To say Susan Bitter Smith is beholden to Arizona’s cable industry would be an understatement.

In addition to purportedly representing the citizens of Arizona on regulated utility matters, Bitter Smith is one of the state’s most powerful cable industry lobbyists, earning a salary that consumes 40 percent of the annual budget of the Southwest Cable Communications Association, which represents most cable operators in Arizona, New Mexico, and Nevada.

Despite clear ties to the telecommunications industry Bitter Smith has no intention of ending, in 2012 she ran for the chair of the Arizona Corporation Commission (ACC) — the state body that oversees and regulates phone, cable, and power utilities. Unlike many other states that appoint commissioners, Arizona voters elect them to office. Giving voters a direct election is written into the state constitution, and was designed to limit potential corporate influence and favoritism. Unfortunately for voters, the 2012 election cycle preoccupied by a presidential race and a rare open Senate seat left the mainstream media little time or interest exploring the backgrounds of candidates for the telecom regulator.

Bitter Smith never exactly hid her business relationship with Arizona’s largest cable companies, notably Cox Communications, the cable operator that dominates Phoenix. But she routinely downplayed the obvious conflict of interest, claiming the ACC dealt with regulated utilities, and cable companies were mostly deregulated. The Arizona Republic offered few insights into Bitter Smith’s background, failing to disclose her lobbying connections in their voter recommendations. Instead, the newspaper wrote a single sentence about Bitter Smith’s campaign in its editorial endorsements for the 2012 election: “Bitter Smith enjoys a great reputation as a strong-willed partisan, which seems a difficult fit for the Corporation Commission, at least as compared with the competition.”

Partisanship was exactly what a lot of voters apparently wanted, however, because the vote swung decidedly Republican in large parts of Arizona in the 2012 election. The turnout in Maricopa County, the largest in Arizona, was strongly anti-Obama and voters seemed content voting the party line down the ballot. Incumbents like Democrat Paul Newman did not exactly win an endorsement from the Republic either. The newspaper called him a “fierce and provocative partisan.”

“It is difficult to fathom work getting done at the commission with a microphone anywhere within Newman’s reach,” the newspaper added. The other Democratic incumbent, Susan Kennedy, was dismissed as an on-the-job trainee by the newspaper.

Broadband Issues Overshadowed by Arizona’s Solar Energy Debate

For most in Arizona, the 2012 election at the ACC was much more about energy issues than high cable bills and dreadful broadband. That year, investment in solar energy was the hot topic and it made the election of business-friendly candidates a high priority for the existing power-generating utilities and their friends at the American Legislative Exchange Council (ALEC). Both could claim a major victory if a state ready-made for solar renewable energy turned its back for the sake of incumbent fossil fuel power generators.

Bitter Smith was never a member of ALEC, not having been a state legislator, but many of her fellow Republicans serving on the ACC were, and some were not shy claiming the Obama Administration’s pro-solar energy policies were “reckless and dangerous.” ALEC and utility companies oppose requirements that mandate the purchase of excess power generated from solar and wind customers at market rates and also want to introduce surcharges for customers relying on solar energy. Their fear: if a large percentage of sun-rich Arizonans installed solar panels, revenue for the investor-owned utilities could plummet.

Against that backdrop, Bitter Smith’s close relationship with Cox Cable went unnoticed while the media focused their attention on incumbent Republican commissioner Bob Stump – dubbed by some “Trash Burner Bob” for successfully pushing approval of a permit for a 13 megawatt trash burning plant in West Phoenix. Despite a reputation for pollution, Stump sold trash burning as a better renewable energy source for Arizona than solar energy. Waste hauling companies were delighted. The campaign met with less opposition than some expected, in part because anonymous voting guides turned up conflating solar panels as fire hazards that were difficult to extinguish, exposed users to dangerous chemicals, and constituted a hazard to firefighters whose ‘neurons may be blocked‘ when they approached solar panel fires, allegedly caused by electricity inside the panel.

Newcomer Robert Burns also won his election to the ACC that same year. His time at the Commission has also been rocky. This year, he faces an ethics complaint for remaining a registered lobbyist with the Arizona Telecommunications and Information Council, a group funded by the state’s largest telecom companies. After the complaint was filed, Burns claimed it was all a mistake. He later asked the group’s attorney to send a letter to the Arizona Secretary of State’s office requesting his lobbying connection be removed.

Some critics of the Commission have tolerated Burns’ alleged ethical lapse because he has demonstrated some independence from the energy companies he helps oversee.

Burns has argued the Arizona Public Service Company (APS) – a large investor-owned utility – must disclose how much it spent in campaign contributions and lobbying efforts to get its preferred candidates elected to the Corporation Commission. His demand for disclosure comes at the same time his fellow commissioner Stump is being investigated for exchanging text messages with APS officials during the 2014 election. Critics suggest he may have been illegally coordinating the campaigns of two of his closest allies — Tommy Forese and Doug Little. Both won seats on the ACC that year and have maintained a strong alliance with Stump, much to the chagrin of good government bloggers, who frequently refer to all three collectively as “Tommy Little Stump.”

Steve Muratore, editor of the Arizona Eagletarian, calls all three “shameless,” as they tirelessly fight to stop any investigation that could force open APS’ books to reveal what money, if any, was spent to help get both into office.

Forese claims the regulator has no business examining APS’ books.

“Commissioners attempting to influence elections in their official capacity through this relationship [as a result of their constitutional authority] would exceed the bounds of their constitutional mandate over public service corporations,” Forese argues.

While the political soap operas play out, in 2013, APA delivered its first Commission-approved blow against solar power, winning permission to apply a surcharge averaging $5 a month for using solar panels to generate electricity. APC successfully argued solar customers cheat other utility ratepayers by not contributing enough to the utility’s fixed costs.

This year, APC is seeking a 400%+ rate increase, proposing a surcharge averaging $21 a month for using solar panels. Customers served by the Salt River Project in Tempe faced even more onerous charges from that utility — a $50 a month fee for using solar panels. The new fees have effectively stopped residential solar power expansion in that utility’s territory, with the approval of ACC commissioners.

Flying Under the Radar

In the context of these other controversies, Bitter Smith’s own apparent conflicts of interest have largely flown under the radar from 2012 until earlier this year. Federal cable deregulation laws limit the Arizona regulator’s oversight of cable companies like Cox, Cable One, and Comcast. That has given Bitter Smith a defense for serving as both a lobbyist and a regulator. She claims she only lobbies for the cable television and broadband services sold by cable companies like Cox Communications and abstains from consideration of cases such as those involving Cox’s digital phone service, which is still subject to some regulatory scrutiny. Bitter Smith also claims it is easy to tell where the ethical line falls because companies like Cox run different aspects of its business under a variety of affiliated subsidiaries.

Arizona Attorney General Mark Brnovich was not impressed with that explanation and last week filed a Petition for Special Action to remove Bitter Smith from office for violating the state’s conflict of interest statute.

“Arizonans deserve fair and impartial regulators,” said Brnovich. “We filed this case to protect the integrity of the Commission and to restore the faith of Arizona voters in the electoral process. Arizona law clearly prohibits a Commissioner from receiving substantial compensation from companies regulated by the Commission.”

On Sept. 2, the Attorney General’s Office (AGO) launched an investigation into Bitter Smith after receiving a formal complaint against her. The AGO investigation found Bitter Smith receives over $150,000 per year for her trade association work, on top of her $79,500 salary as a Commissioner.  Arizona State Statute 40-101 prohibits Commissioners from being employed by or holding an official relationship to companies regulated by the Commission. The law also prohibits Commissioners from having a financial interest in regulated companies. Section 40-101 promotes ethics in government and prevents conflicts of interest.

“This isn’t one of these instances where this was maybe somebody skating too close to a line, or maybe somebody that had gone into a grey area. I think the law is very clear on this case,” Brnovich said.

KJZZ in Phoenix began raising questions about Bitter Smith’s apparent conflicts of interest last summer and carried this special report on Aug. 24, 2015. (7:18)

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Bitter Smith’s Shadowy and Scrubbed “PR Firm”

More troubling for Bitter Smith’s case is the “public affairs firm” Technical Solutions, jointly run by Bitter Smith and her husband. A careful scrubbing of the firm’s website “disappeared” the detailed description of the firm’s lobbying services, which counted Bitter Smith’s presence on the Commission a major asset for would-be telecom company clients. Google’s cache resolved that dilemma. Among those taking advantage of Technical Solutions’ services are AT&T, the former wireless company Alltel, and most of the state’s largest cable operators. Bitter Smith also claimed expertise setting up astroturf “grassroots” campaigns advocating her clients’ agendas and interests, but hiding any corporate connection. She also promoted her ability to plant stories with the media for her paying clients.

Reporters at KJZZ, a public radio station in Phoenix, have spent months following the fine line Bitter Smith has laid as a defense against conflict of interest charges.

Oopsy

Bitter Smith depends on cable and phone companies setting up different entities in name only to manage regulated and unregulated services. That means a cable company could approach the Commission under several different names, one for its phone, one for its television, and one for its broadband business. That distinction allows Bitter Smith to claim she is careful about conflicts of interest:

Bitter Smith said that, because the telecom entities are so separate, it’s OK to vote on telecom matters related to Cox, Suddenlink and other members at the commission. But she still tries not to.

“We thought about that, ‘Well, maybe just from the appearance sake it wouldn’t hurt,’” she said.

Since Bitter Smith took office in 2013, records show the commission has voted at least seven times on matters involving the telephone side of the cable association’s members.

She recused herself four of those times, such as last year when a tariff increase was approved for Cox.

But she didn’t recuse herself on three matters, which she said was accidental, including another tariff increase for Cox approved in 2013.

“Probably should have, just didn’t catch it,” she said.“It was on the consent agenda, I zoomed through.”

She also didn’t recuse herself in May from voting to rescind a $225,000-bond requirement for Mercury Voice & Data, an entity identified in public documents as doing business in Arizona as Suddenlink Communications. She said she missed that one accidentally as well.

“Suddenlink is my member, Mercury Voice & Data is not an entity that I’m familiar with,” Bitter Smith said. “If I had understood, I probably would have, you know, just for optics sake. There’s no legal reason I would need to do that but, had I understood that there was another entity that they now form with a new name, separate entity with a new name, I probably would have.”

[flv]http://www.phillipdampier.com/video/Corporation Commissioner Is Paid Lobbyist For Same Corporations She Regulates 12-3-15.mp4[/flv]

Real News AZ talked with attorney Thomas Ryan about the ethics of serving as a Corporation Commissioner while also employed as a paid lobbyist working for the interests of the companies regulated by that Commission. (7:08)

Bitter Smith’s ‘oopsies‘ infuriate government watchdog and Arizona attorney Thomas Ryan, who has tangled with Arizona’s high-powered politicians before… and won.

“This will not go quietly in the night and whoever she retains will no doubt fight it tooth and nail,” Ryan said of Bitter Smith. “But the state of Arizona deserves a Corporation Commission that is not bought and paid for by the very people it’s supposed to regulate, the very industries it’s supposed to regulate.”

Ryan is particularly incensed that Bitter Smith’s apparent ethical lapses are costing Arizonans twice — taxpayers pay her nearly $80,000 salary as a Commissioner and the increasingly expensive cable and phone bills that grow as a result of some of the Commission’s pro-telecom decisions. But at least Bitter Smith is doing well, also collecting her six figure salary from the cable lobbying association she leads.

Pat Quinn, former director of the Residential Utility Consumer Office, or RUCO, which advocates for consumers at the ACC, isn’t moved by Bitter Smith’s fine line and he should know – he’s the former Arizona president of Qwest Communications (today CenturyLink).

Quinn said Bitter Smith’s explanation about the separateness of telecom entities from cable is making a “difference without a distinction.”

“While you may be able to, accounting wise, separate your expenses between what you put in phone and what you put in cable, how do you take out of your mind, ‘Oh, they’re paying me over here and we do good things for them over here, but I’m going to be fair and unbiased when I look at not only Cox on the phone side, but any of the other phone providers,’” Quinn told KJZZ.

How Bitter Smith helped kill rural community broadband in Arizona for the benefit of the state’s biggest cable companies. (6:43)

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Killing Community Broadband to Protect Arizona Cable Profits

The clearest cut evidence of Bitter Smith’s lobbying for Arizona cable companies while claiming to represent the public interest as a commissioner came in 2013, when Bitter Smith and Cox Communications lobbyist Susan Anable tried to pressure Galen Updike, a state employee tasked with mapping broadband availability in Arizona and advocating for solutions for the 80 percent of rural communities in the state that remain broadband-challenged to this day.

In February, Bitter Smith and Anable allegedly solicited the help of state employees to kill a state contract with GovNet, a firm that had previously received $39 million in federal dollars to bring broadband to rural Arizona.

Updike said Bitter Smith trashed GovNet’s reputation, claiming the provider walked away from earlier projects leaving them incomplete.

“‘There was a better alternative,'” Updike recalls Bitter Smith telling him. “‘You’ve got existing cable companies in the area that are having now to compete against these dollars that come in from the federal government. Can you help us get rid of GovNet’s contract?’ [was the request]. It took my breath away.”

Updike said Bitter Smith maintained a near-constant presence at their meetings, but she had no interest in solving Arizona’s rural broadband problems.

“The only reason for Bitter Smith to be there was to talk about telecommunications policy, broadband policy,” Updike said.

Updike’s efforts to make things better for broadband in rural Arizona met constant headwinds from Bitter Smith and lobbyists for the state’s cable and phone companies.

“All the broadband providers were cherry picking — going after the high easy places to put broadband into where there’s high concentration of population dollars,” Updike said. “And basically the low population areas, the rural areas of the state of Arizona, are sucking wind. They have no possibility for it.”

Efforts to develop the Arizona Strategic Broadband Plan were effectively sabotaged by the cable industry, especially Cox. Bitter Smith immediately objected to the contention the cable industry could collectively offer broadband to 96 percent of the state if it chose. She claimed that was invalid. She also criticized the proposal to begin a comprehensive broadband mapping program claiming it lacked proof it would be any real ongoing benefit to anyone.

At the center of the lobbying effort backed by Cox was an argument the state should not involve itself in expanding broadband networks. Instead, it should spend its funds promoting the broadband service already available from cable operators to those not yet signed up.

Things got much worse for Updike as Republicans cemented their grip on the Corporation Commission in 2013. Updike continued to voice concerns about Bitter Smith’s conflicts of interest and was eventually taken aside and told to be quiet about the issue.

“I was told to stop poking the bear. The bear was the combination of Cox, CenturyLink and Susan Bitter Smith,” Updike told the radio station.

By May 2013, the broadband planning council’s meetings began to be mysteriously canceled. No strategic broadband plan was ever adopted. That same month, Updike was told he no longer had a job at the Arizona Department of Administration.

Henry Goldberg, and independent consultant who helped draft the never-adopted state broadband plan has little to fear from Bitter Smith, so he was frank with KJZZ.

“To me when you stop discussions of the plan, disband this council, which is supposed to advise the governor on digital policy, there’s something inappropriate going on there. Something like this is critical for the citizens of Arizona.”

Telephone companies relying on traditional ADSL service to power their broadband offering will likely face a renewed competitive assault in 2016 that will further reduce their already-challenged market share in areas where cable companies compete.

Cable operators are hungry for profitable broadband customers and the best place to find new prospects is at the phone company, where DSL is still a common technology to deliver Internet access. But while cable Internet speeds have risen, significant DSL speed hikes have proven more modest in the residential market.

In 2016, the cable industry intends to poach some of the remaining price-sensitive holdouts still clinging to DSL with revised broadband offers promising more speed for the dollar.

Cable broadband has already proven itself a runaway success when matched against telephone company DSL service. Over the last year, Strategy Analytics found Comcast and Time Warner Cable alone signed up a combined 71 percent of the three million new broadband customers in the U.S.

“Cable operators continue to increase market share in U.S. broadband,” said Jason Blackwell, a director at Strategy Analytics. “Over the past twelve months, Comcast has accounted for 42 percent of new subscribers among the operators that we track.  Fiber growth is still strong, but the telco operators haven’t been able to shake off the losses of DSL subscribers.  In 2016, we expect to see a real battle in broadband, as cable operators begin to roll out DOCSIS 3.1 for even higher speed offers, placing additional pressure on telcos.”

That battle will come in the form of upgraded economy broadband plans, many arriving shortly after providers upgrade to the DOCSIS 3.1 cable broadband platform. Currently those plans offer speeds ranging from 2-6Mbps. Starting next year, customers can expect economy plan prices to stay generally comparable to DSL, with promises of faster and more consistent speeds. A source tells Stop the Cap! at least two significant cable operators are considering 10Mbps to be an appropriate entry-level broadband speed for 2016, in keeping with FCC chairman Thomas Wheeler’s dislike of Internet speeds below 10Mbps.

Just a few years earlier, most providers wouldn’t think of offering discounted 10Mbps service, fearing it would cannibalize revenue as customers downgraded to get lower priced service. Increasing demands on bandwidth from online video and multiple in-home users have gradually raised consumer expectations, and their need for speed.

Unfortunately for many phone companies that have neglected significant investment in their aging wireline networks, the costs to keep up with cable will become unmanageable unless investors are willing to tolerate significant growth in capital expenses to pay for network upgrades. Frontier Communications still claims most of their customers are satisfied with 6Mbps DSL, neglecting to mention many of those customers live in areas where cable competition (or faster service from Frontier) is not available.

Where competition does exist, it’s especially bad news for phone companies that still rely on DSL. Earlier this year, Frontier’s former CEO Maggie Wilderotter admitted Frontier’s share of the residential broadband market had dropped to less than 25% in 26 of the 27 states where it provides service. In Connecticut, the one state where Frontier was doing better, its acquired AT&T U-verse system has enabled the phone company to deliver broadband speeds up to 100Mbps. But even those speeds do not satisfy state officials who are seeking proposals from providers to build a gigabit fiber network in a public-private partnership.

Frontier’s recent experiments with fiber to the home service in a small part of Durham, N.C., and the unintentional revelation of a gigabit broadband inquiry page on Frontier’s website suggests the company may be exploring at least a limited rollout of gigabit fiber service in the state. But company officials have also repeatedly stressed in quarterly results conference calls there were no significant plans to embark on a major spending program to deliver major upgrades across their service areas.

Some phone companies may have little choice except to offer upgrades where cable operators are continuing to rob them of customers. In the northeast, where Frontier has a substantial presence, cable operators including Charter, Comcast and Time Warner Cable are committing to additional speed upgrades. Time Warner Cable’s current standard speed of 15Mbps will rise to 50-60Mbps in 2016, up to ten times faster than Frontier’s most popular “up to” 6Mbps DSL plan.

Most of the broadband customer gains won by Comcast and Time Warner Cable come as a result of DSL disconnects. AT&T said goodbye to 106,000 customers during the third quarter. Verizon managed to pick up 2,000 new subscribers overall, almost all signing up for FiOS fiber to the home service. No cable operator lost broadband market share, reported analyst firm Evercore. Leichtman Research offered additional insight, finding AT&T and Verizon were successful adding 305,000 U-verse and FiOS broadband customers, while losing 432,000 DSL customers during the same quarter.

The message to phone companies couldn’t be clearer: upgrade your networks or else.

Here’s a problem most North Americans wish they had: confusing rate cuts that are coming as a result of fierce competition for your telecom dollar.

In Ireland, the problem is real and some consumers are finding themselves perplexed watching the cost of broadband, telephone, and television service dropping by as much as $159 a year from the four different providers competing across much of the country. Telco Eircom has a 35% market share (39% in 2013), UPC/Virgin Media Cable – 28% (25% in 2013), Vodafone – 21% (17% in 2013), and Sky – 12% (1% in 2013).

“Neighbors are talking to one another and comparing bills only to find some are paying less than others even though they have the same types of services,” says Richard Donahue, a Dublin resident turned compulsive comparison shopper. “Because competition is getting stronger, local providers are pushing to get customers into bundles of services to keep them from switching.”

The result is lower pricing to help convince consumers to take all of their business to one provider. The ongoing drop in the price of telephone, television and broadband service has now been measured by Comreg, Ireland’s telecoms regulator. It released a report this month stating prices have “fallen significantly for the average Irish household.”

Consumers willing to make providers fight for their business are saving over $100 a year on bundled service packages. Comreg reported that even without asking, the average consumer subscribing to a package of television and broadband service has seen prices fall by nearly $75 a year across the board. Those also subscribing to telephone service are paying around $50 less a year. Only the cost of standalone broadband has remained the same, but that price has stayed close to what the Irish consider an acceptable range for Internet access — between $15 and $40 a month.

“Standalone broadband pricing may not be falling, but it isn’t rising either,” reports Donahue. “Service has improved with faster speeds and better reliability so you receive better value for money.”

Even mobile service prices are down by almost $90 a year, but there are some caveats.

“Ireland has one significant mobile problem yet to be sorted — the penalty for breaching allowances, which can be substantial,” Donahue said. “Comreg found almost a third of Ireland has received a warning text from a provider about nearing a limit provided by our allowances for voice minutes, texts, or data.”

Donahue adds the Irish are reticent about changing mobile providers, even if it would save them money.

“We love to complain about poor providers in this country that drop calls and leave us without coverage but 73 percent of us have not changed our provider in at least three years,” he reports. “Most don’t believe there are any savings doing so.”

Ireland appears to be a few years behind North American trends dealing with telecom services. The Comreg report found:

• Only 9 percent of Irish households subscribe to Netflix
• 76% of Irish mobile users still text back and forth but are gradually shifting towards app-based messaging services like Hangouts, Facebook Messenger and Whatsapp
• 43% of those watching online video report watching less traditional live/linear TV
• Only about 58% of mobile users browse the web with their phones
• 60% of broadband users couldn’t tell you what broadband speeds they receive/are supposed to receive
• 88% of those 65+ still have landline phone service, while 46% of those 18-24 still use landlines to make and receive calls.

Comcast is inviting controversy launching a new live streaming TV service targeting cord-cutters while exempting it from its own data caps.

Comcast’s Stream TV is comparable to Comcast’s Limited Basic lineup, only instead of using a set-top box, Stream TV delivers online video over the Internet to Comcast’s broadband customers in Massachusetts, New Hampshire, Maine and the Greater Chicago area. For $15 a month, Stream TV offers a large package of local over the air stations, broadcast networks, and HBO, along with thousands of on-demand titles and cloud DVR storage. In Boston, the lineup includes:

WGBH (PBS), HSN. WBZ (CBS), NECN, WHDH (NBC), Community Programming, BNN-Public Access, WWDP-Evine Live, WLVI (CW), WSBK (MyTV), WGBX (PBS), WBIN (Ind.), WBPX (Ion), WMFP (Ind.), The Municipal Channel, Government Access, WFXT (FOX), WCEA (MasTV), WUNI (Univision), EWTN, C-SPAN, CatholicTV, POP, QVC, WYDN (Daystar), WUTF (UniMas), WNEU (Telemundo), Jewelry TV, XFINITY Latino, WGBH World, WGBH Kids, Trinity Broadcasting Network, WGBH Create, Leased Access, WBIN-Antenna TV, WBIN-GRIT TV, WNEU-Exitos, WLVI-BUZZR, WCVB (Me-TV), WFXT-MOVIES!, WHDH-This TV, WFXZ-CA, WUNI-LATV, WFXZ (Mundo Fox), WBZ-Decades, and WFXT-Laff TV + HBO. The package also qualifies the customer as an authenticated cable TV subscriber, making them eligible to view TV Everywhere services from many cable networks.

Comcast is offering the first month of Stream TV for free with no commitment to its broadband customers subscribed to at least XFINITY Performance Internet (or above). Up to two simultaneous streams are allowed per account and some channels may not be available for viewing outside of the home. Comcast claims it will expand Stream TV to Comcast customers nationwide in 2016. Comcast will not be selling the service to customers of other cable or phone companies, limiting its potential competitive impact.

Competitors like Sling TV offer their own alternatives to bloated cable TV subscriptions at a similar lower price, and they will sell to anyone with a broadband connection. Sling alone is partly responsible for Comcast’s loss of hundreds of thousands of cable TV customers who don’t want to pay for hundreds of channels many never watch. That Comcast might want to launch its own alternative online video package to retain customers is not a surprise. But Comcast’s decision to exempt Stream TV from the company’s data caps while leaving them in place for competitors is sure to spark a firestorm of controversy.

Comcast claims it is reasonable to exempt Stream TV from its 300GB data cap being tested in a growing number of markets.

“Stream TV is a cable streaming service delivered over Comcast’s cable system, not over the Internet,” wrote Comcast in its FAQ. “Therefore, Stream TV data usage will not be counted towards your Xfinity Internet monthly data usage.”

More precisely, Comcast claims it relies on its own internal IP network to distribute Stream TV, not the external Internet competitors use to reach ex-Comcast cable TV subscribers. Comcast’s premise is it is less costly to deliver content over its own network while Internet traffic comes at a premium. Critics will argue Comcast has found an end run around Net Neutrality by relying on usage caps to influence customer behavior.

For the moment, Netflix is reserving comment after being contacted by Ars Technica. But Sling TV and other services that depend on Comcast’s broadband to reach customers will likely not remain silent for long.

Comcast could effectively deter consumers from using competing online video services with the threat of overlimit fees if customers exceed their usage allowance. The cable company could even use the fact its services don’t count against that allowance as a marketing strategy.

Stop the Cap! has warned our members about that prospect for years. Preferential treatment of certain content over others by playing games with usage caps and overlimit fees could have a major impact on emerging online video competition. Since Comcast owns both the broadband lines and the online video service, it can engage in anti-competitive price discrimination. Competitors will also argue that Comcast’s internal IP network is off-limits to them, making it impossible to deliver content on equal terms over a level playing field.

The next move will likely come from the FCC in response to complaints from Comcast’s competitors. As Ars Technica notes, the Federal Communications Commission’s Net Neutrality rules allow for complaints against so-called zero-rating schemes, with the commission judging on a case-by-case basis whether a practice “unreasonably interferes” with the ability of consumers to reach content or the ability of content providers to reach consumers.

With Comcast’s usage caps and overlimit fees, the only reaching will be for your wallet. Consumers need not wait for Sling TV and others to complain to the FCC. You can also share your own views about Comcast’s usage caps by filing a complaint with the FCC here.

Top officials of four southern states are coordinating efforts with Republican House members to oppose the Federal Communications Commission’s preemption of state laws that restrict or prohibit municipal/public broadband competition.

South Carolina Governor Nikki Haley, Tennessee Governor Bill Haslam, Alabama Attorney General Luther Strange, and Tennessee Attorney General Herbert Slattery have all backed efforts by House Republicans to curtail the regulatory powers of the FCC, claiming states’ rights should have precedence over the federal regulator. All four have sent letters to the House Energy & Commerce Committee putting their opposition on paper.

In 2014, FCC chairman Thomas Wheeler announced the FCC would seek to preempt state laws in North Carolina and Tennessee that severely restrict the development of broadband networks owned or controlled by municipalities and public utilities. The laws typically allow existing municipal networks to continue operating, but prohibit expansion beyond a pre-defined service area. Networks planning to launch after the laws took effect usually face onerous conditions and disclosure requirements that make many untenable. Large incumbent cable and phone companies were exempted from the law.

Wheeler’s efforts came in response to requests from community broadband providers seeking to deliver service to expanded service areas. The debate has put several local governments and utilities in an uncomfortable position of opposing their colleagues in state government.

In North Carolina, Attorney General Roy Cooper has taken the FCC to court in a petition to the U.S. Court of Appeals for the Fourth Circuit.

“Despite recognition that the State of North Carolina creates and retains control over municipal governments, the FCC unlawfully inserted itself between the State and the State’s political subdivisions,” Cooper wrote to the court. Cooper says the FCC’s actions are unconstitutional and exceeds the commission’s authority; “is arbitrary, capricious, and an abuse of discretion within the meaning of the Administrative Procedure Act; and is otherwise contrary to law.”

Much of the opposition to municipal broadband comes from Republican politicians on the state and federal level. Most claim municipal providers represent unfair competition to the private sector. The American Legislative Exchange Council (ALEC) considers municipal broadband a significant issue. The corporate-funded group offers state legislators the opportunity to meet with telecom company lobbyists. Legislators are also provided already-written sample legislation restricting municipal broadband developed by ALEC’s telecom company members, including AT&T, Comcast, and Time Warner Cable. In states where Republicans hold the majority in the state legislature, such bills often become law.

The FCC represents a serious threat to the telecom company-sponsored broadband legislation. Instead of debating the impact of the law on unpopular phone and cable companies, the four state officeholders claim the dispute is a battle pitting states’ rights against the powers of the federal government.

Haslam, who also serves as the national chairman of the Republican Governors Association, formally asked Congress to intervene against the FCC to protect state sovereignty. In a separate appeal to the FCC, Tennessee officials argued the FCC violated the country’s founding concept of separation of state and federal power, citing the 10th Amendment to the Constitution reserving power not delegated to the United States for the states respectively, or to the people.

Haslam’s critics contend the governor has delegated his own power to protect the interests of large telecommunications corporations operating in his state — companies the critics claimed wrote and lobbied for a state law that established anticompetitive broadband corporate protectionism in Tennessee. Among Haslam’s top campaign contributors are AT&T and Comcast — Tennessee’s two largest telecommunications companies.

Slattery, appointed by the Tennessee Supreme Court, argued in his letter to Congress the FCC lacked any authority to circumvent Tennessee state law.

The FCC has consistently claimed it is not overturning any state laws. Instead, it is performing its duties under its mandate.

The FCC cites Section 706 authority to regulate when broadband is not being deployed in a reasonable and timely manner, something that cannot happen if a state law impedes new competitors and entrants.

Alabama’s attorney general joined the fight in a brief to the Sixth Circuit opposing preemption, with a copy sent to the House Subcommittee on Communications and Technology, which is planning to hold a hearing on the matter. Alabama has several municipal and public utility networks operating in the state. AT&T and Comcast also serve large parts of Alabama. AT&T gave $11,000 to Strange’s campaign, Comcast sent $8,500. The Koch Brothers, fierce opponents of community broadband, also donated $10,000 to Strange through Koch Industries.

South Carolina Governor Nikki Haley told legislators she strongly opposes external entities like the FCC overreaching into her state’s business. She did not mention AT&T is her fifth largest contributor, donating more than $16,000 to her last campaign. South Carolina’s largest cable operator is Time Warner Cable. It donated $9,900 to the governor’s campaign fund.