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Locast Plans to Appeal Crippling Court Loss, But Service Shuttered for Now

Phillip Dampier September 2, 2021 Competition, Consumer News, Locast, Online Video 1 Comment

Locast, like Aereo and Ivi before it, has ceased streaming local, over the air television signals on a non-profit basis after a New York federal court judge ruled the service is violating U.S. copyright law by receiving more funding than it needs. But in developments this afternoon, there is word an appeal is planned.

Since January 2018, Locast has attempted to provide its service legally by operating as an independent “translator service,” extending streams of over-the-air signals to viewers within the acknowledged viewing range of the stations. Locast used geofencing technology to block more distant viewers, and sought support for its service with a suggested contribution of $5 a month. Non-paying viewers were nagged with donation request messages that interrupted each stream every 15 minutes.

Despite its limited service areas, Locast amassed over 3 million regular users in its 36 served TV markets over the last three years. That growth represented a threat to lucrative retransmission fee revenue collected by TV station and network owners, who promptly sued Locast in federal court in 2019. A part of that lawsuit was decided Tuesday in favor of the broadcasters.

Judge Louis L. Stanton rejected Locast’s claim it was exempt from Section 111 (a) (5) of the U.S. Copyright Act, which allowed it to stream over the air signals without getting permission from those stations in advance. That section of the Copyright Act was designed to provide a loophole for independent non-profit translator stations, which in some rural areas pick up difficult to receive TV stations and rebroadcast them locally on other channels. Some of these translator operations existed before the days of cable and satellite television, and well before the internet as we know it ever existed. But many of these services were provided through low-power transmitters operated inside large apartment complexes or hotels for the enjoyment of tenants or guests. The Copyright Act allowed groups to retransmit TV signals as long as they lacked “direct or indirect commercial advantage” and did not charge viewers in excess of the “actual and reasonable costs of maintaining and operating the secondary transmission service.”

What got Locast in trouble with the judge is the fact the service nagged viewers to make $5 donations if they wanted the nagging messages to end, and those contributions delivered healthy revenue to Locast of $4.51 million in 2020, while the costs to provide the service were just $2.43 million that same year.

“On those undisputed facts, in 2020 Locast made far more money from user charges than was necessary to defray its costs of maintaining and operating its service,” Judge Stanton wrote. Stanton also rejected arguments that excess revenue was used to expand Locast into new markets, claiming the law was quite clear limiting charges only to the “actual and reasonable costs” incurred providing the service, not for expanding it. Stanton ruled Locast could not charge viewers to raise funds to expand into new markets. Had Judge Stanton accepted Locast’s argument that it was pouring excess revenue into expanding its service, not to make a profit, the broadcaster’s legal case could have been seriously weakened and Locast would have continued operating pending the final disposition of the lawsuit.

Instead, perhaps bowing to the court’s judgment that Locast’s contribution system was hampering its case, last evening Locast notified users it was suspending requests for contributions aired every 15 minutes, and hoped supporters would continue contributions anyway. But early this morning, Locast went further and announced the immediate suspension of its video streaming service.

In an e-mail to supporters, Locast announced:

We are suspending operations, effective immediately.

As a non-profit, Locast was designed from the very beginning to operate in accordance with the strict letter of the law, but in response to the court’s recent rulings, with which we respectfully disagree, we are hereby suspending operations, effective immediately.

Thank you.

Judge Stanton

The Electronic Frontier Foundation (EFF), which has supported Locast with legal assistance in this case, criticized the judge’s ruling.

“We are disappointed that the court ruled against Locast on its copyright defense,” the EFF said in a statement. “The court interpreted the law in an artificially narrow way. Congress wrote copyright’s nonprofit retransmission exception to make sure that every American has access to their local broadcast stations, and expanding access is exactly what Locast does.”

The EFF said Judge Stanton’s ruling may not be the end of Locast, however.

“Locast has decided to suspend its operations. The case will continue, likely including an appeal, to resolve the remaining issues in the case. The problem remains: broadcasters keep using copyright law to control where and how people can access the local TV that they’re supposed to be getting for free,” a lawyer at the EFF said in a statement.

Theoretically, Locast could be restructured to spin off each of its markets into independent non-profit entities responsible for raising funds to maintain current operations and possibly be found “legal” under the U.S. Copyright Act provisions. New markets could be launched independently as well, starting with fundraisers to launch the service and then additional fundraising to maintain each operation.

Any legal appeal would likely be based on Stanton’s determination that “expansion” was disallowed under the Copyright Act, even though most non-profit entities raise funds to expand their operations all the time.

But for now, Locast will likely remain dark until the remaining legal issues are settled or determined.

Sellout: Biden’s Broadband Stimulus is a Shadow of Its Former Self

After weeks of tense negotiations to secure bipartisan support for the Biden Administration’s $1 trillion infrastructure stimulus measure, the White House appears to have largely capitulated to Republican efforts to water down funding to expand broadband service into a $65 billion package that will doubtless be a financial bonanza to the country’s largest phone and cable operators.

The Biden Administration’s original proposal for $100 billion in broadband funding was dedicated to wiring rural areas as well as focusing funding on new entrants like community-owned networks that could deliver internet access to unserved and underserved locations without having a profit motive. The original proposal also would have prioritized funding for future-capable fiber internet, with some advocating that networks be capable of delivering at least a gigabit of speed to customers to qualify for funding. The Administration also promoted the idea of affordable broadband, combatting the growing digital divide exacerbated by internet pricing out of reach of the working poor.

What emerged on Sunday as a “bipartisan agreement” with Republicans on infrastructure stimulus is almost a travesty — slashed almost by half and now effectively a veritable gift to Big Telecom. The industry spent hundreds of millions lobbying Congress and got almost everything it wanted. If passed in its current form, those same phone and cable companies will pocket much of the money for themselves.

Here is how consumers were sold out:

Reduced speed requirements are a dream come true for cable operators.

The bipartisan measure proposes to water down speed requirements to qualify for government stimulus funding to a underwhelming 100/20 Mbps. That speed is tailor made for cable operators, which traditionally offer upload speeds just a fraction of their download speeds. Gone is any condition requiring gigabit-capable networks, at a time when more providers than ever are marketing near-gigabit speeds. That could quickly lead to the emergence of a speed divide, with rural Americans stuck with slower broadband technology from companies that will have no financial incentive to upgrade in these areas.

Addressing affordability is now mostly wishful thinking.

The latest proposal’s idea of solving the broadband affordability issue is to admit there is a problem and declare the need for some kind of low-cost broadband option, but apparently does not specify pricing, who is qualified to get cheaper service, and who will oversee that such programs remain affordable. That allows providers to keep writing the rules of their own token, voluntary efforts to offer discounted internet, like those that disqualify current customers and requires enrollees to jump through various qualification hoops to sign up. The stimulus program will also spend billions of dollars effectively paying a portion of disadvantaged Americans’ internet bills, at the current high prices many ISP’s charge. That is a direct subsidy to big cable and phone companies that can continue charging whatever they please for access, knowing the government will now pay $30-50 of the bill.

Republicans have made sure there is not a whiff of rate regulation or consumer protection mandates in the measure. It also abandons establishing a fixed rate, affordable internet tier for as little as $10 a month. That original proposal would have given cable and phone companies as little as $10 a month from the federal government, much less than collecting up to $50 a month from the Emergency Broadband Benefit, which pays a portion of regular-priced service. The $14 billion being set aside to continue subsidizing Americans’ internet bills at Big Telecom’s monopoly or duopoly prices could be better spent building and expanding internet services where no service or competition exists now.

Digital redlining is A-OK

The watered down compromise measure chastises companies for only incrementally expanding fiber service, mostly to wealthy neighborhoods, but stops short of banning the practice. This wink and a nod to redlining primarily benefits phone companies like AT&T and Frontier, which can now cherry-pick rich neighborhoods for fiber upgrades most likely to return the biggest profits. Phone companies and fiber overbuilders will continue to skip over urban poor neighborhoods and the highest cost rural areas which have always been the hardest to reach.

Sky is the Limit pricing with onerous data caps are fine with us.

Nothing in the measure will give preference to providers willing to offer affordable, flat rate service without the hassle of data caps. Neither will it discourage applicants that plan to use public tax dollars to subsidize expanding service that comes at high prices and with paltry usage limits.

Light Reading reported Wall Street analysts were generally pleased with the outcome, noting the negotiations resulted in stripping out oversight and price regulation and the measure won’t fund potential competitors. It also noted Big Telecom and its associated trade organizations spent more than $234 million on lobbying. Comcast topped the list of spenders at more than $43 million, with AT&T coming in second at $36 million. Both the cable and wireless industry also spent tens of millions on lobbying. They got their money’s worth. Taxpayers won’t.

Frontier Fiber Expands Mostly in Connecticut and Texas In 2021

Frontier Communications will focus primarily on fiber upgrades in Connecticut and Texas in 2021, bringing fiber to the home service to more than 280,000 customers in Connecticut and at least 24,000 additional customers in the San Angelo area of Texas.

Company officials told shareholders it expected to bring fiber upgrades to 495,000 additional locations this year as part of a multi-year plan to scrap portions of its aging copper wire network and bring fiber to the home service to at least six million homes and businesses in its service area. The company previously announced it would focus its fiber upgrades primarily in its California, Texas, Florida, and Connecticut markets.

Frontier has a long way to go to make a dent in retiring its copper network, which currently still serves 11.8 million homes and businesses. Frontier has only committed to upgrade about half of those homes to fiber, leaving the rest stranded on copper or potentially eventually sold off to another provider.

The most noticeable construction activity this year has been in Connecticut, especially in Fairfield and New Haven counties. Customers in the area report Frontier selling 940/880 Mbps fiber service for $79.99 fixed price for three years. Customers can also choose 50/50 Mbps service for $49.99 or 500/500 Mbps service for $59.99 a month for up to one year. The two faster plans include a Ring video doorbell as a sign-up promotion. There are no data caps.

The Magic of Broadband Competition: Sparklight Without Competition vs. Sparklight With Competition

America’s most costly large cable internet service provider is Sparklight, formerly known as Cable One. Its internet plans are usually data-capped and it barely offers new customers a pricing break before high regular prices apply. Sparklight primarily services small cities and towns, many income-challenged, in the middle of the country. Customers do not have much to rave about, because Sparklight puts its own profits far ahead of its customers. The cable operator was among the first to slap on data caps and was the nation’s most aggressive at getting rid of costly cable television channels.

About the only thing that does move Sparklight’s pricing is the presence of a formidable competitor. In Meridian and Garden City, Ida., TDS Fiber (formerly TDS Telecom) has been bringing gigabit fiber to the home service to area residents at prices low enough to motivate Sparklight customers to abandon the cable company. That motivated Sparklight to improve their plans and lower prices.

First, let’s examine the internet rate card for ordinary Sparklight customers typically stuck choosing either the cable company or DSL from Frontier, AT&T, or Windstream:

Sparklight regular pricing nationwide

Notice the entry-level internet plan (100/10 Mbps) costs $55 a month, does not mention the $10.50/mo modem rental fee (required if you choose the company’s Wi-Fi service), an internet service surcharge of $2.75/mo (not charged in all areas), and a stingy data cap of just 350 GB, which is at least 100 GB less than what the average U.S. broadband household now consumes each month. Internet overlimit fees are $10 for each additional block of 100GB of data in excess of your allowance, up to a maximum of $50 a month. Unlimited service costs an extra $40 a month.

When you add it all up: for an unlimited (100/10 Mbps) internet service plan with in-home Wi-Fi, Sparklight charges $108.25 a month.

If you happen to live in a competitive service area, such as Meridian and Garden City, Ida., speeds are faster, prices are lower, and data caps are nowhere to be found:

Pricing for Sparklight in Meridian and Garden City, Ida.

Customers still face a $10.50/mo charge to lease a cable modem, and that $2.75/mo internet surcharge fee might also apply.

The prospect of competition could cut dramatically into company profits, which is one reason telecom companies are fiercely lobbying the Biden Administration not to fund municipal broadband projects or supply funds to a new competitor as part of the 2021 Infrastructure Plan.

New Bipartisan Bill Would Deliver $40 Billion to Expand Rural Internet Access, Subsidize Service for Poor Americans

Sen. Portman

Three moderate senators will reintroduce the latest in a line of broadband funding initiatives later today that would allocate $40 billion to expand rural internet access and provide subsidies to make service more affordable for income-challenged Americans.

The Broadband Reform and Investment to Drive Growth in the Economy Act (BRIDGE Act), is a bipartisan measure sponsored by Republican Sen. Rob Portman of Ohio, Democrat Michael Bennet of Colorado, and independent Angus King of Maine. Originally introduced in 2020, the measure has been expanded this year to combine rural funding of broadband projects with direct subsidies to keep service affordable for poorer Americans. The measure is considerably smaller than the Biden Administration’s own proposal to spend $100 billion on broadband initiatives, the $94 billion broadband proposal from Congressional Democrats, and the $65 billion compromise plan Republicans tentatively reached with the Biden Administration before talks were called off.

Funding would be provided to internet providers prepared to expand broadband service, but only using technology capable of providing speeds starting at 100/100 Mbps — gigabit being even better. The bill would also invalidate state laws that impede or prohibit the development of municipal/public broadband projects. This could eventually lead to additional competition in rural areas not adequately served by existing providers. Funding would also be used to reduce the retail cost of internet service for those qualified as economically disadvantaged.

The reduced cost of the bill would limit the number of rural subsidy projects and would likely not be enough to provide service to all unserved Americans.

 

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