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New Year, Same Lame Cable and DSL Monopolies

It's a new year, but most of us are still stuck with the same old DSL and cable monopolies. Though many communities have built their own networks to create competition and numerous other benefits, nearly half of the 50 states have enacted legislation to make it harder for communities to build their own networks.

Fortunately, this practice has increasingly come under scrutiny. Unfortunately, we expect to see massive cable and telephone corporations use their unrivaled lobbying power to pass more laws in 2012 like the North Carolina law pushed by Time Warner Cable to essentially stop new community broadband networks.

The FCC's National Broadband Plan calls for all local governments to be free of state barriers (created by big cable and phone companies trying to limit competition). Recommendation 8.19: Congress should make clear that Tribal, state, regional and local governments can build broadband networks.

But modern day railroad barons like Time Warner Cable, AT&T, etc., have a stranglehold on a Congress that depends on their campaign contributions and a national capital built on the lobbying largesse of dominant industries that want to throttle any threats to their businesses. (Hat tip to the Rootstrikers that are trying to fix that mess.)

We occasionally put together a list of notable achievements of these few companies that dominate access to the Internet across the United States. The last one is available here.

FCC Logo

As you read this, remember that the FCC's National Broadband Plan largely places the future of Internet access in the hands of these corporations. On the few occasions the FCC tries to defend the public from their schemes to rip-off broadband subscribers, Republicans (joined by a number of Democrats) threaten to overrule what is supposed to be an independent agency to defend the corporations that just happen to be donors to their campaigns.

Back when most assumed AT&T would be able to push its horribly anti-competitive takeover with T-Mobile through an impotent federal government, a few stories exposed the tip of the iceberg of AT&T's astroturf efforts, as with this report from the Center for Public Integrity:

“It is important that we, as Christians, never stop working on behalf of the underserved and forgotten,” the Rev. R. Henry Martin, director of the clinic, wrote to FCC Chairman Julius Genachowski in June. “It might seem like an out-of-place endorsement, but I am writing today in order to convey our support for the AT&T/T-Mobile merger.”

...

Not included in Martin’s letter to the FCC was the fact that his organization had received a $50,000 donation from AT&T just five months earlier. Indeed the Shreveport-Bossier Mission is one of at least two-dozen charities that were recipients of AT&T’s largesse and have written in support of the T-Mobile buyout, which will cut the number of national wireless companies from four to three.

When AT&T's wasn't able to buy enough influence with legitimate groups willing to sell out the interests of their members (who would pay more for their communications in a less competitive environment), it would simply create its own groups to push its interests:

AT&T Logo

Tallahassee Mayor John Marks brought an Atlanta nonprofit to the city as a partner in a $1.6-million federal-grant project, saying it would put high-speed Internet into the hands of poor people.

What he didn't say, and now says he didn't know, was that the Alliance for Digital Equality (ADE), in its first three years of existence, was nearly 100-percent funded by AT&T and spent most of its money — four of every five dollars — to pay board members, consultants, lawyers and media companies to push the global communication giant's positions on Internet and wireless regulation. Nor did Marks disclose, initially, that ADE had paid him $86,000 over several years as a member of its board of advisers.

We continue to see these massive companies abuse their market power to increase their prices, knowing that their lobbying arms will continue pushing legislation to stop communities from building their own networks.
Time Warner Cable hiked its rates in North Carolina immediately after passing its legislation to stop communities from building networks. Mediacom raised its prices while it attempts to sabotage efforts in rural Minnesota to build networks in unserved areas. And invented new fees to rip off its subscribers while trying to disrupt a rural fiber-to-the-farm initiative that slightly overlapped some territory in which they have long refused to invest.

Even as profits on cable broadband services approach Exxon proportions, Time Warner Cable has pushed for usage-based pricing to further overcharge subscribers, but mostly to strangle enormously popular competitors like Netflix. CenturyLink is not far behind, with usage caps prioritizing its own video content over competitors.

Verizon Wireless tried to sneak a new fee past subscribers by announcing it just before Christmas but backed down after outraged consumers reacted. One has to wonder whether it would have backed down in a world where AT&T took over T-Mobile, resulting in 3 out of 4 wireless customers being with Verizon Wireless and AT&T. Four competitors isn't the robust competition envisioned by Adam Smith, but it still beats the duopoly dynamic that results from even less competition.

Verizon Logo

Speaking of less competition, the recent deal between Verizon and cable companies is troubling. We already knew that FiOS was all but dead, but this deal truly puts a fork in it:

I'll assume that neither cable operators or Verizon are going to let us see the deal fine print to confirm the Times guess, but the logic fits Verizon's strategy. Verizon already cherry picked the most valuable FTTH upgrade markets, and has shown total disinterest in further upgrades. This deal allows them to save money on FTTH upgrade costs, instead soaking up remaining customers with LTE -- which we noted was the plan some time ago. This deal is very bad news to the rural telcos without the cash for large-scale upgrades (CenturyLink, Frontier, Fairpoint, two of which Verizon sold aging DSL networks to), and for satellite broadband providers.

The future of next-generation networks is now only community networks, cooperatives, and some small private networks.

We've long argued that phone and cable companies have systematically overstated their coverage in mapping efforts as part of their effort to blunt any sensible public policy that would result in all Americans having a choice between fast, affordable, and reliable connections to the Internet. The New England disaster called FairPoint is back in the news for overstating the number of subscribers that have access to DSL. The company has not met the requirements it agreed to when purchasing Verizon's lines a few years ago.

Comcast Logo

And in the continuing saga of Comcast's growing domination over the information people can access, Bloomberg TV is fighting Comcast's practice of discriminating against channels in which it has no ownership stake. Comcast has long strongly encouraged those who want to put television channels on its lineup to give Comcast a piece of the action, not unlike a mobster encouraging a small business to pay protection money. It wants to continue expanding its role as a gatekeeper to the Internet, particularly in the many areas where people have no real choice from other high speed providers.

And perhaps the best example of why we should not trust these massive corporations to run essential infrastructure is the revelation that AT&T defunded 9-11 call centers in Tennessee to gain a market advantage over competitors, a practice they were previously caught doing, leading to settlements out of court.

These corporations are not evil, they are following a sensible mandate to maximize their shareholder value. It is our government that is not sensible -- entrusting them with the future of Internet access without even bothering to enact the most basic regulations. Communities must continue to wise up and ensure they have the access they need to modern communications -- access that reponds to their needs, not those of distant shareholders.

Longmont Astroturf Opposition Gone in Puff of Smoke

Any hint that the Comcast-funded effort in Longmont to oppose authorizing the City to provide broadband services was anything but an astroturf campaign of lies has evaporated in the wake of its overwhelming defeat.

If there had been a shred of local legitimacy among the "Look Before We Leap" group that was run by Denver-based strategists, it probably would have kept its website up for longer than a few days after the election. If I were them, I would want to keep a record for the future.

But they don't. Because they were just a bunch of paid public relations people working a job. They didn't oppose Longmont's initiative, they didn't know anything about it. They were collecting a paycheck. And this is what they left behind:

Look Before We Leap, disappeared

The Times-Call has a hopeful reflection about the broadband battle (somewhat classier than the hilarious Neener Neener Neener poke at Comcast).

This time, lobbyists for the telecommunications industry spent even more than they did last time -- about $300,000 -- in trying to convince residents that the city having control over its own property was somehow "risky." Obviously, the lobbyists, including the euphemistically monikered Americans for Prosperity, were only concerned about the welfare of Longmont residents and the health of the local economy. They spent so much money to show just how concerned they were.

But the majority of the voters weren't buying what they were selling. People had the audacity to think for themselves and make up their own minds.

Personally, I would thank the anti-2A folks for pouring so much money into the local economy, except most of its spending was elsewhere. They did pop for a few ads in this newspaper, though, so for that they have my gratitude.

The author, Tony Kindelspire, goes on to note just how amazing it was to see everyone unified on an issue.

seal-longmont-co.jpg

Many people who you would typically expect to find defending corporate rights above all else, and criticizing the inefficiency of government, were quite vocal in support of 2A.

As they should have been. Ask a local businessperson how Longmont having its own electric utility is working out for them. We have some of the cheapest rates in the country.

It takes leadership to stand up against big business lobbyists to act on behalf of what you think is right, not what's going to raise you the most amount of campaign cash the next time around. How very, very refreshing it was to see, and I hope it's a lesson that spreads far and wide.

I hate quoting so liberally from an article, but I want to make sure these important words are remembered. I hope the City takes seriously its responsibility to continue involving the public in important decisions about the digital future as it moves forward with the freedom to invest in infrastructure that every community should have regardless of how much money incumbent lobbyists pour into legislatures around the nation.

And I cannot help but remind my readers that this referendum would have failed by Minnesota standards, which requires a 65% supermajority. That is an incredibly tough ask when a major player like Comcast can get 40% of the population to vote for its position by spending a mere $300,000 while having zero support in the community.

Border to Border Broadband in Minnesota

Minnesota's Governor Dayton has already done more for expanding broadband access in Minnesota than predecessor Pawlenty who took the "stay quiet and hope for the best" approach to expanding access in our state.

After being prodded by the legislature (including now-Lieutenant Governor Prettner-Solon) Governor Pawlenty appointed an industry-heavy "Ultra High Speed" Broadband Task Force that exceeded the expectations of many, including myself, with its report [pdf]. I give a lot of credit to a few members, especially "Mikey" and Chairman Rick King of Thomsen Reuters, for that report given the constraints of the environment in which it existed.

Minnesota's Legislature and Governor Pawlenty then created some goals for 2015 and generally ceased any work on ensuring Minnesota could meet the goals. However, some departments (like the Department of Commerce) are using that language to prod broadband providers to consider what steps they can take to get us closer. Despite my frustration, I want to recognize those who are doing all they can to expand access to this essential infrastructure.

Fast forward to this week, when Governor Dayton announced a new Task Force that is supposed to really do things (as opposed to the more common Task Force approach of creating the appearance of doing things).

I am heartened by many of the appointees. There are some terrific people, especially some terrific women who are too often under-represented in technology) that will work very hard to bring real broadband to the Minnesotans that either need their first option or a better option.

And they have their work cut out for them. The state has few options to compel investment from a private sector that sees little reason to invest in an industry with so little competition (St Paul has one high-speed provider: Comcast, and one slower, cheaper alternative - CenturyLink).

For instance, rural Kanabec County took the Ultra High Speed Task Force's recommendation and asked its incumbent to partner in providing better broadband. That went over about the same as every other community that has sought a partnership with a big out-of-state incumbent provider. At least CenturyLink did respond, not all incumbent providers have the grace to do so:

Kanabec County Logo

“After receiving your letter I requested that my management team report back to me on the costs associated with your request for a minimum 10 MB speed to every home and business within the county. For proprietary reasons I’m unable to share with you the estimated costs of meeting this goal in Kanabec County.”

The letter continued, “However, I can tell you that it represents many millions of dollars at a significant cost per household or business passed that under current business models do not generate a return on the investment.”

The Task Force will hear strong voices from within and without its members calling on it to reduce government barriers to private sector investment, whether by gutting local authority over rights-of-way or other means. I encourage it to tell the state to first, get out of the way of communities that want to build their own networks.

Any community that has the willingness to invest in itself should have that right. There is no reason for the state to prefer that massive out-of-state companies with poor track records in Minnesota build networks rather than the communities themselves. The community has a much greater incentive to invest today and tomorrow in modern technologies. Whereas private companies are looking for handouts to serve places like Sibley County, Sibley County is just looking for the state to get out of the way.

Requiring a 65% referendum for a community to build its own network is ludicrous -- and it is Minnesota law. We are the only state in the nation with a supermajority requirement for a community to build essential infrastructure. I just wrote about Longmont, where their massively successful referendum campaign got 60% of the vote -- a loser in Minnesota. Despite absolutely no support from any local leaders, Comcast was able to get 40% support by simply outspending the grassroots community broadband movement $300,000 to $5,000.

Removing this barrier to local authority for community broadband will not bring border to border broadband -- many communities simply do not want to take on the responsibility of building a next-generation networks -- but it will certainly bring us closer, and it will bring much better networks to those communities that are willing to step up and invest in themselves.

Photo by Jackanapes, used under creative commons license.

Atlantic Cities: How the Telecom Lobby is Killing Muni Broadband

Publication Date: 
November 2, 2011
Author(s): 
Emily Badger
Publication Title: 
The Atlantic

An excellent article drawing wide lessons from the referendum battle in Longmont between the community and Comcast.

The city of Longmont, Colo., built its own 17-mile, million dollar fiber-optic loop in the mid-1990s. The infrastructure was paid for by the local city-owned electric utility, though it offered promise for bringing broadband to local businesses, government offices and residents, too.

For years, though, the network has been sitting largely unused. In 2005, Colorado passed a state law preventing local governments from essentially building and operating their own telecommunications infrastructure.

Behind the law was, not surprisingly, the telecom lobby, which has approached the threat of municipal broadband all across the country with deep suspicion and even deeper pockets. Companies like Comcast understandably want to protect their corner on the market from competition with city-run non-profits. What’s less understandable is the route their interests have taken: Residents and state legislators from Colorado to North Carolina have been voting away the rights of cities to build their own broadband, with their own money, for the benefit of their own communities.

Cable Monopoly Result of Private Sector, not Public

A common misconception is that local governments award exclusive (or monopolistic) franchises to cable companies and that is why the US has so little cable competition.  However, no local government has done this since the 1996 Telecommunications Act 1992 Cable Act made the practice illegal.

But even before the '96 Telecom Act '92 Cable Act, local governments tended to award non-exclusive contracts to cable companies because they wanted more competition, not less -- as illustrated in this article about Cox preparing to renew its franchise agreement with New Orleans.

Federal laws and Federal Communications Commission decisions also have sharply curtailed the city's negotiating ability.

Even if other companies were seeking permission to provide cable to local customers, said William Aaron, a legal adviser to the council on telecommunications issues, council members could not arbitrarily refuse to renew the Cox franchise. The council could do that only on the basis of certain limited criteria, such as that the company has not lived up to the terms of the 1995 agreement.

Cox has had a nonexclusive franchise to operate in Orleans Parish since 1981, meaning that other companies also can apply to provide cable services, though none has done so. The franchise was renewed in 1995.

For years, state and federal policies have limited local authority to require just compensation for access to the valuable right-of-way because the cable and telephone companies pretended that they would invest more and create competition if local authority were preempted.

Local authority has been significantly preempted in many communities without any real increase in competition or lowering of prices. No surprise there - another victory for companies better at lobbying than providing essential services.

Comcast v. Community in Colorado

Below, you'll find a commentary I just posted on the Huffington Post.

Longmont, Colorado has become ground zero for the battle over the future of access to the Internet. Because big cable and telephone companies have stopped us from having a real choice in Internet Service Providers and failed to invest in adequate networks, a number of communities have built their own networks.

Chattanooga boasts the nation's best citywide broadband network, offering the fastest speeds available in the nation -- and the community owns it. That means much more of the money spent by subscribers stays in town, supporting local jobs.

Longmont, a town near Boulder with 80,000 people, offers a glimpse at how difficult it can be for communities to make any level of broadband investment -- the big cable and phone companies hate any potential competition, no matter how limited.

Longmont's elected officials all agree they need better broadband options to spur economic development. That's why they put a referendum on the ballot that will allow the city to use its existing assets to improve local broadband access. Not only are the mayor and city council unanimous in support of the referendum (2A) necessary for this, their opponents in the city election overwhelmingly agree also! And the local paper just editorialized in favor of it as well.

Who then, is spending hundreds of thousands of dollars to derail it? Comcast and its allies, of course. And this isn't the first time.

Back in the 1990s, the municipality-owned electric utility built a fiber ring to modernize its electrical grid. They took the opportunity to lay more fiber-optic cables than they would need, knowing that they could later be used by the city or partners to expand broadband access for all businesses and resident.

Over several years, the City worked with a variety of partners to spur broadband deployment locally but a new state law in 2005 gutted their ability to work with private partners to expand broadband. Qwest had just pushed what become known as the "Qwest law" through the Colorado legislature. Starting in 2004, telephone and cable companies used their clout in legislatures across the nation to prevent communities from investing in broadband infrastructure. Now Longmont would have to pass a referendum to allow local businesses and resident to use a network the town built years earlier.

In 2009, Longmont attempted to pass the referendum but Comcast and allies dumped over $245,000 into a "Vote No" campaign that spread fear and misinformation far and wide, resulting in 56% of the voters saying no. They set a record in local campaign spending, dwarfing previous amounts from all sides in any Longmont election.

But after the election, when many learned they had been fooled by anti-competition propaganda, they wanted to revisit the issue. On November 1, they have their chance. But again, Comcast and allies are pouring millions into a campaign of misinformation. Their group has already been busted for erroneously claiming the mayor is against the initiative when he has been unequivocally in favor of it. With two weeks to go before election day, they have already surpassed their previous records by spending $275,000 while the pro-2A groups have yet to expend even $5,000. The true grassroots groups are making do with a website and volunteers countering Comcast's misinformation.

Longmont Comcast Comic

The question is whether big companies like Comcast can again fool more then 50% of the voters with their glossy mailers and robo-calls. This is the real problem -- the debates have shown that the opposition to this measure comes almost entirely from outside the community. But Comcast's ability to flood the papers, airwaves, phones, and mailboxes with market-tested anti-government messages is unrivaled. The big cable and phone companies use the same tactics across the U.S., protecting their high prices and poor services from the only real threat of competition they face -- local community investment.

The most recent mailer threatens that a broadband project would raise taxes, an outright lie given that the referendum text starts, "Without increasing taxes, shall the citizens of the City of Longmont..." But the anti-2A groups care about preserving Comcast's market power, not being truthful.

Longmont could join the growing movement of communities that invest in their own broadband networks to ensure fast, affordable, and reliable connections creating local jobs and offering local benefits.

While big citywide networks like Chattanooga's Gig Network have captured plenty of attention, hundreds of communities have made smaller investments -- like the ring Longmont build 14 years ago. Often without even borrowing money, local governments are expanding fiber-optic rings and connections to encourage economic development, create jobs, and lower the cost of providing city services.

This could be the future of access to the Internet -- local initiatives benefiting local stakeholders, putting the needs of the community before the desires of distant shareholders. Longmont makes its decision on November 1. When will your community make yours?

Congrats to Comcast: Least Trusted Company Twice Over

Comcast has once again distinguished itself as an extraordinary company - not only do Americans trust it less than any other company on the list, it occupies the two bottom positions.  Big shocker that communities want better local service with their own networks.  

Accoding to the 2011 Temkin Trust Ratings, which looks at the level of trust that consumers have in 143 large U.S. companies in a total of 12 industries, only eight companies earned "very strong" ratings while 26 earned "very weak" ratings.

Comcast was the worst. But it is in the company we would expect - Time Warner Cable and Charter are close to the bottom also.

Astroturf Org in Longmont Accuses City of Distributing Propaganda

Just one day after getting busted for lying about its supporters, a group funded by self-interested groups outside the community is accusing the City of distributing propaganda regarding an upcoming referendum over whether the City should have the authority to use an existing fiber-loop to spur economic development.

We developed a comic that explored the ways cable and phone companies use dirty tricks to fool people into voting against more competition in broadband (such as this "Look Before We Leap" Vote no group).

As if to prove our point for us, that group was busted for outrageously claiming the Mayor wanted people to vote no when the Mayor has been explicit in not just supporting the referendum but in condemning outsider groups like theirs from coming into the community to do the dirty work of anti-competitive incumbents.

Bryan Baum has appeared at several forums in support of 2A, including a Longmont Area Chamber of Commerce forum in which he urged out-of-town opponents of the ballot question to "get out of town" and let Longmont settle its own issues.

The group said "This is obviously a mistake," Merritt said. "We'll get that fixed." Yeah sure. Whoops. We accidentally claimed a prominent figure as a supporter. Their response? They took his name off that list but left his wife's name on their site!

Comcast's front group has zero credibility

This is a group with absolutely zero credibility. But they have tons of funding -- likely from Comcast and incumbent trade groups that fight these initiatives everywhere to preserve what is essentially a monopoly for the cable and telephone companies. We just republished an op-ed outlining some these tactics from 2009.

Now the "Look Before We Leap" group is accusing the City of distributing propaganda.

Longmont's pamphlet, on the cover, states that the contents are "intended to provide a factual summary, including arguments both for and against the proposal, of issues of official concern to Longmont voters. It is not intended to urge a vote in favor of or against Ballot Question 2A." Inside, it gives the text of the ballot question, a brief history of Longmont's fiber optic network and the restrictions on it, election dates, and sections titled "What is being asked of voters?", "Those in favor believe" and "Those opposed believe."

"The city used taxpayer dollars to campaign with a glossy mailer, complete with high-quality pictures, an inaccurate history, a lengthy advocacy section and a clearly token statement that does not show how most other cities fail when they enter this unpredictable business," said George Merritt, a senior strategist for Onsight Public Affairs of Denver and spokesman for Look Before We Leap.

Of course, as we discuss on a daily basis, the vast majority of communities have succeeded in this space. Even if one narrows the field to communities that have attempted the most difficult challenge of building citywide networks (which is not what Longmont presently plans), there are very few failures. In the case of Longmont, where the city already has built the asset, the only risk lies in not using it to its full potential.

This is simply another case of a few massive companies using their power to prevent new competition that would greatly benefit the community and create new jobs. The question is whether the majority of voters will be able to see through the blizzard of propaganda pushed by Comcast's "Look Before We Leap" proxies.

Longmont Fiber Ring Referendum

Residents in Longmont, Colorado are preparing for a municipal referendum to utilize an existing fiber optic network.

The referendum is set for Tuesday, November 1, 2011.

At issue is how the city can use a ring of fiber-optic cables it built around the city in the late 90's as part of its electrical infrastructure.  Much of the capacity on the ring remains unused but the city requires approval of the voters in a referendum before it can offer services to local businesses -- which will encourage economic development by creating more telecommunications choices in the community for businesses and residents (some background here).  

This is referendum question 2A:

Ballot Question 2A: Without increasing taxes, shall the citizens of the City of Longmont, Colorado, re-establish their City's right to provide all services restricted since 2005 by Title 29, article 27 of the Colorado Revised Statutes, described as "advanced services," "telecommunications services" and "cable television services," including any new and improved high bandwidth services based on future technologies, utilizing community owned infrastructure including but not limited to the existing fiber optic network, either directly or indirectly with public or private sector partners, to potential subscribers that may include telecommunications service providers, residential or commercial users within the City and the service area of the City's electric utility enterprise?

Big cable and telco operators  have wasted no time in spreading fear and false information to scare voters into voting against using a valuable asset owned by the community. When the community organized a debate for the end of September, the only people willing to defend Comcast's position came from far outside the community to do it.  

Trying to get in the mind of the big incumbents of Longmont, we developed this cartoon (the style is an homage to the "Get Your War On" comic).

Longmont 2A Opposition

Download a higher quality pdf version.

Citizens have responded by joining together to support the referendum to encourage economic development in their community.

Learn more at Longmont's Future.  Also the local Free Range blog has posted an article: Join forces for “YES” on Longmont’s Fiber Optic Referendum

Learn more about Longmont's journey from stories in our archive: