Broadband’s perceived negative impact on print publications is not just a North American phenomena. In Great Britain, the legendary left-leaning national newspaper the Guardian is pondering its future as the UK heads towards a digital online future.

Leigh

David Leigh is the Guardian’s investigations executive editor:

Having survived more than 40 years at the coalface of British journalism (longer than a term of service in the ancient Roman army), I have been feeling a bit depressed lately by the insistent predictions of media pundits that the Internet is killing off quality newspapers. There are very few people in the trade who are prepared to bet that all our daily papers will still be publishing newsprint copies in five years’ time.

According to conventional wisdom, print is doomed. Circulations are collapsing because readers can get everything they want on the Internet. Not only do those readers dislike the idea of paying to read online, but the existence, among other sites, of the rival licence-fee-payer-funded BBC website guarantees that they will never actually need to pay for a supply of reliable day-to-day news. Paywalls will never really work in a UK context for that reason.

Yet when the day comes that the newspapers are forced to stop printing altogether, it will be a disaster for democracy. The lean pickings from web advertising on a free newspaper site will only pay for a fraction of the high-quality investigative journalism that commercial newspapers generate. We’ll just get the timid BBC on the one hand, and superficial junk on the other.

Leigh is convinced the British public will never pay for online news, but the newspaper industry might survive if broadband users are compelled to cough up, with a new surcharge on Internet access bills amounting to no more than £2 ($3.23US) a month, distributed to news providers in proportion to their UK online readership.

The new surcharge would raise at least £500 million annually — a “transformative” amount of money for the ailing print press, according to Leigh.

Those papers already behind an online paywall would receive substantially less from the fund — an incentive to keep online access to news free and open, albeit not monetarily free for UK readers.

Gannett has erected a paywall for its online newspaper editions

The openly self-interested Guardian Media Group would receive in the region of 20% of the cash – £100m a year from the proposed fund.

Leigh defends the new tax in the context of other European countries. Nordic newspapers, for example, receive a direct government subsidy to help keep the presses rolling.

Such a proposal in North America would likely cause a forest fire of controversy, but a large number of avid Guardian readers are having none of it either.

“You’ve got a cheek,” exclaims Elliot Mills. “What about people who don’t read newspapers online and yet would be paying money to the likes of [Rupert] Murdoch if this ridiculous idea came about.”

“A £2-a-month levy on automobiles could save our horse and cart business,” quips Roman David.

“This has got to be one of the most stupidly selfish articles I’ve read for a long time,” shared Mark. “And, for the Guardian, that takes some doing. Why on earth should the customers of a successful business be forced to subsidize a failing and outdated one?”

Even fellow journalists seem skeptical.

“I’ve been a journalist for 38 years, and I have to tell you – this is a stupid idea,” writes Terry Collmann. “Why should the Internet-using public have to pay for newspaper managements’ failure to set up a workable economic model for the post-newsprint world? It’s like advocating a tax on cars to subsidize horse-drawn hackney cabs and omnibuses. If newspapers can’t make themselves pay, they don’t deserve to survive.”

In North America, many newspaper chains are erecting paywalls to promote new subscription models. Gannett newspapers, for example, provide a limited number of free articles before a reader is prompted to subscribe to the online edition. Print subscribers get free, unlimited access.

The question is whether readers confronted with a paywall will simply take their news reading elsewhere, or will they value the content sufficiently to subscribe to maintain access. Leigh’s proposal would avoid pondering that  altogether with a compulsory license fee similar to what UK residents already pay for the BBC.

AT&T and Verizon: The Doublemint Twins of Wireless

Wireless carriers other than AT&T and Verizon Wireless have joined forces asking federal regulators to help level the playing field in wireless competition.

At this week’s convention of the newly-relaunched Competitive Carrier Association (CCA), Sprint, T-Mobile USA, Clearwire, C Spire, and more than 100 other small regional rural carriers joined forces in Las Vegas to sound the alarm about a wireless duopoly restraining competition and raising prices for consumers.

“Humpty Dumpty has been put back together again,” said C Spire CEO Hu Meena. “And while the identical twins sometimes agree to meet and discuss industry issues with other industry players, they seldom, if ever, support action that might better the industry as a whole.”

C Spire should know. The company filed a lawsuit against AT&T earlier this year claiming the phone giant manipulated its 700MHz band allocation to lock C Spire customers out of getting access to the latest smartphones.

“At some point, and that time is coming, regulators and politicians are going to have to acknowledge they have a choice to make: they are going to have to decide whether the communications industry, the fundamental driver of the information economy, is going to be regulated by true, healthy competition or by the government,” Meena said.

In the last 20 years, rampant consolidation has reduced the number of national wireless carriers down to four — Verizon Wireless, AT&T, Sprint, and T-Mobile. Filling in the gaps are various regional providers, all who depend on one of the major four to provide reasonable roaming service for customers traveling beyond the service areas of smaller companies. Without reasonable roaming, competitors are left at a serious disadvantage.

Another major problem is access to the latest smartphones. Major manufacturers largely design and market cell phones for the largest four companies, often relegating smaller providers to sell older or less prominent phones to customers. When phones do not work on the spectrum acquired by smaller competitors, roaming becomes a problem.

But beyond those issues is the question of wireless spectrum. Traditionally sold in competitive auctions, the deepest pocketed companies traditionally win the bulk of frequencies, leaving competitors with less desirable spectrum that has difficulty penetrating buildings or requires a more robust cell tower network.

Meena

Members of the CCA recognize that mergers and consolidation can bring costs down through economy of scale, but in their eyes, AT&T and Verizon’s actions have promulgated a new paradigm for wireless on Wall Street: consolidation around a handful of wireless carriers is healthy; having too many competitors is inefficient.

“Consolidation can introduce business efficiencies,” said Michael Prior, CEO of Atlantic Tele-Network. “But government has a role in making sure that infrastructure is used in a way that works for the entire country. All we’re asking the FCC to do is to make sure there is a level playing field.”

Observers expect the CCA to ask the FCC to set aside spectrum in future wireless auctions exclusively for smaller carriers to help protect what competition still exists.

“There used to be dozens of railroad companies,” Prior noted. “But the government didn’t allow certain companies to develop rails that wouldn’t allow trains to interconnect to rails run by other companies.”

Meena warned the same thing could happen in the wireless industry.

“We know what happened in the first 20 years of the industry where we have had many healthy competitors,” Meena said. “There remains a false hope among too many carriers that the duopoly will one day become reasonable. But, we all know, whether we choose to admit it or not, that until all competitive carriers become fully committed to work together for open competition, the wireless industry playing field will remain harmfully tilted toward the duopoly. They will never give an inch unless and until they have to do so.”

[flv width=”448″ height=”276″]http://www.phillipdampier.com/video/David Cay Johnston The Fine Print How Big Companies Use Plain English to Rob You Blind 9-19-12.mp4[/flv]

Fellow Brighton, N.Y. resident and Pulitzer Prize-winning journalist David Cay Johnston hits the nail right on the head describing the Big Telecom Swindle that promised America it was going to get something magical called “the information superhighway.”

Over a half-trillion dollars in rate increases later, AT&T and Verizon instead spent a lot of that money on an enormously profitable wireless business that redefines the average American family’s monthly phone bill at $100+. Johnston talks about the broken industry promises of ubiquitous broadband, leaving millions of potential FiOS and U-verse customers behind.

With vast lobbying arms, large cable and phone companies have manipulated public policy to assure they can gouge customers, shortchange workers, and erect barriers to fair play. If consumers don’t pay attention, politicians armed with fat campaign contributions will continue to represent corporate interests, not those of the average American.  

[Note to Mr. Johnston: He isn’t the only reporter paying attention. Hat tip to Stop the Cap! reader Pat McDermott who shared the video.]  (17 minutes)

Verizon has a moratorium on further expansion of its fiber to the home service except in areas where it has existing agreements to deliver service.

Verizon Communications will not expand their FiOS fiber optic network beyond the current obligations the company has with communities where it presently provides service.

Verizon chief financial officer Fran Shammo told investors the company intends to wind down FiOS expansion once its contractual commitments to state and local authorities are met to reap the financial rewards of the fiber optic network it began building in 2006.

“At this point we won’t build beyond that, because at this point we have to capitalize on what we have invested,” Shammo told an investor at the Goldman Sachs Communacopia Conference.

From 2014 beyond, Verizon plans to substantially decrease capital investments in its wired networks and continue to shift spending towards Verizon Wireless. Shareholders may also benefit from an increased dividend payout as the company’s balance sheet improves.

In real terms this means that Verizon will only expand FiOS where it previously signed agreements that allowed the company to gradually roll out its fiber optic network. Large sections of Verizon’s service areas, including major cities in the northeastern corridor, are not on the upgrade list and will not get the service.

Verizon’s experience and scale rolling out fiber to the home service over the past five years allowed the company to achieve a cost of  just $700 to reach each home, less than half the original estimated expense for fiber upgrades. But Verizon still considers the network too expensive to expand further.

Shammo also admitted Verizon is targeting its landline investments to bolster its more profitable wireless business.

“The fact of the matter is wireline capital — and I won’t give the number but it’s pretty substantial — is being spent on the wireline side of the house to support wireless growth,” Shammo said. “So the IP backbone, the data transmission, fiber to the cell, that is all on the wireline books but it’s all being built for the wireless company.”

Bruce Kushnick found no bump in construction expenses for FiOS after 2008 and no major increases in capital expenditures in general. In fact, Verizon, on average, spent more on construction from 2000 to 2004 than from 2005 to 2011, when FiOS construction was at its peak.

Bruce Kushnick from New Networks Institute has been tracking Verizon’s capital investments for the last decade and found Verizon was hardly hurting paying for FiOS network upgrades. In fact, Kushnick suspects much of the money to pay for FiOS came from a combination of ratepayer rate increases and diversion of investments intended to maintain Verizon’s existing landline network:

Whatever amount Verizon did spend on FiOS — and obviously it was a not insignificant amount — would therefore appear to have come out of the standard construction budgets that were supposed to be used to upgrade the lines that most Americans are still using for their phone service: the Public Switched Telephone Networks, or PSTN. It would seem that customers, including seniors, low income families, minorities and municipalities have been funding the construction of a cable service through the hefty monthly fees they pay for a dialtone and ancillary services. In some states this is actually illegal.

If Verizon did actually spend $23 billion, then it appears to have come at the expense of the traditional maintenance and upgrades of the utility plant — and the PSTN got totally hosed. At the very least, prices for basic phone service should have been in steep decline as one of the major costs, construction, was dramatically lowered.

Instead, Verizon was also getting rate increases specifically to pay for FiOS. For instance, Verizon persuaded New York officials to increase rates for “fiber optic investments,” where the only service that could use the fiber optic service was Verizon’s FiOS.

For instance, when New York State Department of Public Service Commission Chairman Garry Brown announced the approval of a $1.95 a month rate hike for residential phone lines in 2009, he said “there are certain increases in Verizon’s costs that have to be recognized.” He explained: “This is especially important given the magnitude of the company’s capital investment program, including its massive deployment of fiber optics in New York. We encourage Verizon to make appropriate investments in New York, and these minor rate increases will allow those investments to continue.”

Of course the states weren’t told that everyone would be charged extra for a service that only some people were going to get. In New Jersey, for instance, Verizon made a firm commitment to rewire the entire state with fiber optics — capable of 45 Mbps in both directions. It was supposed to be 100 percent completed by 2010. Instead, Verizon claims to have “passed” 1.9 million homes, representing 57 percent of the households in its territories — but “passed” may or may not mean that they can actually get service.

With Shammo reporting FiOS investments winding down by 2014, Verizon is not increasing the budget to maintain the copper infrastructure it will require non-FiOS customers to keep using for service. Instead, capital investments will continue to be spent supporting Verizon Wireless, although in lower amounts.

“So if you look at overall, I continue to say [investments] will be flat to down and I think we will be probably more slightly down than flat, and [CEO] Lowell [McAdam] and I are really starting to focus in on where we spend that investment and make sure that that investment returns on a shorter period of time,” Shammo said. “And that is really the focus. So what I like to say is that our ratio of CapEx to revenue will continue to decline.”

A N.J. State Commission report from June 2010 saw this coming two years earlier and noted:

“While it is possible for Verizon to extend service throughout its authorized territory, to an additional 155 municipalities in the state that are not included in its current application of 369 towns, Verizon has indicated it will now concentrate its capital expenditures, expected to be between $16.8 billion and $17.2 billion in 2010 on its wireless telephone network. Further FiOS expansion will be limited to increasing penetration in those communities where FiOS is currently available, according to the company.”

Comcast cable subscribers in Mattapoisett want less bundling and fewer fees.

They and everyone else.

This month, the 6,000 local residents of the small coastal town in southeastern Massachusetts got the opportunity to voice their concerns about Comcast Cable’s performance before the Board of Selectmen at an open town meeting contemplating the renewal of the cable operator’s five year franchise agreement.

The Sippican Week covered the proceedings:

Subscription plans and fees were the main concerns voiced by residents at the meeting.

“I’m just here to see if there is any way we can unbundle or offer some of the channels a la carte, rather than have to pay an exorbitant fee for the channels that are bundled at the different levels,” said Herb Webb.

“Instead of these large packages you have to buy, they could break them up into smaller sub-packages,” said Selectman Tyler Macallister. “Get some feedback from the town and develop packages specially for Mattapoisett.”

Resident Bob Spooner also questioned the $2 fee subscribers are charged for each cable box in addition to their main TV.

“What about the people who have four or five TVs,” said Spooner. “That’s another six or eight dollars a month.”

Macallister agreed, “I’m already paying for those channels, but now I have to pay $2 to get it.”

Selectmen chair Jordan Collyer tried to answer residents’ concerns, much like any local town or city official facing similar complaints would — with understanding and little else. After all, Comcast operates in a largely deregulated marketplace and need not fear threats from elected officials.

Local governments have no say over a cable company’s pricing for its most popular tiers of service, cannot dictate matters of channel bundling or equipment fees, and have little recourse beyond taking bids from other operators willing to serve when an incumbent company’s franchise goes unrenewed.

But that almost never happens. No major cable operator will offer to replace another major operator, meaning the chances that Time Warner Cable, Cox, Cablevision, or Bright House Networks would respond favorably to a request are effectively zero.

But parts of Mattapoisett are lucky enough to at least have a competitive option — Verizon FiOS, although that company also charges for set top equipment and bundles channels together. The local government has little control over Verizon’s service either.

One alternative open to residents and the local government is to support the construction of a community-owned provider that could, as much as programming contracts allow, respond more effectively to these kinds of concerns. Under current regulatory policies, that is about the only way Mattapoisett, and towns like it, can guarantee the presence of a responsive provider ready to meet the collective needs of the community.