Cheyenne Mayor Marion Orr

An effort to pass legislation that would award state grants to help rural Wyoming communities get high-speed internet was dead on arrival as far as telecom industry lobbyists were concerned.

So they “fixed it” with a secret substitute bill quietly written by the state’s telecom companies.

The replacement legislation effectively turns the state grant program into a fund for the state’s dominant telecom companies — CenturyLink and Charter Communications.

Stop the Cap! has learned the replacement bill gives high priority to eliminating potential competition by blocking funding for communities to establish their own public broadband alternatives to the phone and cable company if those companies already offer service anywhere inside the community.

The bill also seeks to define the Wyoming government’s involvement in broadband as a non-adversarial partnership with the telecom industry, according to Wyoming Senate Minority Leader Chris Rothfuss (D-District 9).

Under the substitute bill, Rothfuss said the telecom industry will now have a say over how the state awards grant funds. The industry is concerned tax dollars could be given to their competitors to offer service in communities where CenturyLink and Charter already provide modest service. But nothing in the bill would keep either company from collecting state funds for themselves, to expand broadband into unserved areas.

The attempt to switch the bills during a state senate committee meeting was met with surprise and outrage by Cheyenne Mayor Marion Orr.

“I shouldn’t have been surprised to learn industry completely re-wrote proposed broadband legislation to their favor as a ‘substitute bill’ in legislative committee today,” Orr wrote on her Facebook page on Feb. 19. “The substitute bill is substantially different than the original bill. And it wasn’t posted online or anywhere for anyone except insiders to have access to. CenturyLink and Spectrum are bullies. It’s wrong, and they are hurting Cheyenne and other Wyoming communities from gaining affordable access.”

The committee working on the bill may have hoped to switch the bills without notice, but Orr was having none of that.

“As soon as I realized the committee was working a different version that none of us had access to – I spoke up,” she said. “The committee set it aside and will hear it again tomorrow night. This is NOT good governance and the committee realized it. I will stay on this. Guaranteed.”

The substitute bill appears to have subsequently passed and is still facing review by the state legislature.

Orr remains furious Wyoming’s telecom companies that have not delivered on ubiquitous, affordable broadband will now have more power than ever to determine who gets service, who pays to extend service, and what companies can provide it.

“It’s as important as turning on electricity, it’s as important as turning on a tap and having water, it’s an absolute must if we’re going to grow,” Orr said.

FCC Chairman Ajit Pai is under investigation by the Inspector General of the Federal Communications Commission after being alleged of improperly taking actions to benefit Sinclair Broadcast Group, while one of his colleagues, Commissioner Michael O’Rielly, is the subject of an ethics complaint after allegedly violating the Hatch Act by openly advocating for the re-election of President Donald Trump.

Pai’s actions as head of the FCC under the Trump Administration have been under scrutiny by some members of Congress since last fall. Ranking Member of the House Energy & Commerce Committee, Rep. Frank Pallone, Jr. (D-N.J.) and Ranking Member of the House Committee on Oversight and Government Reform, Elijah Cummings (D-Md.) signed a joint letter addressed to FCC Inspector General James Hunt last November requesting an investigation after they claimed Chairman Pai “has repeatedly refused to adequately respond to Congressional inquiries” on the matter.

Pallone and Cummings noted press reports that Pai specifically timed certain FCC regulatory actions to directly benefit Sinclair, seen as politically friendly to the Trump Administration and Republicans. As evidence, they included multiple examples of suspiciously timed regulatory changes that seemed to coincide with Sinclair’s business deals and the company’s lobbying efforts in Washington:

Sinclair-Bonten License Transfer Application

Chairman Pai rescinded a guidance in February (2017), effectively loosening the scrutiny the FCC’s staff applied to deals that could skirt local TV ownership restrictions by using a sharing agreement (effectively allowing Sinclair to control stations owned by another company). The FCC approved a deal three months later where Sinclair used several of these sharing agreements, potentially to circumvent the rules.

Pai

Reinstatement of the UHF Discount Rule

Press reports indicated in March, 2017, Sinclair was in talks with Tribune Media Company about a potential merger, but analysts remarked the deal would likely require the FCC to reinstate an outdated rule called the “UHF discount.” This rule, left over from the days of analog television and finally rescinded in 2016, did not count UHF television stations above Channel 13 the same as VHF stations (Chs. 2-13) when defining how many TV stations a single company can own. The theory behind the discount was that analog UHF reception was more difficult and, as a result, such stations were less valuable than their lower channel counterparts. But digital television largely erased that distinction because UHF reception has improved, TV stations can be “mapped” by digital tuners to any channel number, and, in some areas, digital VHF stations suffer more reception problems than UHF stations do.

Chairman Pai suddenly announced his plan to reinstate the outdated UHF discount rule the same month Sinclair began talks with Tribune. Sinclair announced its proposed acquisition of Tribune’s TV stations just two weeks after the FCC reinstated the UHF discount. If approved, the transaction would solidify Sinclair as the country’s largest TV group owner with a potential to reach 70% of the country, which is far in excess of the current 39% limit.

LG’s Ultra High Definition (UHD) televisions support ATSC 3.0, and were demonstrated at the 2017 Olympic Games in PyeongChang, South Korea.

Next Gen TV (ATSC 3.0)

Sinclair has been one of the main proponents of the ATSC 3,0 (also known as “Next Gen TV”) transition, and its subsidiary holds patents that reports indicate could provide billions of dollars in licensing fees to Sinclair. Chairman Pai announced during his first full month in office a proposal to allow the TV industry to accelerate a transition to the new standard.

Since that time, the FCC has pushed ATSC 3.0 forward and the new technology has begun to be tested in the United States. Some consumer groups worry the new technology will be costly if consumers cannot afford or find converter boxes for existing televisions, although ATSC 3.0 proponents promise stations will continue to broadcast a Standard Definition version of existing TV stations for at least five years after the transition begins.

New televisions supporting the standard have already gone on sale in South Korea at prices ranging from around $900-$1,500US. The government is subsidizing TV station owners a minimum of $1.75 billion as part of a TV station repack that will precede the introduction of ATSC 3.0. But no subsidies will be given to consumers. Those buying ATSC 3.0 tuners or televisions will do so out of their own pocket if they wish to continue watching over-the-air stations. Sinclair will also get a royalty payment for each new television or tuner sold.

Main Studio Rule

The FCC voted last October to eliminate rules requiring a local broadcast station to maintain a physical presence in the market in which it operates. This means a station could deliver programming to a station’s transmitter from another city, with no local programming or personnel. This move would make Sinclair’s potential merger even more profitable by eliminating many of the costs of maintaining local stations, particularly labor and news-gathering costs.

Broadcast Ownership Rules

Chairman Pai plans to significantly change the existing broadcast media ownership limits. This would clear away virtually all remaining obstacles to Sinclair increasing its reach beyond the Tribune merger proposal and acquire still more television stations. Sinclair has carefully prepared for this eventuality by contractually obligating the new owner(s) of stations Sinclair is required to sell to remain under whatever ownership cap still exists to sell those stations back to Sinclair if and when Sinclair requests it.

According to the two Democrats, “all of these actions — when taken in context with reported meetings between the Trump Administration, Sinclair, and Chairman Pai’s office — have raised serious concerns about whether Pai’s actions comply with the FCC’s mandate to be independent.”

Pai’s critics are also concerned about the increased partisanship of the chairman and another Republican FCC Commissioner Michael O’Rielly. Both turned up at the Conservative Political Action Conference (CPAC) in Maryland last week.

The NRA’s “Charlton Heston Courage Under Fire Award” for Ajit Pai’s Assassination of Net Neutrality Includes a Kentucky Long Gun

Pai at CPAC

When Pai arrived on stage to deliver a short speech, Dan Schneider, executive director of the American Conservative Union, which sponsors CPAC, took the microphone to introduce the FCC chairman.

“Ajit Pai is the most courageous, heroic person that I know,” Schneider said. “He has received countless death threats. His property has been invaded by the George Soros crowd. He has a family, and his family has been abused in different ways. Chairman Pai, thank you for everything you’ve done.”

He then turned the podium over to Carolyn Meadows, second vice president of the National Rifle Association, who surprised Pai with the NRA’s “Charlton Heston Courage Under Fire Award,” a rare honor given only to firebrand conservatives willing to push through their political agenda regardless of criticism or voter backlash. Pai was being recognized for ignoring the comments of tens of millions of supporters of net neutrality and pushing through a complete repeal of the open internet rules, regardless of the possible political consequences.

Previous award winners include controversial former Milwaukee Sheriff David A. Clarke Jr., Undersecretary John Bolton, who once threw a tape dispenser at a female government contractor and chased her down a Moscow hotel hallway, conservative talk show host Rush Limbaugh, and Vice President Mike Pence.

The honor included a “Kentucky hand-made long gun,” said Meadows, who promised to store the gun for Pai at an NRA museum. That prompted a Tweet from the former director of the Office of Government Ethics, Walter Shaub, claiming Pai’s gun award likely violated federal ethics rules.

Anyone care to explain to me why the FCC thinks that the ethics rules allow Ajit Pai to accept the gift of an expensive handmade gun from the NRA, an entity whose interests he can affect (and has affected) by the performance of his official duties? Am I missing something? https://t.co/S6ocyWIV7H

— Walter Shaub (@waltshaub) February 24, 2018

As criticism of the FCC chairman grew, Pai’s office sent letters on Thursday to both the NRA and the American Conservative Union declining the handmade weapon. Pai indirectly blamed the NRA, claiming his staff has asked at the event that the gun not be given to him. But the NRA came up with its own compromise, storing the gun until Pai left office.

“As you know, once my staff became aware of what was happening, they asked backstage that the musket not be presented to me to ensure that this could be first discussed with and vetted by career ethics attorneys in the FCC’s Office of General Counsel,” Pai wrote, an FCC source told Politico. “Therefore, upon their counsel, I must respectfully decline the award. I have also been advised by the FCC’s career ethics attorneys that I would not be able to accept the award upon my departure from government service.”

FCC Commissioner Michael O’Rielly Calls for the Re-Election of President Trump and Violates the Hatch Act

O’Rielly

At the same CPAC event, FCC Commissioner Michael O’Rielly also managed to find himself the subject of controversy in response to a question.

Q. What can the FCC do to stop the constant “ping pong” of issues, like net neutrality, every time the party in power changes in the nation’s capital?
A. “I think what we can do is make sure as conservatives that we elect good people to both the House, Senate and make sure that President Trump gets re-elected,” O’Rielly answered.

Experts claim O’Rielly violated the Hatch Act, a law that prohibits employees in the executive branch of the federal government, except the president, vice-president, and certain designated high-level officials from engaging in certain forms of political activity. Telling the public to re-elect President Trump counts as a violation.

The Office of Special Counsel (OSC) already warned government officials so steer clear of President Trump’s already announced 2020 re-election campaign. In short, the Hatch Act “prohibits federal employees, while on duty or in the workplace, from expressly advocating for or against his reelection in 2020,” the OSC wrote in a guidance memo distributed to all federal agencies.

American Oversight, a group that monitors ethics issues in Washington, filed a formal complaint with the OSC against O’Rielly on Feb. 23:

“American Oversight respectfully requests that the Office of Special Counsel (“OSC”) immediately open an investigation into whether Michael O’Rielly, Commissioner on the Federal Communications Commission (FCC), violated the Hatch Act during an appearance at the Conservative Political Action Conference today, February 23, 2018. We do not believe this presents a hard question.

“Appearing in his capacity as a commissioner of the FCC, Commissioner O’Rielly improperly engaged in partisan political activity by expressly advocating for the re-election of Donald Trump
and exhorting the crowd to “elect good people to the House [and] the Senate.” Specifically, during the panel discussion, Commissioner O’Reilly delivered the following remarks:

“‘I think what we can do is make sure as conservatives that we elect good people to both the House, the Senate, and make sure that President Trump gets re-elected. But there’s another thing you can do. We’re going to have a fight over the Obama internet rules in the next couple months in the U.S. Senate. And that’s going to matter and that vote matters, and so making sure people take the right course on that, really does affect what policies we’re able to keep in place moving forward. So we can certainly use everyone’s help along those lines.’

“These remarks, made in Commissioner O’Rielly’s capacity as a commissioner at the FCC, constitute prohibited partisan political activity under the Hatch Act. As you know, the Hatch Act generally prohibits federal officials from engaging in partisan political activity while on duty. Advocating for the election of a candidate in a partisan election is the classic example of such prohibited activity.”

“The FCC controls our airwaves, the internet, and so many of the things we interact with every single day,” said Austin Evers, the executive director of American Oversight. “It should be independent, it should not be partisan, and bottom line, it should obey the law.”

Another group, Citizens for Responsibility and Ethics in Washington (CREW) is also reviewing the event.

“This certainly raises Hatch Act issues,” spokesman Jordan Libowitz told the Chicago Tribune. “[O’Rielly] is prohibited from taking part in partisan political activity using his official title or position.”

“The Young Turks” explain Ajit Pai’s attack on net neutrality and the award the NRA gave him for killing it. (7:16)

The Minnesota Public Utilities Commission (MPUC) has opened an inquiry into whether Frontier Communications is meeting its service obligations to customers after receiving a major spike in complaints about the phone company.

The MPUC acknowledged it has been “receiving a large volume of complaints related to the service quality, customer service, and billing practices of Frontier Communications.” The regulator is concerned that “after attempts to mediate these complaints, many of them remain unresolved.”

The investigation will include the Minnesota Department of Commerce and Minnesota’s Attorney General, both tasked with determining if Frontier is complying with MPUC rules and Minnesota state law.

Frontier provides service to more than 98,000 landlines in Minnesota, doing business as Frontier Communications and Citizens Telecommunications. Most Frontier customers are located in northeastern and southern Minnesota, as well as communities like Apple Valley, Burnsville, Farmington, and Rosemount.

A survey of filed complaints found many involved Frontier’s DSL internet service, which customers complained was slow and prone to frequent outages. Other complaints involved inaccurate billing and missed service calls, which sometimes led to delays of days or weeks before service could be restored.

“I’d heard a bunch of complaints of poor service all across my district,” said Rep. Rob Ecklund (DFL-International Falls) in a news release. “I am a Frontier customer myself, and the service has been lousy.”

Other customers had their complaints published in the Timberjay newspaper, which has been the unofficial meeting place for frustrated customers who cannot get satisfaction from Frontier.

“This has been the worst service experience of my life,” said Melissa Holmes, of Embarrass in northeastern Minnesota. “My whole neighborhood here on Wahlsten Road in Embarrass has had service issues with Frontier for decades. Repeated calls to the company go nowhere.”

The newspaper blamed Frontier’s wrong priorities in a scathing editorial last fall:

Prospects for an improvement in Frontier’s service quality appear unlikely given the increasingly tenuous financial condition of the company. Frontier went deeply in debt in early 2016, when it completed an $11 billion purchase of landline infrastructure formerly owned by Verizon in California, Texas, and Florida. The acquisition more than doubled the size of the company, but also prompted a major restructuring, which included significant layoffs.

Frontier officials had touted the acquisition at the time, arguing that the company knew how to make money from traditional landline infrastructure even as the industry is rapidly transitioning to wireless. But the company has yet to demonstrate it is up to the challenge and as complaints over poor service have mounted, the company has hemorrhaged customers, particularly in more populated regions, where customers often have viable alternatives.

In response, Frontier claims it updated its billing software and is making “process improvements” in the way it conducts business.

If you live in Minnesota and wish to share your views with the MPUC, you can visit their website, register, and comment until May 25, 2018.

The state’s initial investigation and report on Frontier is due on May 11.

KSTP-TV in Minneapolis-St. Paul reports Frontier is under investigation by the state telecom regulator for poor service. (2:21)

Comcast Corporation today made a surprise $31 billion bid to acquire Sky, the British-based satellite TV, internet, and wireless provider, disrupting a rival bid from 21st Century Fox, which spent years trying to acquire the 61% of Sky it doesn’t already own.

Comcast’s bid of £12.50 a share to acquire Sky outright is significantly higher than the £10.75/share offer Fox made to take total control of the satellite venture. A third player – Disney, has been in talks with Fox to acquire a substantial number of its assets, including its minority ownership stake in Sky, for $52 billion. But Comcast’s bid may change everything.

That three American companies are now competing to acquire Europe’s largest media company and biggest pay-TV broadcaster, with more than 23 million subscribers, could create concern among some regulators about foreign ownership of the media. A bid from Comcast is likely to be less controversial than dealing with Rupert Murdoch, however, who already has extensive media holdings in the United Kingdom.

There are three distinct possible bidders for Sky now:

• Comcast, which prefers to take 100% ownership but will accept a majority stake shared with Fox (or possibly Disney).
• Disney wants minority stake in Sky through its $52+ billion acquisition of some of Fox’s assets, including Fox’s part-ownership in Sky.
• Fox, which has sought to take full control of Sky for several years but has met with resistance was originally the most likely buyer. But more recently, Rupert Murdoch has recently shown a willingness to sell some of Fox’s assets, including Sky, if the price is right.

Sky’s share price leaped more than 20% today to £13.47—well above the Comcast offer—as investors believe there will be a bidding war over Sky. Because many hedge funds and investors expect Fox will increase its bid to match Comcast, in turn boosting the value of Sky’s stock, investors are accumulating shares at a rapid pace and driving up share prices further.

Sky has become increasingly valuable because it isn’t just a satellite TV provider. Sky also develops its own original productions, has valuable sports rights deals, and sells broadband and mobile phone service. American media companies are consolidating, preferring to own both the pipes that deliver internet content and the content itself. Acquiring Sky would allow Fox, Disney, and/or Comcast to showcase its own productions in Europe and to a lesser extent import Sky products into the United States.

Regulators in the United Kingdom are likely to press any buyer to protect the independence of Sky News, a well-regarded 24-hour news channel. Many expect regulators to insist that Sky’s buyer  agree to fund Sky for at least 10 years and guarantee its editorial independence.

AT&T’s attempt to avoid oversight and enforcement of consumer protection laws by the Federal Trade Commission (FTC) failed in a federal appeals court Monday, overturning a 2016 decision that agreed with AT&T the FTC could not oversee or punish AT&T for its business practices.

In a unanimous 11-0 decision by the Ninth Circuit Court of Appeals, the court found AT&T’s interpretation of a law it said gave the Federal Communications Commission exclusive authority to regulate and oversee “common carrier” telecom companies was overly broad and based on a misinterpretation of the law. The decision means the FTC will continue to pursue AT&T in court to secure relief for AT&T’s wireless customers that the FTC claims were misled by AT&T’s unlimited data plan that was not truly unlimited.

“The phrase ‘common carriers subject to the acts to regulate commerce’ thus provides immunity from FTC regulation only to the extent that a common carrier is engaging in common-carrier services,” the court ruled Monday. In laymen’s terms, the judges found that the FCC does have the regulatory authority to oversee common carrier services like basic telephone service, but the law does not prevent other government agencies like the FTC to oversee AT&T’s conduct in non common-carrier services.

The FTC and the FCC both argued that allowing AT&T and the 2016 lower court opinion to stand would create a regulatory loophole through which virtually any corporation with even the slightest ownership stake in a common carrier telecommunications company could escape all oversight and enforcement of consumer protection laws.

The dispute began in 2014, when the FTC sued AT&T in court for intentionally throttling wireless internet speeds of millions of AT&T customers hanging on to their legacy unlimited data plans.

The FTC’s complaint alleged that the company failed to adequately disclose to its customers on unlimited data plans that, if they reached a certain amount of data use in a given billing cycle, AT&T reduced – or “throttled” – their data speeds to the point that many common mobile phone applications – like web browsing, GPS navigation and watching streaming video –  become difficult or nearly impossible to use.

“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” said former FTC Chairwoman Edith Ramirez in 2014. “The issue here is simple: ‘unlimited’ means unlimited.”

According to the FTC’s complaint, AT&T’s marketing materials emphasized the “unlimited” amount of data that would be available to consumers who signed up for its unlimited plans. The complaint alleged that, even as unlimited plan consumers renewed their contracts, the company still failed to inform them of the throttling program. When customers canceled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars.

The complaint accused AT&T of violating the FTC Act by changing the terms of customers’ unlimited data plans while those customers were still under contract, and by failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans.

AT&T responded in court asking the case be dismissed, arguing that the FTC could not bring a case against AT&T because, as a common carrier, only the FCC has jurisdiction over the company.

The case was largely decided on whether Congress intended to exempt common carrier companies from FTC oversight based on their “status” or their “activities.” AT&T argued the law clearly gave companies deemed to be common carriers a blanket exemption from FTC oversight. The FTC argued Congress only intended to exempt the specific common carrier “activities” or services sold by a company from FTC oversight, not the entire company. The three-judge panel of the Court of Appeals agreed with AT&T’s view, affirming AT&T’s claim it was untouchable by the FTC and dismissed the FTC’s lawsuit.

Judge Kozinski, questioning AT&T: “I’m regulated by the FTC and I don’t like it. I go out and I buy a small, money-losing common carrier. Do I say, ‘bye bye FTC,’ under your reading of the statute?”

The decision was a stunner in D.C. regulatory circles and opened a chasm-sized loophole for almost any company to completely escape the FTC’s oversight and enforcement of consumer protection laws just by providing a single common carrier service (or acquiring a small phone company that does) to secure blanket immunity. The FTC appealed the decision before the Ninth Circuit Court of Appeals.

Both the FTC and at least one judge hearing the federal agency’s appeal saw the potential impact of the earlier 2016 decision immediately.

“I’m regulated by the FTC and I don’t like it,” Judge Alex Kozinski said to AT&T’s attorney. “I go out and I buy a small, money-losing common carrier. Do I say, ‘bye bye FTC,’ under your reading of the statute?”

The FTC warned if AT&T’s view was upheld, any company could buy a common carrier and violate federal consumer protection laws with no recourse for consumers and no available FTC enforcement action.

This week’s decision, called “common sense” by the judge who wrote the summary of the court’s finding, restores the FTC’s authority over non-common carrier services at companies large and small, including AT&T. It is also a relief to FCC Chairman Ajit Pai, who earlier argued the FTC had jurisdiction over abusive ISPs and would effectively oversee broadband providers without any need to continue the net neutrality policies of his predecessor. Had the court ruled in favor of AT&T, Pai’s policy would have transferred oversight of internet services to an agency legally prohibited from overseeing most broadband providers.

The FTC was pleased with the decision.

“It ensures that the FTC can and will continue to play its vital role in safeguarding consumer interests including privacy protection, as well as stopping anti-competitive market behavior,” Maureen Ohlhausen, acting Chairwoman, said in an emailed statement.

AT&T was not, and claimed the court ignored the merits of the case.

“We are reviewing the opinion and continue to believe we ultimately will prevail,” the representative said in an emailed statement, which did not definitively state whether AT&T intended to appeal the decision.