Moffett

A consolidated cable industry envisioned by Dr. John Malone, currently bidding for a merger between Charter Communications and Time Warner Cable, would feature widespread usage caps and usage billing and could obliterate competition from over-the-top online video providers, predicts a cable industry analyst.

Craig Moffett, now out on his own as co-head of independent Wall Street research firm MoffettNathanson, says broadband usage pricing is the sleeper issue of the last five years.

“I’ve written for years that [usage based pricing] is the single most important issue in all [the telecom sector],” Moffett said in an interview last week. “I’ve always been amazed by how little attention people have always paid to the issue.”

The Street reports that a unified cable cartel limiting consumer access to the Internet or more importantly monetizing that access would immediately devastate streaming video competitors including Netflix, Amazon, YouTube and Hulu.

If usage based pricing were implemented across the cable industry tomorrow, Moffett believes Netflix’s subscriber base would immediately fall from 30 million to 10 million. Nascent video players like Intel and Apple would likely find their business plans untenable, and some analysts believe the sweeping price changes would probably end the shift towards integrating streaming technology into large flat panel television sets.

Consumer backlash

Moffett says the impact would be broadly felt. Other analysts predict it could cause a national consumer uprising, especially at a time when other countries are swiftly moving to get rid of usage limits and consumption-based billing that have never been popular with customers.

“I think it will become clear that over the summer the window may have already closed for the cable operators to move to a usage based pricing theme,” Moffett said.

The Federal Communications Commission has done almost nothing about the issue of usage caps and usage pricing. Former FCC chairman Julius Genachowski even applauded the unpopular price scheme, calling it an important innovation.

Customers call it something else, and an uproar from consumers and competitors alike could overshadow the broadband successes of the Obama Administration. It would represent “a laughable setback for the nation’s communications infrastructure,” predict increasingly pessimistic Wall Street analysts concerned about the inevitable backlash.

The Street:

In a new broadband pricing regime, regulators would have to condone what consumers and competitors would immediately recognize as anti-competitive. Meanwhile, immensely popular content providers such as Netflix, Amazon Prime, Hulu, YouTube and the like would have to lose a Washington lobbying battle to the interests of cable monopolies, their arcane billing and off shored customer service.

Hollywood and broadcast networks would lose marginal new content buyers such as Netflix. Tablet makers such as Apple, Google, Samsung and Amazon would see the value of their fastest growing products put at risk.

Most importantly, it would be an affront to one of the few clear consumer victories for the Department of Justice in the Obama administration.

Powell

You and I may think America can do better providing fast and inexpensive broadband service. But a former chairman of the FCC now representing industry interests waved shiny keys of distraction to explain away why cable companies are still delivering Internet speeds slower than those found in Romania, Latvia, South Korea and Japan.

Michael Powell, the poster child of D.C.’s “revolving door” problem gave a well-compensated, rousing (yet fact-lacking) defense of an industry he was supposed to oversee in the public interest as the Bush Administration’s FCC chairman from 2001-2005.

“America is home to the world’s very best Internet companies,” said Michael Powell, chief executive of the National Cable and Telecommunications Assn. at the annual Cable Show in Washington, D.C. “We have worked hard to reach everyone, and now offer service to 93% of American homes. Despite our success, many people like to denigrate U.S. broadband by painting false comparisons to other countries. There are some nations doing very well, but it is foolish to compare countries like Latvia and France to the United States of America.”

Powell’s response is hardly a fact-filled defense for cable company broadband that still delivers slow speeds at high prices. Instead of attempting to call the statistics inaccurate, he tried to explain away the discrepancy by complaining people are ignoring the size of the country and its population.

In denial

Powell’s arguments might have some merit if the cable industry did not make a point of bypassing vast rural areas that do not meet Return on Investment tests. It is difficult to claim cable companies cannot deliver comparatively fast service in rural Iowa when they don’t offer any service at all.

The People’s Republic of China’s population is far larger than our own and is now a vital market for fiber optics manufacturers and suppliers. While some of America’s cable industry CEOs repeatedly argue America does not need fiber broadband or gigabit broadband speeds, the Chinese government has insisted that every new housing development be pre-wired with fiber that will easily and inexpensively supply those speeds in the near future.

Powell is correct to say speeds are improving in the United States, but there is growing evidence they are improving even faster overseas, especially in countries that are basing their primary telecommunication infrastructure on fiber optics, which can support enormously fast Internet speeds. As those fiber networks are lit, America will fall even faster in broadband rankings as long as cable operators continue to insist there is no demand or interest in the next generation of high-speed service. At the prices they charge, they may just prove their own “no demand”-argument, at least in this country.

Powell himself helped lay the foundation for America’s broadband duopoly by deregulating the industry with one hand while ignoring the need for competitive checks and balances with the other. At the end of Powell’s tenure, his greatest achievement was constructing an industry-friendly personal resumé to win lucrative employment as a telecommunications lobbyist.

Who better to speak with “authority” on telecommunications matters than a well-connected former FCC chairman that does the industry’s bidding? The NCTA hired him to deliver just the kind of defense cable operators hope Americans will believe.

Those that are aware of what broadband is like abroad don’t.

Phillip “I don’t have $1 million in AT&T and Verizon stock” Dampier

Before Tom Wheeler, President Obama’s pick to head the Federal Communications Commission, can find his seat at the federal agency overseeing the nation’s telecommunications industry, he will need time to sever the extensive ties he maintains as an ex-lobbyist and investor in the companies he will soon oversee.

To avoid an even bigger appearance of a conflict of interest, Wheeler has agreed to dump at least $1 million in personal stock in AT&T and Verizon, as well as divest himself of holdings in 76 other media and tech companies including Time Warner, Comcast, Google, Sprint, Deutsche Telekom and News Corp.

Wheeler is also submitting his resignation from the board of Earthlink, an Internet Service Provider, and will also sell off his shares in that company. He will also have to step down from Core Capital, a venture capitalist investor firm with extensive holdings in the telecom industry.

In our view, Wheeler has shown he couldn’t be more of a telecom industry insider unless he also served on the board of AT&T. Wheeler’s extensive holdings depict someone who has maintained a direct financial interest in the industry for years, even after ending his leadership at the National Cable Television Association and leading the nation’s biggest wireless industry lobbying group, the CTIA.

These kinds of deep industry ties are a serious concern for the average consumer. As we’ve reported before, Tom Wheeler has said almost nothing on his blog about consumer interests, writing views from the perspective of an industry lobbyist and investor. Watching him disgorge well over a million dollars in direct investments in AT&T and Verizon — companies he’d oversee in his new role — does not ease our concern he remains a consummate insider. He is well-positioned to move back through the D.C. revolving door at the end of the Obama Administration to reinvest in the companies his tenure at the FCC could potentially make or break.

Wheeler’s appointment represents another broken promise from the Obama Administration:

“No political appointees in an Obama-Biden administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years. And no political appointee will be able to lobby the executive branch after leaving government service during the remainder of the administration.”

Not allowing Wheeler to oversee regulations or contracts with the companies who helped pay his salary and earn him a fortune from his investments would leave the new FCC chairman little to do beyond opening the mail. But of course, that campaign promise from the Obama-Biden campaign has long since been broken and forgotten by most.

Despite the clear conflicts of interest, President Obama remains fully behind his new FCC chairman pick.

“Tom knows this stuff inside and out,” Obama said.

No doubt.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Real News Obama Nominates Cable Industry Lobbyist and Campaign Bundler New Head of FCC 5-12-13.mp4[/flv]

Former FCC commissioner Nicholas Johnson blasts the nomination of Tom Wheeler, an ex-industry lobbyist and insider, for the role of new chairman of the FCC. (From: TheRealNews) (16 minutes)

Giant telecommunications companies and their lobbyist friends are gushing their approval for President Obama’s latest pick — Tom Wheeler — to head the Federal Communications Commission. What do they know that consumers don’t?

AT&T

I’ve known Tom Wheeler for many years, and he is an inspired pick to lead the FCC.  Mr. Wheeler’s combination of high intelligence, broad experience, and in-depth knowledge of the industry may, in fact, make him one of the most qualified people ever named to run the agency.

Mr. Wheeler will face daunting challenges at the FCC.  Already the pace of technological change is clashing with outdated laws, antiquated rules, and approaches more rooted in the past than the present.  The dedicated career staff at the FCC are grappling with these challenges now.  If the pace of change is to continue, along with the investment and job creation that fuel it, the mission of the FCC in the 21st Century must be re-examined, and its rules and methods modernized.  In this situation, I can think of no nominee more talented or whose leadership skills are more needed. Moreover, Mr. Wheeler will be joining a complement of fellow commissioners who are equally formidable and well suited for this important moment in the FCC’s history.

On behalf of AT&T, I’d like to congratulate Tom Wheeler on his nomination. We look forward to working with him once he is confirmed by the Senate. I also want to congratulate Mignon Clyburn, who will take over as interim-chair of the FCC. She’s an experienced and independent policymaker, passionate about public service, who will lead the agency over the coming months with a steady hand.

— Jim Cicconi, Senior Executive Vice President

National Cable & Telecommunications Association (NCTA) — America’s largest cable industry lobbyist

We congratulate Tom Wheeler on his nomination as Chairman of the Federal Communications Commission. With his significant experience in both the private and public sector, Tom is an exceptional choice to lead the Commission during a time when the telecommunications marketplace is experiencing significant innovation and incredible change. We welcome the appointment of Mignon Clyburn as interim chairman as she is a distinguished and able public servant. We will continue working closely with the entire Commission as they tackle important issues facing America’s dynamic media, technology and telecommunications landscape.

— Michael Powell, NCTA President & CEO and Former FCC Chairman

Comcast/NBC

We congratulate Tom Wheeler on his nomination as Chairman of the Federal Communications Commission.  His vast knowledge of the communications industry, as well as his proven leadership, will be invaluable as the Commission sets its course for our nation’s digital future.  We applaud President Obama’s nomination and we look forward to working with the Commission under Tom’s leadership.

Further, we commend the President’s appointment of Mignon Clyburn as Acting Chair of the FCC.  She has distinguished herself in her service as a Commissioner over the past three and a half years, and has demonstrated that she is well-suited to lead the agency.  She works passionately and tirelessly to ensure that the best interests of all Americans are given serious consideration in each matter before her.  We congratulate Chairwoman Clyburn on her well-deserved appointment as the first female chair of the FCC and look forward to continuing to work with the FCC under her leadership.

As current FCC Chairman Genachowski departs, we wish him the best and thank him for his very successful Chairmanship that has ensured the US remains the leader in the global communications marketplace.

— Comcast CEO Brian Roberts

Telecommunications Industry Association

He has the proven ability to transcend a broad range of industry perspectives to reach balanced outcomes.

— Grant Seiffert, president

CTIA – The Wireless Association — America’s top wireless industry lobbyist

Tom has a deep understanding of communications issues, a passion for hard work and creative thinking, a diverse background that spans the realm of the Internet world and a keen understanding of how mobile wireless broadband can drive our economy and innovation.

I can attest to Tom’s commitment to harness the power of communications technology to improve people’s lives, to drive our global competitiveness, and to advance the public interest,” Genachowski said. “The FCC’s role has never been more essential, and with Tom’s deep policy expertise and his first-hand experience as a technology investor, he is a superb choice to advance the FCC’s mission of promoting innovation, investment, competition, and consumer protection.

Wheeler

President Barack Obama will shortly nominate a former top cable and wireless industry lobbyist as his choice to represent the interests of the American people at the Federal Communications Commission.

Thomas Wheeler, who has been a telecom industry insider for at least 30 years and today serves as a venture capitalist, will have enormous influence over how the FCC manages the public airwaves, broadband, and wireless spectrum.

The Wall Street Journal reports this afternoon that President Obama may make a formal announcement as early as this Wednesday, with current FCC commissioner Mignon Clyburn serving as interim chair until Wheeler is seated.

Wheeler is expected to take a more industry-friendly attitude at the FCC. As Stop the Cap! noted after reviewing several years of Wheeler’s personal blog, the future FCC chairman would have approved the merger of AT&T and T-Mobile, considers Google, Apple and other technology companies challenging telecom public policy part of a “Silicon Valley mafia,” and praised AT&T’s chief lobbyist as a visionary that could define the wireless industry’s future.

Wheeler’s regulatory philosophy offers that mergers and acquisitions present an opportunity for regulators to impose certain temporary conditions on deals, offering the best opportunity to influence a short-term regulatory outcome. But such preconditions are often mild, quickly expire, and are predictable for the companies involved. When Comcast sought merger approval for its deal with NBCUniversal, one concession was to sell discounted Internet access for poor families — a service Comcast had earlier plans to offer but withheld as a bargaining chip during merger approval talks.