly out of politics after losing to Democrat Mark Begich in 2008.  The New York Times noted he split his time between Washington and Alaska, providing “consulting” services and worked on resource issues.

His close connections to beltway politics kept him in favor among Alaska’s corporate interests, many of whom had supported Stevens financially and rhetorically for decades.

Tindall’s close relationship to Stevens paid GCI dividends in favors and support — both of which they returned in the form of generous campaign contributions, as the Times reports:

Ms. Tindall, 48, did not work for Mr. Stevens, but several people said they had a strong mutual respect and a warm rapport. She is credited with helping the company she worked for, GCI, grow rapidly in Alaska at the same time that Mr. Stevens was influential in telecommunications issues in Congress. He frequently brought members of the Federal Communications Commission to Alaska and helped steer money toward improving communications in rural areas. Another of his former chiefs of staff, Greg Chapados, is a vice president at GCI.

Tindall

“Senator Stevens was instrumental in helping get a satellite project started so that people in Alaska could watch same-day television and live events,” said Mike Porcaro, a radio personality and advertising executive whose clients include GCI. Mr. Porcaro recalled not being able to watch live network television in Alaska as late as the 1970s. “We went from the 1800s to the 20th century in one day, mostly because of him,” Mr. Porcaro said.

Executives at GCI were generous campaign contributors to Mr. Stevens. Since 1994, Ms. Tindall was the most generous, donating $7,100 to his campaigns, records show. But in 2007 and 2008, as the corruption case surrounded Mr. Stevens, Ms. Tindall and other GCI executives gave less. Ms. Tindall initially gave $1,000 that year, though she later reduced the amount to $400.

Roberta Graham, a public relations executive and a close friend of Ms. Tindall’s, said Ms. Tindall and Mr. Stevens were “kindred spirits,” similarly tenacious and dedicated to their work.

GCI can afford to wine and dine Alaska’s politicians from the rate hikes they will visit on their broadband customers with a proposed Internet Overcharging scheme that will limit customers to how much Internet access they can enjoy.

That abusive pricing is something Senator Stevens would have undoubtedly supported, even if he lacked an understanding of its implications.

The late senator embarrassed himself in 2006 when he sought to defend his friends in the telecommunications industry against Net Neutrality.  At one point, Stevens reduced the Internet down to a “series of tubes.”

But then companies like GCI didn’t contribute generously to his campaign for his broadband knowledge — they just wanted to make sure he was a safe vote in their column.

Broadband customers face dramatically higher prices for Internet service from a telecom company that wants to define for Alaskans an “appropriate” amount of “fair usage” of the Internet.

GCI, Alaska’s largest cable company, is currently embarked on a so-called “education” campaign over the summer telling residential customers it might be time for them to log off, or face the consequences of enormously higher broadband bills.

For one Anchorage coffee shop, that added up for several hundred dollars for just a single month of usage — all because they offer free Wi-Fi to their customers.

“People use it for their second space. Their home office,” Kaladi Brothers Coffee COO Dale Tran told KTVA news. “We’ve always offered an open network in our cafes, and after hours some people come by and park out front.”

Tran says the result was a bill from GCI several hundred dollars higher than expected.

GCI Communications Manager David Morris says at least two percent of their 110,000 customers are using “too much” service and violating the company’s “fair use” policies.  Morris also warned customers with wireless equipment that if they don’t take steps to lock down their routers with passwords and security, they could be exposed to a huge bill from GCI for providing free Internet service to the entire neighborhood.

Morris claims the company wants to specifically define what it considers “fair use,” claiming it will make things more equitable for everyone.

But GCI’s Internet Overcharging scheme will never save a single customer a penny.  Instead, customers will see only skyrocketing bills should they not fit within GCI’s arbitrary definition of “fair use”:

The company’s website states, “For a large majority of customers, normal usage activities are not expected to exceed the plan profiles defined below”:

GCI customers are not happy.  One reader of the AK Community forum provided additional insight:

To add a little dimension to this before I start ranting, here are the respective rates for the above service plans:

Now, those prices are misleading because they are only for the internet service portion of the “bundle.”  What they’re not telling you (anywhere on the web site that I can find, in fact) is that in order to receive that price, data transfer rate, and monthly bandwidth, you must also pay for GCI’s digital cable television service ($57.99 when part of a bundle), local phone service ($15.49 a month), and long distance service ($5.99 a month plus taxes and surcharges).

Without factoring in the various FCC fees and whatnot, the above information brings the total cost of GCI’s fastest, highest monthly bandwidth package to $179.46 per month!  That’s actually the cost they quoted me on the phone, too, so at least we know their “customer service” staff are at least intelligent enough to figure out an adding machine.

Oh, and did I mention that those speeds and transfer rates are not available for standalone cable modem [subscribers]?

[…] What happens when you do go over?  BAM!  $5.12 per gig tacked on to your bill!  I don’t know about you guys, but I’m sick of getting ripped off by GCI.  Those of you who live outside of Alaska can confirm this, but GCI is just about the only cable company that still meters their customers’ bandwidth.  I have friends who tell me that they’re paying $49.00 a month for 8Mb/s transfer rate and unlimited bandwidth!

What GCI is doing is highway robbery.  How are they getting away with it?  I’ll tell you: no competition.  For very high speed broadband internet, they’re the only show in town, so they can charge whatever they want to anybody who wants more than 3Mbps (standard speed DSL service from Alaska’s other big telecom provider, the phone company).

[flv width=”478″ height=”380″]http://www.phillipdampier.com/video/KTVA Anchorage GCI Fair Internet Use Crackdown 6-2-10.flv[/flv]

KTVA-TV in Anchorage ran this report about GCI’s plans to force many of their broadband customers to pay more if they enjoy the Internet “too much.”  (3 minutes)

Jon Stewart spent a few minutes last night making a tentative stab at Net Neutrality on The Daily Show, trying to begin educating viewers about an Internet controversy many net users don’t even know exists. (3 minutes)

From the people who brought you the incredibly creepy computer animation re-enactments of Tiger Woods’ blowout and Lindsay Lohan’s jail stint for Taiwanese television, the Verizon-Google deal is now fair play, right down to devil’s horns for executives at both companies.  (1 minute)

A new report published by the Federal Communications Commission this week finds Americans are being ripped off by their broadband providers who promise speeds 50 percent faster than they actually receive.

In a generically named report, “Broadband Performance,” the FCC finds Americans love spending increasing amounts of time on the Internet, but face providers making bogus marketing claims for speeds they’ll never actually receive.

In 2009, average […] advertised download speeds were 7–8 Mbps, across technologies. However, FCC analysis shows that the median actual speed consumers experienced in the first half of 2009 was roughly 3 Mbps, while the average (mean) actual speed was approximately 4 Mbps. Therefore actual download speeds experienced by U.S. consumers appear to lag advertised speeds by roughly 50%.

[…] The “up to” speed, however, does not provide an accurate measure of likely end-user broadband experience. That experience depends on multiple factors, including the actual speed that consumers realize, taking into account the impact of network congestion; and other metrics like the availability of the network, latency, jitter and packet loss. In other words, consumers need a better, publicly agreed upon measure of broadband performance that reflects the network operation and end-user experience.

No surprises here - the FCC found fiber delivered the fastest broadband speeds with wireless and satellite service delivering the slowest

Providers in several countries have been called to account for marketing claims that never seem to be realized by customers.

For years, providers have relied on the weasel words “up to” to escape charges of outright misrepresentation of their products.  The FCC doesn’t believe the status quo properly informs consumers about true broadband speeds, especially when comparison shopping.

Some of the widest gaps between advertised and actually delivered speeds came from telephone company DSL service.  Many phone companies define their maximum speeds based on theoretical maximums, not the actual average speeds encountered by customers.  While some providers claimed up to 10Mbps service, they only actually delivered up to 3Mbps to many customers.

The report recommends new disclosures, including average actual speeds delivered to customers, what kind of speeds customers can expect during peak usage times, and what speeds consumers will encounter while using certain online applications.

Speeds can make all the difference for certain classes of broadband users, also defined in the FCC report:

➤ Advanced. These consumers use large amounts of data and tend to use the highest quality voice, video, and other cutting-edge applications.

➤ Full media. These consumers are moderately heavy users of broadband and mobile applications, seeking to access high-quality voice, data, graphics, and video communications but, typically not in the most cutting-edge forms.

➤ Emerging multimedia. These consumers utilize some video and graphical content but still see the Internet primarily as a way to communicate and access news and entertainment in a richer format than found in offline content.

➤ Utility. These consumers are largely content to access the Internet for basic news, communication, and basic entertainment.

The New America Foundation thinks the gulf between promises and reality has grown so large, it’s time to bring “The Schumer Box” to broadband.  Named after Sen. Chuck Schumer (D-NY), the “Schumer Box” was made a part of every credit card application and cardholder agreement.  It breaks out in large print fact-based disclosures to consumers about what kind of service and pricing to expect.  The Foundation wants consumers to have truth-in-labeling introduced for Internet users who will be able to comparison shop providers more effectively.

One consumer group wants a credit card-style disclosure of broadband speeds and policies

While the FCC’s findings may not reach the level of credit card-style disclosures, the agency does recognize there is a significant problem with providers misrepresenting their broadband speeds.

The report also found consumers are increasing their amount of monthly usage, often correlated to the speeds they receive.  Those with the fastest broadband accounts consume the most (and typically also pay the most for service).  Those with slower speeds consume less.

That finding supports the contention among many consumer groups that today’s speed-based broadband tiers fairly compensate providers for customer usage.  Those who use the most pay the most for the fastest speeds. Those who use the least pay lower prices for lower speed tiers.

The agency also rated fiber to the home America’s fastest broadband technology, followed by cable broadband, then DSL service, and finally wireless/satellite-delivered service.

Phillip "Cry Me a River, Guys" Dampier

Like two peas in a pod, Robert Cyran and Bob Cox are back for the umpteenth time with their views on something.  A few years ago, they were upset because the group Radiohead decided consumers should name their own price for one of their albums.  This time it’s about Net Neutrality and variable pricing for broadband.  Writing for Reuters BreakingViews, they’re deeply concerned poor traditional phone and cable companies are being shortchanged — saddled with the costs of building and maintaining networks that content companies like Google, Apple, Cisco, and Microsoft get to use for free.

As for the four leading [content companies], they have a combined net cash pile of around $140 billion. Last year they spent $4.9 billion on capital expansion, a tenth of what the big four [telecom companies] paid to erect new cell towers, buy routers and extend fiber-optic cables.

[…]The introduction of variable pricing, or charging customers based on the data they consume, will help pay for the needed gear. But it means that the already unpopular [telecoms] will stick their customers with far larger bills — a recipe for political interference. Meantime, the [content companies] would continue to carry away what the telecom operators see as a disproportionate share of the benefits.

This analysis is a mile wide and an inch deep — fundamentally flawed because of information Cyran and Cox either ignored, didn’t know about, or didn’t care to consider.

First, Cisco is hardly a content company.  It is doing quite nicely feeding rumors of the forthcoming great tsunami of data — the “zettabyte era of broadband” that will result in a global traffic jam only they can help overcome. Cisco’s success comes from the sale of advanced networking equipment that can manage the growth of the Internet.  The amount of data that crosses today’s broadband wires has grown exponentially, even as the costs to manage it are increasingly declining on a per-gigabyte basis.  Apple is partly a content company, but more importantly is a developer of devices like the iPad and iPhone which are driving growth in wireless networks and helping justify the acceptance of monthly wireless phone bills easily over $100 a month in many households.  Google has content, but is also willing to take a plunge into being a provider itself, with plans to deploy an advanced 1Gbps fiber network that big telecom providers say cannot be built in a sensible way (to their investors.)  Finally, love or hate Microsoft, they have successfully powered the growth of personal computing which made the concept of broadband something telecom companies could actually sell to their shareholders as a viable business.

Cyran and Cox equate content providers and big telecom companies as unequal beneficiaries of the broadband revolution.  But just like many other powerful interests opposed to Net Neutrality, they forget those big telecom companies earn enormous revenue and profits from their customers — you and I.  The financial reports of all of these companies tell the story Cox and Cyran don’t.  Broadband profits among large telecom companies are the biggest growth area these companies have.  Deploying the service reaps financial windfalls.  Even with capital expenses involved in constructing fiber optic networks, broadband revenue can still make shareholders smile like no other component in today’s triple play packages.

On the wired side, Verizon has announced it has suspended further expansion of its fiber network FiOS indefinitely.  No other national cable or phone company is currently constructing true fiber to the home networks. Instead, most deploy fiber to the neighborhood and let coaxial or copper wiring cover the rest of the way.  Indeed, capital spending by many telecom companies is actually dropping.

On the wireless side, more than 90 percent of Americans now carry cell phones.  The monthly prices most pay for service exceeds that of their landline provider, if they have one.  Yet for all of the awful costs wireless providers face, AT&T and Verizon can’t wait to devote more time and energy to the wireless side of their business, because that is where the real money can be found.

It’s difficult to claim “victim” status of unequal treatment when you’re standing in a room filled with piles of cash.

The authors also completely ignore the fact companies that produce content don’t just throw it on the web for free.  An entire industry devoted to delivery of streaming media and other high bandwidth content buys fat pipelines from these telecom companies to deliver content to consumers.  Every content provider already pays their fair share for the traffic they generate.  Consumers pick up the rest as part of their monthly bill.

But Cyran and Cox believe these content companies (and consumers) should pay dramatically more to telecom companies for “upgrades” that may or may not materialize, and are frankly just the cost of doing business, which can be recouped from the relatively expensive broadband pricing Americans already pay for service.  The profit margins for broadband service are enormous.

Variable pricing, which we consistently call Internet Overcharging, is nothing more than price gouging, and the one true fact in their piece we agree with is that customers will get stuck with the bill.