Comcast’s decision to spend $300,000 attempting to defeat one community’s public broadband initiative illustrates how America’s largest cable company invested a portion of your monthly cable bill.  It turned out to be a bad investment — Longmont voters saw right through the dollar-a-holler vote buying operation run by a Denver-based “public strategies” firm.  Every vote in favor of the cable company cost Big Cable $35.17 — a bit less than many pay for a month of broadband service.

The pro-fiber forces spent a collective $5,000, some of which came from individuals who want more competition in Colorado.  The Institute for Local Self-Reliance notes the cable industry couldn’t even find a local spokesperson to cheerlead their campaign.

It is proof positive citizen activism can still beat back corporate-financed propaganda campaigns and make all the difference.

Shark-infested waters for AT&T and T-Mobile USA

Months after the U.S. Department of Justice announced its formal opposition to the merger of AT&T and T-Mobile, the Federal Communications Commission yesterday announced it would hold its own unusual “administrative hearing” to review the deal regardless of the outcome of a Justice Department lawsuit.

It has been more than nine years since the FCC last held such a hearing, which derailed the proposed merger of satellite TV providers DISH Network and DirecTV.  It is the clearest indication yet that regulators are deeply uncomfortable with the deal.

FCC Chairman Julius Genachowski waited for the Justice Department to announce its opposition to the deal before making his own concerns known.  The decision to pursue the special hearing, which won’t begin until 2012 and is likely to take several months, follows the lead of antitrust regulators at the DOJ.

It represents a nightmare scenario for AT&T, which has spent millions lobbying and promoting a merger with Deutsche Telekom’s T-Mobile USA.

An unnamed FCC official told The Wall Street Journal AT&T’s campaign has been playing fast and loose with the facts, particularly relating to claims the merger will create up to 100,000 new jobs. The official, who has seen confidential document filings from AT&T, says the phone company’s secret papers reveal the exact opposite — “massive job losses” if the deal gets approved.

Most companies confronting an FCC administrative hearing think long and hard about the prospects of the deal. Unlike an antitrust legal case, which must prove that a merger will substantially undercut competition, the FCC need only prove a deal is contrary to the “public interest” to reject it, a much lower hurdle.

When DirecTV and DISH failed to win a nod from the FCC for their merger, it fell apart.

Solomon

AT&T was testy after hearing the news.

“It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs,” AT&T senior vice president of corporate communications Larry Solomon told the Journal. He added, “We are reviewing all options.”

A growing number of Wall Street analysts believe those options are dwindling by the day, and an all-out war by AT&T against regulators could come at a cost when the giant phone company brings other business before them. Genachowski is still willing to go to bat for AT&T, circulating a draft approval among fellow commissioners that would grant the company’s separate proposal to purchase $1.9 billion in additional wireless spectrum from Qualcomm, Inc.

Observers predict AT&T might offer to divest a larger portion of T-Mobile than it was originally comfortable considering.  That may ultimately prove less expensive than the alternative — paying Deutsche Telekom a breakup fee worth $6 billion dollars should the merger fail to succeed.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/WSJ FCC Chief to Seek Hearing on ATT Deal 11-22-11.flv[/flv]

The head of the Federal Communications Commission will seek an administrative hearing on AT&T’s proposed $39 billion deal to acquire T-Mobile USA, according to a person close to the matter. Thomas Catan has details on The Wall Street Journal’s ‘News Hub.’  (2 minutes)

AT&T pays a lot of money — millions annually — to make sure its business agenda does not run into political or legislative roadblocks in Washington, D.C.  With dozens of members of Congress effectively on AT&T’s campaign contribution payroll and the company’s unparalleled skill at convincing non-profit organizations to advocate for its interests, worrying about the government’s antitrust views on its proposed buyout of Deutsche Telekom’s T-Mobile was the least of its troubles.

“It’s a done deal,” several analysts predicted shortly after the deal was announced, especially after AT&T demonstrated its confidence level in the merger was as high as the enormous $6 billion dollar breakup concession payable to Telekom if it ever fell apart.

Then the government dared to put its two cents in, in the form of a “are you kidding me?”-lawsuit courtesy of the U.S. Department of Justice.  It seems, in the words of some Beltway cynics, the Obama Administration can manage to see a clear cut case of anti-competitive behavior when given enough time.

Since the lawsuit was announced on Aug. 31, it has been “all-hands-on-deck” for the company’s government relations division, packed full of the company’s top lobbyists.  While company lawyers desperately attempt to block what it sees as “pile on” objections and lawsuits from worried competitors, Sprint-Nextel in particular, AT&T lobbyists are trying to compromise away the Justice Department case with proposals of concessions and giveaways to make approval more palatable.

Further north, as fall turns into winter in New York’s financial district, Wall Street analysts are cold on the troubled deal themselves.

The Financial Times reports most analysts think there is now less than a 50-50 chance the merger will be completed unless the two companies agree to disgorge themselves of market share, territories, and increasing “shareholder value” that will come from eventual rate increases a wireless duopoly would inevitably bring.

Some are even less sanguine, predicting AT&T has only a 20 percent shot, and only if it sells off considerable chunks of valuable spectrum to competitors other than Verizon Wireless.

AT&T is retuning its “message” for the times, downplaying the original, ludicrous notion that urban-focused T-Mobile would be the keystone of a new era in 4G wireless service for rural America.  There is a reason T-Mobile isn’t the first choice for small town America’s cell phone buyers.

Instead, AT&T is now positioning the merger deal as a lifeboat for its troubled competitor.  AT&T suggests the number four carrier is in immediate peril — hemorrhaging customers, caught without a coherent 4G strategy, and an exodus of interest by its increasingly neglectful parent — Deutsche Telekom.

Could Time Warner Cable be an eventual part-owner of T-Mobile USA?

“Over the past two years, T-Mobile USA has been losing customers despite explosive demand for mobile broadband,” AT&T said in a statement this week. “T-Mobile USA has no clear path to 4G LTE, the industry’s next generation network, and its German parent, Deutsche Telekom, has said it would not continue to make significant investments in the United States.”

With AT&T predicting the demise of its smaller would-be cousin, consumers may not be in the mood to sign a two-year contract with a company that could soon be rechristened AT&T, especially those leaving AT&T for T-Mobile.

But don’t tell T-Mobile’s marketing department it’s a phone company on life support.  T-Mobile has beefed up its advertising and continues to irritate its larger competitors, particularly AT&T, with very aggressive pricing on its prepaid plans.

T-Mobile recently unveiled two disruptive $30 4G prepaid plans that offer either 1500 shared minutes/text messages and 30MB of data usage -or- 100 voice minutes combined with unlimited texting and up to 5GB of mobile data before the speed throttle kicks in.  Those prices are too low for AT&T and Verizon to ignore, especially when offered on a 4G network.

So far, the Justice Department shows no signs of backing down from their resolute opposition to the deal, minor concessions or not.  Shareholders may not appreciate giving the government too much of what it wants in order to win approval.  Washington lawmakers are split — virtually every Republican favors the merger, Democrats are less absolute, with most opposed.  Among those in favor, by how much is often a measure of what kind of campaign money AT&T has thrown their way.

AT&T absolutely denies they have a “Plan B” in case the merger eventually fails.  But the Times doubts that, reporting as time drags on, an alternative deal might emerge.  Some of the possibilities:

• T-Mobile USA could merge its spectrum with Dish Network, the satellite TV company, to launch a new 4G mobile operator in the USA;
• Combine forces (and spectrum) in a deal with leading U.S. cable companies like Cox, Comcast, and Time Warner Cable to launch a new cable-branded mobile operator;
• Sell or merge operations with MetroPCS, Leap Wireless’ Cricket, or one of several regional cell companies.

Perennial cable booster Craig Moffett from Sanford Bernstein predictably favors the cable solution, which would let companies offer a quad or quint-play of cable TV, wireless mobile broadband, wired broadband, phone, and cell phone service all on one bill.  It would also get the FCC off the backs of cable operators Time Warner and Comcast, who both control a total of 20MHz of favored wireless spectrum they have left unused since acquiring it at auction.  The Commission is increasingly irritated at companies who own unused spectrum at a time when the agency is trying to find additional frequencies for wireless providers.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bloomberg ATTs 96000 Job Claim in T-Mobile Deal Questioned 11-8-11.flv[/flv]

Bloomberg News questions AT&T’s claim its merger deal with T-Mobile will create 96,000 new jobs. [Nov. 8] (3 minutes)

Days after the citizens of Longmont, Col. turned their backs on an expensive lobbying and astroturf campaigned fueled (not by choice) by Comcast ratepayers, the so-called “community activists” opposed to the community using its own fiber network as it sees fit evaporated into dust, but not before one celebrating citizen took out a giant ad in the local Times-Call newspaper:

As Christopher Mitchell from Community Broadband Networks discovered, “citizen activism” has an expiration date when the industry money stops flowing:

If there had been a shred of local legitimacy among the “Look Before We Leap” group that was run by Denver-based strategists, it probably would have kept its website up for longer than a few days after the election. If I were them, I would want to keep a record for the future.

But they don’t. Because they were just a bunch of paid public relations people working a job. They didn’t oppose Longmont’s initiative, they didn’t know anything about it. They were collecting a paycheck.

And when the money ran out, the days of their website were numbered in the single digits.  The only thing left of lookbeforeweleap.org is a cached copy courtesy of Google.  (And by the way, Squarespace, the hosting company, wants the site owner to contact them.)

Americans for Prosperty's Phil Kerpen on Glenn Beck's show opposing Net Neutrality

Comcast’s propaganda campaign fooled no one.  Borrowing from the cable industry’s bag of old tricks, Look Before We Leap conflated Longmont’s fiber optic network with a few failed Wi-Fi projects run years earlier in concert with Earthlink in other states.

The editors at Times-Call had to respect Comcast and its merry band of dollar-a-holler followers for at least being bold.  After all, they tried to convince voters “that the city having control over its own property was somehow ‘risky.‘”  But of course the cable company would prefer Longmont stay out of the comfortable duopoly it has with phone company CenturyLink.

The newspaper had little time and patience for the antics of “Americans for Prosperity” either.  The hilariously misnamed group funded by large corporations to convince people to vote against their own best interests considers Net Neutrality and community broadband self-empowerment evidence of Marxism — at least that is what policy director Phil Kerpen said on Glenn Beck’s now defunct paranoia festival on Fox News Channel.

Longmont doesn’t put out the welcome mat for corporate influence peddlers.  Voters believe local government can be an effective steward of community resources, something Comcast subscribers don’t believe applies to a cable company that shovels hundreds of channels most people never watch and expects annual rate increases to help pay for them.

Times-Call’s Tony Kindelspire:

Ask a local businessperson how Longmont having its own electric utility is working out for them. We have some of the cheapest rates in the country.

It takes leadership to stand up against big business lobbyists to act on behalf of what you think is right, not what’s going to raise you the most amount of campaign cash the next time around. How very, very refreshing it was to see, and I hope it’s a lesson that spreads far and wide.

So do we.

This dollar-a-holler astroturf effort failed to impress Longmont voters, who turned back a Comcast-funded opposition campaign to open up the city's fiber network.

Longmont, Col. residents turned their backs on a Comcast-funded campaign to block the opening of the city’s 17-mile fiber loop to competing broadband providers in a strong vote of approval.

As of early this morning, 60.8% of voters approved Ballot Question 2A.  Just 39.2% opposed the measure.

Longmont’s fiber network, built in 1997 and paid for by the Platte River Power Authority, has heretofore been off-limits to the public.  Colorado’s 2005 corporate welfare laws guarantee that taxpayer or ratepayer-funded broadband networks are kept away from the public that paid for them, for the protection of companies like Comcast and CenturyLink.

This results in the construction of showcase institutional fiber optic networks open to government, public safety, hospitals, and libraries… and practically nobody else.  Once built, institutional networks often go underutilized.  In Longmont, at least two-thirds of the city’s fiber optic network still goes unused 15 years after it was built.

The city government hoped to open the fiber network in time to bolster their application to Google to construct a gigabit network for residential and business customers, but after Google selected Kansas City for its fiber project, Longmont wants to keep its options open.  Passing the ballot question does exactly that.

“I’m glad to see 2A won,” Mayor Bryan Baum told the Times-Call. “I think it shows that money isn’t the determinator.”

Longmont voters were subjected to one of the most expensive pushback campaigns they’ve ever seen, thanks to Comcast, who spent $300,000 and counting to get the public to turn against the fiber network ballot question.

George Merritt, a spokesman for the cable-funded group Look Before We Leap, claims the vote results show “the measure’s narrow margin of victory.”  Merritt’s group relied heavily on a highly-suspect 2006 case study by University of Denver professor Ron Rizzuto that claimed 80 percent of community-owned Wi-Fi broadband networks failed to make money.  But the group didn’t make any distinction between Wi-Fi and fiber optics, and more importantly they left out the fact Rizzuto was inducted into the Cable TV Pioneers in 2004 for service to the cable industry.  Rizutto’s “study” was a classic case of dollar-a-holler research on behalf of the New Millennium Research Council, a creature of the telecommunications industry.

New Millennium Research Council -> Issue Dynamics -> Comcast

In fact, the Council is a “project” of Issue Dynamics, Inc., a for-profit, high powered Washington lobbying firm. Issue Dynamics’ client list includes Verizon, Comcast, AT&T and the United States Telecom Association – the trade association for the telecom industry.  The direct relationship between Rizzuto’s findings, and cable companies like Comcast who paid for the research, never made it into the report (or onto the group’s website).

This is the second time Longmont voters have cast ballots on the issue of the city’s fiber optic network.

In 2009, voters faced another cable industry-funded astroturf effort, with $245,000 spent to successfully defeat a similar measure.  This time, thanks in part to public exposure of the companies pulling the strings behind the astroturf campaign, voters rejected the propaganda onslaught and passed the measure.  Cable bills have also increased several times since the 2009 measure, a reminder to the public why competition can make a real difference.

With the passage of 2A, the city can choose to leave the network exactly as it is today or partner with another provider to offer services to the public.  It’s now their choice, not Comcast’s.