Charter Communications is taking the city of El Centro, Calif., to federal court for interfering in a dispute between Spectrum and a local TV station owner that has resulted in two stations being blacked out on the local cable system for nearly three months.

Northwest Broadcasting, Inc., has been in a contract extension dispute with Charter Communications over multiple stations, including its two El Centro-area affiliates KYMA (NBC) and KWST (CBS). Charter accuses Northwest of gouging, claiming “Northwest demanded an 80 percent increase in carriage fees, more than double the rate Charter pays any other broadcaster anywhere else in the entire country.”

On March 7, 2018, the City of El Centro got involved and cited the cable operator, alleging Charter violated five provisions of Article X of the City Code, and began fining the cable company $100 a day for each violation, assessed each day the dispute continues.

El Centro accuses Charter of:

• Discriminating against subscribers based on specific protected classes;
• Failure to notify the city and subscribers 30 days in advance of any changes to cable service or rates;
• Failure to establish a time frame to respond to service interruptions;
• Failure to refund customers for service interruptions exceeding a stated period;
• Failure to notify the city and subscribers 30 days in advance of any changes to the cable television channel lineup.

El Centro Mayor Sheryl Viegas Walker: “I’m taking it to the streets. I’m so fed up with [Spectrum’s] disregard for this community,” KYMA in El Centro reports. (3:02)

Northwest Broadcasting CEO Brian W. Brady strongly disputes Charter’s claims, dismissing them as “lies,” particularly surrounding the removal of two El Centro stations from Charter’s lineup after the cable company claimed Northwest refused permission to continue carrying the stations while renewal talks continued.

“Charter accepted the first two extensions which were offered to them, however, they refused the third extension and took our stations off with 10 minutes notice,” Brady said.

Charter’s lawsuit argues El Centro officials have no right to intervene in the dispute, force Spectrum to put the stations back on the lineup, or require Charter to issue refunds to customers for channels that are no longer available to them.

“Northwest’s pulling its authorization for Charter to carry its broadcast signals is not a ‘service interruption’ within the meaning of the City Code provisions in question,” Charter argued in its lawsuit. “Even if it were, while El Centro demands that Charter ‘cure’ its alleged violations, the only means for Charter to do so is to finalize a retransmission agreement with Northwest. The City’s citations are thus intended to pressure Charter to accept Northwest’s unreasonable terms by imposing fines and intentionally damaging Charter’s reputation and harming its goodwill and relationships with its existing and prospective customers.”

Charter argued giving refunds to customers over the lost channels was “contrary to Charter’s terms of service, and in so doing improperly interfere [sic] with Charter’s contractual relationship with its customers.”

Charter is relying heavily on California’s statewide video franchise law — the 2006 Digital Infrastructure and Video Competition Act (DIVCA), heavily pushed by telecom lobbyists a decade ago, which stripped most local authority over cable systems and transferred it to the state government. Charter is using DIVCA’s light touch regulations to support its assertion El Centro officials cannot interfere in programming disputes and that their actions during the dispute have only made things worse.

“The effect of the City’s actions has been to harden Northwest’s negotiating position and make a deal on reasonable terms even more difficult,” the complaint says.

“I have never seen a corporate entity act with such disregard for our community,” said El Centro Mayor Sheryl Viegas Walker. “We have a contract with them that spells out certain steps that they’re required to take if those kinds of changes are going to be made. They didn’t do that. We wake up one morning and we’re suddenly without two major channels.”

“Rather than negotiating in good faith like all other parties would do and what the law requires, Charter has taken a ‘take it or leave it’ approach,” added Brady. “In an effort this week to get this back on track, Northwest submitted a new proposal to Spectrum. Spectrum’s representative communicated that they really wanted to get this resolved, but would not counter Northwest’s proposal and would not respond at all in writing. Odd behavior for a company that claims to be negotiating in good faith. It appears that Charter would rather bully a small municipality than to engage in a good faith negotiation.”

It appears other small cities are joining Brady’s cause, complaining to the Federal Communications Commission that Charter was unfairly profiting from station blackouts. In Crescent City, Calif., city officials accused Charter of charging a Broadcast TV surcharge of $7.50-8.85/month, but didn’t change or adjust rates after the Northwest Broadcasting blackout began.

“Despite the fact the fee is itemized and justified as a pass-through, Charter did not eliminate or reduce that fee, even though it was no longer incurring costs associated with carriage of … at least two network affiliates,” Crescent City officials told the FCC.

The two California cities have also been joined by officials in Yuma, Ariz. and Jackson, Wyo., where Charter has removed Northwest Broadcasting stations as well.

“We have learned that it is no different for numerous municipalities which have been forced to sue Charter to collect the fees that are contractually owed to them,” Brady said. “Most disputes are settled because Charter uses their army of lawyers to outspend the municipalities forcing the municipality to settle on Charter’s terms, regardless of their contractual obligations. It’s no different for their customers who have told us that Charter recently raised the broadcast surcharge fee in spite of the fact that the programs they want to watch are unavailable because Charter removed the programming. Many have asked for refunds only to be told no. What is the customer to do, sue Charter?”

Northwest Broadcasting Owned and/or Operated Television Stations

City of license / Market	Station	Channel TV (RF)	Owned since	Affiliation
Yuma, Arizona – El Centro, California	KYMA-DT	11 (11)	2014	NBC
	KSWT	13 (13)	2014	CBS Estrella TV (DT3)
Eureka, California	KJRW	17 (17)	2016	CBS
Pocatello – Idaho Falls, Idaho	KPVI-DT	6 (23)	2016	NBC Decades (DT2) Movies! (DT3)
Greenville – Greenwood, Mississippi	WABG-TV	6 (32)	2016	ABC Fox (DT2)
	WFXW	15 (15)	2016	Silent/Unused
	WNBD-LD	33 (33)	2016	NBC
	WXVT-LD	17 (17)	2017	CBS
Binghamton, New York	WICZ-TV	40 (8)	1997	Fox
	WBPN-LP	10 (40.2)	2000	MyNetworkTV
Syracuse, New York	WSYT	68 (19)	2013	Fox Cozi TV (DT2)
	WNYS-TV	43 (44)	2013	MyNetworkTV GetTV (DT2)
Medford, Oregon	KMVU-DT	26 (26)	1995	Fox MeTV (DT2)
	KMCW-LD	14	2013	Sonlife
	KFBI-LD	48 (48)	2013	MyNetworkTV Telemundo (DT2)
Spokane, Washington	KAYU-TV	28 (28)	1995	Fox Antenna TV (DT2)
Tri-Cities – Yakima, Washington	KFFX-TV	11 (11)	1999	Fox Telemundo (DT2)
	KCYU-LD (Semi-satellite of KFFX-TV)	41 (41)	1995	Fox Telemundo (DT2)

KPVI-TV in Pocatello, Ida. was widely seen in parts of Wyoming over Charter Communications until the station was blacked out in a contract dispute. Now viewers want to see Charter fined. (1:11)

Charter officials claim there was insufficient time to notify subscribers about the loss of Northwest Broadcasting stations from the TV lineup, but Jackson, Wyo., officials noted Charter bought a new domain name reflecting the contract dispute at least two weeks before stations like KPVI were blacked out. (1:02)

Jackson city officials question a Charter representative about refunds for customers paying surcharges for broadcast TV stations no longer on Charter’s lineup. (0:57)

How to File a Petition on this Issue with the Federal Communications Commission:

This petition allows for public comment until April 16, but the FCC requires some special steps for individuals wishing to file comment. Below is a list of the requirements to file a public comment with the FCC regarding Charter Communications:

• Members of the public who wish to comment should do so on or before April 16, 2018.
• Filing should be submitted to the FCC via the electronic comment filing system (ECFS).
  • That system is accessible at https://www.fcc.gov/ecfs/filings.
  • A member of the public should type his or her comments and save them.
  • At the top of the ECFS page, select standard filing and in the “proceedings” box, type 18-91 (the proceeding is MB Docket No. 18-91).
  • Fill out the remainder of the boxes with information that is required (some information is optional).
  • At the end of the form, there is a box where saved comments can be uploaded.
• Comments that contain statements of fact (for example, “Here is what happened to me”) should be supported by an affidavit.
• “Comments or oppositions shall be served on the petitioner and on all persons listed in petitioner’s certificate of service…” The petitioners here are the Cities, and the certificate of service is at the end of the communities’ filing, which can be downloaded from https://www.fcc.gov/ecfs/filing/1032236683943.

Some New Jersey residents and businesses are being notified by insurers they will have to invest in costly upgrades to their monitored fire prevention and security systems or lose insurance discounts because the equipment no longer reliably works over Verizon’s deteriorating landlines in the state.

It’s just one of many side effects of ongoing deregulation of New Jersey’s dominant phone company, Verizon, which has been able to walk away from service and upgrade commitments and oversight during the Christie Administration.

Most of the trouble is emerging in northwest and southeast New Jersey in less-populated communities that have been bypassed for FiOS upgrades or still have to use Verizon’s copper wire network for security, fire, or medical monitoring systems. As Verizon continues to slash spending on the upkeep of its legacy infrastructure, customers still relying on landlines are finding service is gradually degrading.

“The saving grace is that so many customers have dropped Verizon landlines, there are plenty of spare cables they can use to keep service up and running when a line serving our home fails,” said Leo Hancock, a Verizon landline customer for more than 50 years. “I need a landline for medical monitoring and besides cell phone service is pretty poor here.”

Hancock’s neighbor recently lost a discount on his homeowner’s insurance because his alarm system could no longer be monitored by the security company due to a poor quality landline Verizon still has not fixed. He spent several hundred dollars on a new wireless system instead.

Kelly Conklin, a founding member of the N.J. Main Street Alliance said he is required by his insurer and local fire department to have traditional landline service for his business’ sprinkler system, which automatically notifies the fire department if a fire starts when the business is closed. He has also noticed Verizon’s landlines are deteriorating, but he’s also concerned about Verizon’s prices, which the company will be free to set on its own five years from now, after an agreement with the state expires.

“The deal allows Verizon to raise basic landline phone rates 36 percent over the next five years and it allows them to raise business line rates over 20 percent over the next five years,” said Seth Hahn, a CWA staff representative. Beyond that, the sky is the limit.

Most of New Jersey wouldn’t mind the loss of traditional landlines so much if they had something better to replace them. Thanks to the state’s relatively small size, at least 2.2 million residents do. Verizon has managed to complete wiring its fiber to the home service FiOS to 358 towns in the state. Verizon hoped fiber optics, although initially expensive to install, would be infinitely more reliable and easily upgradable, unlike its aging copper-wire predecessor. Unfortunately, there are 494 towns in New Jersey, meaning 136 communities are either stuck using Verizon DSL or dial-up if they don’t or can’t receive service from Comcast.

So how did so many towns get left behind in the fiber revolution? Most of the blame is equally divided between Verizon and politicians and regulators in Trenton.

Verizon did not want to approach nearly 500 communities to secure franchise agreements from each of them, dismissed by then Verizon CEO Ivan Seidenberg as a “Mickey Mouse procedure.” Verizon wanted to cut a deal with New Jersey to create a statewide video franchise law allowing it to offer video service anywhere it wanted in the state.

A November 2005 compromise provided a way forward. In return for a statewide video franchise that stripped local authority over Verizon’s operations, Verizon would commit to aggressively building out its FiOS network to every home in the state where Verizon offered landline telephone service.

The entire state was to be wired by 2010. It wasn’t. Two events are responsible: The arrival of Gov. Chris Christie in 2010 and the retirement of Mr. Seidenberg the following summer.

Christie’s appointments to the Board of Public Utilities, which used to hold Verizon’s feet to the fire as the state’s telecommunications regulator, instead put the fire out.

“They were Christie’s cronies,” charged several unions representing Verizon employees in the state.

The then incoming president of the BPU was Dianne Solomon, wife of close Christie associate Lee Solomon. The BPU is a technocrat’s paradise with hearings and board documents filled with highly technical jargon and service quality reports. Solomon brought her only experience, as an official with the United States Tennis Association, to the table. Administration critics immediately accused the governor of using the BPU as a political patronage parking lot. When he was done making appointments, three of the four commissioners on the BPU were all politically connected to the governor and many were accused of lacking telecommunications expertise.

When communities bypassed by FiOS complained Verizon was not honoring its commitment, the governor and his allies at the BPU proposed letting Verizon off the hook. Instead of demanding Verizon finish the job it started, state authorities decided the company had done enough. So had Verizon’s then-incoming CEO Lowell McAdam, who has since shown almost no interest in any further expansion of fiber optics.

But the working-class residents of Laurel Springs, Somerdale, and Lindenwold are interested. But they have the misfortune of living in more income-challenged parts of Camden County. So while Cherry Hill, Camden itself, and Haddonfield have FiOS, many bypassed residents cannot even get DSL from Verizon.

The Inquirer recently offered readers a glimpse into the life of the FiOS-less — the digitally redlined — where the introduction of call waiting and three-way calling was the last significant telecommunications breakthrough from Verizon.

“All Verizon offers here is dial-up,” Dawn Amadio, the municipal clerk in Laurel Springs, said of the Internet service, expressing the frustration of many residents and local officials. “That’s why everybody has Comcast. What does Verizon want us to do? Live in the Dark Ages?”

Or move to a more populated or affluent area where Verizon’s Return on Investment requirements are met.

The state government could have followed Philadelphia, which demanded every city neighborhood be wired as part of its franchise agreement with Verizon in 2009. So far, Verizon is on track to meet that commitment with no complaints by next February.

Further out in the eastern Pennsylvania suburbs, Verizon got franchise agreements with the towns it really wanted to serve — largely affluent with residents packed relatively close to each other. Verizon signed 200 franchise agreements in Bucks, Delaware, Montgomery, and Chester Counties in Pennsylvania. It managed this without a statewide video franchise agreement. But at least 34 towns in those counties were left behind.

A deal between Verizon and Trenton officials was supposed to avoid any broadband backwaters emerging in New Jersey.

But state officials also allowed a requirement that mandated Verizon not skip any of 70 towns it sought guarantees would be upgraded for FiOS, mostly a mix of county seats, poor neighborhoods, and urban areas in the northern part of the state. Verizon could wire anywhere else at its discretion. Trenton politicians never thought that would be an issue because FiOS would sell itself and Verizon could not possibly ignore consumer demand for fiber optic upgrades.

But Verizon easily could after its current CEO found even bigger profits could be made from its prestigious wireless division. McAdam has shifted the bulk of Verizon’s spending out of its wireline and fiber optic networks straight into high profit Verizon Wireless. If he can manage it, he’d like to shift New Jersey’s rural customers to that wireless network as well, with wireless home phone replacements and wireless broadband. Only state oversight and regulatory agencies stand in the way of McAdam’s vision, and in New Jersey regulators have chosen to sit on the sidelines and watch.

That is very bad news for 99 New Jersey towns where FiOS is available to fewer than 60 percent of residents (Gloucester Township, Mount Laurel, Deptford, Pennsauken, and Voorhees, among others.)

Another 135 New Jersey towns, including a group of Delaware River municipalities along Route 130 in Burlington County and most of the Jersey Shore, have no FiOS at all. Other than in the county seats, Verizon has not extended FiOS to any other towns in Ocean, Atlantic and Cape May Counties, reports the newspaper.

Verizon never promised New Jersey 100% fiber, comes the response from Verizon spokesman Lee Gierczynski. Instead of future expansion, Verizon will step up its efforts to get customers away from the cable company in areas where Verizon offers FiOS service. The company says it spent $4 billion on FiOS in New Jersey and it is time to earn a return on that investment.

But local communities have already discovered Verizon earning fringe benefits by not offering fiber optic service.

In Laurel Springs, customers have largely fled Verizon for Comcast, which is usually the only provider of broadband in the area. A package including broadband and phone service costs less than paying Verizon for a landline and Comcast for Internet access, so Verizon landline disconnects in the town are way up.

Mayor Thomas Barbera discovered that once Verizon serves fewer than 51% of phone customers in town, it can claim it is no longer competitive and devalue its infrastructure and assets to virtually zero and walk away from any business property tax obligations.

“Once they skip,” Barbera told the Inquirer, “we don’t get [Verizon’s] best product, and then they say we can’t compete and we don’t owe you our taxes. It’s good to be king.”

Correction: With our thanks to Verizon’s manager of media relations Lee Gierczynski for setting the record straight, we regrettably reported information that turned out to be in error. The amended Cable Act that brought statewide video franchising to New Jersey never required Verizon to build out its FiOS network to every home in New Jersey where it offered landline telephone service. Instead, the agreement required Verizon to fully build its fiber network to 70 so-called “must-build” municipalities. 

Gierczynski also offers the following rebuttal to other points raised in our piece:

No one is disputing the fact that Verizon is spending less on its wireline networks.  The spending is aligned with the number of wireline customers Verizon serves, which has declined by more than 50 percent over the last decade.  The implication that this decreased investment is leading to a deterioration of the copper network is what is wrong. Over the last several years, Verizon New Jersey has spent more than $5 million just on proactive copper maintenance initiatives that have led to significant decreases in service complaints. The BPU’s standard for measuring acceptable service quality is the monthly customer trouble report rate – which is the best overall indicator of network reliability.  The BPU’s standard is 2.3 troubles per 100 access lines.  Over the last several years, Verizon’s performance across the state has consistently been below that standard, even in places in northwest and southeast New Jersey primarily served by copper infrastructure.  The 2014 trouble rate for southeastern New Jersey towns like Hopewell (0.3 troubles per 100 lines) and Upper Deerfield (0.34 per 100 lines) are well below the BPU’s standard.

Verizon is on track to meet its build obligations in those municipalities by the end of this year as statutorily obligated to do (not 2010 as you wrote) and also has deployed its network to all or parts of 288 other communities across New Jersey.   Today Verizon offers its video service to more customers than any other single wireline provider in the state.

 

Los Angeles cable subscribers are paying $30-50 a year in extra franchise fees the city government has no idea what to do with, allowing a bank account dedicated to housing the unspent funds to reach $35 million and counting. For more news related to the city of Los Angles, feel free to take a peek at sites such as Los Angeleno.

A new audit by the Office of the City Controller found no misappropriation or ethical lapses by the city government, but it did criticize the lack of long-term planning regarding how franchise revenue should be used, as well as lax auditing of expenses that were paid from the fund. Los Angeles City Controller Ron Galperin added the city’s lack of consistent auditing of the five major cable operators servicing greater Los Angeles may be allowing cable operators to charge customers franchise fees the companies are keeping for themselves. A 2006 law passed at the behest of Verizon and AT&T allowing statewide video franchise agreements in California isn’t helping either.

For decades, communities have been able to demand up to a 5% franchise fee from cable and phone companies offering video services in their areas in return for access to public rights-of-way and other public property. Most cities, including Los Angeles, have requested the maximum allowed – 5% of the provider’s gross annual revenue earned within the city. Cable operators retaliated by recouping the franchise fee by billing cable customers for it on a separate line on monthly cable bills.

In Los Angeles, 60% of all franchise fees ($31 million) paid are transferred to the city’s all-purpose General Fund, used for all types of city expenses. The remaining 40 percent ($12.4 million) is supposed to be earmarked for a Telecommunications Fund, but the city often raids that account as well. Time Warner Cable subscribers account for 85% of Los Angeles’ cable franchise revenue, AT&T U-verse contributes another 10% with other operators paying considerably less. Last year, Charter Cable wrote a check for less than $5,000, primarily because only a tiny part of the city of Los Angeles is served by Charter today.

So where is the excess money still in the account coming from?

The Unintended Consequences of Statewide Video Franchising

Eight years ago, Governor Arnold Schwarzenegger signed AB 2987:  the “Digital Infrastructure and Video Competition Act of 2006” (DIVCA). In reality, DIVCA was just another statewide video franchise bill heavily pushed by the state’s dominant phone companies — AT&T and Verizon — to let them begin offering video services without having to sign franchise agreements with thousands of local governments across the state.

AT&T and Verizon sold the legislation to the public as a red-tape cutter to bring Verizon FiOS and AT&T U-verse to millions of Californians without unnecessary bureaucratic delay.

But lobbyists from both phone companies, as well as several cable companies, were successful in inserting their own amendments into the law that undercut their arguments for passing the legislation:

• As local franchise agreements expired, companies took their franchise renewal business direct to the state, cutting off local oversight. Communities could no longer require operators to expand into rural areas or impose fines for sub-standard service;
• Cable companies won the right to toss Public, Educational, and Government Access (PEG) channels out of their buildings. Many communities assigned responsibility for housing and operating PEG channels as part of their franchise agreement. DIVCA rendered those agreements void and unenforceable;
• Cable companies no longer had to offer institutional broadband networks for free or at a discount to local governments, schools and libraries, and many existing networks were closed down as soon as the local franchise agreement expired and communities balked at the new prices charged by telecom companies.

But perhaps the most controversial amendment was language that gets AT&T and Verizon out of meeting obligations to build out their fiber networks where they choose not to built them, while still compelling smaller independent telephone companies to offer service to every customer within their telephone service area within a reasonable amount of time.

So instead of promoting a rush towards video competition, both AT&T and Verizon won concessions that let them cherry pick — on their own schedule — customers for AT&T U-verse and Verizon FiOS:

• Verizon is in compliance with DIVCA as long as 25% of the households where service is available are low-income and within 5 years, Verizon increases that to at least 40%;
• AT&T stays out of trouble with DIVCA by providing video service to 35% of low-income households where service is available. Within five years, AT&T must reach at least 50%.

One of the biggest victims of DIVCA are PEG channels which lost the sponsorship of the cable companies that used to underwrite them as part of their franchise agreements. American Community Television reported in California, Illinois and Indiana, where statewide video franchising laws were passed, cable operators that operated PEG channels closed the doors, sometimes with only 30 days notice. Even in states where PEG funding remained, channels have been exiled to Channel Siberia (eg. Channel 1,512) or are under constant threat of losing their channel if they don’t meet an operator’s arbitrary quality of programming criteria.

Time Warner Cable has moved PEG channels to digital service in a majority of their service areas, requiring many customers to have an added-cost cable box to watch.

To help Californian PEG services cope, a state law permitted cities to collect an extra 1% of gross revenue from cable operators to keep funding these channels. But if a city already collects a full 5% franchise fee, any money collected from PEG channels must only be spent on their operations — no raiding of funds allowed. If the local government thinks there are bigger priorities than supporting public, educational, and government access, the future of PEG channels is questionable.

How to Spend the Untouchable Proceeds

With Los Angeles-area cable companies collecting and sending on the proceeds of the 1% PEG surcharge to city coffers, the money has been more or less just piling up over the last seven years, unspent.

As of the end of June last year, the city had squirreled away about $22 million collected from cable TV customers stashed in a non interest-bearing account. PEG operations across the United States are not known for being profligate spenders, relying on budgets that would be insufficient to keep the lights on at a typical local public television station. So some question whether Los Angeles’ Public Access, Educational Access, and Government Access networks need $22 million to continue operations.

The city has decided the Government Access channel — the one that airs council meetings and other political functions — does need a new home.  So the city is spending $20 million to completely renovate one of the oldest buildings in Los Angeles, the long-vacant three-story Merced Theater near Olvera Street.

When complete, the state-of-the-art digital facilities of Cityview Channel 35 may rival those of some commercial television stations in Los Angeles. The building will house a small performance venue on the first floor, a studio with space for a 70-person live audience, and plenty of office space on the third floor. What it evidently won’t have room for is the Public Access and Educational Access channels that make up the rest of the PEG trio. The new facility is for the exclusive use of Channel 35.

Local residents are happy someone is finally doing something with the theater, which has been empty and unused for at least 30 years. The project could also make Los Angeles’ Government Access channel one of the most capable in the country, producing high quality programming well beyond the ubiquitous city council meetings.

“Space for a live audience of about 70 people will allow us to engage the public with debates, town halls and other events that we weren’t able to do,” Mark Wolf, executive officer at the city Information Technology Agency, which oversees Channel 35, told Downtown News. “The venue also gives us a full upgrade to digital technology, as we’ve been operating in an analog environment.”

Downtown News partly misled its readers when it suggested cable providers are footing the bill for the renovated home of Channel 35. Although money from the city’s general fund won’t be used for the project, the money did originate from cable subscribers who have paid higher cable bills since 2007 because the city elected to collect a 1% PEG franchise fee.

Even after spending $20 million on the Merced Theater, the money from Time Warner Cable, Cox, AT&T, Verizon, and Charter cable TV subscribers will keep rolling in. The audit found that by the time the new Merced Theater facility opens in 2016, the city will again have between $21-25 million in unspent PEG funds.

Galperin thinks throwing more money at traditional PEG operations would be a mistake, particularly when younger audiences are not even subscribing to cable television.

“We’re in a new era,” Galperin said. “The old rules that envisioned everybody getting their programming from cable are changing before our very eyes. We are in a totally different era in terms of how people get their information, so much of viewership is on the Internet now, not necessarily on cable.”

Because PEG funds can only be spent on PEG operations, as a starting point, funds could be spent to build up what is now an anemic, barely functioning website for Channel 35. Although the channel does stream online, it is intermittent in our experience. Channel 35 might also partner with local public broadcasting and minority-interest channels in co-production ventures. It should also develop a robust on-demand library of its content for site visitors because that is increasingly how Americans choose to watch television.

Galperin suggested other uses including a public Wi-Fi network and city Internet sites for programming and other information, but these may stray outside of the boundaries of what is permissible under current California and federal law.

Of course, there is one other alternative – rescind the PEG fee altogether until there is a legitimate need to collect the money from already overburdened cable subscribers.

[flv]http://www.phillipdampier.com/video/Surviving DIVCA.mp4[/flv]

Silicon Valley Community Television aired this lengthy conference last fall for the benefit of local governments across California still trying to make sense of the 2006 Digital Infrastructure and Video Competition Act, a provider-influenced piece of legislation that has tied the hands of most communities to manage their local telecommunications infrastructure for the good of their citizens. (2 hours, 47 minutes)

 

Since 1991, Verizon telephone customers in New Jersey have paid at least $15 billion in surcharges for a promised high-speed broadband network that would reach every home in the state by 2010. But now critics charge Verizon diverted much of that money to shareholder dividend payouts and building infrastructure for its highly profitable wireless network, leaving almost half the state with slow speed DSL or no broadband at all.

In the early 1990s, Verizon’s predecessor — Bell Atlantic — launched “Opportunity New Jersey,” a plan promising the state it would have the first 100% fiber telecommunications network in the country. In return, the company enjoyed more than two decades of generous tax breaks and collected various surcharges from customers to finance network construction. But a review of Verizon’s promises vs. reality suggest the company has reneged on the deal it signed with the state back when Bill Clinton was beginning his first term as president.

Verizon promised at least 75 percent of New Jersey would have a fiber service by 1996 offering 384 television channels and 45/45Mbps broadband service for $40 a month. The network would be open to competitors and be deployed without regard to income or its potential customer base.

The state suspected trouble as far back as 1997, when the Division of the Ratepayer Advocate with the New Jersey Board of Regulatory Commissioners blasted the company’s progress five years into the project:

Bell Atlantic-New Jersey (BA-NJ) has over-earned, underspent and inequitably deployed advanced telecommunications technology to business customers, while largely neglecting schools and libraries, low-income and residential ratepayers and consumers in Urban Enterprise Zones as well as urban and rural areas.

By 2006, New Jersey was being introduced to FiOS, which some believed was part of Verizon’s commitment to the state. But a decade after Verizon’s target dates, customers were still waiting for FiOS video service, the maximum broadband speeds offered at that point were 30/5Mbps and the cost of the package ranged from $180-200 a month. Most of Verizon’s FiOS deployments were in the northern half of the state, leaving southern New Jersey with few, if any service improvements.

Despite Verizon’s repeated failures to meet its target dates, that same year New Jersey made life even easier for the phone company by passing a statewide video franchise law allowing Verizon to bypass negotiating with each town and city regarding its video services and instead run FiOS TV as it pleases anywhere in the state. The company argued a statewide video franchise would allow for more rapid deployment of Verizon’s fiber network. In reality, the company was falling further and further behind. By 2013, when Verizon sought renewal of its statewide franchise, Verizon only offered FiOS TV to 352 of the 526 communities hoping for service. At least 174 communities still waiting for FiOS are likely never going to get the fiber service, despite paying Verizon’s surcharges for more than 20 years. Verizon suspended its FiOS expansion project more than two years ago.

Bait and Switch Broadband

Despite early commitments of providing New Jersey with advanced fiber broadband speeds unheard of elsewhere in the country in the 1990s, Verizon changed its tune when it became clear the company wanted to prioritize investment in its more lucrative wireless network. Instead of a commitment of 45/45Mbps, providing basic DSL broadband at any speed was now seen as adequate. Verizon spokesman Lee Gierczynski told both Newsweek and the Inquirer the company never promised a statewide deployment of FiOS.

“Nobody knew what FiOS was 20 years ago,” Gierczynski said. “It wasn’t until 2004 when FiOS came on the scene.”

Forget about that commitment for 45/45Mbps speed as well.

“It didn’t say a minimum of 45mbps,” Gierczynski said, “it just says ‘up to’.”

That means DSL service will be a part of southern New Jersey for the near future. Customers unimpressed with the 5Mbps DSL service they get from Verizon can always pay substantially more for access to Verizon Wireless’ usage capped LTE 4G network that Gierczynski believes can be used to download movies.

In effect, ratepayers that wrote checks to pay artificially higher phone bills to help subsidize a promised 100% fiber optic future have instead funneled working capital to Verizon Wireless’ network expansion and helped enrich shareholders with generous dividend payouts.

Opportunity New Jersey Verizon: Christie Administration Proposes Letting Verizon Off the Hook Permanently

Most victims of costly bait and switch schemes get angry and demand justice. In New Jersey, the Christie Administration believes Verizon is the victim of unreasonable expectations and has proposed a sweetheart deal to both let the company off the hook and keep the surcharges it collected from New Jersey ratepayers for the last 21 years.

While the rest of the country clamors for better broadband, Governor Christie’s State Commission, his Attorney General’s Office and the state Consumer Rate Counsel believe that basic DSL is good enough, and making life difficult for Verizon by insisting it live up to its part of a mutual agreement just isn’t very nice.

All eyes were on incoming president of the Board of Public Utilities Dianne Solomon, wife of close Christie associate Lee Solomon. The BPU has direct authority over Verizon’s compliance with its promises to the state. But Dianne’s only apparent experience is as an official with the United States Tennis Association. Critics immediately pounced on the odd nomination, accusing the governor of using the BPU as a lucrative parking lot for political patronage. Three of the four current commissioners are all politically connected and their experience navigating telecommunications law is questionable.

Instead of demanding that Verizon be held to its commitment to the state, government officials are bending over backwards to let Verizon walk away from its promises forever.

A stipulation proposal would allow the company to shred its commitment to upgrade New Jersey with fiber optics. Instead, Verizon gets permission to discontinue service if you have any other option for service — including cable or wireless. Not only would this stipulation eliminate any hope bypassed communities have to eventually get Verizon FiOS, it would also let Verizon scrap its rural landline network and kill DSL, forcing customers to its lucrative wireless broadband product instead.

The agreement also eliminates any commitment Verizon had to deliver fiber-fast speeds. Instead, Verizon will be considered in good standing if it matches the slowest speed on offer from Verizon DSL.

“Broadband is defined as delivering any technology including Verizon’s 4G wireless, fiber, copper or cable, data transmission service at speeds no less than the minimum speed of Verizon New Jersey’s Digital Subscriber line (DSL) that is provided by Verizon New Jersey today.”

New Jersey customers can file comments about the proposed agreement until March 24, 2014 with the Board of Public Utilities.

We have found a good sample letter you should edit to make your own. You can e-mail the secretary directly and/or send your message to the general e-mail address: [email protected] (be sure to include “Verizon New Jersey, Docket No. TO12020155” on the Subject line):

New Jersey Board of Public Utilities
Kristi Izzo, Secretary
44 South Clinton Avenue, 9th Floor
P.O. Box 350 Trenton, NJ 08625-0350

Email: [email protected]

Re: In the Matter of Verizon New Jersey, Inc. Docket# TO 12020155

Dear Secretary Izzo:

I want to alert you to an urgent matter pending before the New Jersey Board of Public Utilities. Pursuant to a 1993 law called Opportunity New Jersey, Verizon NJ was obligated to upgrade New Jersey’s “copper wire” network by 2010. To fund the Opportunity New Jersey expansion, Verizon NJ was permitted to collect excess charges from their customers and received lucrative tax breaks from the State. These charges and tax breaks began in the 1990s and are still being collected today.

Verizon failed to meet its timeframe requirements under the Opportunity New Jersey agreement to New Jersey residents. As a result of Verizon’s failures, on March 12, 2012, the New Jersey Board of Public Utilities initiated a legal action against Verizon NJ. The Board and Verizon NJ have now entered into a proposed settlement agreement which I believe is inadequate and not in the best interests of myself and other New Jersey residents who have paid for this service that was not fully delivered.

I oppose the Board’s proposed settlement agreement and demand that The Board of Public Utilities hold Verizon to the original Opportunity New Jersey agreement which requires Verizon to expand broadband services to every customer in the State. The proposed settlement has the potential of costing myself and other residents even more money than I have already paid for the last 21 years. The Board of Public Utilities should not allow Verizon to flagrantly disregard the stipulations which are the framework for the charges and tax breaks that Verizon has enjoyed for 21 years.

I am asking the Board of Public Utilities to be my advocate and investigate where our dollars were spent and to require Verizon to give me what I was originally promised under Opportunity New Jersey agreement of 1993.

Sincerely,

[Your Name, Address, Phone Number]

Milwaukee’s Public, Educational, and Government (PEG) channels will soon be off Time Warner Cable’s analog basic cable lineup with little recourse for city officials upset about the channel losses.

Time Warner Cable is notifying analog cable subscribers in several Wisconsin cities about an upcoming digital conversion that will cut an average of a dozen channels from the analog lineup this fall. In Wisconsin, Time Warner is targeting several well-known cable networks like The Weather Channel and CNBC for the digital switch, as well as Ion TV over the air affiliates and several independent/religious broadcast stations.

The loss of PEG channels without any discussion with local officials has some Wisconsin community leaders upset, fearing significant viewing losses. Communities across Wisconsin lost their right to compel the carriage of the public interest channels after a 2007 deregulation bill essentially written by AT&T became law.

“It has been brought to our attention that a number of channels in the local Time Warner Cable ‘basic’ package will be shifted to the digital tier next month, meaning that most Milwaukeeans without a newer model television will need to obtain a digital to analog converter box in order to continue to view the entire basic cable package. We are both frustrated and perturbed by this news,” said Milwaukee Council members Jim Bohl, Robert Bauman, and Tony Zielinski. “Let’s not minimize who it is that will be most impacted by this move on Time Warner’s part either — people with older model televisions who only subscribe to a basic cable package. In short, this cut in service will have a disproportionate effect on residents within the city of Milwaukee.”

Time Warner Cable spokesman Michael Hogan made it clear the transition is something subscribers will have to get used to, because Time Warner is gradually moving all of its cable systems to digital only service.

“We are moving towards a higher-quality, digital-only experience by making channels that had been available in both analog and digital formats available in a digital format only,” said Hogan. “Delivering channels digitally frees up capacity in our network to deliver faster Internet speeds, more HD channels and On Demand choices, and other new services in the future. We began the process several years ago of moving towards a digital-only experience. All of our direct video competitors – including direct broadcast satellite providers and phone companies – already take advantage of the efficiencies of digital delivery and deliver all of their programming solely in digital format.”

The Sordid History of “Video Competition” in Wisconsin

The race to digital service to keep up with satellite providers and AT&T U-verse is not exactly the type of competition Wisconsin residents thought they would get from the passage of a 2007 statewide video franchise law advocated by AT&T.

According to the Center for Media and Democracy, the Wisconsin law is modeled on the American Legislative Exchange Council’s “Cable and Video Competition Act,” a model bill ghostwritten by AT&T for use in statehouses around the country. AT&T provided more funding for ALEC’s activities in Wisconsin from 2008-2012 ($55,735) than any other corporation. Supporters of the legislation promised it would lead to more competition, better customer service and lower cable rates.

Instead, it leaves Wisconsin communities with no recourse when cable operators decide to digitize or encrypt cable channels that city officials believe should be widely available to the public. Provisions in the law no longer permit local communities to have any say in a provider’s channel lineup, placement, or technology used to deliver the service.

Milwaukee Alderman Jim Bohl called the channel conversion a Time Warner bait-and-switch maneuver that will cut off residents’ access to city government. As for those promises of lower cable rates, Bohl rolled his eyes.

“I can only tell you it’s gotten worse,” Bohl told the Milwaukee Express. “This change would not have been looked at real happily by the council. I don’t think they ever would have done that if they were still accountable for their franchise agreement with the city of Milwaukee.”

Time Warner Cable subscribers without converter boxes who directly attach coaxial cable to the back of older television sets will be affected by the switch and will need to pay extra for a standard set-top box on each affected television in the home (roughly $7 a month each), or take advantage of a temporary offer from the cable company to supply a small digital to analog converter box that will be available for free for one year. After that, the smaller converter boxes will cost $0.99 a month each with no purchase option.

Without the boxes, Time Warner Cable subscribers will find themselves increasingly out of luck as the company gradually eliminates analog channels from the lineup.

Being AT&T’s Best Friend Can Be Rewarding

Supporters of AT&T’s video competition bill have been luckier than most Wisconsin cable subscribers.

Former Republican state Rep. Phil Montgomery, lead sponsor and claimed author of the 2007 video competition bill, was well compensated with a sudden $2,250 campaign contribution from AT&T the year the bill was introduced. Another $1,500 arrived from AT&T executives and one of their spouses in Texas and $1,500 from a senior AT&T executive in Wisconsin.

Before AT&T’s bill was written, the company barely knew Montgomery existed, donating a total of only $300 to his campaigns from 1998-2005.

After the bill became law, Montgomery spent his remaining years in the Wisconsin Assembly building a solid record avidly supporting AT&T’s public policy maneuvers, including a measure to deregulate basic phone rates and end oversight of telephone service quality by the state’s Public Service Commission.

Despite revelations Montgomery served as an ALEC board member and received contributions amounting to $10,800 from telecom companies, in 2011 Gov. Scott Walker appointed him to chair the PSC — very same agency Montgomery worked for years to disempower.

“He was very friendly to industry when he was a legislator, and was seen as carrying water for the telecommunications industry and the utilities,” said Mike McCabe, executive director of the Democracy Campaign. “Consumer advocates would naturally have concerns about somebody who seemed so supportive of industry now being in a position of overseeing those industries.”

Sen. Jeff Plale Takes Marching Orders from AT&T, His Chief of Staff’s Rap Sheet, a Freezer Full of Steaks and a Country Club for Cronies

AT&T’s biggest ally in the Wisconsin Senate was Jeff Plale, one of only a handful of Democrats — all pro-business conservatives — belonging to ALEC.

The patience of his district was tested after Plale began openly advocating for his corporate donors and claimed he could not understand why questions about his integrity were being raised by his opponents. Plale, after introducing AT&T’s companion video franchising bill in the Senate expressed he was shocked, shocked to discover he received more campaign contributions from AT&T and the cable industry than any other legislative Democrat. He added he did not know why AT&T’s Political Action Committee had suddenly maxed out on its campaign contribution two years before the next election.

Plale’s close working relationship with AT&T evolved inside of his office.

In 2003, Plale hired Katy Venskus, a charged felon, to raise funds for his election campaign. Despite pleading no contest to siphoning off more than $12,000 from an abortion rights organization and being caught up in a scandal over illegal campaign work for another Democrat, Venskus was appointed Plale’s chief of staff and would quickly become the point person for AT&T’s video competition bill in Plale’s office, working closely with AT&T to adjust the bill’s language to the company’s liking and help coordinate its movement through the Senate.

The successful passage of the bill would prove personally lucrative to Venskus when she left Plale’s office to join lobbying firm Public Affairs Co., of Minneapolis just one month after AT&T’s bill was signed into law. One year later, she took on AT&T as a lobbying client.

In 2009, Plale and AT&T closely collaborated to write another deregulation measure to be introduced in the Wisconsin legislature, this time deregulating phone rates, making provision of landline service optional, and gutting service oversight. By then, AT&T Wisconsin considered Venskus an on-contract lobbyist.

The irony of a felon serving as the chief of staff for a Wisconsin state senator or as a registered lobbyist was not lost on the Milwaukee Express’ Lisa Kaiser.

“Despite being a felon, Venskus can affect public policy at the highest levels as a registered lobbyist,” observed Kaiser. “Yet she couldn’t be licensed to become a day care provider.”

According to e-mails and draft copies of the telephone deregulation bill obtained from the Legislative Reference Bureau and interviews conducted by The Capital Times, a number of meetings —  “too numerous to count,” according to Plale’s chief of staff, Summer Shannon-Bradley — occurred with AT&T lawyers and executives and several other key industry stakeholders to work on the bill.

One important meeting in November 2009 included this attendance list: Andrew Petersen, director of external affairs and communications with telephone company TDS; William Esbeck, executive director of the Wisconsin State Telecommunications Association (WSTA) – a telecom industry lobbying group; that group’s attorney, Judd Genda; and AT&T attorney David Chorzempa.

E-mails and other correspondence between those at the meeting and Plale’s staff show slashes or check marks next to sections of the proposal that attorneys for AT&T and the WSTA suggested should be changed.

“It’s like lawmakers looked around and said, ‘These are the companies affected. So sit down with the drafters and make a bill,’ ” Barry Orton, a UW-Madison telecommunications professor told the Times. “The public interest isn’t represented. How could it be? Nobody was there to represent them.”

Life got tougher for Ms. Venskus a few months later when she was charged with felony theft and felony identity theft on suspicion of making $11,451 in improper purchases with her Public Affairs credit card, including a freezer full of steaks, according to the criminal complaint filed in Dane County court. She repaid the charges, but her contract to work for AT&T’s interests was suspended.

That September, Plale wore out his welcome in the 7th District serving southern Milwaukee and lost to primary challenger Chris Larson, who contended Plale was far too conservative and cozy with AT&T for his district.

Plale would land on his feet when, after siding with Republicans on a lame duck session vote to stick it to the state’s unions, he joined the administration of Republican Gov. Scott Walker as the administrator of the Division of State Facilities — a $90,000 a year job.

“Instead of seeking out the best and brightest, this governor is busy creating a country club for cronies,” Marty Beil, executive director of the Wisconsin State Employees Union, told the Wisconsin State Journal. “When he says ‘open for business’ and then appoints people like Plale, he’s obviously saying that he doesn’t draw the line at the world’s oldest profession.”