Blackburn

One of the telecom industry’s most notorious favorites – Rep. Marsha Blackburn (R-AT&T), is running for departing Sen. Bob Corker’s seat in the U.S. Senate, and she will enjoy extra support from Sinclair-owned television stations across the state of Tennessee, sometimes whether those stations want to support her candidacy or not.

Blackburn has a long history supporting the corporate agendas of AT&T and Comcast, pushing for deregulation, blocks on community-owned broadband networks, and opposition to net neutrality. She is the telecom industry’s most reliable member of Congress, willing to introduce new legislation custom-written by industry lobbyists. The Tennessee Tribune noted that Blackburn’s lackluster performance in Congress as little more than an “errand boy” was foreshadowed by Blackburn herself in each of her political races:

During political events when Blackburn first ran for Congress, she said she wanted the job so she could support George W. Bush’s agenda. Later it was to fight Barrack Obama. Now, as Blackburn spokesperson Andrea Bozek told the Associated Press, “We want to ensure President Trump has a reliable vote in the U.S. Senate.”

The AP’s Feb. 14 story confirms the congressman’s consistent posture displayed in person and other ways. She’s spoken of the “leadership” she’s followed. Blackburn’s also behaved like loyal party members by holding private, invited-guests-only sessions, usually for fundraising. In recent months, she excluded the press from a program on telecommunications.

Blackburn has boldly said she’s doing what the people tell her they want. Now, she wants to be a U.S. senator.

Polls in Tennessee show Blackburn trailing against moderate Democrat Phil Bredesen, a former Tennessee governor. That has her corporate allies worried, particularly in the telecommunications and broadcasting business.

Baltimore-area based Sinclair Broadcast Group, which owns or runs more than 200 television stations around the United States, has been under fire for quietly inserting conservative and pro-Trump stories into the local newscasts of the stations it programs, without disclosing those stories have a deliberate spin defending the Trump Administration or various conservative causes favored by Sinclair Broadcasting’s executives. In March, Deadspin produced a video showing uncomfortable local newscasters across the country forced to read a scripted Sinclair promotion attacking the media for “fake news” — a corporate campaign that quickly won praise from President Donald Trump and scorn by media watchdog groups and many viewers.

So funny to watch Fake News Networks, among the most dishonest groups of people I have ever dealt with, criticize Sinclair Broadcasting for being biased. Sinclair is far superior to CNN and even more Fake NBC, which is a total joke.

— Donald J. Trump (@realDonaldTrump) April 2, 2018

Sinclair is the only station owner in the country that requires its stations to insert pre-produced news stories and commentaries it calls “must-runs” that do not always tell viewers in full disclosure  those segments and news stories were produced by Sinclair’s corporate owners from studios in Maryland. This fall, Sinclair plans to ramp up coverage of the 2018 mid-term elections with recently hired reporters, one who formerly worked for the Russian government-owned RT propaganda outlet, to produce political stories that will be required to air by Sinclair’s local stations nationwide. In fact, Sinclair has hundreds of job listings on help-wanted websites.

Among Sinclair’s top priorities for the fall is getting Rep. Blackburn installed in the U.S. Senate. No elected official has received greater support from Sinclair’s PAC than Blackburn. According to Poyntor, Blackburn has already received $4,500 from Sinclair this year. She is the current chair of the House Communications and Technology subcommittee, which oversees the FCC, the same agency headed by Chairman Ajit Pai that has bent over backwards for Sinclair and its efforts to acquire additional stations, including some of the biggest outlets in the country currently owned by Tribune Broadcasting. Pai is now under investigation by the FCC’s inspector general for possible collusion with Sinclair.

The New York Times’ investigation into the close relationship between Sinclair and Pai has been strengthened with evidence Pai and his staff members have frequently met and corresponded with Sinclair executives several times, usually coinciding with agenda items at the telecommunications regulator that have an impact on Sinclair’s business. The meetings, including one with Sinclair’s executive chairman just days before Pai was appointed to head the FCC by President Trump, have raised eyebrows among some members of Congress, but not Rep. Blackburn.

Sinclair’s top lobbyist, a former FCC official, also communicated frequently with former agency colleagues and pushed for the relaxation of media ownership rules, the Times reported. Pai’s talking points about relaxing media ownership rules were suspiciously nearly identical to the language the lobbyist provided the agency promoting the rules change that will allow Sinclair to grow even larger.

Sinclair’s executives need Blackburn’s support to keep Congress in check as the company grows its station count well above long-standing federal station ownership caps that Pai has systematically sought to relax. Putting her in the U.S. Senate could be critical to protect Sinclair, especially if Republicans lose control of the U.S. House of Representatives in this year’s mid-term elections.

In January, Sinclair mailed letters to its station’s managers urging they quietly participate in Sinclair’s PAC, asking each to contribute up to $5,000. Sinclair will spend that money supporting candidates like Blackburn. A copy of the letter was obtained by FTVLive.

You are receiving this letter because you are eligible to participate in the Sinclair Political Action Committee (PAC), our fund that supports candidates for Congress who can influence the future of broadcasting. The Federal Election Commission strictly defines who may participate, and not everyone in the company meets these qualifications, so please do not forward this letter to anyone.

[…] Since the change in administration last year, we now have an FCC chairman who appreciates the important role of local broadcasting enough to launch a number of politically unpopular deregulatory initiatives necessary to ensure the future of our industry. In response, there have been Congressional efforts to counter those actions, such as a legislative proposal to eliminate the UHF discount, which will prevent any broadcaster from meaningful growth in the future. […] We need allies in Congress who understand the role of local television  and who are willing to defend it in today’s ever-changing landscape.

Corporate contributions to federal candidates are prohibited by law, but our PAC is a legally acceptable way for eligible Sinclair employees to make our collective voice heard in the electoral process.

In addition to direct financial support, Sinclair is expected to produce additional news stories and commentaries it will force-air on its stations that echo the themes and views of the candidates the company supports. Sinclair owns five stations in Nashville and Chattanooga and will own a sixth in Memphis if the FCC approves Sinclair’s acquisition of Tribune-owned television stations.

Sinclair’s Tennessee stations are already loaded with Sinclair’s editorials and slanted news coverage pieces that are required to air as part of the stations’ local newscasts. But some stations also air extra weekly news shows that swing to the right, including one hosted by conservative commentator Armstrong Williams, who bought television stations through his entity Howard Stirk Holdings, using Sinclair’s money and contracts with Sinclair to run “his” stations.

WTVC (NewsChannel 9) and WFLI (The CW) in Chattanooga

• Sinclair-owned WTVC (NewsChannel 9) in Chattanooga regularly airs at least some of Sinclair’s “must-run” content, including nationally produced news packages, and it aired the recent anchor-read scripted segments about media bias. News Channel 9 also airs Sinclair’s weekly news shows Full Measure with Sharyl Attkisson and The Armstrong Williams Show. WTVC 9.2 (a subchannel of WTVC) hosts Chattanooga’s Fox affiliate, Fox Chattanooga.
• MPS Media-owned WFLI (The CW Chattanooga) “receives certain services from an affiliation of Sinclair” and occasionally re-airs some of Fox Chattanooga’s local news programming, such as its 10 p.m. Saturday newscasts. The two stations share a main studio address.

WZTV (Fox 17), WUXP (My30), and WNAB (CW58) in Nashville

• Sinclair-owned WZTV (Fox 17) also regularly airs at least some of Sinclair’s “must-run” content, including nationally produced news packages, fearmongering “Terrorism Alert Desk” updates, and the weekly show Full Measure.
• Sinclair-owned WUXP (My30) shares a main studio address with Fox 17 and re-airs at least some of Fox 17’s local news programming.
• Nashville Broadcasting-owned WNAB (The CW58) “receives certain services from an affiliation of Sinclair Broadcast Group” and also shares a main studio address with Fox 17 and My30. It does not appear to regularly air news programming.

Coming soon: WREG (News Channel 3) in Memphis

• WREG (News Channel 3) in Memphis is currently owned by Tribune Media but will soon be owned by Sinclair if the company’s pending acquisition of up to 42 Tribune stations is approved.

(programming details courtesy of Media Matters)

Pierce (Image courtesy of: KTUU-TV)

FCC Chairman Ajit Pai’s choice to lead his newly created Broadband Deployment Advisory Committee (BDAC) was arrested last week by the FBI and charged with a multimillion-dollar investment fraud scheme.

Elizabeth Pierce, former CEO of Quintillion and ex-chair of the BDAC from its start until September, 2017 surrendered to authorities in New York City. Pierce was charged with wire fraud for allegedly tricking investors into putting more than $250 million into an Alaskan fiber optic project based on guaranteed revenue contracts prosecutors claimed Pierce forged herself to reassure investors Quintillion would benefit from telecom traffic revenue the fiber network never had.

“To realize her plan to build a fiber optic system that would service Alaska and connect it to the lower 48 states, Pierce convinced two investment companies that she had secured signed contracts that would supposedly generate hundreds of millions of dollars in guaranteed future revenue from the system,” said Manhattan U.S. Attorney Geoffrey Berman. “Those sales agreements were worthless because the customers had not signed them. Pierce had forged counterparty signatures on contract after contract.”

To raise adequate funds to support Quintillion’s ambitious fiber optic network buildout, Pierce frequently appealed to outside investors. Several wanted evidence the fiber network would attract enough business from telecom companies to justify an investment. Pierce was accused of faking contracts with Alaska’s telecommunications companies from 2015 until 2017 to provide reassurance companies were committed to spend at least $24 million in traffic charges the first year the network began operation.

Pierce’s alleged scheme fell apart when Quintillion began invoicing clients based on the fake contracts. At least one protested, claiming it did not use Quintillion’s network. A subsequent internal investigation allegedly founds dozens of phony contracts kept in Pierce’s Google Drive account, with at least 78 moved to the service’s trash bin 48 hours before investigators began searching Pierce’s computer. Prosecutors were able to recover the deleted documents with a search warrant presented to Google.

Pierce may have attracted FCC Chairman Ajit Pai’s attention after publicly complaining the permitting process in Alaska took longer than building fiber cables from scratch and shipping them from Europe. Out of more than 380 applicants, FCC Chairman Ajit Pai picked Pierce in 2017 to head his new broadband advisory committee, tasked with eliminating or streamlining regulations and making life easier for broadband providers to persuade them to expand broadband rollouts.

“The Commission was fortunate to have an excellent and deep pool of applicants to serve on the BDAC,” Chairman Pai noted on the occasion of introducing the BDAC and Pierce to the public. Critics argue Pai’s BDAC has been stacked with industry, industry-funded or industry-friendly committee members that are influencing most of the public policy recommendations issued in the group’s final recommendations. At least two city officials resigned over concerns their views were not being taken seriously.

Pierce resigned from Quintillion in August 2017 and from the BDAC a month later for  “personal reasons.”

KTUU-TV in Anchorage reports Quintillion’s ex-CEO was charged with wire fraud. Nevertheless, the Alaskan fiber project is trying to carry on. (3:11)

The head of a state-funded group with direct ties to the Massachusetts governor’s office told local officials in New Marlborough that the Massachusetts Broadband Institute (MBI) “believes in cable companies” and is favoring one — Charter Communications, with an exclusive offer to invest millions in taxpayer dollars to entice Charter to bring its Spectrum cable service to town, while telling would-be competitors the money is only available to Charter Communications.

MBI was created in 2008, originally tasked with investing $50 million in state funds to help resolve the digital divide between eastern and western Massachusetts. MBI also manages the publicly owned, middle mile fiber optic network that towns in western Massachusetts are depending on as part of their plans to connect local residents to the internet.

In 2015, MBI suddenly yanked support for WiredWest, the region’s most robust and credible player in connecting residential homes and businesses. The group had spent several years organizing and educating some two dozen largely rural communities, and was well on its way to constructing a public broadband network for the towns that agreed to sign on to the project. Since 2015, a series of political disputes, bureaucracy, and confusion has stalled broadband expansion.

Peter Larkin, MBI’s board chairman, has been roundly criticized in many western Massachusetts communities for continuing MBI’s slow and cumbersome bureaucracy, frequent policy shifts, and most recently playing favorites with cable companies. Ignoring his own organization’s systemic failures and bureaucratic roadblocks, Larkin has recently leveraged community frustration with the slow pace of progress as an excuse to hand two of the nation’s largest cable operators public taxpayer dollars to complete a project MBI was directly responsible for stalling.

Larkin

Under the latest proposal, outlined last Friday, Charter Communications would receive $3.1 million to expand Spectrum cable service to at least 96% of the community of New Marlborough. Originally, the town was responsible for $1.44 million in cost sharing with the state, a substantial sum for a community with a population just over 1,500 residents. Larkin last week offered to split the cost to the town, with the town’s share reduced to $720,000 — payable directly to Charter.

“The state is willing to cut the gap in half to make this project go,” Larkin said.

But that deal appears to be good only if the town selects Charter Communications. Over the last year, MBI has been allocating public taxpayer dollars towards private cable and phone companies, especially Comcast and Charter, to get the companies to agree to expand their cable systems in areas both have ignored for decades. WiredWest’s proposal made towns partners in the project. Larkin’s offer suggests taxpayers should pay up to 50% of the expansion costs, while Charter keeps 100% of the revenue and profits.

In the past, MBI’s financial carrots have been enough to get the two cable companies to expand using state matching funds alone, but as the town’s Broadband Committee Chairman Richard Long told the Berkshire Eagle after the meeting, he thinks this is the first time an unserved town in central or western Massachusetts will have to contribute local taxpayer funds as well just to get service from a cable company.

Larkin’s hard sell for Charter raised eyebrows among some in the town, especially after Larkin offered to use state funds to also finance their $720,000 portion of the deal over as much as a decade. Larkin claimed he wanted to get the project done and wanted to be helpful.

“The state may spend moneys or engage in other activities that benefit or incentivize private businesses in order to promote such [economic] development and it may authorize or partner with its cities and towns to do likewise,” Larkin recently wrote in a letter to towns offering to help them get negotiations going with the cable companies.

Town resident Dave Travis called Larkin’s offer something else.

“Call me a whistleblower, concerned citizen, activist for fairness, justice and democracy, but for Massachusetts Broadband Institute to show such blatant preferential treatment [to Charter] when there are qualified, experienced local options feels like corruption, and it needs some serious daylight,” Travis wrote.

WiredWest’s Tim Newman exposed just how far Larkin was willing to go to bat for Charter.

“Is the generosity you’re presenting to our town on behalf of Charter the same generosity if the town were to build its own network?” he asked Larkin.

“We do believe in the cable companies … we think it’s a value worth leaning in a little bit harder for,” he said, suggesting Charter has the financial ability to complete the project.

“So, the short answer is ‘no’ — the $720,000 would not be available?” Newman pressed.

“No,” Larkin answered.

The wireless industry’s largest lobbying group, CTIA-The Wireless Association, filed suit in a Utah federal court Wednesday to stop the state from imposing a 36 cent surcharge wireless carriers like AT&T, Sprint, and Verizon Wireless cannot easily pass on to their customers.

The new fee, retroactively charged from the beginning of 2018, applies to all telephone lines other than prepaid wireless phones, and represents the chief funding mechanism for Utah’s Universal Public Telecommunications Service Support Fund, which supports providing service in high cost rural areas of Utah and the expenses attributed to Utah’s participation in the federal Telephone Lifeline program, which provides subsidized telephone service to the poor.

The CTIA is upset because its member companies will have to assess the surcharge on almost every customer with a landline or wireless postpaid phone in the state, including customers getting free wireless service through the federal Lifeline program. The CTIA argues that puts an unfair burden on companies, especially those asked to either eat the cost of the surcharge or attempt to collect 36¢ a month from Lifeline customers that currently do not receive bills from their providers.

The lobbying group called its options “a Hobson’s choice” between two bad ideas. Because wireless carriers don’t want to absorb the surcharge and pay for it out of current revenue, the alternatives are to either pass along the cost to customers or raise rates. CTIA’s complaint predominately focuses on what it calls the “absurd real world results” of wireless companies struggling to get paid back the 36¢ monthly surcharge:

Participants in these [Lifeline] programs are frequently members of “unbanked” communities, and even a monthly rate of $0.36 may prove an insurmountable obstacle to participation in the Lifeline program. Those without bank accounts or a credit card have no effective means to remit a surcharge of $0.36. If they choose to mail cash, they would have to spend more on postage than on the surcharge itself. Or they may need to purchase a money order, if such are available in increments of $0.36, and pay both the charges applicable to obtaining a money order and the cost of postage – all well in excess of the $0.36 due under the PSC Rule.

[…] The PSC Rule has a chilling effect on the introduction of service offers in the market today. Carriers that have an interest in introducing innovative service plans that have or are likely to have intrastate revenues near, at, or below $0.36 will have to determine whether to select a collection method illegally imposed on them under the PSC Rule or to not offer such service plans at all.

[…] Further, requiring the underlying wireless carrier to pay the required $0.36 per month UUSF surcharge in such third-party retail prepaid situations would not cure this discrimination, as the wireless carrier generally has no billing relationship with the end-user customer, and therefore no ability to pass the charge through to the end-user customer. Requiring wireless carriers to remit the UUSF surcharge in those situations, notwithstanding their inability to pass the surcharge through to the end-user customer, is equally discriminatory vis-à-vis service providers who can pass through the UUSF surcharge to customers.

The CTIA doesn’t dwell on the real world impact of its member companies, with revenues well into the billions of dollars, simply absorbing the 36¢ a month charged to their Utah customers as a cost of doing business. Instead, the lawsuit argues Utah cannot apply USF surcharges in a way that is “inconsistent with the requirements related to the federal universal service Lifeline program.”

CTIA argues the surcharge, when applied to Lifeline customers, unfairly increases rates for the most-needy. But the lobbying group was equally concerned the charges would not apply to competing prepaid wireless providers, because the Utah Public Service Commission lacks statutory authority to impose surcharges on those providers. The CTIA argues the surcharge is discriminatory and not competitively neutral, because the it allows third-party retailers of prepaid wireless telecommunications services like Tracfone to avoid the surcharge.

The CTIA is seeking a permanent injunction to stop the surcharges and has asked the court to order the defendants — essentially Utah’s taxpayers — to pay its court costs.

The Wall Street Journal today reported Sprint has rekindled merger talks with Deutsche Telekom’s T-Mobile USA, the third time such merger discussions have taken place in the last four years.

The newest round of preliminary discussions begin five months after earlier negotiations collapsed over the issue of which merger partner would ultimately control the combined company.

Analysts are uncertain if the latest round of talks will amount to anything, especially after watching the Trump Administration’s Justice Department aggressively fight the merger of AT&T and Time Warner, Inc., on antitrust grounds.

If Sprint and T-Mobile combine, it would create three large national carriers competing with each other and an assortment of smaller regional wireless carriers, possibly leading to price increases for consumers who have benefited from the last few years of aggressive sales and promotions launched by market disruptor T-Mobile USA and, to a lesser extent, Sprint.

A Sprint/T-Mobile combination would have nearly 100 million customers, making it America’s second largest wireless company just ahead of AT&T, which had 93 million U.S. subscribers at the end of 2017. Verizon Wireless would continue to be the nation’s largest wireless company with 116 million customers.