Wisconsin residents, in 2007 you were promised more competition, lower prices, and better service from your pay television and broadband provider.  Two years later, two things are certain:

1. The Wisconsin Video Competition Act was didn’t exactly deliver what was promised to consumers by those pushing the legislation, but paid off handsomely for the one company lobbying the hardest for its passage — AT&T.
2. You had a lower bill in 2007 than you now have in 2009.

A new audit released by the Wisconsin Legislative Audit Bureau exposes the truth AT&T’s astroturfing friends never wanted you to know: despite the passage of a new law in December 2007 that promised increased competition and lower rates, the average basic cable rate in Wisconsin actually increased an average of 21 percent over the past two years.

The Bureau analyzed ten providers’ monthly charges for basic and expanded basic service in 17 Wisconsin municipalities at two points in time—July 2007 and July 2009—using data reported to us by the providers. Over this two-year period, charges for basic service increased an average of 21.2 percent, and charges for expanded basic service increased an average of 11.5 percent. The reported data do not suggest that competition has had a substantial effect in reducing either basic or expanded basic video service charges or in slowing their rates of growth during the period we reviewed.

Wisconsin consumers were promised something very different.  So just how did Wisconsin get snookered into passing legislation that was supposed to help consumers, but in reality just helped AT&T?

Dick Armey, chairman of FreedomWorks, an industry-backed astroturf group that heavily promoted the bill, emphatically promised the Competition Act would bring prices down.  On November 19, 2007 Armey wrote:

The Wisconsin Video Competition Act would allow consumers to take advantage of new technologies by streamlining the franchise application process for potential providers. When companies compete to provide service, consumers win through more choices, lower prices and better service.

Unfortunately for consumers, the Video Competition Act was little more than a custom-written giveaway to AT&T.  From the bill’s earliest draft language crafted by lobbyists working with legislative aides, to the big budget sales job employing 15 lobbyists and a major media budget, AT&T ran the show from start to finish according to Madison’s Capital Times newspaper.

TV4US (also known as WeWantChoice.com), an AT&T-supported astroturf group, ran television ads around Wisconsin promoting the bill.  In May 2007 the group sent every state legislator binders filled with what it claimed were the names of their constituents who wanted “an end to the cable monopoly” and competitive choice.  As The Center for Media & Democracy discovered, several people named, including two state lawmakers, didn’t support the bill and hadn’t given permission for their names to be included.

[flv]http://www.phillipdampier.com/video/TV4US Ad Wisconsin.mp4[/flv]

TV4US ran this ad across Wisconsin in 2007, promoting “cable competition.”

TV4US’ primary press contact Lizanne Sadlier just also happened to be employed by lobbying firm Fleishman-Hillard, which “has built its reputation by using strategic communications to deliver what its clients value most: meaningful, positive, and measurable impact on the performance of their organizations,” according to a press release from the group.

Fleishman-Hillard and AT&T are well acquainted with each other.  In fact, the PR firm was instrumental in rebranding the phone company as “the new AT&T” after the SBC-AT&T merger.  To this day, AT&T has several company bloggers actually employed by Fleishman-Hillard.

In March of 2007, the Wisconsin Merchants Federation turned up at a state hearing about the Competition Act. This struck several observers as odd, considering the WMF primarily concerns itself with retail store tax policies and strengthening retail theft laws. The WMF seemed well-prepared to articulate the proposed law’s benefits, which included, according to them:

• increased competition in the video entertainment business;
• creation of good-paying jobs;
• bring (literally) hundreds of millions of dollars in capital investment to our state.

PR Watch wanted to know exactly what prompted the WMF to not only testify about a non-issue for retail stores, but also who wanted the group to get involved, and who exactly belongs to the WMF.

WMF’s David Storey told PR Watch that his group sees AB 207 / SB 107 as an economic development issue. “Where consumers have choices, not only are the consumers served, but the economy in general is served. The economy is made stronger,” he explained. “And this is all about consumer choice in the video entertainment field.”

Storey said that no particular member had asked WMF to support AB 207 / SB 107, but that he was personally interested in the issue, as the former Deputy Secretary of the Wisconsin Department of Commerce. Asked for a list of WMF members, Storey responded that one was not available, but that information would hopefully be added to the WMF website in the future.

One thing that is clear is that many of WMF’s partners in lobbying for AB 207 / SB 107 have ties to the telecom industry. The Coalition of Wisconsin Aging Groups, which is a member of the Wisconsin Video Choice Coalition, has received funding from AT&T and from SBC Wisconsin, which is now part of AT&T. The group also offers “discounts on assistive devices for the telephone such as volume amplifiers from the AT&T Special Needs Center.” Another Wisconsin Video Choice Coalition member, the Wisconsin Technology Council, lists AT&T among its major sponsors. Fellow coalition member Women Impacting Public Policy is a Washington DC based group that receives funding from AT&T and Verizon, among other corporate sponsors.

[flv]http://www.phillipdampier.com/video/Press event promoting Wisconsin bill Aug 2007.flv[/flv]

In August 2007, WMF turned up at a press event with other bill supporters to promote the results of a poll conducted by the Mellman Group, which isn’t a respected polling firm but rather a Washington, DC public relations firm that “develops effective communications strategies that lead people to choose our client’s product or service, join their organization, hold their opinion, or vote as we would like.” ^[1] (13 minutes, video begins at ten second mark)

In short, no matter where consumers turned during the push for the Wisconsin Video Competition Act, that big AT&T logo was always somewhere in sight.

Before the legislation was passed, some were warning Wisconsin the dog and pony astroturf show wasn’t actually working for the best interests of Wisconsin consumers, but were instead looking out for the best interests of AT&T.  Charles Uphoff is chair of the Fitchburg Broadband Telecommunications Commission, and wrote this back in 2007:

Lobbyists for telecommunications giant AT&T have been pressuring Wisconsin legislators to pass sweeping changes in the laws regulating cable TV with a million-dollar media campaign and behind the scenes arm-twisting that would make Karl Rove blush.

Under the guise of promoting increased consumer choice, lower cable rates and high-paying union jobs, AT&T is trying to steamroller bills that would prohibit any meaningful regulation of video service rates; eliminate funding for public access, educational and government channels; and effectively guarantee statewide franchises for the telecom giant in perpetuity.

Among the more astonishing features of this dubious legislation is a provision that specifically prohibits the state or local municipalities from reviewing franchise transfers. While initial applicants would have to establish their legal, financial and technical qualifications to obtain a statewide franchise, once granted, statewide franchises can be literally transferred to anyone — even politicians. Video franchise holders wouldn’t even have to inform the affected communities until 10 days after the transfer had been completed.

[…]

So how about the claim being made in the TV ads that cable rates have gone up 246 percent and the “Video Competition Act” would increase choice and save consumer millions? It sure sounds good, but these assertions are, at best, misleading. In the city of Fitchburg, for example, the basic cable rate has risen less than 6 percent over the past 10 years and is currently at $8.19 a month. Admittedly, premium packages have risen much more sharply, largely driven by the cost of content providers like the NFL Network, MTV and ESPN, but AT&T would be facing the same kind of costs if they want to include these offerings.

So if you are expecting whopping decreases in your cable TV bills if this legislation passes, don’t hold your breath. In fact, the ability of municipalities or the state to even regulate basic cable rates would be gone.

What’s happening in Wisconsin isn’t an isolated incident. Wholesale deregulation of the video services industry under the guise of fostering competition is being pushed in legislatures all across the country, backed by big money and conservative ideologues like former House Majority Leader Dick Armey, a Texas Republican whose right-wing “think-tank” has been pushing this legislation since before it had a bill number. Weeks before most members of the Wisconsin Legislature had even seen the bill, Armey’s Freedom Works Foundation was trying to line up sponsors. Major contributors to Dick Armey’s cause include AT&T, Verizon and Exxon-Mobile.

Sadly, the recent trend in video services and telecommunications has been toward increasing the concentration of ownership and control of the media, resulting in fewer consumer choices and less competition, not only in terms of price, but also in terms of ideas. The opinions expressed here are strictly my own, but it seems to me that in the arena where competition is most important to our democracy and our future, the competition of ideas, the net effect of these bills will be to decrease competition through the elimination of public access as a vehicle for information, dialogue and discussion of things that matter to our communities.

Despite playing fast and loose with the facts, the astroturf groups, aided by AT&T’s generous campaign contributions to Wisconsin state legislators helped grease the way towards passage of the Video Competition Act, which was signed into law in December 2007.

But rate increases for consumers aren’t the only problem impacting Wisconsin residents.  Collateral damage for those interested in public affairs television programming is now also becoming apparent.

One of the biggest opponents of the statewide video franchising law has been the Wisconsin Association of PEG Channels (WAPC).  “PEG” stands for public access, educational, and government access channels found on virtually every cable system in the country.  These non-profit channels are provided in the public interest to give subscribers access to customer-produced video programming, local government public meetings and hearings, and educational programming from local schools and universities.  They are traditionally financed by the cable system as part of their franchise agreement.  In return for tearing up local streets and yards, systems give something back to the community by making room for these public access channels, and often also provide equipment and training to assist in program production and distribution.

The Video Competition Act was no friend to PEG channels.  By moving to statewide video franchise agreements, local communities no longer had much say over their public access channels, and the bill’s passage quickly provided a convenient opportunity to bury PEG channels, kill their funding, or outright renege on local agreements.

[flv]http://www.phillipdampier.com/video/Hunting PEG Channels on U-verse.mp4[/flv]

AT&T’s U-verse doesn’t make it easy for video customers to find PEG channels.  In Wisconsin, the channels are housed on a website that appears on screen on channel 99, the equivalent of TV Channel Siberia for the remote control channel surfer.  From there, consumers have to navigate a series of menus on their remote control to find the right channel.  Mike Ryan, director of West Bend Community Television, discovers just how ponderous this procedure is, even for those dedicated to finding his channel.

In the case of Charter Cable, they’ve managed to go one step further and help destroy one city’s public access channels.

Funding for the Wausau Area Access Channels had been provided in part by the franchise agreement between the City of Wausau and local cable provider Charter Communications. While Wausau Access Channels served the greater Wausau area, only the City of Wausau franchise agreement provided any funding.

When the state passed the Competition Act replacing local franchise agreements with a standard state wide franchise, Wausau PEG support fees were eliminated after a three year sunset. That sunset would occur December 31, 2010. The City of Wausau has not received any PEG support fees from Charter Communication during the three year sunset period.

Apparently unwilling to meet even a three year commitment, Charter Cable’s non-payment led Wausau mayor Jim Tipple to announce Monday that the city would not continue to fund the station in 2010 because of budget constraints.

“We realize this is a tough decision, not only for the city of Wausau but for the entire community,” Tipple said.

The City of Wausau is pursuing legal remedies against Charter. PEG fee revenue had funded 60% of the station’s annual budget of $100,000.

“The City does not want the channels to go dark, but it can no longer fund them alone,” said John Jordan, Wausau Access Coordinator.

“We are stunned to hear about the closure of the Wausau community channels. It is hard to believe that residents of Wausau will no longer be able to see and participate in community television. We warned this could come with the passage of the Video Competition Act. We just didn’t expect it quite this soon,” said Mary Cardona, WAPC Executive Director.

On January 1, 2011, more stations will be in Wausau’s position. On that date, all dedicated PEG fees end as a result of the passage of the Video Competition Act.

[flv]http://www.phillipdampier.com/video/WSAW-WAOW Wausau Public Access Cut 12-21-09.flv[/flv]

WSAW & WAOW-TV, both in Wausau, Wisconsin headlined their newscasts with news that the community’s public access channels were on the chopping block. Loud Volume Alert (4 minutes)

The Cable Consumer Repair Bill (AB606) recently introduced by Representative Gary Hebl (D – Sun Prairie) could resolve serious problems with the Video Competition Act that took effect in January 2008. Since then, cable companies and AT&T have moved community channels to out of the way locations on the line-up, subjected the channels to interference problems, imposed transmission equipment costs, and withdrawn a commitment to provide dedicated revenue for public, education, and government access stations.

Of course, the industry players don’t like it one bit.  “Wired Wisconsin,” a non-profit group claiming to seek cutting edge broadband technology for Wisconsin, who unsurprisingly counts AT&T as a “partner,” thinks Hebl’s bill will gut the Competition Act.

“Even though the VCA was passed less than two years ago, we’ve already seen a great deal of progress under the bill.  It’s generated real competition, helped improve prices, created hundreds of new jobs, spurred millions in investment in infrastructure, improved customer service and expanded consumers’ access to new video providers, services and features all across the state,” said Wired Wisconsin’s executive director Thad Nation.

The state’s audit of cable pricing would seem to belie Nation’s views. That he holds them should come as no surprise.  After all, Nation is the former executive director of TV4US, the AT&T-backed astroturf effort that helped enact the law Nation seeks to defend.

“On balance, the law hasn’t been good for consumers but has been very good for the companies that wanted it. Two years from now, I don’t think you will be able to say that consumers saved a lot of money if any at all,” Barry Orton, a telecommunications professor at the University of Wisconsin-Madison, told the Milwaukee Journal Sentinel.

Has the bill brought about any savings for Wisconsin consumers?

“We haven’t seen it. I think the short answer is ‘no,’ ” said Curt Witynski, assistant director of the League of Wisconsin Municipalities, which represents 582 local governments.

“I think the public relations effort of AT&T and others was remarkable in convincing state legislators that this law would bring about all kinds of competition, and that consumers would benefit from it. But that hasn’t been the case,” Witynski added.

Indeed, with additional rate increases announced this week by AT&T’s U-verse, the much-heralded savings promised by AT&T and its various astroturf elements have become only more elusive for the hard-hit consumer struggling through ongoing economic challenges.  Those challenges aren’t exactly the same for AT&T, which increased its dividend payment to stockholders and has plenty left over to continue astroturfing its way to statewide video franchises in other states it serves.

Stop the Cap! reader Joe sends along news of another one of those guest opinion hit pieces on Net Neutrality that pop up regularly in the media.  This one, The Internet is Never Neutral, printed in today’s Sun-Sentinel in south Florida, comes from Mark A. Jamison and Janice Hauge, a dynamic duo who have co-written several papers that always manage to turn up favorable conclusions for big telecommunications companies, including these page-turners:

• “Bureaucrats as Entrepreneurs: Do Municipal Telecom Providers Hinder Private Entrepreneurs?”
• “Subsidies and Distorted Markets: Do Telecom Subsidies Affect Competition?”
• “Dumbing Down the Net: A Further Look at the Net Neutrality Debate.”

The two are also working on other papers purporting to study regulatory policy and competition issues.  Let me illustrate my psychic powers by guessing they’ll find regulatory authorities to be obstacles to the well-oiled telecommunications machine and competition will be most hearty if there are no pesky regulations to hamper it.  We’ve seen how well that has worked so far for consumers in North America.

Remember Al Gore calling the Internet the information superhighway? The metaphor wasn’t and isn’t perfect, but it is instructive. Suppose we applied net neutrality to our transportation system — there would be no high-occupancy vehicle lanes during rush hour, no car-only lanes on interstates, and no toll road as an alternative to I-95 in South Florida. Transportation would be more costly and provide less value.

Forcing net neutrality would have similar results. Time-sensitive information, such as stock market transactions, would wait in line behind football game highlights.

Jamison, who is a former manager at Sprint Communications, and Hauge miss the entire point of the Internet’s biggest strength: its equal treatment of traffic from the smallest blog to Amazon.com.  Assuming providers, earning billions in profits even as their costs decline, invested appropriately in those networks, there would be no need for high-occupancy vehicle lanes and toll roads.  These kinds of “traffic management” techniques are proposed because provider dollars don’t keep up with consumer demand.  Social engineering tries to throttle traffic downwards by discouraging it with toll fees or manage it with special high cost lanes reserved only for those willing to pay or follow arbitrary rules governing their use.  More often than not, those premium lanes go underutilized while the rest of us remain stuck in the slow lane.

Net Neutrality would not impede network management that enhances the efficiency of traffic, except when it comes at the expense of someone else’s traffic. Net Neutrality also throws up a roadblock against providers who would plan to cash in with enhanced connectivity services that cannot exist unless  a market is created to sell them.  It’s similar to providers in Canada limiting your access to broadband, then throwing a penalty fee on your bill… unless you sign up and pay for their “insurance” plan to protect you from those charges.

Want to run a video streaming application on the Internet?  Pay for a broadband provider’s deluxe delivery insurance, and customers will be able to watch that video without buffering.  The alternative is to be stuck waiting because your video is being delivered on an artificial “slow lane.”

If you are thinking that it sounds like net neutrality restricts innovation and hurts customers, you’re right. Our research has shown that net neutrality limits innovation, contrary to the claims of the net neutrality proponents. How can this be? Imagine a one dimensional network — one that does nothing but carry information from point to point, which is how the old Internet has worked. What kinds of content providers flourish in that context? Those big enough to distribute their software across the net and those whose software takes advantage of the great bandwidth that they don’t have to pay for.

Their research makes numerous assumptions that might prove accurate in a laboratory environment, but simply discounts provider mischief in their efforts to maximize profits and minimize costs.  Providers have earned countless billions providing this “one dimensional network” to consumers.  It’s the one bright spot in a lackluster telecommunications sector.  Those who innovate new broadband applications have flourished.  Some providers who have not want to innovate in a different way – by inventing new Internet Overcharging schemes to profit from the service without actually improving it.  When their interests are at stake in owning and managing their own content services, bandwidth suddenly becomes plentiful.  The TV Everywhere project will potentially provide a value-added service to cable and telco TV providers, all made possible in marked contrast to their argument that other producers’ video content is clogging their networks.

Another naked fallacy in the authors’ argument is that content providers don’t pay for the bandwidth to host and distribute their content.  They do — to the companies that host their content and provide connectivity to the Internet.  That’s the job of web hosting companies.  Internet service providers simply want to be paid extra for doing their job – providing connectivity to consumers who pay $4o or more a month Free Press found costs about $8 to provide, and then also charging content creators a second time to facilitate delivery of that content.  That’s akin to charging a phone customer for placing a long distance call and also demanding to bill the person who answers.

Now, suppose that the network can offer enhancements that improve customers’ experiences. Content providers whose sites would not benefit from such enhancements could ignore the offering. But there will be some content providers who could improve their services by buying the enhancements, such as priority packet delivery. These sites become better without net neutrality and offer customers more service. In other words, there is more innovation and greater customer welfare without net neutrality than with it.

Promises, promises.  Just getting these providers to upgrade broadband speeds to consumers has been a never-ending quest.  Many consumers are willing to pay for “improved service” in the form of faster connections to the Internet.  Consumers are not willing to pay more for artificially limited service, be it through throttled speeds or usage caps.

At the conclusion of their study, which assumes providers will not leverage their duopoly in most American markets to increase pricing/revenue and reduce costs by limiting demand on their networks, they readily admit they did not take into account several possible scenarios:

One issue is how the offering of premium transmission might affect the network provider’s incentive to change the standard transmission speed. At least AT&T has committed to not degrade service for any network user, but it is unclear how such a commitment would be enforced.

Secondly, we do not analyze the effects of peer-to-peer communication, which is growing in importance on the Internet.

Thirdly, we do not consider the effects of vertical integration by the network provider and whether this would provide an incentive for foreclosure.

Because the broadband industry fights any attempt to regulate their service, it is unlikely any such promise from AT&T would be enforced.  What AT&T defines as “degraded” service is open to interpretation as well.  As broadband demand is dynamic and growing, should AT&T leave standard transmission speeds exactly as they are today, that non-premium service would be degraded through inattention to broadband growth.  Peer to peer communication is largely a story from the first round of the Net Neutrality debate in 2006-7.  A more significant amount of traffic is now attributed to online video.  Finally, not considering vertical integration in the cable and telephone industry is a fatal flaw.  The history of telecommunications regulation has largely been written during periods when the cable and telephone industry abused their market position to overcharge consumers for service, lock up content distribution channels, and forestall competition wherever and whenever possible.

Frankly, Jamison and Hauge’s world view only innovates new, even fatter profits for providers like AT&T.  Perhaps some of those profits can go towards even greater funding for the Public Utility Research Center, where Jamison serves as director and Hauge as a Senior Research Associate.  The PURC, part of the University of Florida, just happens to have, among others, AT&T and Embarq Florida as sponsors, and both companies have seats on the PURC Executive Committee.

Sun-Sentinel readers don’t have that information because it’s not included in the disclosure at the bottom of the piece.  Following the money would shed a lot more sun on this important debate.

Lobbyists, corporate executives, and several interest groups are busy lobbying the newest additions to the Federal Communications Commission in an all-out effort to stop Net Neutrality.

The Hill newspaper today reports Mignon Clyburn, daughter of House Majority Whip James Clyburn (D-S.C.), is particularly under pressure to reject Net Neutrality.  The Hill reports industry lobbyists believe that if her father is amenable to their position, his daughter might also be.  To date, several hundred letters from minority groups and organizations, many opposed to Net Neutrality, have been filed with the FCC.

After reviewing dozens of those letters, it’s readily apparent many are the fruits of AT&T and Verizon lobbying labor, because several adopt both companies’ anti-Net Neutrality talking points, often word for word.

Even the newest Republican commissioner, Meredith Attwell Baker, is under a lobbying assault.

The thinking on K Street is that Baker’s views on net neutrality may not be set. Lobbyists and corporate executives have sought out Baker before the FCC votes on a final rule sometime next year.

“They are trying to get in there and remind her where she comes from to shore up her vote for the anti-net neutrality camp,” said one lobbyist working on the issue.

While the special interest blitz attempts to kill Net Neutrality, one pro-Net Neutrality advocate got into a dispute with some of the minority interest groups opposing Net Neutrality, which was gleefully covered by the broadband industry trade press. Public Knowledge got a bit too close to a nerve of several of these groups who put their logos on a letter sent to the FCC opposing Net Neutrality.  The letter represents the groups’ concerns that broadband for many in America is simply not available, especially for the economically disadvantaged.  They’ve been swayed by industry propaganda to characterize Net Neutrality as a threat to addressing the digital divide by making service ultimately even more expensive.  Some of those groups fired back against Public Knowledge, offended by some of the language used on their blog they felt suggested minority groups were naive and possibly even “selling out” the people they represent.  A few public exchanges later led to an apology from Public Knowledge if feelings were hurt and a plea from Free Press to put aside some of the personal disputes and rhetoric and argue the merits of the issue pro or con.

We agree with Free Press that personality disputes and pointless name calling don’t work and serve only to distract from the issues at hand. These groups advocating against Net Neutrality should be open to receiving additional information that doesn’t come from the broadband industry, particularly arguments that debunk those fear-mongering industry talking points.  Perhaps those groups will be amenable to changing their position once they gather additional facts.

But we also feel the first rule of politics must always be to “follow the money” and that is true for non-profits, for-profits, and government interests.  There must be full disclosure of the financial support and board membership of all of the groups claiming to represent consumer and minority interests.  Consumers, and more importantly members of the groups themselves, deserve to know where the money is coming from and if their boards have members working for or with the telecommunications industry or its friends.

For example, in our own research of the background of 100+ members of Broadband for America, we found instances of telecommunications industry involvement in virtually every single group.  If one chooses to believe that is a coincidence and still feels comfortable with that organization, so be it.  However, if one is concerned to learn that in several cases those ties were being scrubbed from interest groups’ websites, or were not openly disclosed to members, learning about that could be a cause of concern.  People should have the right to make an informed decision.  Some of the groups complaining about Public Knowledge are also members of Broadband for America and have telecommunications industry money backing them.  There is nothing wrong, in my judgment, in making sure that information is out there for readers to consider.

Be aware that while pro-Net Neutrality groups ring their hands over potentially offending one another, opponents are wasting no time mass mailing anti-Net Neutrality correspondence to the FCC.  Let’s remember our first priority is to fight for Net Neutrality.  If a group is offended, send them flowers, apologize quickly if you must, and be done with it.  Don’t entertain the trade press.

Navarrow Wright on BlackWeb 2.0 called proponents of Net Neutrality “digital elites” and then condensed many of the industry talking points that are common to many of the anti-Net Neutrality letters heading to the FCC:

The risk that a regressive pricing mandate that net neutrality rules could impose will shift online costs to the poor is real.

The risk that over-regulation will depress deployment and access is real.

The risk that restrictions on network management will reduce the quality and reliability of Internet service for light users — students, the poor on fixed incomes, the elderly, and community organizers who rely on Internet access to reach their communities – is real.

Wright doesn’t bother to provide any evidence to back up these claims.  Underlining the word real does not make it reality.

We recognize these talking points from the broadband industry’s lobbying efforts against Net Neutrality.  The industry scare tactic about raised prices is exactly the same one they use to justify Internet Overcharging schemes like forced consumption billing and usage caps, despite earning healthy profits and enjoying a decline in their traffic costs.  Read the financial reports from the major players about broadband profits for yourself.  Don’t take our word for it.

Net Neutrality simply demands the status quo — open and equal access to everyone, including the economically disadvantaged Wright is concerned about.  If Wright is concerned about the cost of broadband services for the economically disadvantaged, giving the providers the right to monetize content delivery in new ways, it will lead to even higher prices than we cope with today.

Industry rate hikes come in spite of Net Neutrality, and we call on Wright to join our effort to demand increased competition so these kinds of price increases become untenable.  Time Warner Cable, the nation’s second largest provider, is busily increasing prices for Road Runner service right now in several regions, even without the “imminent threat” of Net Neutrality.

Net Neutrality is hardly “over regulation,” and the empty rhetoric about it depressing investment, deployment, and access has been made every time this industry has faced the prospect of some oversight.  Wright should remember the industry used the same arguments to resist universal wiring requirements made in franchise agreements to guarantee that income challenged neighborhoods had the same access to cable and telephone broadband services as wealthy suburbs.  In their fight to obtain quick and simple statewide video franchising, they argued that without it, it would discourage investment, deployment, and access to competition.  Regulating rates?  Same argument.  The Discovery Institute, which has produced suspect studies on demand for the industry, paid for by the industry, provides an excellent example of “we’ve heard this song before” in comments they made to the FCC back in 2006 to try and reform cable franchising:

V. LEVEL-PLAYING-FIELD REQUIREMENTS ARE ANTICOMPETITIVE

Build-out requirements were an appropriate quid pro quo for the telephone, cable and wireless companies who received an exclusive franchise. An exclusive franchise ensured the viability of average pricing by eliminating the risk of cherry-picking by a competitive entrant, and allowed providers to serve the most profitable customers first who could then, in turn, subsidize the cost of serving everyone else.

Competitive entrants already have an incentive to expand their networks: They must produce consistent revenue gains, and the cost of adding additional users declines as a network grows. But unless flexibly and intelligently applied, a build-out requirement threatens the entire undertaking by creating the possibility that the initial investment will be effectively lost if, for whatever reason, it just isn’t possible to meet the deadline. The evidence that cities possess the inclination to perform this thoughtful and delicate task is entirely conjectural.

Build-out is typically not required of competitive entrants, because it imposes costs that may not be recoverable in a competitive market. Exceptions are Personal Communications Service (PCS) providers and Eligible Telecommunications Carriers (ETCs). However, these examples are clearly distinguishable. As the Commission has noted in another context, the grant of a PCS license confers on the licensee an exclusive right to use a designated portion of the electromagnetic spectrum. In that decision, the Commission rejected a Texas build-out requirement applicable to competitive entrants in the local exchange market.

ETCs are required to provide service and advertise their rates throughout the area for which they seek Universal Service support, but an ETC has the right to resell another carrier’s services. There is no suggestion in the current proceeding that telephone companies seeking to offer video services should have the right to resell the services of the incumbent cable operator, nor should there be. However, in view of the fact that telephone companies cannot be assured of the capital needed to build out their advanced services networks, a resale requirement would probably be the only practical way ensure that a competitive entrant could serve every household.

Build-out is not the same thing as redlining. Redlining is illegal, but by its terms, 47 U.S.C. 621(a)(4)(A) does not require build-out. It merely imposes a reasonableness requirement on the amount of time locally-enacted build-out requirements provide for the competitive entrant to serve every household. There is no Congressional mandate for build-out.

Since cable operators are not required to offer voice services to every household, it is not clear why telephone companies should be required to offer video services throughout their service area. There is no way to predict whether competitive entrants will have access to sufficient capital or be able to gain enough market share to make build-out requirements objectively reasonable. These risk factors suggest that build-out requirements would be anticompetitive.

It is also utter nonsense to suggest network management restrictions will reduce the quality and reliability of Internet service for light users.  In fact, the industry’s proposed “light user” solution is a consumption billing scheme that includes usage allowances and limits, overlimit penalties for exceeding them, and consumers forced into limited use plans, often for little or no savings over existing under-marketed “lite” plans.

Most providers currently tier broadband based on speed.  If a consumer wants to get “light service,” they can purchase a discounted lower speed package perfectly adequate for most web use, and never have to worry about how much they choose to use it.  They want to continue offering speed tiers, but also limit customers’ use of their accounts, giving them a paltry usage allowance and then subjecting them to steep penalties for exceeding it.  Residents in Rochester, New York fought back against two such schemes advocated by Time Warner Cable and Frontier Communications, the local phone company.  It is under the guise of “network management” that these Internet Overcharging schemes were born.  A word to the wise – this price gouging hurts the economically disadvantaged far more than wealthy suburbanites.

I also point Wright’s attention to the broadband situation in Canada, which has adopted the viewpoint of our provider friends.  There, Internet usage is limited by allowances, with fees of $1-5 per gigabyte for exceeding them.  Net Neutrality is not protected, and certain Internet services are “network managed” with speed throttles, reducing their speed by 90% or more, making their use untenable.  Yet, Canadian broadband dropped in global broadband rankings, service providers increased prices anyway, and the digital divide Wright is worried about has not been addressed.  In fact, it’s arguably worse, because the industry won efforts to also limit and ration wholesale broadband access used by independent service providers to create competitive, lower-priced alternatives.

Does that make Wright stupid or a “sell-out?”  Of course not.  It means we have a lot of information to share with Mr. Wright and others like him.  As consumers ourselves, we believe in getting affordable broadband access to disadvantaged communities, and support Universal Service Fund reform and appropriate stimulus funding, or providing municipally built networks to introduce needed competition to get quality, affordable broadband service into urban and rural homes that are woefully underserved.  The industry advocated “don’t regulate us” approach has been in place since the 1990s and has not come close to solving the problem.

It’s our view broadband service is rapidly becoming as important as water, gas and electric, and telephone service, and must be provided to every American that wants a connection, at an affordable price.  When private providers won’t do that, it’s time to follow the same path we took to assure electrification of this country decades earlier, with public projects to get the job done.

We think every person should check out these issues for themselves.  As a consumer, confronting Internet Overcharging schemes was what got this site started, and once I examined the facts about the profitable state of broadband, and the quest to make it even more profitable at consumer expense, I got angry and involved.  That doesn’t make me an “elitist.”  It makes me an informed and involved citizen.

We have always told providers this isn’t personal and we respect the work done by the employees to serve their customers.  Most of us are customers ourselves.  We will debate policy matters and advocate for our position, and try and bring supporting evidence to the table, and let the best argument win.  Along the way, disclosing who represents who and where they money comes from is part of that debate.

It will remain our policy to expose industry connections in organizations that purport to advocate for consumer interests, particularly when those connections are not routinely disclosed.  Consumers have a right to know whether the industry is writing checks to ostensibly independent groups, or have executives seated on their governing boards, potentially influencing their public policy positions.  To not provide this needed information would sell out our readers, and not living up to the standards we set for ourselves.

For the record, Stop the Cap! has zero industry money backing us.  We are 100% consumer-funded and have no involvement in any online business or telecommunications company.

Frustrated communities across America, take note.

If your town or city government starts making serious noises about constructing your own, municipally-owned broadband network (especially one built with fiber optics to the home), existing providers who have repeatedly said “no” to requests for faster service at more reasonable prices have a track record of quickly turning around and saying, “yes — why didn’t you ask us before?”

Big existing telecommunications players loathe the thought of facing a new competitor in their midst.  They are accustomed to the usual arrangement of one cable operator and one phone company.  Cable companies provide cable modem service, phone companies mostly provide DSL.  In smaller cities, and where a competitor is missing (or provides a lower quality service), there is almost no drive to upgrade.  Cable will set speeds just above what the phone company is offering, and both will co-exist happily ever after.

For communities being bypassed by the fiber revolution now underway by Verizon, and to a lesser degree AT&T, requests from civic leaders, businesses, and consumers for upgraded service fall on deaf ears.  ‘What you have now is good enough for this market, so be quiet and be lucky we give you what you’ve got now.  Oh, and we’re raising rates, too.’

In Rochester, the one upstate New York city not on the “to-do” list of Verizon (which is merrily wiring urban and suburban communities across their service areas with fiber optic cable FiOS), Time Warner Cable sees little incentive to raise speeds or upgrade to DOCSIS 3 with a phone company competitor that has no apparent plans to move beyond traditional old school DSL service.  Where FiOS does threaten, Time Warner Cable is in a hurry to provide “wideband” broadband as quickly as possible.

In Wilson, North Carolina, years of pleading from local officials to provide something beyond anemic broadband in their community was met with yawns from Time Warner Cable and Embarq, the local phone company.  Wilson decided to build their own municipal fiber network, offering faster speeds at better pricing.  Time Warner and Embarq did what most existing competitors do — they moved through the Four Stages of Telecommunications Competition Grief:

1) Behind the Scenes Threats and Anger: Companies work the phones with local officials trying to browbeat them into dropping the plans to construct municipal broadband, try to gin up partisan opposition, issue overinflated cost estimates, issue warnings about the trouble they’ll cause local politicians who support such initiatives, and snow a blizzard of documents illustrating how wonderful and reasonable their existing service is;

2) Stall Tactics Through Negotiation: Once home office is notified, a series of negotiations to attempt to forestall the project begins, such as throwing crumbs for incrementally better service, offers to build showcase mini-projects that represent a “win” for local politicians, or “looks good on paper” concessions that end up amounting to far less.  Most of these discussions are designed simply to stall to allow the company to prepare for stage three.

3) PR and Legal Blitzkrieg: Assuming local officials haven’t been discouraged away from their idea, or dropped it after starring in a company-sponsored press event – ribbon cutting a small wi-fi or school connectivity project, the next stage is a multi-front battle involving company legal teams filing lawsuits to delay or kill projects, public relations and astroturf lobbying efforts to distort issues and build public opposition, legislative maneuverings to make such projects untenable through industry-friendly laws, and often vague promises about impending upgrades making the entire project unnecessary.

4) Acceptance, Competition, and Better Service: The final stage is the realization consumers don’t always get suckered by astroturf groups and company scare tactics.  They accept the project is moving forward, and send out the press release saying they welcome the competition and are announcing their own significant service upgrade because “customers asked for it.”  Price increases slow, speeds increase, and service improves, all because of the reality that an aggressive competitor is in their future.

Wilson city officials tried negotiations for better service, got nowhere, and had to fight back against a blizzard of nonsense from the telecommunications industry trying to legislate such projects out of existence with changes to state law.  Americans for Prosperity, an astroturf group, even hassled residents in other nearby communities with robocalls to try and stop similar projects.

The arrival of Wilson’s Greenlight service, which offers speeds far faster than Time Warner and Embarq ever did, at lower prices, was a shock to Time Warner’s call centers.  As customers canceled, representatives taking those calls were in denial residents were actually achieving the speeds Time Warner failed to deliver.

[flv]http://www.phillipdampier.com/video/Chattanooga Builds Fiber Network.flv[/flv]

Chattanooga’s public power utility fought back against telecommunication company propaganda to construct fiber to the home service across the city, which launched this year. (5 minutes)

In Monticello, Minnesota, local telephone company TDS had spent years refusing requests to improve service in the city.  Speed and access issues plagued the community, northwest of Minneapolis.  Local officials had enough and voted to construct their own fiber to the home municipal network.

Enter the four stages.  TDS started by telling city officials the company’s network was state of the art for Monticello, and couldn’t be immediately improved because there was insufficient return on investment.  Companies want to be assured they are paid back for investments they make, and because Monticello is a relatively small city, there were questions whether the costs for a fiber network would be paid back quickly enough through revenues.

When that didn’t work, the company sued the city as a stalling tactic.  Despite the fact Monticello won case after case, TDS kept filing.  A full assault by large telecommunications interests also began, trying to gin up public opposition.  While the project was approved by voters, and Monticello was tied up in court, TDS quickly moved to stage four and started rapidly building their own fiber network in Monticello, actually putting down fiber the city was prohibited to wire themselves as the lawsuits dragged through the courts.

The company told Ars Technica that despite its earlier refusals to provide fiber service, TDS didn’t act earlier because it didn’t actually know that people really, really wanted fiber; once the referendum was a success, the company moved quickly to give people what it now knew they wanted.

Then, in June, the company said with the advent of its own fiber network, the city of Monticello should back away from constructing theirs, because its economic viability report was partly premised on the fact TDS refused to provide that service.

To underline that, TDS’ new fiber network doubled customer speeds to 50Mbps, trying to keep customers from taking their business to  FiberNet Monticello.

[flv]http://www.phillipdampier.com/video/Vote Yes on Fiber.mp4[/flv]

Lafayette staged a multi-year battle with Cox and other providers to bring municipal fiber broadband to it’s corner of Louisiana.  This 30 second ad promoted a “yes” vote on the project.

In Louisiana, Cox Cable is facing accusations it’s engaged in predatory pricing to kill Lafayette Utility System’s fiber to the home network and EATel’s fiber network in Ascension Parish.  Cox Cable froze rates and moved in with DOCSIS 3 upgrades, delivering up to 50Mbps service.  Cox chose to upgrade Lafayette before any other Cox-served community.

EATel, an independent phone company that wired fiber across Ascension Parish, also faced down Cox.  When the cable company began promoting cut-rate pricing in Ascension, EATel took out advertising promoting Cox’s special prices — in other cities, much to Cox’s consternation.  EATel’s ads, much like those run by Novus against Shaw in British Columbia, tell Cox’s customers to call the company and ask for the lower price they are advertising elsewhere.

“Cox came in with an incredibly aggressive promotion for TV service with every bell and whistle you could imagine. We couldn’t figure out how they could even make money on it. So we took out an ad in the Lafayette newspaper that basically said, ‘Hey Lafayette, look at the great prices you are going to get from Cox.’ Cox was not amused,” Trae Russell, communications manager for EATel told Telephony Online.

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p style=”text-align: center;”>Joey Durel, Jr., president of Lafayette parish, testifies before the House Committee on Energy and Commerce on Lafayette’s municipal fiber network on February 27, 2008. (7 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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p style=”text-align: center;”>

Lesson learned — just threatening to bring in a municipal competitor is often all it takes to turn a persistent “no” from the local cable and phone companies into “yes, Yes, YES!”

Of course, not every project is successful.  Some, such as Burlington Telecom Stop the Cap! reported on yesterday face political and cost challenges.  Others are killed through stage managed opposition and astroturf campaigns paid for by the telecommunications industry before they even get started.

In North St. Paul this year,  “PolarNet,” a planned fiber optic broadband network to stimulate the local economy was killed by an astroturf propaganda campaign undertaken by Qwest, Comcast, and other telecommunications companies that would have to deal with PolarNet as a competitor.  The telecommunications companies claimed it would result in higher local taxes and “more government” where it wasn’t needed.  Citizens defeated the proposal 67-33%.

Windom, Minnesota faced similar challenges and their fiber project was shot down in 1999, but with lessons learned, proponents brought it back up and won in 2000.  To this day, the community of 4500 in western Minnesota face considerable envy from adjacent communities — they want service from the fiber-to-the-home system as well.

Almost universally, opponents to municipal broadband systems claim they are financial failures and saddle communities with debt.  In reality, most have forced those opponents to provide improved service in their competitive communities, or those companies will become the financial failure.

[flv width=”427″ height=”240″]http://www.phillipdampier.com/video/Terry Huval of Lafayette Utility System April 2009.flv[/flv]

Terry Huval of Lafayette Utility System talks with the Fiber Revolution blog about the challenges Lafayette experienced building their own municipal fiber network.  Huval offers excellent advice for other municipalities exploring similar projects.  (April, 2009 – 10 minutes)

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p style=”text-align: left;”>Thanks to Stop the Cap! readers Tim and Matt who suggested this story idea.

What a week.  Broadband policy now has its very own death panel, in the form of accusations that Net Neutrality policies are:

• a Marxist-Obama plot to control the Internet;
• designed to silence conservative talk radio like the Fairness Doctrine;
• going to ruin Sen. John “I don’t use e-mail” McCain’s (R-Arizona) day.

Just a few years ago we watched former Sen. Ted Stevens (R-Alaska) tell us the Internet is not a truck but a series of tubes.  Glenn Beck earlier this week was coddling a small, terrified puppy that he claimed represented cowardly media missing out on the grand Marxist conspiracy underway, and Net Neutrality was just the latest piece of the coup puzzle.  Now one Tennessee congresswoman believes Net Neutrality is the Fairness Doctrine of 2009 and is being run by a czar.

Let’s review:

Sen. John McCain (R-Arizona) has introduced the ironically named “Internet Freedom Act” to free the broadband industry from potential oppressive government overregulation.

“Today I’m pleased to introduce ‘The Internet Freedom Act of 2009’ that will keep the Internet free from government control and regulation,” said McCain.  “It will allow for continued innovation that will in turn create more high-paying jobs for the millions of Americans who are out of work or seeking new employment,” McCain continued.  “Keeping businesses free from oppressive regulations is the best stimulus for the current economy.”

It’s certainly a stimulus — for broadband provider coffers and for McCain himself, who is Congress’ top recipient of big telecom money in the form of campaign contributions (over $900,000 and counting).  He’s the best senator the telecom industry could buy.  But wait, the guy who doesn’t own a computer or use e-mail says ‘father knows best’ for America’s online communities? McCain released a statement introducing his new bill:

The wireless industry exploded over the past twenty years due to limited government regulation.  Wireless carriers invested $100 billion in infrastructure and development over the past three years which has led to faster networks, more competitors in the marketplace and lower prices compared to any other country.  Meanwhile, wired telephones and networks have become a slow dying breed as they are mired in state and Federal regulations, universal service contribution requirements and limitations on use.

And we all know who has one of those dying breed rotary dial wired telephones, don’t we?

In fact, wireless industry profits have exploded over the past twenty years as the vast majority of Americans signed up for service.  The industry has been so awash in cash they’ve been on a consolidation shopping spree for at least the past three years, buying each other out through mergers and acquisitions.  The number of competitors John McCain thinks he sees growing is, in reality, a case of double vision.  He should get that checked.  Lower pricing?  Not quite.

Consumers don’t dump wired telephones because of government regulations:

“Honey, I can’t believe they are doing a Reverse Morris Trust deal with the phone company over in West Virginia.  We should cancel our Verizon phone line and take our business elsewhere… to Verizon Wireless instead — that will show them!”

Consumers confronting two telephone bills, one for the wireless and one for the wired phone, makes one redundant for those Americans trying to economize in this difficult economy.  The McCain family doesn’t have to

economize thanks to Comcast, AT&T and Verizon – just a few cutting checks to the self-described maverick.  Increasingly, consumers are looking for better deals and finding one with the cable company’s “digital phone” product, or an Internet-based Voice Over IP service.  State and federal regulations aren’t the problem — the quality and price of the service can be.

The vast majority of those consumers switching to wireless do not escape “universal service contribution requirements” either.  More often than not, wireless phone bills are decorated like Christmas trees with add-ons for everything from USF fees to 911 support surcharges, local, county, state and federal taxes, among others.

Limitations on use?  That would not be the wired telephone line’s flat rate calling plan.  The limitations are more commonly found on the wireless side, where many consumers get an allowance and a per-minute fee for exceeding it.  It sounds like the out of touch senator probably still makes station to station calls to “enterprise numbers.”  Welcome to the 21st century.

In short, John McCain doesn’t understand what he is talking about.  He apparently does understand those big telecom industry checks he gets, however.  No doubt that is the real inspiration for this industry-friendly legislation.

Rachel Maddow spent several minutes Friday night breaking down McCain’s legislation and what Net Neutrality is really all about.

[flv width=”596″ height=”336″]http://www.phillipdampier.com/video/MSNBC Rachel Maddow Net Neutrality 10-23-09.flv[/flv]

Rachel Maddow and Xeni Jardin, co-editor of Boing Boing discuss Sen. McCain’s “Internet Freedom Act” and Net Neutrality. (6 minutes)

We’ve already dealt with the psychotic world of Glenn Beck.  The self-described “rodeo clown” is entertaining, as long as you recognize reality has a restraining order against Beck and must keep at least 900 feet away from him at all times.  Art Brodsky from Public Knowledge speaks to Beck’s worldview:

“Mr. Beck fails to understand the fundamentals of how the Internet works. He should be in favor of Net Neutrality, because it guarantees streaming of his program will not be able to be placed behind, say, Keith Olbermann’s Countdown. That could happen if NBC’s owner decided to pay protection money for prioritized data transmission.”

Meanwhile, Rep. Marsha Blackburn (R-Tennessee) took time out from her tireless efforts to root out the czar problem in the Obama White House to conflate Net Neutrality with the Fairness Doctrine, conservative talk radio’s garlic-to-a-vampire bugaboo.  Appearing at an event sponsored by the Astroturf group “Safe Internet Alliance,” Blackburn railed against “government interference” in broadband, as Kim Hart from The Hill took it all down.  It was an amazing feat, considering she stumbled her way through a statement:

“Net neutrality, as I see it, is the Fairness Doctrine for the Internet,” she said.  The creators “fully understand what the Fairness Doctrine would be when it applies to TV or radio.  What they do not want is the federal government policing how they deploy their content over the Internet and they want the ISPs to manage their networks and deploy the content however they have agreed on with ISP.  They do not want a czar of the Internet to determine when they can deploy their creativity over the Internet. “They do not want a czar to determine what speeds will be available….  We are watching the FCC very closely as it relates to that issue.”

When it comes to broadband expansion, she said, she wants to make sure “all individuals’ rights are respected and that we look at the freedom of all broadband participants.” She said Congress needs to make sure the groups receiving stimulus funds for broadband expansion are able to deploy reasonable and effective network management tools so they can be helpful in tracking down illegal activity.”

“We shouldn’t look at technology as how do we punish and impede, but how do we encourage innovation,” she said.  “That needs to be a key thought as we move forward.  How do we encourage that innovation and not impede it?”

Blackburn herself is impeding a rational discussion with her word salad.

Blackburn doesn’t see or understand much of anything.  Her off the rails representation of Net Neutrality as the equivalent of the Fairness Doctrine is bizarre at best, just plain rock stupid at worst.  Indeed, the Fairness Doctrine did dictate a form of balance in opinions for licensed radio and television stations in this country before it was repealed.  Net Neutrality specifically requires Internet providers, and everyone else, to keep their hands out of determining whether something is balanced or not.  The Internet is not a licensed medium, and the free exchange of ideas possible on today’s Internet already provides the ultimate fairness, where ideas can be freely expressed by anyone.

Glenn Beck sees Marxists.  Marsha Blackburn sees czars.  These folks need to cut down on the borscht for lunch.

Blackburn’s only priority for broadband stimulus seems to be using the money to help ferret out illegal activity online.  Perhaps she can come over and clear out my spam folder.

I didn’t even realize we had a Broadband Speed Czar.  I want to be the Broadband Speed Czar, moving across the land and banishing slow, expensive, and just plain lousy slow broadband technologies.  I decree no Internet Overcharging experiments and fiber-fast speeds for all!

As for the “Safe Internet Alliance,” considering their members include AT&T, the National Cable & Telecommunications Association, Verizon, and a whole mess of other astroturfers (many who also belong to Broadband for America), we can guess the kind of safety they are looking for.