One of the chairs of the North Carolina House Finance Committee abruptly resigned his chairmanship on the House floor Wednesday, submitting a letter read aloud in the chamber that accused fellow Republican House Speaker Thom Tillis (R-Mecklenburg) of having an unexplained business relationship with Time Warner Cable.

Rep. Robert Brawley (R-Iredell) wrote Tillis burst into his office demanding to know about a bill Brawley introduced that would have weakened the 2011 law Tillis strongly supported that severely restricted publicly owned broadband networks in the state.

“You slamming my office door shut, standing in front of me and stating that you have a business relationship with Time Warner and wanting to know what the bill was about,” Brawley wrote in his resignation letter. “You and I both know the bill stifles the competition with MI Connections in Mooresville. MI Connections is being operated just as any other free enterprise system and should be allowed to do so without the restrictions placed on them by the proponents of Time Warner.”

Tillis’ office described the resignation of Brawley’s chairmanship as “a mutual decision.”

Tillis was honored in 2011 as ALEC’s “Legislator of the Year” and received an undisclosed cash reward. Time Warner Cable is a corporate member of ALEC.

House Bill 557, introduced by Brawley, would have permitted an exception under state law for the community-owned MI Connection cable system to expand its area of service to include economic development sites, public safety facilities, governmental facilities, and schools and colleges located in and near the city of Statesville. It would also allow the provider to extend service based on the approval of the Board of County Commissioners and, with respect to schools, the Iredell County School Board.

The bill died in the Committee on Government earlier this month.

MI Connection is the publicly owned and operated cable and Internet system serving the towns of Mooresville, Davidson and Cornelius in the counties of Mecklenburg and Iredell. It was originally a former Adelphia-owned cable system that fell into disrepair before it was sold in a bankruptcy proceeding. MI Connection has proved financially challenging to the local communities it serves because the antiquated cable system required significant and costly upgrades, faces fierce competition from AT&T and Time Warner Cable, and lacks the technological advantage fiber to the home offers other public networks like Greenlight in Wilson and Fibrant in Salisbury. Despite the challenges, MI Connection has successfully upgraded its broadband infrastructure with the fastest speeds available in the area — up to 60/10Mbps.

Tillis helped shepherd into law the 2011 bill that Time Warner Cable helped write and sponsor designed to stop public networks like MI Connection from expanding and new public networks ever seeing the light of day. The legislation places strict limits on public broadband network deployment and financing. The bill Brawley introduced would have chipped away at the law’s limits on network expansion. Brawley’s letter suggests Tillis had direct involvement stopping his bill from getting further consideration.

Brawley

Both Brawley and Tillis represent portions of the MI Connection service area.

Time Warner Cable has a long history pushing for community broadband bans in North Carolina, but the bills never became law when the legislature was still in the hands of Democrats. But in late 2010, Republicans took control of the state house for the first time in more than a century. Time Warner Cable’s fortunes brightened considerably under Republicans like Rep. Marilyn Avila (R-Wake). Avila willingly met with Time Warner Cable’s top lobbyist to coordinate movement on the community broadband ban legislation she introduced and after it became law was honored by the state cable lobby at a retreat in Asheville.

Tillis, who became speaker of the house in 2011 under the new GOP majority, received $37,000 in telecom contributions in 2010–2011 (despite running unopposed in 2010), which is more than any other state lawmaker and significantly more than the $4,250 he received 2006–2008 combined. AT&T, Time Warner Cable, and Verizon each gave Tillis $1,000 in early-mid January, just before he was sworn in as speaker on January 26. Tillis was in a key position to make sure the anti-competitive bill moved along the legislative pipeline.

Last summer, Time Warner Cable returned the favor inviting Tillis to serve a prominent role at a media event inaugurating its Wi-Fi network in time for last year’s Democratic National Convention, held at the Time Warner Cable Arena.

Despite all that, newspapers in the state are having trouble determining exactly what ties Tillis has to Time Warner Cable. The Raleigh News & Observer noted, “It’s unclear what relationship Tillis might have to Time Warner. His financial disclosure lists no connection.”

The Greensboro News & Record published a non-denial denial from Tillis spokesman Jordan Shaw: “Shaw said he doesn’t know of any business relationship between Tillis and Time Warner.” The paper added, “a regional Time-Warner spokesman said Tillis has no ties to the company.”

“Not knowing” is not a total denial and a legislator need not have direct ties to a company to be influenced by their agenda through lobbyists like the North Carolina Cable Telecommunications Association, the statewide cable trade association that includes Time Warner Cable as its largest member. Then there are third-party groups.

A May 7 editorial in the News & Observer pointed out Tillis does have close ties to the American Legislative Exchange Council (ALEC), a group financed in part by Time Warner Cable and cited by CEO Glenn Britt as a useful asset to the cable operator because it was “particularly focused on telecom matters.” The commentary, “ALEC’s Guy is Thom Tillis,” reminded readers Tillis wasn’t just a casual member of the corporate-funded group, he’s a national board member. In fact, Stop the Cap! has learned he was ALEC’s 2011 Legislator of the Year. On hand at the 2011 New Orleans ALEC event to applaud Tillis were more than two dozen fellow North Carolina Republican legislators, including Reps. Marilyn Avila and Julia Howard.

Among the model, corporate ghost-written bills ALEC maintains in its extensive database is one that restricts or bans publicly owned broadband networks, similar to what passed in North Carolina in 2011.

The fortunes of ALEC (and the corporations that underwrite its operations) have continued to improve in North Carolina this year. The News & Observer notes:

ALEC, as it’s known, has provided language for bills that [have been] used this session in North Carolina, ranging from creating an independent board to take charter school governance away from the State Board of Education to protecting a Philadelphia-based company from lawsuits involving asbestos exposure to installing an anti-union amendment in the state constitution. Closer to home, the Civitas Institute, a conservative group, used ALEC literature in an indoctrination…er, training…session for freshman lawmakers.

“I wish you’d turn the camera off now because I am going to get up and leave if you don’t,” said Rep. Julia Howard

Uncovering the corporate influence and pay to play politics pervasive in North Carolina’s legislature on broadband matters has proved historically scandalous for members and ex-members alike, as Stop the Cap! has reported for more than four years:

• In 2009, Rep. Ty Harrell (D-Wake) ran away from his own bill to ban community broadband after he admitted he ran into a hornet’s nest of controversy over the legislation, which was introduced because Time Warner approached him and asked for it. Later that same year he ran into another hornet’s nest over allegations of misused campaign funds and resigned his office;
• In 2010, Sen. David Hoyle admitted he introduced a community broadband ban in the North Carolina Senate that the cable industry wrote with his help. When asked about criticism that he was “carrying water” for the cable companies, Hoyle replied, “I’ve carried more water than Gunga Din for the business community – the people who pay the taxes.” He decided not to run for re-election;
• In 2011, life became uncomfortable for Rep. Julia Howard (R-Davie, Iredell), who became so upset over scrutiny she received from Raleigh’s NBC affiliate over the bill to ban community broadband, she threatened to flee the interview if the cameras were not shut off.

Tillis is following in others’ footsteps and is suspected of having even bigger political ambitions for 2014 — challenging the U.S. Senate seat now held by Democrat Kay Hagan.

The News & Observer thinks Tillis is forgetting about the people who elected him to office:

For North Carolinians of any political philosophy, however, the larger concern here is that laws are being written by those outside the state with only an ideological interest. ALEC, except for advancing its agenda, likely could care less about issues specific to North Carolina, things of intense, day-to-day concern to North Carolinians.

And not only are bills being influenced by ALEC, the speaker of the House is on the group’s board.

Thom Tillis and his Republican mates on Jones Street weren’t elected to march to orders issued by some national organization. Perhaps if they kept their eyes and ears open for constituents, their legislative agenda might be more about them and less about doing ALEC’s bidding.

Brawley himself is not free from controversy. In addition to attending the aforementioned ALEC event in New Orleans with Tillis, Avila, and Howard, earlier this year Brawley introduced House Bill 640, legislation that would roll back ethics reforms and allow lobbyists to once again give gifts to state lawmakers without any public disclosure.

Brawley told WRAL-TV that required ethics classes on gifts and disclosure requirements “are useless for anyone without internal ethics anyway. They only tell you the law. They do not guarantee integrity. What makes you think a person without ethics is going to obey a law anyway?”

The laws were enacted after a major 2006 scandal involving then-House Speaker Jim Black.

Corrections: In the original article, we mistakenly identified the News & Observer as a Charlotte newspaper. It is actually published in Raleigh. We also wrote that House Bill 557 died without being assigned to any committee for consideration. We received word the bill was actually referred to the Committee on Government on Apr. 4, 2013 where no further action was apparently taken. We regret the errors.

Phillip “I Shop Online” Dampier

Last week, JCPenney launched their nationwide redemption tour, apologizing to millions of ex-customers that fled the former retail giant, begging them to come back.

It took over a year for JCPenney to get the message that “disciplining” and “re-educating” customers to accept the wisdom of everyday higher prices with few sales and almost no coupons was hardly the door-busting success “miracle worker” CEO Ron Johnson originally had in mind. The ex-Apple executive was rewarded a $52.7 million signing bonus to take over JCPenney’s tired leadership and in return he dragged sales down 28.4% from the year before, with same store sales down 32%. Johnson’s new vision also steamrolled one-third of JCPenney’s online business.

The day those results became known, he confidently showed Wall Street he did not dwell in the reality-based community: “I’m completely convinced that our transformation is on track!” (For Kohl’s benefit anyway.)

Johnson also believed in a “less is more” philosophy in human resources, overseeing layoffs of 13 percent of the company’s workforce last April, with another 350 let go in July.

Despite the fact his all-new, rebooted vision of JCPenney was about as popular as bird flu, he stayed, even as customers and employees didn’t.

It wasn’t that the company didn’t know customers had a problem with all this. Many complained about the radical, unwanted changes at JCPenney, particularly middle-aged professional women representing one of the stores’ most important business segments. Company executives simply didn’t listen.

A year later, some of the same analysts that cheered JCPenney’s crackdown on discounting now wonder if the company will survive 2013. Many fretted about the real possibility the last customer to brave the “new era” of JCP might forget to turn the lights out when they left for good. Others were mostly furious the board let Johnson go.

Despite the tragic consequences, the conventional wisdom on Wall Street remains: Alienating customers with a revamp nobody asked for and “everyday pricing” designed to boost profits every day was not the problem, how Johnson implemented the strategy was. He just didn’t educate customers enough.

We see the same warped thinking in the broadband marketplace, particularly with usage caps, consumption billing, junk fees and the general ever-increasing price of broadband itself.

On providers’ quarterly results conference calls, the regular questions challenging leaders of the industry are not about providers charging too much for too little. The real concern is that your ISP is leaving too much ripe fruit on the tree:

• Where is the revenue-boosting usage caps and consumption billing, Time Warner Cable?
• Comcast: can’t you raise prices further on those recent speed increases to maximize additional revenue?
• Verizon: why are you spending so much on fiber broadband upgrades customers love when that money could have gone back to shareholders?
• AT&T: Is there anything else you can do to exploit your market share and make even more money from costly data plans?

The best ways a consumer can reward a good broadband provider include remaining a loyal customer, paying your bill on time and upgrading to faster speeds as needed. For Wall Street, the growing demand for broadband is a sign there is plenty of wiggle room for at-will rate increases, new fees and surcharges, contract tricks and traps, customer service cuts, and monetizing usage wherever possible. After all, you probably won’t cancel because the other guy in town is doing the same thing.

This is what sets the broadband marketplace of today apart from most retailers: consumers don’t have 10-20 other choices to take their business to if they are fed up.

Comcast or AT&T? Both charge a lot and have usage limits on their broadband service for no good reason. Your other alternatives? A wireless provider charging even more with an even lower usage cap. Or you can always go without.

While providers may tell you there is a healthy, competitive broadband marketplace, Wall Street knows better. When Time Warner Cable recently announced it would dramatically curtail new customer promotions and concentrate on delivering fewer services for more money, nobody bothered asking whether this would result in a stampede to the competition. What competition?

Although Google is delivering much-needed, game-changing competition in a tiny handful of cities, most Americans will not benefit because the best upgrades and lowest prices are only available where Google threatens the status quo. A larger number of municipalities are done putting their broadband (and economic) future in the hands of the phone and cable company and are building their own digital infrastructure for the good of their communities.

For everyone else, we can dream that one day, someday, the cable and phone company most Americans do business with will be forced to run their own JCPenney-like apology tour for years of abusive pricing and mediocre “good enough for you” broadband with unwarranted usage limits. Time Warner Cable went half way, but until competition or oversight forces some dramatic changes, we should not count on providers to actually listen to what customers want. They don’t believe they need to listen to earn or keep your business.

Former Insight Cable customers in Evansville, Ind. are fuming after the company’s new owner temporarily left them without phone or Internet service, with nobody available to explain why.

Time Warner Cable attempted to convert Insight customers to its own platform last week, interrupting service in the process. Affected customers quickly jammed customer service lines, leading some to visit local cable offices to straighten things out.

Time Warner Cable will convert former Insight customers in Kentucky and Ohio to its own platform starting in June.

“Right now, I have no Internet,” said Insight customer Claudia Congleton. “I tried to call them three or four times today. No one answers. You’re waiting for over 30 minutes and so that’s why I’m down here. I’m just going to come down here and talk to them about it.”

“It’s so frustrating,” Congleton told Tristate News.

Time Warner blamed the problems on “minor glitches” during the customer conversion process, which began in Evansville on April 29. A larger transition is planned in Kentucky in mid-June, with former Insight customers in Columbus, Ohio moved later that same month.

When Time Warner Cable launched the conversion in Indiana, broadband customers whose names ended in letters “A” through “K” were redirected to a web page that required them to re-register broadband service and select a new twc.com e-mail address to replace their existing Insight e-mail account. Customers who either failed to complete the registration process or who tried during peak usage times often found their Internet service interrupted. Similar problems occurred with phone customers.

Some customers were unhappy with the cable company’s optimistic predictions of a quick fix.

“They lied to me,” said Insight customer Mary Jackson.  “I am so upset because they lied to me.”

Jackson visited the Evansville cable office to report her phone and Internet service were out and the company promised a same-day fix. A day later it was still out.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WTVW Evansville Time Warner Transition Step By Step 5-1-13.flv[/flv]

Here is how the transition was supposed to take place between Insight Cable and Time Warner. WTVW in Evansville walks customers through the conversion process.  (2 minutes)

 [flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WFIE Evansville Broadband Problems 5-1-13.mp4[/flv]

WFIE in Evansville reports how things actually went. Not so good, reported a number of customers.  (1 minute)

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WTVW Evansville Time Warner Cable Customers Look For Answers 5-1-13.flv[/flv]

The next day, Time Warner Cable customers who could not get through to the company by phone were down at this Time Warner Cable office in Evansville looking for answers, as WTVW reports.  (2 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WFIE Evansville Insight Switch 5-3-13.mp4[/flv]

The following day, some customers were still without service. WFIE talks to one Time Warner Cable customer upset she still did not have phone service.  (1 minute)

This looks good enough for us, says the American Cable Association

A lobbying group for small cable operators says the nation’s current broadband availability maps are flawed, but good enough for the FCC to rely on to veto funding for rural broadband projects that might compete with some of their members.

The American Cable Association submitted its comments to the FCC as part of discussions about the next phase of broadband subsidy funding from the Connect America Fund.

Most current broadband maps rely heavily on unverified data voluntarily submitted by existing broadband providers or by third-party groups that are funded or controlled by some of the nation’s largest phone companies. Both have a vested interest painting an optimistic map of solid broadband coverage as a tool in the ongoing public policy fight pitting broadband advocates clamoring for better access and speed against the cable and phone companies that offer the service.

ACA members are concerned that the government might subsidize new broadband start-ups that could eventually compete against existing cable companies. The group calls such “overbuilders” redundant and wasteful.

“The FCC should protect the public by ensuring that broadband deployment subsidies do not result in significant government-supported overbuilding, which would cause real harm to cable operators that have invested only private capital,” ACA President and CEO Matthew M. Polka said. “It would also mean that locations across the country that need support will not receive broadband because the program would not have additional funding.”

Don’t Surprise Us With Doubling the Minimum Speed Requirement When We Thought 3Mbps Service Was Good Enough

ACA member cable operators assumed they would be safe from the government-funded overbuilders if they provided at least 3Mbps broadband, but now the FCC is exploring doubling the minimum speed to 6Mbps, which threatens a number of smaller cable operators that have avoided upgrades to increase speeds.

Polka

“This is a huge burden on a smaller operator.  These operators assumed when they filed data through the State Broadband Initiatives (SBIs) in June, 2012, providing service with speeds of at least 3 Mbps/768 kbps service was enough to protect them,” Polka said.

The ACA also wants the agency to initially reject applicants for broadband funding if current broadband map data shows another provider operating in the area, even if that provider’s volunteered service coverage maps are exaggerated.

“The Commission should presume the National Broadband Map (“NBM”) is accurate and rely upon it in identifying eligible areas for Phase II support, even though it is a work in progress and contains inaccuracies. The reasons for this conclusion are many.

First, the NBM is the most accurate and most granular representation of national broadband deployment that currently exists. Second, the federal government has already made a significant investment in the NBM, is seeking to further perfect its data, and clearly intends for it to be a key tool upon which to base its policies.

The group also warned that if the FCC does not rely on its inaccurate map, providers might be hesitant to voluntarily supply more coverage data in the future.

Prove That We Don’t Already Provide Service If Your Broadband Operation Wants Funding

The ACA’s comments also urge the FCC to require would-be new broadband providers to have the burden of proof that a cable operator does not already offer service in an area before they can qualify for Connect America funding. How? By calling the cable company pretending to be a new customer and seeing if they can schedule an installation at each particular home a provider plans to serve.

“In the normal course of business to attract customers, small cable operators post their service areas and broadband service offerings,” writes the ACA. “All a [new entrant] needs to do is survey the operator’s website and advertisements and, if necessary, call customer service. In contrast, it would be a much greater hardship for small cable operators, who lack regulatory staff and have already made the effort to be designated on the [map], to bear the initial burden and start from the beginning to submit documents to ensure they are on the map.”

In short, the ACA wants the FCC to assume their cable operator members cover an area until proven otherwise.

“It would be far less burdensome for the [new entrant] to challenge [allegedly inaccurate coverage map data] first, in which instance only those operators who are challenged would need to reaffirm their presence,” writes the ACA.

Because We Are Cable Operators Running the “Robust DOCSIS Platform,” It Means We Already Provide Great Service

The ACA also called on the FCC to give cable operators a free pass from demonstrating they can meet the Commission’s quality of service standards regarding latency and the responsiveness of the customer’s broadband connection.

“For cable operators, the Commission should presume that because they employ the robust DOCSIS platform they meet the latency requirement,” the ACA wrote.

Committing to study and oversee the quality of cable broadband is also a really bad idea according to the cable lobbying group.

“Further exploration of a cable system’s latency performance without clear and convincing evidence to the contrary would be unproductive for the Commission in carrying out its public interest mandate and for cable operators,” the ACA argued.

Don’t Tell Us What We Can Charge and What Usage Limits We Can Impose; That Should Be Reserved for Wall Street and Our Investors

The ACA is also concerned that the FCC might consider the price consumers pay for rural broadband and what usage limits rural cable operators impose when deciding whether it is time to help fund the launch of a competing provider.

Captive rural customers can pay the same or higher prices for much slower broadband service than urban Americans pay, but the ACA advocates the FCC look the other way and avoid making any such comparisons:

“[…] There are many reasons for the Commission to refrain from establishing (even minimal) comparable rates and terms of service for the provision of broadband service by cable operators to be deemed as “serving” an area.

First, the Commission should recognize that cable operators as a rule build their networks and provide broadband service with no government support, only using private capital and based on a business case enabling them to receive a market return on that investment.

Any effort by the government to impose price or usage allowances – that is regulate the service – has great potential to lower that return and slow rural broadband deployment. With universal service funding limited, this would lessen the ability for the Commission to achieve its objective of bringing broadband to unserved areas.

Further, it would be almost impossible to establish a reasonably comparable rate and terms of service because, at least for cable operators, these change so often and are usually offered in bundles with other services. Most cable customers subscribe to either or both a package of services and some sort of promotional offering. Further, bundles are far from homogeneous and operators change frequently. All of this makes it virtually impossible to have valid urban-rural comparisons.

[…] Finally, if it were to establish a comparable rate and terms of service for broadband, the Commission would be acting in an area where it clearly lacks authority.

[flv width=”528″ height=”318″]http://www.phillipdampier.com/video/MSNBC A Mom and Pop Cable Company by OPEN Forum 3-30-13.flv[/flv]

ACA past chairman Ben Hooks, CEO of Buford Media and operator of cable systems under the Alliance Communications brand, appeared on MSNBC to rail against federal cable broadband regulations and oversight requirements. Hooks operates several small cable systems in Texas, Oklahoma, Arkansas, Louisiana, Mississippi, and Alabama that are throwbacks to a much earlier era of cable. Many offer just a few dozen channels and deliver no broadband or cable phone service.

Hooks is upset because the federal government wants to help fund new start-up broadband providers in his backyard. He thinks this is unfair, because his cable operations, run with largely refurbished, cast-off cable equipment discarded years ago by larger cable operators, is funded with private capital and may have to compete with new providers partly funded by the Connect America Fund. In the middle of the dispute are rural Americans who cannot get broadband from Alliance Communications and would be prevented from getting it from anyone else if Hooks has his way.  (6 minutes)

Fox Television’s over the air signal may be scrambled and available “only by subscription” if the courts do not reverse their decision to allow an upstart television streaming service to continue operations while a broadcaster-backed lawsuit works through the legal system.

Aereo has been streaming New York City local stations to area residents that lease a tiny dime-sized antenna and receive the stations via the Internet. Broadcasters consider Aereo an end run around copyright law and retransmission consent fees paid by cable, satellite, and telco-TV operators. With millions in licensing fees at stake, several networks immediately filed suit to force the service to suspend operations.

But the 2nd Circuit Court of Appeals ruled in a 2-1 decision last month that Aereo’s streaming service did not represent a “public performance,” meaning the company was not infringing on the copyrights of broadcasters. Until a final court ruling is made, Aereo can continue operating, the judges ruled.

That decision prompted a hissy fit by News Corporation’s president and chief operating officer, who declared he is considering turning the Fox television network into a subscription-only service, potentially meaning the service would be scrambled and unavailable for free over-the-air in the future.

“Aereo is stealing our signal,” Chase Carey said at the opening of the National Association of Broadcasters’ convention is Las Vegas last night. “If we can’t have our rights properly protected through legal and governmental solutions, we will pursue business solution. One solution would be to take the network and make it a subscription service. We’re not going to sit idly by and let people steal our content.”

[flv width=”640″ height=”380”]http://www.phillipdampier.com/video/Bloomberg News Corp to Take Fox Off Air If Courts Back Aereo 4-8-13.flv[/flv]

Bloomberg Television explores Fox’s “nuclear option” of scrambling its broadcast outlets and forcing all Americans to pay for its content. (2 minutes)

[flv width=”384″ height=”236″]http://www.phillipdampier.com/video/CNN Money Aereo TV 3-13.flv[/flv]

CNN Money explains Aereo and its threat to the traditional broadcast retransmission consent fee system that has made over-the-air networks highly profitable with subscriber fees paid by your cable, satellite, or telco-TV provider and passed on to you in the form of higher cable or satellite bills.  (2 minutes)