The Federal Communications Commission’s Net Neutrality rules took full effect Friday, after a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit denied petitions for a temporary stay of the rules made in separate lawsuits by AT&T and other telecom industry opponents.

“This is a huge victory for Internet consumers and innovators!,” FCC Chairman Thomas Wheeler exclaimed in a written statement. “There will be a referee on the field to keep the Internet fast, fair and open. Blocking, throttling, pay-for-priority fast lanes and other efforts to come between consumers and the Internet are now things of the past. The rules also give broadband providers the certainty and economic incentive to build fast and competitive broadband networks.”

The Net Neutrality rules govern both wired and wireless Internet services, and most observers predict the biggest impact will be felt by wireless customers. Wireless providers have experimented with speed throttling, priority access, data caps, and so-called “sponsored data” exempt from usage caps or usage billing. Some of these practices are now illegal under Net Neutrality rules and others are subject to increased scrutiny by the FCC.

Providers generally have not opposed rules blocking online censorship, paid prioritization, and selective speed throttling, but they are vehemently against the FCC’s catch-all “Internet general conduct rule,” that effectively allows the agency to oversee issues like interconnection agreements that connect content producers with each ISP, data caps/usage billing, and issues like zero-rating — providing an exemption from an ISP’s usage allowance for preferred content partners.

Providers argue the FCC could block innovative pricing and usage-based billing they argue customers would like to have.

Other industry groups claim Net Neutrality will lead to a significant decline in investments towards broadband upgrades and expansion. But Charter Communications CEO Thomas Rutledge, now in the middle of a multi-billion dollar merger deal with Time Warner Cable and Bright House Networks, disagreed, noting it will have no effect on Charter’s investment plans for its own cable systems or those it may acquire.

“The big news today is that there is no news,” said Timothy Karr, senior director of strategy for Free Press. “With Net Neutrality protections in place, there are no dramatic changes to the way the Internet works. Internet users are logging onto a network that’s open, as they’ve long expected it to be.”

Walden

When a group advocating broad-based deregulation and less government suddenly takes a laser-focused, almost obsessive interest in a subject like Internet Net Neutrality, it rarely happens for free.

Randolph May’s Free State Foundation claims to be a non-profit, nonpartisan think tank to promote the free market, limited government, and rule of law principles. But in fact it primarily promotes the corporate interests of some of the group’s biggest financial backers, which include the wireless and cable industry.

Rep. Greg Walden (R-Ore.), no stranger to big checks from cable companies himself, was in friendly territory at the group’s annual Telecom Policy Conference, a largely consumer-free affair, where he served as keynote speaker. Walden used the occasion to announce a solution to the Net Neutrality problem — defunding the FCC sufficiently to make sure it can never enforce the policy.

Walden, ignoring four million Americans who submitted comments almost entirely in favor of Net Neutrality, said the idea of the FCC overseeing an open and free Internet represented “regulatory overreach that will hurt consumers.”

Big Telecom Funded

Walden serves as chairman of the House Subcommittee on Communications and Technology. Walden told the audience he will be spending his time in Congress taking a hard look at the FCC, its budget request, and its policies after Net Neutrality became official FCC policy. Walden’s plans to punish the agency include a limit on FCC appropriations, making enforcement of Net Neutrality more difficult, if not impossible. Longer term, he hopes to bleed the agency dry by depriving it of resources to manage its regulatory mandate.

Walden’s third largest contributor is Comcast. He also receives significant financial support from the American Cable Association and Cox Cable. He spoke to a group that depends heavily on contributions from the same telecom industry Walden’s campaign coffer does.

According to tax filings by two cable and wireless lobbying groups, the Free State Foundation has cashed almost a half a million dollars in checks written by the groups in the last five years. The National Cable and Telecommunications Association (NCTA) paid FSF $280,000. The wireless lobby, represented by CTIA-The Wireless Association, managed $213,000 in contributions. These two groups are likely among FSF’s most substantial donors.

In 2012, Free State Foundation reported a total of $797,500 in contributions. After Stop the Cap! and other groups began reporting on the connection between the Free State Foundation’s agenda and its Big Telecom sponsors, the group began hiding its donor list. That earned FSF an “F” for donor transparency by PCWorld.

[flv]http://www.phillipdampier.com/video/Free State Foundation Seventh Annual Telecom Policy Conference March 2015.mp4[/flv]

Rep. Greg Walden (R-Ore.) delivered the keynote address at the 7th Annual Telecom Policy Conference of the Free State Foundation. Despite receiving nearly a half million dollars in contributions from the cable and wireless lobbies, the group did not think to invest in a tripod to keep the camera steady. (38:42)

In a major victory for consumers and public interest groups, the Federal Communications Commission this week will unveil fundamental changes in the oversight of high-speed Internet service, regulating it in the public interest as a public utility.

According to a report in the Wall Street Journal, FCC chairman Thomas Wheeler plans to include robust Net Neutrality protection in the proposal, insisting the agency has a right to oversee providers’ traffic management practices when they impact customers.

Central to the proposal is redefining broadband away from the current, barely regulated “information service” category that has allowed telecom companies to successfully challenge the FCC in court on almost every attempt to oversee broadband Internet service. Wheeler’s plan is expected to reclassify broadband as a “telecommunications service,” which will subject providers to more regulator scrutiny.

The FCC is expected to specifically prohibit providers from blocking, slowing down, or speeding up individual websites in return for financial compensation. The ban on “Internet fast lanes” and “toll booths” will protect Internet startups that would otherwise face an immediate disadvantage from well-heeled competitors that can afford to pay for enhanced access to customers.

But despite claims from Net Neutrality opponents, Wheeler is not expected to impose a one-size-fits-all regulatory regime over broadband. Instead, he prefers to reserve regulatory powers to police individual disputes such as those between Netflix, Comcast, Verizon and other providers which caused traffic slowdowns for consumers in 2014 until paid peering agreements were finalized, compensating ISPs for handling Netflix streaming video content.

Providers fear that reclassifying broadband under Title II rules could subject them to future oversight of practices like usage-based billing, usage caps, speed throttling, broadband pricing and availability. But the Obama Administration is on record opposing price regulation of broadband, and few expect the FCC will adopt a micromanagement approach to broadband oversight.

Wheeler’s proposal is likely to win a majority vote from the three Democratic commissioners. Opposition is a virtual certainty from the Republican minority.

The telecom industry promises whatever rules are adopted will face an immediate challenge in court.

President Barack Obama’s strong commitment to robust Net Neutrality protections for the Internet has created a nightmare scenario for Net Neutrality opponents who can no longer count on an ex-telecom industry lobbyist now in charge at the Federal Communications Commission to take care of their business interests with watered down, damage-controlled, net-protection-in-name-only.

The attacks on President Obama’s convictions began almost immediately after his video was published on whitehouse.gov with Sen. Ted Cruz’s declaration that Net Neutrality was Obamacare for the Internet, a statement that may have played well with his Texas tea party base, but was quickly parodied on social media:

Hal Singer from the ironically named Progressive Policy Institute opined that President Obama’s decision to declare real Net Neutrality would likely lead to the new majority of Republicans to completely defund the agency in retaliation. PPI is strongly opposed to Net Neutrality and many other consumer protection measures and represents the interests of the George W. Bush wing of the Democratic Party, which consists of about six people (and Harold Ford, Jr. probably wishes he was one of them.)

“We are stunned,” Michael Powell, a former FCC chairman who is now president of the National Cable & Telecommunications Association, said in an e-mail to Bloomberg reporters. After six years of supine oversight of giant telecommunications companies from former FCC chairman Julius “Data caps are innovative” Genachowski and the installation of an ex cable and wireless industry lobbyist as chief regulator of the country’s telecommunications industry, AT&T, Verizon and Comcast have faced few challenges to their regulatory wish lists.

The Washington Post “Innovations” editorial page proved once again the Post is now the leading publication neocons and pro-business conservatives keep hidden under their mattresses next to the Wall Street Journal for those private moments. WaPo devoted news space to a hack editorial from Larry Downes, who turned up in Congress earlier this summer to cheerlead the merger of AT&T and DirecTV and has vociferously opposed Net Neutrality since at least 2011.

In his generally fact-challenged piece, Downes proclaims the Obama Administration was seeking nothing less than to saddle the Internet with oppressive outdated regulations written in 1934, that the courts threw out earlier hybrid/compromise Net Neutrality regulations simply because they lacked the words “commercially unreasonable,”  and that implementing Net Neutrality would destroy investment in the world’s leading cable, mobile, and fiber networks.

Downes does not get out much, because other countries as diverse as South Korea, Lithuania, Bulgaria, Japan and Singapore have long since passed the United States, with much of Europe poised to follow their lead. Some of them even enforce Net Neutrality and the sky failed to collapse as a result. Broadband life is good in Bucharest.

Nothing about the Obama Administration’s proposal for Net Neutrality would do anything beyond preserving the Internet as we know and love it and judges told the FCC’s attorneys they had no authority to impose Net Neutrality under the freak flawed framework established by Michael Powell, former FCC chairman-turned cable industry lobbyist.

Downes also laims he is shocked, shocked I tell you to discover the FCC isn’t immune to political pressure from the White House and other Beltway forces. Except he is one of those Beltway forces.

The Post was content disclosing that Downes was simply a co-author of “Big Bang Disruption:  Strategy in the Age of Devastating Innovation” (Portfolio 2014) and the project director at the harmless-sounding Georgetown Center for Business and Public Policy.

If you suspected Downes was just a tad closer to the industry he often advocates for than the newspaper was letting on, you would be right.

In fact, Downes is a “fellow” at the Bell Mason Group, a corporate advisory firm “passionate about partnering with forward-thinking corporate venturing and innovation executives, […] helping clients build risk-reduced, impactful programs and overcome corporate antibodies and obstacles [and deliver] measurable value.”

Net Neutrality is an example of one of those “risky corporate obstacles” to total monopoly control that could deliver Big Telecom companies “measurable value.” Among Downes’ past clients is a tiny phone company named AT&T, but you wouldn’t know it from Bell Mason’s well-scrubbed website. Too bad for them archive.org took a snapshot of an earlier version of his bio, revealing his less-than-arm’s-length relationship with AT&T.

None of this is apparently pertinent to the editors of the Washington Post. Disclosing Downes’ co-authorship of a far-less germane book one critic called a “big bang disappointment” was more than enough.

Bloomberg News avoided the hopelessly unbelievable talking points about Internet takeovers and concluded President Obama threw his FCC chairman under the bus. But even that conclusion originated from the conservative, anti-Net Neutrality group the Heritage Foundation, quoted in the piece:

“He threw Tom Wheeler under the bus,” said James Gattuso, a senior research fellow at the Heritage Foundation, a Washington-based policy group. Obama’s strong stance makes it harder for Wheeler to reach a compromise among proponents of regulation, Gattuso said.

Except proponents of Net Neutrality are tired of compromises that favor ungrateful telecom companies that routinely sue even the most minor consumer protections out of existence. Wheeler was rumored to be proposing yet another compromise as late as last week, one that would protect deep-pocketed content companies but leave consumers open to further abuse from high cost fast lanes and speed throttles.

Various tea party groups ginned up with claims of an imminent Obama socialist takeover of the Internet, Maoist censorship and protectionist rate regulation took to the comment sections of various news pieces and wrote comments like this:

“I don’t want government control that would force private companies not to control what I can see on the Internet.” 

For public policy mavens that claim Net Neutrality is a solution in search of a problem, countering Wall Street’s decisive view that Net Neutrality is a disaster for plans of revenue boosting schemes are harder to counter.

Obama’s intervention effectively kills Wheeler’s mixed plan, Paul de Sa, a senior analyst at Sanford C. Bernstein & Co. in New York, said in a note. It will be hard for the FCC, with a majority of Democrats appointed by Obama, to deviate significantly from his preference, and strong rules are likely, de Sa said.

Obama’s intervention “does not lead to price regulation of broadband,” in part because the FCC has no desire to do so, he said. Debate in Washington will intensify, with Congress holding “interminable hearings” and trying to prohibit the FCC from applying the strong rules, de Sa said.

The meaning to investors was clear: Internet profiteering plans are on indefinite hold. Comcast Corp. fell 63 cents or 1.2 percent, to $52.33 at 10:39 a.m. in New York trading, and are down as much as 5.1 percent this week. Time Warner Cable Inc. dropped $3.34, or 2.5 percent. AT&T Inc. fell 16 cents to $34.97 and Verizon Communications Inc. (VZ) fell 15 cents to $50.57.

A move to fully reclassify broadband, even if it includes “forbearance” from rate regulation, as President Obama suggested, would send investors scurrying, according to Kim Wallace, a policy analyst at Renaissance Macro Research. That is because it would cast doubt on cable and telecom companies’ abilities to generate a “sufficient return” on capital investments, which they expect to be sky high based on the limited amount of competition that exists today.

Craig Moffett, perennial cable stock booster, had the temerity to blame the latest developments on Comcast.

“The great irony is Comcast helped start this ball rolling by trying to buy Time Warner Cable in the first place,” said Moffett, an analyst at MoffettNathanson. “With the specter of possible price regulation hanging in the balance, [the question is] would Comcast still want to increase its exposure to distribution assets” in broadband.

The Wall Street press provides some salve for the chafed telecom industry high-flyer — the likely prospect of litigation tying up Net Neutrality long enough for Republicans to write new telecom laws that would lead to near-total regulatory capitulation and a free hand for providers. But investors sure hate uncertainty, so the Money Party will have to be postponed for now.

We have four illuminating news stories to share today on Net Neutrality:

[flv]http://www.phillipdampier.com/video/PBS Why is Obama weighing in on net neutrality 11-10-14.mp4[/flv]

More than 3 million commenters crashed the Federal Communications Commission website in July to weigh in on the issue of net neutrality. Now President Obama has added his strong support, directing the FCC to protect equal access to all web content. Judy Woodruff speaks with U.S. chief technology officer Megan Smith about the president’s move. (7:33)

[flv]http://www.phillipdampier.com/video/Bloomberg Ex-FCCs Furchtgott-Roth Copps Debate Net Neutrality 11-10-14.flv[/flv]

Former Federal Communications Commission members Harold Furchtgott-Roth and Michael Copps talk about President Barack Obama’s call for the “strongest possible rules” to protect the open Internet and the value of so-called net-neutrality rules. They speak with Cory Johnson on Bloomberg Television’s “Bloomberg West.” (7:00)

[flv]http://www.phillipdampier.com/video/CNN Here is why you should care about net neutrality 11-10-14.flv[/flv]

CNN explores why you should care about Net Neutrality and reminds us in a world of distorted punditry exactly what “Net Neutrality” is. (3:58)

[flv]http://www.phillipdampier.com/video/Fox Business Michael Powell Net Neutrality 11-10-14.flv[/flv]

Fox Business gives former FCC chairman Michael Powell an unchallenged platform to present his views on Net Neutrality. It becomes clear which side Fox is on when they call porn peddler Larry Flynt the quintessential Net Neutrality advocate. (5:08)

Sen. John Thune (R-S.D.) will assume the leadership of the Senate Commerce Committee in January.

The Republican takeover of the U.S. Senate could have profound implications on U.S. telecommunications law as Congress contemplates further deregulation of broadcasting, broadband, and telecom services while curtailing oversight powers at the Federal Communications Commission.

Sen. John Thune (R-S.D.), expected to assume leadership over the Senate Commerce Committee in January, has already signaled interest in revising the 1996 Communications Act, which was built on the premise that deregulation would increase competition in the telecommunications marketplace.

“Our staff has looked at some things we might do in the area of telecommunications reform,” Thune told Capital Journal.” That hasn’t been touched in a long time. A lot has changed. The last time that the telecom sector of the economy was reformed was 1996, and I think in that bill there was one mention of the Internet. So it’s a very different world today.”

Republicans have complained the 1996 Telecom Act is dependent on dividing up services into different regulatory sectors and subjecting them to different regulatory treatment. In the current Net Neutrality debate, for example, a major component of the dispute involves which regulatory sector broadband should be classified under — “an information service” subject to few regulations or oversight or Title 2, a “telecommunications service” that has regulatory protections for consumers who have few choices in service providers.

Republicans have advocated streamlining the rules and eliminating “broad prescriptive rules” that can have “unintended consequences for innovation and investment.” Most analysts read that as a signal Republicans want further deregulation across the telecom industry to remove “uncertainty for innovators.”

Republicans have been particularly hostile towards imposing strong Net Neutrality protections, particularly if it involves reclassification of broadband as a “telecommunications service” under Title 2 of the Communications Act. Most expect Thune and his Republican colleagues will oppose any efforts to enact Net Neutrality policies that open the door for stronger FCC regulatory oversight.

The move to re-examine the Communications Act will result in an enormous stimulation of the economy, if you happen to run a D.C. lobbying firm. Just broaching the subject of revising the nation’s telecommunications laws stimulates political campaign contributions and intensified lobbying efforts. From 1997-2004, telecommunications companies advocating for more deregulation spent more than $44 million in direct soft money and PAC donations — $18 million to Democrats, $27 million to Republicans. During the same period, eight companies and trade groups in the broadcasting, cable and telephone sector collectively spent more than $400 million on lobbying activities alone, according to Common Cause.

Reopening the Telecom Act for revision is expected to generate intense lobbying activity, as Congress contemplates subjects like eliminating or curtailing FCC oversight over broadband, how wireless spectrum is distributed to wireless companies, how many radio and television stations a company can own or control, maintaining or strengthening bans on community broadband networks, oversight of cable television packages, and compensation for broadcast stations vacating frequencies to make room for more cellular networks.

Common Cause notes ordinary citizens had little say over the contents of the ’96 Act and consumer group objections were largely ignored. When the bill was eventually signed into law by President Bill Clinton, its sweeping provisions affected almost every American:

Good times at K Street lobbying firms are ahead

BROADCASTING

1. The 96 Act lifted the limit on how many radio stations one company could own. The cap had been set at 40 stations. It made possible the creation of radio giants like Clear Channel, with more than 1,200 stations, and led to a substantial drop in the number of minority station owners, homogenization of playlists, and less local news. Today, few listeners can tell the difference between radio stations with similar formats, regardless of where they are located.
2. Lifted from 12 the number of local TV stations any one corporation could own, and expanded the limit on audience reach. One company had been allowed to own stations that reached up to a quarter of U.S. TV households. The Act raised that national cap to 35 percent. These changes spurred huge media mergers and greatly increased media concentration. Together, just five companies – Viacom, the parent of CBS, Disney, owner of ABC, FOX-News Corp., Comcast-NBC, and Time Warner now control 75 percent of all prime-time viewing.
3. The Act gave broadcasters, for free, valuable digital TV licenses that could have brought in up to $70 billion to the federal treasury if they had been auctioned off. Broadcasters, who claimed they deserved these free licenses because they serve the public, have largely ignored their public interest obligations, failing to provide substantive local news and public affairs reporting and coverage of congressional, local and state elections. Many television stations have discontinued local news programming altogether or have relied on partnerships with other stations in the same market to produce news programming for them. Most local television stations are now owned by out-of-state conglomerates that control dozens of television stations and now expect to be compensated by viewers watching them on cable or satellite television.
4. The Act reduced broadcasters’ accountability to the public by extending the term of a broadcast license from five to eight years, and made it more difficult for citizens to challenge those license renewals.

TELECOMMUNICATIONS

1. The 1996 Act preserved telephone monopoly control of their networks, allowing them to refuse new entrants who depend on telco infrastructure to sell their services.
2. The Act was designed to promote increased competition but also allowed major telephone companies to refuse to compete outside of their home territories. It also allowed Bell operating companies to buy each other, resulting in just two remaining major operators — AT&T and Verizon.

CABLE

1. The ’96 Act stripped away the ability of local franchising authorities and the FCC to maintain oversight of cable television rates. Immediately after the ’96 Act took effect, rate increases accelerated.
2. The Act permitted the FCC to ease cable-broadcast cross-ownership rules. As cable systems increased the number of channels, the broadcast networks aggressively expanded their ownership of cable networks with the largest audiences. In the past, large cable operators like Time Warner, TCI, Cablevision and Comcast owned most cable networks. Broadcast networks acquired much of their ownership interests. Ninety percent of the top 50 cable stations are owned by the same parent companies that own the broadcast networks, challenging the notion that cable is any real source of competition.

“Those who advocated the Telecommunications Act of 1996 promised more competition and diversity, but the opposite happened,” said Common Cause president Chellie Pingree back in 1995. “Citizens, excluded from the process when the Act was negotiated in Congress, must have a seat at the table as Congress proposes to revisit this law.”

Above all, the legacy of the 1996 Telecom Act was massive consolidation across almost every sector.

Over ten years, the legislation was supposed to save consumers $550 billion, including $333 billion in lower long-distance rates, $32 billion in lower local phone rates, and $78 billion in lower cable bills. But most of those savings never materialized. Indeed, Sen. John McCain (R-Ariz.), who opposed the legislation, noted in 2003: “From January 1996 to the present, the consumer price index has risen 17.4 percent … Cable rates are up 47.2 percent. Local phone rates are up 23.2 percent.”

Advocates of deregulation also promised the Act would create 1.4 million jobs and increase the nation’s Gross Domestic Product by as much as $2 trillion. Both proved wrong. Consolidation meant the loss of at least 500,000 “redundant” jobs between 2001-2003 alone, and companies that became indebted in the frenzy of mergers and acquisitions ended up losing more than $2 trillion in the speculative frenzy, conflicts of interest, and police-free zone of the deregulated telecom marketplace.

The consolidation has also drastically reduced the number of independent voices speaking, writing, and broadcasting to the American people. Today, just a handful of corporations control most radio and TV stations, newspapers, cable systems, movie studios, and concert ticketing and facilities.

The law also stripped away oversight of the broadband industry which faces little competition and has no incentive to push for service-enhancing upgrades, costing America’s leadership in broadband and challenging the digital economy. What few controls the FCC still has are now in the crosshairs of large telecom companies like AT&T, Comcast, and Verizon.

All are lobbying against institutionalized Net Neutrality, oppose community broadband competition, regulated minimum speed standards, and service oversight. AT&T and Verizon are lobbying to dismantle the rural telephone network in favor of their much more lucrative wireless networks.

Consumers Union predicted the outcome of the 1996 Telecom Act back in 2000, when it suggested a duopoly would eventually exist for most Americans, one dedicated primarily to telephone services (AT&T and Verizon Wireless’ mobile networks) and the other to video and broadband (cable). The publisher of Consumers Reports also accurately predicted neither the telephone or the cable company would compete head to head with other telephone or cable companies, and High Speed Internet would be largely controlled by cable networks using a closed, proprietary network not open to competitors.

Analysts suggest a 2015 Telecom Act would largely exist to further cement the status quo by prohibiting federal and state governments from regulating provider conduct and allowing the marketplace a free hand to determine minimum standards governing speeds, network performance, and pricing.

In fact, the most radical idea Thune has tentatively proposed for consideration in a revisit of the Act is his “Local Choice” concept to unbundle broadcast TV channels from all-encompassing cable television packages. His proposal would allow consumers to opt out of subscribing to one or more local broadcast television stations now bundled into cable television packages.