South Jersey: The worst broadband problems are in the southernmost counties closest to Delaware.

Customers hoping New Jersey’s telecom regulator would compel Verizon to expand fiber to the home service across southern New Jersey are out of luck.

The New Jersey Board of Public Utilities (BPU) approved a settlement between Verizon New Jersey, Inc., Cumberland County, and 18 southern New Jersey towns that alleged Verizon failed to properly maintain its wireline network in areas where it has chosen not to deploy FiOS — its fiber to the home service. But the settlement will only compel Verizon to maintain its existing copper network and offer token DSL and FiOS expansion in some unserved rural communities.

“We have heard our customers’ concerns in South Jersey and are pleased to have reached an agreement with the approval of all 17 towns on a maintenance plan going forward,” said Ray McConville, a Verizon spokesman. “We look forward to staying in regular communication with the towns to ensure our customers continue to receive the level of service they expect and deserve.”

“While the Board was fully prepared to proceed on this matter, the parties were able to reach a negotiated settlement which takes into consideration the needs of each community,” said Richard S. Mroz, president, N.J. Board of Public Utilities.

But some residents of those communities beg to differ.

“It’s another example of Chris Christie’s hand-picked regulators letting Verizon off the hook and sticking us in a digital divide,” complained Jeff Franklin, a Verizon DSL customer in Cumberland County. “Verizon should not be allowed to offer one half of the state modern broadband while sticking the rest of us with its slow DSL service.”

Franklin is upset that communities bypassed by Verizon’s FiOS network appear to have little chance of getting it in the future, now that regulators have agreed to allow Verizon to fix its own copper network.

“All the Board did was force Verizon to do what it should have been doing all along, taking care of its own network,” Franklin complained to Stop the Cap! 

Verizon did agree to expand its fiber network into the communities of Estell Manor, Weymouth Township, Corbin City, and Lower Alloways Creek Township, but only because of a 2014 agreement with Verizon compelling them to offer broadband to residents who read and complete a “Bona Fide Retail Request” (BFRR) form which stipulates homes and businesses in Verizon’s New Jersey territory can get broadband if they don’t have it now as long as these criteria are met:

• Have no access to broadband service from a cable provider or Verizon;
• Have no access to 4G-based wireless service; and
• Sign a contract for at least one (1) year of broadband service and pay a $100 deposit.

“BFRR is a joke because it requires potential customers have no access to 4G wireless service,” claimed Franklin. “You have to go to the government’s National Broadband Map to determine eligibility, which is very tough because — surprise, surprise — Verizon itself contributed its 4G wireless coverage information for that map and as far as Verizon is concerned, their 4G coverage in New Jersey is beautiful, even though it really isn’t.”

If a single provider submits map data that shows a home address is already covered by 4G wireless service, even if that isn’t accurate on the ground, that customer is ineligible under the terms of BFRR. Even if they were able to subscribe to 4G broadband, most plans are strictly data capped or throttled.

Under the settlement, Verizon gets to choose what technology to deploy. Outside of the four communities getting FiOS, the rest of South Jersey will have to continue relying on Verizon’s DSL service. Verizon has agreed to extend DSL to 2,000 new residences and businesses in Upper Pittsgrove, Downe, Commercial, Mannington, Pilesgrove, and South Harrison. It will also fix some of its DSL speed congestion problems and monitor for future ones as part of the settlement.

But DSL won’t work if Verizon’s wireline network stays in poor shape. The company has agreed to deploy its “Proactive Preventative Maintenance Tool” (PPMT) to scan its copper network to identify and repair or replace defective cables. Verizon has also agreed to daily inspections of outside facilities and fix any detected problems within 30 days, as well as regularly reporting back on the condition of its infrastructure inside the towns affected under the settlement.

This agreement took a year and a half to reach and will keep the two parties out of court, but many are not satisfied being left with Verizon’s DSL service.

“Unfortunately, the BPU continues to allow Verizon to pick and choose which residents will receive modern telecommunications at an affordable cost,” Greg Facemyer, a Hopewell Township committeeman in Cumberland County, told NewsWorks. “The state legislature needs to recognize these inequities and step in and level the playing field for South Jersey. Otherwise, our region will continue to fall even farther behind and be less competitive.”

This is part two of a multi-part series examining Time Warner Cable’s internal documents, made partly public as a result of a lawsuit filed by the New York Attorney General. You can read part one here.

In the summer of 2014, Time Warner Cable had a problem. For three years, the Federal Communications Commission had been issuing reports about the quality of broadband service from the nation’s largest internet service providers. The raw data collected by about 800 subscribers of Time Warner Cable who volunteered to participate in the project began to worry executives because it showed their broadband service was oversold in certain large cities and was no longer capable of consistently achieving advertised speeds. Even worse, the company’s congestion problems threatened to lower Time Warner Cable’s internet performance score at the FCC.

Sam Knows (but so does Time Warner Cable): The Not-So-Independent, Not-So-Confidential FCC Speed Test Program

The FCC commissioned a private company – Sam Knows – to distribute modified internet routers to gather data about the internet connections of thousands of volunteers and shared the results with the FCC to incorporate into its Measuring Broadband America program. After the FCC issued its first report in 2011, providers quickly learned the consequences of overpromising and underdelivering when Cablevision was called out for dramatically overselling its broadband service and not delivering the speeds customers paid to receive. While Cablevision executives publicly attacked the FCC speed test program as unreliable and wrong, they also quietly opened the company’s checkbook and spent millions quickly upgrading their facilities. The metric they failed to achieve was the FCC’s 80/80 test: “speed that at least 80% of the subscribers experience at least 80% of the time over peak periods.”

Here is what broadband performance on an oversold broadband service looks like. Notice Cablevision’s 2011 speed ranking plummets during peak usage periods when too many customers are sharing too little available bandwidth.

The incident embarrassed and damaged Cablevision’s reputation, and no cable operator wanted to be the next highlighted company for a public spanking by the FCC.

Time Warner Cable’s “Slow-Motion Train Wreck”

In 2013, a Time Warner Cable executive recognized the company’s practice of limiting company-financed expansion of their upstream connections with the rest of the internet would have serious implications for their own speed test scores, because customers were encountering nightly slowdowns on popular websites like YouTube caused by overcongested connections. Company executives feared customers participating in the Sam Knows/FCC program would soon reveal Time Warner Cable’s internet speeds were beginning to suffer some of the same peak usage problems Cablevision was encountering in 2011. The executive’s solution? Temporarily expand upstream connections just long enough to protect Time Warner Cable’s broadband speed scores:

“Our Sam Knows scores are like watching a slow-motion train wreck. We need to get in front of this. One thing I think we may need to be prepared to do is just give more ports to Cogent during sweeps month [when FCC results are measured for purposes of the MBA report]. We don’t have to make any promises, we just have to make it work temporarily.”

But even tricks like that failed to help Time Warner Cable’s speed scores in New York City, where serious congestion problems were obvious, even as late as last year:

The lawsuit filed by New York’s Attorney General revealed that FCC panelists in New York were getting speeds consistently well below the speeds they paid for, especially those paying for premium speeds:

FCC/Sam Knows Time Warner Cable Maxx Panelists in New York Speed Test Reports:

100Mbps subscribers received 73-87% of advertised speed (<80% advertised speed over six month period)
200Mbps subscribers received 49-58% of advertised speed (<60% advertised speed over six month period)
300Mbps subscribers received 33-52% of advertised speed (<38-74% advertised speed over six month period)

Speed test results showed consistent speed deficiencies between 2013-2016 occuring for many reasons, according to the lawsuit, including customers using outdated, company-supplied cable modems insufficient to support the customer’s speed plan, chronically oversold neighborhood groups that Time Warner Cable did not split or upgrade with additional capacity, and inadequate upstream/backbone connections to properly deliver content originating outside of Time Warner Cable’s own broadband network.

Overprovisioning Your Broadband Speed = “Putting Lipstick on a Pig”

We subscribe to 50/5Mbps service but receive closer to 62/6Mbps because Spectrum/Time Warner Cable overprovisions our service.

Instead of investing adequately in network upgrades and node splits, a July 7, 2014 internal email from Time Warner Cable’s former head of corporate strategy told senior colleagues the best way out of this dilemma was to cheat on the FCC broadband tests:

“We recommend increasing over-provisioning our modem speeds to around 20% to drive our Sam Knows scores >100% and then to market that we deliver more than promised speeds.”

In plain English, Time Warner Cable boosted the maximum allowed speed of each customer by about 20%. As a result, during non-peak usage times customers would find, for example, a plan advertising 50/5Mbps speed now delivered around 60/6Mbps. Although some customers considered overprovisioning a hidden free upgrade, Time Warner Cable’s motives were not altruistic. Because the Sam Knows testing program averages scores received from periodic testing, Time Warner Cable padded the results with higher-than-advertised speeds when their network was not congested, which compensated for the slower speeds and worse performance customers were getting during peak usage times. The lawsuit also alleges the practice helped to hide the abundance of obsolete rented cable modems still in use across Time Warner Cable’s broadband network.

The strategy worked to boost Time Warner Cable’s scores, but only as far as the FCC was concerned. Some customers were still finding their visits to YouTube, Netflix, and other websites littered with buffering problems and degraded resolution videos just about every evening. In 2013, before Time Warner Cable went ahead with its overprovisioning plan, the company’s own network engineers called the practice putting “lipstick on a pig.”

The Attorney General had its own analogy:

Using the highway analogy, Spectrum-TWC’s overprovisioning strategy amounts to allowing cars to go faster than the posted speed limit at certain times to compensate for the fact that often the highway slowed to a crawl. Boosting the average results with outlier results masked the enormous frustration for most subscribers stuck in traffic.

Breaking the FCC’s Rules

The lawsuit also alleges Time Warner Cable broke its own commitment to the FCC in the Code of Conduct it signed as a participant in the FCC’s testing program.

The FCC’s Code of Conduct required Spectrum-TWC to “at all times act in good faith” and not do anything “if the intended consequence of such act or omission is to enhance, degrade or tamper with the results of any test.” Specifically, the Code of Conduct prohibited the company from “modifying or improving services delivered to any class of subscribers” that was not “consistent with normal business practices.”

Stop the Cap! has also learned Time Warner Cable was able to identify each participant of the FCC/Sam Knows Time Warner Cable panel. This allowed the cable company to secretly verify the line quality and equipment in use by each participant, and give extra attention to those customers/volunteers to make sure service was performing as well as possible. In fact, executives instructed customer service representatives to assign FCC panelists “VIP treatment” and “best in class devices” when swapping modems, even as the company continued to supply deficient equipment to other customers who were not FCC panelists.

Still to Come: Playing games with online gamers, company officials tell the truth about bandwidth costs and Net Neutrality, and more….

Are you paying Windstream for 6Mbps DSL service and getting half that speed or less? Stop the Cap! doesn’t think it is fair to charge full price for half or less the speed you paid good money to receive. If Windstream shrugs its shoulders when you complain and tells you there is nothing they can do to improve your speed, it’s time to take 10 minutes to file a complaint with the Federal Communications Commission. That 10 minute investment may get you $120 in relief.

Complaints sent to the FCC are forwarded to Windstream’s executive relations team of customer service representatives, who have tried to placate customers with a monthly $10 discount off poor-performing DSL. Although your complaint will not get Windstream to pry open its safe and make immediate investments to correct your situation, it will keep the phone company’s fingers out of your wallet, collecting money it doesn’t deserve for a level of service it refuses to provide.

Windstream blames the Internet slowdowns on Internet traffic growth that other providers quietly manage with periodic upgrades. Windstream would not experience these congestion problems if it elected to spend some of the money it collects from customers on upgrades. As Stop the Cap! has reported before, in states like Georgia, Pennsylvania, South Carolina, New Mexico, Kentucky, Alabama, and beyond that does not seem to be happening as often as it should. Windstream appears to be waiting for a ratepayer bailout from Connect America Funds to pay for service upgrades it should be doing with its own money. Until they do, you are owed a discount and here is how to apply for one:

Filing a Complaint with the FCC Regarding Your Windstream DSL Service

1. Visit Windstream’s Speed Test website, select the server nearest you, and perform several speed tests, preferably over the course of a few days. Windows users can hit the F10 key on their keyboard to capture a screen image, use the paste command in any picture editor, and then crop and save the result as an image file. Paint.net is a good freeware program to use for this purpose. Mac users can follow these instructions. If this is too complicated, you can print a copy of the web page within your web browser.
2. Visit the FCC’s Consumer Help Center – Internet Complaint Form and complete the form online. You can upload and attach file(s) showing your speed test results at the bottom of the complaint form. Choose “speed” as your complaint category and let the FCC know you are paying x dollars for x Mbps DSL service from Windstream you are not getting. If you have previously complained about the speed and performance of your connection to Windstream directly, let the FCC know that as well, in addition to any response you received. The more details about your bad experience(s), the better. You can also suggest that as long as the problem continues, you want a discount for the poor performance of your Internet connection.
3. If you wish to mail or fax your complaint, download this complaint form and attach any printouts showing speed test results.

It will likely take at least 4-6 weeks for a response to reach you from the FCC, usually also containing a written response from Windstream. Some customers scheduled for significant upgrades this year may not get the same credit others not scheduled may receive. There are no guarantees Windstream will offer you any specific discount or credit for your service, especially if the problem can be corrected right away. But you won’t get a thing if you don’t ask.

Phillip “Speaking as a Customer” Dampier

Two defenders of large Internet Service Providers are coming to the defense of the broadband industry by questioning a Guardian article that reported major Internet Service Providers were intentionally allowing a degradation in performance of Content Delivery Networks and other high volume Internet traffic in a dispute over money.

Richard Bennett and Dan Rayburn today both published articles attempting to discredit Battle for the Net’s effort highlighting the impact interconnection disputes can have on consumers.

Rayburn:

On Monday The Guardian ran a story with a headline stating that major Internet providers are slowing traffic speeds for thousands of consumers in North America. While that’s a title that’s going to get a lot of people’s attention, it’s not accurate. Even worse, other news outlets like Network World picked up on the story, re-hashed everything The Guardian said, but then mentioned they could not find the “study” that The Guardian is talking about. The reason they can’t find the report is because it does not exist.

[…] Even if The Guardian article was trying to use data collected via the BattlefortheNet website, they don’t understand what data is actually being collected. That data is specific to problems at interconnection points, not inside the last mile networks. So if there isn’t enough capacity at an interconnection point, saying ISPs are “slowing traffic speeds” is not accurate. No ISP is slowing down the speed of the consumers’ connection to the Internet as that all takes place inside the last mile, which is outside of the interconnection points. Even the Free Press isn’t quoted as saying ISPs are “slowing” down access speed, but rather access to enough capacity at connection points.

Bennett:

In summary, it appears that Battle for the Net may have cooked up some dubious tests to support their predetermined conclusion that ISPs are engaging in evil, extortionate behavior.

It may well be the case that they want to, but AT&T, Verizon, Charter Cable, Time Warner Cable, Brighthouse, and several others have merger business and spectrum auction business pending before the FCC. If they were manipulating customer experience in such a malicious way during the pendency of the their critical business, that would constitute executive ineptitude on an enormous scale. The alleged behavior doesn’t make customers stick around either.

I doubt the ISPs are stupid enough to do what the Guardian says they’re doing, and a careful examination of the available test data says that Battle for the Net is actually cooking the books. There is no way a long haul bandwidth and latency test says a thing about CDN performance. Now it could be that Battle for the Net has as a secret test that actually measures CDNs, but if so it’s certainly a well-kept one. Stay tuned.

The higher line measures speeds received by Comcast customers connecting to websites handled by GTT in Atlanta. The lower line represents speeds endured by AT&T customers, as measured by MLab.

Stop the Cap! was peripherally mentioned in Rayburn’s piece because we originally referenced one of the affected providers as a Content Delivery Network (CDN). In fact, GTT is a Tier 1 IP Network, providing service to CDNs, among others — a point we made in a correction prompted by one of our readers yesterday.

Both Rayburn and Bennett scoff at Battle for the Net’s methodology, results, and conclusion your Internet Service Provider might care more about money than keeping customers satisfied with decent Internet speeds. Bennett alludes to the five groups backing the Battle for the Net campaign as “comrades” and Rayburn comes close to suggesting the Guardian piece represented journalistic malpractice.

Much was made of the missing “study” that the Guardian referenced in its original piece. Stop the Cap! told readers in our original story we did not have a copy to share either, but would update the story once it became available.

We published our own story because we were able to find, without much difficulty, plenty of raw data collected by MLab from consumers conducting voluntary Internet Health Tests, on which Battle for the Net drew its conclusions about network performance. A review of that data independently confirmed all the performance assertions made in the Guardian story, with or without a report. There are obvious and undeniable significant differences in performance between certain Internet Service Providers and traffic distribution networks like GTT.

So let’s take a closer look at the issues Rayburn and Bennett either dispute or attempt to explain away:

1. MLab today confirmed there is a measurable and clear problem with ISPs serving around 75% of Americans that apparently involves under-provisioned interconnection capacity. That means the connection your ISP has with some content distributors is inadequate to handle the amount of traffic requested by customers. Some very large content distributors like Netflix increasingly use their own Content Delivery Networks, while others rely on third-party distributors to move that content for them. But the problem affects more than just high traffic video websites. If Stop the Cap! happens to reach you through one of these congested traffic networks and your ISP won’t upgrade that connection without compensation, not only will video traffic suffer slowdowns and buffering, but so will traffic from every other website, including ours, that happens to be sent through that same connection.

MLab: “Customers of Comcast, Time Warner Cable, and Verizon all saw degraded performance [in NYC] during peak use hours when connecting across transit ISPs GTT and Tata. These patterns were most dramatic for customers of Comcast and Verizon when connecting to GTT, with a low-speed of near 1 Mbps during peak hours in May. None of the three experienced similar problems when connecting with other transit providers, such as Internap and Zayo, and Cablevision did not experience the same extent of problems.”

Our initial findings show persistent performance degradation experienced by customers of a number of major access ISPs across the United States during the first half of 2015. While the ISPs involved differ, the symptoms and patterns of degradation are similar to those detailed in last year’s Interconnections study: decreased download throughput, increased latency and increased packet loss compared to the performance through different access ISPs in the same region. In nearly all cases degradation was worse during peak use hours. In last year’s technical report, we found that peak-hour degradation was an indicator of under-provisioned interconnection capacity whose shortcomings are only felt when traffic grows beyond a certain threshold.

Patterns of degraded performance occurred across the United States, impacting customers of various access ISPs when connecting to measurement points hosted within a number of transit ISPs in Atlanta, Chicago, Los Angeles, New York, Seattle, and Washington, D.C. Many of these access-transit ISP pairs have not previously been available for study using M-Lab data. In September, 2014, several measurement points were added in transit networks across the United States, making it possible to measure more access-transit ISP interconnection points. It is important to note that while we are able to observe and record these episodes of performance degradation, nothing in the data allows us to draw conclusions about who is responsible for the performance degradation. We leave determining the underlying cause of the degradation to others, and focus solely on the data, which tells us about consumer conditions irrespective of cause.

Rayburn attempts to go to town highlighting MLab’s statement that the data does not allow it to draw conclusions about who is responsible for the traffic jam. But any effort to extend that to a broader conclusion the Guardian article is “bogus” is folly. MLab’s findings clearly state there is a problem affecting the consumer’s Internet experience. To be fair, Rayburn’s view generally accepts there are disputes involving interconnection agreements, but he defends the current system that requires IP networks sending more traffic than they return to pay the ISP for a better connection.

Rayburn’s website refers to him as “the voice of industry.”

1. Rayburn comes to the debate with a different perspective than ours. Rayburn’s website highlights the fact he is the “voice of the industry.” He also helped launch the industry trade group Streaming Video Alliance, which counts Comcast as one of its members. Anyone able to afford the dues for sponsor/founding member ($25,000 annually); full member ($12,500); or supporting member ($5,500) can join.

Stop the Cap! unreservedly speaks only for consumers. In these disputes, paying customers are the undeniable collateral damage when Internet slowdowns occur and more than a few are frequently inconvenienced by congestion-related slowdowns.

It is our view that allowing paying customers to be caught in the middle of these disputes is a symptom of the monopoly/duopoly marketplace broadband providers enjoy. In any industry where competition demands a provider deliver an excellent customer experience, few would ever allow these kinds of disputes to alienate customers. In Atlanta, Los Angeles, and Chicago, for example, AT&T has evidently made a business decision to allow its connections with GTT to degrade to just a fraction of the performance achieved by other providers. Nothing else explains consistent slowdowns that have affected AT&T U-verse and DSL customers for months on end that involve GTT while Comcast customers experience none of those problems.

We also know why this is happening because AT&T and GTT have both confirmed it to Ars Technica, which covered this specific slowdown back in March. As is always the case about these disputes, it’s all about the money:

AT&T is seeking money from network operators and won’t upgrade capacity until it gets paid. Under its peering policy, AT&T demands payment when a network sends more than twice as much traffic as it receives.

“Some providers are sending significantly more than twice as much traffic as they are receiving at specific interconnection points, which violates our peering policy that has been in place for years,” AT&T told Ars. “We are engaged in commercial-agreement discussions, as is typical in such situations, with several ISPs and Internet providers regarding this imbalanced traffic and possible solutions for augmenting capacity.”

Missing from this discussion are AT&T customers directly affected by slowdowns. AT&T’s attitude seems uninterested in the customer experience and the company feels safe stonewalling GTT until it gets a check in the mail. It matters less that AT&T customers have paid $40, 50, even 70 a month for high quality Internet service they are not getting.

In a more competitive marketplace, we believe no ISP would ever allow these disputes to impact paying subscribers, because a dissatisfied customer can cancel service and switch providers. That is much less likely if you are an AT&T DSL customer with no cable competition or if your only other choice cannot offer the Internet speed you need.

1. Consolidating the telecommunications industry will only guarantee these problems will get worse. If AT&T is allowed to merge with DirecTV and expand Internet service to more customers in rural areas where cable broadband does not reach, does that not strengthen AT&T’s ability to further stonewall content providers? Of course it does. In fact, even a company the size of Netflix eventually relented and wrote a check to Comcast to clear up major congestion problems experienced by Comcast customers in 2014. Comcast could have solved the problem itself for the benefit of its paying customers, but refused. The day Netflix’s check arrived, problems with Netflix magically disappeared.

More mergers and more consolidation does not enhance competition. It entrenches big ISPs to play more aggressive hardball with content providers at the expense of consumers.

Even Rayburn concedes these disputes are “not about ‘fairness,’ it’s business,” he writes. “Some pay based on various business terms, others might not. There is no law against it, no rule that prohibits it.”

Battle for the Net’s point may be that there should be.

Uh oh… deer in headlights moment for Tumblr founder David Karp.

Net Neutrality opponents today made hay about an underwhelming, sometimes stumbling debate performance by Tumblr founder David Karp, who was inexplicably CNBC’s go-to-guy to explain the inner machinations of the multi-billion dollar high-speed Internet connectivity business.

TechFreedom, an industry-funded libertarian-leaning group spent much of the day hounding Karp about his “painful, babbling CNBC interview.”

“Those pushing #TitleII have NO FREAKING CLUE what it means,” tweeted TechFreedom’s Berin Szoka.

BTIG Research devoted a whole page to the eight minute performance, where Karp faced interrogation by two CNBC hosts openly hostile to Net Neutrality and another that expressed profound concern the Obama Administration would over-enforce Net Neutrality under Title II regulations. CNBC is owned by Comcast, a fierce opponent of mandatory Net Neutrality.

“Given the importance of Net Neutrality and the central role played by Tumblr’s Karp in getting us to this point, we thought it was very important for everyone to watch his interview earlier today on CNBC in its entirety,” wrote Rich Greenfield, noting the “best parts” (where Karp appeared like a deer frozen by oncoming headlights) were encapsulated into an extra video clip.

Greenfield referred to a Wall Street Journal piece in February that suggested access means everything when it comes to D.C. politics:

“In a lucky coincidence, Tumblr Chief Executive David Karp, who attended the meeting in New York, found himself seated next to Mr. Obama at a fundraiser the following day hosted by investment manager Deven Parekh.

Mr. Karp told Mr. Obama about his concerns with the net-neutrality plan backed by Mr. Wheeler, according to people familiar with the conversation. Those objections were relayed to the White House aides secretly working on an alternative.”

That was sufficient for some to imply Karp was a powerful influence over the president’s sudden pronouncement last November that strong, all-encompassing Net Neutrality was the was to go.

CNBC’s hosts grilled Karp, asking him to prove a negative, set up false premises for Karp to defend, and repeatedly cut his answers off. At the same time, Karp was clearly unprepared and often did not have his facts in order.

Stop the Cap! sorts it all out.

[flv]http://www.phillipdampier.com/video/CNBC Tumblr Net Neutrality 2-24-15.flv[/flv]

Nobody’s shining moment on the Net Neutrality debate on CNBC featuring an unprepared David Karp, founder of Tumblr vs. the B-team at CNBC – lackeys with an agenda who can’t wait to interrupt. Truth comes in last place. (8:18)

CNBC Claim: “If you talk to AT&T’s Randall Stephenson, he will say right now they have more capital expenditures than any company in America … and if you turn it into a utility it will not be profitable to continue investing like that.”

Fact: AT&T does invest heavily in its network but also enjoys very healthy returns on that investment. In 2014, AT&T was expected to end the year spending about $21 billion, primarily on its highly profitable wireless network. Last week, USA Today published a list of the top 12 companies in the Standard & Poor’s 500 that boosted capital spending by 40% or more in the past 12 months and spent at least 15% of revenue on capital expenditures. AT&T was not on it. Outside of claims from telecom companies and their lobbyists, there are no plans by the FCC to turn broadband into a regulated utility.

Karp Claim: “There is a tremendous amount of throttling going on right now.”

CNBC Question from Alternate Universe of Fair, Balanced Journalism: “In general, do you think heavy-handed government regulation is a good thing or a bad thing for an industry?”

Fact: “Throttling” is not well-defined here. There is intentional throttling among certain wireless companies, usually under the guise of “fair access policies” and usage caps, and there is throttling as a side effect of congestion in two areas: backbone connectivity among certain ISPs and wholesale traffic handlers and last mile congestion among providers, especially those offering DSL in rural areas, where multiple customers share access to a limited capacity middle mile network. There is no evidence that any significant wired providers are intentionally throttling the speeds of services except as part of a fair access policy or a purposeful lack of investment in network upgrades.

CNBC Claim: “You have a monopoly because it is really expensive to build the pipes so you have not had multiple people who will build pipes to the door.”

Fact: The capital cost required to offer wired broadband service to each home is a clear deterrent for many providers, but not an insurmountable one as Google and community-owned providers have demonstrated. The cable industry won early protection from competition in exclusive franchise agreements that calmed investor fears that the enormous cost of wiring communities for cable might not be repaid if a competition war broke out. AT&T later fought for and won statewide franchising agreements and considerable deregulation in many states where it provides U-verse, arguing regulatory burden reduction would enhance competition. But the same large cable and phone companies that achieved deregulation for themselves have lobbied heavily to regulate and banish community-owned providers from getting off the ground by encouraging the passage of restrictive state laws making such competition nearly impossible.

CNBC Question: “In general, do you think heavy-handed government regulation is a good thing or a bad thing for an industry?”

Our reply: Really?

Karp: I think a bright line rule that sort of spells out these foundational principles that we believe in… I think the Bill of Rights is a good thing… even without getting into the weeds, spelling out something like the First Amendment that says this is a truth that we believe… (cut off).

CNBC: I don’t see how that is an answer at all comparing this to the Bill of… I understand the Bill of Rights but… has there been a problem up to this point where you feel that people… that Net Neutrality has been violated.

Karp: We’ve had instances where companies like Comcast have tried to block whole protocols and shut off consumers access to new innovative parts of the Internet.

Traffic congestion problems on many major ISPs were limited to Netflix traffic, until Netflix began paying for peering connections with problem ISPs.

Fact: In 2007, Comcast installed new software or equipment on its networks that began selectively interfering with some of Comcast’s customers’ TCP/IP connections. The most widely discussed interference was with certain BitTorrent peer-to-peer (P2P) file-sharing communications, but other protocols were also affected. The case led to an effort by the FCC to introduce open Internet traffic rules in 2010 which Comcast later defeated in court. At no time did Comcast completely block access – it simply impeded it, reducing customer speeds only while using those services.

A CNBC host then challenged Karp to prove a negative on AT&T’s plans to pull back investment in its network expansion.

“How has it been disproven that he’s not actually going to pull in on his buildout of more infrastructure?”

Fact: On Nov 7, 2014 – a week before President Obama unveiled his support for strong Net Neutrality policies – AT&T announced at least $3 billion in capex reduction (or “pull in” to quote CNBC) for 2015 in a press release on its acquisition of Mexico Wireless Provider Iusacell:

AT&T’s VIP-related capital investment levels will peak in 2014, as the company has said previously. As a result, AT&T expects its 2015 capital expenditure budget for its existing businesses to be in the $18 billion range. This will bring the company’s capital spending as a percent of total revenues to the mid-teens level — consistent with its historical capital spending levels.

Even after AT&T CEO Randall Stephenson was announcing cutbacks in capex, his office was releasing press releases claiming a major expansion of AT&T’s gigabit fiber upgrades for U-verse, claims Stop the Cap! have found to be grossly exaggerated.

Stephenson made the mistake of putting the cart in front of the broadband horse, making it impossible to credibly claim he was reducing his capex budget because of a Net Neutrality policy that had not even been announced yet.

CNBC Claim: “It doesn’t mean someone will pay for it if they are losing money as a result.”

Fact: None of the providers mentioned by CNBC have lost any money provisioning broadband service. In fact, broadband is becoming the new profit center of the industry, netting higher revenue after adjustments for cost than any other part of the cable package.

Another exchange:

CNBC: “If you look at Netflix traffic, sometimes it is 80 percent of the network’s nighttime load.”

Karp: “The consumers are paying for it and Netflix is already paying for it.”

CNBC: “I am not a Netflix user and it ticks me off I have to subsidize everybody that is doing that. Why do I have to pay for that?”

Fact: The CNBC host is being disingenuous and inaccurate. Although Netflix traffic can constitute 80% of the evening traffic load, the customers accessing Netflix paid both Netflix and their ISP for that traffic. Whether or not the CNBC host uses Netflix or not is irrelevant. Assuming she is a Comcast or Time Warner Cable customer, last mile congestion that could impact her enjoyment of the Internet was never an issue under DOCSIS 2, has been rendered a non-issue under the current DOCSIS 3 standard, and will remain a non issue going forward.

The traffic dispute between Comcast and Netflix only affected Netflix viewing. The CNBC host need not subsidize Netflix or anyone else. Netflix offers free peering services and equipment to any ISP that wants it. Comcast refused to take part, demanding financial compensation instead. It then raised rates on customers anyway. Her beef is with Comcast, not Netflix.