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FCC Panel Recommends Taxing Websites and Giving the Proceeds to Big Telecom Companies

The telecom industry wants a new tax on broadband services to pay for rural broadband expansion.

Nearly two years after FCC Chairman Ajit Pai announced the formation of a new federal advisory committee on broadband development, the telecom industry-stacked panel has recommended implementing a new tax on websites and online subscription services like Netflix, Hulu, and Amazon Prime Video and turning over the proceeds to many of the same companies dominating the Committee.

The proposal is part of a large set of recommendations from the Broadband Deployment Advisory Committee (BDAC) designed to promote and streamline broadband expansion, especially in rural areas. If adopted by the states, the new tax would create a large broadband deployment fund that could be accessed by telecommunications companies like AT&T and Comcast to expand service without having to pay back the funds or give up part ownership of the taxpayer-funded expansion.

What caught many by surprise was the sweeping impact the new tax could have on the internet economy, because online businesses, streaming services, and even many website owners could be subject to the tax, if enacted:

Entities that financially benefit from access to a broadband system located in the state, including advertising providers, shall contribute to the Broadband Deployment Fund.

A comprehensive piece by Jon Brodkin on Ars Technica points out defining the meaning of “entities” and “advertising providers” will be crucial to determine who will have to pay the tax and who won’t:

Article 11 of the BDAC’s model state code would create a Rural Broadband Deployment Assistance Fund, paid for by contributions from broadband providers and “Broadband Dependent Services.”

The definition of “Broadband Dependent Services” is where things get interesting. An earlier version of that definition—available in this document—reads as follows:

“Broadband Dependent Service” means a subscription-based retail service for which consumers pay a one time or recurring fee which requires the capabilities of the Broadband Service which the consumer has purchased and shall also include entities that financially benefit from access to a broadband system located in the state, including advertising providers.

The BDAC met on December 7 and pared that definition back a bit to exclude “entities that financially benefit from access to a broadband system.” Video is available here; the discussion on the definition starts around 2:04:45.

BDAC Chair Elizabeth Bowles, who also runs an Arkansas-based wireless Internet service provider called Aristotle, expressed concern that the original version of the definition “was including every small business in America,” potentially forcing them all to pay the new tax.

Nurse

AT&T has been one of the strongest advocates for the new tax, and argued it should be as expansive as possible.

“It basically is everybody [that should be taxed] because this is a societal objective,” said Chris Nurse, assistant vice president for state legislative and regulatory affairs at AT&T. “Universal service is a societal objective. We want to spread that $20 or $30 billion burden more broadly so the tax is low on everybody.”

Google Fiber policy chief John Burchett objected, claiming under AT&T’s vision, everyone who has an internet connection would be taxed. In his view, AT&T’s proposal was “absurd.”

As the debate raged on, it became clear AT&T was once again looking for a way to be compensated by companies like Amazon and Facebook — using its ‘pipes’ without contributing towards the cost of the network.

“Who are we cutting out and who are we leaving in?” Nurse asked. “Today it’s basically the telephone companies [who pay] and not Google and not Amazon and not Facebook, right? And they’re gigantic beneficiaries from the broadband ecosystem. Should they contribute or not? Someone has to pay.”

Burchett

In the end, the BDAC settled on adopting a compromise over what broadband entities will be subject to the new tax:

“Broadband Dependent Service” means a subscription-based retail service for which consumers pay a one time or recurring fee, and shall also include advertising-supported services which requires the capabilities of the Broadband Service which the consumer has purchased.

This compromise definition primarily targets the new tax on streaming video services — the ones AT&T itself competes with. But it will also cover any websites sponsored with online advertising — like Facebook and Google, ISPs, subscription services delivered over the internet, as well as AT&T’s broadband competitors.

The proposal also seeks to guarantee that rural residents be granted access to affordable broadband, but the industry-dominated Committee chose to define “affordable” as the cost of internet access in urban areas, which some would argue isn’t affordable at all.

The draft proposal has been criticized by many stakeholders, including the National Rural Electric Cooperative Association, representing electric cooperatives. The group implied the new proposal was just the latest attempt to get the telecom industry’s wish list enacted.

“Instead of focusing on solutions for unserved and underserved rural communities, many of the recommendations focus on issues specific to urban areas where broadband is already available,” said NRECA CEO Jim Matheson. “Ignoring the precedent of federal law and laws in 20 states, the state model code would treat co-op poles like those belonging to large investor-owned utilities. The state model code would also cap pole attachment rates in state statute, effectively making those rates permanent. This code, in effect, increases regulatory burdens while giving co-ops less time and less money to comply with those regulations.”

The National Multifamily Housing Council also objected to another proposal approved in the draft.

“Article 8 of the MSC grants broadband providers the unilateral right to install facilities in all multifamily residential and other commercial buildings and mandate construction of broadband facilities at the property owner’s expense without regard to the rights and concerns of the owner,” the organization claimed. “NMHC/NAA and its real estate industry partners argued that Article 8 of the MSC is riddled with many practical and legal problems. Among the most serious issues with the MSC is that it interferes with private property rights, disrupts negotiations and existing contracts between property owners and communications service providers and will lead to costly regulation and litigation at the state level without any assurance of actually spurring broadband deployment.”

AT&T would be among the biggest beneficiaries of the tax fund, already receiving $428 million annually from another rural broadband fund to expand wireless internet access in rural areas. If Nurse’s predictions are correct, the tax could collect $20-30 billion, far more than has ever been spent on rural broadband before.

Liccardo

Critics also contend the BDAC’s industry-friendly proposals are predictable for a Committee created by FCC Chairman Ajit Pai and well-stacked with telecom industry executives and lobbyists. The former head of the BDAC was arrested by the FBI on fraud charges, and San Jose Mayor Sam Liccardo quit the Committee in January, writing, “the industry-heavy makeup of BDAC will simply relegate the body to being a vehicle for advancing the interests of the telecommunications industry over those of the public” in his letter of resignation.

Whatever the BDAC ultimately decides, the final proposal has a long road to travel before becoming law. Each state can choose to adopt the proposal, part of it, or none of it. In the end, it is just a “model code” for states to consider. But it will be part of the argument made by the telecom industry that laws must be streamlined to prevent delays in deploying service, and that those benefiting from broadband should cover more of the costs to provide it.

Ironically, the person most likely to be embarrassed by the model code could be FCC Chairman Ajit Pai, who has almost universally rejected new taxes and fees on broadband services. But his approval is not required to advance the argument and the model code to the states, where the telecom industry’s lobbyists are waiting to begin advocating the passage of new state laws enacting its recommendations.

The Return of Court TV: Law and Order Networks Struggle to Gain Carriage

Phillip Dampier December 11, 2018 Competition, Consumer News, Online Video, Video No Comments

In the era of cord-cutting, getting a new, independently owned cable network on cable lineups can be an exercise in futility.

With most new channel additions coming as part of renewal agreements with major cable network owners or sports teams, launching a new 24-hour cable network and getting it on the lineup has never been so difficult. That isn’t stopping a relaunch of Court TV — a well-known former cable network that literally burned its logo into some television sets that were reliably tuned to coverage of the murder trial of O.J. Simpson, which ran from January-October, 1995.

“Court TV was a top-20 cable network and at the height of its popularity when the network was taken off the air in 2008,” said Jonathan Katz, CEO of Katz Networks. “Today, while consumer interest in the real-life drama of true-crime programming is at an all-time high, there is no dedicated daily court coverage on television. We expect the new Court TV to fill that void on cable, satellite, over-the-air and over-the-top.”

A promotional video for Court TV, returning in May, 2019 (0:44)

Katz Networks, a division of E.W. Scripps Co., has acquired the rights to the Court TV name and other intellectual property from its old owner, Time Warner (Entertainment). That includes over 100,000 hours of pre-recorded programming and trial coverage in the Court TV archives. The new venture has hired Vinnie Politan, a former Court TV presenter, as its lead anchor. The new Court TV has also hired back some of its old employees who either left the network or transitioned to its replacement – Tru TV.

The new Court TV will run 24 hours a day, everyday, and is expected to concentrate on live coverage of high-profile trials.

The thought of bringing back Court TV has not been enough to attract much attention from the cable industry. When the network launches in May 2019, it is expected to achieve coverage in 25% of cable homes at best. Most viewers will be able to watch Court TV as a digital subchannel offered by a local over-the-air station. Katz already specializes in running digital sub-networks, including Bounce (African-American targeted channel) and Laff (comedy).

Multichannel News reports several station owner groups will carry Court TV, giving it coverage of about half the country at launch:

Dan Abrams hosting a show on the Law & Crime Trial Network

Tribune Broadcasting will carry Court TV in 22 markets, including New York; Los Angeles; Chicago; Philadelphia; Dallas-Fort Worth; Houston; Miami-Fort Lauderdale; Denver; St. Louis; Seattle-Tacoma, Washington; and Sacramento, Calif.

Eight Scripps markets will carry Court TV, including Tampa, Fla.; Detroit; Cleveland; Cincinnati; Las Vegas; Tulsa, Okla.; Green Bay, Wis. and Tucson, Ariz.

Entravision Communications’ 10 Court TV markets include Boston; Orlando, Fla. and Wichita, Kan.

Univision Communications will carry the network in San Antonio; Albuquerque, N.M. and Bakersfield, Calif.

Citadel Communications will air Court TV in Providence, R.I.

Court TV already has at least one minor competitor. Dan Abrams, a former well-known Court TV personality who now hosts the popular A&E show Live PD, also runs the Law & Crime Trial Network, which relies primarily on live video streaming online to attract viewers. While the network has garnered little attention since it began streaming multiple feeds of live trial coverage over its website, YouTube, and Facebook Live, it did attract A+E Networks, which announced its involvement in the project in March, 2018.

Like Court TV, Abrams’ Law & Crime depends on live trial coverage during the day and analysis and documentary-style programming at night. So far, it is free to watch. Its future may be overshadowed by the higher profile return of Court TV, however, unless A+E bundles it into its suite of networks offered to cable and satellite providers.

Dan Abrams pitches his Law & Crime Trial Network to potential partners. (1:29)

Spectrum Strikers Launch Website to Teach Consumers How to Cut Cable’s Cord

Phillip Dampier December 10, 2018 Charter Spectrum, Competition, Consumer News, Online Video, Video 2 Comments

A new union-sponsored website promises consumers they can find a better deal with a different video provider.

(Courtesy: Cut the Cord on Spectrum)

Many of the more than 1,800 Charter/Spectrum workers in the New York City area, on strike since early 2017, have teamed up in a new campaign to encourage customers to cut cable’s cord and disconnect service.

“We all know a typical cable/internet bill with Spectrum runs about $164 – 194 (can’t forget those equipment rental fees, DVR fees & random bill increases!),” the Cut the Cord on Spectrum website says. “By cutting the cord on Spectrum and signing up for streaming services – many of which offer Live TV options including all your favorite cable network and sports channels – you can cut your bill down to as low as $57.99/month!”

The website offers basic advice on alternative providers that stream video programming over the internet, including general pricing and included features. The website implies choosing any other provider is probably better than sticking with Spectrum.

“Spectrum customers – along with the N.Y. Attorney General’s office – have a long list of gripes with Spectrum Cable,” the site claims. “With an income over $490 million and CEO Tom Rutledge earning a salary of $98.5 million, it’s clear that Spectrum Cable is fleecing its customers, overcharging for horrible service while raking in huge profits.”

The International Brotherhood of Electrical Workers Local 3 is behind the latest digital effort to make life difficult for Charter Communications. The union plans to spend “tens of thousands of dollars” on online ads targeting zip codes where Spectrum provides cable service, according to union officials.

The union is getting significant support from politicians downstate, including New York Gov. Andrew Cuomo, who blasted Charter at a well-attended union rally in front of Charter’s headquarters on Wednesday in Manhattan.

“[Spectrum’s] CEO in 2016 made $100 million. The COO of Charter Spectrum, $50 million. The company made $15 billion,” Cuomo told the audience. “How dare you abuse the hardworking men and women that built that company and put the money in your pocket?”

The governor also continued his ongoing attack on NY1 – Spectrum News, a company-owned 24-hour news channel. Many union-supporting politicians have refused to appear on NY1, accusing the channel of bias.

“You want to know what’s interesting about their news organization? It has a very selective memory, their news organization,” Cuomo said. “You know what their news organization never covered? The fact that the state of New York is trying to take away their franchise and kick them out of New York. You know what their news organization failed to cover? The fact that 2,000 Local 3 members were kicked to the street and they’re rallying for two years for fairness and decency.”

Gov. Andrew Cuomo blasted Charter Spectrum at a rally held Wednesday in front of Spectrum’s corporate headquarters in New York City. (15:19)

 

DirecTV’s Crazy December Customer Retention Deals Can Save You $90+ a Month

Phillip Dampier December 4, 2018 Competition, Consumer News, DirecTV, Online Video 2 Comments

AT&T is responding to its deepening losses of satellite television customers by slashing prices for those threatening to leave by as much as $90 a month and throwing in Visa debit cards worth up to $300 if customers agree to stay.

AT&T lost at least 346,000 subscribers during the last quarter and is on track to break an all-time record of subscriber losses, primarily attributed to cord-cutting.

When Stop the Cap! readers called to cancel, they shared stories of outrageous discounts available to anyone willing to spend a few minutes on the phone to ask, including slashed pricing, discounted or free channel upgrades, and equipment improvements. Some customers are now paying as little as $5 a month after the discounts were combined.

“It’s ridiculous,” said Stop the Cap! reader Dylan Marshall. “My old promotion recently expired and I called to threaten them with cancellation and they cut my bill by $90 a month for a year, which means my video package is costing me $15 a month. Then they offered me a free year of NFL Sunday Ticket, a $200 Visa debit card, and every premium movie channel available for three months at no charge!”

“I got $70 off my package after my credits expired last summer,” said Sandra Bizek. “It is always such a hassle to call in every year to argue with them, but they were very receptive this year. I almost thought I was being greedy when I also asked them about a gift card, which they usually won’t offer. They put you on hold and then come back and offer one. I got $100, but I know others were offered $200-300, depending on how long they have been a customer.”

It is easiest to score a good promotion if you do not already have one on your account, but it is possible for everyone — even customers still under contract — to get a better deal. One customer negotiated $25 off a month in early 2018. He had to surrender that credit, but in return his new bill will be $85 less.

Are you overpaying for AT&T’s DirecTV?

“They don’t even argue with you anymore,” said Narash, another Stop the Cap! reader. “Within two minutes he gave me $70 off my video package and then he found another $20 credit a month he could add, making my multi-hundred TV channel package about $5 a month. I couldn’t understand the guy very well and I think he thought I was hesitating to accept his offer so he also came up with a $300 Visa gift card out of the blue. I said ‘yes.’ Oh wow.”

Here is how to get your discount:

  1. Start by calling (978) 890-3027. This is DirecTV’s customer retention center in Massachusetts. If your account is combined with your AT&T wireless phone and you are billed by AT&T, they may have to transfer your call to a different call center. You can also try DirecTV’s general customer assistance number – 1-800-531-5000 and say “cancel service” when the auto-attendant answers. Answer “no” to the question about moving.
  2. When the representative answers, let them know you are planning to cancel DirecTV because you have a better offer from another provider (try to research an offer from a competitor that would generally interest you and be ready to discuss it). Add that you wanted to give them the opportunity to save your business by lowering your bill and enhancing the services you now get.
  3. You will be placed on hold as a representative reviews your account and any retention offers you are qualified to receive. Pay careful attention to the length of the discounts and any terms that might lock you into a contract. If you do not like what you hear, thank them for their time and call back. The next deal may be much more lucrative.

Our readers offered some important tips to maximize your savings:

  1. Print out your current bill so you understand exactly what you are paying for services now. If a representative tries to get you to remove services to lower your bill, let them know you can keep the same services and lower your bill with one of their competitors.
  2. Explain to the representative that you wish to cancel service because it costs too much and you are considering switching to a provider like YouTube TV or Hulu. Avoid mentioning DirecTV Now, which is also owned by AT&T.
  3. Do NOT simply accept the first offer made to you. When they try to lock you in, prevaricate. Ask, “is this really the best you can do?” and remind the representative you can create your own package of just the channels you want from one of their online streaming competitors like YouTube TV. You really want the lowest possible price, so could they please check one more time.
  4. When you are satisfied you have gotten the best possible deal, ask them about the availability of a gift card that you have heard about others getting, to compensate for the months you paid for channels you are not really watching. You may be able to get that as well, typically in amounts ranging from $100-300. But do not make it a dealbreaker and be sure it does not lock you into a long term contract.
  5. If a representative offers you nothing or seems uninterested in assisting, thank them and hang up and call right back. During high call volumes, regular representatives may be taking cancellation calls instead of customer retention specialists who are trained to offer the best deals to keep your business.

If you called for a better deal, let us know in the comment section what you were offered.

Canadian Netflix Rate Increase: Up $3 to $13.99/Month for Standard Plan

Phillip Dampier November 29, 2018 Canada, Competition, Consumer News, Online Video No Comments

Canadian Netflix subscribers will pay up to $3 more a month in the coming weeks for streaming video as the company raises prices to produce more original Canadian content.

The latest rate increase is the largest ever for the service in Canada.

New Rates for Netflix Canada

  • Netflix Basic increases $1 to $9.99 a month. No 4K video and one-stream only
  • Netflix Standard increases $3 to $13.99 a month. No 4K video and up to two streams at a time viewing
  • Netflix Premium increases $3 to $16.99 a month. Includes 4K ultra HD video and up to four streams at a time viewing

The new rates take effect today for new customers. Existing customers will be notified by e-mail about the rate increase and when exactly it will be applied to their account.

Netflix Canada has taken over distribution of the long running mockumentary filmed in Nova Scotia.

The last rate increase in 2016 raised the price of Netflix by $1.

Netflix Canada spent $3.3 billion on original content in 2017. That is more than any of Canada’s English language commercial networks or broadcasters spent on scripted productions. Netflix also films many of its original productions in Canada, which is less expensive than many American filming locations.

Netflix Canada appears to have found a formula that works for the streaming service: participating in co-productions with entities like the CBC (at least for English productions) and asking subscribers to pay more to cover the company’s costs. This has spared Netflix from having its service subject to the federal GST, which would come out of subscribers’ pockets.

The company has had a much more difficult time dealing with the provincial government in Quebec, which protested loudly that Netflix Canada failed to make specific French language content commitments. As a result, Quebec has slapped its 9.975% sales tax on Netflix and all other streaming services.

Canada is gradually catching up to the United States in cord-cutting options. Netflix Canada’s offering is just a few hundred titles behind Netflix’s catalogs in the United States and Japan.

Other services have entered Canada in the last year or so, including CBS’ All Access, Acorn TV, and BritBox.

In response, Canadian broadcasters and telecom companies are beefing up their own services, which include CTV Movies/CTV Vault and Citytv Now/FX Now (which are only for authenticated cable/satellite subscribers) and Bell’s Crave TV (which just launched CraveTV+, offering more movies and original HBO shows).

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Recent Comments:

  • Dylan: Look at their prices. Absolutely ludicrous compared to many companies, especially Charter Spectrum. I pay $60 a month for 100/10 with unlimited data. ...
  • Paul Houle: For a long time communities have been frustrated in that they don't have any power to negotiate with cable companies. This town refused to enter into...
  • Ian S Littman: To be fair, you aren't wrong. Spectrum likely knows it won't have any competition for years in Lamar, so they'll quickly get take rates of >70% (re...
  • Ian S Littman: Are you in an area that can even get Spectrum service? Because in areas where they actually have to compete, they're actually pretty decent now. Yes,...
  • Ian S Littman: A more odd entry in that list is Chattanooga. The entire area has FTTH via EPB. Yet apparently folks can't swing the $57/mo starting price for 100 Mbp...
  • Ian S Littman: The issue here is that the NY PSC's threats have no teeth because, well, who will take over the cable systems if Spectrum is forced to sell? Either Al...
  • Bill Callahan: Phil, National Digital Inclusion Alliance just published interactive Census tract maps for the entire US based on the same ACS data. Two datapoints a...
  • Carl Moore: The idiots that run the cable companies must be also using drugs...a lot of people are cutting their cable services because of the higher rate and inc...
  • EJ: This will require a New Deal approach. Municipals need the ability to either be granted money or loaned money for broadband expansion. Until this is d...
  • Bob: I also got $1 increase for my 100/10 internet from Spectrum. A rep said it's for the speed increase that's coming in 2019. I complained that I was pro...
  • EJ: It makes sense to focus on wireless considering the government contract they have. The strange thing is they referenced fixed wireless in this article...
  • nick: Interesting how they conveniently leave out (Spectrum TV Choice) streaming service which is also $30/mo ($25/mo for the first 2 years)....

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