FCC Protects Job Destroyers, Not Job Creators

Art Brodsky of Public Knowledge makes a compelling case that the Federal Communications Commission is refusing to take actions that will create thousands of jobs. And his estimate is probably low.

Smartly, he doesn't just pin it on the FCC, where the stumbling block appears to be Chairman Genachowski (both Copps and Clyburn already want to help the innovators and true job creators) but also on Congress

To explain:

Once upon a time, the old, old AT&T was the sole supplier of telephones and other equipment to consumers and businesses. The FCC, in a series of market-opening orders, culminating in the 1968 Carterfone ruling, finally freed the non-AT&T world to provide telephone equipment. Through the years, consumers and businesses had many more choices as new companies sprang up to provide home phones, business phones, and business switching equipment for voice and data. Anyone could buy a phone and plug it in. At one telephone equipment show in the mid-1980s, a small California computer company said it was going to enter the telephone business, but only put up an empty booth promising products later. (Whatever happened to those Apple guys and their phones, anyway?)

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One reason is that the FCC over the years succumbed to the Big Telecom campaign to put all the little guys out of business through subterranean means that the public would never see (like charges big phone companies levy to connect to their network). Another is that the FCC gave up the authority over Internet access (broadband), which leads to its current troubles in trying to justify legally how to get an open Internet and will likely lead to future controversies over how to support broadband deployment (universal service).

Right now, it doesn't matter whether Democrats or Republicans appoint FCC Commissioners so long as 3 of the 5 commissioners are more concerned with what benefits a few massive companies rather than the vast majority of businesses and citizens.

FCC Logo

This is exactly why communities are smart to build their own networks -- they have more control and are less damaged by the poor decisions and waffling of the federal bodies charged with making telecom policy.

AT&T, CenturyLink, Comcast, and the other big cable/telephone companies keep consolidating -- killing jobs directly by laying off workers and then killing jobs indirectly by raising the prices they charge for their unreliable services that compare poorly with overseas competitors. But this allows them to invest heavily in lobbyists and legislatures, which is their comparative advantage (certainly not expertise in telecom).

We need an FCC that cares about small businesses and citizens, but more importantly, we must ensure that smart, innovative communities are able to invest in themselves regardless of what decisions the FCC makes.

Small Minnesota Town Sees Savings on County Network

Albert Lea, a town of 18,000 in southern Minnesota, transitioned from getting its Internet access from a private ISP to its County, Freeborn.  This is part of a larger IT collaboration between the local governments.

Previously, the community was paying $95/month for a 3Mbps DSL connection from a local private company (the options from the telephone and cable incumbents were even more expensive, offering less value).  Now Freeborn County is providing a connection of at least 25Mbps for $150/month -- however the connection regularly offers connections over 50Mbps.  

There is an upfront cost of $9,000 to make this switch, which pays off in less than 2 years (local governments often fail to make smart investments that have longer break-even windows because of how they budget for capital vs. ongoing costs).  After it breaks even, Albert Lea says it will save $6,000 a year.

Local governments will need broadband connections as long as they exist, meaning that leasing connections from a private party is often fiscally irresponsible.  Better to own it or work with another community provider that prices its service closer to the cost of actual provisioning rather than marking it up to reflect a scarce market.  

Kutztown Encourages Citizens to Keep Money in Community

When I visited Hometown Utilicom in Kutztown, Pennsylvania, I snapped this photo of a sign they have posted in their office to remind people how supporting the local network helps the local economy.  Not a very good photo, I'm afraid, but it conveys the message.

Hometown Utilicom Marketing

Should FCC Only Fund Competitors to Community Broadband?

I recently joined some other grassroots groups in talking to FCC Commissioner Copps about the ways the FCC could improve access to telecommunications for most Americans -- you know, the mission of the Federal Communications Commission.  This was the day before FCC Chairman Genochowski announced the broad outline of Universal Service Reform.  

Presently, it appears that the FCC will broadly adopt the industry's plan of taking more money from subscribers and spreading it among private companies and coops that are providing services in rural America.  We have called up on the FCC to recognize the important role of community broadband networks and make them eligible recipients of USF funds but the FCC appears to be ready to double down on its past mistakes of relying on absentee-owners who have little incentive to actually provide reliable services at affordable prices.  (Fred Pilot has also called upon the FCC to make this change.)

The result is that communities like rural Sibley County in Minnesota's farm country may build their own next-generation broadband network, only to find the federal government subsidizing a vastly inferior DSL network from a competitor. This is a fiscally irresponsible approach that prioritizes the profits of a few private companies over what is best for the vast majority of private companies and residents in communities that need networks that are actually accountable to them.  

If you care about this issue, you should ask the Rural Broadband Policy Group or Media Actions Grassroots how you can help.  They have been working to break through the beltway bias against solutions that encourage local self-reliance.

The FCC will soon release its USF reform approach and I fear it will do very little to actually help communities while doing a lot to help a few companies continue to receive federal funds while ignoring community needs.  It is long past time the FCC stop entrusting our communications future to absentee landlords and look to community networks ... or at least locally owned private alternatives embodied by WISPs. 

While we prefer networks that are democratically accountable to the communities, local private ownership would be vastly preferable to the waste we see with the present system.

Free Press Media Minutes Covers Longmont Referendum

The weekly 5 minutes netcast "Media Minutes" from Free Press has just featured a short discussion about the Longmont Referendum.

Understanding Fiber-to-the-Home Video For Anyone

Thanks to the Fibre Evolution Blog for alerting us to a slick, short video that explains why FTTH is superior to alternatives when it comes to accessing the Internet. The video was produced the FTTH Council of Europe and is meant for a very general audience.  Enjoy.

Video: 
See video

Listen to the Rural Broadband Hearing in Kentucky

Listen to a great conversation about rural broadband needs from a hearing on October 12 in Kentucky. From the show description:

On October 12 a group gathered at Appalshop to talk about the importance of accessible, affordable high-speed Internet in Appalachian communities. Residents from across the region came to share their concerns and ideas with special guests Jonathan Adelstein, administrator of the Rural Utilities Service in the US Department of Agriculture, and Mark Defalco from the Appalachian Regional Commission. The first broadband hearing to be held in rural America, was co-sponsored by the Center for Rural Strategies, the Center for Media Justice, and Free Press, with the local support of Appalshop, the Partnership of African American Churches, and the Central Appalachia Regional Network. This WMMT Mountain Talk highlights excerpts from the presentations and public comments shared at the event.

Riverside: Municipal Wi-Fi is Alive in California

Riverside, California, an innovative city of 300,000 in the eastern part of Los Angeles has been a broadband pioneer even though it sits in the shadow of tech centers like nearby Santa Barbara.   Riverside’s accomplishment as a city catching up with the information age was evident when it was selected as one of the top 7 Intelligent Communities Award in 2011 by New York-based Intelligent Community Forum.  

“It’s an honor to be selected as one of the top 7 cities in the world.  It comes down to a couple factors, what communities are doing with broadband, but... includes digital inclusion, innovation, knowledge workforce (of folks within your community) and marketing advocacy... We rank very high in all those categories.” - City CIO Steve Reneker [Gigabit Nation Radio]

The cornerstone the city’s SmartRiverside initiative is a free public wireless network which covers 78% of the city’s 86 square miles.  Established in 2007 by AT&T (which also offers DSL services in Riverside), the maximum speed of the network is 768kbps, which at just under 1Mbps is decent enough to surf the web and check emails.  However the road to providing free Internet access and bridging the digital divide wasn’t so easy for Riverside.  

The City issued a RFP in 2006 for a provider to deploy a citywide Wi-Fi network, with the goal of making the Internet accessible to users who can’t afford higher cost plans.  The City met with respondents and a speed of 512kbps or about half a megabit was initially quoted as an entry-level speed that would complement existing services rather than compete against them.  The contract was awarded to AT&T who hired MetroFi to build the network and charge the city a service cost of about $500,000 a year.  MetroFi went bankrupt after completing only 25 square miles and Nokia Siemens took over but only completed up to the present level of coverage. 

In 2007, the wifi network launched and began bridging the digital divide. Through the City’s digital inclusion efforts, not only were modest-income families able to obtain low cost or free PCs but also have means to use them with an Internet connection.  

After AT&T acquired a competitor and created AT&T Wireless Systems (AWS), it informed the city in 2009 that it was going to off-load the network, transferring it back to Riverside at no cost.  AT&T wanted out because it “didn’t sign up enough customers who would pay for premium service.” [Riverside takes over Wi-Fi network] Given that the contract stipulated the network could not be sold or leased to a private owner until after five years of operation, the City of Riverside’s only options were to find a new “sponsor,” pay for it, or shut it down.   MuniWireless followed the events closely and revealed the community’s split between a quality public service they depend on and the willingness to pay for it:

The city council will vote on 16 March 2010 to maintain the network, find a sponsor, or shut it down. Some people in Riverside do not want the city to spend money on the network given the city’s precarious financial state, but others who have been enjoying the free Wi-Fi service, don’t want it taken away from them (see my article about St. Cloud, Florida whose city council ran into stiff opposition from residents over the termination of free Wi-Fi service). People who have been financially crushed and are trying to save money by using the free Wi-Fi service (and canceling their DSL/cable subscriptions) are urging Riverside to keep it up and running. This is exactly the same situation that the St. Cloud city council faces today. [Residents Oppose Closing of St. Cloud's CyberSpot Wi-Fi Network]

Smart Riverside

The Riverside City Council voted to end the AT&T contract and now owns the equipment.  Time Warner is now the service provider and Minnetonka-based US Internet was selected to service and maintain the network.  The new 5 year contract has the city paying $5.48 million, or a little over a million a year to US Internet. [US Internet takes over Riverside citywide Wi-Fi network] [Press Release]

In the future, Riverside hopes to build out the network to near full 100% coverage.  It was rejected in both rounds of NTIA stimulus funds.  In the first round, the city was not rural and did not lack resources to implement broadband.  In the second round, it’s $8 milllion request for a middle mile intranet connection was rejected.  However Riverside will benefit from indirect programs that did receive funds such as the California Emerging Technology Funds [CETF NTIA page] which does digital literacy.  This bolsters the city’s existing digital inclusion and PC refurb programs for low-income families. 

Comcast's Deep Pockets Fund False Claims in Longmont Referendum

We have been closely following the referendum in Longmont, Colorado, that will allow the local government to use an existing fiber loop to sell telecommunications services to the private sector and residents.

Comcast and CenturyLink are opposed because local businesses would have more choices for broadband services -- which would require Comcast and CenturyLink to actually invest in their offerings rather than simply collecting the benefits of a de facto monopoly. It is more profitable for them to invest in astroturf opposition to the referendum than in their physical infrastructure.

When this came up previously, Comcast and its allies spent an unprecedented $245,000 to defeat it by confusing and lying to voters. This time around, big cable may outdo itself. It looks like Comcast and anti-competition allies in the Colorado Cable Telecommunications Association have already spent some $239,000 [pdf] in glossy mailers and phone calls and door knockers to scare Longmont's voters into defeating the 2A ballot initiative.

The Comcast-sponsored Vote No group is called "Look Before We Leap and has already been busted for lying about the Mayor's position on the referendum, claiming he supported their position when he has been emphatically on the record in support of 2A. In fact, his challenger in the Mayoral race also supports 2A, as detailed here in the statements from both candidates on the issue.

Public Persuasion Logo

So who exactly is "Look Before We Leap?" They cannot point to any real local support in the community. The web site is registered to "Melisa Kotecki Schlote" of a PR firm, Public Persuasion that lists both Comcast and the Colorado Cable and Telecommunications Association as clients (with a testimonial from Comcast). But she is out of Denver, not Longmont.

The Vote-No phone calls that direct people to "Look Before We Leap" are filled with lies about the experience of other communities that have built full networks -- which is not even what Longmont is proposing to do. When pressed, the callers have claimed they are "volunteering" their time and refusing to divulge who pays them. A letter to the editor of the Times Call reports on one experience with the calls:

At 5:30 p.m. Sept. 24, I received a call from a listing called FAX GLOBAL 303-648-4835. An older woman began telling me that a yes vote for 2A was a mistake because 80 percent of cities that have done this failed. I asked who was sponsoring this call and she said it was volunteers. I asked who was paying for the equipment and got the runaround. I asked if the call center was in Longmont and she hung up. I dialed back and got a fax tone. The phone is a land line in south metro Denver.

Hard to imagine why anyone is volunteering to call people in another town and lie to them about a referendum.

The letter writer goes on to discuss the absurdity of Comcast's position that a yes vote is a risk for the community:

If I have a building that is paid for (as is the fiber-optic network) and is one-third rented and have the opportunity to rent the empty space and the renter goes bust, I have made money with little expense.

Longmont Seal

The grassroots groups supporting the initiative seem to have spent substantially less -- far less than even 1% of what Comcast is dropping to maintain its monopoly on fast broadband. But they are springing for pizza at a Vote Yes on 2A event next Friday.

We have an event scheduled for Friday, October 21st, from 3:00pm to 8:00pm at Left Hand Brewery in Longmont. We want to encourage the public to stop by and see high-tech displays showing what YES on ballot issue 2A COULD mean to them.

There is also a meeting tonight where the Longmont Tea Party will discuss the referendum. It will be curious to see who they side with -- the distant mega-corporations overcharging them for telecom or the local government that is directly accountable to the voters.

AT&T Takeover of T-Mobile Will Kill Tens of Thousands of Jobs

Harold Feld details "double speak" from Deutsche Telekom in the matter of the AT&T takeover of T-Mobile. They have admitted it will kill jobs and is in no an essential outcome for either company.

Two weeks ago, Deutsche Telekom (DT) Chief Technology Officer Olivier Baujard accidentally spoke truth about T-Mobile to an audience of German investment analysts. After running through the usual company talking points about the effort to sell T-Mobile to AT&T (e.g., it will happen, DoJ is just playing hardball with negotiations, etc.), Baujard said at a public presentation at a Paris broadband conference that: “any rational company had a Plan B and that Deutsche Telekom had other opportunities for its U.S. operations should the U.S. Department of Justice succeed in terminating the deal.”

This is vitally important because, after accidentally shooting the “this is the only way to bring 4G to rural America” argument in the foot by accidentally leaking documents proving AT&T could bring 4G to rural America whenever it wants, and T-Mobile killed the ‘this will create jobs’ argument by confirming that it was preparing pink slips for more than 20,000 employees after the acquisition gets approved, the “T-Mobile is a sickly gazelle” argument is about all AT&T and it supporters have left. Unfortunately for AT&T, this is not the first time Deutsche Telekom has screwed up the “sickly gazelle” storyline by revealing inconvenient truths about its other options. And while there is usually a rule in Washington that “we totally ignore what you say to investors when it contradicts your chosen story,” this deal is sufficiently high profile and has sufficient problems that eventually someone may notice if AT&T’s “Sickly Gazelle Chorus” keeps getting thrown off key by Deutsche Telekom’s “We Have Lots of Other Options Counterpoint.”

Harold offers much more on this job killing merger in his excellent Tales of the Sausage Factory blog.

Coincidentally, the Washington Post ran a front page story about the "fuzzy math" used by big companies in job creation claims.

... A wide array of businesses are saying they can help solve the country’s unemployment crisis if only the government would roll back some regulations, approve their big mergers or lower their taxes.

Yet the industry often touts debatable jobs numbers. Mergers between big companies, for instance, tend to result in layoffs rather than new positions overall.

Small businesses create jobs - big Fortune 500 companies put small businesses out of business. Community broadband networks encourage small businesses to create jobs. Massive cable and telcos strangle local businesses with inflated charges and poor customer service.