The mouthpiece of Big Telecom.

The Information Technology and Innovation Foundation has looked and looked, and just does not see America’s broadband problems aptly described by industry critics including Susan Crawford, David Cay Johnston and Tim Wu. As far as the ITIF is concerned Americans have little to complain about with respect to broadband availability, speeds or pricing.

That finding is part of a new research paper, “The Whole Picture: Where America’s Broadband Networks Really Stand,” authored by Richard Bennett, Luke Stewart, and Robert Atkinson.

The report sniffs at critics complaining about uncompetitive, high-priced service, dismissing them as misguided “holders of a particular ideology or economic doctrine, which is Neo-Keynesian, populist economic thinking in this instance.”

Bennett, Stewart, and Atkinson, who have all penned pro-industry reports for years, prove another economic doctrine: the free market for industry bought-and-paid-for-“research” is alive and well.

The summary finding of the report:

Taking the whole picture into account, this report finds that the United States has made rapid progress in broadband deployment, performance, and price, as well as adoption when measured as computer-owning households who subscribe to broadband. Considering the high cost of operating and upgrading broadband networks in a largely suburban nation, the prices Americans pay for broadband services are reasonable and the performance of our networks is better than in all but a handful of nations that have densely populated urban areas and have used government subsidies to leap-frog several generations of technology ahead of where the market would go on its own in response to changing consumer demands.

Although the report is extensively footnoted to bestow credibility, once a reader begins to check out those footnotes, trouble looms:

1. Some footnotes lead the reader to business or Wall Street media reports, which can favor an industry point of view or extensively quote from executives and insiders;
2. Several certain critical assertions include footnotes that link only to the home page of the source, making it impossible to find the exact source material used;
3. Many footnotes come from earlier articles, position papers, and statements from the authors or others affiliated with the ITIF — hardly independent sources of information.

Bought and paid for research.

ITIF’s report is riddled with customized benchmarks the ITIF appears to have invented itself. Ars Technica caught one in the executive summary and questioned the relevance of measuring broadband adoption among “computer-owning households” at a time when an increasing number of Americans use broadband for video streaming on televisions, use smartphones, or rely on tablets for access.

We also noted the authors making several assertions without facts in evidence to support them. Among them is the unsupported notion that “the high cost of operating and upgrading broadband networks in a largely suburban nation” makes today’s broadband pricing understandable and fair.

In fact, the most significant costs borne by cable operators came during the early years of their initial construction — one, even two decades before broadband over cable was envisioned. When cable Internet service was introduced, it was praised for its relatively inexpensive start-up costs and its ability to deliver ancillary, unregulated revenue for cable operators. Those cable networks over which broadband is delivered have been paid off for years.

The authors avoid the actual financial reports of the largest phone and cable companies in their study, because as public shareholder-owned companies, they are obligated to disclose reality. Those financial reports show a consistent drop in capital expenses and infrastructure investment and a major increase in revenue and profits from broadband service. Cable industry executives have repeatedly asserted the reason they raise broadband prices is not because the costs to run their networks are very high, but rather because “they can.”

From there, Bennett, Stewart, and Atkinson play endless rounds of Statistics Scrabble.

Claim: America enjoys robust competition for broadband.

Phone Company

Fact: The cable industry has declared itself the victor for delivering high-speed broadband in the United States. DSL has long since given up competing on speed, and even AT&T’s hybrid fiber-copper U-verse platform is rapidly losing ground in the broadband speed race. Wireless and satellite plans are almost all slower and routinely cap usage, often to levels of just a few gigabytes per month.

The cable industry also won the right to keep its network to itself, not allowing third-party wholesalers on-demand access to resell broadband over those networks. Phone companies have been able to charge discriminatory wholesale pricing to access their networks, and only for certain types of connections.

Abroad, most networks are open to third parties on non-discriminatory terms. In places like the United Kingdom, customers have their choice of ISPs available over a traditional BT DSL line. In Asia, public subsidies and incentives helped push providers to construct fiber to the premises networks, but those networks are open access, helping spur competition and lower prices.

Domestically Time Warner Cable permits competitors like Earthlink on its network on a voluntary basis, but unsurprisingly Earthlink charges the same or higher prices for service that Time Warner charges once a six month promotion ends. That represents “competition” in name-only.

Claim: Most speed-test-based research rankings on broadband speeds around the world are wrong.

Cable Company

Fact: ITIF at one point makes the unfounded assertion that since many people only test their broadband speed when something seems wrong with their connection, most speed-test-sourced “actual speed” data is not very useful because there often is something wrong with a broadband connection when testing it, resulting in flawed data. This ‘picked out of the sky’ claim is one of the primary arguments ITIF makes about why broadband rankings (produced by those other than themselves) are irrelevant.

ITIF’s press release about its report makes the completely unsubstantiated assertion that “the average network rate of all broadband connections in the United States was 29.6Mbps in the third quarter of 2012; in the same period, we ranked seventh in the world and sixth in the OECD in the percentage of users with performance faster than 10Mbps.”

DSL customers may find a statistic rating America’s broadband speeds as better than one might expect to be less than useful when it only counts broadband connections faster than the average DSL user can buy themselves.

This cherry-picking may help the ITIF’s arguments look more credible, but it does nothing to improve your broadband speeds at home or at work.

Claim: Broadband provider profits average less than 2% annually.

Fact: Another clever statistic (poorly sourced as ‘from the home page of Bloomberg.com’ — check back with us when you find the original article yourself) that fails to tell the whole story.

We aren’t THAT profitable, really.

First, ITIF defines net profits specifically as “simply the difference between revenue and expenses.” But that definition may not account for a range of corporate accounting activities which can diminish net profits but still let the company walk away with high fives from Wall Street. Share buybacks or dividend payouts, acquisitions, costs and expenses from other divisions not related to broadband, etc., can all affect the bottom line and mask the enormous earnings and profit potential of American broadband.

Take Time Warner Cable, which has a 95 percent gross margin selling broadband. Broadband service is just one of three primary services sold by the cable operator. Broadband does not suffer from landline losses in the phone business or from escalating TV programming expenses. Broadband is clearly the most profitable service in Time Warner’s product arsenal because it occupies only a small part of the company’s wired infrastructure. Supplying broadband service also costs Time Warner relatively little money as a percentage of their earnings and has helped offset revenue loss from the television side of the business. Bandwidth costs have also declined year after year. Infrastructure upgrades are more than covered by pricing that has begun to creep up over the last few years. In effect, broadband earnings are covering for other products that are not selling as well.

ITIF’s claim that supplying broadband is costly and that current rates are justified just isn’t true.

Claim: Europe is behind the United States in broadband.

Fact: The one legacy network that both Europeans and Americans share in common is the copper wire basic telephone service. From there, telecommunications service diverged.

North Americans embraced cable television while much of western Europe (especially the UK) preferred direct-to-home satellite service. That difference set the stage for some significant broadband disparity. Cable broadband technology has proved more robust and reliable than DSL service. Phone companies that rely on basic DSL are falling behind in broadband speeds. Investment to bring fiber online is the only way these phone companies can stay competitive with cable broadband. Some countries with particularly decrepit telephone networks, especially those left over from the Communist era in eastern Europe, are being scrapped in favor of fiber to the home service. Many western European countries are incrementally introducing fiber to the cabinet or neighborhood service, which leaves the last mile copper phone wire connection in place.

This is why speeds in many eastern European countries and the Baltic states with full fiber networks are so high. Advanced forms of DSL are more common further west, using technologies like VDSL2+. But DOCSIS 3 cable upgrades (and those to follow) continue to leapfrog over telephone company DSL advancements. Speed disparity is often the result of fewer cable systems in Europe as well as the amount of fiber optics replacing basic telephone service infrastructure.

Despite that, many Europeans pay less, particularly for faster service, than we do. Plus, fiber optic upgrades are within the foreseeable future in many European countries. In the United States, fiber deployments are now crawling or stalled in areas served by AT&T and Verizon. Neither company shows much interest in spending money on further wired upgrades and no competitive pressure is forcing them to, especially as both phone companies increasingly turn attention to their wireless divisions for most of their earnings.

The kind of research produced by the ITIF is tainted as long as they don’t reveal who is paying for these research reports. As Stop the Cap! readers have learned well, following corporate money usually helps expose the real agenda of these so-called “think tanks,” which are created to distort reality and quietly echo the agenda of their paymasters with a veneer of independence and credibility.

The Internet Innovation Alliance this week unveiled its 2013 Broadband Guide to the 113th Congress, outlining recommendations for a better broadband future that just so happen to fall in step with AT&T’s lobbying action agenda, guaranteeing near-total telecom deregulation and abandoning rural America’s wired telecommunications networks.

That should come as no surprise, because the IIA’s principal backer is AT&T, along with a host of public interest and non-profit groups that have received significant contributions and backing from the phone giant.

The IIA’s chief recommendation: allow phone companies to abandon wired landline networks in favor of all-IP-based technologies that escape most regulatory requirements and are not subject to much oversight by local, state, or federal officials.

The IIA guide unintentionally illustrates that AT&T’s largest service area in the central and southern U.S. has some of the lowest broadband rankings in the country.

In order for consumers to enjoy the speed and bandwidth capacity of IP networks and to take advantage of the programs and services (including education, gaming, entertainment, social media) that require fast and robust data transmission, the United States should encourage the upgrade to a digital, all-Internet Protocol (IP) broadband infrastructure. Current legacy wired networks fail to meet the FCC’s definition of broadband, yet outdated laws essentially assume that incumbent telephone companies continue to maintain and operate these slow, antiquated networks, even as incumbents invest and deploy separate IP infrastructure and fewer and fewer consumers rely on the outdated voice-only networks.

Requiring incumbent telephone providers to maintain costly antiquated networks siphons investment away from deployment of advanced, high-speed next-generation IP-based networks that consumers prefer. Reforming antiquated 1930s regulations designed for monopoly providers in a copper-wire, analog era will encourage the private sector investment needed to upgrade non-IP-based facilities with newer and faster broadband infrastructure, creating jobs and growing our economy.

In addition, today’s 4G LTE wireless networks are IP-based, but the spectrum required to fuel consumers’ advanced wireless devices on these networks is becoming severely congested. Releasing more spectrum, the radio waves that carry everything from television to texts to mobile video, is necessary to maintain and improve service quality on wireless networks. The government controls the allocation of spectrum and should reallocate more of it for consumer use in order to sustain the increasing public demand for data and continue the benefits offered by the mobile revolution.

Nowhere in IIA’s guide does the “Alliance” disclose its largest backer is AT&T, one of the “telephone providers” IIA talks about as if it was a third party that had no direct connection to the group.

IIA’s guide takes care not to come down too hard on its benefactor for not upgrading rural telecommunications networks to support next generation broadband. In fact, AT&T has dragged its feet providing even ordinary DSL service in many of its rural service areas. The IIA is also careful not to disclose AT&T’s real plan: not to upgrade existing networks to fiber but rather abandon them altogether in favor of its high-profit, high revenue wireless service. That assures everyone deemed unworthy of wired broadband investment will be relegated to the company’s high-cost wireless platform with paltry usage caps and speed throttles.

At the start of 2013, we are witnessing exciting changes enabled by mobile broadband: an app economy that didn’t even exist five years ago now employs more than 500,000 Americans, according to Economist Michael Mandel; the inexorable shift to the cloud and its more efficient information storage; proliferating creative tools that are transforming consumers’ business and personal lives; rapacious appetite for faster speeds, greater bandwidth opportunity and more capacious storage; overwhelming competition with 90 percent of consumers able to choose from at least five different providers, as reported by the FCC; and accelerating innovation cycles where tomorrow’s technology is invented today. The future of broadband is bright and the benefits to consumers and our nation could be boundless. To realize these benefits we need only to let our innovators innovate, our entrepreneurs compete, and ensure our consumers have the knowledge and freedom to make the most of the technology available to them.

…and let AT&T do whatever and charge whatever it wants, while depriving rural America of a wired broadband future.

The IIA hopes its message gets through to members of Congress. Helping make that happen are two former Washington, D.C. insiders that have bipartisan support for AT&T’s agenda.

“We love technology here and believe in its power to change the country, the world, and that it’s a non-partisan issue,” gushes Bruce Mehlman, IIA’s founding co-chairman and former assistant secretary of commerce for technology policy in the George W. Bush Administration.

Mehlman was recognized by Washingtonian Magazine as one of the city’s top lobbyists and is a founding partner of his own lobbying firm. Mehlman is considered an expert in running issue campaigns and “developing advanced lobbying strategies that achieve impactful policy outcomes.” At least AT&T hopes so.

Mehlman’s D.C. lobbying firm promises “we get things done in Washington.”

“It’s critical that policymakers be well-informed as they make decisions affecting the Internet in order to promote and encourage the expansion of Internet investment, access and adoption,” echoed IIA honorary chairman Rick Boucher, a former Democratic member of Congress from the state of Virginia.

Boucher has never strayed too far from AT&T money either. AT&T was his third largest contributor overall from 1989 until he lost re-election in 2010. Today, Boucher is a partner in the law firm of Sidley Austin, which has represented AT&T’s interests for over 100 years.

All new homes must be equipped with fiber broadband connections if they are located in a county or city where fiber service is provided, according to a new mandate from China’s Ministry of Industry and Information Technology.

The Chinese government has learned turning over national broadband policy to self-regulating providers reluctant to invest in super-fast broadband service is a mistake other countries will pay for dearly as they fall behind in broadband rankings and digital opportunities only available to the broadband “well-connected.”

Now the government has taken measures to level the playing field for ordinary consumers and businesses who will share the right to equal service from various telecommunications companies over the country’s state-of-the-art fiber to the premises network.

The mandate takes effect April 1, and is anticipated to bring explosive growth in domestic fiber broadband, according to the China Daily.

With an open fiber network, expensive network redundancy and cherry-picking lucrative customers are reduced or eliminated, allowing the country to deploy fiber more rapidly in areas providers would typically deem “unprofitable.”

The new fiber policy will mean at least 40 million Chinese homes will have fiber broadband by 2015. China Unicom (Hong Kong) Ltd., the nation’s second largest telecom company, is among the most aggressive providers, adding 10 million Chinese families to its fiber network in the last year alone.

The bare minimum fiber speeds for Chinese families will be 4Mbps in rural areas, 20Mbps in urban zones, with 95 percent of the country blanketed with broadband within a few years.

The Chinese government’s broadband plan is laser-focused on fiber optics, with satellite and wireless service filling in rural coverage gaps. The country sees 21st century broadband as a national priority and is well on its way even as North American broadband companies are pulling back on fiber deployments. Instead, American and Canadian companies are incrementally upgrading inferior copper wire and cable HFC broadband networks. The Chinese government does not believe these older technologies will suffice.

Optical fiber manufacturers who assumed telecom companies in North America would continue aggressive fiber deployments and ramped up optical fiber production as a result have taken a financial beating, slashing prices to reduce inventory. The price for fiber cable has dropped at least 90 percent in the past decade. The Chinese government has even resorted to tariffs to stop American and European manufacturers from dumping fiber cables and equipment at rock bottom prices to the detriment of its domestic manufacturers.

China remains the largest driver in global fiber demand. In 2011, China accounted for about 50% of the global demand, reaching nearly 60 percent by the end of 2012.

A CenturyLink official made a remarkable concession in the state of Minnesota last week when he admitted the state’s community-owned broadband networks are better equipped to deliver 21st century broadband speeds that CenturyLink simply cannot provide.

Duane Ring, midwest region president for CenturyLink publicly told an audience at a Minnesota High Tech Association-sponsored discussion in Minneapolis that community-owned networks don’t have to meet shareholder demands for return on investment and other corporate metrics that have left CenturyLink broadband customers with far lower speeds than municipal broadband customers. Minnesota Public Radio was on hand:

Noting that CenturyLink wants every customer it can find, Ring pointed out that the company nonetheless needs a return on investment that satisfies shareholders and meets the demands of larger commitments and fiduciary responsibilities.

The small phone companies that have laid high-speed fiber networks, some of whom are cooperatives whose customers are the owners “can make decisions that maybe the economic return is 25 years,” Ring said. “They can do that.”

CenturyLink concedes Paul Bunyan offers better speeds over a superior network.

Only 62 percent of Minnesotans can today purchase what qualifies as broadband service. Those lucky enough to be served by public providers like Paul Bunyan in the Bemidji area and Farmers Mutual Telephone in western Minnesota benefit from some of the fastest broadband speeds in the state. That is because those cooperatives and public ventures laid fiber optic cables connected to individual homes. Those in rural Minnesota served by CenturyLink or Frontier get much less from slow speed, copper-based DSL, if they can get broadband at all.

CenturyLink has proven itself an obstacle for community broadband, opposing the construction of improved networks in areas they already service, condemning rural customers to substandard broadband speeds indefinitely. While the company says it is not opposed to public-private partnerships, any attempt to bypass them will result in a hornet’s nest of legal protests and blocking actions.

While community-owned networks struggle for financing and approval in a hostile atmosphere created by incumbent providers, the government is handing out money to companies like CenturyLink to get them to extend their slow speed DSL network. CenturyLink is spending $11 million in Connect America funds in Minnesota alone.

In other areas, residents have no interest in waiting around for single digit DSL speeds. In Lac qui Parle County in western Minnesota, local officials have joined Farmers Mutual Telephone to build a fiber network.

CenturyLink’s admission proves it answers first to shareholders, much later to customers.