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)

Santa Broadband: Ajit Pai’s magical world of broadband

God bless deregulation and your local phone and cable companies for making American Broadband Great Again.

That’s the message FCC Chairman Ajit Pai hopes will be the take away in the forthcoming 2019 Broadband Deployment Report — a highly dubious and over optimistic assessment of America’s rural broadband landscape.

“For the past two years, closing the digital divide has been the FCC’s top priority,” Chairman Pai said. “We’ve been tackling this problem by removing barriers to infrastructure investment, promoting competition, and providing efficient, effective support for rural broadband expansion through our Connect America Fund. This report shows that our approach is working. But we won’t rest until all Americans can have access to broadband and the 21st century opportunities it provides to communities everywhere.”

Except closing the rural-urban broadband gap has been a FCC priority for more than two years, and was a particularly high priority for the previous administration, which devoted a large amount of controversial stimulus funding after the Great Recession to internet expansion during the Obama Administration. In fact, Chairman Pai repeatedly claimed credit for broadband expansion projects that were funded by the previous administration, while at the same time criticizing the FCC under former Chairman Thomas Wheeler for harming investment in broadband with the enforcement of net neutrality.

The FCC continues to rely on dubious and flawed data to produce its reports — unverified data typically volunteered by the country’s phone and cable companies. The FCC has been frequently criticized for relying on inaccurate broadband availability maps, taking providers at their word on broadband speeds that fail to materialize in the real world, and reporting expansion projects that do not directly benefit consumers.

Pai’s office this week released a press release attempting to conflate broadband gains to his deregulatory policies and the banishment of net neutrality.

“The private sector has responded to FCC reforms by deploying fiber to 5.9 million new homes in 2018, the largest number ever recorded. And overall, capital expenditures by broadband providers increased in 2017, reversing declines that occurred in both 2015 and 2016.”

But Pai does not offer any evidence to back up those claims. In fact, as Stop the Cap! has reported, many of the country’s largest telecom companies have been cutting capital expenditures, many initiated as part of system upgrades to convert to digital cable television or to increase the amount of fiber optics to increase cable system reliability — neither relevant to the debate about net neutrality. This year, Charter Communications has announced a dramatic drop in spending (despite the repeal of net neutrality) because their long-planned system upgrades surrounding the retirement of analog cable television are now complete. Charter also had its merger agreement with Time Warner Cable revoked in New York for failing to meet its rural broadband commitments in that state.

Comcast cut spending by 3% because it bought fewer set-top TV boxes in light of cord-cutting customer losses. Verizon, which has been aggressively promoting its forthcoming 5G millimeter wave wireless network, slashed spending from $17.2 billion in 2017 to between $16.6-17 billion last year, and a significant sum of that money was earmarked for 5G buildouts in urban areas, not expanding rural internet. AT&T’s capital expenditures for 2019 are not expected to move much, placed in the $23 billion range for 2019, just a little more than last year. But AT&T is expecting to be reimbursed $1.6 billion by the federal government for AT&T’s FirstNet public safety network buildout, and much of its other spending is targeting its wireless business, including a plan to launch 5G services in 19 cities this year. That means less money for AT&T’s wireline network, including fiber broadband for homes and businesses.

Pai’s claims about the increased availability of broadband, at higher speeds, comes largely at similar incremental rates to progress under the Obama Administration. In New York, which is seeking to approach near universal broadband coverage, what moved the needle the most was a large sum of funding available to subsidize rural broadband expansion. The availability of substantial financial assistance from the state government, which some described as corporate welfare, appeared to be the most effective broadband expansion motivator for an industry Pai praised in his press release, not deregulation or the repeal of net neutrality.

The telecom industry wants a new tax on broadband services to pay for rural broadband expansion.

Nearly two years after FCC Chairman Ajit Pai announced the formation of a new federal advisory committee on broadband development, the telecom industry-stacked panel has recommended implementing a new tax on websites and online subscription services like Netflix, Hulu, and Amazon Prime Video and turning over the proceeds to many of the same companies dominating the Committee.

The proposal is part of a large set of recommendations from the Broadband Deployment Advisory Committee (BDAC) designed to promote and streamline broadband expansion, especially in rural areas. If adopted by the states, the new tax would create a large broadband deployment fund that could be accessed by telecommunications companies like AT&T and Comcast to expand service without having to pay back the funds or give up part ownership of the taxpayer-funded expansion.

What caught many by surprise was the sweeping impact the new tax could have on the internet economy, because online businesses, streaming services, and even many website owners could be subject to the tax, if enacted:

Entities that financially benefit from access to a broadband system located in the state, including advertising providers, shall contribute to the Broadband Deployment Fund.

A comprehensive piece by Jon Brodkin on Ars Technica points out defining the meaning of “entities” and “advertising providers” will be crucial to determine who will have to pay the tax and who won’t:

Article 11 of the BDAC’s model state code would create a Rural Broadband Deployment Assistance Fund, paid for by contributions from broadband providers and “Broadband Dependent Services.”

The definition of “Broadband Dependent Services” is where things get interesting. An earlier version of that definition—available in this document—reads as follows:

“Broadband Dependent Service” means a subscription-based retail service for which consumers pay a one time or recurring fee which requires the capabilities of the Broadband Service which the consumer has purchased and shall also include entities that financially benefit from access to a broadband system located in the state, including advertising providers.

The BDAC met on December 7 and pared that definition back a bit to exclude “entities that financially benefit from access to a broadband system.” Video is available here; the discussion on the definition starts around 2:04:45.

BDAC Chair Elizabeth Bowles, who also runs an Arkansas-based wireless Internet service provider called Aristotle, expressed concern that the original version of the definition “was including every small business in America,” potentially forcing them all to pay the new tax.

Nurse

AT&T has been one of the strongest advocates for the new tax, and argued it should be as expansive as possible.

“It basically is everybody [that should be taxed] because this is a societal objective,” said Chris Nurse, assistant vice president for state legislative and regulatory affairs at AT&T. “Universal service is a societal objective. We want to spread that $20 or $30 billion burden more broadly so the tax is low on everybody.”

Google Fiber policy chief John Burchett objected, claiming under AT&T’s vision, everyone who has an internet connection would be taxed. In his view, AT&T’s proposal was “absurd.”

As the debate raged on, it became clear AT&T was once again looking for a way to be compensated by companies like Amazon and Facebook — using its ‘pipes’ without contributing towards the cost of the network.

“Who are we cutting out and who are we leaving in?” Nurse asked. “Today it’s basically the telephone companies [who pay] and not Google and not Amazon and not Facebook, right? And they’re gigantic beneficiaries from the broadband ecosystem. Should they contribute or not? Someone has to pay.”

Burchett

In the end, the BDAC settled on adopting a compromise over what broadband entities will be subject to the new tax:

“Broadband Dependent Service” means a subscription-based retail service for which consumers pay a one time or recurring fee, and shall also include advertising-supported services which requires the capabilities of the Broadband Service which the consumer has purchased.

This compromise definition primarily targets the new tax on streaming video services — the ones AT&T itself competes with. But it will also cover any websites sponsored with online advertising — like Facebook and Google, ISPs, subscription services delivered over the internet, as well as AT&T’s broadband competitors.

The proposal also seeks to guarantee that rural residents be granted access to affordable broadband, but the industry-dominated Committee chose to define “affordable” as the cost of internet access in urban areas, which some would argue isn’t affordable at all.

The draft proposal has been criticized by many stakeholders, including the National Rural Electric Cooperative Association, representing electric cooperatives. The group implied the new proposal was just the latest attempt to get the telecom industry’s wish list enacted.

“Instead of focusing on solutions for unserved and underserved rural communities, many of the recommendations focus on issues specific to urban areas where broadband is already available,” said NRECA CEO Jim Matheson. “Ignoring the precedent of federal law and laws in 20 states, the state model code would treat co-op poles like those belonging to large investor-owned utilities. The state model code would also cap pole attachment rates in state statute, effectively making those rates permanent. This code, in effect, increases regulatory burdens while giving co-ops less time and less money to comply with those regulations.”

The National Multifamily Housing Council also objected to another proposal approved in the draft.

“Article 8 of the MSC grants broadband providers the unilateral right to install facilities in all multifamily residential and other commercial buildings and mandate construction of broadband facilities at the property owner’s expense without regard to the rights and concerns of the owner,” the organization claimed. “NMHC/NAA and its real estate industry partners argued that Article 8 of the MSC is riddled with many practical and legal problems. Among the most serious issues with the MSC is that it interferes with private property rights, disrupts negotiations and existing contracts between property owners and communications service providers and will lead to costly regulation and litigation at the state level without any assurance of actually spurring broadband deployment.”

AT&T would be among the biggest beneficiaries of the tax fund, already receiving $428 million annually from another rural broadband fund to expand wireless internet access in rural areas. If Nurse’s predictions are correct, the tax could collect $20-30 billion, far more than has ever been spent on rural broadband before.

Liccardo

Critics also contend the BDAC’s industry-friendly proposals are predictable for a Committee created by FCC Chairman Ajit Pai and well-stacked with telecom industry executives and lobbyists. The former head of the BDAC was arrested by the FBI on fraud charges, and San Jose Mayor Sam Liccardo quit the Committee in January, writing, “the industry-heavy makeup of BDAC will simply relegate the body to being a vehicle for advancing the interests of the telecommunications industry over those of the public” in his letter of resignation.

Whatever the BDAC ultimately decides, the final proposal has a long road to travel before becoming law. Each state can choose to adopt the proposal, part of it, or none of it. In the end, it is just a “model code” for states to consider. But it will be part of the argument made by the telecom industry that laws must be streamlined to prevent delays in deploying service, and that those benefiting from broadband should cover more of the costs to provide it.

Ironically, the person most likely to be embarrassed by the model code could be FCC Chairman Ajit Pai, who has almost universally rejected new taxes and fees on broadband services. But his approval is not required to advance the argument and the model code to the states, where the telecom industry’s lobbyists are waiting to begin advocating the passage of new state laws enacting its recommendations.

New York’s Department of Public Service (DPS) has granted Charter Communications an unprecedented additional 18-day extension to file its threatened appeal of the Commission’s decision to boot the cable company from the state and its six-month exit plan.

“Charter and DPS Staff state in their request for a limited 18-day extension of time that discussions are ongoing, that Charter and DPS Staff have established a framework for how a settlement agreement might be structured, and that any final agreement would necessarily address: issues relating to the inclusion of certain categories of addresses and whether they are valid ‘passings’ under the Merger Approval Order; penalty actions and amounts under dispute in Supreme Court; and a schedule for compliance (including enforcement mechanisms) going forward,” the order granting the extension reads.

Despite last week’s filing from Charter’s attorneys excoriating the Public Service Commission for its decision to remove Spectrum from the state, the DPS claimed this week that because of Charter’s “continued obligations to comply with the Public Service Law and regulations, good cause exists […] to allow for further discussions while both sides reserve their respective legal rights.”

But some consumer groups, including Stop the Cap!, are wondering exactly when patience will run thin at the Commission.

“When the latest deadline arrives in January 2019, it will be nearly six months since the Commission voted to strip approval of Charter’s merger with Time Warner Cable,” said Phillip M. Dampier, founder of Stop the Cap! “While we can appreciate the benefits of negotiation and dialogue, these conversations are taking place behind closed doors with no public input and no formal ability for groups like ours to intervene and offer our own views.”

Stop the Cap! has advocated that Charter Communications be allowed to remain in business in New York, but only with their agreement to meet some additional terms and conditions:

1. Further extend Spectrum service to additional customers in rural New York scheduled to receive satellite internet service;
2. Increase entry-level broadband speed to at least 200 Mbps immediately and further extend availability of Everyday Low Price Internet service ($14.99/mo);
3. Settle the ongoing labor dispute with striking Spectrum workers in downstate New York.

“At present, it appears the DPS/PSC is only negotiating to get Spectrum back in compliance with the original terms of the Merger Order they have been ignoring, which is hardly a concession,” Dampier said. “Charter’s arrogance and blatant disrespect for the terms of the merger deal and its flippant adherence to those terms should cost the company more than just a monetary fine lost in the state’s coffers. Visible benefits to New York consumers must be part of the equation.”

The state seems mostly focused on keeping Charter in compliance with the agreement while the lawyers talk.

“As the Commission noted in prior extensions, however, this limited extension should not be viewed as an indefinite grant of time for discussions to continue between DPS Staff and the Company,” DPS officials wrote. “Many Upstate New Yorkers living in Charter’s franchise areas are understandably frustrated by the lack of modern communications infrastructure. The Compliance and Revocation Orders were designed to deal with very serious consumer issues presented by Charter’s conduct related to the company’s network expansion. As such, the processes envisioned therein must continue in the absence of an agreement.”

The current extension resets the deadlines to file an appeal to Dec. 14, 2018 and the six-month exit plan to Jan. 11, 2019. Both are just the latest in a series of extensions.

Important Dates:

• July 27, 2018: The PSC votes to rescind approval of the Charter/Time Warner Cable merger in New York, effectively disallowing the company to continue to do business in the state.
• August 17, 2018: Charter files a 60-day extension request, which is granted on Aug. 20.
• September 7, 2018: Charter files a 30-day extension request, which is granted on Sept. 10.
• October 9, 2018: Charter files a 60-day extension request. The DPS grants a 45-day extension instead on Oct. 10.
• November 21, 2018: Department of Public Service (DPS) Staff and Charter filed a joint letter stating that they had not yet been able to reach a fully executed settlement agreement, but that they had established a framework for how a settlement agreement might be structured and that discussions remain ongoing. A limited 18-day extension is granted.
• December 14, 2018: Deadline for Charter to file its appeal with the Commission.
• January 11, 2019: Deadline for Charter to file a six-month exit plan showing the Commission how the company intends to orderly transfer its Spectrum cable operation to another provider.

Pai

Despite the potential for a Democratic Party takeover of the U.S. House of Representatives that is likely to usher in a new era of more aggressive oversight of the Republican-dominated Federal Communications Commission, current chairman Ajit Pai “plans to lead the FCC for the foreseeable future.”

Multichannel News reports Pai is unlikely to leave his post just two years after being appointed to the position by President Donald Trump, despite an ethics controversy over alleged assistance given to Sinclair Broadcast Group to allow the company to acquire more stations despite a federal ownership cap on the number of stations that can be owned by a single entity. Pai also was responsible for a highly controversial decision to cancel net neutrality provisions enacted during the Obama Administration.

“Chairman Pai remains focused on his key priorities, including bridging the digital divide, fostering American leadership in 5G and empowering telehealth advancements,” said Brian Hart, director of the FCC’s office of media relations.

Should both the Senate and House flip to Democrats in next week’s midterm election, Pai’s agenda of deregulation, media consolidation, and elimination of many Obama-era consumer protections would be in peril and subject to determined Congressional oversight.

Pai has taken heat from consumer groups for ending a set-top box competition program that could have forced television providers to accept equipment obtained competitively in the retail market. He also faced criticism for reinstating a program giving UHF TV station owners the opportunity to acquire more stations, directly benefiting Sinclair and allowing it to pursue its since failed merger with Tribune Broadcasting.