Phillip “Oh look, more industry-backed research in denial regarding unpopular usage caps and consumption billing” Dampier

It seems America’s biggest industry-funded broadband astroturf group, Broadband for America, thinks the New America Foundation completely misses the point of “new pricing strategies” like restrictive usage caps, costly consumption-based billing, and fiendishly high overlimit fees. In a hurry, they released this particularly weak argument favoring usage pricing:

A new report by the New America Foundation suggests that “dwindling competition is fueling the rise of increasingly costly and restrictive Internet usage caps” in the broadband sector. But as we’ve explained before, these experimental new pricing strategies are actually signs of competition in the market and ultimately benefit consumers.

In terms of competition between broadband service providers, a study by Boston College Law School Professor Daniel Lyons concluded “data caps and other pricing strategies are ways that broadband companies can distinguish themselves from one another to achieve a competitive advantage in the marketplace.” He also concluded these practices were not anti-consumer: “When firms experiment with different business models, they can tailor services to niche audiences whose interests are inadequately satisfied by a one-size-fits-all flat-rate plan.” Indeed, many consumers are no longer satisfied with one-size-fits-all rate plans. Since data usage by individual users can vary dramatically, imposing a one-size-fits-all approach to pricing would result in light data users subsidizing the use of heavier ones. As Michigan State University Professor of Information Studies Steven Wildman explains, not having usage-based pricing models “means that light users pay a higher effective rate for broadband service, cross-subsidizing the activities of those who spend more time online. With usage-based pricing, those who use more bandwidth contribute more toward the cost of building and maintaining broadband networks.”

Broadband providers should be free to experiment with usage-based pricing and other pricing strategies as tools in their arsenal to meet rising broadband demand on their networks. Moving forward, Lyons recommends instituting public policies that allow providers the freedom to experiment, in order to best preserve the spirit of innovation that has characterized the Internet since its inception.

Broadband for America thinks they are clever when they introduce “academic papers” that extend credibility to their arguments. No, Broadband for America, we get the point. Your benefactors want to charge customers more  money for less service and call that a fair deal.

The wheels driving their talking points start to fall off the moment one peaks under their covers:

1. Broadband for America (BfA) is America’s largest telecom industry front group, backed almost entirely by cable and phone companies and dozens of supporting groups that are typically funded by those companies, have telecom industry board members, or whose lifeblood depends on doing business with Big Telecom companies.

2. Experimental pricing plans that largely leave existing pricing in place –and– impose new service limitations is not a sign of competition that benefits consumers, it is proof of its absence. With today’s broadband duopoly, there is little risk imposing new fees or service restrictions when the only competition you have typically follows suit. There is no evidence that usage-based pricing is saving consumers money, particularly when broadband providers are using their marketplace power to further increase prices.

3. There is no evidence “many consumers are no longer satisfied with one-size-fits-all rate plans” for home broadband. In fact, the reverse has been proved conclusively, sometimes by industry-funded researchers.

4. With a 90-95% gross margin on broadband, there is plenty of room for price cuts –and– unlimited broadband, but why give those profits away when lack of competition doesn’t provide the necessary push. Instead, providers’ ideas of “innovative pricing” are always upwards and include usage limits, modem rental fees, and other restrictions.

5. The railroad industry argued much the same case in the early 20th century when communities complained about wide pricing disparity, depending on local competition. We all know what eventually happened there.

6. Full disclosure, as is too often the case, is completely lacking at BfA. So we’ve offered to help:

The “study by Boston College Law School Professor Daniel Lyons” is accurate. He is now a faculty member there. But BfA fails to disclose the study was actually produced on behalf of the Koch Brother-funded Mercatus Center, which specializes in industry-friendly position papers on deregulation. Lyons is also on the Board of Academic Advisers at the Free State Foundation, itself an industry-backed astroturf group that advocates on behalf of large telecom companies, among others.

His colleague Michigan State University Professor of Information Studies Steven Wildman is also an adviser at the Free State Foundation. He is also a bit more transparent about where the money comes from for his studies advocating usage-based pricing – the National Cable and Telecommunications Association (NCTA), the largest cable industry lobbying and trade group in the United States.

The only surprise Lyons and Wildman could have delivered is if they advocated against these Internet Overcharging schemes. But then they probably would not have been invited to present their findings at an NCTA Connects briefing last week entitled, “Connecting the Dots on Usage-Based Pricing.”

We at Stop the Cap! can connect the dots as well.

Efforts to develop new unlicensed uses for the public airwaves that include high-powered public Wi-Fi may be shelved if AT&T and House Republicans succeed in their joint effort to force those frequencies to be sold in a spectrum auction.

Majority House Republicans on the House Communications & Technology Subcommittee on Wednesday lectured all five FCC commissioners, insisting they have no authority to set aside spectrum specifically for unlicensed use when those airwaves could be sold to private companies.

Sub-Committee chairman Greg Walden (R-Ore.) criticized FCC Chairman Julius Genachowski for his plans to “give away” scarce airwaves eventually open to the public’s use when they could fetch as much as $19 billion in auction proceeds from large telecommunications companies seeking to own and control those frequencies.

Walden, the House’s second largest recipient of campaign contributions from the same companies likely to bid on that spectrum, insisted federal law only allows the Commission to designate unlicensed uses for so-called “technically necessary guard bands,” which act as a buffer between neighboring frequency users to protect against interference. Walden also criticized the FCC for setting aside too much spectrum for that protection.

Walden, the second largest recipient of telco cash in Congress.

The Oregon congressman has collected more than $84,000 in campaign contributions from telephone companies so far this year. Only House Speaker John Boehner won larger contributions from companies like AT&T.

Other Republican members of the subcommittee agreed with Walden’s sentiment and also received generous contributions from AT&T this year.

Rep. Lee Terry (R-Neb.), wanted to be sure the FCC does not impose “value-sapping restrictions” on the use of privately-owned airwaves owned by large telecommunications companies. Terry is the third largest recipient of campaign contributions in the House from those telecom companies, adding $69,400 so far this year to his campaign coffers.

Rep. Joe Barton (R-Tex.) expressed concerns that spectrum auctions could displace low-power television stations to make way for mobile communications. But Barton did not oppose the auctions generally. His largest contributor: AT&T, which sent him checks for more than $21,000 in 2012.

Representative Robert E. Latta (R-Ohio) suggested auctioning off airwaves intended for public use to large mobile broadband companies would help America’s competitiveness, alluding to his belief unlicensed, free use of the airwaves for new wireless applications would not. Latta cashed $10,500 in AT&T checks so far this year — his fourth largest contributor. Latta added he wanted there to be transparency and openness in the entire spectrum process. He did not disclose his significant contributions from AT&T at the hearing, despite being a chief stakeholder in the debate.

Rep. Marsha Blackburn (R-Tenn.) agreed with large telecommunications companies that the maximum amount of available spectrum should be sold off to private companies to sell mobile broadband services to the public. Blackburn’s third largest campaign contributor this year is Verizon Communications, who sent her $15,400. AT&T, her ninth largest contributor, handed her $13,250, together adding up to $28,650.

The Democrats on the panel roundly criticized Republican plans to sell off spectrum intended for unlicensed, public use applications to large wireless companies, which already own and control frequencies they still have not put into service.

Terry, worried about “value-sapping” regulations.

Rep. Henry Waxman (D-Calif.) called unlicensed spectrum an incredible economic success story.

“Innovative services like Wi-Fi and Bluetooth are now ubiquitous parts of our communications system,” he said in his opening remarks. “They came about because of the use of unlicensed spectrum.”

Waxman suggested eliminating or limiting unlicensed spectrum would destroy innovation and further concentrate wireless communications in the hands of a handful of companies. Waxman said Congress’ original intent in passing laws that permitted the FCC to move forward with spectrum auctions also authorize the agency to protect competition and prevent unnecessary concentration of spectrum ownership to the detriment of smaller providers.

“I am troubled by attempts by some to relitigate issues that were resolved earlier this year, when the bill passed Congress with widespread support,” Waxman added. “After-the-fact-spin that unfairly twists the language of the law deserves little weight by the Commission or the courts.”

Rep. Anna Eshoo (D-Calif.) noted the FCC by statute is prohibited from considering the amount of revenue possible from spectrum auctions when drafting auction rules. She found Republican efforts to recast those rules to raise as much money as possible by selling off as much spectrum as possible “interesting.”

Many Republicans also complained the FCC must not set rules that either limit the maximum amount of spectrum owned by one company or set aside certain frequencies exclusively for smaller competitors. The Republicans want auctions to maintain a more straightforward “highest bidder takes all” format. Critics say that gives the advantage to larger, deep-pocketed existing providers and dissuades the entry of new competitors.

Some Republicans were also upset with FCC meddling over when and how private companies begin providing service on the airwaves they won at auction. Current FCC rules prohibit warehousing unused spectrum. The rules were designed to ensure large companies don’t invest in airwaves just to keep them off the market and unavailable to competitors.

The taxpayers of Ohio spent $13 million to fund a new 100 gigabit institutional fiber network average Ohio residents cannot access.

The upgraded Ohio Academic Resources Network (OARnet) delivers 10 times the speed of its immediate predecessor and is the first statewide network to achieve 100Gbps.

Gov. John Kasich was on hand to light the network, telling attendees at the ribbon-cutting ceremony it will provide research opportunities and help some of the state’s largest corporations manage manufacturing, data mining and analytics, alternative energy development, consumer products and medicine. He, among others, downplayed the fact the network offers little to average businesses and consumers in Ohio who helped pay for it. Large businesses can sign agreements with educational institutions around the state to gain access to the super-speed network.

While institutional broadband networks for education and research are important, and there is nothing inherently wrong with OARnet or its mission, it does very little to solve Ohio’s stubbornly poor broadband landscape, especially in rural areas.

Advocacy groups affiliated with AT&T are back asking for more regulatory relief in return for promising a better broadband future for Ohio.

Ohio ranked a dismal 39th in TechNet’s broadband rankings published this month. Ohio’s Republican-dominated state government has been willing to devote state’s resources to enhance institutional broadband, but relies almost entirely on the private sector for broadband expansion to small businesses and residential customers.

TechNet notes Ohio has a history of cutting deals with providers like AT&T, among others, for “alternative” regulatory arrangements to encourage broadband expansion in exchange for approval of telecom company mergers.

The results have been meager in rural areas of the state. Despite provider promises to do more, fewer than 2% of Ohio residents have access to fiber broadband, and many smaller communities are forced to use slow speed DSL from AT&T, if they can get the service at all. AT&T has some more bad news for rural Ohio. The company’s idea of improvement is to dismantle its rural wired network and force customers to use AT&T’s expensive, bottom-rated wireless service, complete with extremely low usage caps.

As part of that process, AT&T and their friends and partners are back with more promises.

This time, it comes from research-for-hire reports like, “Incentive to Invest in Ohio Broadband & The Carrier of Last Resort Obligation,” which argues if Ohio releases AT&T from its obligation to provide phone service, investors will magically pour money into the state on broadband improvements. Just like last time. Only it never really happened for wired broadband customers.

The “report” was paid for by “Technology for Ohio’s Tomorrow,” a non-profit organization that claims it “advocates for public policies that inspire and encourage innovation in technology while informing and educating technology consumers about legislative and regulatory issues that impact their lives.”

While those things may be true, even more insight can be gleaned from who actually operates the group.

Stop the Cap! learned:

• Technology for Ohio’s Tomorrow is the Ohio project of Midwest Consumers for Choice and Competition;
• Midwest Consumers for Choice and Competition is also related to Mobile Consumers for Choice and Competition;
• Mobile Consumers for Choice and Competition is a registered lobbying group in the state of Wisconsin, doing business as Wired Wisconsin;
• Wired Wisconsin’s chief partner and benefactor? AT&T It’s chief lobbyist and executive director? Thad Nation;
• Nation has run a whole assortment of “consumer” groups out of his lobbying firm Nation Consulting, including: Illinois Technology Partnership, TV4Us, and Technology for Ohio’s Tomorrow. His work coincides closely with AT&T’s corporate agenda. When AT&T wanted statewide franchising of U-verse, TV4Us arrived on scene advocating exactly that. When AT&T wants to promote deregulation of its wired and wireless efforts and win government assistance with no strings attached, Wired Wisconsin, the Illinois Technology Partnership and Technology for Ohio’s Tomorrow were ready to go to bat for AT&T.
• AT&T’s core involvement in all of these groups goes undisclosed.

Nation calls it an “advocacy agenda,” (we call it Astroturf backed by bought-and-paid for research) and Nation’s firm claims to specialize in it:

At Nation Consulting, Nation focuses on assisting corporate clients with strategic planning in government and public relations, and managing crisis communications.

Our team has worked on the “inside” of the offices of Governors, Congressional members, and state agencies. We’ve worked at every level of government, and we have the relationships necessary to help you navigate state and federal bureaucracies to accomplish your goals. We know how government works – and we know what government can do for you.

Getting government officials or bodies to do what you want isn’t easy. Government is inherently a slow, bureaucratic entity. When you want elected or appointed officials to change policy, you need a comprehensive plan – and the resources, relationships and quick-thinking to implement that plan.

We come to you with decades of experience in advocacy, moving legislators and engaging state agency leaders to action. Let us help you build and drive an aggressive advocacy agenda.

Regardless of your industry, the internet has a role to play in achieving your public relations goals – and we have the experience and the expertise to implement a plan suited to your needs. Whether you need to effectively use social networking sites, manage a blog, conduct email campaigns or use Web 2.0 tools, Nation Consulting can help you maximize your online presence in a way that is both cost-effective and beneficial to your business or organization.

Rep. Gerry Connolly (D-Va.) is fed up with Verizon Communications. The company handles most of the region’s 911 calls and has performed that task poorly in the last few years, argues Connolly.

“The whole purpose of 911 is that when you need it, it works,” Connolly told WUSA-News.

After several high profile 911 failures during significant storm events, Connolly and a few other congressmen are demanding Verizon resolve its 911 problems or face an intervention from the Federal Communications Commission.

The elected officials want Verizon to voluntarily comply, but if they won’t, all suggest it is time for the FCC to strengthen regulations and oversight to assure residents they will be met with a 911 operator when they call instead of a busy signal or nothing at all.

Verizon countered it takes its role in handling calls to 911 seriously, and when an issue arises, the company is quick to investigate, correct and apply any lessons learned across their system.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WUSA Washington Gerry Connolly Va- Democratic Congressman critical of Verizon for its 911 performance 12-6-12.flv[/flv]

WUSA reports Connolly has grown tired of repeated failures with Washington, D.C.’s 911 system, handled by Verizon Communications. He wants the company to make changes to increase the service’s reliability, especially during storms when demand on the 911 system is greatest. (2 minutes)

Ford, Jr. (D-The Green Room)

Harold Ford, Jr., a former Democratic congressman from Tennessee and John Sununu, former governor of New Hampshire, are unhappy with an Op-Ed piece written by David Cay Johnston in the New York Times that calls out the telecom industry for high prices and and an uncompetitive marketplace.

Ford, who can usually be found in the green room of various cable news networks waiting to deliver his pro-industry messages on behalf of front groups like Broadband for America, says that 93 percent of Americans are happy as can be with their broadband Internet service.

Sununu joined Ford in some less-than-factual arguments about the state of American broadband:

Second, nearly 90 percent of all Americans can choose from two or more wireline competitors and at least three wireless broadband providers, most of whom now provide some of the fastest 4G LTE broadband networks in the world. Meanwhile, new fiber optic, satellite and wireless choices keep emerging.

Third, during the past four years, broadband providers invested $250 billion in the nation’s broadband infrastructure, while other industries sat on their cash.

Fourth, unlike many other consumer products, the monthly prices for broadband Internet have remained relatively constant, while average speeds have increased by 900 percent or more. Free-standing broadband service is now routinely available for $20 to $30 a month.

That is playing fast and loose with the truth. In reality:

• Most Americans have one cable and one phone company to choose from, not “two or more.” Wireless broadband providers offer service with a cap so low, it can almost never provide a suitable replacement for wired broadband service. Although AT&T and Verizon Wireless have growing 4G LTE networks, neither carrier has provided universal access to LTE speeds. T-Mobile and Sprint are only getting started. The fiber optic choices that are emerging these days are primarily from community-owned providers Ford’s industry friends vehemently oppose. AT&T does not offer fiber to the home service and Verizon effectively suspended expansion of its FiOS fiber network several years ago.  Wireless choices are now shrinking because of mergers and acquisitions and satellite broadband remains a painful experience regardless of the provider;
• Most that the investment made in “broadband” is focused on expanding wireless 4G service. That investment allowed both AT&T and Verizon to pay Uncle Sam dramatically lower tax bills — AT&T even collected a refund. Home broadband expansion has been far less expansive;
• Monthly broadband bills have not remained constant — they are rising, and more rapidly than ever. Speeds enjoyed by average customers have not increased by 900 percent, only some top speeds that are priced well out of range for most Americans. The price both quote for free-standing broadband is for “lite” service, often so slow it no longer even qualifies as “broadband.” Often, that budget service also comes with usage caps, sometimes as low as 5GB per month.

Sununu and Ford close:

Fortunately, very few policy makers in either party have endorsed the kind of heavy-handed regulations that Mr. Johnston’s arguments seem to imply — regulations that would only stifle investment and truly put America at risk of falling behind.

America has already fallen behind, and will remain in decline as long as regulators and Congress listen to a handful of telecommunications companies speaking from their sock puppet front groups and handing out campaign contributions to elected officials to keep things exactly as they are today.