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. 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.

I encourage readers to visit Doc Searls post "Broadband vs. Internet" for a discussion about things that matter regarding the future of Internet access for most Americans.

The Internet is no more capable than the infrastructures that carry it. Here in the U.S. most of the infrastructures that carry the Internet to our homes are owned by telephone and cable companies. Those companies are not only in a position to limit use of the Internet for purposes other than those they favor, but to reduce the Net itself to something less, called “broadband.” In fact, they’ve been working hard on both.

There is a difference between the Internet and "broadband." Broadband is a connection that is always on and tends to be somewhat faster than the dial-up speeds of 56kbps. Broadband could connect you to anything... could be the Internet or to an AOL like service where some company decides what you can see, who you can talk to, and the rules for doing anything. The Internet is something different. It is anarchic, in the textbook definitional sense of being leaderless. It is a commons. As Doc says,

The Internet’s protocols are NEA:

• Nobody owns them.*
• Everybody can use them, and
• Anybody can improve them.

Because no one owns it, few promote it or defend. Sure, major companies promote their connections to it (and when you connect to it, you are part of it) but they are promoting the broadband connection. And the biggest ones (Comcast, AT&T, Verizon, Time Warner Cable, etc) will do anything to increase the profits they make by being one of the few means of connecting to the Internet -- including charging much more and limiting what people can do over their connection, etc. This is one reason the connections from major corporations are so heavily tilted toward download speeds -- they want consumers to consume content. Just about every community network built in the last 3-4 years offers symmetrical connections by contrast.

Last I heard, the fastest cable offering in the upstream direction was 12Mbps. Cox, our cable provider in Santa Barbara, gives us about 25Mbps down, but only 4Mbps up. Last time I talked to them (in June 2009), their plan was to deliver up to 100Mbps down eventually, but still only about 5Mbps up.

Susan Crawford published an excellent essay in the New York Times presenting her Looming Broadband Monopoly argument as a discussion of the coming digital divide between those with access to next-generation networks and those without.

These numbers are likely to grow even starker as the 30 percent of Americans without any kind of Internet access come online. When they do, particularly if the next several years deliver subpar growth in personal income, they will probably go for the only option that is at all within their reach: wireless smartphones. A wired high-speed Internet plan might cost $100 a month; a smartphone plan might cost half that, often with a free or heavily discounted phone thrown in. The problem is that smartphone access is not a substitute for wired. The vast majority of jobs require online applications, but it is hard to type up a résumé on a hand-held device; it is hard to get a college degree from a remote location using wireless. Few people would start a business using only a wireless connection.

She identifies the problem as a lack of competition in the market while highlighting the role of lobbying from the wealthy cable companies to keep it that way:

The bigger problem is the lack of competition in cable markets. Though there are several large cable companies nationwide, each dominates its own fragmented kingdom of local markets: Comcast is the only game in Philadelphia, while Time Warner dominates Cleveland. That is partly because it is so expensive to lay down the physical cables, and companies, having paid for those networks, guard them jealously, clustering their operations and spending tens of millions of dollars to lobby against laws that might oblige them to share their infrastructure.

In this essay, her preferred solution is better federal regulation that would require companies that own networks to share parts of their infrastructure with competitors (to significantly reduce the problems of natural monopoly). Unfortunately, she did not explicitly discuss the solution of the communities building their own networks - a topic she has discussed at great length elsewhere in very positive terms.

Learning the lessons of Longmont's recent cable referendum.

Download a larger PDF version here.

There are definitely times when you learn of a business practice where you think, "Wow, my opinion of AT&T could not go any lower." And then, BOOM. You find out that AT&T was intentionally underfunding a 9-11 call center in order to undercut its competitors in bids. Yikes. Did we mention that this is not an isolated case? AT&T has been busted in several jurisdictions for this practice. Hat tip to Stop the Cap! for bringing my attention to a lawsuit brought by Hamilton County against AT&T for its practice of under-reporting the number of business lines it provides. This practice allows it to undercut all competitors in the market, including the community fiber network run by Chattanooga's Electric Power Board. From the Times Free Press article:

The lawsuit claims that, since at least July 2001, AT&T has filed monthly and annual reports listing fewer business phone lines than they actually provide. Under Tennessee law, phone companies must pay $3 per month per line to pay for 911 access. ... In a March phone service bid proposal for Hamilton County, AT&T stated it would not collect the $3 rate and instead collect $2 per line per month. That allowed the company to underbid the next lowest bidder by 69 cents per line per month, “unlawfully increasing its profits at the expense of revenue to support the critical emergency services that” 911 provided, according to court records.

A difference of $.69 may not seem like much, until you consider they may be providing 1,000 lines - which is a difference of $690/month or $8,280/year. It is an incredible racket. AT&T gets more high-margin customers, pays less in fees than competitors, and the only people who get hurt are those who depend on 9-11. Just when you think AT&T is brilliantly evil (an accusation I tend not to make against many corporations no matter how much I disapprove of their practices), you have to consider how incredibly incompetent they are.

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: 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.

Dane Jasper, the CEO of Sonic.net, one of the few ISPs to survive the death of broadband competition over the past ten years, wrote about "America's Intentional Broadband Duopoly."  It is a short history of how the FCC's flawed analysis (helped along by incredible amounts of lobbying dollars, no doubt).

He starts by asking when the last time anyone offered to sell you broadband over power lines (BPL).  The FCC decided that cable and telephone companies shouldn't have to share their wires (which are a natural monopoly) with competitors (creating an actual marketplace for services) because BPL, satellite, and wireless would put so much competitive pressure on DSL and cable.  FAIL.

Then, in the Brand X decision, they ruled that Cable would not be required to allow competitors to lease their lines either. The FCC did this by reclassifying broadband Internet access as an “information service”, rather than a “telecommunications service”. As a result, common carriage rules could be set aside, allowing for an incumbent Cable monopoly. This decision was challenged all the way to the supreme court, who ruled in 2005 that the FCC had the jurisdiction to make this decision. To close out Powell’s near-complete dismantling of competitive services in the U.S., the FCC took up the issue of ISPs resale of DSL using the incumbent’s equipment, also known as wholesale “bitstream” access. If Cable is an information service under Brand X, why shouldn’t Telco have the same “regulatory relief”? The result: the FCC granted forbearance (in other words, declined to enforce its rules) from the common carriage requirements for telco DSL services.

For those who are thinking that wireless is finally competitive with cable and DSL, don't forget that while 4G appears much faster (because so few people are using it presently), it still comes with a 2GB monthly cap. So if you want to do something with your connection aside from watching one movie a month, 4G is not competitive with a landline connection.

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.

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.

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. So who exactly is "Look Before We Leap?" They cannot point to any real local support in the community.