Efforts to develop new unlicensed uses for the public airwaves that include high-powered public Wi-Fi may be shelved if AT&T and House Republicans succeed in their joint effort to force those frequencies to be sold in a spectrum auction.

Majority House Republicans on the House Communications & Technology Subcommittee on Wednesday lectured all five FCC commissioners, insisting they have no authority to set aside spectrum specifically for unlicensed use when those airwaves could be sold to private companies.

Sub-Committee chairman Greg Walden (R-Ore.) criticized FCC Chairman Julius Genachowski for his plans to “give away” scarce airwaves eventually open to the public’s use when they could fetch as much as $19 billion in auction proceeds from large telecommunications companies seeking to own and control those frequencies.

Walden, the House’s second largest recipient of campaign contributions from the same companies likely to bid on that spectrum, insisted federal law only allows the Commission to designate unlicensed uses for so-called “technically necessary guard bands,” which act as a buffer between neighboring frequency users to protect against interference. Walden also criticized the FCC for setting aside too much spectrum for that protection.

Walden, the second largest recipient of telco cash in Congress.

The Oregon congressman has collected more than $84,000 in campaign contributions from telephone companies so far this year. Only House Speaker John Boehner won larger contributions from companies like AT&T.

Other Republican members of the subcommittee agreed with Walden’s sentiment and also received generous contributions from AT&T this year.

Rep. Lee Terry (R-Neb.), wanted to be sure the FCC does not impose “value-sapping restrictions” on the use of privately-owned airwaves owned by large telecommunications companies. Terry is the third largest recipient of campaign contributions in the House from those telecom companies, adding $69,400 so far this year to his campaign coffers.

Rep. Joe Barton (R-Tex.) expressed concerns that spectrum auctions could displace low-power television stations to make way for mobile communications. But Barton did not oppose the auctions generally. His largest contributor: AT&T, which sent him checks for more than $21,000 in 2012.

Representative Robert E. Latta (R-Ohio) suggested auctioning off airwaves intended for public use to large mobile broadband companies would help America’s competitiveness, alluding to his belief unlicensed, free use of the airwaves for new wireless applications would not. Latta cashed $10,500 in AT&T checks so far this year — his fourth largest contributor. Latta added he wanted there to be transparency and openness in the entire spectrum process. He did not disclose his significant contributions from AT&T at the hearing, despite being a chief stakeholder in the debate.

Rep. Marsha Blackburn (R-Tenn.) agreed with large telecommunications companies that the maximum amount of available spectrum should be sold off to private companies to sell mobile broadband services to the public. Blackburn’s third largest campaign contributor this year is Verizon Communications, who sent her $15,400. AT&T, her ninth largest contributor, handed her $13,250, together adding up to $28,650.

The Democrats on the panel roundly criticized Republican plans to sell off spectrum intended for unlicensed, public use applications to large wireless companies, which already own and control frequencies they still have not put into service.

Terry, worried about “value-sapping” regulations.

Rep. Henry Waxman (D-Calif.) called unlicensed spectrum an incredible economic success story.

“Innovative services like Wi-Fi and Bluetooth are now ubiquitous parts of our communications system,” he said in his opening remarks. “They came about because of the use of unlicensed spectrum.”

Waxman suggested eliminating or limiting unlicensed spectrum would destroy innovation and further concentrate wireless communications in the hands of a handful of companies. Waxman said Congress’ original intent in passing laws that permitted the FCC to move forward with spectrum auctions also authorize the agency to protect competition and prevent unnecessary concentration of spectrum ownership to the detriment of smaller providers.

“I am troubled by attempts by some to relitigate issues that were resolved earlier this year, when the bill passed Congress with widespread support,” Waxman added. “After-the-fact-spin that unfairly twists the language of the law deserves little weight by the Commission or the courts.”

Rep. Anna Eshoo (D-Calif.) noted the FCC by statute is prohibited from considering the amount of revenue possible from spectrum auctions when drafting auction rules. She found Republican efforts to recast those rules to raise as much money as possible by selling off as much spectrum as possible “interesting.”

Many Republicans also complained the FCC must not set rules that either limit the maximum amount of spectrum owned by one company or set aside certain frequencies exclusively for smaller competitors. The Republicans want auctions to maintain a more straightforward “highest bidder takes all” format. Critics say that gives the advantage to larger, deep-pocketed existing providers and dissuades the entry of new competitors.

Some Republicans were also upset with FCC meddling over when and how private companies begin providing service on the airwaves they won at auction. Current FCC rules prohibit warehousing unused spectrum. The rules were designed to ensure large companies don’t invest in airwaves just to keep them off the market and unavailable to competitors.

Ford, Jr. (D-The Green Room)

Harold Ford, Jr., a former Democratic congressman from Tennessee and John Sununu, former governor of New Hampshire, are unhappy with an Op-Ed piece written by David Cay Johnston in the New York Times that calls out the telecom industry for high prices and and an uncompetitive marketplace.

Ford, who can usually be found in the green room of various cable news networks waiting to deliver his pro-industry messages on behalf of front groups like Broadband for America, says that 93 percent of Americans are happy as can be with their broadband Internet service.

Sununu joined Ford in some less-than-factual arguments about the state of American broadband:

Second, nearly 90 percent of all Americans can choose from two or more wireline competitors and at least three wireless broadband providers, most of whom now provide some of the fastest 4G LTE broadband networks in the world. Meanwhile, new fiber optic, satellite and wireless choices keep emerging.

Third, during the past four years, broadband providers invested $250 billion in the nation’s broadband infrastructure, while other industries sat on their cash.

Fourth, unlike many other consumer products, the monthly prices for broadband Internet have remained relatively constant, while average speeds have increased by 900 percent or more. Free-standing broadband service is now routinely available for $20 to $30 a month.

That is playing fast and loose with the truth. In reality:

• Most Americans have one cable and one phone company to choose from, not “two or more.” Wireless broadband providers offer service with a cap so low, it can almost never provide a suitable replacement for wired broadband service. Although AT&T and Verizon Wireless have growing 4G LTE networks, neither carrier has provided universal access to LTE speeds. T-Mobile and Sprint are only getting started. The fiber optic choices that are emerging these days are primarily from community-owned providers Ford’s industry friends vehemently oppose. AT&T does not offer fiber to the home service and Verizon effectively suspended expansion of its FiOS fiber network several years ago.  Wireless choices are now shrinking because of mergers and acquisitions and satellite broadband remains a painful experience regardless of the provider;
• Most that the investment made in “broadband” is focused on expanding wireless 4G service. That investment allowed both AT&T and Verizon to pay Uncle Sam dramatically lower tax bills — AT&T even collected a refund. Home broadband expansion has been far less expansive;
• Monthly broadband bills have not remained constant — they are rising, and more rapidly than ever. Speeds enjoyed by average customers have not increased by 900 percent, only some top speeds that are priced well out of range for most Americans. The price both quote for free-standing broadband is for “lite” service, often so slow it no longer even qualifies as “broadband.” Often, that budget service also comes with usage caps, sometimes as low as 5GB per month.

Sununu and Ford close:

Fortunately, very few policy makers in either party have endorsed the kind of heavy-handed regulations that Mr. Johnston’s arguments seem to imply — regulations that would only stifle investment and truly put America at risk of falling behind.

America has already fallen behind, and will remain in decline as long as regulators and Congress listen to a handful of telecommunications companies speaking from their sock puppet front groups and handing out campaign contributions to elected officials to keep things exactly as they are today.

Tomorrow is election day in the United States. Stop the Cap! has reviewed both presidential candidates’ positions (or the lack thereof) as well as the past voting records and platforms of members of both major political parties. With this in mind, it is time for our election guide for broadband enthusiasts. Regardless of what candidate you support, please get out and vote!

Neither political party or candidate has been perfect on broadband advocacy or consumer protection.

We’ve been disappointed by the Obama Administration, whose FCC chairman has major problems standing up to large telecom companies and their friends in the Republican-led House of Representatives. Julius Genachowski promised a lot and delivered very little on broadband reform policies that protect both consumers and the open Internet. Both President Obama and Genachowski’s rhetoric simply have not matched the results.

Bitterly disappointing moments included Genachowski’s cave-in on Net Neutrality, leaving watered down net protections challenged in court by some of the same companies that praised Genachowski’s willingness to compromise. Genachowski’s thank you card arrived in the form of a lawsuit. His unwillingness to take the common sense approach of defining broadband as a “telecommunications service” has left Internet policies hanging by a tenuous thread, waiting to be snipped by the first D.C. federal judge with a pair of sharp scissors. But even worse, the FCC chairman’s blinders on usage caps and usage billing have left him unbelievably naive about this pricing scheme. No, Mr. Genachowski, usage pricing is not about innovation, it’s about monetizing broadband usage for even fatter profits at the expense of average consumers already overpaying for Internet access.

Obama

Unfortunately, the alternative choice may be worse. Let’s compare the two parties and their candidates:

The Obama Administration treats broadband comparably to alternative energy. Both deliver promise, but not if we wait for private companies to do all of the heavy lifting. The Obama Administration believes Internet expansion needs government assistance to overcome the current blockade of access for anyone failing to meet private Return On Investment requirements.

While this sober business analysis has kept private providers from upsetting investors with expensive capital investments, it has also allowed millions of Americans to go without service. The “incremental growth” argument advocated by private providers has allowed the United States’ leadership role on broadband to falter. In both Europe and Asia, even small nations now outpace the United States deploying advanced broadband networks which offer far higher capacity, usually at dramatically lower prices. Usually, other nations one-upping the United States is treated like a threat to national security. This time, the argument is that those other countries don’t actually need the broadband networks they have, nor do we.

The Obama Administration bows to the reality that private companies simply will not invest in unprofitable service areas unless the government helps pick up the tab. But those companies also want the government to spend the money with as little oversight over their networks as possible.

That sets up the classic conflict between the two political parties — Democrats who want to see broadband treated like a critically-important utility that deserves some government oversight in its current state and Republicans who want to leave matters entirely in the hands of private providers who they claim know best, and keep the government out of it.

FCC Chairman Julius Genachowski’s regular cave-ins for the benefit of Big Telecom brought heavy criticism from us for his “cowardly lion” act.

Just about the only thing the two parties agree on is reforming the Universal Service Fund, which had until recently been directing millions to keeping traditional phone service up and running even as Americans increasingly abandon landlines.

But differences quickly emerge from there.

The Obama Administration believes broadband is increasingly a service every American must be able to access if sought. The Romney-Ryan campaign hasn’t spoken to the issue much beyond the general Republican platform that market forces will resolve virtually any problem when sufficient demand arises.

Republicans almost uniformly vociferously oppose Net Neutrality, believing broadband networks are the sole property of the providers that offer the service. Many Republicans characterize Net Neutrality as a “government takeover” of the Internet and a government policy that would “micromanage broadband” like it was a railroad. Somehow, they seem to have forgotten railroad monopolies used to be a problem for the United States in the early 20th century. Robber barons, anyone?

President Obama pushed for strong Net Neutrality protections for Americans, but his FCC chairman Julius Genachowski caved to the demands of AT&T, Verizon, and the cable industry by managing Net Neutrality with a disappointing “light touch” for those providers. (We’d call it “fondling” ourselves.)

Democrats favor wireless auctions and spectrum expansion, but many favor limits that reserve certain spectrum for emerging competitors and for unlicensed wireless use. Republicans trend towards “winner take all” auctions which probably will favor deep-pocketed incumbents like AT&T and Verizon. The GOP also does not support holding back as much spectrum for unlicensed use.

Republicans have been strongly supporting the deregulation of “special access” service, critical to competitors who need backhaul access to the Internet sold by large phone companies like AT&T. Critics contend the pricing deregulation has allowed a handful of phone companies to lock out competitors, particularly on the wireless side, with extremely high prices for access without any pricing oversight. The FCC under the Obama Administration suspended that deregulation last summer, a clear sign it thinks current pricing is suspect.

Romney

Opponents of usage-based pricing of Internet access have gotten shabby treatment from both parties. Republicans have shown no interest in involving themselves in a debate about the fairness of usage pricing, but neither have many Democrats.

As for publicly-owned broadband networks, sometimes called municipal broadband, the Republican record on the state and federal level is pretty clear — they actively oppose community broadband networks and many have worked with corporate front groups like the American Legislative Exchange Council (ALEC) to ban them on the state level. Democrats tend to be more favorable, but not always.

The biggest problem broadband advocates face on the federal and state level is the ongoing pervasive influence of Big Telecom campaign contributions. While politicians uniformly deny that corporate money holds any influence over their voting, the record clearly indicates otherwise. Nothing else explains the signatures from Democrats that received healthy injections of campaign cash from companies like AT&T, and then used the company’s own talking points to oppose Net Neutrality.

But in a story of the lesser of two-evils, we cannot forget AT&T spends even more to promote Republican interests, because often those interests are shared by AT&T:

• AT&T has spent nearly $900,000 on self-identified “tea party” candidates pledged to AT&T’s deregulation policies;
• AT&T gave nearly $2 million to the Republican Governors Association — a key part of their ALEC agenda;
• AT&T gave $100,000 to everyone’s favorite dollar-a-holler Astroturf group — The Heartland Institute, which opposes Net Neutrality and community broadband.

Cohen

Comcast’s chief lobbyist stalled plans to unveil cheaper Internet service for the financially disadvantaged to use as bait to win regulator approval of its 2009 merger with NBC-Universal.

The Washington Post today reports David Cohen’s influence at the cable operator as its chief of lobbying has helped the cable company achieve its status as America’s largest cable operator and entertainment conglomerate.

Cohen has friends in high places thanks to his status as a Democratic Party money bundler. A self-styled “consigliere” to the Roberts family that controls the company, Cohen has overseen a transformation of Comcast from one cable operator among many into a high-powered force not to reckoned with in Washington or Silicon Valley.

Comcast’s growth into a mega-corporation with $58 billion in annual revenues came, in part, from dealmaking that won regulator approval in D.C. Maintaining good relations with those regulators is a Cohen specialty. It did not take the Post too long to find former FCC officials giving Cohen high praise:

• “Every meeting with David is incredibly substantive,” Eddie Lazarus, former chief of staff to the FCC told the newspaper. “He always comes with a willingness to find solutions.”
• “David loves politics, he loves government and he has incredible situational awareness — a 360-degree view of business,” said Blair Levin, a former senior adviser to FCC Chairman Julius Genachowski. “He’s just so good at what he does.”

Under Cohen’s leadership, Comcast has spent lavishly on its corporate lobbying and legal team. Today, 20 full time lobbyists work under Cohen’s direction, with dozens of others available on retainer. The company spent $8.3 million of its subscribers’ money solely on lobbying. The Post reports that makes Comcast the ninth biggest K Street spender, above Verizon.

The poor and disadvantaged had to wait for Comcast to seal the deal on their $30 billion acquisition of NBC-Universal before affordable Internet could become reality for them.

In 2009, Comcast insiders were hard at work on a discount program for the disadvantaged who could not afford Comcast’s regular prices for broadband service. But the program was stalled at the direction of Cohen, who wanted it to be a chip with regulators to win approval of its acquisition of NBC-Universal. The program, sure to be popular among advocates of the digitally disadvantaged, was a key part of approving the $30 billion deal.

“I held back because I knew it may be the type of voluntary commitment that would be attractive to the chairman [of the FCC],” Cohen said in a recent interview.

Regulators promoted Comcast’s “concession” to offer the discounted Internet service as a win for consumers as part of the final approval of the deal. In reality, Comcast was planning to offer the service anyway and finally introduced it in 2011 — two years after first being proposed inside the company.

That fact is a slight embarrassment to current FCC chairman Julius Genachowski, who has told audiences the discounted Internet program was partly to his credit.

“This particular program came from our reviewing of the Comcast NBC-U transaction,” Genachowski said in a speech. “Comcast embraced it as good for the country, as well as good for business. And I’m fine with that.”

Cohen defends Comcast’s lobbying expense as part of the company’s effort to combat scrutiny and challenges to its all-or-nothing video business model, denying customers access to a-la-carte programming.

Comcast’s scope has now grown so large, it has become a force few companies are willing to challenge, and those that try are quick to run into a blockade of Comcast lawyers, lobbyists, and carefully constructed contracts that protect the company’s bottom line from would-be competitors.

Deep pockets like Verizon, Apple, Netflix and Google have all tried… and failed to recast the cable television experience with on-demand programming, a-la-carte channels, and cord-cutting technology.

In response, Comcast has kept competitors tied down to the same cable packages that require subscribers to pay for everything, even if they seek only a few channels. Comcast leverages its broadband network with usage limits that effectively curtail cord-cutting among consumers looking to skip the TV package. Anyone seeking a place in today’s entertainment industry ends up dealing with Comcast sooner or later.

“They are hugely important because they can singlehandedly sink or swim multiple businesses that rely on the Internet ecosystem by virtue of controlling the dissemination of information through their pipes and now by supplying so much of the content,” said Joel Kelsey, a policy director at consumer interest group Free Press. “So many companies have come to us and ask we fight their battles for them because they are afraid of retribution.”

Cohen is well-compensated for his effectiveness. His latest three-year contract makes him one of the highest paid corporate lobbyists in Washington, with a $15 million annual compensation package and $3 million in bonuses, not including his ample stock holdings in Comcast.

His influence extends to the highest levels of the Obama Administration. Last summer, the family hosted a $1.2 million campaign fundraiser for President Obama, and the Cohens have separately contributed $877,000 to various campaigns. Comcast itself has spent $3.3 million in campaign contributions so far this year.

[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)