Deregulation likely means higher phone bills for CenturyLink customers in Arizona.

CenturyLink has convinced Arizona state regulators local phone service is now competitive throughout the state, allowing the company to raise rates with less regulatory oversight. But some consumers are wondering how deregulation benefits them.

“Once again the phone company has sold us another bill of goods in Arizona,” says Tucson ex-CenturyLink customer Miguel Gonzalez. “First Qwest and now CenturyLink told us that deregulation would bring rates down for phone service, yet both companies fought for years to raise, not lower prices.”

Under the plan approved by the Arizona Corporation Commission, CenturyLink will be able to raise its residential rates up to 10 percent per year, so long as the rate increases do not exceed 25 percent over three years.

Arizona residential landline customers have paid roughly $13.18 for standard urban phone service since the 1990s, when Qwest was the local phone company. Now CenturyLink is free to raise those prices $1.30 a month in any of the next three years or up to $3.30 overall, even as customers continue to disconnect service across the state. Business customers face potentially higher rate hikes — 15 percent annually or 25 percent over three years.

Regulators expect the company to file for a rate increase before you finish reading this article.

Oddly, both CenturyLink and some members of the commission called the change a victory for consumers, despite the likely higher rates to follow. The plan won approval in the Republican-controlled body in a 4-1 vote.

“It should be a win-win for the consumer (and the company),” said Democrat commissioner Paul Newman, who represents southern Arizona and voted for the plan with reservations. “That’s yet to be seen, but I hope it will be.”

The Arizona Daily Star reports CenturyLink will not be able to charge different rates in competitive and less-competitive areas, which consumer advocates say will protect ratepayers in areas where wireless coverage is poor and cable companies do not compete.

CenturyLink said it needs “rate flexibility” to compete as people disconnect landlines and head for cell phones and cable company “digital phone” products. Although the company did not elaborate, it argues the right to raise rates will allow it to compete more effectively with dominant cable operators Cox and Comcast.

Prior to deregulation, CenturyLink was allowed a guaranteed rate of return based on the true cost of providing landline phone service. The company also guaranteed to provide phone service to any Arizona resident inside of its service territory who asked. Under the terms of the new agreement, CenturyLink will now enjoy more rate flexibility, but will continue serving as the phone company of last resort.

“I’m still scratching my head about how the pointy-heads in Phoenix believe that raising rates makes you more competitive with cable and cell phone companies and not less,” Gonzalez says. “I guess it’s the same kind of New Phone Math that CenturyLink uses to try and keep the customers that are slipping away from them faster than ever.”

Gonzalez says he pulled the plug on CenturyLink last August.

“They offer nothing compelling to me when I can get a better price and better service with more calling features from the cable company, and now they offer even less.”

The Republican party platform on technology gives little credit to the Obama Administration’s handling of all-things-high-tech and demands a wholesale deregulation effort to free the hands of service providers, get rid of Net Neutrality, and sell off wireless spectrum to boost wireless communications.

The platform authors are particularly incensed about Net Neutrality, a policy that requires providers to treat Internet content equally on their networks. Some Republicans have previously called that “a government takeover of the Internet,” telling providers what they can and cannot provide customers. Vice-presidential nominee Rep. Paul Ryan (R-Wis.) fiercely opposes Net Neutrality. In 2011, he supported a resolution disapproving of the policy and in 2006 he voted against an amendment to a bill that would have codified it into federal law.

“The most vibrant sector of the American economy, indeed, one-sixth of it, is regulated by the federal government on precedents from the Nineteenth Century. Today’s technology and telecommunications industries are overseen by the FCC, established in 1934 and given the jurisdiction over telecommunications formerly assigned to the Interstate Commerce Commission, which had been created in 1887 to regulate the railroads. This is not a good fit,” the Republican platform states. “Indeed, the development of telecommunications advances so rapidly that even the Telecom Act of 1996 is woefully out of date.”

Mitt Romney is an ardent deregulator. Under a plan favored by the Republican presidential candidate, agencies like the Federal Communications Commission would be required to offset the cost of any new regulations by eliminating existing regulations. Additionally, Romney plans to issue an executive order as president telling all agencies they must notify Congress about any forthcoming regulations and wait for the House and Senate to approve them before they could take effect. With the current level of Congressional gridlock, a consensus to approve any new regulatory policy is unlikely. The end effect would likely be a near-moratorium on government regulation.

The Republican platform also attacked the Obama Administration for failing to expand broadband to rural areas, but offered nothing beyond generalities about “public-private partnerships” on how to expand broadband to the unserved.

Romney

“That hurts rural America, where farmers, ranchers, and small business manufacturers need connectivity to expand their customer base and operate in real time with the world’s producers,” the platform said. “We encourage public-private partnerships to provide predictable support for connecting rural areas so that every American can fully participate in the global economy.”

One can infer from the language in the document Republicans are opposed to public broadband initiatives.

The Republicans also promise to accelerate public spectrum sell-offs to private companies through auctions to expand the number of frequencies available for wireless communications.

The Obama Administration defends its telecommunications policies, noting the FCC’s National Broadband Plan and the American Recovery and Reinvestment Act’s broadband stimulus program have identified unserved areas, despite provider obfuscation, and targeted funding to open up new broadband opportunities. The administration also says it has effectively reformed the Universal Service Fund into a new Connect America Fund that will underwrite prohibitively expensive rural broadband expansion projects.

The White House also defends its spectrum policies noting existing spectrum still has licensed users that face lengthy and often costly transitions to other frequencies to clear space for cell phone companies. Still, President Obama ordered the FCC to find 500MHz of spectrum to reallocate to wireless communications and the FCC plans the first ever incentive auction that will let TV stations voluntarily surrender their frequencies in return for financial incentives.

Both the Obama and Romney campaigns oppose efforts to internationalize Internet regulatory policy through organizations like the United Nations or the International Telecommunications Union. Some governments have stepped up their efforts to lobby for a transition away from Internet policies they see dominated by the United States.

Democrats are also considering Internet language in their party platform for the party’s upcoming convention next month.

Otero

When a former labor leader suddenly starts advocating for the interests of AT&T and other super-sized telecommunications companies, even as AT&T’s unionized work force prepared to strike, the smell of Big Telecom money and influence permeates the air.

Jack Otero, identified in the Des Moines Register as “a former member of the AFL-CIO Executive Council and past national president of the AFL-CIO’s Labor Council for Latin American Advancement,” penned a particularly suspicious love letter to deregulation that might as well have been written by AT&T’s director of government relations:

[…]Industries — like broadband Internet — are thriving and creating innovations. Tossing a regulatory grenade into these businesses could wreck markets that create value for consumers and jobs for workers.

The United States is one of the most wired nations in the world. More than 95 percent of households have access to at least one wireline broadband provider, and the vast majority can connect at speeds exceeding 100 Mbps. And monthly packages start as low as $15. That means more families can go online to improve their job skills, look for work or help the kids with their school assignments.

More choices and higher speeds — the signs of a vibrant market — are the product of private investment, not public dollars. Internet service providers have invested over $250 billion in the last four years alone. This has created roughly half a million jobs laying fiber-optic and coaxial cable.

But some squeaky wheels are demanding heavy-handed regulations that would move our broadband Internet to the European model, where taxpayers have to subsidize outdated networks with slow speeds. Some want broadband providers to be required to lease their networks to competitors at discounted prices — as they do in Europe. But lawmakers in both parties agree that this policy, tried in the 1996 Telecommunications Act, failed miserably.

Others argue that broadband Internet providers should not be able to impose a small surcharge on the tiny percentage (less than 1 percent) of consumers who download hundreds of movies and tens of thousands of songs every month — effectively the data usage of a business. They say these fees discriminate against online video companies like Netflix. But that’s silly. More than 99 percent of users can watch plenty of Apple TV or Netflix without approaching the lowest data allotment. Without tiered pricing plans, the rest of us would have to underwrite these super-users.

Okay then.

Otero’s Fantasy World of Broadband sounds great, only it does not exist for the vast majority of Americans. Are most of us able to connect at speeds exceeding 100Mbps?

If you happen to live in a community served by a publicly-owned broadband provider Otero effectively dismisses, you can almost take this fact for granted.

Some of America’s most advanced telecommunications providers are actually owned by the public they serve in dozens of communities small and large. EPB Fiber, Greenlight, Fibrant, Lafayette’s LUS Fiber, among others, deliver super-fast upload and download speeds at very reasonable prices while the giant phone and cable companies offer less service for more money.

The only major telecommunications company with a wide deployment of fiber-to-the-home service is Verizon Communications.

You cannot easily buy residential 100Mbps service from Time Warner Cable, AT&T, CenturyLink, Frontier, FairPoint, or a myriad of other telecom companies at any price, unless you purchase an obscenely expensive business account. From the rest, 100Mbps service typically sets you back $100 a month.

Otero’s quote of affordable $15 broadband is not easy to come by either. It usually requires the customer to qualify for food stamps or certain welfare programs, have a family with school-age children, a perfect payment history, and no recent record of subscribing to broadband service at the regular price.

The only people who believe America is the home of a vibrant market for broadband service are paid employees of telecom companies, paid-off politicians, or their sock-puppet friends and organizations who more often than not receive substantial contributions from phone or cable companies. The fact is, the United States endures a home broadband duopoly in most communities — one cable and one phone company. They charge roughly the same rates for a level of service that Europe and Asia left behind years ago. Broadband prices keep going up here, going down there.

Simply put, Mr. Otero and actual reality have yet to meet. Consider his nonsensical diatribe about the impact of the “heavy-handed” 1996 Telecommunications Act, actually a festival of mindless deregulation that resulted in sweeping consolidation in the telecommunications and broadcasting business and higher prices for consumers.

Otero is upset that big companies like AT&T and Verizon originally had to open up their networks in the early 1990s to independent Internet Service Providers who purchased wholesale access at fair (yet profitable) prices. Those fledgling ISPs developed and marketed third-party Internet service based on those open network rates. Remember the days when you could choose your ISP from a whole host of providers? In some markets, this tradition carried forward with DSL service, but for most it would not last.

The telecommunications industry managed to successfully lobby the government and federal regulators to change the rules. Phone companies did not appreciate the fact they had to open their networks for fair access while cable operators did not. So in 2005, the FCC allowed both to control their broadband networks like third world despots. Competitors were effectively not allowed. Wholesale access, where available, was priced at rates that usually guaranteed few ISPs would ever undercut the cable or phone company’s own broadband product.

The lawmakers who believed open networks represented awful policy were almost entirely corporate-friendly or recipients of enormous campaign contributions from the telecom companies themselves.

So which market is actually on the road to failure?

The LCLAA couldn’t do enough to help AT&T swallow up competitor T-Mobile USA.

The American broadband business model is a firmly established duopoly that charges some of the world’s highest prices and has rapidly fallen behind those “failures” in Europe.

In the United Kingdom, BT — the national phone company, is required to sell access at the wholesale rates Otero dismisses as bad policy. As a result, UK consumers have a greater choice of service providers, and at speeds that are increasingly outpacing the United States. Nationally backed fiber to the home networks in eastern Europe and the Baltic states have already blown past the average speeds Americans can affordably buy from the cable company.

Even Canada requires Bell, the dominant phone company, to open its network to independent ISPs selling DSL service. Without this, Canadians would rarely have a chance to find a service provider offering unlimited, flat rate service.

Otero’s final, and most-tired argument is that data caps force “average” users to subsidize “heavy” users. In fact, as Stop the Cap! reported this week, that fallacy can be safely flushed away when you consider the largest ISPs pay, on average, just $1 per month per subscriber for usage, and that price is dropping fast. The only thing being subsidized here is the telecom “dollar-a-holler” fund, paid to various mouthpiece organizations who deliver the industry’s talking points without looking too obvious.

The Des Moines Register omitted the rest of Mr. Otero’s industry connections. We’re always here to help at Stop the Cap!, so here is what the newspaper forgot:

• Mr. Otero is a board member of Directors of the U.S. Hispanic Leadership Institute (USHLI), a group funded in part by AT&T and Verizon;
• He is the past president of the Labor Council for Latin American Advancement, a group that enthusiastically supported the anti-competitive merger of AT&T and T-Mobile USA;

Mr. Otero has a side hobby of penning nearly identical editorials with largely these same broadband talking points. One wonders what might motivate him into writing letters to the Des Moines Register, the Lexington Herald-Leader, the Gainesville Sun, the Star-Banner, and the Ledger-Inquirer.

Otero may have a case for plagiarism, if he chooses to pursue it, against Mr. Roger Campos, president of the Minority Business RoundTable (the top cable lobbyist, the National Cable & Telecommunications Association is labeled an MBRT “strategic partner” on their website). Campos uses some of the exact same talking points in his own “roundtable” of letters to the editor sent to newspapers all over the place, including the Ventura County Star, the Leaf Chronicle, and the Daily Herald.

Normally, telephone companies looking for a rate increase file a request themselves with state regulators to charge customers more for service. But in Georgia, AT&T, Comcast, and the state cable lobbying group are asking the Georgia Public Service Commission (GPSC) to order two rural phone companies to raise rates because they are not “charging enough” for phone service, when compared with cable telephone services and AT&T.

The Ringgold Telephone Company (RTC) and Chickamauga Telephone Company both argue the action is anti-competitive.

“By forcing [both companies] to increase rates, these competitors are seeking to make wireless and cable companies more attractive to consumers,” says the Don’t Raise My Rate website.

The independent phone companies are vehemently against raising their rates, and executives at both companies are outraged AT&T and the state’s cable companies are literally trying to force the GPSC to order rate increases on residential and business customers.

“It’s totally unprecedented,” Phil Erli, executive vice president at RTC told the Times Free Press.  “It is ludicrous and illogical.”

The Georgia Public Service Commission will decide on Oct. 16 whether the rate increases are justified, following local public hearings Aug. 13.

AT&T, which is driving the campaign to force customers to pay higher rates, says they are pressing the case because both companies unfairly charge substantially lower rates than AT&T does in Georgia.

Peter F. Martin, vice president for legislative and regulatory affairs in Georgia openly admits he wants both companies to charge essentially the same prices AT&T bills its customers in other areas of the state.

“The premise of my recommendation is that [the two phone companies] raise rates to roughly the same levels that are being charged by other local exchange carriers in surrounding areas,” Martin testified before the GPSC. “In other words, my recommendation is that [the two phone companies] increase their own end-user rates to market-based levels comparable to what other carriers are charging their subscribers.”

For customers of Chickamauga Telephone, that would amount to a 42% rate increase on residential customers, 100% on business customers. Customers of RTC would pay 20 percent more for residential service, 37% more for business service.

AT&T claims both companies, in deeply rural Georgia, are tapping into the state’s rural service fund and are receiving some of the largest state-mandated telecom subsidies, which are funded by all of Georgia’s phone companies and ratepayers. But both companies claim they have spent a large portion of those funds repairing damages to their rural networks incurred from a series of tornadoes which hit the area two years in a row.

The state cable lobbying group, the Cable Television Association of Georgia (CTAG) also has a dog in this fight. Comcast Cable, the dominant provider in Georgia, directly competes with both phone companies. They support AT&T’s demands that both phone companies hike their rates. It is not difficult to understand why:

Residential Service With Calling Features:

Business Service With Calling Features:

(EPB, a publicly-owned provider from nearby Chattanooga, Tenn., also offers service in some areas.)

Chickamauga Telephone executives argue Georgia’s telephone deregulation policies are heavily weighted in favor of huge phone and cable companies and leave independent, rural phone companies with no new revenue opportunities. Chickamauga argues AT&T and the cable industry are using legislatively imposed “unfunded mandates” to win favor and additional profits for themselves and their shareholders, with no resulting savings for Georgia ratepayers, especially in rural areas.

If AT&T and cable operators have their way, both independent phone companies “would be priced out of the competitive market,” and “would soon find [themselves] out of business.”

“If you lived down here and you had a phone with us and your rates went up, how would you respond?” asked Ted Austin, a spokesman for Chickamauga Telephone. “Nobody wants their bills to go up, especially when it’s not something that Chickamauga Telephone is asking for.”

Large telecom and oil companies want to pay less property taxes and don’t mind Montana homeowners and small businesses paying the difference.

Telecommunications companies and the oil industry are lobbying the Montana Legislature to lower their assessed property taxes, shifting tax collections away from themselves and towards homeowners and small businesses.

Members of the Montana Legislature’s Revenue and Transportation Interim Committee are reviewing how the state values property — an important prerequisite to setting property taxes. The state legislature intends to collect a certain amount of tax revenue from owned property in the state. What percentage is paid by large national and multinational corporations, small businesses, and homeowners is open to debate, and industry lobbyists are fighting to lower the taxes of some of Montana’s largest businesses. Critics contend that will shift a greater proportion of property taxes on those who don’t have the resources to pay lobbyists — independent small businesses and residential property owners.

The Missoulian reports that the interim committee is currently divided on the proposition — Republicans favoring the views of large corporations and Democrats in favor of small businesses and homeowners.

Outgoing Democratic Gov. Brian Schweitzer warns that Montanans are facing a corporate lobbying snowjob that will stick them with a higher tax bill.

“What they’re proposing is a great tax shift in favor of out-of-state and multinational corporations in Montana – a shift from those paying the taxes to small businesses and homeowners in Montana,” Schweitzer told the newspaper. “They’ve decided that they can hire lobbyists on both the Democratic and Republican side and pull the wool over legislators. This is the same cast of characters that brought us utility deregulation. What could go wrong?”

The Montana Budget and Policy Center agrees, suggesting a large shift in property taxes towards homeowners, small businesses, farmers and ranchers could prove shocking when tax bills start arriving in mailboxes.

Leading to change the property tax laws are cable television, telecommunications companies, and oil refineries, with the assistance of the Chamber of Commerce and the Montana Taxpayers Association, which does not disclose its funding sources.

Prior to the introduction of the “tax reform” study, large telecom companies including AT&T, Verizon Wireless, and Cablevision routinely appealed their property tax bills to the tune of $61.3 million out of $108.2 million owed in property taxes assessed from 2005-2011.

State Revenue Director Dan Bucks defends the current valuation system, which he says has used the same practices since the 1930s. Bucks warns if the tax burdens are shifted away from the telecommunications and oil industries, the difference will have to be paid by homeowners and small businesses.

The newspaper reports if Republicans control the 2013 Legislature, telecom and oil industry supporters in the state legislature are confident they can pass a bill to change property tax assessments, and Sen. Bruce Tutvedt, (R-Kalispell) acknowledged there would be a noticeable tax shift.

“We’ve got to take the political hit of the tax shift,” Tutvedt said. “If you’re going to be fair, then you shouldn’t get hit.”

Rep. Dick Barrett (D-Missoula) warned the Republican-backed measure could deliver tax bills packing a major wallop on unsuspecting property owners.

“They could be pretty severe, depending on what it looks like,” he said.