Kyle McSlarrow, president of the National Cable & Telecommunications Association (NCTA), a cable industry trade group, wants cable companies to be able to continue experimenting with metered broadband service.

McSlarrow

In an interview with Ars Technica, McSlarrow claims broadband pricing experiments aren’t about “gouging” customers or creating even fatter profit margins.  Instead, he claims the cable industry just wants to provide Internet access in a way “that’s best for the consumer.”

According to McSlarrow, there’s no particular rush to pick one business model, and the industry has no “grand plan” hashed out by cigar-smoking executives in clubby back rooms. In his view, though, cable needs to do the experiments to make sure that the Internet survives the coming bandwidth apocalypse.

“As demand goes in a certain direction,” he says, “someone’s going to have to build a network” to deal with “not just instantaneous peak but, more importantly, average peak usage. The whole point is to do it in a way, and to serve your customers in a way, that they have a great experience. If you fail on the network side to do that, particularly with our shared network, that’s a real problem.”

McSlarrow himself enjoys flat rate pricing from his Internet service provider, so he’s not a part of any experiment, nor is he willing to defend Time Warner Cable’s recent attempt to launch metered billing in several cities around the country.  But, he feels that broadband service doesn’t have to come with a single monthly price for everyone, claiming that the “majority” of broadband customers consume so little, they are basically overpaying to support heavier consumers of bandwidth.

McSlarrow, who has ties to the Republican party, having been the national chairman for Dan Quayle’s failed 2000 presidential bid, and has worked for two Senate Majority Leaders — Sens. Bob Dole and Trent Lott, is a firm believer in free markets, with no government regulation.  He also claims the broadband industry is highly competitive, which means market forces will protect consumers from gouging providers.

McSlarrow must have spoken to Ars Technica on Fantasy Island, because that must be where he is living these days.  He certainly doesn’t live in Reno, Beaumont, San Antonio, Rochester, Greensboro, or Austin, where AT&T and Time Warner Cable decided to test their paltry Cap ‘n Tier schemes.  It’s no surprise he wasn’t willing to defend Time Warner Cable, which tried to launch a Money Party at consumers’ expense.  McSlarrow should also know that free market competition without regulation only works when there are competitors — lots of them, offering similar levels of service.  That’s not the broadband industry the majority of America lives with today.

Nate Anderson, who penned the piece for Ars, took a skeptical aim at many of McSlarrow’s claims.  We’re willing to go further and say they don’t represent reality, period.

… Continue Reading

Following the Money: Telecom's Best Friends in North Carolina Get a Payday

If there is one thing I know about how politics work, it is that when you follow the money you find the reason certain people are pushing so hard to get legislation through.  After doing some intensive research into the Senators involved with S1004, I found a trail of money that leads right back to the Cable/Telecom industry.  S1004 was primarily sponsored by Senator David Hoyle (D-Gaston County) and was co-sponsored by Sen Debbie Clary (R-Cleveland and Rutherford Counties).

Sen. David Hoyle (D-NC)

What made me think to look in the first place was the quotes in the local paper by Hoyle.

You can expect to see 1004 on the Senate floor and sent over to the House soon, said Sen. David Hoyle, its sponsor. Hoyle says he doesn’t much care how it gets studied, as long as it gets there.  “It’s an issue that needs to be looked at,” Hoyle said. “All the parties need to get in the same room and defend their position.”

Add that to a Hoyle quote reported on Facebook by the Greensboro News & Record’s Mark Binker, “I take great pride in being a pro-business member of the Senate.” Now I had to look.

What I found was that Hoyle took a total of $25,750 in telecom industry PAC money in 2008.  Embarq Employees PAC gave $4500, Time Warner PAC gave $4250,  AT&T PAC gave $4000, NC Cable PAC gave $2500, Sprint/Nextel PAC gave $3000, NC Broadcast PAC gave $1500, NC Association of Broadcasters PAC gave $4000 and ElectriCities gave $2000.  That last donor is particularly interesting, because their lobbyist, Drew Saunders, also happened to sponsor a nearly identical bill in  2007.

It is easy to see why Hoyle is pushing this legislation so hard for his telecom buddies: $25,750 is a lot of money for a state politician.  Most people don’t make much more than that in a single year working 40 hours a week.

Co-sponsor Clary has not been very outspoken on this bill, but her total take from telecom industry PACs was considerably lower as well, amounting to $4750.  Embarq Employees PAC gave her $1500, Time Warner PAC gave $1000, AT&T PAC gave $1750, and ElectriCities gave $500.

Other big players in the North Carolina Senate are also cashing their industry checks, and the details are forthcoming.  Next, my attention will turn to the sponsors of HB 1252 in the North Carolina House.  Soon, we’ll all know exactly how much is takes to get big telecom’s legislative agenda passed into law in the North Carolina General Assembly.

All information I have provided above was a matter of public records search at the NC State Board of Elections website.

Verizon’s decision to exit several smaller communities across the country and hand operations over to Frontier isn’t threatening Comcast, one of the predominate cable providers in some of the larger communities Verizon is abandoning in Washington, Oregon, and Indiana.  Some of the impacted communities, particularly Fort Wayne, were being prepared for Verizon FiOS before this week’s announcement.  While Verizon and Frontier have agreed to continue building out the fiber to the home projects already underway, the cable operators serving these communities are likely to exploit the molasses slow transfer from one phone company to the other.

Comcast is busily deploying DOCSIS 3 in their service areas, and even with Verizon FiOS, cable operators with upgraded networks can readily compete for broadband business in any of their markets.

As Verizon rapidly loses interest in the markets it will be leaving, the slow transition can be part of a publicity campaign by the cable operator to convince customers to abandon the phone company, because ‘they’ve abandoned you.”

Donna Jaegers, a senior research analyst at D.A. Davidson & Company told Multichannel News, “Verizon has no real incentive to continue to invest more capital in these markets.”

“In that one-year window, the cable competitors have an easy sales pitch,” she said. “They can say, ‘Hey look, Verizon is already neglecting you — and for the next year they’ll have even more reason to neglect you.’ ”

Cable operators completing upgrades to their networks as a normal cost of doing business make competing with changes in a market a snap.  Some companies recognize the benefits of DOCSIS 3 and have upgraded without running a “pledge drive” to beg for money to do it.  Others have not.

The Communications Workers of America and the International Brotherhood of Electrical Workers, two unions representing employees at Verizon and Frontier, are skeptical about the benefits of Frontier acquiring telephone lines from Verizon.

In a joint statement, the two unions suggest the debt load from the deal will mean less money for broadband service deployment, not more.

The sale would move 4.8 million lines serving residential and business customers in 14 states to Frontier. The deal calls for Frontier to take on $3.3 billion in debt; Verizon gets that amount in debt relief. That leaves Frontier saddled with debt that will lessen the potential amount available for investment in high speed broadband deployment.

Similar tax-free transactions by Verizon, especially those involving the Reverse Morris Trust tax provisions, haven’t worked out so well, especially for consumers in New England now served by FairPoint Communications.

Having your local phone company disappear and get replaced by another provider isn’t an everyday occurrence for most people.  Customers are concerned about the impact of Verizon leaving their area, to be replaced by Frontier, an unfamiliar company for most parts of the country.  We have the video.

Let’s begin in Fort Wayne, Indiana, where WANE-TV interviews one worried local businessman already dissatisfied with what Verizon was charging, and wonder what surprises Frontier will bring: