Every once in a while, a brazen utility service company will come to our attention that is so egregious in its conduct and pricing, it makes Comcast’s business practices resemble Amateur Hour.

Not for lack of trying, Comcast’s worst abuses pale in comparison to the conduct of a nasty little firm called Nationwide Energy Partners (NEP). No customer that endures this pseudo-utility will likely ever forget its name, or the $500+ utility bills the company is known to send to renters in Ohio.

Ohio’s deregulated utility market has opened the door to speculators, multi-level marketing scams, and the new and growing practice of “submetering,” — rebilling renters for utility usage charges on behalf of the property owner. The epicenter of some of the worst abuses is in Columbus, where two “submetering” companies with dubious records and close ties to property developers are getting rich charging customers up to 97% more than other Columbus households pay for basic utilities.

Four families are now taking NEP to court, alleging the company is lying about its rates, overcharging customers, and engineering a monopoly business model that does not allow customers to switch utilities, leaving them captive to the threat of eviction and property liens for those that fall behind on their bills.

Ralph Cantore in Columbus is well-acquainted with NEP. It’s the utility company that has billed him $4oo-525 a month for electricity and water service for his three-bedroom apartment.

“I really enjoy the location,” Cantore told The Columbus Dispatch about Olentangy Commons apartments. “I enjoy everything about it, except the ridiculous energy bills.”

Courtney VanSickle, a registered nurse, says her bills have been as high as $450 a month at her two-bedroom apartment.

Those are two of approximately 30,000 customers served by NEP, many in central Ohio where renters served by these third party companies are often shocked by astronomical utility bills. Another firm, American Power & Light, was founded in 2003 by property developer Don Kenney, Sr. The “energy company” shares office space with Kenney’s other ventures, including Ardent Property Management, Village Communities and Metro Development. Kenney’s companies have built more than 35,000 apartments or condominium units, many coincidentally relying on AP&L as the monopoly provider of utility service.

Nationwide Energy founder and CEO Mike DeAscentis Jr., was frank with investors about the real aim of NEP in a 2010 presentation: “How we make money is we buy power at a commercial rate and we resell it at the residential rate and there is arbitrage in the rate structure,” he said, according to a transcript obtained by The Dispatch.

DeAscentis isn’t an energy man from way back. He’s the CEO of Lifestyle Communities, an apartment developer, which coincidentally contracts with NEP for utility services.

NEP pays developers, owners, and/or managers of condominiums, apartment buildings, and multi-family dwellings for contracts offering exclusivity to provide gas, electric, water, and sewer service to tenants. Tenants are informed at closing or move in that NEP is the only utility service provider available to them and they must sign a service agreement with NEP to obtain basic utilities.

NEP is well aware of the favorable position this puts the company, telling customers on its website:

“At NEP we know you choose us because you have to.”

Under Ohio’s deregulation strategy, utilities are still supposed to be mildly regulated to guarantee quality of service, establish proper disconnection policies, and follow basic guidelines to help manage the competitive market. Except NEP was created at the outset to skirt those rules.

“NEP is the new utility,” DeAscentis said in the 2010 presentation. “We do everything that a utility does except generate power. NEP builds electrical-distribution systems for residential communities, and we were very deliberate when we started the business 10 years ago to put it in a place where it was not regulated.”

That is what has allowed NEP to effectively operate as an unregulated monopoly. If customers can’t or won’t pay, the normal protections extended to customers for utility services that protect life do not apply. NEP and AP&L can cut service at will for non-payment, even during winter when a customer’s safety could be at risk. If residents are late with payments, American Power will sometimes evict them, even if the consumer’s rent is up to date and even though American Power is not the landlord. Another contract provision allows companies to place liens on personal property for non-payment. Both companies have sought hundreds of evictions since 2002. Nationwide appeared to have stopped seeking evictions in 2011.

“Once you enter this slippery slope, where a third party has the ability to order evictions, that’s shocking,” Emily Crabtree, a lawyer with Columbus Legal Aid who has defended American Power customers, told The Dispatch in 2013.

The centerpiece of the Ohio lawsuit is the allegation NEP charges residents substantially more that what regulated or municipal providers charge their customers. A 2013 investigation by The Dispatch found that once all the fees and surcharges were calculated, customers paid up to 94% more than if they had an account directly with the regulated or municipal utility serving the area.

“This rate arbitrage is how NEP makes money,” the lawsuit claims.

The plaintiffs claim NEP won’t disclose its energy charges, making it difficult for customers to compare what they are paying for service in contrast with their non-NEP neighbors.

“NEP’s website falsely states that ‘NEP is contractually bound to match the rates of the host utility for both electric and water,’ that ‘rates [customers] are charged by NEP are the same residential rates that are charged by [their] current utility provider,’ and that customers ‘will not pay a higher rate for [their] electric and water as a NEP customer.'”

Ironically, NEP’s CEO stated that NEP “adds value” to services traditionally provided by public or private utility companies.

“The only entity that benefits from NEP’s business model is NEP,” the lawsuit claims.

[flv]http://www.phillipdampier.com/video/Columbus Dispatch Submetering 10-20-13.flv[/flv]

The Columbus Dispatch investigated submetering back in 2013, and the large spike in consumer complaints that resulted from the practice. (4:24)

Consumers, when they find out about the submetering practice, are shocked to discover it is completely legal under Ohio law.

Guy Fulcher, a former American Power customer who now lives in Galena, got the pass-the-buck treatment when he complained.

“The attorney general back then was Richard Cordray, and his office just rolled over and said, ‘We don’t regulate that,’” he said. “They said to go to [Ohio’s Public Utilities Commission]. PUCO said, ‘We don’t regulate that.’”

When other renters have complained to regulators, attorneys representing submetering companies argue the complaints should be ignored or rejected for lack of standing.

“This complaint should begin and end with the determination that Mr. Whitt lacks standing to bring a complaint concerning utility services (at his condo) because he is not the utility customer,” said Howard Petricoff, attorney for Nationwide Energy, in a filing.

According to the company, the true customer is the condo association, not each resident, reported the newspaper. Nationwide Energy has a long-term contract with the association to act as the exclusive reseller of utility services.

AE&P spokeswoman Terri Flora said the responsibility falls squarely on the shoulders of renters.

“As people make choices to rent in an apartment, they need to be fully aware of what that choice involves,” Flora told the newspaper about the possibility of paying higher prices with a submeter company. “It’s a different environment than consumers are used to.”

Customers in other states beyond Ohio should also be on the lookout because submetering is legal in several other states. Where money can be made, submeterers are sure to expand. NEP is already active in Ohio, New York, New Jersey, Pennsylvania, Tennessee, and Kentucky. Submetering, with an allowance for charging a substantial markup, was legal in Alabama, Georgia, Kansas, Pennsylvania, South Carolina, Utah and Washington as of 2013.

Does Canada’s Food TV need special protection when it made 53% gross profits on the backs of cable subscribers that pay for the network whether they watch it or not?

“If you cut your cable, then your Internet is going to go up,” predicts Gary Pelletier, president of the Canadian chapter of the Cable & Telecommunications Association for Marketing.

That is just one of several predictions many Canadian cable and phone companies are claiming will come from the “disastrous decision” to allow consumers the freedom to pick and pay for only the cable channels they want to watch. Amidst claims that over 10,000 jobs will be lost, chaos and bankruptcy will stalk minority and niche cable networks, consumers will pay much higher bills, and American programming will boycott Canada fearing a-la-carte could make its way into the United States, Canada is at least having an adult discussion about the future of television and where it fits in the country’s identity.

Big changes are coming as a result of the latest great soul-searching made by our good neighbors to the north, always concerned about the potential of the Canadian Experience being overrun, if not decimated by the United States’ entertainment hegemony. In a moment of clarity, regulators have just realized what the rest of English-speaking Canada already knew: protectionist content regulations don’t work on the Internet. Canadians routinely bypass geographical restrictions and Canadian content laws with virtual private networks that relocate them, online at least, to a home address in the U.S. so they can binge-watch the unrestricted American versions of Netflix, Hulu and other online video services.

Regulators have now adopted the attitude – “if you can’t beat ’em, join ’em,” encouraging Canadian entertainment producers to create fewer, but better shows that will not only attract Canadian audiences, but those abroad.

Only the exchange is supposed to be mutual. High quality Canadian television productions like Orphan Black, Schitt’s Creek, X Company, The Book of Negroes, This Life, 19-2, Vikings, Killjoys, Rookie Blue, and Murdoch Mysteries are all among Canadian critics’ top favorites. But relatively few Americans know these shows exist or assume they are co-productions owned by some American entertainment conglomerate. Only a brief glimpse of a Canadian flag during the warp speed end credits might clue viewers this isn’t the case.

Despite protectionist media policies that have endured since 1970, the Canadians are now boldly going where Americans have so far feared to tread. They are having the conversation about the future of television and online entertainment in all forms while American media barons remain in denial.

For average consumers, the biggest change will begin next spring when the era of Canadian a-la-carte cable television arrives, allowing consumers to take an ax to the expensive 120-300 channel television package once and for all. Starting March 1, all Canadian providers will be required to offer consumers a basic cable package priced at no more than $25 a month, containing Canadian and U.S. over the air stations and networks, educational, and public channels. If you want more, you can have it by buying channels or mini-packages of networks individually to create a personalized cable TV lineup of networks you actually care to watch.

Programmers across Canada, particularly those catering to sports fans, foreign audiences, religious viewers, and minorities are horrified by the idea. So are media critics that fear the change could help bring an end to Canada’s unique multilingual and multicultural identity.

Customers like James Rehor of Hamilton explains why.

“Why would I pay for it? Why do I get it? Why does it come on my TV?” asks the 60-year-old construction worker. He’s ready on day one to purge the large number of French and other non-English channels from his Cogeco Cable lineup. Rehor offers comfort to sports programmers, however. He’s a big fan of the Toronto Maple Leafs, so Leafs TV, Sportnet, and TSN will stay.

Non-sports fans are another matter. They can’t wait to ditch the sports networks that are always the most expensive channels in a Canadian cable package.

“Clearly the most expensive (channels) will always be sports,” Pelletier tells the Canadian Press. “At the end of the day, for sports watchers, their cable bill will probably stay the same or increase, maybe … In the case of someone who doesn’t watch any sports at all, their bill will probably decrease.”

[flv]http://www.phillipdampier.com/video/CRTC Supporting the creation of content made by Canadians for Canadians and global audiences 3-2015.mp4[/flv]

An Age of Abundance: Canadian telecom regulators are transforming media regulations in Canada, recognizing the way Canadians watch television has changed. Quality, not quantity, is now most important. CRTC chairman Jean-Pierre Blais discusses the new reality. (6:08)

Pelletier and his industry friends are on a mission to convince Canadians to leave well enough alone and not drop the current all-for-one price cable television package for a-la-carte — not realizing the potential consequences.

Some in the cable industry have tried other scare tactics to no avail.

One industry-backed study predicted pick-and-pay could cost the economy 10,000 jobs. Consumers could care less. Unifor, a union that represents many in the television sector, seemed to agree Canada’s cultural heritage will be at risk with lowest common denominator programming dominating from St. John’s to Vancouver, much of it shoveled from the United States. But Canadians still want their House of Cards and Homeland.

Howard Law, a media spokesman for Unifor, predicts less profitable Canadian channels will fold under a pick-and-pay pricing model.

“The introduction of pick and pay will, in itself, lead to a major loss of revenues to Canadian broadcasting system, which ultimately plays out in less Canadian content and less Canadian jobs and less Canadian broadcasting,” he said in an interview on CBC’s The Exchange with Amanda Lang.

Minority interest and religious channels are also worried about their future. Most of those networks are classified as “specialty channels” by the Canadian Radio-television and Telecommunications Commission (CRTC). Legacy networks that have been around since at least the 1990s have been sitting pretty, protected by their designation as a “Category A” specialty station. Unlike in the United States, Canadian cable networks are licensed to operate by the CRTC, and at least 60 of those Category A networks also enjoy “genre protection,” a CRTC policy that guarantees their channel carriage on Canadian cable, satellite, and telco TV systems and protection from other cable networks that want to run the same kind of programming.

[flv]http://www.phillipdampier.com/video/CBC How New CRTC Rules Will Change Canadian TV 3-2015.mp4[/flv]

For decades, protectionist Canadian content regulations made certain Canadian television reflected its audience. But online video and the Internet has allowed Canadians to bypass traditional cable television to watch they want, not what the government hopes they will. New CRTC rules reflect that reality as Canadian TV rethinks how to get the viewer’s attention. From CBC-TV’s The National (4:16)

CRTC policies have allowed Canadian specialty channels to flourish despite operating in a smaller marketplace with fewer viewers than their American counterparts. That means networks like FoodTV and HGTV in Canada have profit margins ranging from 53-58 percent. Fashion Television and BookTV made an improbable $2.7 million in pre-tax profit, not so much from viewers but from the licensing fees every Canadian cable customer pays for the four networks whether they watch them or not.

From its start, Canadian TV has always faced a looming shadow from the south. Protecting Canada’s identity has been a priority for decades.

“If you’re a specialty channel that’s lived within the protective cocoon of bundling for years, you’ve gotten used to having a full-time job with benefits,” independent technology analyst Carmi Levy told CBC News. “Contrast that with living outside the protective cocoon, you’re essentially a freelancer, you fight for every contract, you have no benefits, there are no guarantees that money will be coming tomorrow or next week.”

It probably won’t be coming from subscribers like Mr. Rehor, who won’t hesitate to drop channels if they go unwatched.

The CRTC is also doing some dropping of its own, starting with genre protection, which could lead many specialty networks to follow American cable networks that today depend on chasing ratings to justify their licensing fees. The unintended result in the United States has been questionable lineup changes like the appearance of Law & Order rerun marathons on WEtv, a network supposedly dedicated to women’s entertainment. Ovation, a fine arts independent cable network that is about a niche as a network can be, depended on weekend binges of PBS’ Antiques Roadshow reruns in 2012 just to attract enough viewers to show up in the ratings.

Lesser known networks like OutTV, Canada’s only network dedicated to lesbian, gay, bisexual, and transgender viewers, may face an uncertain future if it can’t charge a premium price to make up for expected subscriber losses from pick and pay. Other niche channels may have to merge with other networks or more likely relaunch with an online platform and deliver a reduced menu of content to audiences.

Large Canadian mainstream networks and programmers don’t expect too much change from pick and pay, as most Canadians will likely still demand a package with their programming included. But distributors – cable, satellite, and telco TV platforms, do expect some major changes. The average Canadian now pays around $50 a month for basic cable, a price that will be cut in half next spring.

Rogers Cable already knows what is coming. It ran a trial in 2011 in London, Ont., with 1,000 customers who were given the choice of picking and paying for the channels they wanted. It didn’t take long for the cable company to discover customers loved it and TV stations and cable programmers hated it.

“We found that customers like bundles, but want to build their own. They want a basic package and an extra package they create,” Rogers spokesman Kevin Spafford told the Toronto Sun. “We did get push back from TV stations. There was concern about offering this service. They did not want us to proceed with that model.”

After the trial ended, Rogers allowed the pilot project participants to keep their pick and pay packages, something they’ve held tightly for over four years.

Rogers’ pilot offered something like what the CRTC is demanding be available to all Canadians:

ROGERS PICK AND PLAY PILOT

• $20 a month for “skinny basic” TV package of Canadian stations. (The CRTC plan mandates no more than $25.)
• 15-channel package for $27 a month. Other packages of 20 and 25 stations also offered, for more money. (The CRTC wants networks to offer channels individually or in mini-bundles.)
• U.S. major networks offered for $3 a month. (Under the CRTC policy, these stations may appear under the basic or a-la-carte tiers.)

REGULAR ROGERS

• Basic: $40 a month, 190 channels
• Digital Plus: $63, 220 channels
• Sports packages: $77, 230 channels
• VIP TV: $77, 270 channels
• VIP Ultimate: $119, 320 channels

The upcoming changes are probably the biggest in Canadian cable television history, but they still may not be enough to attract cord-nevers — those who have never subscribed to cable TV. Most are under 30 and already watch all their favorite shows online. Some budget-minded Canadians who want to cut their cable bill may consider joining them by cutting the cord altogether or slimming down their cable packages, but Pelletier warns that cable operators will not leave their money on the table.

Supplementing a slimmer cable package with a streaming service or two could increase data charges, Pelletier warns. Plus, you may have to surrender any discounts you get from bundling cable with home phone, Internet and/or wireless service.

Usage capped Internet is also still an effective deterrent for cord-cutting and whether your television entertainment comes over the cable or online, providers will still make a run for your wallet. Some observers predict providers will dramatically increase the retail prices of a-la-carte networks to limit potential savings while also continuing to raise broadband prices.

A 2014 national PIAC poll found 90 per cent of 1,000 consumers polled were willing to pay an additional $1 a month per channel, while 54 per cent would be willing to go $3 a month, and 21 per cent would be willing to pay $5 a month for an extra channel of their choosing. Many don’t realize under the current system the wholesale rate for many channels is under 50 cents a month. Considering what Canadians are willing to pay, it is likely cable companies will price channels according to what the marketplace will tolerate, which could be around $3 for each channel a month.

Suspicion about any cable company offering a New Deal is something Americans and Canadians have in common. Mr. Rehor is already keeping a wary eye.

“I think it’s a good idea, I just don’t know how they’re going to really work it,” he says, fearing it could ultimately end up costing the same amount he pays now.

[flv]http://www.phillipdampier.com/video/CBC Pick and Pay TV 3-2015.flv[/flv]

CBC News offers this extended discussion about the implications of “pick and pay” cable television. (10:11)

Susan Bitter Smith

To say Susan Bitter Smith is beholden to Arizona’s cable industry would be an understatement.

In addition to purportedly representing the citizens of Arizona on regulated utility matters, Bitter Smith is one of the state’s most powerful cable industry lobbyists, earning a salary that consumes 40 percent of the annual budget of the Southwest Cable Communications Association, which represents most cable operators in Arizona, New Mexico, and Nevada.

Despite clear ties to the telecommunications industry Bitter Smith has no intention of ending, in 2012 she ran for the chair of the Arizona Corporation Commission (ACC) — the state body that oversees and regulates phone, cable, and power utilities. Unlike many other states that appoint commissioners, Arizona voters elect them to office. Giving voters a direct election is written into the state constitution, and was designed to limit potential corporate influence and favoritism. Unfortunately for voters, the 2012 election cycle preoccupied by a presidential race and a rare open Senate seat left the mainstream media little time or interest exploring the backgrounds of candidates for the telecom regulator.

Bitter Smith never exactly hid her business relationship with Arizona’s largest cable companies, notably Cox Communications, the cable operator that dominates Phoenix. But she routinely downplayed the obvious conflict of interest, claiming the ACC dealt with regulated utilities, and cable companies were mostly deregulated. The Arizona Republic offered few insights into Bitter Smith’s background, failing to disclose her lobbying connections in their voter recommendations. Instead, the newspaper wrote a single sentence about Bitter Smith’s campaign in its editorial endorsements for the 2012 election: “Bitter Smith enjoys a great reputation as a strong-willed partisan, which seems a difficult fit for the Corporation Commission, at least as compared with the competition.”

Partisanship was exactly what a lot of voters apparently wanted, however, because the vote swung decidedly Republican in large parts of Arizona in the 2012 election. The turnout in Maricopa County, the largest in Arizona, was strongly anti-Obama and voters seemed content voting the party line down the ballot. Incumbents like Democrat Paul Newman did not exactly win an endorsement from the Republic either. The newspaper called him a “fierce and provocative partisan.”

“It is difficult to fathom work getting done at the commission with a microphone anywhere within Newman’s reach,” the newspaper added. The other Democratic incumbent, Susan Kennedy, was dismissed as an on-the-job trainee by the newspaper.

Broadband Issues Overshadowed by Arizona’s Solar Energy Debate

For most in Arizona, the 2012 election at the ACC was much more about energy issues than high cable bills and dreadful broadband. That year, investment in solar energy was the hot topic and it made the election of business-friendly candidates a high priority for the existing power-generating utilities and their friends at the American Legislative Exchange Council (ALEC). Both could claim a major victory if a state ready-made for solar renewable energy turned its back for the sake of incumbent fossil fuel power generators.

Bitter Smith was never a member of ALEC, not having been a state legislator, but many of her fellow Republicans serving on the ACC were, and some were not shy claiming the Obama Administration’s pro-solar energy policies were “reckless and dangerous.” ALEC and utility companies oppose requirements that mandate the purchase of excess power generated from solar and wind customers at market rates and also want to introduce surcharges for customers relying on solar energy. Their fear: if a large percentage of sun-rich Arizonans installed solar panels, revenue for the investor-owned utilities could plummet.

Against that backdrop, Bitter Smith’s close relationship with Cox Cable went unnoticed while the media focused their attention on incumbent Republican commissioner Bob Stump – dubbed by some “Trash Burner Bob” for successfully pushing approval of a permit for a 13 megawatt trash burning plant in West Phoenix. Despite a reputation for pollution, Stump sold trash burning as a better renewable energy source for Arizona than solar energy. Waste hauling companies were delighted. The campaign met with less opposition than some expected, in part because anonymous voting guides turned up conflating solar panels as fire hazards that were difficult to extinguish, exposed users to dangerous chemicals, and constituted a hazard to firefighters whose ‘neurons may be blocked‘ when they approached solar panel fires, allegedly caused by electricity inside the panel.

“Trash Burner Bob” Stump

Newcomer Robert Burns also won his election to the ACC that same year. His time at the Commission has also been rocky. This year, he faces an ethics complaint for remaining a registered lobbyist with the Arizona Telecommunications and Information Council, a group funded by the state’s largest telecom companies. After the complaint was filed, Burns claimed it was all a mistake. He later asked the group’s attorney to send a letter to the Arizona Secretary of State’s office requesting his lobbying connection be removed.

Some critics of the Commission have tolerated Burns’ alleged ethical lapse because he has demonstrated some independence from the energy companies he helps oversee.

Burns has argued the Arizona Public Service Company (APS) – a large investor-owned utility – must disclose how much it spent in campaign contributions and lobbying efforts to get its preferred candidates elected to the Corporation Commission. His demand for disclosure comes at the same time his fellow commissioner Stump is being investigated for exchanging text messages with APS officials during the 2014 election. Critics suggest he may have been illegally coordinating the campaigns of two of his closest allies — Tommy Forese and Doug Little. Both won seats on the ACC that year and have maintained a strong alliance with Stump, much to the chagrin of good government bloggers, who frequently refer to all three collectively as “Tommy Little Stump.”

Steve Muratore, editor of the Arizona Eagletarian, calls all three “shameless,” as they tirelessly fight to stop any investigation that could force open APS’ books to reveal what money, if any, was spent to help get both into office.

Utility giant APS will approach the Arizona Corporation Commission to win a 400% rate hike on special fees for solar panel users.

Forese claims the regulator has no business examining APS’ books.

“Commissioners attempting to influence elections in their official capacity through this relationship [as a result of their constitutional authority] would exceed the bounds of their constitutional mandate over public service corporations,” Forese argues.

While the political soap operas play out, in 2013, APA delivered its first Commission-approved blow against solar power, winning permission to apply a surcharge averaging $5 a month for using solar panels to generate electricity. APC successfully argued solar customers cheat other utility ratepayers by not contributing enough to the utility’s fixed costs.

This year, APC is seeking a 400%+ rate increase, proposing a surcharge averaging $21 a month for using solar panels. Customers served by the Salt River Project in Tempe faced even more onerous charges from that utility — a $50 a month fee for using solar panels. The new fees have effectively stopped residential solar power expansion in that utility’s territory, with the approval of ACC commissioners.

Flying Under the Radar

In the context of these other controversies, Bitter Smith’s own apparent conflicts of interest have largely flown under the radar from 2012 until earlier this year. Federal cable deregulation laws limit the Arizona regulator’s oversight of cable companies like Cox, Cable One, and Comcast. That has given Bitter Smith a defense for serving as both a lobbyist and a regulator. She claims she only lobbies for the cable television and broadband services sold by cable companies like Cox Communications and abstains from consideration of cases such as those involving Cox’s digital phone service, which is still subject to some regulatory scrutiny. Bitter Smith also claims it is easy to tell where the ethical line falls because companies like Cox run different aspects of its business under a variety of affiliated subsidiaries.

Arizona Attorney General Mark Brnovich was not impressed with that explanation and last week filed a Petition for Special Action to remove Bitter Smith from office for violating the state’s conflict of interest statute.

“Arizonans deserve fair and impartial regulators,” said Brnovich. “We filed this case to protect the integrity of the Commission and to restore the faith of Arizona voters in the electoral process. Arizona law clearly prohibits a Commissioner from receiving substantial compensation from companies regulated by the Commission.”

On Sept. 2, the Attorney General’s Office (AGO) launched an investigation into Bitter Smith after receiving a formal complaint against her. The AGO investigation found Bitter Smith receives over $150,000 per year for her trade association work, on top of her $79,500 salary as a Commissioner.  Arizona State Statute 40-101 prohibits Commissioners from being employed by or holding an official relationship to companies regulated by the Commission. The law also prohibits Commissioners from having a financial interest in regulated companies. Section 40-101 promotes ethics in government and prevents conflicts of interest.

“This isn’t one of these instances where this was maybe somebody skating too close to a line, or maybe somebody that had gone into a grey area. I think the law is very clear on this case,” Brnovich said.

KJZZ in Phoenix began raising questions about Bitter Smith’s apparent conflicts of interest last summer and carried this special report on Aug. 24, 2015. (7:18)

You must remain on this page to hear the clip, or you can download the clip and listen later.

Bitter Smith’s Shadowy and Scrubbed “PR Firm”

More troubling for Bitter Smith’s case is the “public affairs firm” Technical Solutions, jointly run by Bitter Smith and her husband. A careful scrubbing of the firm’s website “disappeared” the detailed description of the firm’s lobbying services, which counted Bitter Smith’s presence on the Commission a major asset for would-be telecom company clients. Google’s cache resolved that dilemma. Among those taking advantage of Technical Solutions’ services are AT&T, the former wireless company Alltel, and most of the state’s largest cable operators. Bitter Smith also claimed expertise setting up astroturf “grassroots” campaigns advocating her clients’ agendas and interests, but hiding any corporate connection. She also promoted her ability to plant stories with the media for her paying clients.

Scrubbed from the website, but retained by Google’s cache.

Reporters at KJZZ, a public radio station in Phoenix, have spent months following the fine line Bitter Smith has laid as a defense against conflict of interest charges.

Oopsy

Bitter Smith depends on cable and phone companies setting up different entities in name only to manage regulated and unregulated services. That means a cable company could approach the Commission under several different names, one for its phone, one for its television, and one for its broadband business. That distinction allows Bitter Smith to claim she is careful about conflicts of interest:

Bitter Smith said that, because the telecom entities are so separate, it’s OK to vote on telecom matters related to Cox, Suddenlink and other members at the commission. But she still tries not to.

“We thought about that, ‘Well, maybe just from the appearance sake it wouldn’t hurt,’” she said.

Since Bitter Smith took office in 2013, records show the commission has voted at least seven times on matters involving the telephone side of the cable association’s members.

She recused herself four of those times, such as last year when a tariff increase was approved for Cox.

But she didn’t recuse herself on three matters, which she said was accidental, including another tariff increase for Cox approved in 2013.

“Probably should have, just didn’t catch it,” she said.“It was on the consent agenda, I zoomed through.”

She also didn’t recuse herself in May from voting to rescind a $225,000-bond requirement for Mercury Voice & Data, an entity identified in public documents as doing business in Arizona as Suddenlink Communications. She said she missed that one accidentally as well.

“Suddenlink is my member, Mercury Voice & Data is not an entity that I’m familiar with,” Bitter Smith said. “If I had understood, I probably would have, you know, just for optics sake. There’s no legal reason I would need to do that but, had I understood that there was another entity that they now form with a new name, separate entity with a new name, I probably would have.”

[flv]http://www.phillipdampier.com/video/Corporation Commissioner Is Paid Lobbyist For Same Corporations She Regulates 12-3-15.mp4[/flv]

Real News AZ talked with attorney Thomas Ryan about the ethics of serving as a Corporation Commissioner while also employed as a paid lobbyist working for the interests of the companies regulated by that Commission. (7:08)

Ryan

Bitter Smith’s ‘oopsies‘ infuriate government watchdog and Arizona attorney Thomas Ryan, who has tangled with Arizona’s high-powered politicians before… and won.

“This will not go quietly in the night and whoever she retains will no doubt fight it tooth and nail,” Ryan said of Bitter Smith. “But the state of Arizona deserves a Corporation Commission that is not bought and paid for by the very people it’s supposed to regulate, the very industries it’s supposed to regulate.”

Ryan is particularly incensed that Bitter Smith’s apparent ethical lapses are costing Arizonans twice — taxpayers pay her nearly $80,000 salary as a Commissioner and the increasingly expensive cable and phone bills that grow as a result of some of the Commission’s pro-telecom decisions. But at least Bitter Smith is doing well, also collecting her six figure salary from the cable lobbying association she leads.

Pat Quinn, former director of the Residential Utility Consumer Office, or RUCO, which advocates for consumers at the ACC, isn’t moved by Bitter Smith’s fine line and he should know – he’s the former Arizona president of Qwest Communications (today CenturyLink).

Quinn said Bitter Smith’s explanation about the separateness of telecom entities from cable is making a “difference without a distinction.”

“While you may be able to, accounting wise, separate your expenses between what you put in phone and what you put in cable, how do you take out of your mind, ‘Oh, they’re paying me over here and we do good things for them over here, but I’m going to be fair and unbiased when I look at not only Cox on the phone side, but any of the other phone providers,’” Quinn told KJZZ.

How Bitter Smith helped kill rural community broadband in Arizona for the benefit of the state’s biggest cable companies. (6:43)

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Killing Community Broadband to Protect Arizona Cable Profits

The clearest cut evidence of Bitter Smith’s lobbying for Arizona cable companies while claiming to represent the public interest as a commissioner came in 2013, when Bitter Smith and Cox Communications lobbyist Susan Anable tried to pressure Galen Updike, a state employee tasked with mapping broadband availability in Arizona and advocating for solutions for the 80 percent of rural communities in the state that remain broadband-challenged to this day.

In February, Bitter Smith and Anable allegedly solicited the help of state employees to kill a state contract with GovNet, a firm that had previously received $39 million in federal dollars to bring broadband to rural Arizona.

Updike said Bitter Smith trashed GovNet’s reputation, claiming the provider walked away from earlier projects leaving them incomplete.

“‘There was a better alternative,'” Updike recalls Bitter Smith telling him. “‘You’ve got existing cable companies in the area that are having now to compete against these dollars that come in from the federal government. Can you help us get rid of GovNet’s contract?’ [was the request]. It took my breath away.”

Updike said Bitter Smith maintained a near-constant presence at their meetings, but she had no interest in solving Arizona’s rural broadband problems.

“The only reason for Bitter Smith to be there was to talk about telecommunications policy, broadband policy,” Updike said.

Updike’s efforts to make things better for broadband in rural Arizona met constant headwinds from Bitter Smith and lobbyists for the state’s cable and phone companies.

“All the broadband providers were cherry picking — going after the high easy places to put broadband into where there’s high concentration of population dollars,” Updike said. “And basically the low population areas, the rural areas of the state of Arizona, are sucking wind. They have no possibility for it.”

Efforts to develop the Arizona Strategic Broadband Plan were effectively sabotaged by the cable industry, especially Cox. Bitter Smith immediately objected to the contention the cable industry could collectively offer broadband to 96 percent of the state if it chose. She claimed that was invalid. She also criticized the proposal to begin a comprehensive broadband mapping program claiming it lacked proof it would be any real ongoing benefit to anyone.

At the center of the lobbying effort backed by Cox was an argument the state should not involve itself in expanding broadband networks. Instead, it should spend its funds promoting the broadband service already available from cable operators to those not yet signed up.

Things got much worse for Updike as Republicans cemented their grip on the Corporation Commission in 2013. Updike continued to voice concerns about Bitter Smith’s conflicts of interest and was eventually taken aside and told to be quiet about the issue.

“I was told to stop poking the bear. The bear was the combination of Cox, CenturyLink and Susan Bitter Smith,” Updike told the radio station.

By May 2013, the broadband planning council’s meetings began to be mysteriously canceled. No strategic broadband plan was ever adopted. That same month, Updike was told he no longer had a job at the Arizona Department of Administration.

Henry Goldberg, and independent consultant who helped draft the never-adopted state broadband plan has little to fear from Bitter Smith, so he was frank with KJZZ.

“To me when you stop discussions of the plan, disband this council, which is supposed to advise the governor on digital policy, there’s something inappropriate going on there. Something like this is critical for the citizens of Arizona.”

Despite the UL label on the cord, these Walmart-sold Christmas lights have been recalled in Canada for causing “unfortunate incidents.” In the U.S. they are still on the market and consumers are on their own.

The increasing prevalence of energy-saving LED holiday lights may help reduce your energy bill this Christmas, but are probably not doing any favors to your in-home Wi-Fi.

Chinese factories that produce billions of light string sets annually often have the attitude that quality control should take a back seat to selling price, and as such many of these cheaply produced sets experience a growing number of issues the longer they are in use. This year, Canadian regulators have ordered complete recalls of holiday lights manufactured by Taizhou Hongpeng Colour Lanterns or Ningbo EGO International Co. Ltd. The sets were implicated for interference, overheating, fire, shock, toxicity, and more.

The affected lights, sold until the fall of 2015, were available across North America in dollar stores, hardware warehouses, supermarkets, and department stores. Many were sold by Loblaws, Michaels (the CELEBRATE IT series) and Walmart’s “Holiday Time” brand lights. Up north, it’s time for those lights to go after sampling and evaluation by the federal agency led to clear evidence they posed serious safety risks.

In the United States, consumers are on their own. Despite adopting new safety regulations in June, the Consumer Product Safety Commission remains satisfied with a hands-off/business-friendly approach that relies primarily on voluntary recalls that begin after consumers self-report injuries from defective products.

The CPSC does not test Christmas light sets, despite the fact seasonal and decorative lighting products have been responsible for hundreds of fire and shock-related deaths and injuries over the years. CPSC is aware of 132 fatal incidents that occurred from 1980 through 2014 which led to 258 deaths, and 1,405 nonfatal incidents associated with seasonal and decorative lighting products.

Despite clear warnings from Health Canada’s own testing, the CPSC continues to allow manufacturers to sell dangerous light sets that are now recalled in Canada.

Assuming your Christmas tree lights don’t overheat or short out, regulators are also turning their attention to a less serious problem with the light sets: their potential to create interference problems.

Wi-Fi trouble waiting to happen.

Ofcom, the United Kingdom’s independent telecom regulator, has seen enough reports of Wi-Fi problems tracked back to Christmas lights to issue a caution.

The problem isn’t so much with the LED bulbs. The interference problems usually develop from the cheap transformers/switched mode power supplies used to regulate voltage for certain energy-saving lights. A poor quality unshielded light set, especially those with a built-in, programmed light show, is likely to throw audible hash across the AM radio dial. But it can also interfere with Wi-Fi reception in certain cases, especially if you turn your home and yard into the equivalent of the Vegas strip.

Despite the timely holiday themed Ofcom announcement, most of the lights sold in the United States have offered negligible interference so far — typically when the wireless router is located very near a Christmas tree or a powered holiday decoration. The biggest culprit that obliterates Wi-Fi is still the microwave oven. When running, many models can wipe out reception across a home or apartment.

Other factors that can make a difference include the distance between you and your router and whether the neighbors are sharing the same Wi-Fi channel you use.

Ofcom’s advice:

Move your router away from electrical devices: Halogen lamps, electrical dimmer switches, stereo or computer speakers, Christmas lights, TVs and monitors and AC power cords have all been known to cause interference to broadband routers. It’s important to use quality key materials in modern electronics. Keep your router as far away as possible from other electrical devices as well as those which emit wireless signals such as baby monitors etc.

Move your router to a different part of your home: The walls and furniture in your house act as an obstacle to the Wi-Fi radio frequencies. Ideally routers should be kept centrally within the home and placed on a table or shelf rather than on the floor.

Try restarting your wireless router: This may automatically select a less busy Wi-Fi radio frequency.

Our advice is to consider replacing or upgrading a misbehaving router that will not hold a Wi-Fi connection even in the best of circumstances and above all, make sure you have enabled wireless security to keep uninvited guests off your network.

While AT&T is in no hurry to expand and upgrade U-verse broadband to its wireline customers in the United States, the Dallas-based company has spent more than $7 billion trying to attract wireless customers in Mexico that so far don’t show much interest in the U.S. company.

AT&T last month reported it is losing big south of the border. After spending $4.4 billion to acquire two competing wireless companies in Mexico and committing another $3 billion to upgrade their networks to 4G service, customers are continuing to abandon the carrier.

The losses AT&T continues to incur improving wireless service in Tabasco, Veracruz, and Baja California has not bothered AT&T to date — in fact the company plans to dump even more money into the Mexican cellular market, despite achieving a market share of only around 8.5 percent, effectively making it about as relevant as Sprint in the United States. Its largest competitors are the gigantic América Móvil, which has nearly 70 percent of the market and Telefónica, which holds a 22 percent share.

So far, AT&T has been forced to support different websites for its two different carriers – Iusacell and Nextel Mexico. The former also maintains the Unefon brand, which targets low income Mexicans with cheap prepaid service.

Part of AT&T’s problem recouping its investment is the fact Mexicans cannot afford the pricing Americans pay for cell service. While AT&T charges $50+ for a low-end cell plan in Texas, just across the Mexican border AT&T offers a $13 basic plan offering 500 calling minutes and 500MB of data.

AT&T’s decision to spend billions in Mexico while it reduces spending on further expansion of its U-verse network has nothing to do with Net Neutrality or Title II enforcement by the Federal Communications Commission. It is all about finding new customers. Wireless penetration has now topped 100 percent in the U.S. (because some families maintain multiple devices, sometimes with different carriers). In Mexico, less than 50% of the population has a cell phone and even fewer own smartphones. AT&T believes that gives it plenty of room to grow. AT&T believes wireless service brings the best potential for profits both inside and outside of the U.S., and the company thinks it can dramatically improve market share in Mexico and charge prices that will bring it a healthy return.

Their customers apparently disagree. In Mexico, for the first nine months of the year, AT&T lost 689,000 wireless subscribers — a decline of almost 8 percent. Even customers attracted to try AT&T for the first time often decide to leave, giving AT&T Mexico a churn rate exceeding 5% — five times worse than what AT&T experiences in the United States.

Some Wall Street analysts are critical of AT&T throwing good money after bad down south. Michael Hodel of Morningstar doesn’t like what he sees. The incumbent Mexican telecom giant América Móvil has kept the lion’s share of the market for years and has vastly more scale than AT&T. Hodel sees losses for AT&T until 2018.

Others wonder how AT&T Mexico will be able to introduce the premium priced services it will depend on to get a return on its investment. The Mexican economy is unlikely to allow customers to pay substantially more for wireless service.

AT&T CEO Randall Stephenson has told investors if AT&T builds a 4G network, customers will come and pay AT&T’s asking price.

“We are convinced that what we experienced in the U.S., we will experience in Mexico,” Stephenson said at an investor conference in May. “So you are going to see the mobile Internet revolution take off in Mexico. We intend to ride that wave.”

Free trade supporters and those who support the deregulation of the Mexican telecom market are trying to use AT&T’s experience as evidence that free markets and trade works.

“AT&T’s moves are the clearest evidence of success in Mexico’s reforms, and it’s hard to overstate the importance,” said Christopher Wilson, deputy director of the Mexico Institute at the Woodrow Wilson International Center for Scholars in Washington.

For customers, it isn’t a matter of free trade. It’s good coverage at a reasonable price that matters most, and AT&T Mexico has not yet achieved that.

Arturo Diaz, originally an Iusacell customer in Mexico City, recently dropped his AT&T Mexico service.

“Their coverage is not very good outside of large cities and AT&T’s reputation is to raise prices, which they seem to do a lot in the U.S.,” Diaz said. “If you can afford a better phone and plan, you switch to América Móvil. With the stronger American dollar, the peso is devalued again, so more people will likely want a budget prepaid plan which they can get from Telcel. I’m not sure what AT&T is doing in Mexico and their plans from two different companies are a mess. I signed up with América Móvil last month.”