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Michigan's Failed Deregulation of Cable After 5 Years

Five years ago, Michigan decided to deregulate cable companies, preempting local authority to negotiate with cable companies in favor of a more relaxed statewide franchise. Many states have gone down this path in hopes of spurring competition and lowering the prices for service. All have seen very minimal gains (mostly from AT&T U-Verse and Verizon FiOS, deployments that have gone forward as well in states that did not preempt local authority). None have seen real decreases in prices.

Michigan also created greater hurdles for the public sector (click on Michigan on our Community Broadband Preemption Map for an explanation of the legislation). In short, Michigan made a big bet that the private sector would build the networks they need to remain competitive. The results are in.

"No matter how you look at it, 70 percent of Michigan's communities still have only one cable provider four years after deregulation," said Deborah Guthrie, President of MI-NATOA, in a statement. "Even in the places where two providers offer service, if serious competition existed, prices wouldn't run up several times faster than inflation and customer service wouldn't be so poor."

Michigan's National Association of Telecommunications Officers and Administrators joined with the Michigan Alliance for Community Media (neither of which seems to have much a web presence) to note that Comcast's prices for lifeline basic have gone up 18% with other services increasing 3x the rate of inflation. Most communities remain stuck with Comcast or Charter solely, two of the most hated corporations in America.

As we educate legislators around the country, we need to keep the lessons from Michigan in mind. Legislators often know very little about telecom issues and are bombarded by lobbyist talking points - but examples like Michigan clearly show what happen when the telco and cableco lobbyists make policy.

And so long as we are discussing Michigan, it is worth noting that the City of Detroit is pushing to have Michigan's statewide franchise law invalidated. Below you'll see the pdf of Detroit's recent motion for summary judgment, offering background for those who are interested.

An Unlevel Playing Field: Wilson Forced to Disclose Network Information to Competitors

I recently heard that the only place one finds a free lunch is in a mouse trap. As we sift through the lessons from the broadband stimulus programs, we have learned that the federal government preferred funding private projects rather than those that are structurally accountable to the community.

Before the first round of stimulus applications were due, many communities recognized the costs of applying were too high for them. Now, some are recognizing the high costs of complying with the many federal rules that come with accepting federal grants and loans (as detailed by Craig Settles).

And now, North Carolina's city of Wilson has found that applying for the broadband stimulus may have disadvantaged its FTTH network. Though the application was not accepted, the city has had to turn over its full application (chock full with proprietary information) to its competitors.

This is yet another example of ways in which the "playing field" is tilted against the public. The Wilson Times explained the situation and settlement.

The application included a proposed expansion of the network to provide reduced-cost or no-cost broadband lines to homes of Wilson County school children, a health network, increased lines for police and other improvements that would enhance the network in the city, Goings said.

When the North Carolina Telecommunications Association (with prominent member Time Warner Cable - incumbent cable provider competing with Wilson's Greenlight) asked to see the full application, the City refused to turn it over -- even after a court ruled against the City. The City argued the application contained key information regarding the policy and utilities that should not be made public for security reasons. When the Department of Homeland Security ignored the City's requests to intervene, the City was compelled to release the documents.

This is a particularly interesting juxtaposition as privately owned telcos and cablecos regularly argue against having to disclose any information about about their networks as a security concern. In this case, they are on record arguing the same information should be in the public domain.

As reported in the Wilson Times article,

"We have known from the very beginning that, if we built a fiber-optic network, it would basically be a situation where we'll constantly be in court with Time Warner," Goings said. "We're not surprised. I think this won't be the last time we have a court case with Time Warner."

I have been told by many community owned network operators that they have to deal with constant requests for information from the private competitors as a form of harassment and a means to get all kinds of data they would never share themselves. I first became aware of this Wilson lawsuit when reading an editorial in the Salisbury Post regarding transparency and the Fibrant network.

This is one of the big challenges a municipal system faces. It has to play by different rules than private enterprise does. While Time Warner can plan expansions in private, Fibrant and the city have to be open to public scrutiny, and competitors are part of the public.

If Federal programs want to create a "level playing field," they must require all applications are equally available to competitors. In the meantime, this is just another example of the ways in which privately owned massive incumbent providers have most of the advantages in offering broadband services.

Update: Our story kicked off greater tech coverage from DSL Reports and Ars Technica.

An Open Internet Means Not Having to Ask Permission

Publication Date: 
October 1, 2010
Author(s): 
Larry Lessig
Publication Title: 
New Republic

In a TNR Review, Larry Lessig uses The Social Network to explain why we must maintain an open Internet. This fits exactly into our recurring theme on MuniNetworks.org that rules and structure matter greatly.

The full review is excellent and worth reading, but this is the key for our purposes (it comes toward the middle of the article):

Instead, what’s important here is that [Founder of Facebook] Zuckerberg’s genius could be embraced by half-a-billion people within six years of its first being launched, without (and here is the critical bit) asking permission of anyone. The real story is not the invention. It is the platform that makes the invention sing. Zuckerberg didn’t invent that platform. He was a hacker (a term of praise) who built for it. And as much as Zuckerberg deserves endless respect from every decent soul for his success, the real hero in this story doesn’t even get a credit.

Too few appreciate why the Internet is so revolutionary. One does not have to ask permission to create and distribute content -- ideas. However, there is a lot of money to be made and power to be had by forcing creators to ask permission -- this is what big companies like Comcast and AT&T want to do. They want more control over the Internet to consolidate their power as intermediaries between content and ideas.

The tragedy—small in the scale of things, no doubt—of this film is that practically everyone watching it will miss this point. Practically everyone walking out will think they understand genius on the Internet. But almost none will have seen the real genius here. And that is tragedy because just at the moment when we celebrate the product of these two wonders—Zuckerberg and the Internet—working together, policymakers are conspiring ferociously with old world powers to remove the conditions for this success. As “network neutrality” gets bargained away—to add insult to injury, by an administration that was elected with the promise to defend it—the opportunities for the Zuckerbergs of tomorrow will shrink. And as they do, we will return more to the world where success depends upon permission. And privilege. And insiders. And where fewer turn their souls to inventing the next great idea.

Prior to an important decision in 1968, one had to ask permission of "Ma Bell" to connect anything to the phone network. Then the FCC, at that time buoyed by a DC Circuit Court that did not automatically reject all regulation, forced the telephone company to allow anyone to attach devices to the network so long as they did not damage the network. A world with fax machines, answering machines, computer modems, and more followed because no one had to secure permission to connect to the network.

If you have a great idea for a television channel, can you get it carried in your community? Almost definitely not -- and the bigger the incumbent cable company, the harder it is. The Internet is different -- but it too could change rapidly when big companies like Comcast and AT&T are writing the rules. In the early days of both radio and television, few would have expected these exciting communications mediums to be ultimately controlled by a few powerful corporations and used almost exclusively for lowest-common-denominator, advertisement-driven, content.

This is exactly why broadband networks must put community needs before private demands. Whether owned by the local government, a nonprofit, or coop, broadband networks must be structurally accountable to the public, not a private company with its own interests.

We must resist changes that would require asking permission to publish content, which means we must maintain the power to write the rules.

For the record, I am much less bullish than Lessig on Facebook because its scale and ambition now also present a threat to the open Internet

Update in Lafayette v. NCTC Legal Battle

LUS has asked the court in Kansas to dismiss a lawsuit against it by NCTC (I previously explained this situation here). Down in Louisiana, a local paper is continuing to cover it and John at Lafayette Pro Fiber has explained the situation as well, with more context about the NCTC.

Once this lawsuit is dismissed, we'll hope for a ruling from the FCC that the NCTC cannot simply discriminate against some municipalities based on the private company incumbents doing business there.

FCC and Network Neutrality - A Quick Take

A quick reaction to the court decision that the FCC cannot currently prevent Comcast from telling subscribers where they can and cannot go on the Internet: This is what happens when private companies own infrastructure.

Comcast owns the pipes so it makes the rules. The FCC, authorized to regulate "all interstate and foreign communication by wire or radio" by Congress, most assuredly is supposed to have the authority to ensure Internet Service Providers cannot arbitrarily block some websites to subscribers. Whether it really has the power or not is determined by courts - and the courts are massively swayed by the arguments of Comcast, related trade associations, and powerful organizations like the US Chamber of Commerce. So long as Comcast and other massive corporations own the infrastructure, they will make the rules. We can attempt to fiddle at the edges by responding via the FCC, or we can build public infrastructure (over which they can provide services without making the rules) and avoid this entire problem.

On this particular issue, though, I found the following bits helpful in understanding the decision and how it changes federal policy.

Cecilia Kang of the Washington Post posted a video interview with Ben Scott of Free Press that is well worth watching to understand what is at stake and what is not. For instance, the FCC is not proposing to regulate the Internet so much as the wires and transmissions that allow the Internet to run. As long as Comcast can decide what bits it wants to transport (as in, it will transport bits from CNN but not Fox News, for instance), the open Internet is at risk. Ben Scott also appeared on the excellent Diane Rehm show that asked Who Controls the Internet?

If you really want to get into the nuts and bolts of what the Court said, you never go wrong by starting with an analysis by Harold Feld, who notes (with more authority than I when yelling back at my radio at misinformed tech reporters) that lots of folks are talking about this decision (including a certain FCC Commissioner) without understanding what the ruling actually said.

The FCC does not require an additional grant of power from Congress to enforce network neutrality, as noted by Public Knowledge:

The real tragedy of today’s ruling is that this entire issue is a self-inflicted wound by the FCC. When it decided not to regulate broadband Internet under Title II (by placing cable broadband into Title I and moving DSL broadband from Title II to Title I), it turned its back on a specific delegation of powers from Congress. There would be no debate about ancillary authority if the FCC were to recognize that broadband Internet is a Title II “telecommunications” service. The FCC has the statutory power it needs if it chooses to use it.

Photo used under Creative Commons license from AdamWillis.