Phil Kerpen with Glenn Beck in 2009

A conservative pro-business group allied with the telecom industry run by a former top aide for the Koch Brothers is in the middle of a growing scandal over a flood of allegedly phony, identically worded messages opposing Net Neutrality sent to members of Congress.

Politico today reported Phil Kerpen’s group – American Commitment – claimed it had easily found a half-million Americans opposed to the Obama Administration’s support for Net Neutrality and helped funnel 1.6 million messages from them to members of the House and Senate.

But suspicious members of Congress quickly determined that many of the messages originated from constituents who had no memory of sending them and a firm hired to help process incoming e-mail for members of Congress warned many of the messages originated from questionable email addresses and “a vast majority of the emails do not appear to have a valid in-district address.”

The content of many of the emails was exactly the same, with a variant paragraph inserted in the middle opposing Net Neutrality for different reasons, all urging Congress to defund the Federal Communications Commission to prevent the agency from enforcing its new Net Neutrality policies.

When Rep. Jackie Speier (D-Calif.) noticed the majority of the anti Net Neutrality messages came from constituents that have never written her before, she quickly reached out to the senders to respond to their concerns. A few replied they had never signed up to send emails criticizing Net Neutrality. Lockheed Martin, which manages many of the email messages resulting from constituents clicking the “Contact Me” button on lawmakers’ websites, notified Congress they were suspicious about the authenticity of the emails as well, and had configured a filter to begin weeding them out.

American Commitment, which maintains close ties to the Koch Brothers, characterizes Net Neutrality as an “Obama Internet Takeover.”

“The idea that an outside group could use consumer data to impersonate constituents suggests an attempt to hijack the important feedback members of Congress need to truly represent their districts,” Speier said in a statement. “This is identity theft, but instead of impersonating for financial gain, the originators of this theft are striking at the heart of our representative democracy.”

Kerpen maintains close ties to several Koch Brother-funded, pro-corporate astroturf groups. His former work opposing Net Neutrality with Americans for Prosperity, almost entirely funded by Koch Industries, mirrors his continued opposition today.

As early as 2009, Stop the Cap! tangled with Kerpen and Americans for Prosperity after Kerpen appeared on Glenn Beck’s program attacking Net Neutrality. Kerpen nodded in agreement as Beck offered that Net Neutrality represented a joint Marxist and Maoist plot to take over the Internet on behalf of the Obama Administration. Stop the Cap! has repeatedly asked Americans for Prosperity to disclose their donor list, but Kerpen has consistently refused, even after the Sunlight Foundation detailed ties the group maintains with other Koch efforts.

Kerpen’s group pre-wrote most of the letters it sent to the FCC. A writer was offered a variant where an extra paragraph would appear at the point indicated expressing one of several views across the political spectrum. Those were pre-written as well.

In his new position at American Commitment, Kerpen’s group generated the majority of responses received during the FCC’s second round accepting comments about Net Neutrality. To evade Congress’ ability to sniff out a form letter writing campaign, American Commitment went over the top, designing its form letters with at least 30 different comment variants, many offering wildly different reasons why Net Neutrality was bad for America. When the final letter was created, it appeared original until groups like the Sunlight Foundation discovered nearly exact copies of the different variants ostensibly coming from different writers.

For example, Joe Smith could oppose Net Neutrality because it violates personal freedom — a common conservative view and Marsha Smith could oppose it because it would hurt small co-ops and municipal providers — likely a left-leaning view, but both letters were pre-written by Kerpen’s group. One telltale sign of Kerpen’s involvement is his relentless personal loathing of Robert McChesney, who helped found the consumer group Free Press. Kerpen can’t help himself routinely, almost reflexively accusing McChesney of being a Marxist, extreme leftist, or outright communist. His personal views show up in one of American Commitment’s letter variants:

The ideological leader of the angry liberals calling for you to reduce the Internet to a public utility is Robert McChesney, the avowed Marxist founder of the socialist group Free Press. In an interview with SocialistProject.ca, McChesney said: “What we want to have in the U.S. and in every society is an Internet that is not private property, but a public utility…At the moment, the battle over network neutrality is not to completely eliminate the telephone and cable companies. We are not at that point yet. But the ultimate goal is to get rid of the media capitalists in the phone and cable companies and to divest them from control.” In a country of over 300 million people, even an extremist like McChesney can find, perhaps, millions of followers. But you should know better than to listen to them.

Politico asked Kerpen about the matter and he denied impersonating the alleged letter writers and suggested some other group borrowed American Commitment’s idea and potentially ran too far with it.

“We’re aware that other groups used identical language in their campaigns and we cannot speak to those efforts,” Kerpen said. “We verified our data through postal address verification and follow up phone calls. We stand by our campaign and Congress should work to stop President [Barack] Obama’s plan to regulate the Internet at the request of these constituents.”

Kerpen also continued his refusal to disclose what corporations are paying to keep the lights on at American Commitment. No matter, the Sunlight Foundation triangulated donor data and discovered much of the money comes from Koch-affiliated political organizations. Another significant donor is the National Cable & Telecommunications Association, the nation’s biggest cable lobbyist and fierce Net Neutrality opponent.

Walden

When a group advocating broad-based deregulation and less government suddenly takes a laser-focused, almost obsessive interest in a subject like Internet Net Neutrality, it rarely happens for free.

Randolph May’s Free State Foundation claims to be a non-profit, nonpartisan think tank to promote the free market, limited government, and rule of law principles. But in fact it primarily promotes the corporate interests of some of the group’s biggest financial backers, which include the wireless and cable industry.

Rep. Greg Walden (R-Ore.), no stranger to big checks from cable companies himself, was in friendly territory at the group’s annual Telecom Policy Conference, a largely consumer-free affair, where he served as keynote speaker. Walden used the occasion to announce a solution to the Net Neutrality problem — defunding the FCC sufficiently to make sure it can never enforce the policy.

Walden, ignoring four million Americans who submitted comments almost entirely in favor of Net Neutrality, said the idea of the FCC overseeing an open and free Internet represented “regulatory overreach that will hurt consumers.”

Big Telecom Funded

Walden serves as chairman of the House Subcommittee on Communications and Technology. Walden told the audience he will be spending his time in Congress taking a hard look at the FCC, its budget request, and its policies after Net Neutrality became official FCC policy. Walden’s plans to punish the agency include a limit on FCC appropriations, making enforcement of Net Neutrality more difficult, if not impossible. Longer term, he hopes to bleed the agency dry by depriving it of resources to manage its regulatory mandate.

Walden’s third largest contributor is Comcast. He also receives significant financial support from the American Cable Association and Cox Cable. He spoke to a group that depends heavily on contributions from the same telecom industry Walden’s campaign coffer does.

According to tax filings by two cable and wireless lobbying groups, the Free State Foundation has cashed almost a half a million dollars in checks written by the groups in the last five years. The National Cable and Telecommunications Association (NCTA) paid FSF $280,000. The wireless lobby, represented by CTIA-The Wireless Association, managed $213,000 in contributions. These two groups are likely among FSF’s most substantial donors.

In 2012, Free State Foundation reported a total of $797,500 in contributions. After Stop the Cap! and other groups began reporting on the connection between the Free State Foundation’s agenda and its Big Telecom sponsors, the group began hiding its donor list. That earned FSF an “F” for donor transparency by PCWorld.

[flv]http://www.phillipdampier.com/video/Free State Foundation Seventh Annual Telecom Policy Conference March 2015.mp4[/flv]

Rep. Greg Walden (R-Ore.) delivered the keynote address at the 7th Annual Telecom Policy Conference of the Free State Foundation. Despite receiving nearly a half million dollars in contributions from the cable and wireless lobbies, the group did not think to invest in a tripod to keep the camera steady. (38:42)

Phillip “It isn’t so dumb to own the pipes” Dampier

In 2006, AT&T CEO Ed Whitacre thought his company was at a disadvantage being stuck with “dumb pipes” while Google, Yahoo! (remember them?) and Vonage couldn’t count their earnings fast enough. While AT&T sold consumers plain DSL service, content was king on Wall Street and Whitacre groused it was unfair for bandwidth hogs to use “the pipes for free.” That one statement was the equivalent of throwing a lit match on a hillside in Malibu Canyon and a predictable firestorm over Net Neutrality ensued.

Nine years later, Net Neutrality is now official FCC policy, although the sour grape-eating Republicans will continue to throw Congressional hissyfits along the way. While they rely on tissue-thin evidence to back their assertion the FCC secretly colluded with the Obama Administration to stick it to AT&T and demand its repeal, the future of Net Neutrality will more likely be decided in a courtroom a year or two from now.

Back in 2006 AT&T primarily sold DSL service and was looking for cash to finance its then emerging U-verse platform. AT&T planned to follow cable’s lead, devoting most of the available bandwidth on its fiber to the neighborhood network to cable television programming. Broadband speeds were limited to just under 25Mbps — even less if a large household had multiple television sets in use.

But as the Great Recession arrived and wages stagnated, the cost of what used to be a “must-have” service for most Americans increasingly began to exceed the household budget and the day finally arrived when cable companies started losing more television customers than they were adding. Even worse, cable programming costs continue to spiral upwards and no major cable company can increase cable television rates fast enough to support the usual profit margin the industry counted on.

What Whitacre failed to realize nine years earlier is that broadband providers did not simply own “dumb pipes.” AT&T, Comcast, Verizon, Time Warner Cable, Charter and other providers actually occupy two gilded catbird seats, with AT&T and Verizon dominating the wireless Internet business and Comcast, Time Warner, and Charter dominating at-home viewing and wired broadband. Lawmakers who deregulated both industries predicted pitting AT&T against Comcast or Verizon against Time Warner Cable would create competition not seen since Coke vs. Pepsi. Consumers would benefit and world-class service would result.

Instead, Time Warner Cable now sells Verizon Wireless phone service. Verizon gave up on expanding its FiOS network and is selling off its DSL and FiOS business in pieces to focus on its best moneymaker, Verizon Wireless. Comcast in turn threw in the towel on any notion of offering competing cellular service and, in fact, sold its acquired wireless spectrum to Verizon.

PlayStation Vue’s lineup

The best way to make money is to avoid price wars with your competitors and the evidence shows there is growing peace in America’s Telecom Valley. Comcast can now raise your broadband bill because, for most, Verizon FiOS isn’t an option. AT&T U-verse does not have to hurry speed upgrades to customers if Time Warner Cable delivers no better than 50/5Mbps service in large parts of its service area. Google Fiber remains a minor threat, only available in a handful of cities. AT&T distributed more copies of its press release touting U-verse Gigapower — its gigabit Internet offering — than there are customers qualified to sign up.

Notice that we’ve drifted away from talking about cable television programming. So has the industry, now increasingly dependent on broadband rate increases to make up the difference in revenue they used to take home from their television packages.

But now that the biggest players have a predictable source of revenue, allowing disruptors to further challenge earnings isn’t something your local cable and phone company will allow for long. At the moment, those most likely to cause problems are the growing number of “over the top” streaming video services that do not require a cable television subscription to watch. But they do need broadband — Whitacre’s “dumb pipes” — to reach subscribers. To manage that, services like Apple, PlayStation Vue and Sling TV and their customers must deal with the gatekeepers — AT&T, Comcast, Time Warner Cable, Verizon and others.

What Whitacre thought was a disadvantage is now becoming the best thing in the world — manning a toll booth on the only two roads most Americans can use to access online content.

Today, Sony officially launched its Internet-TV service, “PlayStation Vue” in three cities (New York, Chicago and Philadelphia) with a base price of $49.99/month. In includes more than 50 cable networks and in the three launch cities — local network affiliates. In Chicago and Philadelphia, where Comcast provides cable service, potential customers will need to pay $50 a month for Vue and another $64.95 a month for 50Mbps broadband — the least expensive broadband-only tier that is suitable for high quality viewing. Your combined bill for both services is $114.94 a month. Comcast charges $99.99 a month for its double play – 220 TV channels and 50Mbps broadband — almost $15 a month less for its package, and it includes around 150 more channels than Vue.

Comcast explains its new usage caps.

But Comcast also has another weapon it is testing is several of its markets — the resumption of usage caps and overlimit fees on its broadband service. Comcast customers in most test markets are given 300GB a month, after which they face overlimit fees of $10 for each additional increment of 50GB. While web browsing and e-mail fit more than comfortably within those caps, watching HD video may not. That leaves a potential Vue customer with a major dilemma. Should they pay $15 a month more for service than they can pay Comcast for a better package -and- chew away their usage allowance using it?

Comcast has yet to figure out how to install a coin collector on top of your television set, so you can watch as much Comcast cable television as you’d like. But watching streaming video could get very expensive if it exceeds a future Comcast usage allowance.

Smaller video packages from providers like Sling TV or the forthcoming Apple streaming service might make more sense, but will still be subject to Comcast’s usage caps if/when they are reintroduced around the country, while Comcast’s own television service will not.

This is why cable and phone companies hold enormous power over their potential competitors, even if Net Neutrality is fiercely enforced. Usage caps and usage-based billing represent an end run around Net Neutrality and both are permitted. The FCC has consistently refused to engage on the issue of broadband usage caps, leaving providers with a useful weapon to deter customers from dropping their television package in favor of an online alternative.

With most Americans having a choice of only one or two “dumb pipes” over which they can reach these services, being an owner of those pipes and getting to set the rates and conditions to use them is a very comfortable (and profitable) place to be.

Wheeler at this morning’s hearing.

Revenge-seeking Republicans spent more than two hours this morning grilling the chairman of the Federal Communications Commission, Thomas Wheeler, in the first of five Congressional hearings on the agency to be held over the next two weeks.

Rep. Jason Chaffetz (R-Utah), chairman of the House Oversight and Government Reform Committee, accused the FCC of a lack of transparency regarding the recent release of Net Neutrality rules that universally ban paid fast lanes and revenue-based traffic management. Republicans accused the Obama Administration of secretly pressuring Wheeler to adopt strong Open Internet protections.

“The lack of transparency surrounding the open Internet rule-making process raises a lot of questions,” said Chaffetz.

Chaffetz, most of his Republican colleagues, and many large telecom companies object to the Net Neutrality rules and suggest Wheeler’s rumored original lighter-touch “hybrid approach” was swamped by White House objections and replaced with a much stronger Open Internet policy framed around Title II reclassification of broadband as a telecommunications service at the urging of the administration.

Chaffetz dismissed comments from four million Americans writing the FCC in favor of Net Neutrality claiming the writers did not recommend Title II reclassification of broadband, despite the fact many suggested exactly that.

To bolster Republican arguments that President Obama exercised undue influence on an independent agency, Chaffetz’s committee selectively released portions of now-unredacted email exchanges between Wheeler, agency officials, Congress, and the White House. It also included a partial e-mail exchange involving AT&T’s top lobbyist, Jim Cicconi, who is evidently on a first-name basis with some of the FCC’s highest officials, including Wheeler’s senior counselor, Philip Verveer.

In response to a November 10 news release featuring comments from FCC chairman Wheeler in response to President Barack Obama’s statements of support for strong Net Neutrality, Cicconi sent a concerned email to Wheeler’s office the Republicans chose not to disclose. But they did include Verveer’s response:

Jim,

We’re trying to schedule a conversation about this morning’s developments for some time this afternoon. I hope we’re able to connect.

Phil

In response to that, Cicconi fired off this quick response from his iPad:

I hope so too.

Now I at least understand why you pushed the hybrid.

This is awful. And bad for any semblance of agency independence too.

Too many people saw Zients going in to meet with Tom last week.

Cicconi is referring to Jeff Zients, a White House economic adviser, who met with Wheeler on Nov. 6. In Cicconi’s mind, and by extension the Republicans at today’s House hearing, that meeting represented “undue pressure from the White House.”

Republicans also attempted to prove the FCC and the White House closely collaborated on a rollout of Net Neutrality using an email from an irritated Wheeler to his senior staff shortly after his driveway was blocked by Net Neutrality activists:

FYI, Isn’t it interesting:

1. The day of the demonstration just happens to be the day folks take action at my house.
2. The video of [President Obama] just happens to end up on the same message as the video from [the president].
3. The White House sends this email to their supporter list asking “pass this on to anyone who cares about saving the Internet.”

Hmmm….

Chaffetz

But Wheeler’s message suggests he was never aware of the White House’s campaign to bolster Net Neutrality, much less a part of it.

A third email from then Sen. Majority Leader Harry Reid’s office revealed the senator was no fan of Title II reclassification of broadband to protect Net Neutrality. David Krone, Reid’s chief of staff, lectured Wheeler about keeping strong Net Neutrality off the table because it creates “problems for us.”

In May 2014, chairman Wheeler announced his plans for a hybrid approach to Net Neutrality that would likely combine bans on censorship with permission for Internet providers to set up paid fast lanes for content producers like Netflix.

Initial media reports of Wheeler’s intentions sparked a major backlash against the proposal among Net Neutrality advocates.

In a May 15, 2014 email exchange with Wheeler, Krone attempted to buck up Wheeler and his “third way” Net Neutrality plan once in the morning before it was announced and later that evening after the proposal took heavy fire in the press.

9:26 am (Krone to Wheeler)

Good luck today.

Not sure how things have landed but I trust you to make it work. Please shout if you need anything.

Spoke again with the [White House] and told them to back off Title II. Went through once again the problems it creates for us.

6:15pm (Krone to Wheeler)

Too funny. I literally just watched your remarks from this morning. Spot on. Thank you!!!

P.S. Zients was definitely reacting to press reports. Or, should I say, overreacting. My main point to the [White House] is how can you declare today that regulations written in the 1930’s will work fine for 2014 technology. Let Tom do his job and this will be fine.

Another email exchange between Wheeler and John Podesta, counselor to the president, referenced a New York Times story that signaled Wheeler was backpedaling on Net Neutrality, a story later proven inaccurate.

At this morning’s hearing, Wheeler pushed back against the Republican accusations.

“There were no secret instructions from the White House,” Wheeler said. “I did not, as CEO of an independent agency, feel obligated to follow the president’s recommendation.”

C-SPAN carried this morning’s hearing with FCC chairman Thomas Wheeler appearing before the House Oversight and Government Reform Committee. (2 hours, 41 minutes)