Phillip “How far will $20 get me in your office?” Dampier

Congress is famous for obfuscation when it comes to introducing legislation that promises one thing and delivers something quite different. Take the 2003 “Clear Skies Initiative,” which would have allowed the energy industry to increase polluting emissions, or “The Disclosure of Hydraulic Fracturing Fluid Composition Act,” which allows frackers to keep secret the ingredients of millions of gallons of chemicals pumped into the ground to displace natural gas, and potentially your potable drinking water.

So it shouldn’t be much of a surprise that Rep. Bob Latta (R-Ohio) wants to “protect” the open and free Internet by introducing a new bill that opens and frees the telecom companies that steadfastly support his campaign coffers to install paid Internet toll booths. Like many pieces of legislation coming from some House Republicans these days, “freedom” only extends to corporate interests, not to you or I (unless we want to start a corporation of our own.)

Reclassifying broadband as a telecommunications service under Title II of the Communications Act is the Holy Grail for Net Neutrality supporters. It offers clear oversight authority that would make future lawsuits from Comcast, Verizon and other telecom companies untenable. Earlier court decisions have laid a foundation for broadband oversight under Title II, but the FCC itself must take advantage of that opportunity, and so far it has not.

Congressman Latta has introduced legislation to make sure the FCC can never take that step. His bill would specifically prohibit the FCC from reclassifying broadband Internet access as anything beyond an unregulated “information service.”

According to Latta, only with his legislation can America be assured the Internet will stay “open and free.” — “Open and free” for the picking by companies who dream of new revenue monetizing Internet traffic. Not satisfied charging some of the world’s highest prices for Internet access, many of the largest cable and phone companies in the country now want the right to “double-dip” — charging consumers to reach Internet content and content producers for delivering it. It would be like paying postage to mail a letter and having it arrive postage due or letting the phone company charge both the caller and the person called for a long distance telephone call.

“The legislation comes after the FCC released a proposal to reclassify broadband Internet access under Title II as a telecommunications service rather than an information service,” says a press release from Latta’s office.

Would I lie to you? Rep. Bob Latta (R-Ohio)

That is patently false. In fact, FCC chairman Thomas Wheeler has twisted himself into a human pretzel with clever language and a clear determination not to reclassify broadband under Title II. Wheeler prefers sticking to the rickety Section 706 faux-authority for Net Neutrality — the same section that keeps handing FCC lawyers loss after loss in federal court. After Wheeler announced his intention to propose allowing Internet companies to build paid fast lanes for Internet traffic, the resulting backlash from content companies and the public made him grudgingly offer a “discussion” about utilizing Title II.

That kind of “discussion” will be familiar to every 16-year old teenage girl who is told “we’ll talk about it” after asking mom and dad if she can take her new 22-year old boyfriend on vacation and stay in their own hotel room.

Ironically, detractors like Latta are the ones that usually accuse Net Neutrality of solving a problem that doesn’t exist. But that didn’t stop Congressman Latta from introducing legislation to stop the current ex-telecom lobbyist chairman of the FCC from going all Elizabeth Warren on us, suddenly imposing draconian pro-consumer regulations against those job creators at the cable companies Wheeler used to represent. But on the bright side, when Wheeler doesn’t do what Latta’s bill wouldn’t let him do, Latta can still declare victory against “big government.” If you live in Latta’s district, you can read all about it in the forthcoming government-subsidized, no-postage-needed “newsletter” he and other members of Congress will pelt your mailbox with right before election time.

“In light of the FCC initiating yet another attempt to regulate the Internet, upending long-standing precedent and imposing monopoly-era telephone rules and obligations on the 21^st Century broadband marketplace, Congress must take action to put an end to this misguided regulatory proposal,” said Latta. “The Internet has remained open and continues to be a powerful engine fueling private enterprise, economic growth and innovation absent government interference and obstruction. My legislation will provide all participants in the Internet ecosystem the certainty they need to continue investing in broadband networks and services that have been fundamental for job creation, productivity and consumer choice.”

Consumers not included. Maybe he just forgot.

“At a time when the Internet economy is thriving and driving robust productivity and economic growth, it is reckless to suggest, let alone adopt, policies that threaten its success. Reclassification would heap 80 years of regulatory baggage on broadband providers, restricting their flexibility to innovate and placing them at the mercy of a government agency. These businesses thrive on dynamism and the ability to evolve quickly to shifting market and consumer forces. Subjecting them to bureaucratic red tape won’t promote innovation, consumer welfare or the economy, and I encourage my House colleagues to support this legislation, so we can foster continued innovation and investment within the broadband marketplace.”

Guess not. The Internet should only be about business in Latta’s mind. Consumers that support Net Neutrality are nothing more than parasites sucking away valuable potential profits from the dynamic, flexible and innovative world of traffic shaping, usage caps, and double-dipping.

Latta isn’t interested that your provider is turning your weekend Netflix binge into an exercise of maddening rebuffering futility as your cable/phone company waits for protection racket proceeds a paid peering agreement with Netflix. That is because he doesn’t represent you. He represents AT&T, Time Warner Cable, Comcast, and CenturyLink.

Latta can afford to travel through the Internet toll booth when one considers who his top contributors keeping his campaign flush with cash are:

• More than $32,000 in contributions from AT&T and its executives;
• $29,500 from Tom Wheeler’s old haunt — the National Cable & Telecommunications Association (Big Cable lobby);
• $15,000 from the American Cable Association (Small Cable lobby);
• $21,000 from Time Warner Cable and its executives;
• $16,000 from Verizon and its executives;
• $11,400 from CenturyLink;
• $11,000 from Comcast (they are ditching Ohio customers to Charter after merging with Time Warner Cable so why throw good money after bad).

Latta’s close friendship with Big Telecom is so obvious, it has made co-sponsoring his fact-free bill about as popular as Justin Bieber at an NAACP convention. Even his like-minded Congressional colleagues are staying away. But his industry friends sure appreciate his efforts on their behalf.

One wonders why his constituents return him to office when he would be obviously much more comfortable in his next job — lobbying for AT&T or Comcast. Before our Internet connections slow, let’s hope his constituents hasten a much-needed turbo-speed departure for the congressman, already a shadow employee of AT&T.

227194356 05 28 14 LATTA Broadband Bill (Text)
 

Companies in the Pacific Coastal region of California are concerned about losing wholesale access to Time Warner Cable’s business fiber network if the cable company is acquired by Comcast.

Independent business communications providers acquire connectivity at wholesale rates from providers like Time Warner Cable and provide competition in the telecommunications marketplace.

“Time Warner Cable actually provides wholesale access, at least to its fiber network,” Dave Clark, president of Santa Barbara-based Impulse Advanced Communications, told the Pacific Coast Business Times. “From a competitive telecom perspective, they cooperate and work with competitive telecoms. Comcast does not. The big fear in the competitive telecom industry is that Comcast buys Time Warner and cuts [wholesale access] off.”

Currently, third-party access to cable broadband technology is provided on a voluntary basis by cable operators. Regulated telephone companies like Verizon and AT&T that serve California are required to offer open access to competitors, at least on their copper line networks.

If Comcast decides it won’t continue wholesale access to Time Warner’s network, it can cut off access almost immediately.

“The worst impact is going to be Ventura County, which has chunks of Time Warner,” Clark told the newspaper. “If Time Warner down there stops providing any wholesale access to facilities, those customers will be worse off. They’ll have fewer competitive options.”

Customers in Ventura, San Luis Obispo, and Santa Barbara counties would see the number of cable providers serving the area cut in half, from four providers to two. Charter and Time Warner Cable customers would be transferred to Comcast. That’s a major development, because Comcast now only operates in a tiny area of Santa Maria and the Santa Ynez Valley. Now the company would be dominant in Ventura and San Luis Obispo counties. Cox would still serve its customers in the South Coast region.

Level 3’s global network: Orange lines represent Level 3-owned infrastructure, yellow lines show leased or co-owned connections.

Five of the largest Internet Service Providers in the country are intentionally sabotaging your use of the Internet by allowing their network connections to degrade unless they receive extra compensation from content companies they often directly compete with.

Mark Taylor, vice president of content and media for Level 3, wrote a lengthy primer on how Internet providers exchange traffic with each other across a vast global network. While clients of Level 3 are likely to have few problems exchanging traffic back and forth across Level 3’s global network, vital interconnections with other providers that make sure everyone can communicate with everyone else on the Internet are occasional trouble spots.

Every provider has different options to reach other providers, but favor those offering the most direct route possible to minimize “hops” between networks, which slow down the connection and increase the risk of service interruptions. These connections are often arranged through peering agreements. Level 3 has 51 peers, minimized in number to keep traffic moving as efficiently as possible.

This oversaturated port in Dallas cannot handle all the traffic trying to pass through it, so Internet packets are often dropped and traffic speeds are slowed.

Taylor writes most peering arrangements were informal agreements between engineers and did not involve any money changing hands. Today, 48 of the 51 Level 3 peering agreements don’t involve compensation. In fact, Level 3 refuses to pay “arbitrary charges to add interconnection capacity.” Taylor feels such upgrades are a matter of routine and are not costly for either party.

Peering agreements have been a very successful part of the Internet experience, even if end users remain completely in the dark about how Internet traffic moves around the world. In the view of many, customers don’t need to know and shouldn’t care, because their monthly Internet bill more than covers the cost of transporting data back and forth.

Because of ongoing upgrades the average utilization of Level 3’s connections is around 36 percent of capacity — busy enough to justify keeping the connection and providing spare capacity for days when Internet traffic explodes during breaking news or over the holidays.

However, Taylor says more than a year ago, something suddenly changed at five U.S. Internet Service Providers. They stopped periodic upgrades and allowed some of their connections to become increasingly busy with traffic. Today, six of Level 3’s 51 peer connections are now 90 percent saturated with traffic for several hours a day, which causes traffic to degrade or get lost.

“[The] congestion [has become] permanent, has been in place for well over a year and […] our peer refuses to augment capacity,” Taylor wrote. “They are deliberately harming the service they deliver to their paying customers. They are not allowing us to fulfill the requests their customers make for content.”

Taylor adds all but one of the affected connections are U.S. consumer broadband networks with a dominant or exclusive market share. Where competition exists, no provider allows their Internet connections to degrade, said Taylor.

Taylor won’t directly name the offenders, but he left an easy-to-follow trail:

“The companies with the congested peering interconnects also happen to rank dead last in customer satisfaction across all industries in the U.S.,” Taylor wrote. “Not only dead last, but by a massive statistical margin of almost three standard deviations.”

Taylor footnotes the source for his rankings, the American Consumer Satisfaction Index. The five worse providers listed for consumer satisfaction:

• Comcast
• Time Warner Cable
• Charter Communications
• Cox Communications
• Verizon

AT&T has also made noises about insisting on compensation for its own network upgrades, blaming Netflix traffic.

In fact, Netflix traffic seems to be a common point of contention among Internet Service Providers that also sell their own television packages. They now insist the streaming video provider establish direct, paid connections with their networks. Level 3 is affected because it carries a substantial amount of traffic on behalf of Netflix.

Ultimately, the debate is about who pays for network upgrades to keep up with traffic growth. Taylor says Level 3’s cost to add an extra 10Gbps port would be between $10-20 thousand dollars, spare change for multi-billion dollar Americans cable and phone companies. Normally, competition would never allow a traffic dispute like this interfere with a customer’s usage experience. Angry customers would simply switch providers. But the lack of competition prevents this from happening in the United States, leaving customers in the middle.

This leaves Taylor with a question: “Shouldn’t a broadband consumer network with near monopoly control over their customers be expected, if not obligated, to deliver a better experience than this?”

Bigger is not better. Despite endless claims that mergers, acquisitions and consolidation brings operating efficiencies and cost savings, for most customers it means only one thing: a higher cable bill. The Wall Street Journal traced the ancestors of some of today’s largest cable operators, cobbled together in takeovers, buyouts, and in the case of Adelphia, criminal activity leading to bankruptcy and absorption by Comcast and Time Warner Cable .

Wall Street analysts are pondering what deals are coming next, with Cablevision, Suddenlink, Mediacom, and Cable ONE all top targets. Among the current players, Charter is by far the most aggressive buyer and will likely be in the market for some or all of those smaller cable systems soon enough. Just remember, someone has to pay for those blockbuster merger deals, debt financing and executive bonuses.

Anyone in their 40s probably can recall companies like Jones, TCI, Falcon, Prime and Media General. They are all long gone, much the same way Bell Atlantic, SBC, Pacific Bell, BellSouth, and Ameritech have been absorbed into the AT&T and Verizon Continuum.

If you are a Time Warner Cable customer, one of four things will happen by this time next year:

1. You will still be a Time Warner Cable customer if regulators shoot down its merger with Comcast;
2. You will be a Comcast customer;
3. You will be a Charter Communications customer;
4. You will be served by a brand new cable company temporarily dubbed “SpinCo,” owned partly by Comcast but managed by Charter.

Comcast and Charter this week reached an agreement on how to handle the 3.9 million Time Warner Cable customers Comcast intends to spin-off to keep its total subscriber numbers at a level they believe will appease regulators. The transaction will affect Time Warner customers in the midwest the most, particularly former Insight Cable customers.

Charter Communications will say goodbye to customers in California, New England, northern Georgia, Texas, North Carolina, Oregon, Washington, Virginia and parts of Tennessee. Most of those customers will now be served by Comcast. Among the regions affected: New York, Boston, Dallas/Ft. Worth, Northern/Southern California, and Atlanta.

[flv]http://www.phillipdampier.com/video/WISN Milwaukee First Comcast Now Charter 4-28-14.flv[/flv]

WISN in Milwaukee reports Time Warner Cable customers there were just getting used to the idea of Comcast and they are not happy service will be provided by Charter Communications instead. (2:03)

Comcast and Time Warner Cable will in turn give up many of its cable systems in the midwest, either transferring them to Charter or the “SpinCo” venture managed by Charter.

Charter will take over directly in Ohio, Kentucky, Wisconsin, Indiana and Alabama.

If you are a Comcast or Time Warner Cable customer next to a current Charter service area in Michigan, Minnesota, Indiana, Alabama, Eastern Tennessee, Kentucky or Wisconsin, chances are you will end up a subscriber of the “SpinCo” venture. That will prove a distinction without much difference to customers, because Charter will manage the day-to-day operations of the new cable company and has the right to eventually acquire it outright.

With the exception of a small handful of systems in western sections of Pennsylvania, Virginia and North Carolina, all of New England, New York, and the mid-Atlantic region will be serviced by Comcast.

With the exception of Cablevision in eastern New York, Comcast will be the dominant cable provider across New York State from Manhattan to Buffalo.

The agreement also includes a commitment by Charter to drop its opposition to the Time Warner Cable/Comcast merger.

“Today’s announcement from Comcast would, in essence, lead to the creation of a three-company cable cartel. Masquerading as subscriber divestitures, the agreement with Charter brings together the three largest cable providers, who account for 38% of cable subscribers and 45% of Internet subscribers,” the Writers Guild of America West said in a statement. “The decision of these three powerful companies to divide markets and share ownership of subscribers through a new publicly traded corporation is unprecedented and adds to the mounting evidence against the Comcast-Time Warner Cable merger.”

The transaction is expected to be tax-free and will happen in three stages:

• Asset Sale: Charter acquires systems serving around 1.4 million former TWC customers for an estimated $7.3 billion in cash;
• Asset Transfer: Charter and Comcast transfer assets in a tax-free exchange involving around 1.6 million former TWC customers and about 1.6 million Charter customers;
• Asset Spin-off: Comcast will spin-off a new entity (“SpinCo”) composed of cable systems serving around 2.5 million Comcast customers to its shareholders, with Charter acquiring close to 33% of the equity of SpinCo in exchange for 13% of the equity of a new holding company of Charter.

Charter Communications would become the nation’s second largest cable operator if the deal is approved, owning outright systems with an estimated 5.7 million video customers and managing an extra 2.5 million SpinCo customers, together totaling more than 8.2 million video customers.

Comcast wanted the deal done quickly so it could begin lobbying Washington and other regulators with detailed divestiture plans to keep Comcast’s total subscribers to less than 30% of the national cable market.

Although Comcast will face tough competition in Time Warner Cable territories also served by Verizon FiOS, Charter and its managed SpinCo will compete primarily with AT&T U-verse. Just 1% of Charter’s territory is expected to see competition from Verizon’s fiber network.

[flv]http://www.phillipdampier.com/video/Bloomberg Divesting Comcast Subs 4-28-14.flv[/flv]

Comcast agreed to divest 3.9 million customers to Charter Communications, potentially helping to ease the approval process for its merger with Time Warner Cable. Media Morph Chairman and Chief Strategist Shahid Khan and Bloomberg’s Paul Sweeney speaks on Bloomberg Television’s “In The Loop.” (6:23)