[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Arbogast Sees ATT Sweet-Talking for T-Mobile Approval 3-21-11.mp4[/flv]

Rebecca Arbogast, analyst with Stifel, Nicolaus and Co., discusses AT&T Inc.’s $39 billion purchase of Deutsche Telekom AG’s T-Mobile USA unit. As the acquisition may take a year to gain regulators’ approval, AT&T will need to “sweet-talk” regulators, consumers, and the Obama Administration with promises of rural coverage and broadband enhancements.  That means astroturf groups that claim to represent consumers but are funded by telecom companies will be a growth industry in 2011.  The question Bloomberg’s Betty Liu does not ask is whether competitive pressures against AT&T would force them to provide better service anyway, without wiping one of four national players off America’s wireless map.  (4 minutes)

Don't allow a "dollar-a-holler" mouthpiece for the broadband industry to speak on your behalf. Get on the phones and send those e-mail messages today!

H.129, Rep. Marilyn Avila’s (R-Time Warner Cable) anti-broadband bill has been moving full speed ahead as she hurries it through the state legislature before consumer outrage gets a chance to block it.  Tomorrow morning, it will make a stop at the Finance Committee, where we expect the bill’s broadband-killing language will remain largely intact, thanks to hard work from Time Warner Cable and their astroturf friends.

While Ms. Avila is e-mailing copies of a so-called “independent article” about H.129 written by a man who received a $20,000 check from Time Warner Cable and works for a telecommunications company-funded think tank to her colleagues, you need to be e-mailing, tweeting, and calling your friends and neighbors and get everyone to call or write the individual members of the Finance Committee immediately.

Here are the points you need to raise:

1. Please vote NO on H.129, an unnecessary bill that does nothing to improve broadband in North Carolina;
2. H.129 is sponsored by the state’s biggest cable and phone companies to protect their anti-competitive markets and guarantee high rates for slow service indefinitely;
3. The fastest broadband at the fairest prices in the state comes from 21st century fiber optic networks that will be driven out of business if this bill becomes law;
4. Although Ms. Avila and Chairwoman Howard promised to protect and exempt existing community broadband networks from the terms of this bill, they have not yet kept their promise;
5. If the companies supporting this bill delivered broadband at the speed they are rushing H.129 through the legislature, North Carolina would not have a broadband problem;
6. If rural communities cannot solve their own broadband problems, who will?  The companies that refused to provide appropriate service yesterday, today, and will continue to not do so tomorrow?

Make sure you remind your legislator this is not a Republican of Democratic issue — it’s a consumer issue, it’s an issue for every rural community, and it’s an issue for the future economic well-being of a state that needs digital economy jobs.

Finance Committee Members

(click each name for contact information)

Powell

Former Federal Communications Commission Chairman Michael Powell has been hired as America’s top cable industry lobbyist — taking over as president of the National Cable & Telecommunications Association.

Powell’s tenure on the Commission started during the Clinton Administration after President Clinton signed the 1996 Communications Act into law, which brought sweeping deregulation and industry consolidation.  Powell’s appointment as one of two Republican commissioners came with an agenda for deregulation and competition.  Powell believed free markets were best equipped to manage telecommunications in the United States.

His regulatory record impressed President George Bush, who appointed him chairman of the FCC during his first term.  Powell’s service at the Commission was marked by good times for the telecommunications industry, which was rapidly consolidating even as it added new customers.  Broadband was a rapid growth industry and getting service to consumers was a priority.  Powell’s interest in broadband often walked over the interests of others regulated by the Commission.  Powell was a major proponent of the now-forgotten “broadband over power lines” concept, which alienated broadcasters and amateur radio operators because the technology used unshielded power lines which often reduced much of the AM and shortwave radio dial to a cacophony of digital noise where it was attempted.

Powell’s record was consistently pro-provider except in one area — he was a strong advocate of Net Neutrality, going as far as to fine Madison River Communications for blocking VoIP telephone service in 2005 – the first time the concept of Net Neutrality was enforced.

The NCTA is the cable industry's biggest lobbying group.

Later, he laid the foundation for a flawed mechanism to partially enforce Net Neutrality under an FCC policy that classified broadband as an “information service,” not a “telecommunications service.”  It was this policy that was the subject of a lawsuit by Comcast which objected to the policy framework as untenable and lacking in authority.  A DC Court of Appeals agreed and overturned the policy, setting the stage for the 2010 fight for Net Neutrality.

During the start of Bush’s second term, Powell left the FCC and quickly assumed membership on the Board of Directors at Cisco, an equipment manufacturer that also sells the theory of the “zettabyte era,” where a great wave of Internet usage could create Internet “brownouts.”  Cisco and other manufacturers have also closely aligned themselves with the large telecommunications companies who are among their best customers.

Powell today serves as “honorary co-chair” of the industry front group Broadband for America, perhaps America’s largest corporate astroturf telecom group supporting broadband policies favorable to the industry that pays for their operation, while purporting to represent consumer interests.

Kyle McSlarrow is the outgoing head of the cable lobby.

His assumption of leadership at the NCTA, replacing Kyle McSlarrow (who is headed to Comcast to run their DC lobbying operation) — a strong advocate of Internet Overcharging — is likely a natural fit for the cable industry agenda, with the exception of Powell’s “tarnished record” of supporting Net Neutrality.  But his anti-regulatory, pro-provider credentials go unquestioned by most in the industry.  The congratulatory well-wishes have come pouring in since the announcement earlier today:

Matt Polka, American Cable Association: “The American Cable Association congratulates former Federal Communications Commission chairman Michael Powell on his appointment as NCTA’s new president and CEO. Everyone in the independent cable community wishes Michael the very best in his new position, and we look forward to working with him on the issues that are important to both large and small cable operators.”

Brian Roberts, Comcast: “We are thrilled that Michael Powell has accepted the position as CEO of NCTA. As a former FCC Chairman and advisor to Providence Equity, Michael brings unprecedented government and business experience to his new position. Michael is respected by the leaders of both the Senate and House, Republicans and Democrats, as well as the Administration and the business community. The cable industry is fortunate to have him as the new leader of our trade association.”

Gordon Smith, Nat’l. Assn. of Broadcasters: “NAB salutes the NCTA for its outstanding choice of former FCC chairman Michael Powell as its new president and CEO. I got to know Michael well during my tenure on the Senate Commerce Committee, and always found him to be thoughtful, engaging and a tremendous public servant. Though NAB and NCTA do not always agree on every issue, we look forward to working with Michael in the months ahead on public policy issues where we might find mutual agreement.”

The revolving door never stops turning as regulators take jobs with the industries they used to regulate.

Among consumer groups, Media Access Project and Public Knowledge tried to start off on a good note.  Andrew Schwartzman from MAP has a long history disagreeing with Powell during his time at the FCC, but still calls him a friend and looks forward to sparring with him in the future.  Gigi Sohn from Public Knowledge said their group hopes he will “help the association realize the transition to a broadband economy will take many forms, as consumers wish to exercise choices of online services and service providers.”

Free Press was in no mood to ingratiate themselves with Powell.  Craig Aaron, Free Press Managing Director, issued a statement affirming this was indeed good news for the cable industry.

“If you wonder why common sense, public interest policies never see the light of day in Washington, look no further than the furiously spinning revolving door between industry and the FCC.

Former Chairman Michael Powell is the natural choice to lead the nation’s most powerful cable lobby, having looked out for the interests of companies like Comcast and Time Warner during his tenure at the Commission and having already served as a figurehead for the industry front group Broadband for America.

During his time as a public servant, Chairman Powell once dismissed the notion of a digital divide as no different from the Mercedes divide that afflicted him — after all, he said, not everyone who wants a Mercedes can have one.

Thanks in no small part to the policies he pursued at the FCC and to the cable lobby’s unyielding fight against any real competition in the broadband market, the digital divide is still with us. But today we can finally say, at least in Michael Powell’s case, that the Mercedes divide is closing.”

Despite promises from AT&T and their astroturf friends that telecom deregulation would result in lower prices for Ohio residents, the company announced this week it was -increasing- prices for basic landlines — the service Ohio’s poorest rely on most from the phone giant.

AT&T Ohio residential customers are receiving notices with their recent bills that effective Jan. 7, monthly service will increase by $1.25, the maximum amount allowed under Ohio’s new deregulation law.  Before taxes, fees, and surcharges, Ohio phone rates for basic residential service will increase from $14.25 to $15.50.

It’s the fourth rate hike in four years for Ohio landline customers who were promised savings as a result of telecommunications deregulation.

But in fact AT&T’s lobbyists recommended and got language in the legislation that actually reduced the competitive test required for AT&T to win approval of rate increases.

Under old Ohio law, AT&T had to show they had at least five competitors in a service area; today that number has been reduced to just two, leaving virtually the entire state wide open to unfettered rate hikes.

“It is unfortunate residential consumers will have to pay more for basic landline service, especially during these difficult economic times,” Consumers’ Counsel Janine Migden-Ostrander told the Times-Reporter.

The Ohio Consumers’ Counsel tried to have the rate increase rolled back, arguing under the new law, AT&T Ohio failed to show proof that even two competitive services are available.

But AT&T’s lobbyists made sure the company really did not have to respond, because the new law provides for automatic approval if Ohio’s Public Utility Commission fails to deny rate hike requests within a 30 day window.  In this case, they did not rule on the Consumer Counsel’s appeal within 30 days, which effectively ceded the issue to AT&T’s favor.

While large numbers of Ohio residents continue to drop landline service in favor of cell phones or phone service from the cable company, Ohio’s rural and poor consumers are the least likely to cancel landline service, and face the brunt of the rate hikes, even as they cannot buy (or afford) products like U-verse AT&T said would be possible with statewide deregulation.

No, don't get up. We've got it.

Want an example of the kind of lazy journalism you get from one of America’s largest news operations, about to become a part of the Comcast family?  Look no further than MSNBC’s Wilson Rothman, who shared some serious Net Nonsense in his piece: ‘Open’ Internet just a pipedream.

Rothman apologized in a tweet after publishing the essay, admitting it was “cynical.”  But we want to know where the apology is for being wrong on the actual facts.

The author tells readers it’s a Comcast world this winter:

As long as you buy Internet access via cable provider, wireless carrier or telecom, you’re going to have to play — or at least pay — by their rules. They’ll just have to make sure to tell you what those rules are. That seems to be the real gist of the FCC order that was ratified today.

[…]The only people currently getting throttled by their broadband providers are file-sharing pirates who wouldn’t be protected by any net neutrality regulation anyway; meanwhile, wired and wireless broadband networks are increasingly controlled by a smaller, more powerful cadre of competitors.

Tiered pricing has to happen

You can use as much electricity from the power grid as you want, but you have to pay by the kilowatt hour. If you think of the Internet as a utility — and why shouldn’t you? — network management should look something like that. Prices offered by regulated private companies should be competitive and reasonable, but highly metered. Sadly, that means no more flat-fee unlimited access.

[…]I don’t mean to sound cynical, but I come at this from a technology background, not a legal or political one. What I see are all the ways in which “public” access to utilities become profit centers for increasingly massive companies.

After the break-up of the Bells, the phone companies eventually consolidated and worked their way back together like some kind of liquid-metal Terminator. The good news? Instead of a single monopolistic phone company, we have two Leviathans and some smaller fish. Long-distance service used to be their cash cow; now it’s wireless and broadband, and they’re not going to let those slip so easily.

“Give that man a raise,” said Brian Roberts, Comcast CEO.

Seriously, Rothman might come from a technology background, but he sure doesn’t know his way around the broadband public policy debate. Digging into the reasons for today’s broadband mess would require actual reporting.

Rothman suggests Americans are effectively required to accept today’s decision from the Federal Communications Commission.  That’s akin to telling Time Warner Cable customers they should have just knelt down to the cable company’s 2009 pricing experiments.  Or that North Carolina needed to padlock community broadband networks until they could be sold on eBay to the highest Big Telecom bidder.  Or that Frontier can and should get away with a 5GB usage cap.

We said no.  You said no.  And we won all three of those battles.

Today’s FCC vote has relevance only until the first major cable or phone company (or interested third party) files a lawsuit.  The outcome is predictable — the same court that threw out the FCC’s authority earlier this year will do so again, for many of the same reasons.  For consumers, that isn’t all bad.

Rothman’s claim that only pirates are victims of speed throttling is demonstrably false, and nothing less than journalistic malpractice.  Innocent consumers are routinely throttled on wireless and wireline broadband networks using “network management” technology.  Are Clear’s customers all pirates?  How about Cricket’s clients?  Exceeding an arbitrary amount of usage on these networks guarantees you a spot in the dial-up-like doghouse.

The author also misses the point about increasing consolidation in the Big Telecom marketplace.  Cadre?  Sure.  Competitors?  Hardly.  Most Americans endure a broadband duopoly for reasonable Internet access — a cable and phone company.  Cable and phone companies have quite a deal.  They effectively charge around the same price for service and never have to worry about a third cable or phone company entering the marketplace.  Cable companies don’t compete with other cable companies.  Same for telephone companies.  Community broadband networks deliver the only real competition some areas have, which is why Big Telecom wants to ban these upstarts wherever they can.  Big Telecom believes Americans should not get to choose an alternative cable company if Comcast delivers terrible service.  Consumers living in small communities like Penn Yan, N.Y., live with Verizon DSL, if they are lucky.  Outside of the immediate town limits, there isn’t a cable competitor, much less another phone company.  That’s the real “take it or leave it” Americans contend with.

Rothman's electric utility analogy is as valid as charging for broadband by the foot.

Why shouldn’t Americans think of broadband as just another electric utility?  Because it isn’t.  This common talking point/analogy adopted by Rothman’s future employer has as much validity as pricing broadband by how many feet of wire was necessary to install it.

Broadband is neither a limited resource nor a product that requires a utility to purchase raw materials to perpetually generate.  His argument works only if a provider “generated” the actual content you consume online.  They don’t — they simply transport content from one point to another over a network that becomes enormously profitable once the initial construction costs are paid.  Rothman can discover this for himself reviewing the quarterly financials of broadband providers.  After billions in profits are counted, it’s clear this is one recession-proof industry that is hardly hurting.

It’s no mistake these analogies always leave out the one utility that is most comparable to broadband — telephone service.  You know, the one service that is rapidly moving towards unlimited, flat rate — talk all you want.  Providers using the consumption billing argument cannot afford to include phone service in their analogy, because then the ripoff would be exposed.  One would think a reporter for NBC News might have managed to figure that one out as well, but no.

The fact is, there is no healthy competition in broadband.  You know what that means — high prices for limited service.  Rothman seems ready and willing to take whatever Big Telecom wants to dish out, but then his paycheck is about to be paid by one of those companies, so he can afford to be cynical.

Unfortunately for his readers, Rothman is oblivious to the reasons why phone companies have consolidated and consumers are stuck with the results.  The recipe:

• A multimillion dollar lobbying effort that includes huge contributions to politicians, astroturf “dollar-a-holler” groups paid to front for Big Telecom’s agenda, and a mess of scare tactics predicting horrible things if they do not get their way;
• A supine media that simply accepts provider arguments as fact, deems the abusive practice that follow as inevitable, and apologizes later for being cynical;
• An uninformed public that decreasingly relies on media companies that also happen to have direct financial interests in the outcome of these public policy debates.

Consumers have more power than Rothman thinks when they take a stand with elected officials.  When taking AT&T money becomes more costly than voting for their constituents, elected officials will do the right thing.  That takes individuals letting elected officials they are watching them closely on these issues.

Consumers can also tell their local elected officials that the Big Telecom Money Party needs to come to an end.  A community-owned broadband network that throws out the online toll booths and creates a network for Main Street instead of Wall Street is the functional equivalent of handing unruly Verizon and Comcast their coats and escorting them the door.