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Locast Plans to Appeal Crippling Court Loss, But Service Shuttered for Now

Phillip Dampier September 2, 2021 Competition, Consumer News, Locast, Online Video 3 Comments

Locast, like Aereo and Ivi before it, has ceased streaming local, over the air television signals on a non-profit basis after a New York federal court judge ruled the service is violating U.S. copyright law by receiving more funding than it needs. But in developments this afternoon, there is word an appeal is planned.

Since January 2018, Locast has attempted to provide its service legally by operating as an independent “translator service,” extending streams of over-the-air signals to viewers within the acknowledged viewing range of the stations. Locast used geofencing technology to block more distant viewers, and sought support for its service with a suggested contribution of $5 a month. Non-paying viewers were nagged with donation request messages that interrupted each stream every 15 minutes.

Despite its limited service areas, Locast amassed over 3 million regular users in its 36 served TV markets over the last three years. That growth represented a threat to lucrative retransmission fee revenue collected by TV station and network owners, who promptly sued Locast in federal court in 2019. A part of that lawsuit was decided Tuesday in favor of the broadcasters.

Judge Louis L. Stanton rejected Locast’s claim it was exempt from Section 111 (a) (5) of the U.S. Copyright Act, which allowed it to stream over the air signals without getting permission from those stations in advance. That section of the Copyright Act was designed to provide a loophole for independent non-profit translator stations, which in some rural areas pick up difficult to receive TV stations and rebroadcast them locally on other channels. Some of these translator operations existed before the days of cable and satellite television, and well before the internet as we know it ever existed. But many of these services were provided through low-power transmitters operated inside large apartment complexes or hotels for the enjoyment of tenants or guests. The Copyright Act allowed groups to retransmit TV signals as long as they lacked “direct or indirect commercial advantage” and did not charge viewers in excess of the “actual and reasonable costs of maintaining and operating the secondary transmission service.”

What got Locast in trouble with the judge is the fact the service nagged viewers to make $5 donations if they wanted the nagging messages to end, and those contributions delivered healthy revenue to Locast of $4.51 million in 2020, while the costs to provide the service were just $2.43 million that same year.

“On those undisputed facts, in 2020 Locast made far more money from user charges than was necessary to defray its costs of maintaining and operating its service,” Judge Stanton wrote. Stanton also rejected arguments that excess revenue was used to expand Locast into new markets, claiming the law was quite clear limiting charges only to the “actual and reasonable costs” incurred providing the service, not for expanding it. Stanton ruled Locast could not charge viewers to raise funds to expand into new markets. Had Judge Stanton accepted Locast’s argument that it was pouring excess revenue into expanding its service, not to make a profit, the broadcaster’s legal case could have been seriously weakened and Locast would have continued operating pending the final disposition of the lawsuit.

Instead, perhaps bowing to the court’s judgment that Locast’s contribution system was hampering its case, last evening Locast notified users it was suspending requests for contributions aired every 15 minutes, and hoped supporters would continue contributions anyway. But early this morning, Locast went further and announced the immediate suspension of its video streaming service.

In an e-mail to supporters, Locast announced:

We are suspending operations, effective immediately.

As a non-profit, Locast was designed from the very beginning to operate in accordance with the strict letter of the law, but in response to the court’s recent rulings, with which we respectfully disagree, we are hereby suspending operations, effective immediately.

Thank you.

Judge Stanton

The Electronic Frontier Foundation (EFF), which has supported Locast with legal assistance in this case, criticized the judge’s ruling.

“We are disappointed that the court ruled against Locast on its copyright defense,” the EFF said in a statement. “The court interpreted the law in an artificially narrow way. Congress wrote copyright’s nonprofit retransmission exception to make sure that every American has access to their local broadcast stations, and expanding access is exactly what Locast does.”

The EFF said Judge Stanton’s ruling may not be the end of Locast, however.

“Locast has decided to suspend its operations. The case will continue, likely including an appeal, to resolve the remaining issues in the case. The problem remains: broadcasters keep using copyright law to control where and how people can access the local TV that they’re supposed to be getting for free,” a lawyer at the EFF said in a statement.

Theoretically, Locast could be restructured to spin off each of its markets into independent non-profit entities responsible for raising funds to maintain current operations and possibly be found “legal” under the U.S. Copyright Act provisions. New markets could be launched independently as well, starting with fundraisers to launch the service and then additional fundraising to maintain each operation.

Any legal appeal would likely be based on Stanton’s determination that “expansion” was disallowed under the Copyright Act, even though most non-profit entities raise funds to expand their operations all the time.

But for now, Locast will likely remain dark until the remaining legal issues are settled or determined.

AT&T Trying to Make Printed Telephone Directories Extinct

Phillip Dampier August 24, 2021 AT&T, Consumer News, Public Policy & Gov't No Comments

Endangered Species: The AT&T Printed White Pages Directory

Landline customers in Michigan might never receive another printed telephone directory after AT&T successfully lobbied the state legislature for an end to the requirement that anyone that wants a phone book can have one, for free.

AT&T let its fingers do the walking and looked up support for Michigan Senate Bill 372, introduced by the company’s good friend, Sen. Ken Horn (R-Frankenmuth). In addition to counting AT&T as his third largest contributor, Horn has been honored with the Excellence in Education Award (2017), sponsored by AT&T and the Michigan Association for Computer Users in Learning.

Horn’s bill was short and to the point, amending Michigan state law by stripping out the requirement that every landline provider in the state must provide a free printed telephone directory (if requested) to each customer. In its place:

The People of the State of Michigan enact:

Sec. 309. (1) A provider of basic local exchange service shall provide to each customer local directory assistance.
(2) A provider of basic local exchange service shall provide each customer at no additional charge the option of having access to 900 prefix services blocked through the customer’s exchange service.

This act is ordered to take immediate effect.

The bill was passed in both houses of the legislature with wide margins and Michigan Gov. Gretchen Whitmer signed it into law last month.

The new law requires phone companies to continue offering local “411” directory assistance service, but says nothing about how much a phone company can charge a customer looking for a telephone number (in Michigan, some now pay as much as $2.49 per directory assistance call.)

It also finally allows customers to block all calls to “900 numbers” that can carry hefty per minute charges. Of course, the worst scandals involving 900 call charges were back in the 1990s — some 20-30 years ago. Many phone companies lobbied against call blocking technology when 900 number revenue, split between the phone company and the 900 number, was far more lucrative than it is today. Does anyone even call “Time of Day and Temperature” or “Local Weather and Horoscope” numbers today?

AT&T has once again shown it is effective lobbying state legislatures, where it brings its corporate agenda to state lawmakers like Mr. Horn. About a decade ago the company fought to eliminate the automatic delivery of printed phone directories. It also fought for statewide video franchising to rip control of cable TV services away from local communities just as it was introducing U-verse, its own TV service. It fought to marginalize public, educational, and government access channels. It even continues to seek an end to the requirement it provide local wireline phone service in areas it considers unprofitable.

AT&T was not alone in support of the measure to eliminate the century-old printed phone book. Frontier Communications heartily supported AT&T in its efforts.

Today’s printed directory has been hobbled by the ongoing move towards wireless. As consumers cut their landlines, listings disappear from phone directories because wireless numbers are rarely published. Competing digital phone companies like Charter Spectrum offer to sell their customer number listings for telephone directories, but companies like Frontier refuse to pay, resulting in Frontier’s phone books slimming down to the point of irrelevance. In the Rochester, N.Y. 585 area code, where Frontier is by far the largest incumbent local landline provider, its printed White Pages for 2021 includes just 111 pages of business and residential listings in an area with more than a million people.

With reciprocal listings no longer freely shared, the obsolescence of the telephone directory — electronic or printed — is virtually assured. That will leave many customers with just one option: calling directory assistance and paying a fee for each number successfully obtained.

The Roku/Spectrum War is Over: Spectrum TV Returns to Roku App Store After 9-Month Blackout

Phillip Dampier August 17, 2021 Charter Spectrum, Consumer News, Online Video No Comments

A dispute between Charter Communications and Roku over compensating the set-top box maker for distributing the Spectrum TV app in the Roku app store is over after a nine-month impasse that kept new Roku users from accessing the cable company’s streaming TV package.

“Charter Communications and Roku have reached a mutually beneficial agreement to renew distribution of the Spectrum TV App on the Roku platform,” a joint statement announced. “As a result of the renewal, the Spectrum TV App is now available for download from the Roku channel store. We are pleased to renew our partnership and offer this great streaming experience to our shared customers.”

The dispute began when Charter turned down Roku’s demands for an undisclosed form of compensation in return for distributing the Spectrum TV app. Roku removed the app from its app store, but allowed existing versions already downloaded to continue working. The dispute annoyed Spectrum TV customers that found they could not install the streaming TV app on new Roku devices. Roku has at least 54 million active users in the United States. Charter’s solution to cord-cutting is heavily reliant on streaming a budget-priced TV package over independent set-top devices like Roku.

The two companies did not discuss specifics of their final settlement agreement. The Spectrum TV app should be back on Roku’s channel app store today.

 

Sellout: Biden’s Broadband Stimulus is a Shadow of Its Former Self

After weeks of tense negotiations to secure bipartisan support for the Biden Administration’s $1 trillion infrastructure stimulus measure, the White House appears to have largely capitulated to Republican efforts to water down funding to expand broadband service into a $65 billion package that will doubtless be a financial bonanza to the country’s largest phone and cable operators.

The Biden Administration’s original proposal for $100 billion in broadband funding was dedicated to wiring rural areas as well as focusing funding on new entrants like community-owned networks that could deliver internet access to unserved and underserved locations without having a profit motive. The original proposal also would have prioritized funding for future-capable fiber internet, with some advocating that networks be capable of delivering at least a gigabit of speed to customers to qualify for funding. The Administration also promoted the idea of affordable broadband, combatting the growing digital divide exacerbated by internet pricing out of reach of the working poor.

What emerged on Sunday as a “bipartisan agreement” with Republicans on infrastructure stimulus is almost a travesty — slashed almost by half and now effectively a veritable gift to Big Telecom. The industry spent hundreds of millions lobbying Congress and got almost everything it wanted. If passed in its current form, those same phone and cable companies will pocket much of the money for themselves.

Here is how consumers were sold out:

Reduced speed requirements are a dream come true for cable operators.

The bipartisan measure proposes to water down speed requirements to qualify for government stimulus funding to a underwhelming 100/20 Mbps. That speed is tailor made for cable operators, which traditionally offer upload speeds just a fraction of their download speeds. Gone is any condition requiring gigabit-capable networks, at a time when more providers than ever are marketing near-gigabit speeds. That could quickly lead to the emergence of a speed divide, with rural Americans stuck with slower broadband technology from companies that will have no financial incentive to upgrade in these areas.

Addressing affordability is now mostly wishful thinking.

The latest proposal’s idea of solving the broadband affordability issue is to admit there is a problem and declare the need for some kind of low-cost broadband option, but apparently does not specify pricing, who is qualified to get cheaper service, and who will oversee that such programs remain affordable. That allows providers to keep writing the rules of their own token, voluntary efforts to offer discounted internet, like those that disqualify current customers and requires enrollees to jump through various qualification hoops to sign up. The stimulus program will also spend billions of dollars effectively paying a portion of disadvantaged Americans’ internet bills, at the current high prices many ISP’s charge. That is a direct subsidy to big cable and phone companies that can continue charging whatever they please for access, knowing the government will now pay $30-50 of the bill.

Republicans have made sure there is not a whiff of rate regulation or consumer protection mandates in the measure. It also abandons establishing a fixed rate, affordable internet tier for as little as $10 a month. That original proposal would have given cable and phone companies as little as $10 a month from the federal government, much less than collecting up to $50 a month from the Emergency Broadband Benefit, which pays a portion of regular-priced service. The $14 billion being set aside to continue subsidizing Americans’ internet bills at Big Telecom’s monopoly or duopoly prices could be better spent building and expanding internet services where no service or competition exists now.

Digital redlining is A-OK

The watered down compromise measure chastises companies for only incrementally expanding fiber service, mostly to wealthy neighborhoods, but stops short of banning the practice. This wink and a nod to redlining primarily benefits phone companies like AT&T and Frontier, which can now cherry-pick rich neighborhoods for fiber upgrades most likely to return the biggest profits. Phone companies and fiber overbuilders will continue to skip over urban poor neighborhoods and the highest cost rural areas which have always been the hardest to reach.

Sky is the Limit pricing with onerous data caps are fine with us.

Nothing in the measure will give preference to providers willing to offer affordable, flat rate service without the hassle of data caps. Neither will it discourage applicants that plan to use public tax dollars to subsidize expanding service that comes at high prices and with paltry usage limits.

Light Reading reported Wall Street analysts were generally pleased with the outcome, noting the negotiations resulted in stripping out oversight and price regulation and the measure won’t fund potential competitors. It also noted Big Telecom and its associated trade organizations spent more than $234 million on lobbying. Comcast topped the list of spenders at more than $43 million, with AT&T coming in second at $36 million. Both the cable and wireless industry also spent tens of millions on lobbying. They got their money’s worth. Taxpayers won’t.

Cuomo Administration Capitulates on Affordable Broadband Law; State Laws Cannot Regulate Broadband Pricing

Cuomo

As expected, New York’s efforts to lower broadband pricing through a state mandate has been effectively killed in a Brooklyn federal court, putting an end to Governor Andrew Cuomo’s efforts to require providers to offer a $15 broadband tier to income-challenged state residents.

U.S. District Judge Denis R. Hurley, who signed a preliminary injunction preventing the mandate from taking effect on June 15, signaled the concept was likely unlawful in a memorandum attached to the injunction. Several telecom companies challenged the mandate in a lawsuit heard in Hurley’s courtroom, claiming states have no regulatory authority to set broadband terms or pricing. Hurley was clearly persuaded in their direction, and was pessimistic the state could ever show a legal way to regulate internet pricing, something currently reserved to the FCC. As a result, a settlement has been proposed dropping the affordable pricing mandate.

Hurley was also moved by arguments from several smaller New York providers that claimed the new mandate would force them to sell service below cost. Empire Access, a fiber to the home overbuilder based in Prattsburgh, filed a declaration with the court threatening to cancel a major expansion project to wire customers in Livingston and Broome counties, including the city of Binghamton, if the mandate was implemented, because it would likely lose federal funding.

Because of the state’s definition as to who would have qualified for the affordable broadband tier, many smaller companies in rural, economically challenged area of upstate New York claimed they would face substantial economic losses to their businesses. Empire claimed it would lose “approximately $2 million per year,” Heart of the Catskills claimed top-line revenue would decrease $1,364,000 annually, Delhi Telephone claimed it would lose at least $90,000 per month, and the Champlain Telephone Company notified the court that “nearly half (48%) of its existing broadband customers will qualify for discounted rates,” causing the company to lose money on each customer.

“While a telecommunications giant like Verizon may be able to absorb such a loss, others may not,” Judge Hurley wrote in his order.

Gov. Cuomo bristled after learning of the lawsuit, threatening to revoke the franchise of any company that refused to implement the  state’s affordable broadband program. But the governor has made empty threats before, including a promise in 2018 to revoke the merger of Charter Communications and Time Warner Cable because the company failed to live up to the deal commitments it made to state regulators. A settlement was eventually reached between the cable giant and the state, and it appears a settlement between the plaintiff telecom companies and the state will also end this dispute and lawsuit. It appears the state has capitulated and plans to walk away from the affordable broadband proposal, although it reserved the right to appeal the case.

Stop the Cap! predicts the state will work with larger providers to increase public knowledge of the companies’ existing affordable internet programs, which usually have similar qualifications to the affordable internet law Cuomo proposed. Cuomo Administration officials will also likely lobby the Biden Administration to toughen federal oversight of broadband service and suggest a possible federal mandate for an affordable service tier and a return to net neutrality under a regulatory framework that opens the door for future price and service regulation.

The court decision signals states the solution to broadband affordability will not be found in state laws or mandates that attempt to regulate broadband pricing, at least until the current federal law changes.

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