Years ago, phone companies could not simply raise rates willy-nilly.  They had to justify rate increases before an oversight body, usually on the state level.  But after spending millions to lobby state lawmakers to deregulate the phone business, AT&T is set to recoup their investment with a dramatic 25 percent rate increase for landline phone service in the state of California.

Some residential customers have kept basic landline service as a last resort, switching to “measured service,” where customers pay a small charge for every call they make or receive a calling allowance that covers several calls a day.  Measured service can deliver substantial savings over traditional flat rate service.  But now AT&T is targeting these “budget customers” for some stunning rate hikes.

Starting March 1st, AT&T is raising rates by nearly 25% for measured service — from $12.37 to $15.37 a month — a $3 increase.  After your calling allowance is exhausted, each additional local call will cost three cents per minute.

Customers with flat rate service will also pay AT&T $1.05 more — $21 a month (before taxes, fees, and surcharges) for basic flat rate, unlimited local calling.

Best of all (for AT&T), the company does not have to explain or justify the rate increase.  That attitude was evident when reading the Los Angeles Times‘ account of the rate hike, complete with an arrogant, shoulder-shrugging AT&T spokesman:

Lane Kasselman, an AT&T spokesman, said fees for measured and flat-rate calling plans are going up because, well, because.

“Goods and services go up,” he told me. “That’s how our economy works.”

The increase is expected to hit seniors and low income consumers the hardest — they are the biggest constituency of the 10 percent of AT&T customers who choose measured-rate, budget service.  They are also the least likely to have cut the cord on their traditional landline service in favor of a cell phone or competing Voice Over IP provider.

AT&T hints that the rate increase is partly to push customers into multi-service bundles that include phone, Internet, and television service.  By hiking the price of individual services, the bundled price suddenly seems to deliver the best “savings” for customers.

Critics call that price pumping — artificially raising the price of a-la-carte services to create phantom savings for the company’s higher-revenue bundled service packages.

A San Francisco advocacy group calls it something else.

“It’s extortion, pure and simple,” said Regina Costa, telecom research director for the Utility Reform Network, or TURN, a consumer group. “There’s no proof that these price increases are justified.”

Thanks to California’s deregulation of the landline phone business, no proof is required.

Draft legislation to make life difficult for community broadband in South Carolina has resurfaced this week in the state Senate Judiciary Committee.  The legislation, H. 3508, would hamstring communities from setting up fiber networks that are attracting hundreds of millions of dollars of new investments from digital economy businesses like Amazon.com in the nearby state of Tennessee.

Lobbyists from AT&T are aggressively pushing the measure, and no doubt Time Warner Cable will also deliver its support.

The protectionist legislation, which delivers all of the benefits to status quo providers like AT&T inside the Palmetto State, guarantees local officials cannot pitch advanced, community-owned fiber networks to companies like Amazon, Google, and other billion-dollar businesses that are expanding across the southern United States.

The implications are so dire, the South Carolina Association of Counties and the Municipal Association of South Carolina vociferously opposed the legislation last year.  On the ground in rural Orangeburg County, administrator Bill Clark understands first hand the implications of broadband scarcity.  He was shocked to discover the bill considers any connection that achieves the woeful speed of 190kbps would qualify as “broadband,” no doubt to allow AT&T to claim its 3G wireless broadband service already “well serves” the state of South Carolina.  If AT&T can demonstrate it delivers at least 190kbps service in South Carolina, even if capped to just a few gigabytes of usage per month, the company can claim South Carolina does not have a broadband problem.

Stop the Cap! readers inside South Carolina regularly complain about the state’s lousy broadband on the ground.  Our regular reader Fred in Laurens is stuck between a broadband rock and a hard place, navigating poor service from Frontier Communications, AT&T, and bottom-rated Charter Cable.  He can’t wait for a community provider to set up in South Carolina.

Unfortunately for Fred and other South Carolina residents, special interests in the telecommunications industry have gone out of their way petitioning state government to set up obstacles to community broadband while providers do little or nothing to upgrade broadband in the rural corners of the state.

Back to push more special interest legislation to keep community-owned broadband from taking hold.

Now AT&T is back to push for even stronger restrictions, and as Chris Mitchell from Community Broadband Networks wrote during last year’s tangle, this legislation will effectively make any local government ownership of telecommunications facilities impossible:

The bill is blatantly protectionist for AT&T interests, throwing South Carolina’s communities under the bus. But as usual, these decisions about a “level playing field” are made by legislators solely “educated” by big telco lobbyists and who are dependent on companies like AT&T for campaign funds. Even if AT&T’s campaign cash were not involved, their lobbyists talk to these legislators every day whereas local communities and advocates for broadband subscribers simply cannot match that influence.

We see the same unlevel playing field, tilted toward massive companies like AT&T, in legislatures as we do locally when communities compete against big incumbents with their own networks. Despite having almost all the advantages, they use their tremendous power and create even more by pushing laws to effectively strip communities of the sole tool they possess to ensure the digital economy does not pass them by.

South Carolina’s access to broadband is quite poor — 8th worst in the nation in access to the the kinds of connections that allow one to take advantage of the full Internet according to a recent FCC report [pdf].

Some of the provisions on display are remarkably transparent for AT&T’s own interests:

No reasonable provider will invest in expensive broadband infrastructure in an unserved area if it must stop providing communications services within 12 months of a Commission finding that a private provider has begun to offer at least 190 kilobits per second to more than 10 percent of the households in the area.

Public sector entities will be subjected to “the same local, state, and federal regulatory, statutory, and other legal requirements to which nongovernment‑owned communications service providers” are held. This is similar language we see in North Carolina and other states, betraying the total lack of ignorance on telecommunications policy among legislators and their staff.

Requiring public communications providers to comply with all applicable local, state, and federal requirements would be appropriate, but requiring them to meet the same requirements that non-government entities must meet would be tremendously time-consuming, burdensome, and costly for public entities. It would also lead to endless disputes over which requirements public entities should comply with and how they should do so. For example, incumbent local exchange carriers, competitive local exchange carriers, Internet service providers, cable companies, private non-profit entities, and other communications providers are all subject to different requirements.

Requiring public communications providers to comply with all requirements that apply to private communications providers will not achieve a “level playing field” unless private providers are simultaneously required to comply with all open records, procurement, civil service, and other requirements that apply to public entities.

Call to Action: Contact these members of the South Carolina Senate Judiciary Committee right away and let them know you oppose H.3508:

(click names of individual members to obtain direct contact information)

Points to Share:

• While South Carolina ponders another bill tying the hands behind the backs of our community leaders, Tennessee’s community fiber network in Chattanooga just helped that state score thousands of new jobs for an Amazon.com distribution center.  Amazon is investing hundreds of millions in the state and local economy, creating new high quality jobs.  They chose Chattanooga because it had the digital infrastructure at a price that made that community too attractive to ignore.  Meanwhile, AT&T and other companies do not offer this level of service without a huge upfront commitment and lengthy delay to provision facilities.  That’s time for companies to look to states like Tennessee instead, where they can get the right service at the right price in days, not months.
• South Carolina delivers the country’s 9th worst broadband.  What high tech company will consider coming to our state when broadband service is so lacking?  Since private providers have had ample opportunity to deliver service themselves, and failed to do so, why can’t local communities decide what is best for themselves, free from special interest interference from big companies like AT&T.
• Why is AT&T setting the broadband bar so low in South Carolina when other states are enjoying fiber to the home service at lightning fast speeds?  The bar is set so low at 190kbps, it leaves South Carolina in the dust.  Our schools, public safety networks, health care facilities, and economy deserve better and could get a major economic boost from construction of networks similar to that in Chattanooga.  If it doesn’t make sense, communities won’t build it. If it does, why are we letting AT&T effectively make the final decision?
• Public broadband does not have to risk taxpayer dollars.  Successful fiber networks are being built in communities across the country at no risk to taxpayers.
• South Carolina must compete in the high tech economy.  We cannot do that with low speed wireless networks and DSL.  H. 3508 is corporate protectionism at its worst and will leave South Carolina without the flexibility to compete with states like Tennessee for future private sector investment.  What is more important — protecting AT&T’s incumbent copper wire facilities or attracting hundreds of millions of dollars in investment from private companies like Google and Amazon?

We have received several inquiries about where Stop the Cap! stands on the “Stop Online Piracy Act” — legislation currently in Congress designed to combat online piracy.  We’ve remained silent on this legislation for only one reason: we just haven’t have the time to cover it.  But I wanted to take a moment to answer the ongoing inquiries from readers about where we stand on this legislation.

In short, we oppose it.

As with virtually all legislation bought and paid for by large corporate interests, this attempt to thwart online piracy is yet another example of special interest overreach with a bountiful basket of unintentional consequences corporate lobbyists are not paid to consider when pushing the agenda of giant media and entertainment conglomerates.

As of yesterday, the Obama Administration seems to have recognized the growing opposition to the legislation from just about everyone apart from the corporate interests spending millions to promote and lobby it.  Some media reports seem to indicate SOPA is on the verge of being shelved, at least temporarily.  But you can be certain that like all monied legislation, it will be back.

Instead of a lengthy explanation about SOPA, we’d prefer to point you to some excellent pieces explaining why the proposed bill is a really, really bad idea.  Free Press has an organized campaign to stop the legislation in its current form, one that you should consider supporting, even if the bill is now languishing in Washington.  Also check out the Electronic Freedom Foundation’s web form to contact your legislators to oppose SOPA.

Stop the Cap! will participate in the Stop SOPA censorship campaign scheduled for tomorrow.  Visitors will first land on an information page explaining why this site “has been blocked.”  But that page includes a link to continue your journey back here, where regular coverage will continue.

Be sure to watch these two videos:

[flv width=”596″ height=”356″]http://www.phillipdampier.com/video/MSNBC Chris Hayes SOPA and Antipiracy Debated 1-15-12.flv[/flv]

Chris Hayes’ courageous in-depth debate about SOPA appeared on MSNBC, a network owned by Comcast-NBC, which ardently supports the legislation to the point of distributing pro-SOPA coffee mugs to employees. (18 minutes)

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/SOPA Marvin Ammori.flv[/flv]

Marvin Ammori’s assessment of the legislation appeared on Al-Jazeera English, one of the few news networks willing to discuss the proposed legislation on-air.  (4 minutes)

Angry Netflix investors upset that they did not receive advance warning the online and DVD rental movie service was facing the expiration of several important content contracts and would have to pay substantially more to renew them have launched a class action lawsuit against the company.

The City of Royal Oak Retirement System, which holds a substantial number of shares in the company, hired Robbins, Geller, Rudman & Dowd LLP, who filed the suit in U.S. District Court Friday on behalf of the pension fund and similarly situated investors.

The suit claims Netflix management misled investors with plans to grow the business while the company was actually preparing to significantly increase prices to cope with the increased licensing costs to stream content.

Netflix management in July announced it was effectively separating its streaming and DVD-by-mail businesses by charging individual subscription rates for each, resulting in a 60 percent rate hike for some subscribers.  Then it suggested it would spinoff its DVD rental business to its own division, to be called Qwikster.  Neither plan impressed customers, and led many to downgrade or discontinue service.  It did nothing for Netflix’s stock price either.  The stock tumbled from a July price of $291.27 to $94.79 last week.

The suit charges:

“At the beginning of the class period, Netflix was facing increasing competition for streaming business, and content providers were exploring new ways to distribute their content and/or maximize their licensing fees. Rather than fully disclose the devastating cost increases which were then threatening Netflix’s entire business, the defendants talked about [their] ability to grow.”

Several Netflix executives’ personal portfolios have grown as a result of selling their personal shares in the company, netting more than $90 million before the rate increase was announced, a fact the lawsuit also prominently mentions.

A western Indiana fiber-to-the-home project first envisioned more than five years ago is finally moving forward as it wins unanimous approval at the Tippecanoe County Redevelopment Commission.

Lafayette and West Lafayette, Ind., home to prestigious Purdue University, has a broadband problem.  Broadband advocates claim current providers Comcast and Frontier Communications underserve Tippecanoe County.  The former has put western Indiana on the “long list” waiting for service upgrades, and Frontier Communications offers little more than slow speed DSL in the region.  While Purdue arranges for its own Internet connectivity, off-campus students and area residents have had to make due with what the local cable and phone company offers, which isn’t much according to the locals.

“Comcast service has recently improved, but there is a big difference between Comcast service in a city like Chicago and what they deliver this part of Indiana,” shares Stop the Cap! reader Nick Jefferson, who tipped us to the recent developments.  “Frontier is a complete waste of time, and they have alienated customers across Indiana after taking over from Verizon Communications.”

In 2005, Tippecanoe County officials met with Verizon to encourage construction of its FiOS fiber-to-the-home network in western Indiana, as it had planned for the eastern Indiana city of Fort Wayne.  But Verizon sold off its Indiana landline operations to Frontier Communications, which has since shown little interest in expanding the fiber to the home network it inherited.  Now the county is considering financing a fiber network itself, to be ultimately run and administered by Cinergy MetroNet, which already provides service in the Indiana communities of Connersville, Greencastle, Huntington, Madison, New Castle, North Manchester, North Vernon, Seymour, Vincennes, and Wabash.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/WLFI Lafayette Ultra-high-speed net may be headed here 3-21-11.flv[/flv]

WLFI-TV explained the basics of the new fiber-to-the-home network and how it will be paid for in this report from March, 2011.  (2 minutes)

The $40-50 million project would not come out of taxpayer funds directly.  Instead, a novel financing approach would cover construction costs over a 15-20 year period using a combination of MetroNet investor funds and a “tax increment financing” district, which would provide a temporary tax abatement during the period the network is being paid off.  Taxpayer dollars would not be exposed — the financial risks would be to MetroNet and its investors alone.

A fiber to the home service would provide a network capable of gigabit broadband speeds, but historically Cinergy has offered lower speeds to their other Indiana customers, albeit at highly competitive pricing, along with packages of video and phone service.

Larry Oates, head of the West Lafayette redevelopment commission for the project, says the fiber network delivers more than just the promise of better broadband service

“This project could be a great economic development tool,” Oates told The Exponent. “It is up to the businesses and residents who live here to decide what to do with it. We are just facilitating their potential.”

The County Commissioners will decide later whether to give the project a final approval.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/WLFI Lafayette Tippecanoe County moves forward with plans for Fiber to Home 1-9-12.mp4[/flv]

WLFI in Lafayette reports Tippecanoe’s fiber to the home network has gotten unanimous approval from the country redevelopment commission.  (2 minutes)