Big Apple Day

New York City officials are sick and tired of taking complaints about missed cable appointments and other service problems on its 311 city help line.  Nearly 1,200 calls about cable have been made so far this year alone, with fed up New Yorkers annoyed they took a day off work to wait for a cable technician that never arrived, or one who never solved the problem they were called to fix.

Now city officials are forcing the area’s two incumbent cable operators — Time Warner Cable and Cablevision, to pay for their mistakes.

As part of franchise renewal negotiations, both cable companies have agreed to credit subscribers the full amount of that month’s cable bill if the cable guy arrives late, or not at all.

The penalty decreases to $25 after 2012, when Verizon FiOS service is expected to blanket most of the city.

But consumer reforms extend beyond financial penalties for missed appointments.

Customers will soon be able to request notification by e-mail, phone or text message when a technician is heading to their home.  And calls to either cable company should be answered by a real person no more than 30 seconds after dialing.

Many of these reforms are already a part of the franchise agreement New York City’s Office of Information Technology & Telecommunications worked out with Verizon, allowing the phone company to provide cable television in the city.

Time Warner Cable spokesman Alex Dudley didn’t miss the opportunity to turn the challenging new requirements into an opportunity.  He told area reporters Time Warner welcomes the new customer service standards and appreciates the opportunity to compete for customers in the metropolitan New York area.

As Robert Porto, 38, a Time Warner Cable customer in Boerum Hill, Brooklyn, told the New York Times, the new contract will be “the ultimate revenge for the little guy.”

Importantly, none of these consumer-focused reforms would have been possible had New York adopted the kind of “reform” companies like AT&T and Verizon have advocated in other states — statewide video franchising.

Brodsky

New York’s legislature has rejected previous attempts to eliminate local cable and video franchise agreements, citing the loss of control by local municipalities to deal with provider issues that would sail over the heads of a statewide committee in Albany.  New York has been generally hostile to Big Telecom’s deregulation agenda.  One state assemblyman, Richard Brodsky (D-Westchester), even introduced a bill requiring phone companies like Verizon to split the proceeds of asset sales with ratepayers.

Other provisions of the franchise agreements include:

• The right to terminate franchise agreements with Time Warner Cable and Cablevision Systems if broadband-delivered video significantly erodes cable TV revenue over the next 10 years;
• Time Warner Cable and Cablevision are required to invest about $10 million to install Wi-Fi access in 32 public parks in all five boroughs, to be operated and maintained by the companies until 2020;
• At least five new Public, Educational and Government (PEG) community access channels will be added, up from the four that currently exist, by 2012.  At least one must be in HD.  The operators also agree to pay a combined total of more than $9 million, payable in annual installments, plus an additional $2 million of “in-kind” services to pay for equipment and operation expenses;
• More than $20 million to help finance the upgrade of CityNet, the city government-dedicated network;
• Time Warner Cable will establish four community broadband access centers per year (40 total), in collaboration with nonprofits, over life of franchise;
• Time Warner Cable will install 20 miles of fiber per year in underserved commercial/industrial areas over franchise term; and will build-out Brooklyn Navy Yard. Cablevision already serves the commercial blocks in its service areas. Companies will commit to expend $1.8 million per year to bring fiber to commercial buildings of city’s choice.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WABC New York New Yorkers could get money if cable guy stands them up 9-15-10.mp4[/flv]

WABC-TV covers the introduction of pro-consumer cable service reforms for metropolitan New York residents.  (2 minutes)

Phillip "Darn, they didn't pick my essay" Dampier

Time Warner Cable paid $20,000 for a report that concludes, “policymakers not only need to focus on the oft-stated long-term goal of encouraging Fiber-To-The-Home but also on the more immediate need to bring fiber significantly closer to the customer.”

That declaration was included in one of five essays released this week by Time Warner Cable’s Research Program.  When we first wrote about this program in February, we were convinced that the resulting essays would parrot the cable company’s public policy agenda.  We were largely right, especially in those that delved into public policy matters.  They stayed safely inside the company’s policy boundaries.  Even those who focused on technical matters avoided directly challenging the company writing the check.

The cable company earlier announced it would pay $20,000 stipends to essayists that wrote research reports on these questions:

• How are broadband operators coping with the explosive growth in Internet traffic? Will proposed limits on network management practices impede innovation and threaten to undermine consumers’ enjoyment of the Internet?
• How can policymakers harmonize the objectives of preventing anticompetitive tactics and preserving flexibility to engage in beneficial forms of network management?
• Regarding these issues, describe a vision for the architecture of cable broadband networks that promotes and advances innovation for the future of digital communications.
• How might Internet regulations have an impact on underserved or disadvantaged populations?

The winners:

• Dale N. Hatfield, executive director, Silicon Flatirons Center for Law, Technology and Entrepeneurship, University of Colorado, “The Challenge of Increasing Broadband Capacity.”
• John G. Palfrey, Jr., Henry N., Ess III professor of Law, Harvard Law School, “The Challenge of Developing Effective Public Policy on the Use of Social Media by Youth.”
• Nicole Turner-Lee, vice president and director, Media and Technology Institute, Joint Center for Political and Economic Studies, “The Challenge of Increasing Civic Engagement in the Digital Age.”
• Scott J. Wallsten, vice president for Research and Senior Fellow, Technology Policy Institute, “The Future of Digital Communications Research and Policy.”
• Christopher S. Yoo, professor of Law & Communciations, University of Pennsylvania Law School, “The Challenge of New Patterns in Internet Usage.”

Among the reports were a few that echoed the cable industry’s public policy agenda, particularly Scott Wallsten’s policy essay, “The Future of Digital Communications Research and Policy.” Wallsten is an industry favorite.  He works for the Technology Policy Institute, an industry front group funded by AT&T, Comcast, the National Cable & Telecommunications Association, Qwest, Time Warner Cable, T-Mobile, and Verizon.

Scott Wallsten's essay parrots the cable industry's agenda

Wallsten argues worrying about residential broadband service is far less important than delivering broadband improvements to businesses to spur economic growth.  Part of the money to do that might come from raising residential broadband prices.  Wallsten points out consumers are willing to pay far more than they do today for their broadband accounts — up to $80 a month for today’s typical access speeds.  That’s music to an Internet Overcharger’s ears.

Wallsten’s essay hints that broadband expansion to the unserved, and Washington’s focus on broadband competition, might be misplaced if they are looking for the biggest economic bang for the buck.  His overall conclusion?  Worry about business broadband, not home residential use.

This is hardly new territory for Mr. Wallsten, who in 2007 wrote a piece warning of the perils of flat rate, unlimited use broadband pricing for the Progress & Freedom Foundation and the Heartland Institute, both great friends of large industry players. Only this time, he got a nice chuck of change from Time Warner Cable ratepayers.

More remarkable was Dale Hatfield’s essay, “The Challenge of Increasing Broadband Capacity.” Unlike Mr. Wallsten’s cable industry public policy echo chamber, Hatfield tries to keep things technical, but also safely made sure he didn’t stray too far off Time Warner’s broadband plantation.

Hatfield discusses the challenges of different broadband technologies ranging from twisted-pair copper wiring that delivers DSL to cable’s hybrid coaxial-fiber networks and the latest generation wireless and fiber optic technologies.  Hatfield largely calls them as he sees them, noting DSL’s inherent distance limitations and maximum supportable speeds, cable’s potential for last-mile/neighborhood congestion, wireless spectrum inadequacy, and the promises fiber optics can bring to the broadband revolution if costs can be reduced.

Hatfield avoids embarrassing his benefactor too much by spending the least amount of time and space on the benefits fiber brings to the broadband expansion question:

The fourth technology, fiber optic cable, is generally regarded as the “gold standard” in terms of increasing broadband digital access capacity because of its enormous analog bandwidth and its immunity to natural and man-made forms of electrical noise and interference. The actual digital transmission rate delivered to or from a customer depends upon the details of the architecture employed, but the ultimate capacity is limited more by economic factors rather than by the inherent technical constraints on the underlying technology imposed by Shannon’s Law. In this regard, fiber optic cable is often referred to as being “future-proof” because the maximum digital transmission rates are governed more by the electronic equipment attached to the cable rather than by the actual fiber itself. It is future-proof in the sense that the capacity can be increased by upgrading the associated electronic equipment rather than by taking the more expensive step of replacing the fiber itself.

Hatfield

While Time Warner Cable does market itself as having an “Advanced Fiber Network,” it is, in reality using the same technology the cable industry has used for a decade — fiber distribution into individual towns and large neighborhoods, coaxial cable the rest of the way.  Hatfield believes that simply isn’t good enough:

[…]Both DSL and cable modem technology benefit from the shorter distances that are associated with a more dense deployment of their access nodes. This suggests the growing need to extend fiber optic cable capacity closer to the customer—either fixed or mobile—to minimize the distance between the customer and the access nodes.

Hatfield’s subtle conclusion is that broadband expansion is ultimately best served by delivering fiber-optic connections straight to the home, something Time Warner Cable has argued against and refused to provide for years, but has now paid $20,000 to put on their website:

[…]Policymakers not only need to focus on the oft-stated long-term goal of encouraging FTTH but also on the more immediate need to bring fiber significantly closer to the customer to support a vastly increased number of access nodes. This is particularly important in the wireless case, where the capacity added through frequency reuse is critical to facilitating wireless competition with the two major suppliers of fixed broadband capacity—the incumbent telephone and cable television companies.

AT&T is buying newspaper ad space to publish a feel good message about Internet Openness that bears no reality to the company’s multi-million dollar lobbying effort to derail broadband reform, taking guarantees of a free and open Internet with it.

The advertisement’s appearance is remarkable, coming at the same time the company’s “government affairs” team of paid lobbyists and friends are browbeating elected officials and the Federal Communications Commission.  AT&T wants the right to allow preferential treatment of its selected content partners while dumping everyone else on the Internet slow lane.

The only opening AT&T supports is a new way to cash in even further on the Internet.  An “open network” to the phone giant means one that is totally deregulated and open to whatever AT&T wants to do with it.

AT&T’s “innovation” is to monetize the traffic that happens to cross their network on its way to AT&T customers.  By manipulating broadband traffic, AT&T will sell its “selected partners” priority access, shoving uncompensated traffic out of the way to make room for whatever AT&T’s special friends want you to see.  While that’s great news for companies that agree to pay AT&T’s tolls, it’s very bad news for everyone else, because the websites you choose to visit may or may not be available on the second rate “free lane.”  Given the choice between AT&T-backed video streaming or a third party provider like Netflix, guess what traffic will never get stuck “buffering” or face glitches.

Investors love the concept because AT&T can collect revenue just by sitting back and demanding tolls from content they neither produce nor host.  It’s not as if they haven’t been paid already — by their customers — to obtain access to that content.  AT&T wants another payday for their shareholders while sticking you with second-rate service.

The problem with AT&T’s world view is… AT&T’s world view.  Real innovation would mean delivering customers a world class broadband service the envy of anyone, delivered on America’s most advanced communications network, not re-purposed copper wire phone lines.  Then, “traffic management” on a mega-sized information highway wouldn’t have to squeeze the speed of some traffic to make room for “premium content.”  There would be plenty of room for one and all.

AT&T’s proposed answer for broadband reform is all about their interests, never yours.

America already experienced a corporate-sanitized online experience with preferred content partners. It was called Prodigy, and by 2000 it was fed to 77 million SBC (later AT&T) customers.

Some examples:

• Net Neutrality has been a part of AT&T’s corporate life for several years as a condition of its 2005 merger with SBC.  It didn’t harm their ability to provide all of the innovation, service, and speeds they could have, but never did.  Nothing about Net Neutrality protection harms AT&T’s ability to deliver broadband service to more of its customers. Giving AT&T whatever it wants won’t change that fact or deliver service to a single new customer;
• The freedom AT&T writes about is their idea of a Corporate Bill of Rights, which grants them the freedom to exchange their ideas and content, but says nothing about protecting your freedom of speech;
• A robust and secure network should exist regardless of Net Neutrality, considering the enormous amount of cash AT&T harvests from their Internet customers month after month.  AT&T is free to innovate all they like, on a level-playing-field, where customers can choose the best applications at the best prices, not the ones AT&T provides to them on a paid fast lane;
• AT&T’s record on competition is laughable when it spends its free cash on an army of lobbyists and “dollar-a-holler” interest groups.  Their mission?  To oppose potential competitors and enthusiastically support AT&T’s competition-busting mergers and acquisitions that further concentrate their market power;
• For AT&T’s customers, transparency alone is hardly the kind of consumer protection Internet users need.  Yes, it’s nice to be told when you are overpaying for broadband service that is “network managed.” Admitting AT&T seeks to throttle broadband speeds and potentially block websites in a monopoly/duopoly market doesn’t help much when customers can’t find another provider.  Disclosing the fact AT&T is sticking it to you is not the same thing as prohibiting them from trying in the first place.

AT&T has no interest in working with anyone that opposes their corporate interests.

The Internet should not be AT&T’s personal playground, ready and able to be “managed” out of its unique ability to deliver ideas equally — to be judged on their merit — not on the money backing them.

Americans have already experienced a corporate-sanitized online service for pre-approved ideas, products, and services.  It was called Prodigy, and by 2000 it was to become the Internet experience for 77 million SBC (later AT&T) customers. By the time the bottom fell out in 2001, SBC owned 100 percent of the service nobody wanted.  In 2005, SBC tried to sell the Prodigy brand in the United States.  There were no buyers.

That should be the outcome of AT&T’s proposal for “an open Internet.”  No deal.

What is the last technology product you purchased that never declined in price after you bought it?  If you answered your broadband service, a new study proves you right.

Since there are no public data on what has happened to broadband prices over the last decade, Shane Greenstein, a professor of management and strategy at the Kellogg School of Management, and his co-author Ryan McDevitt, an assistant professor of economics and management at the University of Rochester and a graduate of Northwestern University, analyzed the contracts of 1,500 DSL and cable service providers from 2004 to 2009.

The results every broadband user already knows.

At best, prices have declined only slightly — typically between 3-10 percent, partly from a “quality adjustment” the authors included to account for gradually increased broadband speeds when measuring prices.

Greenstein blames a broadband duopoly for the stagnation in broadband pricing.

Greenstein

“So if you were in such a market as a supplier, why would you initiate a price war?” Greenstein asks. With no new entries on the market, suppliers can compete by slowly increasing quality but keeping prices the same. According to Greenstein, quality is where providers channel their competitive urges.

Meanwhile, once companies have installed the lines, their costs are far below prices. “At that point, it becomes pure profit,” Greenstein says. A company might spend around $100 per year to “maintain and service” the connection, but people are paying nearly that amount every other month. Greenstein says that it is not surprising that prices were high during the buildout phase in the early and mid-2000s, since the firms were trying to recover their costs. “However, we are approaching the end of the first buildout, so competitive pressures should have led to price drops by now, if there are any. Like many observers, I expected to see prices drop by now, and I am surprised they have not.”

The authors also confirm Stop the Cap!‘s long-standing contention that providers are enjoying dramatically reduced costs to deliver broadband to customers, yet are not spending some of those profits on important network upgrades.  That could lead to a broadband bottleneck, Greenstein contends, especially with the growth of online video.  We argue it is a recipe for Internet Overcharging — triggering increased pricing to “pay for upgrades” while limiting usage of broadband service, despite the mountain of profits available today to cope with usage growth.

McDevitt

Greenstein and McDevitt pored over 1,500 broadband contracts over several years, tracking pricing, service bundling, and speed improvements.  Pricing, adjusted for speed improvements, was generally flat.  Because the cable industry has delivered most of the speed growth Americans enjoy, the “quality adjustment” the authors used credited most of the modest price declines to the cable industry, especially for customers moving to bundled packages of services.  The authors found DSL and its providers almost completely stagnant — both in pricing and speed.

The most surprising discovery, Greenstein says, is that national decisions are being made without the type of data that he created in the consumer price index. “As an observer of communications policy in the U.S., I find it shocking sometimes how often government makes decisions by the seat of their pants,” he says. Without real data and statistics, decisions are based solely on who has better arguments—in essence, a debate. A better consumer price index will help produce better decisions for the future of the Internet and its users.

It may also serve as an effective challenge to telecommunications industry lobbyists who engineer their own statistics and claims about the performance of the nation’s phone and cable companies.

Thanks to Stop the Cap! readers Bones and Michael for sending along the story.

John Linton, CEO Exetel

Australia’s planned National Broadband Network (NBN) delivering the country access to broadband speeds up to 1Gbps face many of the same criticisms American municipal providers hear when incumbent commercial providers face imminent competition from fiber broadband.

But nobody can top the venomous spray of Exetel’s CEO John Linton, who called the entire concept of public broadband for the public good “a load of crap” and those behind it a mix of ‘thugs,’ ‘pretenders,’ and generally incompetent and stupid.

Linton’s Internet Service Provider delivers broadband to most of its customers over Telstra landlines, using DSL.  But the company has grudgingly agreed to participate in the NBN project, even while still despising it to the core.

Exetel’s pricing on NBN’s fiber network charges for speed and usage.  Much like cable broadband, Exetel delivers much faster downstream speeds (up t0 100Mbps), with upload speeds maxing out at 8Mbps. The higher the speed, the higher the monthly access fee.  Users receive no usage allowance, paying fees per gigabyte for all of their usage.  Exetel still reserves the right to throttle customer speeds for certain online applications, and “traffic shape” users based on their usage.

In Tasmania, Exetel has introduced a 25/2Mbps broadband plan with no usage allowance — but no monthly access fee either — charging a flat $2 per gigabyte of usage.

Exetel Fiber Pricing In Tasmania

Linton spews most of his angry commentary on his personal blog, which he closed to non-Exetel customers unless they made a $20AUS contribution to the company’s endangered wildlife protection programs.  But he rarely pulls punches in public either.

Is this Australia's broadband future?

A sampler:

With wireless broadband waiting in the wings, those excited by NBN’s 1Gbps speeds are “unthinking and just plain stupid, pretty much along the same lines as the stone age cargo cult dwellers in the jungles of New Guinea are excited about the next ‘goods drop’ from the strange colored bird.”

Australia’s aging population, “who don’t play computer games or get a surrogate sex life from pornography” have zero interest in getting terabyte broadband speeds, making the whole endeavor a giant waste of money.

“The number of people who want 100Mbps are almost none today and aren’t going to be very many in five years time.   Probably 40-50% of people today will never want to use a piece of fiber […] and they’re certainly not gamers playing, or those other things.  They’re the other half of Australia that has a life rather than a half life.”

On the results of the recent election and the decision to move forward with the NBN: “God help us all.”

On Communications Minister Stephen Conroy (Australia’s version of FCC Chairman Julius Genachowski): “He was his usual mixture of bewilderment, ignorance and barely concealed thuggery, but I was amused at his reference to Exetel (not by name).” Linton wrote on his blog. “While I’m grateful for the ‘free plug’ I thought it was an obvious example of “straw clutching” if it wasn’t based on appallingly bad briefing, which I would doubt, because for him to have been aware of any actual pricing would have required some sort of briefing,” added Linton.

On NBN co-chief Mike Quigley, who will help manage NBN service: “Is [Mike Quigley] god? Can he reverse 100 years of telecommunications going one way and say, ‘Oh, I’m Mike Quigley, and I haven’t worked here in 30 years, I know nothing about running major networks, but someone has paid me $2 million a year so I can pretend I can’.  The only one who can do it is Telstra. It would do it cheaper than a bloody government.”

Linton blames all of the talk about a publicly-owned broadband network for the decrepit state of Australia’s commercial broadband market, claiming it dried up private investment in new ADSL products: “The situation as I see it is that the suppliers — Telstra, Optus, AAPT — are not really investing in anything new, especially when you’re referring to ADSL type broadband products. The current suppliers are holding on to the margins they have at the moment, and if anything they will seek to increase them rather than reduce them,” says Linton.

Since nearly every broadband user in Australia knows Linton hates fiber broadband, what technology does he believe represents Australia’s future?

Or this?

3G wireless.

“Most people that I know, including me, put a much higher priority on mobility than they do on speed,” he told ZDNet. “The average person needs a 100Mbps internet connection about as much as they need to have their arms amputated.”

While mobility is important, his critics charge, there is no way 3G wireless can deliver Australia its broadband future.  Service is not ubiquitous across the country, speeds are far below even what DSL offers, streaming multimedia is challenging at best, and the usage fees and limits that accompany wireless service plans in the south Pacific would create an even greater divide between those who can afford wireless broadband, and those who cannot.

A report released yesterday by the Bureau of Statistics shows Australians are downloading more data than ever before, increasing more than 50 percent in the second quarter compared to the same period last year. The amount of data downloaded every three months is now 11 times higher than March 2005 and 126 times higher than March 2002.

Australia’s National Broadband Network is open to all Internet Service providers that wish to participate, reselling their broadband plans using NBN’s infrastructure.