Rep. Rocky Miller (R-Lake Ozark)

A Missouri state representative with a track record of supporting AT&T and other telecommunications companies has introduced a bill that would effectively prohibit community broadband competition in a bid to protect incumbent phone and cable companies.

Rep. Rocky Miller’s (R-Lake Ozark) House Bill 437 would strictly prohibit the construction of public broadband networks in any part of Missouri served by a private provider, regardless of the quality of service available or its cost, without a referendum that includes a mandated question observers consider slanted in favor of existing providers.

HB437 would banish community broadband networks as early as September unless services were already up and running. The bill would effectively stop any public broadband network intending to compete against an existing phone or cable company within the boundaries of a city, town, or village offering any level of broadband service. It would also require communities to schedule a referendum on any project budgeted above $100,000, and includes ballot language that implies public broadband projects would duplicate existing services, even if a private provider offers substantially slower broadband at a considerably higher price. (Emphasis below is ours):

“Shall [Anytown] offer [broadband], despite such service being currently offered within Anytown by x private businesses at an estimated cost of (insert cost estimate) to Anytown over the following five-year period?”

Miller’s proposal would also require voters to approve a specific and detailed “revenue stream” for public broadband projects and if the referendum fails to garner majority support, would prohibit the idea from coming up for a second vote until after two years have passed, allowing cable and phone companies to plan future countermeasures.

The proposed bill also carefully protects existing providers from pressure to upgrade their networks.

Miller’s bill defines “substantially similar” in a way that would treat DSL service as functionally equivalent to gigabit broadband as both could be “used for the same purpose as the good or service it is being compared to, irrespective of how the good or service is delivered.”

In other words, if you can reach Rep. Miller’s campaign website on a CenturyLink 1.5Mbps DSL connection and over a co-op gigabit fiber to the home connection, that means they are functionally equivalent in the eyes of Miller’s bill. Residents voting in a referendum would be asked if it is worthwhile constructing fiber to the home service when CenturyLink is offering substantially similar DSL.

Among the telecom companies that had no trouble connecting to Rep. Miller to hand him campaign contributions: AT&T, CenturyLink, Comcast, and Charter Communications

The Coalition for Local Internet Choice was unhappy to see yet another state bill introduced designed to limit competition and take away the right of local communities to plan their own broadband future.

“The state of Missouri is the latest legislature to attempt to erect barriers to the deployment of broadband networks that are critical to the future of its local economies and the nation, via House Bill 437,” said a statement released by the group. “High-bandwidth communications networks are the electricity of the 21st century and no community should be stymied or hampered in its efforts to deploy new future-proof communications infrastructure for its citizens – either by itself or with willing private partners.”

The group urged the Missouri legislature to reject the bill.

In 2013, Miller hit the ground running in his freshman year to achieve his campaign pledge of “getting the government out of the way of economic development.” In the Missouri state legislature, Miller strongly supported AT&T’s other state legislative priority: deregulation of cell tower placement. Miller traveled around Missouri promoting HB650, an AT&T inspired bill that would strip away local oversight powers of cell sites.

The issue became a hot topic, particularly in rural and scenic areas of Missouri, where local officials complained the bill would allow haphazard placement of cell towers within their communities.

“[The] bill inhibits a city’s ability to regulate cell towers as we have in the past,” Osage Beach city attorney Ed Rucker said. “The process we have in place has worked, and has worked well.”

Had HB650 become law, Osage Beach residents would today be surrounded by six new cell towers around the city, with little say in where they ended up. The bill Miller supported would have also eliminated a requirement that providers repair, replace, or remove damaged or abandoned cell towers, potentially leaving local taxpayers to pick up the tab.

Miller claimed the legislation would allow expansion of wireless broadband across rural Missouri and remove objectionable fees. HB650 would limit municipal fees to $500 for co-locating an antenna on a pre-existing tower and $1,500 for an application to build a new tower. Local communities complained those limits were below their costs to research the impact and placement of cell towers.

“That cost is an inhibitor to broadband,” Miller countered. “It’s beginning to look like the fees are an impediment to the expansion of broadband.”

Miller did not mention AT&T’s interest in cell tower expansion is also connected to its plan to retire rural landline service in favor of its wireless network, saving the company billions while earning billions more in new revenue from selling wireless landline replacement service over its more costly wireless network. The cell tower bill was eventually caught up in a legal dispute after a court ruled the broader bill that included the cell tower deregulation language was unconstitutional on a procedural matter.

Nobody raises phone rates after deregulation like AT&T.

AT&T’s bill to maximize profits and minimize responsibility to its customers is back for consideration in the Illinois state legislature.

The Illinois Telecom Act is up for review in the spring and AT&T’s team of lobbyists are gearing up to advocate killing off AT&T’s legal obligation to provide low-cost, reliable landline service to any resident that wants service. AT&T says the measure is a reasonable response to the ongoing decline in its landline customer base, but rural and fixed-income residents fear the phone company will walk away from areas deemed unprofitable to serve and force customers to expensive wireless phone alternatives.

Areas in central and southern Illinois are served by a variety of rural phone companies including AT&T and Frontier Communications. Northeast Illinois is the home of metropolitan Chicago, where businesses depend on reliable phone service and the urban poor and senior residents depend on predictably affordable basic landline service.

The state still has as least 1.3 million residential landline customers paying rates starting at $3 a month for basic “Lifeline” service in Chicago to $9.50 a month for rural flat rate service with a limited local calling area. Cell service costs several times more than AT&T’s basic landline rates and signal quality is often challenged in rural areas. In large sections of Illinois where AT&T has elected not to bring its U-verse fiber to the neighborhood service, customers with basic voice calling and DSL broadband service could find themselves eventually disconnected and forced to switch to AT&T’s wireless residential service.

AT&T’s Wireless Home Internet plan charges $60/month for 10GB of Internet use, $90/month for 20GB, and $120/month for 30GB. The overlimit fee is $10 per gigabyte. Telephone service is extra.

Customers will need smartphones or hotspot equipment to reach AT&T’s wireless services. Although often discounted or free for those who sign two-year contracts, credit-challenged customers will be required to pay a steep deposit or buy equipment outright.

“Smartphones are wonderful technology but they don’t come cheap and anybody who has traveled across Illinois knows they’re not always reliable,” David Kolata, executive director of Citizens Utility Board, said at a recent news conference. “Traditional home phone service is the most affordable, reliable option for millions of people and we shouldn’t take away that choice.”

The Federal Communications Commission is currently allowing AT&T to experiment with discontinuing landline service in parts of Alabama and Florida. Customers in urban areas are switched to AT&T’s U-verse service, those in rural areas are switched to cell service. Both services are unregulated. If AT&T can sell the Illinois legislature on abandoning its need to serve as a “carrier of last resort,” the company will have the unilateral right to disconnect service, set rates at will, and be under few, if any, customer service obligations.

In states where AT&T won the near-total deregulation it now seeks in Illinois, phone rates quickly soared. In California, AT&T flat rate calling shot up 115% between 2006 and 2013 — from $10.69 to $23 a month. AT&T also raised prices on calling features and other services.

In earlier trials run by Verizon, similar wireless landline replacement devices lacked support for home medical and security alarm monitoring, did not handle faxes or credit card authorizations, and often lacked precision in locating customers calling 911 in an emergency. The equipment also failed during power outages if the customer lacked battery backup equipment.

When Verizon Wireless finally fired up its network in Alaska in September of 2014, the writing was on the wall for at least one of Alaska’s homegrown wireless competitors.

Faced with competing against Verizon’s $115 million, state-of-the-art advanced LTE network that already supports new features like Voice over LTE (far ahead of what many customers in the lower 48 states get) Alaska Communications System Group, Inc., decided it was time to sell.

An ACS and GCI-shared cell tower. (Photo: Rosemarie Alexander)

ACS’ 109,000 wireless customers won’t be going far. The buyer, General Communications, Inc., (GCI) is a co-investor in the Alaska Wireless Network that ACS also relies on to offer wireless service. Besides billing and rate plans, most ACS customers won’t notice much of a change after the $300 million sale is complete during the first quarter of this year. GCI will end up with about 253,000 customers after the transaction is finished, which represents about one-third of the Alaskan wireless marketplace. The sale will mean most Alaskans will have a practical choice of three major wireless carriers — AT&T, Verizon Wireless, and GCI.

ACS, weighed down by debt, wanted out of the wireless business because it has proven expensive to support a network serving a high-cost, low margin state like Alaska, where small communities are often far apart. Serving cities like Fairbanks and Juneau is one thing. Serving hundreds of settlements like Meyers Chuck (pop. 21) or towns like Unalakleet (pop. 688) is another.

Like many traditional rural or independent telephone companies, ACS sees gold in its future focusing on selling lucrative broadband service to residential and business customers, where profit margins often exceed 50 percent. There is plenty of room to grow if ACS invests in network upgrades. ACS currently only has a 20 percent share of Alaska’s broadband market, primarily selling DSL service. GCI, which sells cable broadband, has managed a speed advantage.

Both companies have reassured Wall Street that despite ACS’ renewed focus on broadband, there will be no fierce competition, no price wars, or lower prices for consumers. ACS will devote considerable resources into bolstering its business broadband marketing and has already secured contracts with the state government and a regional health consortium.

Despite the $300 million windfall, ACS plans to turn most of that money towards paying off its debts and possibly reinstating a dividend payout program for shareholders. The company is expected to only spend $35 million to $40 million annually on capital investment projects and executives promise they will only open their wallet for projects that guarantee a high return on that investment. As a result, ACS will likely not spend much on rural broadband expansion.

Broadband Yes

Time Warner Cable is spending taxpayer dollars received from New Yorkers to expand cable service in rural areas of the state, but primarily for the benefit of affluent residents — some that have sought cable and broadband service for their rural estates and vacation homes for years.

An analysis of publicly-available data by the New York Public Utility Law Project (PULP) from an earlier $5.3 million state rural broadband expansion grant paid to Time Warner Cable found that 73 percent of the money was spent extending cable service in zip codes where median incomes are significantly higher than surrounding areas that remain unserved. Time Warner Cable is relying on New York taxpayers to cover about 75% of the construction costs.

PULP’s Gerald Norlander has spent months seeking more information about how Time Warner Cable and its presumptive new owner Comcast collectively plan to address rural broadband issues in the state, but Time Warner Cable has fought to keep most of its plans secret, including projects funded in part by taxpayers.

Broadband No

Norlander’s current research included an analysis of 53 rural expansion projects that were included in the last round of broadband grant awards. He found Time Warner interested in expanding in affluent communities like Grafton in Rensselaer County. The part of the community targeted for expansion has a 10% higher median income than the rest of the county.

In a letter to the state’s Public Service Commission, Norlander argues Time Warner Cable’s desire to keep its rural broadband plans a secret may run contrary to New York’s universal broadband service goal to bring broadband to every customer that wants the service.

Targeting service on more affluent areas can result in higher revenue as wealthy customers are more likely to choose deluxe packages of services and are unlikely to fall behind paying their bills. But such decisions can also become politically untenable when a seasonal resident can access cable service for their six bedroom summer home while middle-income residents with school children up the road cannot.

Time Warner Cable has appealed to the Secretary of the New York Department of Public Service to keep information about taxpayer-subsidized broadband expansion projects in New York a secret.

The case is part of a series of ongoing requests for disclosure of information about the proposed merger of Comcast and Time Warner Cable under New York’s Freedom of Information Law.

Several public interest groups are requesting copies of documents submitted to the state Public Service Commission that the two cable operators have repeatedly asserted should remain confidential. Gerald Norlander from the Public Utility Law Project has been seeking details about how the two companies plan to address New York’s rural broadband dilemma before any decision about the merger is made by state regulators. Norlander requested copies of documents that include details about Time Warner’s taxpayer-subsidized rural broadband expansion under the auspices of Gov. Cuomo’s Connect NY program. Time Warner wants to keep the information confidential, citing competitive concerns.

New York Administrative Law Judge David L. Prestemon ruled earlier this month that while Time Warner could maintain secrecy in the early stages of its proposed expansion efforts, once the company disclosed details about a project in a public filing with state or local officials, confidentiality should be lifted.

Prestemon rejected efforts by Time Warner Cable to maintain confidentiality even after news of one broadband expansion project was reported by Albany-area media outlets. Prestemon added that public regulatory filings submitted by the company as a project commences effectively places information about it in the public domain.

Counsel for Time Warner Cable rejected that assertion, claiming information found in certain regulatory filings or in a newspaper article lacks the granularity sought by Time Warner’s competitors.

“Simply because physical construction begins on a project does not mean that the public or competitors would be aware of who is completing the project, the geographic extent of the project, the number of passings, or the estimated completion date,” argued Maureen O. Helmer and Laura L. Mona in an appeal filed by Time Warner’s legal team at Hiscock & Barclay, LLP. “This information would be difficult and costly for a competitor to compile, such that disclosure would significantly harm Time Warner Cable’s competitive advantage.”

The attorneys revealed Time Warner Cable’s use of subcontractors is already helping shield the company from having expansion projects become public knowledge:

Time Warner Cable typically uses subcontractors to complete the physical construction. Therefore, the vehicles used to construct the build-out are often not Time Warner Cable owned vehicles. While Time Warner Cable generally requires contractors to display signs stating “Contractor for Time Warner Cable,” the existence of construction vehicles on the side of a road would not convey to an average member of the public or a competitor that Time Warner Cable was engaged in construction of new facilities, as opposed to repair, maintenance, or some other activity. In similar fashion, if a Time Warner Cable vehicle was present on the side of a road, it would not mean that a new build-out was being constructed as the vehicle could be performing any number of tasks that would not be known to the public.

Norlander’s group is concerned Comcast intends to combine Time Warner Cable’s systems in New York and could focus entirely on large urban markets while potentially abandoning rural customers to maximize revenue.

This is the third time Time Warner Cable has appealed one of Judge Prestemon’s rulings on this subject.