New York City’s cable franchise territories

A proposal to replace Charter Communications’ Spectrum cable systems in New York with a workers co-op, owned and self-managed by its workers, would offer a bundle of television, phone, and broadband service price-capped at $100 a month for residential customers.

Developed by several dozen striking Charter/Spectrum workers, the 18-page proposal, “New York City Communication July 2018 Business Plan” would, for now, address only the five boroughs of New York City and nearby Bergen, N.J. But Troy Walcott, a striking member of the International Brotherhood of Electric Workers (IBEW) Local 3, says the current proposal was written as “a proof of concept” that can be adopted across New York State.

“The best time is now,” Walcott told LaborPress, noting that if the city (or state) decided not to renew Charter Communications’ franchise agreements in the city, there will still be a few years left before it expires, giving the proposed co-op time to develop its own network or plan to overhaul what was originally Time Warner Cable’s system in places like Manhattan.

A citywide co-op would also introduce competitive service in boroughs presently serviced by Altice, formerly Cablevision. The group would have to build its own network in those areas. If New York revokes Charter’s franchise, the cable system would likely take the city and/or state to court, setting up years of litigation. Past precedent has shown that cable systems abandoning or forced from an area are exceptionally rare, and usually involve a friendly sale of the existing system to another provider. One example was Adelphia Communications Corporation, which ran the fifth largest cable company in the country until it filed bankruptcy in 2002 after investigators revealed internal executive corruption. Adelphia systems were sold to Comcast and Time Warner Cable in most areas, although the communities of Mooresville, Davidson, and Cornelius, N.C., acquired the bankrupt Adelphia system serving parts of the three communities in 2007 for $80 million, relaunching it as a community-owned cable provider with mixed results.

A workers co-op is owned and run by its workers in the public interest.

If New York does strip Charter of its Spectrum cable franchises in the state, and if that effort survives the inevitable court challenges, Charter would likely sell its systems in New York to Comcast, an obviously motivated buyer. Another possible, but less-likely buyer is Altice, which acquired Cablevision and already provides service in parts of downstate New York, New Jersey, and Connecticut.

Charter is facing multiple investigations in New York over its business conduct. In New York City, where its franchise agreement is set to expire July 18, 2020, the company is under fire for its creative interpretation of “located in New York City” — language in Article 17 of the franchise agreement which requires Charter to use vendors registered to do business in New York, have a long-term commercial lease in New York, and more than 50% of its workforce living in New York.

With a substantial amount of its workforce on strike in the area for the last year and a half, and the industry’s trend to shift work to third-party contractors as a cost saving measure, the IBEW has been documenting instances of Charter-badged commercial vehicles parked overnight behind a Far Rockaway florist shop or in residential neighborhoods, often with out-of-state license plates.

Charter officials deny those accusations, and claim at least 75% of its vendors and contractors are located within New York City.

When Kate Blumm, assistant commissioner of the New York City Department of Information Technology & Telecommunications (DoITT) confronted Charter officials about its possible use of out-of-state vendors, the response from Charter was less than reassuring.

“Once we started to probe, we realized that Charter was essentially making the argument that if you are a worker and you are doing work in the city, therefore, you are located in the city,” Blumm said during the March 13 episode of the “Blue Collar Buzz” podcast. “They pointed us to a Macmillan online dictionary definition of what the word ‘located’ means — and we kind of looked at ourselves and were scratching our heads — this is not the spirit and intent of this provision. This provision says that Charter has to use best efforts to use vendors located in the city.”

As a result, the DoITT has pushed its franchise agreement audit one year earlier than normal, now scheduled to begin Sept. 1. The city’s concerns about Charter’s performance have been amplified at the state level by the New York Public Service Commission, which has hammered Charter executives for months about the company’s inability to meet its obligations under the 2016 Merger Order approving the takeover of Time Warner Cable.

Tell us what you think about your cable TV service – whether it’s @verizon , @Altice or @GetSpectrum – send us your comments so we can make sure New Yorkers get the best service possible 📺👉https://t.co/ic2cx3sAjW

— NYC IT & Telecomm (@NYCDoITT) July 11, 2018

“Not only has the company failed to meet its obligations to build out its cable system as required, it continues to make patently false and misleading claims to consumers that it has met those obligations without in any way acknowledging the findings of the Public Service Commission to the contrary,” said PSC Chairman John B. Rhodes. “Our patience with Charter has come to an end and now we must move to take much stronger actions.”

Mayor de Blasio

Backers of the cable co-op note many of those on their business plan development team have direct experience designing, surveying, building, and maintaining the existing Spectrum cable system originally owned by Time Warner Cable.

“We know the system because we built it,” Walcott said. “The system was already crumbling and the infrastructure needed to be redone. This is something that’s going to have to get done anyway. We’re saying, instead of letting them do it, let’s start doing it and rebuilding it ourselves — the people that are actually going to build it anyway.”

Finding enough money to proceed will be the co-op’s biggest challenge. New York City officials, like Mayor Bill De Blasio, are in favor of more cable competition in spirit, but are careful not to commit themselves, or the sizable sums required if the group decides to begin building a competing system or bid to acquire the current Spectrum system. So far, the New York City Council has committed to gradually increasing financial support for the development and cultivation of worker cooperatives, starting with $1.2 million in 2015 and increasing to $2.2 million last year. A full-scale acquisition of the existing infrastructure owned by Charter in New York would likely run into the billions of dollars.

The group hopes public demand and dislike of Charter/Spectrum will force elected officials to get involved in the effort.

Murphy

Every Minnesota resident would receive access to high-speed internet service under a new proposal that would fund broadband expansion with sales tax revenue earned from out-of-state internet purchases.

The Connect MN plan, backed by the Democratic-Farmer-Labor Party (DFL) candidate for governor Erin Murphy, would offer rural and underserved Minnesotans 100/20 Mbps broadband service by 2026. To pay for the expansion program, Murphy proposes to invest $100 million annually in Minnesota’s Broadband Development Grant Program, which would provide funding to public and private providers to incentivize expansion into areas currently unprofitable to serve.

“For too long, we have talked about the importance of broadband at the Capitol without the investment needed to address the scope of the challenge,” said Murphy. “When I am Governor, we will move forward with a strategic plan that will connect every Minnesotan with the high-speed internet they need to succeed.”

Funding for the broadband expansion would come from new sales tax collections on out-of-state online purchases that have largely gone uncollected in the past. With the recent Supreme Court decision, South Dakota v. Wayfair, out-of-state retailers would be compelled to collect Minnesota’s sales tax when shipping items to a Minnesota address and remit the proceeds to the state government. The U.S. Government Accountability Office estimates more uniform collection of sales tax on out-of-state purchases will collect an extra $132-206 million for Minnesota annually. Dedicating much of that money to improve broadband service in the state could result in extending service to 550,000 unserved households — more than 26% of the state — within eight years.

Colored sections show areas lacking at least 25/3 Mbps broadband.

That level of investment would put Minnesota in the same league as New York, where in 2015 Gov. Andrew Cuomo announced a $500 million investment by the state in rural broadband expansion in an effort to achieve statewide broadband access by 2018. Cuomo’s plan is still under construction, and has been criticized for missing its end goal of universal coverage, with about 1-2% of state residents left with the option of satellite-delivered internet access.

Murphy’s plan would dramatically expand on her predecessor’s own broadband initiatives. Incumbent Gov. Mark Dayton’s (DFL) 2018 plan proposed to invest $30 million and reach 11,000 homes and businesses. Since taking office, Gov. Dayton claims to have secured enough funding to expand broadband access to 33,852 households, 5,189 businesses, and 300 community institutions in Greater Minnesota since taking office in 2011. Reaching the half million still unserved homes would take decades at current funding levels.

Murphy’s proposal also goes far beyond rural broadband expansion programs in other states. Tennessee currently offers a $45 million investment in rural broadband over three years — with less than $30 million specifically designated for rural broadband hookups. In West Virginia, a state ranked 43rd in wired broadband by the FCC’s 2018 Broadband Deployment Report, less than $2 million was available this year for rural broadband expansion, combining available funds from a Community Development Block Grant program with leftover money originally set aside for water and sewer projects.

Murphy claims universal access to broadband spurs innovation and drives economic development, education, healthcare and quality of life. One study indicates that a community will see a $10 return on investment for every $1 invested in broadband.

“This is a once-in-a-generation opportunity to make progress on an issue holding back too many Minnesotans in communities all over the state,” said Murphy. “It’s a critical step in ensuring that everyone in Minnesota can build a bright future for themselves and their families.”

Rural Roane County, Tenn.

Earlier this month, a standing room only crowd packed the offices of Rockwood Electric Utility (REU) in Rockwood, Tenn., despite the fact the meeting was held at 10 a.m. on a Friday morning.

Local residents were there on a work day to listen to area providers and local officials discuss rural broadband access. Most wanted to know exactly when the local phone or cable company planned to expand to bring internet access to the far corners of the region between Knoxville and Chattanooga in east Tennessee.

Comcast, Charter, and AT&T told Roane County Commissioners Ron Berry and Darryl Meadows, State Sen. Ken Yager (R-Kingston), and the crowd they all had a long wait because the companies couldn’t profit offering rural broadband service to the county.

“That is what our shareholders expect and the way we operate in a capitalistic society,” declared Andy Macke, vice president of external affairs at Comcast.

“The biggest challenge for all of you in this room is what they call the last mile,” said Alan L. Hill, the regional director of external and legislative affairs at AT&T Tennessee. “It is a challenge. We all face these challenges.”

In short, nothing much had changed in Roane County, or other rural counties in southeastern Tennessee, to convince service providers to spend money to bring internet service to the region. Until that changed, AT&T, Comcast and others should not be expected to be on the front lines addressing rural internet access. Successive governors of Tennessee have long complained about the rural broadband problem, but the state legislature remains cool to the idea of the state government intervening to help resolve it.

Gov. Haslam

In 2017, Tennessee Gov. Bill Haslam noted Tennessee currently ranked 29th in the U.S. for broadband access, with 34 percent of rural Tennessee residents lacking access at recognized minimum standards. In splashy news releases and media events, Haslam sold his solution to the problem — the Broadband Accessibility Act, offering up to $45 million over three years to assist making broadband available to unserved homes and businesses.

In reality, the law authorized spending no more than $9.5 million annually on rural broadband grants over the next three years. It also slashed the FCC’s broadband standard from 25/3 Mbps to 10/1 Mbps, presumably a gift to the phone companies who prefer to offer less-capable DSL service in rural areas. In the first year of awards, 13 Tennessee counties, none in the southeastern region where Roane County lies, divided the money, diluting the impact to almost homeopathic strength.

Critics called Haslam’s broadband improvement program “The Smoke and Mirrors Act” for promising a lot and delivering little. At current funding levels, broadband service can only be expanded to 5,000 of the estimated 422,000 households that lack access to internet service, and then only with the award winner’s matching financial contribution.

The demand for rural broadband financial assistance is obvious from the $66 million in requests received from 71 different utilities, co-ops, and communications companies in the first year of the program, all seeking state funding to expand rural broadband. Only a small fraction of those requests were approved. AT&T applied for money targeting Roane County and was turned down. AT&T’s Hill expressed sympathy for the county’s school children who need to complete homework assignments by borrowing Wi-Fi access from fast food establishments, area businesses, and larger libraries. But AT&T’s sympathy will not solve Roane County’s broadband problems.

What might is Rockwood Electric Utility, the municipal power company that sponsored the broadband event.

REU is a not-for-profit, municipally owned utility that has successfully served portions of Roane, Cumberland, and Morgan counties since 1939. By itself, the community-owned utility is no threat to companies like Comcast, because it offers service in places the cable company won’t. But if REU partnered with other municipal providers and offered internet service in larger nearby towns and communities to achieve economy of scale and a more secure financial position, that is a competitive threat apparently so perilous that the telecom industry spent millions of lobbying dollars on state legislatures like the one in Tennessee to ghost-write legislation to discourage utilities like REU from getting into the broadband business, much less dare to compete directly with them. AT&T, Charter, and Comcast also fear how they will compete against municipal utilities that have successfully delivered electric service and maintained an excellent reputation in the community for decades.

Tennessee law is decidedly stacked in favor of AT&T, Charter, and Comcast and against municipal utilities. Although the state allows municipal providers to supply broadband, it can come only after satisfying a series of regulatory rules designed to protect commercial cable and phone companies. It also prohibits municipal providers from offering service outside of existing service areas. That leaves communities served by a for-profit, investor-owned utility out of luck, as well as residents in areas where a rural utility lacked adequate resources to supply broadband service on its own.

Haslam’s Broadband Accessibility Act cynically retained these restrictions and blockades, hampering the rural broadband expansion the law was supposed to address.

For several years, Sen. Janice Bowling (R-Coffee, Franklin, Grundy, Marion, Sequatchie, Van Buren and Warren Counties), has tried to cut one section of Tennessee’s broadband-related laws that prohibits municipal providers from offering service outside of their existing utility service area. Her proposed legislation would authorize municipalities to provide telecommunication service, including broadband service, either on its own or by joint venture or other business relationship with one or more third parties and in geographical areas that are inside and outside the electric plant’s service area.

In her sprawling State Senate District 16, a municipal provider already offers fiber broadband service, but Tennessee’s current protectionist laws prohibit LightTUBe from offering service to nearby towns where service is absent or severely lacking. That has left homes and businesses in her district at a major disadvantage economically.

Sen. Janice Bowling (R-Tenn.) discusses rural broadband challenges in her 16th district south of Nashville and her bill to help municipal utilities provide broadband service. (4:20)

“In rural Tennessee, if we have what is called an industrial park, and we have electricity, you have running water, you have some paved roads, but if you do not have access to fiber at this point, what you have is an electrified cow pasture with running water and walking trails. It is not an industrial park,” she complained, noting that the only reason her bill is prevented from becoming law is lobbying by the state’s cable and phone companies. “We can no longer leave the people of Tennessee hostage to profit margins of large corporations. We appreciate what they’re doing. We appreciate where they do it, but in rural Tennessee we will never meet their profit margins and so we can no longer be held hostage when we have the ability to help ourselves.”

Sen. Yager

Her sentiment in shared by many other Tennessee legislators who serve rural districts, and her Senate bill (and House companion bill) routinely receive little, if any, public opposition. But private lobbying by telecom industry lobbyists makes sure the bill never reaches the governor’s desk, usually dying in an obscure committee unlikely to attract media attention.

That reality is why residents of Roane County were meeting in a crowded room to get answers about why broadband still remained elusive after several years, despite the high-profile attention it seems to get in the legislature and governor’s office.

“‘It is a critical issue as I said. It is not a luxury. It is a necessity. I certainly understand your frustration,” responded Sen. Ken Yager. “This problem is so big I don’t think one person can do it alone, one entity. It’s going to have to have partnerships. One thing this bill encourages is for your co-ops to partner with one another to bring broadband in.”

The bill Sen. Yager refers to and endorsed at the meeting was written by Sen. Bowling. Sen. Yager must be very familiar with Bowling’s proposals, because she has appeared before the Senate Commerce & Labor Committee he belongs to year after year to promote it. On March 3, 2018, the bill failed again in a 4-3 vote. But unbeknownst to those in attendance at the public meeting, Sen. Yager himself delivered the fourth “no” vote that killed the bill.

Undeterred, Bowling promises to be back next year with the same bill language as before. Perhaps next time, voters will know who their friends are in the legislature, and who actually represents the interests of big corporate cable and phone companies.

Rep. Stefanik

Waiting for broadband companies to wire rural America could take forever, so a new bipartisan bill would reward motivated businesses and neighborhoods with refundable tax credits if they cover the costs of connecting to nearby providers themselves.

The Broadband for All Act (copy not yet available) would create a new tax credit of up to 75% for groups of two or more homeowners or businesses who agree to cover the cost of infrastructure to extend broadband service from any available provider to their homes and businesses. The bill was jointly introduced by Rep. Elise Stefanik (R-N.Y.) and Derek Kilmer (D-Wash.), who both serve rural districts where broadband availability has been a challenge for years.

Rep. Kilmer

In practice, many unserved Americans live within a mile or two of a service provider, unserved because their homes and businesses failed to offer a suitable Return On Investment (ROI) to wire for service. Would-be cable customers are often quoted prices of $15,000-30,000 to extend service into their neighborhoods — a price too high for most. The new bill would reduce the sting of such upfront costs by offering tax credits to help offset the expense. But it is still a lot of money, and the bill would likely benefit those with deeper pockets the most.

The tax refund would apply to any available technology, so each group can choose the best option that bridges the “last-mile” gap between their homes and businesses and the existing broadband service network.

A copy of the bill was not yet available. If the bill does not disqualify municipal or public broadband providers, it could prove useful in areas where public broadband construction is underway. Many of those projects carry significant up front connection fees to help defray network construction costs. If such costs were largely covered by tax credits, it could provide a significant boost to broadband uptake in rural communities.

While parts of rural Tennessee languish with little or no broadband service, the state’s electric cooperatives are jumping to deliver internet access over fiber optic cables after the governor eased restrictions written into state law on rural co-ops offering public broadband service.

After Gov. Bill Haslam (R) signed a bill in 2017 permitting not-for-profit electric co-ops to offer broadband service to their customer-members, at least seven of Tennessee’s 22 municipal co-ops almost immediately launched fiber to the home service projects that offer faster and more reliable service than many of the state’s phone companies that still offer DSL service (or nothing at all).

Offering broadband service is a win-win for small communities and the co-ops that serve them, because existing infrastructure already in place to provide electric service can be augmented with fiber optic cables to deliver phone, television, and internet service as well. Co-ops can also use the fiber infrastructure to manage smart electricity grids, which can better detect outages and offer useful power management tools.

Among some of the projects now underway:

• Tri-County Fiber Communications  of Lafayette, Tenn., serves more than 50,000 customers in rural Tennessee and Kentucky. Its fiber project will serve part of its current service area and is enrolling customers now who want to commit themselves as future customers and avoid a $1,500 installation fee.
• SVEConnect, providing electric service since 1939, will offer customers in seven counties starting internet speeds of 200 Mbps and up to 1 Gbps in 2018, along with phone and television service.
• Gibson Connect, operated by the Gibson Electric Membership Corporation, offers service to 39,000 homes and businesses in eight west Tennessee counties (Crockett, Dyer, Gibson, Haywood, Lake, Lauderdale, Obion and Madison) and four west Kentucky counties (Carlisle, Fulton, Graves and Hickman). Fiber broadband is planned to roll out gradually in many of these areas, and the co-op has already signed up 6,000 customers before service is even available. Gibson Connect will sell 100 Mbps internet for $49.95 and 1,000 Mbps service for $69.95 a month. Some customers in its service area are already served by other providers, but Gibson promises faster speeds, no data caps, and more affordable pricing.

The conservative and industry-backed groups that coordinated with the telecom industry to push Tennessee to pass restrictive laws effectively banning municipal or public broadband competition are grudgingly tolerating co-ops entering the broadband marketplace, as long as they only service areas where they won’t compete with an established phone or cable company. They also must remain within their electric service area.

Those opposed to public broadband claim the networks offer unfair competition because they often receive subsidies or grants. But many municipalities are doubly frustrated because the same companies that are lobbying to keep them out of the broadband business also refuse to provide service in their towns and villages. Many communities are too small or sparsely populated to provide enough Return On Investment (ROI) to entice those providers to expand, they add.

In areas where residents are quick to complain about government spending, many are strongly in favor of broadband development. Local officials have been told by frustrated residents, “if you do not provide the service, nobody else will.”

Despite the flourishing of fiber-fast broadband in areas served by co-ops, other parts of Tennessee remain broadband dead zones because the current state law continues to frustrate local communities trying to build financially feasible broadband projects that have a chance of breaking even. Tennessee’s Rep. Marsha Blackburn, who is running for a Senate seat this year, is notoriously one of the country’s biggest allies of AT&T, Comcast, and other telecom companies and favors keeping public broadband in shackles. She is also among the top recipients of campaign contributions from the telecom industry.