Time Warner Cable has appealed to the Secretary of the New York Department of Public Service to keep information about taxpayer-subsidized broadband expansion projects in New York a secret.

The case is part of a series of ongoing requests for disclosure of information about the proposed merger of Comcast and Time Warner Cable under New York’s Freedom of Information Law.

Several public interest groups are requesting copies of documents submitted to the state Public Service Commission that the two cable operators have repeatedly asserted should remain confidential. Gerald Norlander from the Public Utility Law Project has been seeking details about how the two companies plan to address New York’s rural broadband dilemma before any decision about the merger is made by state regulators. Norlander requested copies of documents that include details about Time Warner’s taxpayer-subsidized rural broadband expansion under the auspices of Gov. Cuomo’s Connect NY program. Time Warner wants to keep the information confidential, citing competitive concerns.

New York Administrative Law Judge David L. Prestemon ruled earlier this month that while Time Warner could maintain secrecy in the early stages of its proposed expansion efforts, once the company disclosed details about a project in a public filing with state or local officials, confidentiality should be lifted.

Prestemon rejected efforts by Time Warner Cable to maintain confidentiality even after news of one broadband expansion project was reported by Albany-area media outlets. Prestemon added that public regulatory filings submitted by the company as a project commences effectively places information about it in the public domain.

Counsel for Time Warner Cable rejected that assertion, claiming information found in certain regulatory filings or in a newspaper article lacks the granularity sought by Time Warner’s competitors.

“Simply because physical construction begins on a project does not mean that the public or competitors would be aware of who is completing the project, the geographic extent of the project, the number of passings, or the estimated completion date,” argued Maureen O. Helmer and Laura L. Mona in an appeal filed by Time Warner’s legal team at Hiscock & Barclay, LLP. “This information would be difficult and costly for a competitor to compile, such that disclosure would significantly harm Time Warner Cable’s competitive advantage.”

The attorneys revealed Time Warner Cable’s use of subcontractors is already helping shield the company from having expansion projects become public knowledge:

Time Warner Cable typically uses subcontractors to complete the physical construction. Therefore, the vehicles used to construct the build-out are often not Time Warner Cable owned vehicles. While Time Warner Cable generally requires contractors to display signs stating “Contractor for Time Warner Cable,” the existence of construction vehicles on the side of a road would not convey to an average member of the public or a competitor that Time Warner Cable was engaged in construction of new facilities, as opposed to repair, maintenance, or some other activity. In similar fashion, if a Time Warner Cable vehicle was present on the side of a road, it would not mean that a new build-out was being constructed as the vehicle could be performing any number of tasks that would not be known to the public.

Norlander’s group is concerned Comcast intends to combine Time Warner Cable’s systems in New York and could focus entirely on large urban markets while potentially abandoning rural customers to maximize revenue.

This is the third time Time Warner Cable has appealed one of Judge Prestemon’s rulings on this subject.

Stop the Cap! has learned the New York State Public Service Commission has again delayed its final decision on the merger of Comcast and Time Warner Cable.

The latest deadline the PSC will pass is Nov. 19, and the new deadline, accepted by both cable operators, is Dec. 31, 2014.

Sources tell us the multiple delays come as a result of regulators underestimating the complexity of the transaction and its potential impact on New York residents.

There is also an ongoing legal dispute over the possible public release of information both cable companies argue is proprietary and confidential. Public interest groups argue otherwise and consider details about current broadband subscriptions, future expansion plans, and the possible fate of Time Warner Cable’s $14.99 low price Internet plan worth sharing with New York residents.

The staff of the New York Public Service Commission has requested extra time for consideration of Comcast’s application to assume control of Time Warner Cable’s operations in New York State.

“Pursuant to a request from Department of Public Service staff in the above-referenced matter, Comcast Corporation and Time Warner Cable Inc. agree to action by the Public Service Commission on the Joint Petition at the November 13, 2014 Commission Session, with a final order being issued no later than November 19, 2014,” says a filing published late this afternoon by the Commission.

The merger was to be on the agenda for approval or rejection at a meeting in early October. New York public interest groups are continuing to mount opposition campaigns against the merger. Many feel the proposal has not been given enough attention and the public remains largely unaware of their ability to take part in discussions about the proposal.

Update: 9/29/14:

Public Service spokesperson James Denn sent this statement to City Newspaper on Monday:

“The Comcast proceeding, affecting 2.2 million cable customers in New York and representing an approximate New York transaction value of $3 billion, has led to an intense stakeholder focus producing nearly 3,000 public comments, making it one of the most active proceedings in commission history. Given the depth and breadth of the public record and the importance of the issues presented, the commission has accepted the extension of the period for review so that it may consider the matter more fully at its November 13 session.”

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For $48.5 billion, AT&T will vault itself into second place among the nation’s largest pay television providers with the acquisition of DirecTV. The Wall Street Journal reports the executives at AT&T have been looking to for a giant deal for several years. Most executives earn special bonuses and other incentives worth millions for successfully completing these kinds of transactions. (3:03)

AT&T plans to spend $48.5 billion to acquire the nation’s biggest satellite television provider, allowing AT&T to become the second largest pay television company, behind a merged Comcast and Time Warner Cable.

The deal, finalized on Sunday, pays $95 per DirecTV share in a combination of stock and cash, about a 10% premium over DirecTV’s closing price on Friday. Including debt, the acquisition is AT&T’s third-largest deal on record, behind the purchase of BellSouth for $83 billion in 2006 and the deal for Ameritech Corp., which closed in 1999, according to data compiled by Bloomberg.

“This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens – mobile devices, TVs, laptops, cars and even airplanes. At the same time, it creates immediate and long-term value for our shareholders,” said Randall Stephenson, AT&T chairman and CEO. “DirecTV is the best option for us because they have the premier brand in pay TV, the best content relationships, and a fast-growing Latin American business. DirecTV is a great fit with AT&T and together we’ll be able to enhance innovation and provide customers new competitive choices for what they want in mobile, video and broadband services. We look forward to welcoming DirecTV’s talented people to the AT&T family.”

The announced acquisition has left some on Wall Street scratching their heads.

“Like any merger born of necessity rather than opportunity, the combination of AT&T and DirecTV calls to mind images of lifeboats and rescues at sea,” telecommunications analyst Craig Moffett of MoffettNathanson Research wrote this week. AT&T, Moffett wrote, is in “dire need of a cash producer to sustain their dividend.”

[flv]http://www.phillipdampier.com/video/Bloomberg ATT DirecTV Deal a Head Scratcher 5-19-14.flv[/flv]

Craig Moffett, founder of MoffettNathanson LLC, talks about AT&T Inc.’s plan to buy DirecTV for $48.5 billion. Moffett speaks with Tom Keene, Scarlet Fu, William Cohan, and Adam Johnson on Bloomberg Television’s “Surveillance.” StockTwits founder Howard Lindzon also speaks. (5:12)

The deal would combine AT&T’s wireless, U-verse, and broadband networks with DirecTV’s television service, creating bundling opportunities for some satellite customers. As broadband becomes the most important component of a package including phone, television, and Internet access, not being able to offer broadband has left satellite TV companies at a competitive disadvantage. AT&T’s U-verse platform – a fiber to the neighborhood network – has given AT&T customers an incremental broadband speed upgrade, but not one that can necessarily compete against fiber to the home or cable broadband.

Some analysts are speculating AT&T will eventually shut down its U-verse television service and dedicate its bandwidth towards a more robust broadband offering. Existing television customers would be offered DirecTV instead.

But deal critics contend AT&T is spending a lot of money to buy its competitors instead of investing enough in network upgrades.

“The amount of cash alone AT&T is spending on this deal — $14.55 billion — is as much as it cost Verizon for its entire FiOS deployment, which reaches more than 17 million homes,” Free Press’ Derek Turner tells Stop the Cap! “Add in the $33 billion in AT&T stock and $18.6 billion in debt, and you can see just how wasteful this merger is.”

In effect, AT&T is spending nearly $50 billion to buy DirecTV’s customer relationships, its satellite platform, and its agreements with programmers, all while removing one competitor from the market. Cable has 54 percent of the pay TV market, satellite has 34 percent, and AT&T and Verizon share 11 percent. AT&T’s U-verse has 5.7 million TV customers. DirecTV has 20.3 million. Combining the two gives AT&T 26 million television customers, second only to Comcast/Time Warner Cable.

Rural Americans will effectively see their choice in competitors drop by one-third, giving them the option of the phone company or Dish Network.

AT&T intends to persuade regulators to approve the deal despite its antitrust implications by offering several commitments the company says are in the public interest and protect consumers:

• 15 Million Customer Locations Get More High Speed Broadband Competition. AT&T will use the merger synergies to expand its plans to build and enhance high-speed broadband service to 15 million customer locations, mostly in rural areas where AT&T does not provide high-speed broadband service today, utilizing a combination of technologies including fiber to the premises and fixed wireless local loop capabilities. This new commitment, to be completed within four years after close, is on top of the fiber and Project VIP broadband expansion plans AT&T has already announced. Customers will be able to buy broadband service stand-alone or as part of a bundle with other AT&T services.
• Stand-Alone Broadband. For customers who only want a broadband service and may choose to consume video through an over-the-top (OTT) service like Netflix or Hulu, the combined company will offer stand-alone wireline broadband service at speeds of at least 6Mbps (where feasible) in areas where AT&T offers wireline IP broadband service today at guaranteed prices for three years after closing.
• Nationwide Package Pricing on DIRECTV. DIRECTV’s TV service will continue to be available on a stand-alone basis at nationwide package prices that are the same for all customers, no matter where they live, for at least three years after closing.
• Net Neutrality Commitment. Continued commitment for three years after closing to the FCC’s Open Internet protections established in 2010, irrespective of whether the FCC re-establishes such protections for other industry participants following the DC Circuit Court of Appeals vacating those rules.
• Spectrum Auction. The transaction does not alter AT&T’s plans to meaningfully participate in the FCC’s planned spectrum auctions later this year and in 2015. AT&T intends to bid at least $9 billion in connection with the 2015 incentive auction provided there is sufficient spectrum available in the auction to provide AT&T a viable path to at least a 2×10 MHz nationwide spectrum footprint.

[flv]http://www.phillipdampier.com/video/CNN ATT DirecTV Merger 5-19-14.flv[/flv]

CNN says AT&T’s buyout of DirecTV is about getting video programming to customers using all types of technology, but public interest groups suspect it’s about reducing competition. (1:17)

A closer look at AT&T’s commitments exposes several loopholes, however.

AT&T U-verse and DirecTV compete head-on in these areas.

• AT&T’s “commitment” to expand broadband to 15 million new locations is in addition to their Project VIP U-verse expansion now underway. However, AT&T does not say how many rural customers will see wired U-verse service finally become available vs. how many will lose their landlines permanently and have to rely on AT&T’s wireless landline replacement and expensive, usage-capped wireless broadband;
• AT&T’s speed commitment is largely unenforceable and falls apart with language like, “where feasible.” Anywhere they don’t deliver 6Mbps DSL speed can easily be explained away as “unfeasible.” AT&T also only commits to providing DSL where it already offers DSL, so no expansion there;
• The FCC’s Net Neutrality protections never covered wireless and three years is a very short time to commit to the “light touch” approach the FCC had with Net Neutrality back in 2010;
• AT&T’s wireless auction commitment comes with loopholes like “meaningfully,” “provided there,” and “a viable path to at least.”

“You can’t justify AT&T buying DirecTV by pointing at Comcast’s grab for Time Warner, because neither one is a good deal for consumers,” said Delara Derakhshani, policy counsel for Consumers Union, the advocacy arm of Consumer Reports. “On the heels of Comcast’s bid for Time Warner Cable, AT&T is going to try to pull off a mega-merger of its own. These could be the start of a wave of mergers that should put federal regulators on high alert.  AT&T’s takeover of DirecTV is just the latest attempt at consolidation in a marketplace where consumers are already saddled with lousy service and price hikes. The rush is on for some of the biggest industry players to get even bigger, with consumers left on the losing end.”

“The captains of our communications industry have clearly run out of ideas,” said Craig Aaron, president of Free Press. “Instead of innovating and investing in their networks, companies like AT&T and Comcast are simply buying up the competition. These takeovers are expensive, and consumers end up footing the bill for merger mania. AT&T is willing to pay $48.5 billion and take on an additional $19 billion in debt to buy DirecTV. That’s a fortune to spend on a satellite-only company at a time when the pay-TV industry is stagnating and broadband is growing. For the amount of money and debt AT&T and Comcast are collectively shelling out for their respective mega-deals, they could deploy super-fast gigabit-fiber broadband service to every single home in America.”

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Sen. Al Franken (D-Minn.) appeared on CNN’s New Day this morning to express his skepticism about the consumer benefits of a merger between AT&T and DirecTV. “We need more competition, not less.” (2:40)

Verizon gets out the black marker to redact information it considers “confidential.”

The New York Public Service Commission Monday rejected most of Verizon’s request to keep secret the state of its landline network and details about the company’s plans to distribute Voice Link as an optional wireless landline replacement in the state.

Nearly two months after Verizon announced it was abandoning its original plan to replace defective landlines on Fire Island with Voice Link, Verizon is bristling over a Freedom Of Information Law (FOIL) request from consumer advocates and a union for disclosure of reports filed with the PSC regarding Verizon’s network and its upkeep — information the company considers confidential trade secrets. To underline that belief, Verizon provided the PSC with edited versions of documents it filed with the state considered suitable for public disclosure, one consisting of 330 pages of blanket redactions except for the page headings and page numbers.

“[These discovery requests] are designed solely to advance the Communications Workers of America’s self-serving efforts to prevent Verizon from offering its Voice Link product, even on an optional basis, and to investigate the relationship between Verizon and Verizon Wireless — matters that are beyond the scope of this or any other pending Commission proceeding,” wrote Verizon deputy general counsel Joseph A. Post. “On September 11, 2013, Verizon announced that it had decided to build out a fiber-to-the-premises (“FTTP”) network on western Fire Island, and targeted Memorial Day 2014 for the completion of construction and the general availability of services over the new network.”

The PSC disagreed with Post, ruling the majority of documents labeled “confidential” by Verizon were, in fact, not.

“[…] The information claimed by Verizon to be trade secrets or confidential commercial information does not warrant an exception from disclosure and its request for continued protection from disclosure is denied,” ruled Donna M. Giliberto, assistant counsel & records access officer at the Department of Public Service.

Verizon has until Nov. 14 to file an appeal.

Common Cause New York, the Communications Workers of America-Region 1, Consumers Union, the Fire Island Association, and Richard Brodsky used New York’s public disclosure laws to collectively request documents shedding light on their suspicion Verizon has systematically allowed its landline facilities to deteriorate to the point a wireless landline substitute becomes a rational substitute. They also suspect Verizon diverted funds intended for its landline network to more profitable Verizon Wireless.

“In spite of its obligations under New York law, in spite of the investment by ratepayers in the FIOS wireline system, in spite of the needs and expectations of the people, businesses and economy of the state, Verizon is intending to and has begun to shut down its wireline system,” declared the groups.

Many involved took note of Stop the Cap!’s report in July 2012 that warned then-CEO Lowell McAdam had plans to decommission a substantial part of Verizon’s copper landline network, especially in rural areas, where it intended to replace it with wireless service:

“In […] areas that are more rural and more sparsely populated, we have got [a wireless 4G] LTE built that will handle all of those services and so we are going to cut the copper off there,” McAdam said. “We are going to do it over wireless. So I am going to be really shrinking the amount of copper we have out there and then I can focus the investment on that to improve the performance of it. The vision that I have is we are going into the copper plant areas and every place we have FiOS, we are going to kill the copper. We are going to just take it out of service and we are going to move those services onto FiOS. We have got parallel networks in way too many places now, so that is a pot of gold in my view.”

Some consumer groups suspect Fire Island represented an opportunity to test regulators’ tolerance for a transition away from copper landlines in high cost service areas. As Stop the Cap! reported this summer, New Yorkers soundly rejected Verizon Voice Link, with more than 1,700 letters opposing the wireless service and none in favor on record at the PSC.

In early September, a well-placed source in Albany told Stop the Cap! Verizon’s request to substitute Voice Link where it was no longer economically feasible to maintain landline infrastructure was headed for rejection after a constant stream of complaints arrived from affected customers. Verizon suddenly withdrew its proposal on Sept. 11 and announced it would bring FiOS fiber optics to Fire Island instead.

Although Verizon now insists it will only offer Voice Link as an optional service for New York residents going forward, public interest groups still believe Verizon has allowed its landline network to deteriorate to unacceptable levels.

Verizon originally claimed 40% of its facilities on Fire Island were damaged beyond repair when they were assessed after Hurricane Sandy. But residents claim some of that damage existed before the storm struck last October. Some fear Verizon is engaged in a self-fulfilling prophecy, allowing its unprofitable copper wire facilities to fall apart and then point to the sorry state of the network as their principle argument in favor of a switch to wireless service.

Herding money, resources, and customers away from landlines to Verizon Wireless

“In fact, the vast majority of defective lines are a consequence of the failure and refusal of Verizon to maintain and repair the system over time,” the groups assert. “The Commission must make a factual determination of the cause of the 40% defect allegation as part of this proceeding. If, as asserted herein and elsewhere, the evidence shows a pattern of inadequate repair, maintenance and capital investment, the Commission can not and should not approve any loss of wireline service to any customer, as matters of law and sound policy.”

“We assert that Verizon has systematically misallocated costs thereby distorting the extent to which the wireline system has suffered losses, if any. […] It is fair to say that substantial losses in the landline system are repeatedly used by the Commission and the Company as a justification for rate increases and regulatory decisions affecting the scope, cost, adequacy and nature of telephone service provided to customers of Verizon NY.”

Verizon would seem to confirm as much.

In 2012, Verizon’s chief financial officer Fran Shammo told investors the company was diverting some of the costs of Verizon Wireless’ upgrades by booking them on Verizon’s landline construction budget.

“The fact of the matter is wireline capital — and I won’t get the number but it’s pretty substantial — is being spent on the wireline side of the house to support the wireless growth,” said Shammo. “So the IP backbone, the data transmission, fiber to the cell, that is all on the wireline books but it’s all being built for [Verizon Wireless].”

Funds diverted for Verizon Wireless’ highly profitable business were unavailable to spend on Verizon’s copper wire network or expansion of FiOS. In 2011, Verizon diverted money to deploying fiber optics to 1,848 Verizon Wireless cell towers in the state. In 2012, Verizon deployed fiber to an extra 867 cell tower sites in New York and Connecticut. Public interest groups assert the costs for these fiber to the cell tower builds were effectively paid by Verizon’s landline and FiOS customers, not Verizon Wireless customers.

Since 2003, Verizon has been subject to special attention from the New York Public Service Commission because of an excessive number of subscriber complaints about poor service. As early as a decade ago, the PSC found Verizon’s workforce reductions and declining investment in its landline network were largely responsible for deteriorating service. Each month since, Verizon must file reports on service failures and its plans to fix them.

In September alone, Verizon reported significant failures in service in rural areas upstate, almost entirely due to the weather:

• Heuvelton: A summer filled with significant thunderstorms resulted in downed poles and service disruptions. Verizon reported the central office serving the community was in jeopardy in June. By mid-July, 7% of customers reported major problems with their landline service.
• Amber: Nearly 11% of customers were without acceptable service in May because a 100-pair cable serving many of the community’s 274 customers was failing.
• Chittenango: Nearly 9% of the community’s 1,059 landline customers had significant problems with service because Verizon’s central office switching system in the exchange was failing.
• Sharon Springs: Almost 11% of Verizon’s customers in this small rural office of 417 lines were knocked out of service in July.
• Elenburg Dept.: More than 8% of Verizon’s 324 lines in this rural Adirondack community were out of service, usually as a result of a thunderstorm passing through.
• Hartford: When it rains hard in this Adirondack community, landline service fails for a substantial number of customers. In September, 2.43 inches of rain left 12.4% of customers with dysfunctional landline service.
• Valley Falls: Nearly one-third of Valley Falls’ 722 landlines were out of service in September after lightning hit several Verizon telephone cables. Problems only worsened towards the end of the month.
• Kendall: Almost 9% of Verizon customers in the Rochester suburb of Kendall were without service after a rain and wind storm. When a cold front moves through the community, landlines service is threatened.
• Bolivar: More than 20% of customers lost service July 19th after heavy rain, winds, and power outages hit.
• Cherry Valley: Verizon blamed seasonal service outages in Cherry Valley on farmers that dig up or damage buried telephone cables. More than 7% of customers were knocked out by harvested phone lines in July.
• Edmeston: More rain, more service outages for the 801 landlines in this small community in area code 607. More than 13.5% of customers called in with complaints in July. Verizon blamed heavy rain.
• Clinton Corners: Service failures come after nearly every heavy rainfall due to multiple pair cable failures in the aging infrastructure. More than 9% of customers reported problems in June, 13.2% in July, 8.2% in August, and 12.5% in September.

Verizon’s landline trouble reports disproportionately come from rural communities, exactly those Verizon’s former CEO proposed to serve by wireless. Weather-related failures are often the result of deteriorating infrastructure that results in outages, especially when moisture penetrates aging cables. Rural communities are also the least-likely to be provided fiber service, exposing customers to a larger percentage of the same copper wiring critics charge Verizon is allowing to deteriorate.