Cuomo

As expected, New York’s efforts to lower broadband pricing through a state mandate has been effectively killed in a Brooklyn federal court, putting an end to Governor Andrew Cuomo’s efforts to require providers to offer a $15 broadband tier to income-challenged state residents.

U.S. District Judge Denis R. Hurley, who signed a preliminary injunction preventing the mandate from taking effect on June 15, signaled the concept was likely unlawful in a memorandum attached to the injunction. Several telecom companies challenged the mandate in a lawsuit heard in Hurley’s courtroom, claiming states have no regulatory authority to set broadband terms or pricing. Hurley was clearly persuaded in their direction, and was pessimistic the state could ever show a legal way to regulate internet pricing, something currently reserved to the FCC. As a result, a settlement has been proposed dropping the affordable pricing mandate.

Hurley was also moved by arguments from several smaller New York providers that claimed the new mandate would force them to sell service below cost. Empire Access, a fiber to the home overbuilder based in Prattsburgh, filed a declaration with the court threatening to cancel a major expansion project to wire customers in Livingston and Broome counties, including the city of Binghamton, if the mandate was implemented, because it would likely lose federal funding.

Because of the state’s definition as to who would have qualified for the affordable broadband tier, many smaller companies in rural, economically challenged area of upstate New York claimed they would face substantial economic losses to their businesses. Empire claimed it would lose “approximately $2 million per year,” Heart of the Catskills claimed top-line revenue would decrease $1,364,000 annually, Delhi Telephone claimed it would lose at least $90,000 per month, and the Champlain Telephone Company notified the court that “nearly half (48%) of its existing broadband customers will qualify for discounted rates,” causing the company to lose money on each customer.

“While a telecommunications giant like Verizon may be able to absorb such a loss, others may not,” Judge Hurley wrote in his order.

Gov. Cuomo bristled after learning of the lawsuit, threatening to revoke the franchise of any company that refused to implement the  state’s affordable broadband program. But the governor has made empty threats before, including a promise in 2018 to revoke the merger of Charter Communications and Time Warner Cable because the company failed to live up to the deal commitments it made to state regulators. A settlement was eventually reached between the cable giant and the state, and it appears a settlement between the plaintiff telecom companies and the state will also end this dispute and lawsuit. It appears the state has capitulated and plans to walk away from the affordable broadband proposal, although it reserved the right to appeal the case.

Stop the Cap! predicts the state will work with larger providers to increase public knowledge of the companies’ existing affordable internet programs, which usually have similar qualifications to the affordable internet law Cuomo proposed. Cuomo Administration officials will also likely lobby the Biden Administration to toughen federal oversight of broadband service and suggest a possible federal mandate for an affordable service tier and a return to net neutrality under a regulatory framework that opens the door for future price and service regulation.

The court decision signals states the solution to broadband affordability will not be found in state laws or mandates that attempt to regulate broadband pricing, at least until the current federal law changes.

The cable industry’s public affairs network — C-SPAN, gave a friendly reception to a top telecom industry lobbyist over the weekend, responding to soft ball questions about rural broadband and telecommunications public policy debates.

Jonathan Spalter, president and CEO of USTelecom appeared on C-SPAN’s “The Communicators” to answer questions about broadband service in the era of COVID-19. USTelecom’s members, primarily telephone companies, have been strong proponents for government funding of rural broadband expansion, are opposed to telecom industry regulation and net neutrality policies, and argues that the more oversight and regulation the industry deals with, the less investment Wall Street will direct towards broadband networks.

Spalter was asked about how American broadband networks handled the work/learn-from-home requirements during the coronavirus pandemic. Spalter said networks handled the increased traffic well, but noted many rural Americans still lack access to high-speed internet. Some Democrats have proposed regulating broadband service as a utility to deal with issues of access and affordability, an idea that Spalter rejects.

“To wrap it in the red tape of regulatory strictures, the overhang of bureaucracy that would be required if we were to make it a utility, would take us backward,” Spalter said, adding he prefers “light touch” regulation. But Spalter had no objection to spending taxpayer dollars to pay for-profit telephone companies to expand broadband service in high-cost rural areas. Spalter called estimates that it would cost $100 billion to bring high speed internet service to all Americans “adequate.”

Jonathan Spalter, USTelecom’s president and CEO, talked about the coronavirus’s impact on telecommunications, regulatory issues, and solving the problems of rural internet access. (28:52)

The Federal Communications Commission will seek hundreds of millions of dollars in fines from America’s four largest wireless companies after company officials apparently lied to Congress and regulators about ending the lucrative sale of customer locations to third parties in early 2019.

The Wall Street Journal reported the FCC has sent Notices of Apparent Liability to Verizon, AT&T, T-Mobile, and Sprint accusing the companies of continuing to sell the real-time locations of customers after telling Congress they would stop.

The companies allegedly routinely sold personal customer data to middlemen companies that had very few controls over who ultimately received that information. Clients included private investigators, debt collectors, police agencies, and even potentially ex-partners engaged in stalking. Customers have never been clearly informed that their location data was subject to resale to third parties, and privacy concerns were immediately raised after revelations data aggregators LocationSmart, Inc., and Zumigo, Inc., were selling data to inappropriate entities and individuals.

After being exposed in early 2019, all four carriers promised to end or curtail the practice, but an FCC investigation found carriers were not being forthright.

In January, FCC Chairman Ajit Pai disclosed the practice because of ongoing oversight by the House Energy and Commerce Committee, which had demanded an investigation by the FCC early last year. In a letter to the Committee, Pai wrote that the agency found U.S. carriers “apparently” broke the law by continuing to sell location data.

“I am committed to ensuring that all entities subject to our jurisdiction comply with the Communications Act and the FCC’s rules, including those that protect consumers’ sensitive information, such as real-time location data,” Pai wrote.

Too little, too late, according to Rep. Frank Pallone (D-N.J.), who chairs the Committee.

(Image by Brad Jonas originally for Pando.com)

“Following our longstanding calls to take action, the FCC finally informed the Committee today that one or more wireless carriers apparently violated federal privacy protections by turning a blind eye to the widespread disclosure of consumers’ real-time location data,” Pallone said in a statement in January, 2019. “This is certainly a step in the right direction, but I’ll be watching to make sure the FCC doesn’t just let these lawbreakers off the hook with a slap on the wrist.”

Today’s revelations infuriated Sen. Ron Wyden (D-Ore.) who tweeted:

“Ajit Pai has failed to protect consumers at every turn. This issue came to light after my office and dedicated journalists discovered how wireless carriers shared Americans’ locations without consent. He investigated only after public pressure mounted.”

Consumers often unwittingly share their real-time locations with cell phone providers whenever their phones are switched on and connected to a cellular or Wi-Fi network. Carriers have developed a lucrative business reselling that information to third parties, typically data aggregators that combine location information with data collected from other companies and sell it on. Buyers often include law enforcement agencies and private investigators, but one reporter found it simple as an individual to get real-time data about his location by paying $300 to a data aggregator. Privacy advocates worry that stalkers could easily track their victims through such services, with victims unaware their own cell phone company betrayed their location in return for money.

A Notice of Apparent Liability demands a written response from a targeted individual or company to explain why they should not be subject to the monetary penalty specified in the letter. Many companies win significant reductions or fine waivers through negotiations with the FCC. The Journal reports that so far, the FCC has not been willing to offer settlements, but that could change as carriers try to negotiate a settlement through the agency’s administrative process.

The article does not specify the exact fines targeted for each carrier. AT&T and Verizon have more than adequate financial resources to pay almost any fine in full. But a multi-million fine against T-Mobile and Sprint could complicate the final agreement between T-Mobile and Sprint to merge, which is expected to happen in the coming weeks. Under the revised merger agreement, both companies agreed to split any expenses related to liabilities up to $200 million, leaving Sprint investor-owner SoftBank responsible for the rest.

Brindisi, as he appeared in an ad slamming Charter Spectrum in the summer of 2018.

Rep. Anthony Brindisi (D-N.Y.) today introduced a bill in Congress to force cable operators fined by a state telecommunications regulator to publicly reveal the actual performance of their internet services, subscriber counts, and a complete price listing including all fees and surcharges.

The Transparency for Cable Consumers Act comes in response to New York’s experiences with Charter Communications, which was fined for failing to meet its commitments under a 2016 merger agreement allowing Charter to acquire Time Warner Cable. Brindisi made the cable company’s performance a core issue in his 2018 campaign, brazenly buying commercial time on Spectrum cable systems for 30-second ads slamming the cable company.

“I’ve heard from thousands of Upstate New Yorkers who are sick and tired of dealing with frequent rate hikes, poor customer service, and failed promises,” said Brindisi. “This is more than just an inconvenience. For families on fixed incomes, an unexpected rate hike could wreck their budget. And for people in rural communities, crawling internet speeds can take away their connection to jobs, health care, information, and important online services. When a company enters into an agreement, it should be required to hold up its part of the bargain.  We can’t keep giving these companies a free pass. If we don’t hold them accountable, nothing will change.”

Brindisi has bristled over the New York State Public Service Commission’s decision to repeatedly extend the deadline given to Charter to file an orderly exit plan winding down its cable operations in the state. The most recent extension was approved on Wednesday, now giving Charter Communications until April 5, 2019 to appeal the Commission’s decision and until May 9, 2019 to file its six-month exit plan.

Brindisi complains Spectrum is being allowed to linger even as consumers continue to contact his office with complaints about frequent rate hikes, slow internet speeds, and poor customer service. His December 2018 letter to the PSC asking the Commission to stop giving Charter additional time extensions has gone unanswered, according to Brindisi.

Brindisi’s bill attempts to walk a fine line around the federal government’s wholesale deregulation of the cable industry. Various deregulation measures stripped federal, state, and local officials of most of their powers to oversee the internet and Voice over IP telephone service. Cable television remains subject to some local oversight and regulation, but not in all areas. Many states also have so-called “state franchise” laws in place, which gives blanket authority for cable operators to offer cable television in the state without seeking a separate agreement with each community.

The Transparency for Cable Consumers Act, would require a cable or internet company to disclose information about its operations if it is fined by a state regulator:

• The number of cable and broadband internet customers in each county;
• The average cable bill and broadband internet bill amounts in each county;
• A full accounting of all fees charged customers in each county; and
• The average broadband internet speeds delivered in each county.

Rep. Anthony Brindisi (D-N.Y.) appeared on the House floor this afternoon to introduce the Transparency for Cable Consumers Act. (1:18)

Accenture’s six-page analysis.

CTIA, America’s largest wireless industry trade group and lobbyist, commissioned a research consultant to produce a six-page analysis that unsurprisingly concludes stripping some oversight responsibilities regarding cell tower placement would reduce the cost to deploy 5G wireless small cells by as much as $1.6 billion over the next nine years.

The Federal Communications Commission is currently considering industry-friendly proposals that would “streamline” and “modernize” the historic and environmental regulatory requirements for wireless deployments, exclude small cells from certain federal regulatory reviews, and put a strict limit on completing environmental impact reviews on new tower and antenna installations or else they will be automatically approved.

The Accenture analysis, produced at the request of CTIA, claims that it will cost an average of $9,730 for each 5G small cell regulatory review. But the report also states only 28-29% of installations will face this type of review. The CTIA implies it is much worse than that in its new 30-second ad complaining about regulatory burdens. That ad suggests 5G small cell “approval can take a couple of years.”

As the FCC ponders further deregulation of cell tower and antenna placement, wireless industry players are sharing their horror stories with the FCC to strengthen the agency’s likely  view that installation rules and oversight should be relaxed.

In January, Sprint complained it faced a demand to pay a $90,000 “tribal review fee” for six tower upgrades in the Chicago area. The company claims the towers were located in historic preservation areas, but not in areas of tribal significance. Sprint added in its letter to the FCC it only planned to install additional antenna equipment at those tower sites to increase capacity, not erect new towers.

The wireless industry is also lobbying to get cut-rate access to public infrastructure like street lights, on which it eventually plans to place 5G network equipment.

In states like California, AT&T has pushed hard for new legislation that would mandate cities and counties to give the company open access to public infrastructure in public rights-of-way or utility easements. In a 2017 bill before the California Senate, companies like AT&T would face a fee limit of $100-850 per small cell per year, indexed for inflation,

With multiple wireless companies prepared to enter the 5G marketplace, utility poles could get crowded.

Cities and counties may also find their right to object to what eventually ends up on their poles curtailed as a result of the deregulation effort.

CTIA’s new 30-second advertisement claims 5G small cells can be installed in about 90 minutes, but only after waiting years for a sluggish review process. (30 seconds)