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?

Verizon Wireless became the Bank of America of late 2011 when it attempted to impose a $2 “convenience fee” on select customers who prefer to pay their monthly phone bills online or through an automated telephone attendant.  It’s just the latest experiment in customer gouging — the same kind of toe-in-the-water strategic experimenting that unleashed ubiquitous baggage fees on airlines, low balance fees on checking accounts, and the increasingly-common practice of charging customers extra to mail them their monthly bill.

An entire industry of consultants pitch their creative talents to companies like Verizon who want “a little extra” from captive customers.  These specialists sell their expertise identifying the most vulnerable (and least likely to leave), who will grin and bear just about any kind of abuse heaped on them. Many income and resource-challenged consumers are left feeling powerless to protest and reverse unwarranted extra charges.

The consultant gougers-for-hire made millions for large banks when they figured out how to score the biggest bounced check and overdraft fees (simply pay the biggest check first, opening the door to $39 bounced check fees for all the little checks that follow).  Verizon’s $2 fee targeted customers who couldn’t afford to let the company automatically withdraw their monthly payment, or didn’t trust the company to do it correctly.  Even more, Verizon’s fee would target more desperate past-due customers who needed to make a fast payment to avoid service interruption.  Consumer advocates wondered if Verizon was successful charging these customers more, would they expand the fees to cover all online or pay-by-phone payments?

We’ll never know because the public outcry and intensive media coverage during a slow holiday week combined to force Verizon into a fourth quarter revenue retreat, rescinding the fee 24 hours after announcing it.  But Verizon may be pardoned if they feel they were unfairly singled out.  That is because other telecommunications companies have been charging certain customers bill payment fees of their own for years:

Verizon's evolved position on the $2 convenience fee (Courtesy: WTVT)

• Stop the Cap! reader Larry writes to share TDS Telecom, an independent phone company, charges a $2.95 “third party processing fee” when accepting payments by phone.  “In its place you either have to revert to U.S. Postal Service, or agree to electronic billing for on-line payment access.”
• AT&T charges a $5 bill payment fee for “certain customers.”
• Sprint/Nextel not only has its own $5 bill payment fee for those paying at the last minute,  it also forces customers with spotty credit to sign up for auto-pay to avoid a mandatory surcharge.  Want a paper bill?  That’s $2 extra a month.
• Comcast charges a $5.99 payment fee, but only in certain states.
• Time Warner Cable charges fees ranging from an “agent assisted payment” fee ($4.99) to a statement copy fee ($4.99) in some locations.

While Verizon has agreed to drop its latest new charge, the company’s carefully-named bill-padding extra fees attached to monthly bills remain.  In addition to breaking out and passing along all government fees and surcharges, Verizon also bills customers administrative and regulatory recovery fees that, for other companies, would represent the cost of doing business.  These latter two go straight into Verizon’s pocket, despite the implication they are third party-imposed mandatory surcharges.

Had Verizon called their new $2 “convenience” fee a “business efficiency accounting recovery fee,” would they have snookered enough consumers to get away with it?

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WTVT Tampa Verizon cancels planned 2 bill-pay fee 12-30-11.mp4[/flv]

WTVT in Tampa says Verizon did a complete 180 on its $2 bill payment “convenience fee.”  (3 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CNN Verizon Dumps Fee 12-30-11.flv[/flv]

CNN hints the FCC’s potential involvement in Verizon’s business may have had something to do with the quick shelving of the $2 fee.  (2 minutes)

Phillip Dampier on USF Reform: It might have been great, it could have been a lot worse, but ultimately it turned out to be not very good.

Last week, the Federal Communications Commission unveiled their grand plan to reform the Universal Service Fund, a program originally designed to subsidize voice telephone service in rural areas deemed to be unprofitable or ridiculously expensive to serve.  Every American with a phone line pays into the fund through a surcharge found on phone bills. Urban Americans effectively subsidize their rural cousins, but the resulting access to telecommunications services have helped rural economies, important industries, and the jobs they bring in agriculture, cattle, resource extraction, and manufacturing.

The era of the voice landline is increasingly over, however, and the original goals of the USF have “evolved” to fund some not-so-rural projects including cell phone service for schools, wireless broadband in Hollywood, and a whole mess of projects critics call waste, fraud, and abuse.  For the last several years, USF critics have accused the program of straying far from its core mission, especially considering the costs passed on to ratepayers.  What originally began as a 5% USF surcharge is today higher than 15%, funding new projects even as Americans increasingly disconnect their landline service.

For at least a decade, proposals to reform the USF program to bridge the next urban-rural divide, namely broadband, have been available for consideration.  Most have been lobbied right off the table by independent rural phone companies who are at risk of failure without the security of the existing subsidy system.  Proposals that survived that challenge next faced larger phone company lobbyists seeking to protect their share of USF money, or by would-be competitors like the wireless industry or cable operators who have generally been barred from the USF Money Party.

This year, FCC Chairman Julius Genachowski finally achieved a unanimous vote to shift USF funding towards the construction and operation of rural broadband networks.  The need for broadband funding in rural areas is acute.  Most commercial providers will candidly admit they have already wired the areas deemed sufficiently profitable to earn a return on the initial investment required to provide the service.  The areas remaining without service are unlikely to get it anytime soon because they are especially rural, have expensive and difficult climate or terrain challenges to overcome, or endure a high rate of poverty among would-be customers, unable to afford the monthly cost for the service.  Some smaller independent phone companies are attempting to provide the service anyway, but too often the result is exceptionally slow speed service at a very high cost.

The new Connect America Fund will shift $4.5 billion annually towards rural broadband construction projects.  Nearly a billion dollars of that will be reserved in a “mobility fund” designated for mobile broadband networks.

The goal is to bring broadband to seven million additional households out the 18 million currently ignored by phone and cable operators.

The FCC believes AT&T will take a new interest in upgrading its rural landline networks, even as the company continues to lobby for the right to abandon them.

Unfortunately, the FCC has set the bar pretty low in its requirements for USF funding.  The FCC defines the minimum level of “broadband” they expect to result from the program — 4/1Mbps.  That’s DSL speed territory and that is no accident.  The phone companies have advocated a “less is more” strategy in broadband speed for years, arguing they can reach more rural customers if speed requirements are kept as low as possible.  DSL networks are distance sensitive.  The faster the minimum speed, the more investment phone companies need to make to reduce the length of copper wiring between their office and the customer.  Arguing 4Mbps is better than nothing has gotten them a long way in Washington, but it also foreshadows the next digital divide — urban/rural broadband speed disparity.  While large cities enjoy speeds of 50Mbps or more, rural towns will still be coping with speeds “up to” 4Mbps.

The FCC does not seem too worried, relying heavily on a mild incentive program to prod providers to upgrade their DSL service to speeds of 6/1.5Mbps.

The irony of asking AT&T to invest in an aging landline network they are lobbying to win the right to abandon is lost on Washington, and future speed upgrades for rural America from companies like Verizon are in serious doubt when they sell off their rural areas to companies like FairPoint and Frontier and leave town.

Critics of USF reform suggest the program is still stacked in favor of the phone companies, and considering the state of their copper wire networks, would-be competitors are scratching their heads.

The cable industry, in particular, is still peeved by reforms they feel leave them at a disadvantage.  Of course, Washington may simply be recognizing the fact cable companies are the least likely to wire rural America, but when they do, the service that results is often faster than what the phone company offers.  The nation’s biggest cable lobbyist — ironically also the former chairman of the FCC, Michael Powell — still feels a little abused after reading the final proposal.

“While we are disappointed in the Commission’s apparent decision to ignore its longstanding principle of competitive neutrality and provide incumbent telephone companies an unwarranted advantage for broadband support,” said National Cable & Telecommunications Association President Michael Powell, “we remain hopeful that the order otherwise reflects the pro-consumer principles of fiscal discipline and technological neutrality that will bring needed accountability and greater efficiency to the existing subsidy system.  We are particularly heartened by the Commission’s efforts to ensure that carriers are fairly compensated for completing VoIP calls.”

Wireless operators are not happy either, because the arcane requirements that come with the USF bureaucracy were written with the phone companies in mind, not them.  Small, family-owned providers find it particularly difficult to do business with the USF, if only because they don’t have the staff or time to navigate through endless documents and forms.  Phone companies do.

Your phone bill is going up.

Many consumer groups are relieved because it could have been much worse.   The FCC could have simply capitulated and adopted the phone companies’ wish-list — the ABC Plan.  Thankfully, they didn’t, but the FCC has naively left the door open to substantial rate increases for consumers by not capping the maximum annual outlay of the fund.  That follows the same recipe that invited higher phone bills and questionable subsidies awarded in an effort to justify the original USF program even after it accomplished most of its goals. Consumers may face initial rate increases of $0.50 almost immediately, and up to $2.50 a month five years from now.

The FCC, unjustifiably optimistic, suspects phone companies and other telecommunications interests won’t gouge customers with higher prices.  They predict rate increases of no more than 10-15 cents a month.  I wouldn’t take that bet and neither will consumer groups.

“We’re going to press the FCC to ensure that these are temporary increases, because history has shown that these types of costs tend to stick around and go on and on and on,” said Parul Desai, policy counsel for Consumers Union.

An even bigger question left unanswered is just how far the FCC will get into the broadband arena when it refuses to take the steps necessary to ensure it has an admission ticket.  The agency has avoided classifying broadband as a telecommunications service, an important distinction that would bolster its authority to oversee the industry.  Without it, some members of Congress, and more importantly the courts, have questioned whether the FCC has any business in the broadband business.  Just one of the many high-powered players in the discussion could test that theory in the courts, and should a judge throw the FCC’s plan out, we’ll be back at square one.

[flv]http://www.phillipdampier.com/video/C-SPAN Tom Tauke from Verizon on Changes to the Universal Service Fund 10-29-11.flv[/flv]

Verizon’s chief lobbyist Tom Tauke spent a half hour last weekend on C-SPAN taking questions about USF reform and the side issues of IP Interconnection and Net Neutrality policies. Tauke supports consolidation of small phone companies into fewer, larger companies.  He also expands on his company’s lawsuit against Net Neutrality, which fortuitously (for Verizon) will he heard by the same D.C. Court of Appeals that threw out the FCC’s fines against Comcast for throttling broadband connections.  Politico’s Kim Hart participates in the questioning, which also covered wireless spectrum issues impacting Verizon Wireless, AT&T’s stumbling merger deal with T-Mobile, and Verizon’s latest lawsuit against the FCC for data roaming notification rules.  (28 minutes)

In August, Time Warner Cable’s billing system went haywire for some 15,000 Ohio customers, some of whom found their promotional rates canceled, resulting in a doubling of their monthly bills.

One such Time Warner customer is Linda Sacash, who lives in Russell Township.  She had a three-year deal, in writing, with Time Warner that provided her family with a triple play package of Internet, telephone, and cable service for $89.95 a month.  But when her August bill arrived, Time Warner insisted she owed twice that amount — $179.

Sacash, among others, started calling Time Warner to complain about the inaccurate bills and was told the cable company unilaterally decided to expire promotional packages a year early.  Sacash wasn’t happy with that explanation, and noted a clause in her written agreement that limited rate increases to no more than 10 percent a year.  That didn’t matter much to Time Warner, who looked forward to receiving her new $179 payment by the due date on her bill.

Time Warner’s attitude changed, however, when WEWS-TV consumer troubleshooter Joe Pagonakis turned the camera on himself, and called the cable company looking for answers:

The company responded immediately, admitting some 15,000 bills were processed inaccurately during the summer.

Time Warner quickly corrected Sacash’s bill, and confirmed that her promotional offer will remain in place until November 2012, as stated in the Time Warner service invoice.

If considering a promotional offer, get it in writing and keep the paperwork for the length of the promotion, just in case your provider decides to renege on the deal. If signing up for a promotion over the phone, always get the name, extension/employee ID, and the exact details of the offer and keep those details in your files.  It’s often easier to get a company to stand up to their commitments when you have the name and extension number of the employee who sold it.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WEWS Cleveland Russell Township woman fights wins battle over inaccurate Time Warner digital cable bill 10-24-11.mp4[/flv]

WEWS-TV in Cleveland intervenes on behalf of a local woman who faced a doubling of her cable bill when Time Warner elected to end her promotion a year early.  (2 minutes)