The corporate-funded American Legislative Exchange Council (ALEC) took a hit in the Georgia legislature last week as the clock ran out on several initiatives backed by its members and supporters on behalf of the group’s corporate clients.

While H.B. 282, a municipal broadband ban introduced by Rep. Mark Hamilton (R-Cumming) was soundly defeated in an unusual, bipartisan 94-70 vote, two other measures supported by Hamilton never came up for votes, including one that would have placed restrictions on city employees speaking out against corporate-ghostwritten bills like the public broadband ban he introduced.

Hamilton is no stranger at ALEC. He received $3,527.80 in ALEC “scholarships” in 2008 alone, according to the Center for Media and Democracy. Those payments covered certain travel expenses, wining and dining, and entertainment for state lawmakers (and often their families) bought and paid for by ALEC’s corporate members which include large telecom companies. After 2008, ALEC no longer had to disclose their scholarships and neither do many politicians who receive them.

In the last cycle, Hamilton cashed checks well into the thousands of dollars from AT&T, Charter Communications, Comcast and Verizon. That doesn’t include $1,000 from the Georgia Cable TV Association.

Rep. Don Parsons, another bill supporter, happens to be an active member of the ALEC Telecommunications and Information Technology Task Force. He has received $5,735.48 during his first three years in that role.

ALEC’s principle role is to get corporate-backed legislative ideas written into state laws. The group maintains a large database of pre-approved legislation ready-made for introduction in any statehouse. Simply change a few words here and there and suddenly it isn’t AT&T, Verizon, Time Warner Cable or Comcast introducing the bills they helped draft, it is Reps. Hamilton and Parsons.

In 2013, these two representatives went over the top for their corporate friends at ALEC.

Mark Hamilton’s H.B. 228: The “Keep Your Mouth Shut Else or Else” Act

Hamilton

Among the most overreaching bills introduced in the 2013 session was Rep. Hamilton’s H.B. 228 – an untitled bill that would prohibit local government employees from using government computers, fax machines or email to promote or oppose legislation by the General Assembly. It would also prohibit employees from contacting members of the General Assembly or the governor to discuss the impact of pending legislation on local governments, unless the employee is registered as a lobbyist or information is requested directly by a member of the General Assembly.

The greatest wish-come-true of ALEC is introducing legislation supported by unshackled corporate interests while muzzling local governments from objecting to the legislation.

In the community broadband battle, large cable and phone companies have limitless budgets to spend opposing public broadband with scare mailers, push polling, newspaper, radio and even television ads. Local officials fighting to defend their interests in better broadband do not. Hamilton’s bill would have taken this imbalance even further, making it a crime for any agencies, authorities, bureaus, departments, offices, and commissions of the state or any political subdivision of the state to provide members of the General Assembly with information about their broadband problems. Communities could not correct misinformation, explain a bill’s unintended consequences, or request changes to the bill.

“HB 228 is utterly ridiculous,” said Conyers City Manager Tony Lucas. “When did a local government, contacting one of our representatives or our governor, become professional lobbying? It’s respective governments conducting business for or on behalf of our citizens.”

Don Parsons’ H.B. 176: AT&T’s “Put Your Cell Tower Wherever You Want” Act

Rep. Parsons had trouble coming up with a good name for his latest legislative gift to AT&T. Originally entitled the “Advanced Broadband Colocation Act,” that title was eventually scrapped because it was not snappy enough. In its place, the “Mobile Broadband Infrastructure Leads to Development (BILD) Act” was suddenly born.

Parsons

But after reading both it and a substitute amendment, we call it the “Put It Anywhere Act,” because the bill’s real intent is to largely strip away cell tower location authority from Georgia’s local governments.

Parsons does not host an AT&T cell tower in his backyard in Marietta, but other Georgian homeowners might had the bill passed.

H.B. 176 allowed cell towers to be placed anywhere a wireless company wanted with very limited local input. Companies were under no obligation to prove that the new towers were needed. Local governments could no longer veto their choices, much less limit additions to existing towers or suggest more suitable alternative locations.  Parsons’ bill even removed authority from local governments to insist that companies remove abandoned towers before constructing new ones.

Parsons went all-out for AT&T. Knowing that resource-strapped local governments often have bigger priorities, he set a deadline on cell tower applications at 90 days for existing towers, five months for new ones. Unless the community rejects a proposal showing good cause, it would be deemed automatically approved.

Amy Henderson, director of communications for the Georgia Municipal Association, scoffed at claims the bill was designed to streamline the cell tower application process.

“Dictatorship is just streamlined government,” she told the Rockdale Citizen. “It doesn’t necessarily mean it’s in the best interest of the public.”

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/Youtube – Rep Parsons on HB176 3-2-13.flv[/flv]

Rep. Parsons’ rambling YouTube video featuring a laundry list of AT&T talking points about the need for cell companies to throw up cell towers wherever they please because it is good for business (even if it isn’t so good for you or your neighbors). Parsons’ video then launches into a hissyfit directed at the Georgia Municipal Association, unhappy with Parsons’ sweeping transfer of authority away from local communities in favor of AT&T and others. Al Gore never sighed this much. It garnered a whopping 41 views on YouTube to date and in the spirit of open dialogue, Parsons disabled comments on the video.  (17 minutes)

Private vs. Public: A Phone-y Debate

At the heart of most of ALEC’s legislative initiatives is a sense that public institutions are somehow hampering private enterprise. Community broadband is considered an especially dangerous threat because incumbent providers claim public broadband represents unfair competition.

But as ALEC itself demonstrates, corporate welfare is alive and well in the statehouses of even the reddest states. The idea that taxpayers should not be footing the bill for things the private sector can do without costing taxpayers a nickel just doesn’t fly with reality.

As Free Press reports, phone and cable companies have been on federal welfare since their inception. A 2011 Institute on Taxation and Economic Policy study shows AT&T and Verizon receiving more than $26 billion in tax subsidies from 2008–2010.

The FCC’s 2012 report on Universal Service Fund subsidies shows nearly $3 billion in federal payments to AT&T, Verizon and Windstream. In 2010, Windstream — a telecommunications company with services across the South — applied for $238 million in federal stimulus grants to improve its service in 16 states. More than 16 million taxpayer dollars went to upgrade the company’s services in Georgia.

“Phone and cable companies would not be recording the soaring profit margins that they do, if there were truly a free market,’” said Free Press Research Director S. Derek Turner. “They have created an unlevel playing field that gives them massive first-mover advantages. The real-dollar benefits of that can’t be quantified.”

Stop the Cap! reader Paul writes to share his dilemma with AT&T U-verse:

I have had AT&T U-verse broadband for three years and although the company has a 250GB usage cap, they have a completely dysfunctional measurement tool. It has never worked. AT&T tells me I should not be concerned about my Internet use for billing purposes. It seems pretty clear to me AT&T’s -only- interest in capping usage is, in fact, for billing purposes. If you ask customer service about why AT&T caps wired usage, they claim it provides a better user experience for everyone. But nowhere does AT&T ask customers to consider what they are doing with their Internet accounts. If this was really about congestion, why not ask customers to conserve broadband resources?

With AT&T, one of the largest phone companies in the country, it was never about congestion and still is not. This is about money, pure and simple. Their usage meters don’t work right, their billing penalty is a huge $10 fee for 50GB of usage (why not $0.20 per gigabyte?), and their service has tons of capacity once it gets onto their fiber network at the link up the street. Who are they kidding?

The Internet Innovation Alliance this week unveiled its 2013 Broadband Guide to the 113th Congress, outlining recommendations for a better broadband future that just so happen to fall in step with AT&T’s lobbying action agenda, guaranteeing near-total telecom deregulation and abandoning rural America’s wired telecommunications networks.

That should come as no surprise, because the IIA’s principal backer is AT&T, along with a host of public interest and non-profit groups that have received significant contributions and backing from the phone giant.

The IIA’s chief recommendation: allow phone companies to abandon wired landline networks in favor of all-IP-based technologies that escape most regulatory requirements and are not subject to much oversight by local, state, or federal officials.

The IIA guide unintentionally illustrates that AT&T’s largest service area in the central and southern U.S. has some of the lowest broadband rankings in the country.

In order for consumers to enjoy the speed and bandwidth capacity of IP networks and to take advantage of the programs and services (including education, gaming, entertainment, social media) that require fast and robust data transmission, the United States should encourage the upgrade to a digital, all-Internet Protocol (IP) broadband infrastructure. Current legacy wired networks fail to meet the FCC’s definition of broadband, yet outdated laws essentially assume that incumbent telephone companies continue to maintain and operate these slow, antiquated networks, even as incumbents invest and deploy separate IP infrastructure and fewer and fewer consumers rely on the outdated voice-only networks.

Requiring incumbent telephone providers to maintain costly antiquated networks siphons investment away from deployment of advanced, high-speed next-generation IP-based networks that consumers prefer. Reforming antiquated 1930s regulations designed for monopoly providers in a copper-wire, analog era will encourage the private sector investment needed to upgrade non-IP-based facilities with newer and faster broadband infrastructure, creating jobs and growing our economy.

In addition, today’s 4G LTE wireless networks are IP-based, but the spectrum required to fuel consumers’ advanced wireless devices on these networks is becoming severely congested. Releasing more spectrum, the radio waves that carry everything from television to texts to mobile video, is necessary to maintain and improve service quality on wireless networks. The government controls the allocation of spectrum and should reallocate more of it for consumer use in order to sustain the increasing public demand for data and continue the benefits offered by the mobile revolution.

Nowhere in IIA’s guide does the “Alliance” disclose its largest backer is AT&T, one of the “telephone providers” IIA talks about as if it was a third party that had no direct connection to the group.

IIA’s guide takes care not to come down too hard on its benefactor for not upgrading rural telecommunications networks to support next generation broadband. In fact, AT&T has dragged its feet providing even ordinary DSL service in many of its rural service areas. The IIA is also careful not to disclose AT&T’s real plan: not to upgrade existing networks to fiber but rather abandon them altogether in favor of its high-profit, high revenue wireless service. That assures everyone deemed unworthy of wired broadband investment will be relegated to the company’s high-cost wireless platform with paltry usage caps and speed throttles.

At the start of 2013, we are witnessing exciting changes enabled by mobile broadband: an app economy that didn’t even exist five years ago now employs more than 500,000 Americans, according to Economist Michael Mandel; the inexorable shift to the cloud and its more efficient information storage; proliferating creative tools that are transforming consumers’ business and personal lives; rapacious appetite for faster speeds, greater bandwidth opportunity and more capacious storage; overwhelming competition with 90 percent of consumers able to choose from at least five different providers, as reported by the FCC; and accelerating innovation cycles where tomorrow’s technology is invented today. The future of broadband is bright and the benefits to consumers and our nation could be boundless. To realize these benefits we need only to let our innovators innovate, our entrepreneurs compete, and ensure our consumers have the knowledge and freedom to make the most of the technology available to them.

…and let AT&T do whatever and charge whatever it wants, while depriving rural America of a wired broadband future.

The IIA hopes its message gets through to members of Congress. Helping make that happen are two former Washington, D.C. insiders that have bipartisan support for AT&T’s agenda.

“We love technology here and believe in its power to change the country, the world, and that it’s a non-partisan issue,” gushes Bruce Mehlman, IIA’s founding co-chairman and former assistant secretary of commerce for technology policy in the George W. Bush Administration.

Mehlman was recognized by Washingtonian Magazine as one of the city’s top lobbyists and is a founding partner of his own lobbying firm. Mehlman is considered an expert in running issue campaigns and “developing advanced lobbying strategies that achieve impactful policy outcomes.” At least AT&T hopes so.

Mehlman’s D.C. lobbying firm promises “we get things done in Washington.”

“It’s critical that policymakers be well-informed as they make decisions affecting the Internet in order to promote and encourage the expansion of Internet investment, access and adoption,” echoed IIA honorary chairman Rick Boucher, a former Democratic member of Congress from the state of Virginia.

Boucher has never strayed too far from AT&T money either. AT&T was his third largest contributor overall from 1989 until he lost re-election in 2010. Today, Boucher is a partner in the law firm of Sidley Austin, which has represented AT&T’s interests for over 100 years.

Follow the money to the real root of this argument.

After conclusive evidence that cable broadband upgrades have eliminated any congestion problems, the cable industry has finally admitted usage caps are not about “congestion relief,” but are, in their view, “about fairness.”

Reports of the Internet data exaflood, tsunami, brownouts, or even blackouts are highly exaggerated and always have been. But we knew that from the first day Stop the Cap! got started.

In the summer of 2008, Frontier Communications attempted to define a top limit on their residential DSL accounts at a staggeringly small 5GB per month. Time Warner Cable initially thought 40-60GB a month was more than fair when it tried to ram its own Internet Overcharging scheme down the throats of customers in New York, North Carolina, and Texas in April 2009. Comcast said using more than 250GB a month could create congestion problems on their network and be unfair to other customers. To this day, AT&T, one of the nation’s largest telecommunications companies, claims that anything more than 150GB on their DSL service or 250GB on U-verse could bring their entire network to its knees.

The Holy Grail of Wall Street economics for broadband is to monetize its usage, creating an endless money party for what is today a utility service. Millions have been spent lobbying anyone who will listen that usage caps and consumption billing were essential to promote investment, upgrades, and to expand broadband service into rural America. Since those arguments have been made, broadband rates have increased, investment has decreased on a per customer and often real basis, and the government is now trying to chip in public taxpayer dollars to get providers to wire areas that will never pass demanding return on investment formulas.

The second prong of selling this meme is the creation of an Internet boogeyman — the “data hog,” a largely fictional creature that supposedly cares only about consuming every possible bit of bandwidth and slowing your web browsing to a crawl. Shouldn’t he pay more, you are asked, at the same time these same companies continue to raise your rates and now attempt to limit your use of a service that should cost less.

This week, Michael Powell, former FCC chairman turned head of the nation’s largest cable lobby — the National Cable & Telecommunications Association, capitulated on the “congestion” myth to an audience at the Minority Media and Telecommunications Association.

Asked by MMTC president David Honig to weigh in on data caps, Powell said that while a lot of people had tried to label the cable industry’s interest in the issue as about congestion management. “That’s wrong,” he said. “Our principal purpose is how to fairly monetize a high fixed cost.”

He said bandwidth management was part of it, though a more serious issue with wireless.

But he pointed out that the cable industry had to spend a bunch of money on its network before the first customer was signed. So, for a business that requires “enormously high” fixed costs — digging up the streets, put the wires in — and operational expense, “it is a completely rational and acceptable process to figure out how to fairly allocate those costs among your consumers who are choosing the service and will pay you to recover those costs.”

When will Washington regulators and lawmakers stop drinking the Kool-Aid handed them by high-paid lobbyists?

But our readers know Powell’s arguments are based on nothing more than the same empty rhetoric that declared the Internet exaflood was at hand.

Cable broadband was introduced as an ancillary service in the late 1990s utilizing cable television infrastructure that was constructed and paid off years earlier. Introducing broadband required only incremental investment and that remains true to this day. Cable operators more than cover their costs with sky high prices for service delivering some operators as high as 95% gross margin on broadband. Capital investments have broadly declined for years as have the costs to deliver the service on a per customer basis.

Suddenlink president and CEO Jerry Kent admitted the days of expensive system upgrades were over and it was now time to rake in profits.

“I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity,” Kent said. “Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down.”

Powell’s arguments ironically may apply partly to Verizon’s FiOS fiber network, which requires the retirement of copper wire infrastructure around since Alexander Graham Bell, but even Verizon covered much of its costs winning permission to raise rates years earlier to cover fiber upgrades. Much of that money was diverted to their wireless business instead. Today, Verizon FiOS manages just fine with no usage limits at all.

In fact, the only argument about fairness that should be open for debate regards the current cost of broadband service in the United States when compared against operators’ enormous profit margins. The lack of competition has allowed providers to increase prices and introduce “creative pricing” that always guarantees protection for the incredibly high average revenue per customer already earned.

Too often, Washington regulators and lawmakers drink the Kool-Aid handed them by an industry with an incentive to distort the truth. That incentive is the billions at stake in this fight.

Powell has even shelved the notion of the Cheetos-eating data hog burning up the Internet in his parent’s basement and has elected to try class warfare instead, claiming the most capacity is used “by a high end elite subsidized by the rest.” The real high-end elite are the telecom company executives cleaning up overcharging customers for a service that has become a necessity. Arguing for usage caps as a way to offer “lower prices” for those who cannot afford the ridiculously high prices the industry charges today only creates a new digital divide – the have’s and the have only so much.

Either way, providers laugh all the way to the bank.

Netflix has introduced 3D and Super HD viewing — an improved version of 1080p streamed content — but if you are a Time Warner Cable broadband customer, you will not be able to watch.

Netflix is distributing its highest definition content over its Open Connect CDN network, which minimizes the geographic distance and number of connections between viewers and Netflix’s streaming servers. ISPs can join Netflix Open Connect either by free peering at common Internet exchanges, or save even more in transit costs by putting free storage appliances supplied by Netflix in or near their network.

“OpenConnect provides Netflix data at no cost to the location the ISP desires and doesn’t seek preferential treatment,” Netflix tells GigaOm. “We hope Time Warner will join the many major ISPs around the world who are participating in Open Connect to reduce costs, minimize congestion and improve data delivery to enhance the consumer experience.”

So far, Time Warner Cable has chosen not to participate and accused Netflix of discriminating against its customers.

“While they call it ‘Open Connect,’ Netflix is actually closing off access to some of its content while seeking unprecedented preferential treatment from ISPs,” Time Warner Cable said in a statement to Multichannel News. “We believe it is wrong for Netflix to withhold any content formats from our subscribers and the subscribers of many other ISPs. Time Warner Cable’s network is more than capable of delivering this content to Netflix subscribers today.”

ISP participation in the Netflix Open Connect CDN has proven limited thus far in the United States. Cablevision is the only major cable operator signed on to the content delivery platform. Frontier, Google Fiber and Clearwire also participate. Abroad, Virgin Media, British Telecom, Telmex and Telus also participate.

Netflix’s decision to limit its best streams to participants may be an attempt to force ISPs to take its content delivery network more seriously and enlist subscribers in a push to get additional ISPs on board. By bringing its most watched content directly to ISP’s, the company is attempting to blunt provider arguments for data caps and other viewing limits because the cost to distribute content within a provider’s internal network is negligible.

The necessary hardware powering the Netflix Open Connect CDN is less than you might think. The single device powering Open Connect is easily rack mountable and consists of:

Netflix’s Open Connect CDN hardware