Verizon’s lobbyists are warning western New York politicians that unless they defeat a state measure to allow Verizon ratepayers to share in the proceeds of any future landline network sell-offs, Verizon may take a multi-billion dollar proposed data center elsewhere.

The Niagara county community of Somerset, population 2,900, is the planned home for the new high-tech infrastructure project.  Verizon officials propose to use Lake Ontario breezes and water to help cool the energy-intensive facility, to be located on 160 acres just yards from the shoreline.  In all, the Verizon campus will consist of three buildings — each 300,000 square feet in size.  If built as proposed, it would be among the largest of Verizon’s 250 data centers around the world.

But there’s a hitch.

While Verizon project manager Bruce Biesecker showed drawings and answered questions from an eager audience of local residents, Verizon lobbyists were telling reporters the entire project could end up in another state because of legislation under consideration in the state legislature.

Our regular reader Smith6612 dropped us a note wondering if we knew about the project.  Yes, we did.  But we also noticed company officials spending almost as much time complaining about interference from Albany threatening to derail the data center as they spent talking about the project itself.  Company officials also rarely named the exact bill in question or how it would directly threaten its data center investment.

Stop the Cap! covered the introduction of New York Assembly Bill 2208/Senate Bill 7263 earlier this year.  Introduced by Assemblyman Richard Brodsky (D-Westchester) and Senator Brian X. Foley (D-Blue Point), the companion bills came in response to watching Verizon sell off large segments of its landline network in a dozen states to Frontier Communications.  Both legislators were concerned the deal forced subscribers to deal with a new phone company that earned an “F” rating from the Better Business Bureau, all while personally enriching company executives and shareholders in a tax-free transaction.  They don’t want to see a repeat performance for rural New York residents.

Brodsky and Foley argue that such sales should be in the interests of ratepayers, especially rural customers who have few alternative choices.  Their legislation would compel Verizon to share 40 percent of the proceeds of any sale with their customers — the ones that pay the monthly bills that made Verizon’s network possible.  Alternatively, Verizon could spend an equal amount on verifiable infrastructure improvements and escape writing checks to ratepayers.  In either case, the legislation forces Verizon to spend less on bonus bonanzas for a handful of deal-making executives and more on the customers who have to live with the results.

Verizon lobbyists and company officials have routinely mischaracterized the legislation, claiming it singles out the state’s largest phone company with a “40 percent tax” that “exempts cable companies.”  They have also repeatedly hinted the legislation could force Verizon out of the state.

“That weighs as heavily in our decision as do things like power, taxes, environment,” Verizon spokesman John Bonomo said. “The business climate in the state is as important as some of those other factors.”

Verizon officials have not exactly been subtle about what they want to get the multi-billion dollar project ultimately built:  solid opposition to the two bills, which garnered support from consumer and ratepayer groups and the Communications Workers of America.  The legislation passed the state Assembly but ultimately died in the Senate several weeks ago.  Verizon is obsessed about keeping such bills from being reintroduced.

With billions at stake, the western New York delegation of politicians in Niagara and nearby Erie Counties have been especially supine to Verizon’s arguments.  In particular, some Republicans in the state legislature have made it their mission to see the bill permanently killed.

Unfortunately, the quality of the reporting done by local media about Verizon’s lobbying agenda has been especially underwhelming — frequently shallow, lazy, and downright inaccurate.  The assertions raised about the Brodsky/Foley legislation in area newspapers and television news reports makes one wonder if any of the reporters actually read the bills in question.

Take Bill Wolcott’s piece in the Lockport Union-Sun & Journal.

Wolcott never strays far from Verizon’s talking points, describing the bills as “[containing] conditions for givebacks of 40 percent for telephone providers, but does not do the same with cable TV corporations.”

Wolcott does not bother to accurately depict “givebacks” in terms of what they actually are — refunds to Verizon customers.

Verizon’s red herring complaint of unfair treatment is also repeated by the reporter, who apparently does not realize there are major differences between Time Warner Cable, which controls the overwhelming majority of cable subscribers in western and central New York and Verizon’s telephone operations:

1. Time Warner Cable has no plans to sell off its network to the highest bidder, abandoning rural and suburban areas served today.  Verizon did exactly that in most of the dozen states it left on July 1st;
2. Verizon’s landline network provides universal service to New York telephone customers, for which it receives a substantial subsidy from the Universal Service Fund;
3. Time Warner Cable is not held to universal service standards, something Verizon rarely complains about these days now that the phone company is in the same business as Time Warner through its selectively deployed FiOS network (which incidentally is not available in the Niagara county area where the data center is proposed.)
4. Verizon’s prior landline selloffs have almost always resulted in bankruptcies for the buyers, leaving phone customers uncertain about the level of service they will ultimately receive.

The Buffalo News reporter did little better, misrepresenting a fundamental part of the bill (underlining ours):

Under the weight of a multibillion- dollar deficit, the State Assembly in the spring passed a bill that would require telephone companies to return 40 percent of their proceeds to the state if they reached a joint venture with another company or sold off some of their properties in New York.

Reporter Teresa Sharp managed to bungle an important fact.  The state of New York would not receive the proceeds — Verizon ratepayers would.

Most television coverage didn’t bother to challenge the inaccurate assertions made by Republican lawmakers or Verizon representatives either.  Talking points were read and reporters simply nodded their heads.

As a public service to the Buffalo-area media, Stop the Cap! presents a primer on the actual language of the legislation Verizon wants to see dead (underlining ours):

         (1) PROVIDES SHORT-TERM AND LONG-TERM ECONOMIC BENEFITS TO RATEPAYERS.
   49    (2)  EQUITABLY ALLOCATES, WHERE THE COMMISSION HAS RATEMAKING AUTHORI-
   50  TY, THE TOTAL SHORT-TERM AND LONG-TERM FORECASTED ECONOMIC BENEFITS,  AS
   51  DETERMINED  BY  THE  COMMISSION, OF THE PROPOSED MERGER, ACQUISITION, OR
   52  CONTROL BETWEEN SHAREHOLDERS AND RATEPAYERS.  RATEPAYERS  SHALL  RECEIVE
   53  NOT  LESS  THAN  FORTY  PERCENT OF SUCH BENEFITS; PROVIDED, HOWEVER THAT
   54  REINVESTMENT OF SUCH BENEFITS  IN  A  TELEPHONE  CORPORATION'S  IN-STATE
   55  INFRASTRUCTURE MAY BE DEEMED TO SATISFY SUCH REQUIREMENT.

What this means is that Verizon has two choices if it chooses to throw its rural New York landline customers overboard — before paying enormous cash bonuses to executives and deliver subscribers into the waiting hands of a potentially unstable buyer, up to 40 percent of the proceeds must be reinvested in improving the existing telephone network.  Barring that, the same percentage of proceeds must be returned to ratepayers in the form of refund checks or service credits.

Verizon may have a major problem giving customers their fair share, but they have no problem asking New York taxpayers for generous tax breaks.

Verizon has applied for a 20-year payment-in-lieu-of-taxes, or PILOT agreement, which would deliver substantial property tax savings, not a small matter in a region with the highest property taxes in the country.  It also wants a sales tax exemption on building materials and the equipment to be installed at the data center.  The sales tax break alone is expected to cost state taxpayers up to $330 million in lost tax revenue.

Because Verizon is upset about the legislation, local politicians have done one better expressing outrage that Albany politicians could drive Verizon to pack up its data center and head out of state.

Somerset Supervisor Richard Meyers was quoted in Wolcott’s piece suggesting New York residents don’t want any part of a bill that returns money to phone customers if Verizon sells them out.

“I’ll tell you who’s calling the shots in the Senate, and that’s the residents of New York state,” Meyers said. “The average citizen in New York state does not like this bill, and I don’t either. I think it stinks. It’s not a necessary bill, and there’s a lot of time and energy wasted.”

Assemblywoman Jane Corwin, (R-Clarence) characterized the legislation as a union plot, quoted bashing the bills in the Lockport newspaper:

“It’s a very bad bill, being pushed by the Communication Workers of America, the union that represents the workforce at Verizon,” she said. “Of all the people that stand to get hurt, it’s the employees that would get hurt the most, and the investors as well. The whole bill doesn’t make sense.”

“This bill chills any business incentive to invest in New York state … because they stand to lose 40 percent of that investment down the line. The playing field will be made uneven, if we start taking 40 percent of that potential away from Verizon and not from the cable companies and Internet companies.”

She  contends that the CWA was putting pressure on the Assembly. “The shame of it all is that it’s been driven by a special interest group. They are the ones pushing this bill.”

What is especially chilling is that Corwin never bothers to mention concern for the one group affected above all others: Verizon landline customers.  To her, they are incidental.  The CWA?  A “special interest group.”  Verizon?  A source of campaign contributions for her.  This year, she has already picked up some nice change from the folks at Big Red:

VERIZON COMMUNICATIONS INC 140 WEST ST. ROOM 2613 NEW YORK, NY 10007	250.00	16-MAR-10	JANE CORWIN CAMPAIGN COMMITTEE	2010 July Periodic	B	Member of Assembly	142
VERIZON GOOD GOVERNMENT CLUB-NEW YORK 140 WEST ST; RM 2613 NEW YORK, NY 10007	300.00	01-SEP-10	JANE CORWIN CAMPAIGN COMMITTEE	2010 32 Pre General	C	Member of Assembly	142

Source: New York State Board of Elections

That’s not bad for a New York Assemblywoman serving a rural district whose total campaign take since her first election is just under $125,000.

State senator George Maziarz (R-Newfane) is just as bad.

“It’s a terrible piece of legislation, and I’m doing all I can to make sure it doesn’t pass,” said Maziarz, who heads the Senate’s Energy and Telecommunications Committee.

Verizon also thanks Maziarz for his efforts, for which he has been well-rewarded in the last two election cycles:

VERIZON COMM FOR GOOD GOVT 140 WEST NY, NY 10007	500.00	06-MAY-08	COMMITTEE TO ELECT MAZIARZ STATE SENATE	2008 July Periodic	C	State Senator	62
VERIZON COMM INC GOOD GOVT 140 WEST NY, NY 10007	4,000.00	26-MAR-08	COMMITTEE TO ELECT MAZIARZ STATE SENATE	2008 July Periodic	C	State Senator	62
VERIZON COMM INC GOOD GOVT CLUB 140 WEST NY, NY 10007	3,000.00	12-FEB-10	COMMITTEE TO ELECT MAZIARZ STATE SENATE	2010 July Periodic	C	State Senator	62
VERIZON COMMUNICATIONS PAC 140 WEST NY, NY 10007	3,000.00	11-MAY-10	COMMITTEE TO ELECT MAZIARZ STATE SENATE	2010 July Periodic	C	State Senator	62
VERIZON GOOD GOVT CLUB NY 140 WEST NY, NY 10007	3,000.00	27-JUL-10	COMMITTEE TO ELECT MAZIARZ STATE SENATE	2010 32 Pre General	C	State Senator	62

Source: New York State Board of Elections

The prospect of new high technology jobs and investment are more than promising to an upstate economy that has suffered difficult economic times for years.  But Verizon’s threats to skip Somerset for its new data center because of “anti-business” hostility ignores the company’s own willingness to abandon its rural customers.  In states where Verizon has sold off landline service — ending the prospects for real improvements in broadband and other modern services — communities like Somerset were the first to go, seen as too small and isolated for Verizon’s urban-based business plans.

The legislation Verizon fears protects New York residents, including those in Niagara County, from deals that enrich a handful of executives and Wall Street bankers while delivering sub-standard service to customers left behind.  Verizon’s record of sell-offs has been a disaster for customers, forced to endure long-term service disruptions, inaccurate bills with unfair charges, low quality broadband, and high prices.

Ironically, Verizon’s fear is totally misplaced, assuming they intend to remain committed to serving customers across the state — from cities as large as New York -and- towns as small as Somerset.  Even using Verizon’s own language, they can avoid the 40% “tax” if they simply keep providing service to their customers.

That’s just one of many facts the media in western New York needs to do a much better job of communicating to their readers and viewers.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Verizon Data Center 10-18-10.flv[/flv]

WIVB and WKBW-TV in Buffalo delivered several one-sided reports about the proposed Verizon Data Center while allow inaccurate information about Assemblyman Brodsky’s proposed bill to go unchallenged.  (8 minutes)

Residents of McBee, S.C., have been without cable and Internet service since last November, when rural cable provider Pine Tree Cablevision closed its doors and turned the services off in scores of small communities in New Hampshire and South Carolina.  For residents of Lamar, another South Carolina community served by Pine Tree, it wasn’t much of a service to lose.  Pine Tree’s “broadband” in Lamar was limited to 50kbps, with the entire community’s Internet delivered on a single AT&T-provided T-1 line.

But even the loss of a company like Pine Tree was immediately felt by area residents and businesses, now without cable TV and Internet service.  In Lamar, December 10, 2009 will remain a day of infamy:

“I was in the middle of submitting reports to SLED (the State Law Enforcement Division) when [Pine Tree pulled the plug and the cable and broadband system] went down,” Police Chief Charles Woodle told SC Now. Woodle now goes home twice a day to check his work e-mails.

The town’s water office closed December 21st because the town clerk could not upgrade the software needed to process water bills.

In Elloree, residents and local officials found out about Pine Tree’s financial problems when channels started dropping off the cable system, followed by the complete loss of service.  In December, customers mailing payments to Pine Tree had them returned by the post office undelivered.

Elloree Town Clerk Chasity Canaday told The Times and Democrat Pine Tree’s ultimate demise was a travesty.

“It shows a remarkable lack of professionalism to cut services from customers without any prior notice,” Canaday said. “For the majority of our residents, their notice that the cable service was terminated came when their televisions quit working.”

Despite claims from Pine Tree officials that new owners would take over the business they left behind, Canaday says that just isn’t true.

“It has been very, very difficult to get somebody else,” she said. “There is not a large enough customer base to entice a new company to come in. Most people have already switched to satellite.”

The newspaper noted after contacting 20 other municipalities, Canaday said most rural towns have no local cable provider and instead rely on satellite service.

Throughout rural South Carolina, tiny cable companies serving just a few hundred subscribers have come and many more have gone.

The town of Cameron lost Almega Cable about three years ago.  Other communities have said goodbye to operators like Brookridge Cable, SRW Inc., South Carolina Cable Television, Pine State Management Co., and Mid Carolina Cable.

In most cases, satellite television’s ability to deliver hundreds of digital signals it an easy choice over cable systems delivering only 2-3 dozen channels.  Because of a lack of investment to expand rural cable lineups, customer erosion has left many systems financially untenable.  One Texas cable system had just a dozen paying customers left when they called it quits.

That’s why the community of McBee is creating a lot of buzz in rural South Carolina.  They reportedly have Time Warner Cable, the nation’s second largest cable operator, in discussions to take over where Pine Tree left off, restoring cable and broadband service for a community of just 700 people.

But that service may come with a significant price — an indefinite franchise agreement that could eventually threaten the area’s local, customer-owned telephone cooperative.

Town Attorney Tony Floyd says Time Warner Cable in eager to expand into rural areas.  But the question is, will McBee concede too much just to attract a cable company?

“This is a long term contract,” he told SC Now. “If you grant a franchise, Time Warner will be able to keep competition out.”

Newly re-elected councilman Shilon Green is the biggest proponent for the deal.  He will propose an ordinance granting a franchise to the cable company at a town hall meeting to be held tomorrow.  He says Time Warner will bring better cable and broadband service to the area and introduce competition for phone service with their “digital phone” product.

But some other council members are concerned about Time Warner Cable’s impact on the area’s local, customer-owned phone company, Sandhill Telephone Cooperative.

Councilmen A.C. “Kemp” McLeod said he’s afraid the cable company could bully the co-op out of business.

“I know Sandhill is expanding their service into the TV business, and they’ve been very good serving rural communities,” McLeod told the newspaper. “I’d like to check with them first.”

“If [Time Warner] wants to come in [and] lowball this area, they can do it, then run our small business out of business,” McLeod said. “A big company can make it look good, make it look appealing, then once they have the market and run the small guy out, then they can raise the rates. At Sandhill, we have representation.”

Rural communities are often bypassed by cable providers because they lack enough closely spaced customers to make the infrastructure costs worthwhile.  Where smaller communities do cluster most of their population inside the town limits, cable systems have been built.  Many are independently owned and operated by small providers because larger companies have shown no interest in serving areas with just a few hundred potential customers.

That has left town leaders with the prospect of offering generous incentives to attract cable operators.  In addition to franchise agreements that never expire, some communities offer significant tax breaks and other concessions to encourage cable operators to bring service to area residents.  Despite complaints from big city residents that Time Warner is hardly benevolent, its brand and reputation do mean a lot in rural areas burned by Pine Tree’s sudden demise last year.

Green hopes the cable giant will bring a level of cable service not seen before in towns like McBee.

“A little competition is good,” Green said.

Imagine if you lived in a country where broadband competition actually delivered real innovation and savings, overseen by a consumer protection agency that made sure providers in a barely competitive marketplace actually delivered on their “highly competitive” rhetoric.

Australia’s National Broadband Network (NBN) will deliver exactly that, with a check and balance system that makes sure advertiser claims meet reality and that “robust competition” means… robust competition.

One industry-backed front group, Digital Society, doesn’t think that idea is fair to big telecom companies (like those funding its operations), and wants none of that here in the States.

Nick Brown doesn’t object too much to Australia’s plan to deliver fiber-to-the-home connections offering 100/50Mbps service to 93 percent of residents.  He just doesn’t want the Australian government overseeing how private providers use (and how much they can charge to access) the publicly-owned network:

Internet Service Providers in Australia will be forced to compete with each other via the “Competition and Consumer Commission”.  The problem with this is that a supposedly ubiquitous commission deciding what is and what isn’t competition and fair pricing stands a fair chance of not actually playing out in any other fashion than simply being a price fixing commission.

[…]Because the NBN will only act as a wholesaler and treat all ISP retailers equally, ISP’s no longer have the ability to develop their own unique contracts that would reduce costs to consumers.  All backhaul would be priced to all ISP’s at the same rate.  So realistically no company has a significant advantage over the other.  That does potentially create a good deal of choice, but that does not necessarily ensure competition.  This would be akin to going to the grocery store and on the shelf were 5 different brands of soft drink, but every single brand tasted exactly like Coca-Cola.  You would have a lot of choice in that situation, but there would be no real competition between those 5 brands, because taste is the competitive factor.  For the Australian, this means that ISP’s will likely be forced to start bundling services to gain advantages over one another.  Something that is not always considered attractive here stateside.

Brown’s bitter-tasting public-broadband philosophy is based on the inaccurate notion that incumbent private providers are just itching to deliver state-of-the-art broadband service across Australia.  If the darn federal government didn’t get in the way and steal their thunder with a nationwide fiber network, Aussies would be enjoying world class Internet access over copper phone wires and usage-limited wireless 3G networks right now.  Even worse, the Australian government that will finance the entire operation also has the temerity to set ground rules for private companies reselling access to consumers and businesses!  How dare they oversee a network bought and paid for by Australian taxpayers (he objects to the funding as well.)

Brown must also still be living in Australia if he missed the parade of American providers repricing services to push people into “triple-play bundles” whether they want them or not.  And we don’t even get the fiber to go with it.  For most Australians, they no longer care whether it’s Diet Coke, Pepsi One, Cherry Coke, or even RC Cola for that matter — as long as it arrives on a fiber network built by and for their interests (instead of Telstra’s), it’s far better than what they have now.

In reality, broadband issues hold a front-and-center position in Australian politics, and the Labor Government which supports an aggressive national broadband plan that puts America’s proposed broadband improvements to shame was -the- issue that keeps that government in power today.  Why?  Because Australia is well behind others in providing broadband access at reasonable speeds and prices.  Australian private providers maintain a nice little arrangement delivering sub-standard, near-monopoly service at some of the highest prices around, all usage-limited and speed throttled. Despite years of negotiations with big players like Telstra, the privatized phone company, broadband improvement has moved at a glacial pace (too often by their design).

The development of the National Broadband Network for Australia was driven by private provider intransigence.  Even Brown recognizes the logistics of the proposed fiber network is “very smart and very common sense” for a country like Australia, which he considers a close cousin geographically to the United States.  Brown also admits the use of fiber straight to the home “‘future proofs’ Australian networks and would allow for easier improvement in the future.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ABC Radio Battle of the broadband 8-11-2010.mp4[/flv]

ABC Radio National offered a comprehensive review of the competing plans from Australia’s political parties to address broadband issues as the country drops to 50th place worldwide in broadband excellence.  (9 minutes)

While Australia ponders a fiber future, today’s broadband picture across the country is less idyllic.

The minority of Australians receiving service over cable broadband, available mostly in the largest cities, continue to face usage-limited service and higher prices than American providers.

Most Australians get their service from DSL connections offered by Telstra and third party companies leasing access to Telstra facilities.  Telstra’s network is based almost entirely on aging copper wire that cannot deliver broadband to most rural populations.  Telstra’s long term broadband plan for Australia depends on milking every last cent out of those copper wires while raking in even bigger profits from usage limited and expensive wireless data plans.  Just last month, Telstra was fined $18.5 AUS million dollars for monopolistic behavior by impeding competitive access to its telephone network.  No wonder the country had enough.

Brown labeled the Australian government’s buyout of Telstra’s copper wire network a “negative,” as if they were stuck with a pig in a poke.  That suggests Brown does not understand the actual plan, which relies on reusing existing infrastructure like poles and underground conduit to install fiber at an enormous savings — both in billions of dollars in reduced costs and deployment time.  The alternative would require the government to obtain agreements with Telstra-owned facilities to share access or construct their own facilities from the ground up.  Telstra has no incentive to spend money to upgrade their networks, much less decommission them.  Logistically, the plan cuts through enormous red tape and guarantees Australians no one will be stuck waiting decades for the eventual retirement of copper phone wiring.

Call it Fiber Optic Broadband for Copper Wire Clunkers — the government has not nationalized the phone network — it wants to buy it a fair price, from a willing seller who will be able to use the new network to deliver some of its own services.

The horror show for groups like Digital Society is the thought private companies will actually be forced to deliver the competition and real savings they routinely proclaim in press releases, but never actually deliver to consumers.  The Australian people will own the fiber playground private companies will play on, so why shouldn’t they have the benefit of oversight to make sure the game is played fairly?

Australia’s Competition & Consumer Commission is equivalent to the Consumer Product Safety Commission, the Federal Trade Commission, and a state Attorney General all rolled into one.  The ACCC is an independent statutory authority that works for consumers.  It promotes and enforces real competition and fair trade.

The ACCC’s involvement in broadband regulation includes: stopping false advertising, helping intervene and resolve disputes over access and billing issues, and being an impartial observer about broadband uptake and measuring how competition actually delivers better service and savings for consumers.

What Brown dismisses as “a price fixing commission” is in reality a consumer protection agency with enforcement teeth.  The ACCC has a solid track record.  For instance, the broadband industry in 2009 itself admitted the ACCC stopped a “race to the bottom” in wild advertising claims:

In August last year, we sat down with the CEOs of the major telecommunication providers, Telstra, Optus and Vodafone Hutchison Australia. They acknowledged that there was a problem, exacerbated by a “race to the bottom” by industry participants in their advertising practices. The CEOs showed a ready willingness to resolve the issue on an industry-wide basis.

After analysing complaints, the ACCC identified the 12 most prevalent types of potential misleading conduct made in telecommunications. Some of these included:

• use of terms such as “free”, “unlimited”, “no exceptions”, “no exclusions” or “no catches” when this is not the case;
• headline price offers in the form of “price per minute” for calls made using mobile phones and phone cards when there are other fees/charges which are not clearly disclosed; or
• headline claims relating to price, data allowances, total time allowances, speeds and network coverage, where the claims cannot generally be achieved by consumers.

The three industry leaders have provided a court enforceable undertaking to review and improve advertising practices so that consumers are better informed about the telecommunications products they purchase. They have undertaken that their advertising will not make these claims in circumstances where they are likely to be misleading to consumers.

Further the majors have also agreed that they will take reasonable steps to ensure that this commitment will extend to any other players with whom they have commercial agreements which allow them to control the advertising and promotion of goods or services.

I can see why Digital Society, a group partly funded by telecommunications companies, would object to the ACCC stopping Big Telecom’s ill-gotten Money Party-gains.

ACCC also put a stop to promotions that tricked consumers into signing up for mobile data plans that included “free” netbooks, high value gas gift cards, or cash rebates.  The Commission discovered these “promo plans” weren’t giving away anything at all — they simply added the retail cost of the “free” item to the plans’ charges.

The ACCC received a court enforceable undertaking from Dodo Australia Proprietary Limited for the advertising of some of their mobile plans. Dodo had advertised that consumers would receive either an Asus Eee PC, a fuel card or a cash payment when they signed up to a ‘free offer’ plan.

However, cheaper mobile cap plans that did not include the ‘free’ offers were comparable in value and services. After raising these concerns with Dodo, they promptly ceased publishing the ‘free offer’ advertisement and undertook to ensure the affected customers would receive the goods for free, either by way of cash refund or by reducing the monthly charges for the ‘free offer’ plans.

That mean and nasty ACCC, ruining all of the fun for providers delivering tricks and traps for their customers.  Caveat emptor, right?

But the most ludicrous claim of all comes towards the end of Brown’s piece, when he claims the National Broadband Network will leave Australians with even higher priced, usage-capped access:

Australia traditionally has had low bandwidth caps.  Even just five years ago while most Americans were enjoying unlimited bandwidth with their broadband connections, I was living in Melbourne, Australia and was limited to a 1GB cap per month via my Telstra connection.  The likelihood of seeing 100Mb uncapped connections is highly suspect.  Australians may enjoy these speeds, but they will likely be extremely expensive with low bandwidth caps or limited to high priced premium tiers.

Brown can’t blame the private company that delivered his abysmal Internet service without his “free market knows best” philosophy falling apart.  It wasn’t the Australian government that provided him a 1GB monthly usage allowance — it was Telstra, and five years later the company is still usage-limiting Australian broadband consumers.  The National Broadband Network was designed to tackle that problem once and for all.  Brown apparently doesn’t realize the last argument private providers have used to justify usage caps — insufficient overseas capacity — is being addressed by new super-high-capacity undersea fiber cables stretching across the Pacific.  The issue of “usage cap” abatement is among the top bullet points for constructing the NBN.

Brown would be right when he suggests that Australians may enjoy faster speeds, but with low usage caps and high prices — if Telstra was the only company providing the service.  The new network will provide speeds faster than most Americans enjoy, with enormously expanded capacity.  Providers like Telstra have an incentive not to deliver the unlimited service that fiber network can deliver, as it will reduce their profits.  But since any company can access the network and compete, Telstra’s loss in market power will also erode their pricing power.  When a consumer protection mechanism is added, Telstra won’t just be answering to their shareholders’ demands for greater value.  They’ll also answer to the ACCC and the consumers who will pay for and maintain the network.

That may not add up to mega-profits for Big Telecom, but it certainly makes a whole lot of sense to consumers and small businesses who will finally be able to get 21st century broadband at a reasonable price.

Even worse for Digital Society’s friends — AT&T and Verizon — who fund the group through its connection with Arts+Labs, it might provide a blueprint for how America’s broadband future should be built.

[flv]http://www.phillipdampier.com/video/ABC TV National Broadand Network 8-15-10.flv[/flv]

ABC-TV (Australia) debated the merits of competing broadband plans from the incumbent Labor government, which supports a National Broadband Network delivering fiber to the home, versus a cheaper plan from the coalition opposition which promoted a private industry-favored initiative delivering improved broadband only to rural areas.  The Labor government initiative won the day when two rural independent members of Parliament, Rob Oakeshott and Tony Windsor announced they’d support Prime Minister Julia Gillard, giving her the 76 votes required to form a minority Labor government.  Windsor is an enthusiastic supporter of the NBN, telling Sky News “’you do it once, you do it right, you do it with fiber.”  Oakeshott said Labor’s plan to deliver real broadband for the 21st century was a major reason he backed the Labor government.  For the first time ever, fiber optic broadband was the key factor in determining who would govern a country.  (5 minutes)

Attention rural residents in 38 counties in Tennessee with AT&T landlines: Start saving your money because AT&T will come looking for more of it soon enough.

As a result of 2009 legislation heavily promoted by the state’s largest phone company, AT&T has easily managed to pass a “competition test” it helped devise, triggering total deregulation of basic phone rates across the state.

Although some of the legislation’s supporters are celebrating the end of rate oversight by the Tennessee Regulatory Authority (TRA), claims that competition has broken out across Tennessee may be an exaggeration.  Critics contend many residents will face relentless AT&T rate increases, especially for the elderly and those living in rural areas — typically the poorest regions of the state.

AT&T’s competition test only required the presence of a potential competitor to meet the definition of “competition.”  Unfortunately, for many residents in the 38 affected counties, that competing cable or wireless provider often can’t or won’t provide reliable service, either because cable lines bypass rural areas or cell phone service offers poor signals.  That leaves many consumers at the mercy of AT&T, who can now charge whatever they like.

It’s a key flaw many state legislators fail to recognize when accepting the phone company’s argument that deregulation will save consumers money.  Documentary evidence suggests the reverse is true, especially in areas not well covered by cable and wireless competition. Those choosing the most basic levels of service typically face the largest rate hikes as telecommunications companies try to drive customers into multi-service bundles often approaching $200 a month.

For now, the first step is to do away with oversight and AT&T wasted no time pulling out provider maps for the 38 still-regulated counties in the state and found cable and cell phone competitors in all of them.  Despite the fact those services are not available to every resident, AT&T lawyer Joelle Phillips demanded the TRA immediately end rate regulation.

Customer Advocacy Lawyer Mary Leigh White warned the TRA AT&T would follow their track record in other states where rates were deregulated and raise prices up to 50 percent. Phillips told the Authority it didn’t matter — the law AT&T helped write and lobby for was clear:

“When a statute includes one thing specifically and doesn’t refer to other things, that the statute must be read to have done that on purpose,” said Phillips.

With that argument, the TRA capitulated Monday and voted unanimously to end rate oversight.

Consumers in the state who do find major price hikes in their future can blame the deregulation bill’s chief sponsors:

• Sen. Paul Stanley, (R-Collierville) (Resigned last August after caught in an extramarital affair with a 22-year old intern.)
• Sen. Dewayne Bunch, (R-Cleveland)
• Rep. Gerald McCormick, (R-Chattanooga)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WSMV Nashville ATT Deregulated 8-23-10.flv[/flv]

WSMV-TV in Nashville covered the end of AT&T rate oversight and the implications the change will have on Tennessee phone bills.  (2 minutes)

Sen. Ted Stevens death last week in a plane crash has shined a light on increasingly cozy relationships between Alaska’s most powerful politicians and the special interests that court their support.  Winning favor with a politician that can control and direct financial resources from Washington can secure your company millions in taxpayer dollars and legislative favors in America’s most rural state.

When he died, the former Alaskan senator was on his way, as an invited guest, to an isolated lodge owned and maintained for the use of executives at Alaska’s largest broadband provider — GCI.  Time alone in the Alaskan wilderness delivered the ultimate captive audience for those the company sought to influence and Stevens was always a company favorite.

Accompanying Stevens on the doomed flight were GCI’s senior lobbyist Dana Tindall and William D. Phillips Sr., a lawyer, lobbyist and former chief of staff for Mr. Stevens.  Both also perished in the crash.

Even after Stevens was voted out of office after being initially found guilty in a federal corruption trial, special interests like GCI continued to court Stevens, who all-too-willingly mixed business and pleasure — including the ill-fated fishing trip sponsored by the Alaskan telecom company.

Stevens didn’t go quietly out of politics after losing to Democrat Mark Begich in 2008.  The New York Times noted he split his time between Washington and Alaska, providing “consulting” services and worked on resource issues.

His close connections to beltway politics kept him in favor among Alaska’s corporate interests, many of whom had supported Stevens financially and rhetorically for decades.

Tindall’s close relationship to Stevens paid GCI dividends in favors and support — both of which they returned in the form of generous campaign contributions, as the Times reports:

Ms. Tindall, 48, did not work for Mr. Stevens, but several people said they had a strong mutual respect and a warm rapport. She is credited with helping the company she worked for, GCI, grow rapidly in Alaska at the same time that Mr. Stevens was influential in telecommunications issues in Congress. He frequently brought members of the Federal Communications Commission to Alaska and helped steer money toward improving communications in rural areas. Another of his former chiefs of staff, Greg Chapados, is a vice president at GCI.

Tindall

“Senator Stevens was instrumental in helping get a satellite project started so that people in Alaska could watch same-day television and live events,” said Mike Porcaro, a radio personality and advertising executive whose clients include GCI. Mr. Porcaro recalled not being able to watch live network television in Alaska as late as the 1970s. “We went from the 1800s to the 20th century in one day, mostly because of him,” Mr. Porcaro said.

Executives at GCI were generous campaign contributors to Mr. Stevens. Since 1994, Ms. Tindall was the most generous, donating $7,100 to his campaigns, records show. But in 2007 and 2008, as the corruption case surrounded Mr. Stevens, Ms. Tindall and other GCI executives gave less. Ms. Tindall initially gave $1,000 that year, though she later reduced the amount to $400.

Roberta Graham, a public relations executive and a close friend of Ms. Tindall’s, said Ms. Tindall and Mr. Stevens were “kindred spirits,” similarly tenacious and dedicated to their work.

GCI can afford to wine and dine Alaska’s politicians from the rate hikes they will visit on their broadband customers with a proposed Internet Overcharging scheme that will limit customers to how much Internet access they can enjoy.

That abusive pricing is something Senator Stevens would have undoubtedly supported, even if he lacked an understanding of its implications.

The late senator embarrassed himself in 2006 when he sought to defend his friends in the telecommunications industry against Net Neutrality.  At one point, Stevens reduced the Internet down to a “series of tubes.”

But then companies like GCI didn’t contribute generously to his campaign for his broadband knowledge — they just wanted to make sure he was a safe vote in their column.