Pulling the wool over your eyes.

As the Federal Communications Commission continues to consider AT&T’s proposal to abandon its wired infrastructure in rural service areas, hundreds of comments are arriving at the federal agency both for and against the idea. Between the submissions from large telecom companies and state regulators, a curious mix of professionally prepared comments favoring AT&T’s proposal have also arrived, many from organizations that simply do not have a direct interest in the outcome.

These Friends of AT&T include a range of non-profit, minority, and civil rights groups that have little interest in rural telecommunications policy but every interest in pleasing a company that lends executives to serve on advisory boards or writes big checks.

Even worse, some of the constituencies these groups purport to represent are among the most vulnerable. The rural poor, elderly, and economically disadvantaged are precisely those that cannot afford to lose budget-friendly phone and broadband service in favor of the expensive wireless solutions AT&T proposes as replacements.

Not all groups favoring AT&T are simply trolling for corporate contributions. Some seem to have been hoodwinked by the AT&T’s lobbyists, believing that abandoning rural wired infrastructure is an evolutionary step towards better service. They do not understand AT&T will offer exceptionally expensive broadband and voice calling over a wireless network notorious for dropped calls, poor rural reception, and stingy data caps in its place.

Stop the Cap! is here to help. Over the coming weeks, we will be running a special series calling out a range of groups that either take AT&T money and advocate for their cause or seem misinformed about the future rural reality AT&T has in store for rural America. We encourage readers to contact these groups and let them know they are hurting themselves — and you — spending precious resources advocating for a multibillion dollar telecommunications company that honestly does not need their help and does not have their interests at heart.

Ask these groups to carefully consider the comments from organizations that live and breathe rural broadband, consumer protection, and oversight:

A million-five can buy a lot of advocacy.

RURAL BROADBAND POLICY GROUP: “[We are] alarmed at the request AT&T has presented before the Commission, and believes that approving this petition will inflict negative consequences on rural communities and consumers including loss of affordable and reliable basic telephone service, which is the only form of communication many remote communities can access; eliminate consumer protections that have made it possible for rural people to access telecommunications services; reverse our commitment to Universal Service; endanger our national public safety; and fuel a divest-from-Rural-trend that will disadvantage our national economy and global competency. We simply cannot allow that to happen.”

FREE PRESS: “For the typical consumer, the grant of AT&T’s wishes would mean no protections from price gouging, no accountability for service outages, no consumer protections from cramming and slamming, and no reliable access to emergency services. For millions of consumers and businesses, it would mean no access at all, as AT&T would be free to stop providing service. And because there would no longer be any obligation for interconnection, Americans should expect to see rolling localized Internet blackouts as intercarrier disputes pop up, which will be “resolved” by higher prices paid to dominant carriers like AT&T.”

MICHIGAN PUBLIC SERVICE COMMISSION: “The MPSC recognizes that the transition to an IP-based network is already underway. The MPSC supports the transition from TDM to IP-based or other next generation networks and services, and the deployment of affordable, open, and high-capacity broadband by all broadband providers. However, it is imperative to recognize that great care must be taken to ensure the continuation of the competitive marketplace, universal service, and consumer protections. AT&T’s Petition proposes sweeping deregulation of the incumbent providers, which would allow them to withdraw service unilaterally. There cannot be a reduction in competition, thus leaving customers subject to prices and/or rates that are not just, reasonable, and affordable, with little or no competitive recourse.”

Coming Up: The National Farmers Union: Hoodwinked by AT&T’s Lobbyists

The corporate-funded American Legislative Exchange Council (ALEC) took a hit in the Georgia legislature last week as the clock ran out on several initiatives backed by its members and supporters on behalf of the group’s corporate clients.

While H.B. 282, a municipal broadband ban introduced by Rep. Mark Hamilton (R-Cumming) was soundly defeated in an unusual, bipartisan 94-70 vote, two other measures supported by Hamilton never came up for votes, including one that would have placed restrictions on city employees speaking out against corporate-ghostwritten bills like the public broadband ban he introduced.

Hamilton is no stranger at ALEC. He received $3,527.80 in ALEC “scholarships” in 2008 alone, according to the Center for Media and Democracy. Those payments covered certain travel expenses, wining and dining, and entertainment for state lawmakers (and often their families) bought and paid for by ALEC’s corporate members which include large telecom companies. After 2008, ALEC no longer had to disclose their scholarships and neither do many politicians who receive them.

In the last cycle, Hamilton cashed checks well into the thousands of dollars from AT&T, Charter Communications, Comcast and Verizon. That doesn’t include $1,000 from the Georgia Cable TV Association.

Rep. Don Parsons, another bill supporter, happens to be an active member of the ALEC Telecommunications and Information Technology Task Force. He has received $5,735.48 during his first three years in that role.

ALEC’s principle role is to get corporate-backed legislative ideas written into state laws. The group maintains a large database of pre-approved legislation ready-made for introduction in any statehouse. Simply change a few words here and there and suddenly it isn’t AT&T, Verizon, Time Warner Cable or Comcast introducing the bills they helped draft, it is Reps. Hamilton and Parsons.

In 2013, these two representatives went over the top for their corporate friends at ALEC.

Mark Hamilton’s H.B. 228: The “Keep Your Mouth Shut Else or Else” Act

Hamilton

Among the most overreaching bills introduced in the 2013 session was Rep. Hamilton’s H.B. 228 – an untitled bill that would prohibit local government employees from using government computers, fax machines or email to promote or oppose legislation by the General Assembly. It would also prohibit employees from contacting members of the General Assembly or the governor to discuss the impact of pending legislation on local governments, unless the employee is registered as a lobbyist or information is requested directly by a member of the General Assembly.

The greatest wish-come-true of ALEC is introducing legislation supported by unshackled corporate interests while muzzling local governments from objecting to the legislation.

In the community broadband battle, large cable and phone companies have limitless budgets to spend opposing public broadband with scare mailers, push polling, newspaper, radio and even television ads. Local officials fighting to defend their interests in better broadband do not. Hamilton’s bill would have taken this imbalance even further, making it a crime for any agencies, authorities, bureaus, departments, offices, and commissions of the state or any political subdivision of the state to provide members of the General Assembly with information about their broadband problems. Communities could not correct misinformation, explain a bill’s unintended consequences, or request changes to the bill.

“HB 228 is utterly ridiculous,” said Conyers City Manager Tony Lucas. “When did a local government, contacting one of our representatives or our governor, become professional lobbying? It’s respective governments conducting business for or on behalf of our citizens.”

Don Parsons’ H.B. 176: AT&T’s “Put Your Cell Tower Wherever You Want” Act

Rep. Parsons had trouble coming up with a good name for his latest legislative gift to AT&T. Originally entitled the “Advanced Broadband Colocation Act,” that title was eventually scrapped because it was not snappy enough. In its place, the “Mobile Broadband Infrastructure Leads to Development (BILD) Act” was suddenly born.

Parsons

But after reading both it and a substitute amendment, we call it the “Put It Anywhere Act,” because the bill’s real intent is to largely strip away cell tower location authority from Georgia’s local governments.

Parsons does not host an AT&T cell tower in his backyard in Marietta, but other Georgian homeowners might had the bill passed.

H.B. 176 allowed cell towers to be placed anywhere a wireless company wanted with very limited local input. Companies were under no obligation to prove that the new towers were needed. Local governments could no longer veto their choices, much less limit additions to existing towers or suggest more suitable alternative locations.  Parsons’ bill even removed authority from local governments to insist that companies remove abandoned towers before constructing new ones.

Parsons went all-out for AT&T. Knowing that resource-strapped local governments often have bigger priorities, he set a deadline on cell tower applications at 90 days for existing towers, five months for new ones. Unless the community rejects a proposal showing good cause, it would be deemed automatically approved.

Amy Henderson, director of communications for the Georgia Municipal Association, scoffed at claims the bill was designed to streamline the cell tower application process.

“Dictatorship is just streamlined government,” she told the Rockdale Citizen. “It doesn’t necessarily mean it’s in the best interest of the public.”

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/Youtube – Rep Parsons on HB176 3-2-13.flv[/flv]

Rep. Parsons’ rambling YouTube video featuring a laundry list of AT&T talking points about the need for cell companies to throw up cell towers wherever they please because it is good for business (even if it isn’t so good for you or your neighbors). Parsons’ video then launches into a hissyfit directed at the Georgia Municipal Association, unhappy with Parsons’ sweeping transfer of authority away from local communities in favor of AT&T and others. Al Gore never sighed this much. It garnered a whopping 41 views on YouTube to date and in the spirit of open dialogue, Parsons disabled comments on the video.  (17 minutes)

Private vs. Public: A Phone-y Debate

At the heart of most of ALEC’s legislative initiatives is a sense that public institutions are somehow hampering private enterprise. Community broadband is considered an especially dangerous threat because incumbent providers claim public broadband represents unfair competition.

But as ALEC itself demonstrates, corporate welfare is alive and well in the statehouses of even the reddest states. The idea that taxpayers should not be footing the bill for things the private sector can do without costing taxpayers a nickel just doesn’t fly with reality.

As Free Press reports, phone and cable companies have been on federal welfare since their inception. A 2011 Institute on Taxation and Economic Policy study shows AT&T and Verizon receiving more than $26 billion in tax subsidies from 2008–2010.

The FCC’s 2012 report on Universal Service Fund subsidies shows nearly $3 billion in federal payments to AT&T, Verizon and Windstream. In 2010, Windstream — a telecommunications company with services across the South — applied for $238 million in federal stimulus grants to improve its service in 16 states. More than 16 million taxpayer dollars went to upgrade the company’s services in Georgia.

“Phone and cable companies would not be recording the soaring profit margins that they do, if there were truly a free market,’” said Free Press Research Director S. Derek Turner. “They have created an unlevel playing field that gives them massive first-mover advantages. The real-dollar benefits of that can’t be quantified.”

Dampier

One of the most frustrating things about covering the public policy issues surrounding broadband is an-often lazy mainstream media that cannot tell the difference between an industry sock puppet and a consumer broadband advocate. One expects that the New York Times will do better than most.

It certainly did not this morning in a sloppy front page piece on Google’s privacy invasion concession.

New York Times reporter David Streitfeld seemed utterly out of his league from the lede paragraph in the story, where he suggested Google “casually scooped up passwords, e-mail and other personal information from unsuspecting computer users.”

That is a bit histrionic considering any “data theft” would have only occurred for the 5-15 seconds Google’s Street View vehicle was in range of an entirely unprotected home Wi-Fi network, and that you were actively using it at the time of Google’s “drive-by.” If you enabled any wireless network security, Google would have captured nothing beyond the name of your Wi-Fi network (assuming you had not hidden it with another setting) — something anyone could capture with a Wi-Fi sniffer.

Even more concerning was the sudden appearance in the piece of paid Google critic Scott Cleland, who runs a suburban Washington, D.C. corporate public strategy lobbying firm called Precursor LLC that has as its chief mission:

Help companies anticipate change to better exploit emerging opportunities and guard against emerging risks.

Attacking Google and broadband advocacy groups is Cleland’s bread and butter.

The New York Times called him a “consumer watchdog.”

At this point I coughed up my peppermint patty.

Cleland, whose rhetoric about Google ranges from alarmist to lugubrious — America must worry about being on the cusp of a Google-run online dystopia — is well-known to those of us who encounter his various paid-for campaigns. Cleland is best known for his anti-Google rhetoric and his reflexive defense of all-things-Big Telecom, hardly surprising considering his client list.

What is disturbing is that I know this and the reporters at the New York Times apparently do not:

“Google puts innovation ahead of everything and resists asking permission,” said Scott Cleland, a consultant for Google’s competitors and a consumer watchdog whose blog maintains a close watch on Google’s privacy issues. “But the states are throwing down a marker that they are watching and there is a line the company shouldn’t cross.”

At least the Times casually disclosed he was a “consultant for Google’s competitors.” But consumer watchdog? That is a line the Times shouldn’t cross because it is reality only in a world where Goldman Sachs is considered a model for altruistic investment banking.

Rogers Communications, Canada’s largest cable operator, told investors at an investment bank conference it intends to accelerate plans to monetize wireless and broadband data usage this year.

Anthony Staffieri, chief financial officer of Rogers Communications told attendees at Morgan Stanley’s Technology, Media & Telecom Conference that Rogers’ future revenue outlook was going to be data-centric.

“We think data, monetizing data, is going to be a key aspect of that, both on the wireless side, as well as on the cable side of things,” Staffieri said.

Staffieri

Key to Rogers is the development of data plans that maximize revenue potential by exploiting the customer’s discomfort with overlimit fees. Staffieri admits the company has plans that can cost the company revenue if customers downgrade to a usage bucket that brings them very close to their usage limit.

But most customers do not choose those “exact fit” data plans. They typically select more expensive, larger-bucket plans so they can rest easy knowing they will not get slapped with a overlimit fee.

“And so they’re coming into data plans that are probably more than they need,” Staffieri said. “But for most users, what they’re looking for is comfort in usage. And so what we found is there’s a preponderance to buy more than what you need. So there’s no surprise at the end of the month in terms of billing. And so it’s all about that comfort in usage that we’re focused on in the price plans.”

In wireless, Rogers is also counting on the explosive growth of usage that comes after introducing 4G LTE coverage.

“Simply on 3G to LTE, you see an immediate growth in data usage,” Staffieri said. “Same users, but if you were to look at the data set, it’s just within a defined period of time, they can just access more. And so for whatever reason, whatever they’re doing with it, it’s just driving more usage, more efficiency and they’re using it in the business context.”

Staffieri says Rogers is experiencing 30-50% increases in data usage year over year. Rogers introduced new wireless plans in the fall of 2012 that refocus customers on their anticipated data usage, with gradually more expensive wireless plans to match.

“That really gets the customer focused on choosing something that continues to drive data growth,” Staffieri noted.

Rogers Cable broadband customers have also faced data caps and consumption-oriented billing for years. Although Rogers competitively responded to a Bell offer introduced in January that includes unlimited use service for customers who want it, that option comes at an added cost — one that can be priced up or down according to marketplace conditions.

Rogers primary focus is on encouraging its cable broadband customers to move towards higher-speed, more expensive data plans.

MONETIZED: Rogers sells a 25/2Mbps broadband plan for $52 a month that includes only an 80GB monthly usage allowance. A $2/GB overlimit fee applies, up to a maximum of $100 per month. Taxes, a modem rental fee or purchase, a one-time activation fee of $14.95 and up to a $99.99 installation fee also apply.

“On the cable side, making sure we have the best Internet experience was the other piece of it,” Staffieri said. “We ended the year with 90% of our footprint able to get 150Mbps data speed ($122.99/mo with 250GB usage allowance). And so to the extent that we continue to lead on Internet, we think that’s going to be important ingredient for the top line [revenue] growth.”

On the wireless side, Rogers is following the lead of big providers in the United States and gradually shifting the cost of new smartphones away from itself and onto its customers by adjusting its subsidy program.

“As we see data [usage] pulling [revenue] growth, overall, that bodes well for a continuation of the subsidization,” Staffieri said. “For us, it’s really been about making sure that we give the customer choice. And so when we combine that with the introduction of the Flex Plan, which we did in 2012, what we’re seeing is more and more customers opting into new handsets. But more and more, it’s on the customer’s nickel as opposed to our nickel on the Flex Plan programs.”

Rogers Wireless’ Individual plans. Rogers’ customers have to pay extra for long distance calling — most plans only cover local calls. Data plans are stingier and more expensive than what most Americans pay, and steep overlimit fees up to $0.02 per megabyte ($20/GB) apply. Like in the United States, Rogers is moving to bundle unlimited calling and texting into more of their plans. What differentiates more plans today is how much data usage is included.

Staffieri admitted Bell is giving Rogers the most competitive headaches in Ontario because of their aggressively priced promotions.

“Certainly, [Bell’s Fibe IPTV] has been competitive for us. In the short-term, we continue to deal with what I would consider to be aggressive pricing in terms of acquisition and retention offers by our IPTV competitor,” said Staffieri. “We’ve always been competing with their satellite product and so that competition has always been there. But I would describe it as certainly having picked up and continuing to pick up. And it’s largely been through pricing offers as opposed to product.”

Staffieri says Rogers is competing with improved set-top equipment like the NextBox 2.0 — a whole-home DVR with an improved user interface. It also offers customers Anyplace TV, a TV Everywhere service that allows customers to watch the Rogers’ TV lineup on tablets inside the home.

The Toronto Maple Leafs, the National Hockey League’s most valuable sports franchise, is today 75% co-owned by Bell Canada Enterprises (BCE) and Rogers Communications.

As is the case in the United States, Canadian cable companies are also facing dramatically increasing programming costs, particularly for sports programming.

But to a greater degree than in the U.S., Canadian media conglomerates own and control a larger share of cable and broadcast networks, programming producers, would-be competitors like satellite television, and even sports teams and the networks that show their games.

That positions them to negotiate with themselves over content costs, because they own or control the sports franchise, the cable or broadcast network that televises their games, and the cable, satellite, or telephone provider through which most Canadians watch.

“We’ve tried to be disciplined on the extent that content price increases are there because consumers want it, then we want to make sure we’re disciplined in passing on that cost to the customer,” Staffieri said. “And so we strive to make sure that in the TV and video business our gross margins are consistent.”

“So if you were to look at how that’s played out over the last several quarters and several years, it’s been fairly consistent. And so that’s what we strive to do is to make sure that those programming costs ultimately are passed on to the consumer, which is ultimately driving up the cost through their demand.”

Stephenson

With a 2011 failed T-Mobile merger well behind him, AT&T CEO Randall Stephenson did well for himself in 2012, walking home with $21 million in compensation.

AT&T customers did less well, facing the imminent termination of AT&T Plus, a customer loyalty rewards program trialed in three states that offered customers waived upgrade and activation fees, gift cards, and 25% off cell phone accessories.

AT&T Mobility’s chief financial officer Pet Ritcher said that customers shifting into its Mobile Share data plans would do a better job of keeping customers in place.

Despite the fact Stephenson’s failure to secure the T-Mobile merger cost the company a $4.2 billion deal termination penalty payable in cash and wireless spectrum, his personal compensation only took a $2.1 million hit in 2011. All was forgiven in 2012, when his compensation hit a new record, up from the $20.2 million earned in 2010 — a four percent pay hike earned in an era of stagnant or declining wages for the middle and working classes.

The breakdown:

• Stephenson’s base salary of $1.55 million was enhanced with a $6.06 million bonus and $12.6 million in additional AT&T shares;
• Stephenson’s personal use of AT&T’s corporate jets cost the company $276,391;
• AT&T paid for Stephenson’s home security as a cost of $101,923;
• Miscellaneous compensation amounted to $803,308.

AT&T’s earnings amounted to $7.3 billion in 2012, up 84 percent from $3.9 billion earned the year before. Revenue increased to $127.4 billion.

AT&T paid no federal taxes in 2011. In fact, the company won a taxpayer-subsidized refund of $420 million.

Wireless plan changes, workforce reductions, rate increases, and other “cost savings” also all helped the company.