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Governing Looks at What the Comcast - Time Warner Cable Merger Could Do to Munis

The debate surrounding the proposed Comcast Time Warner Cable merger continues. The Department of Justice and the FCC ruminate over the deal while the media speculates about the future.

Governing recently published an article on potential side effects for the municipal network movement. Tod Newcombe reached out to Chris for expert opinion.

From Governing:

Partially thanks to Comcast and other cable giant's lobbying, 19 states have already passed laws that ban or restrict local communities from setting up publicly owned alternatives to the dominant provider in the area. Municipalities that pursue publicly owned broadband often cite several reasons for their efforts, ranging from lack of competition and choices in the area to a desire for faster speeds at lower costs. But Mitchell fears the lobbying power of a combined Comcast-Time Warner would choke off what little leverage remains for local governments when it comes to gaining state approval to build publicly owned broadband networks.

Unfortunately, the cable company cyclops borne out of this deal would create a ginormous lobbying monster. Comcast and Time Warner Cable wield significant political influence separately; a marriage of the two would likely damage the municipal network movement. The Center for Responsive Politics reports Comcast spent over $18 million in 2013; Time Warner Cable spent over $8 million.

Chris told Governing:

"Judging by the amount of opposition to the merger, I think people are seeing that we're at a tipping point and that there are ways they can make investments at the local level and control their own destiny," said Mitchell. "A lot of people and local businesses understand that the Internet is really important and that we can't trust it to a few corporations. But I don't see that level of understanding from most elected officials yet."

Network Neutrality Update

The FCC is hearing the massive public outcry over its plan that would allow the big cable and telephone companies to create fast and slow lanes on the wires most of us depend on to access the Internet. Chairman Wheeler has made some bold claims that he would not allow commercially unreasonable deals but many doubt the FCC has the authority to enforce his tough talk.

Now we see that FCC Commissioner Rosenworcel wants to slow down the rulemaking for "at least a month" given the outcry.

Resistance to the plan does seem to be building with the emergence of over 100 Internet-dependent companies decrying the possibility of fast and slow lanes. Full letter here [pdf].

Mozilla has developed an alternative approach to reclassification that some are saying just might work, but as a naturally conservative person, I will want to see it vetted by trusted experts like Harold Feld. The main problem with reclassification seems to be that Republicans would demagogue it as Obama attempting to take over the Internet - a problem for Democrats already facing an uphill battle in November.

However, Barbara van Schewick - one of the most knowledgeable people on this matter - makes a strong case for the FCC rebooting the whole process, gathering more input, and ultimately reclassifying Internet access as Title II while forebearing many of the Title II powers that would allow the FCC to wield too much control over access to the Internet.

Much like the FCC has long overseen telephone access without censoring the content of our speech, it would be possible for the FCC to reclassify Internet access without getting involved in content.

However, the larger problem remains - the market power of the massive firms like Comcast and AT&T. As long as they continue to wield the power they do (which will grow if consolidation continues), they will buy support in Congress and use the FCC's revolving door to their advantage; no amount of regulation will ultimately contain them.

To preserve the open Internet over the long haul, we have to reduce the overwhelming power of those companies. We can do that with an "all hands on deck" approach to expanding Internet access - ensuring local governments are free to build their own networks as they choose or partner with trusted entities. On this matter, Chairman Wheeler has said he will use FCC power to remove state barriers to communities make those decisions, a tremendous step forward for preserving the open Internet.

This is a very important moment. We need the FCC to preserve the open Internet by continuing to prevent paid prioritization schemes and we need to create alternative networks to end the cable monopoly and reduce their power in DC and state houses.

Below is an excellent video on this subject that explains the problem and what can be done. As we noted in our podcast with Scott Bradner, the way this video presents the key question of who should pay who represents a break with the past traditions, but it may be time to reconsider who should pay when faced with a cable monopoly for Internet access.

Video: 
See video

Bill Moyers on Network Neutrality and Threat from Comcast

Bill Moyers has returned to again discuss Network Neutrality with guests Susan Crawford and David Carr from the New York Times. The show is embedded below and well worth watching, especially toward the end as Bill reveals the revolving-door between the top levels of the Federal Communication Commission and industry lobbyists.

During the show, they also discuss the importance of ensuring communities are able to build their own networks as an alternative to the massive cable monopolies.

Finally, a post from John Nicols on BillMoyers.com outlines what action you can take to ensure the FCC protects the open Internet. Scroll about halfway down for the specific steps.

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Wheeler Tells Cable Industry He Intends to Remove Anti-Competitive State Laws

FCC Chairman Tom Wheeler is prepared to roll back restrictions that prevent local governments from deciding if a municipal network would be a wise investment. At the Cable Show Industry conference in Los Angeles, Wheeler told cable industry leaders the FCC will wield its powers to reduce state barriers on municipal networks.

Wheeler spoke before the National Cable & Telecommunications Association (NCTA) on April 30. These words perked up our ears and those of community networks advocates across the U.S. From a transcript of Wheeler's speech

"One place where it may be possible is municipally owned or authorized broadband systems. I understand that the experience with community broadband is mixed, that there have been both successes and failures. But if municipal governments—the same ones that granted cable franchises—want to pursue it, they shouldn’t be inhibited by state laws. I have said before, that I believe the FCC has the power – and I intend to exercise that power – to preempt state laws that ban competition from community broadband."

As our readers remember, a January DC Circuit Court of Appeals decision opened the path for the FCC to take the action Wheeler proposes. Since then, communities have expressed their desire for local authority with resolutions and letters of support. Communities in Michigan and Louisiana, Georgia and Idaho, Illinois, Maryland and Kansas, have shared their resolutions with us. A number of other communities have issued letters of support encouraging action under section 706.

Ars Technica contacted the FCC for more information on Chairman Wheeler's statements. Ars reported:

An FCC spokesperson contacted by Ars said that Wheeler "is not trying to make a distinction between 'ban' or 'limit.' The point is to look at the effect of the law."

The spokesperson said, "We will be taking up this issue in the technology transitions proceedings, and there should be an announcement about this in the next few weeks." It's too early to say "how [Wheeler] will address existing state laws."

As the big companies like Comcast consolidate, enforce bandwidth caps and continuously raise prices, municipal networks are more important than ever. Community owned networks are accountable to the people who use them and put the public good ahead of profit. Community networks are managed in your neighborhood, not in a corner office thousands of miles away.

The content of Wheeler's statement and his choice of venue inspires advocates for publicly owned networks. In order to keep a strong momentum rolling, we encourage you to express your support. The cable and telecommunications lobbyists are already working to prevent the FCC from taking action. When the FCC begins to act, we will want to demonstrate support.

Join our one-email-per-week newsletter to stay in the loop on these developments! If you are excited to demonstrate local support via a resolution or similar effort, let us know.

CenturyLink Seeks Apartment Buildings for Gigabit in Portland

In the wake of Google's announcement that Portland could be one of the next communities for the Google Fiber network, CenturyLink is circulating an offer to select apartment buildings to apply for CenturyLink fiber.

This appears to be more than the standard fiber-to-the-press-release responses we often see from the big telephone companies that prefer to lobby, litigate, and lie rather than invest in next-generation networks. CenturyLink notes it has the "ability to do approximately 15 total" apartment buildings.

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The promotional sheet claims CenturyLink will offer speeds "up to" 1 Gig for $79.95/month for 12 months. 100 Mbps runs $49.95 and 40 Mbps is $29.95 - each for 12 months. No mention of upload speeds but CenturyLink has demonstrated a real aversion to symmetry so users can expect far slower upstream than what modern municipal networks and Google fiber deliver.

The standard operating procedure in apartment buildings will be for CenturyLink to try to lock up the internal wiring to buildings and deny it to competitors. FCC rules make exclusive agreements with landlords unenforceable, but there are a host of tricks that incumbents use to prevent any competition and landlords getting a kickback often have little reason to encourage competition.

The CenturyLink copy notes that its fiber optic GPON option is "up to" more than 92 percent energy efficient than cable modem Internet access. I have to wonder how it compares to DSL energy efficiency and whether that number holds up better than the "up to" 12 Mbps claims they make on DSL circuits that seldom peak at 5 Mbps.

At any rate, it is more than we can expect in the many communities CenturyLink is serving where there the local government have done nothing to spur competition by investing in publicly owned assets that could form a municipal network or be used to entice independent service providers to enter the market. In particular, I would be curious where else CenturyLink is rolling out fiber to buildings without any upfront charges.

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Paid Prioritization Threat Reinforces Value of Community Networks

Recent reports out of the FCC say that it will allow ISPs to create and sell "fast lanes" of Internet access to the companies with sufficiently deep pockets to afford them. While some people argue over whether this violates network neutrality principles or not, the more important point is that most communities have no control over how the networks on which they depend are operated.

The big ISPs, like Comcast and AT&T, are focused on maximizing revenue for their shareholders. It is why they exist. So they will want to make the fast lanes as appealing as possible, which in turn means making providers like Netflix unable to deliver a high quality product without paying special tolls to Comcast.

What does that mean for you? It means you should expect to see the big providers slow their already anemic pace of investing in higher capacity connections in favor of pushing content providers into the paid prioritization schemes. It also means that you may have to start paying more for Netflix or Hulu, where the additional money goes to the ISP you already overpay for comparatively lousy service.

A range of ISPs, from privately owned Sonic.Net in California to Chattanooga's Electric Power Board right up to Google have demonstrated that they can deliver a "fast lane" to everyone. This fight over paid prioritization is nothing more than the big cable and telephone companies trying to increase their profits while minimizing needed investments in higher quality service to everyone.

Unless you live in an area with a community-owned network. Unlike the big providers with a fidiciary responsibility to distant shareholders, community owned networks are directly accountable to the community. Their mission is to maximize local benefits, not extracting as much wealth from households as possible. ISPs like Sonic also have much more reasonable policies but over time these privately owned ISPs are vulnerable to being bought by the big national providers.

Community owned networks are far less likely to engage in paid prioritization because it adds no value for subscribers in the community. In fact, the worse the big cable companies act in terms of ripping off subscribers, the more valuable community owned networks become by providing a better level of service.

Another example of this is monthly data caps - the big cable companies have been "experimenting" with them in several markets in the south but always in areas where the community has not built an alternative option. Community networks not only offer a much better option to the community, they change the behavior of incumbents who are accustomed to operated in non-competitive environments.

The final benefit of community owned networks is that if the federal regulators fall down on the job AND your community-owned networks engages in behavior that hurts subscribers, there is a democratic process for rectifying that, whether in elections for the city council or coop board.

Seattleites Want More Than Rhetoric in Quest for Better Broadband

In a recent SLOG post from the Stranger, Ansel Herz commented on Mayor Ed Murray's recent statement on broadband in Seattle. Murray's statement included:

Finding a job, getting a competitive education, participating in our democracy, or even going to work for some, requires high speed internet access. I have seen people say online, "I don’t need a road to get to work, I need high speed internet." Seattle would never leave the construction of roads up to a private monopoly, nor should we allow the City’s internet access to be constructed and managed by a private monopoly.

It is incredibly clear to me and residents throughout the City of Seattle, that the City’s current high speed internet options are not dependable enough, are cost prohibitive for many, and have few (if any) competitive options.

The Mayor also hinted that if the City needs a municipal broadband network, he would "help lead the way."

As a Seattleite, Herz knows firsthand about the lack of connectivity options in the area. Herz writes:

This is both encouraging and disappointingly tentative language from the mayor. It seems to cast municipal broadband as a last resort. Municipal broadband is a no-f*cking-brainer. [our *]

Herz turned to Chris for perspective:

"I have seen this from many Mayors who talk about how someone should do something but we don't always see concrete actions because of the difficulty and the immense opposition from some powerful companies like Comcast," Christopher Mitchell, the Director of the Telecommunications as Commons Initiative, who's worked with cities across the country on this question, tells me.

Seattle doesn't know what to expect from a Mayor that Comcast tried to buy (we suspect they did not succeed but have nonetheless sent a loud message). It is encouraging to see that the issue has not simply disappeared, but Herz and his neighbors want more:

What are you waiting for, Ed? Progressive rhetoric (and retweeting people who want to see municipal broadband happen) is great, but commitment and action are even better.

Long List of Public Interest Groups Sign on to Free Press Letter Opposing Comcast Time Warner Cable Merger

The Free Press announced that more than 50 public interest groups, including the Institute for Local Self-Reliance, signed on to its letter in opposition to the Time Warner/Comcast merger.

The letter, addressed and delivered to Attorney General Eric Holder and FCC Chairman Tom Wheeler, begins:

The proposed Comcast-Time Warner Cable merger would give one company enormous power over our nation’s media and communications infrastructure. This massive consolidation would position Comcast as our communications gatekeeper, giving it the power to dictate the future of numerous industries across the Internet, television and telecommunications landscape.

In the press release, Craig Aaron, President and CEO of the Free Press, stated:

“The question before the FCC is whether this deal serves the public interest. The answer is clear: A bigger Comcast is bad for America.

“Merging the nation’s two biggest cable-Internet providers would turn Comcast into our communications gatekeeper, able to dictate the cost and content of news, information and entertainment. We need an Internet and video marketplace that offers people high-quality options at prices they can afford — not a near-national monopoly determining what we can watch and download.

“In the past four years, Comcast has raised basic cable rates in some markets by nearly 70 percent. Its top lobbyist has admitted that the price increases will continue to skyrocket if the merger goes through. And that's about the only thing Comcast has said about this deal that you should believe.

“The growing chorus of groups opposing this takeover knows the truth. The only rational choice is for the FCC and Justice Department to reject this merger."

 

American Enterprise Institute Scholar Calls DSL Obsolete

For the second time this year, one of the major defenders of the cable and telephone companies has admitted that DSL cannot provide the Internet access we need as a nation. This admission validates our research as well as that of Susan Crawford and others that show most Americans are effectively stuck with a cable monopoly.

On April 7, 2014, the Diane Rehm show hosted another discussion on telecommunications policy with guests that included Jeffrey Eisenach, the Director of the Center for Internet, Communications, and Technology Policy at the American Enterprise Institute.

During that show, Eisenach stated, "The vast majority of Europeans still only have DSL service available, which we in the United States consider really almost an obsolete technology now."

Interestingly, Eisenach and others have repeatedly claimed that there is no market failure in the US - that we have plenty of choices. But most Americans have to choose between what most now admit is an obsolete DSL product and cable. Eisenach would add 4G LTE as another competitor, but as we have noted many times, the average household would have to pay hundreds of dollars per month to use their LTE connection as a replacement for DSL or cable.

The average household uses something like 40-55 GB of data per month. Given the bandwidth caps from LTE providers, the overage charges quickly result in a bill of approximately $500 or more depending on the plan. This is why the overwhelming majority of the market uses mobile wireless as a complement, not substitute to wired networks.

We are left with one conclusion: there is no meaningful competition or choice for most of us in the residential telecommunications market. And no real prospect of a choice either as the cable companies only grow stronger.

This is not the first time Eisenach admitted that DSL is insufficient for our needs. Back in January, on Diane's show, he again used Europe's dependence on DSL as evidence that it was falling behind: "They are reliant on these 20th century copper networks which have real limits on the amount of speed that they can deliver."

Even those who only want the private sector to deliver services are starting to admit that the existing providers are failing us. What more do communities need to take an active role in ensuring their needs are met?

Diffraction Analysis Offers Free Webinar on FTTH, April 24th, 9 AM ET

On April 24th, Benoit Felten and his organization, Diffraction Analysis, will host a free webinar to discuss results from their latest study. The study, Why Consumers Love FTTH – The FTTH Consumer Experience Study, delves into the fiber experience in Sweden. Here are some preliminary findings from the report:

  • In Sweden a huge majority FTTH users (75%) think their broadband is better than before they had fibre.
  • 67% of Swedish broadband users think broadband over fibre is ‘Very Good’, but only 13% think the same of DSL.
  • Swedish FTTH subscribers use video-communication over the Internet five times as much (25%) as DSL users.
  • In Sweden 59% of FTTH users think fibre broadband is sustainable. Only 44% of DSL users think the same of DSL.
  • In Sweden, 59% of DSL users find their broadband price excessive vs. only 32% for FTTH users.
  • For FTTH users in Sweden, quality of broadband is the 1st criterion after home price when choosing a new home.

He recently spoke at the 2014 Broadband Communities Summit in Austin, Texas. Felten also spoke on Smart Cities and Infrastructure at the FTTH Conference in Stockholm, Sweden, in February. Chris interviewed Felten in episode 21 of the Community Broadband Bits podcast back in 2012, when the two discussed the famous network in Stokab. 

You can register for the free webinar at GoTo Meeting.