Isiogu

A current member of the Michigan Public Service Commission is penning guest editorials featuring AT&T’s favorite talking points: promoting the company’s deregulatory agenda and providing false memes about Internet Overcharging schemes like usage caps and consumption billing.

Orjiakor N. Isiogu, co-vice chairman of the National Association of Regulatory Utility Commissioners Committee on Telecommunications and member and immediate past chairman of the Michigan Public Service Commission wrote nearly identical pieces appearing in The Hill, the Detroit Free-Press and the Battle Creek Enquirer that included misleading claims that could have come straight from an AT&T lobbyist’s “fact sheet.”

A sample:

The federal government has used the telecom industry as a model of how competition could be a better elixir than the guiding hand of government regulation. And the results are impressive. The high-speed Information Superhighway touches 95 percent of the U.S., and most consumers can choose from among six or more wireless or wireline providers (90 percent can choose from at least two). And the price of Internet access — measured by megabits per second — has fallen 87 percent since 1999, even as the speed has increased tenfold;

80 percent of U.S. homes now have access to download speeds of 100 megabits per second, and 4G wireless service will soon be available nationwide, with speeds of up to 20 megabits per second;

Despite the evidence, however, there are those who wonder whether there is sufficient competition for Internet access, whether speeds are too slow and prices too high. Others object to new pricing plans that allow a consumer to purchase the amount of bandwidth that best suits his needs.  In fact, some have asked the government to stop these new tailored pricing plans, even though these plans save nearly all consumers from having to underwrite the “outliers” whose monthly usage is gigantic — over 300 GBs a month or the equivalent of over 500 standard definition movies;

And if Teddy Roosevelt were with us today, he would likely argue that we can walk and chew gum at the same time, pointing to the banking industry as an example of industry excesses in need of a public check and the telecom industry as an example of how private competition, with occasional nudges, could better make the markets work.

In reality, if Teddy Roosevelt were alive today, he’d ask why a state commissioner working for the public is instead carrying water for the large telecommunications companies he oversees.

Did Roosevelt advocate the government keep their hands off AT&T and other consolidating telecom companies?

Isiogu doesn’t know his history either.

Roosevelt made no distinctions between the excesses of one industry over another. He strongly believed all major interstate corporations (and that would cover Isiogu’s friends at AT&T, Comcast, and other big telecom companies) should be subject to federal regulation and, in some cases, have their rates set by the government to ensure the public was charged fairly for the services they received. Roosevelt learned his lesson well from the oil, railway, and tobacco trusts his government sued to break up after years of consolidation and rapacious greed at the public’s expense. Those companies all claimed to be competitive as well.

Few industries have consolidated faster than the telecom sector, which is gradually rebuilding the Bell System in AT&T and Verizon’s image and a cable cartel that agrees never to compete directly with other cartel members.

Isiogu’s “facts” are disturbingly incomplete and misleading for a telecom regulator ostensibly serving the public interest.

For example, his claim that Americans can choose among six or more different providers ignores the fact AT&T and Verizon are counted twice (wired and wireless), no competition exists among multiple cable operators or phone companies, and many of the other options Isiogu counts (almost always wireless) do not provide coverage in suburban and rural Michigan. The average consumer in the U.S. has two practical choices for broadband — the cable or phone company.

While Isiogu sings the praises of American broadband, the rest of us have watched the price of Internet service continue to increase, whether customers want faster speeds or not. The industry itself admits it can raise prices because the competitive landscape and consumer love of broadband gives companies “pricing power.”

He also doesn’t mention the price of 100Mbps service or the fact it is not offered by either AT&T or (outside of one city) Time Warner Cable — both industry leaders. Wireless is no panacea either. 4G service may offer faster speeds, but usage plans that start with just a 1GB allowance make it hard (and expensive) to take advantage of the technology improvements. Just a few years ago those plans offered unlimited access.

Isiogu also tapdances around the fact no broadband provider in the country wants to sell a “pay for what you use” plan. Instead, companies create usage allowances that come with steep overlimit fees and, as AT&T executives have told shareholders, deliver limitless potential revenue growth as subscribers are forced to upgrade as their usage grows.

Most consumers favor and appreciate unlimited-use plans for predictable pricing and ease of mind. But flat rate plans ruin providers’ goals to monetize broadband usage and are usually eliminated when consumption pricing arrives, another fact Isiogu does not bother to disclose.

Isiogu has gotten remarkably cozy with the industry he oversees, even resorting to mind-bending pretzel logic that calls regulation for the banking sector a good idea and oversight of his industry friends a disaster.

What is disturbing is while Isiogu pens these industry friendly guest editorials in his spare time, he is also in a position of power to oversee and regulate these same companies in the public’s interest.

That represents a clear conflict of interest Teddy Roosevelt could see and feel from his grave.

Phillip “Oh look, more industry-backed research in denial regarding unpopular usage caps and consumption billing” Dampier

It seems America’s biggest industry-funded broadband astroturf group, Broadband for America, thinks the New America Foundation completely misses the point of “new pricing strategies” like restrictive usage caps, costly consumption-based billing, and fiendishly high overlimit fees. In a hurry, they released this particularly weak argument favoring usage pricing:

A new report by the New America Foundation suggests that “dwindling competition is fueling the rise of increasingly costly and restrictive Internet usage caps” in the broadband sector. But as we’ve explained before, these experimental new pricing strategies are actually signs of competition in the market and ultimately benefit consumers.

In terms of competition between broadband service providers, a study by Boston College Law School Professor Daniel Lyons concluded “data caps and other pricing strategies are ways that broadband companies can distinguish themselves from one another to achieve a competitive advantage in the marketplace.” He also concluded these practices were not anti-consumer: “When firms experiment with different business models, they can tailor services to niche audiences whose interests are inadequately satisfied by a one-size-fits-all flat-rate plan.” Indeed, many consumers are no longer satisfied with one-size-fits-all rate plans. Since data usage by individual users can vary dramatically, imposing a one-size-fits-all approach to pricing would result in light data users subsidizing the use of heavier ones. As Michigan State University Professor of Information Studies Steven Wildman explains, not having usage-based pricing models “means that light users pay a higher effective rate for broadband service, cross-subsidizing the activities of those who spend more time online. With usage-based pricing, those who use more bandwidth contribute more toward the cost of building and maintaining broadband networks.”

Broadband providers should be free to experiment with usage-based pricing and other pricing strategies as tools in their arsenal to meet rising broadband demand on their networks. Moving forward, Lyons recommends instituting public policies that allow providers the freedom to experiment, in order to best preserve the spirit of innovation that has characterized the Internet since its inception.

Broadband for America thinks they are clever when they introduce “academic papers” that extend credibility to their arguments. No, Broadband for America, we get the point. Your benefactors want to charge customers more  money for less service and call that a fair deal.

The wheels driving their talking points start to fall off the moment one peaks under their covers:

1. Broadband for America (BfA) is America’s largest telecom industry front group, backed almost entirely by cable and phone companies and dozens of supporting groups that are typically funded by those companies, have telecom industry board members, or whose lifeblood depends on doing business with Big Telecom companies.

2. Experimental pricing plans that largely leave existing pricing in place –and– impose new service limitations is not a sign of competition that benefits consumers, it is proof of its absence. With today’s broadband duopoly, there is little risk imposing new fees or service restrictions when the only competition you have typically follows suit. There is no evidence that usage-based pricing is saving consumers money, particularly when broadband providers are using their marketplace power to further increase prices.

3. There is no evidence “many consumers are no longer satisfied with one-size-fits-all rate plans” for home broadband. In fact, the reverse has been proved conclusively, sometimes by industry-funded researchers.

4. With a 90-95% gross margin on broadband, there is plenty of room for price cuts –and– unlimited broadband, but why give those profits away when lack of competition doesn’t provide the necessary push. Instead, providers’ ideas of “innovative pricing” are always upwards and include usage limits, modem rental fees, and other restrictions.

5. The railroad industry argued much the same case in the early 20th century when communities complained about wide pricing disparity, depending on local competition. We all know what eventually happened there.

6. Full disclosure, as is too often the case, is completely lacking at BfA. So we’ve offered to help:

The “study by Boston College Law School Professor Daniel Lyons” is accurate. He is now a faculty member there. But BfA fails to disclose the study was actually produced on behalf of the Koch Brother-funded Mercatus Center, which specializes in industry-friendly position papers on deregulation. Lyons is also on the Board of Academic Advisers at the Free State Foundation, itself an industry-backed astroturf group that advocates on behalf of large telecom companies, among others.

His colleague Michigan State University Professor of Information Studies Steven Wildman is also an adviser at the Free State Foundation. He is also a bit more transparent about where the money comes from for his studies advocating usage-based pricing – the National Cable and Telecommunications Association (NCTA), the largest cable industry lobbying and trade group in the United States.

The only surprise Lyons and Wildman could have delivered is if they advocated against these Internet Overcharging schemes. But then they probably would not have been invited to present their findings at an NCTA Connects briefing last week entitled, “Connecting the Dots on Usage-Based Pricing.”

We at Stop the Cap! can connect the dots as well.

Fuhr

Joseph P. Fuhr Jr. is a real helper. An economics professor at Widener University and a researcher for the Coalition for the New Economy, Fuhr spent time pondering America’s current debt crisis and impending “fiscal cliff” and has come up with some ideas on how to solve it, starting with ending support for community-owned broadband networks. He shared his findings in a guest column printed the Tallahassee Democrat.

“Generally, [these networks] add to the debt load of the municipality that runs them, a burden that certainly has come true in Florida,” Fuhr warns.

Ask most people where the government spends too much and many will suggest corporate welfare, the military, Medicare/Medicaid, or outdated government programs that have outlived their usefulness. Professor Fuhr thinks the gristle that must go comes from about 100 “government-owned broadband networks,” which he labels as “GONs.”

Perhaps that acronym is partly wishful thinking, because Fuhr does not see much use for municipal or public utility broadband, even in areas still waiting for large phone and cable companies to provide the service.

“Of course, not all Floridians are fortunate, not all have access to high-speed broadband, and they should,” writes Fuhr, despite the fact commiserating with the broadband-less does nothing to extend the service to those still using dial-up connections. “However, this service is one that the private sector is able and willing to provide given the correct incentives.”

Incentives. Like taxpayer-funded tax breaks, grants, and rebates?

Fuhr has no problem advocating for taxpayer-funded incentives for private corporate broadband providers, but he opposes directly funding an independent, community-owned broadband service. But it really should not come as a surprise. Fuhr’s sudden interest in cutting public broadband to save us from falling off the fiscal cliff is not really by random chance.

Although readers of the Democrat will probably never learn the “Coalition for the New Economy” is actually a front group largely funded by AT&T, Time Warner Cable, and other telecom industry players that have to compete with community broadband providers, our readers now do.

FCC Chairman Julius Genachowski’s cowardly lion act. The rhetoric rarely matched the results.

Washington insiders are predicting Federal Communications Commission chairman Julius Genachowski will leave his position early in President Obama’s second term.

It cannot come soon enough, as far as we’re concerned.

One of the biggest disappointments of the Obama Administration has been the poor performance of a chairman that originally promised a departure from the rubber stamp-mentality that allowed Big Telecom providers to win near-instant approval of just about anything asked from the Republican-dominated FCC of the Bush Administration. If only to underline that point, former FCC Chairman Michael Powell joined Republican ex-commissioner Meredith Atwell-Baker on a trip through the D.C. revolving door, taking lucrative jobs with the same cable industry both used to oversee.

We had high hopes for Mr. Genachowski when he took the helm at the FCC — particularly over Net Neutrality, media consolidation, and predatory abuse of consumers at the hands of the comfortable cable-telco duopoly. Genachowski promised strong Net Neutrality protections, better broadband — especially in rural areas, an end to rubber stamping competition killing mergers and acquisitions, and more aggressive oversight of the broadband industry generally.

What we got was the reincarnation of the Cowardly Lion.

The Washington Post reviews Genachowski’s tenure during the first term of the Obama Administration and reports he has few unabashed supporters left. Telecom companies loathe Genachowski’s more cautious approach and consumer groups hate his penchant for caving in when lobbyists come calling. In short, another Democrat that talks tough and caves in at the first sign of trouble.

“His tenure has been nothing but a huge disappointment because he’s squandered an opportunity to give consumers the competitive communications market they deserve,” Derek Turner, head of policy analysis at public interest group Free Press told the Post. “If someone like him upholds compromise, it quickly leads to capitulation, which is what he’s done. He folds…to the pressure of big companies.”

Genachowski’s Record:

• Heavily promoted rural broadband and oversaw a review program measuring actual broadband speeds against those claimed by providers. But much of the money available for improving rural broadband has been separately awarded to “middle mile” and “institutional networks” that are not accessible to most consumers or businesses. Genachowki has heaped automatic praise on many of the phone companies winning broadband funding, despite the fact many of them are satisfied giving consumers no better than 4Mbps service;
• Reformed the outdated Universal Service Fund, which long outlived much of its usefulness, into a broadband expansion fund. But some unintended consequences have led to some rural providers suspending network upgrades because of funding uncertainties still unresolved;
• Approved a blockbuster merger deal between Comcast and NBC-Universal that included temporary “hard-won” concessions Comcast later admitted they were going to offer anyway – merger or not. The result is a new high bar for tolerating super-sized media consolidation with no serious consideration of the impact on consumers. The latest evidence: support for Rupert “Phone Hacker” Murdoch’s latest efforts to buy more newspapers in the United States;
• Rejected an AT&T/T-Mobile merger deal, but only after the Justice Dept. took the lead dismissing it as an anti-consumer, anti-competition nightmare. Within hours, Genachowski’s office issued a “me, too” press release condemning the deal he said little about earlier;
• Demanded a strong Net Neutrality framework to protect the open Internet, but utterly caved under pressure from politicians receiving hefty corporate contributions from AT&T and others. The resulting loophole-ridden “protections” do not apply to wireless, and the industry-approved compromise is now the subject of a lawsuit filed by some of the same companies that earlier applauded Genachowski’s flexibility;
• Genachowski handed out his direct phone numbers to the CEO’s of the top Big Telecom companies, and has been directly lobbied by those “super-citizens,” while ordinary consumers are stuck filing comments with the FCC’s arcane Electronic Comment Filing System. Genachowski also directed closed-door meetings be held on the subject of Net Neutrality with large telecom companies. These meetings were closed to the public with no consumer representatives on hand;
• Genachowski refused to reclassify broadband as a “telecommunications service,” which would give the agency clear-cut authority to oversee the service. Instead, he has stuck with former FCC Chairman Michael Powell’s odd interpretation of broadband as “an information service,” not subject to much review by the agency;
• Appropriately nixed Philip Falcone’s LightSquared venture, the biggest threat to GPS navigation around. But Genachowski’s controversial early boosting of the venture, including support for expedited special permission to launch the network without the usual scrutiny, resulted in an embarrassing about-face after long-standing critics’ fears of navigation interference were vindicated;
• In 2012, Genachowski’s cozy relationship with the industry reached whole new levels with unabashed support for Internet Overcharging schemes like usage caps and consumption billing, despite no evidence justifying them. The FCC has continued to ignore repeated requests for a review of these pricing schemes.

The United States once led the world in Internet speed and infrastructure. Now, according to one estimate, it ranks at about 29. Brooke talks to David Cay Johnston, journalist and author of “The Fine Print: How Big Companies Use Plain English to Rob You Blind,” who says that companies continue to raise prices and engage in lobbying efforts to rewrite regulation, while avoiding necessary upgrades to infrastructure that would speed up America’s Internet.  Companies promised major fiber broadband upgrades, but diverted that money to building a wireless conglomerate instead. (6 minutes)