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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."

 

Consumerist Sounds Off on Internet Essentials and Comcast's Hidden Agenda

In a Consumerist article, Kate Cox takes a look at who is benefitting the most from Comcast's Internet Essentials program and - guess what - it is Comcast.

The program has brought Internet access to a number of people who may not otherwise have been able to get online and that's a good thing. According to Comcast, 300,000 families are receiving 5 Mbps download for the program's $9.99 monthly rate. All considered, that is 300,000 families who might otherwise not have Internet access at all.

But Cox noticed how the gigantic cable conglomerate pulls the program out to dazzle politicians whenever they need a little public opinion boost. In August 2013, Comcast announced it was extending the program:

Comcast, meanwhile, is not acting out of a sense of charity or philanthropy. They’re satisfying federal requirements to help bring broadband access to the poor. And Internet Essentials is only available where Comcast already operates — so Comcast isn’t spending a dime to run infrastructure to any place where it doesn’t already exist.

They sure get to benefit from looking philanthropic, though. Community outreach is a huge part of Comcast’s extensive lobbying efforts. And in looking to gain the blessing of federal regulators on their impending buyout of Time Warner Cable, “benefit to the community” is one of their best cards to play.

Cox notes the significant obstacles to signing on to the program, as we did in 2012. She also notes that families who need the program most are not always the ones who are able to find the information to enroll:

The other barrier is the enrollment process itself: Internet Essentials is separate from Comcast’s standard service. It uses a different website and phone number for enrollment and information. Consumers who call Comcast’s regular line and try to ask for the cheap internet generally get shunted into some kind of promotional triple-play package. Comcast representatives don’t redirect callers to the other phone number.

So the consumers most likely to be able correctly to sign up for Internet Essentials are high-information consumers who have the time and resources to use the internet to research how to get the best choice in internet access. And the target user of Internet Essentials is a lower-information consumer, potentially with education and/or language barriers, who doesn’t necessarily have the time and resources, or internet access, to do all the research over best choices.

Once a household no longer has a child who qualifies for free and reduced lunches, that household no longer qualifies for Internet Essentials.
Cox also comments on the service itself:

The other main problem with Internet Essentials is that it’s crap. A download speed of “up to 5 Mbps” is, by the standards of 2014, painfully slow. Those fancy online educational tools that are supposedly the main benefit of the program? Many of them don’t work so well on that connection.

In other words, Comcast is giving their low-income customers access to what they pay for — not access on par with what most other Comcast customers can buy. It’s both a fifth of the cost and a fifth of the service.

Last year, John Randall from the Roosevelt Institute came to a similar conclusion:

Comcast's Internet Essentials program does more to benefit Comcast's customer acquisition, public relations, and lobbying departments than to help people in America who need high-speed Internet access at a reasonable price. The reality is that the program is a cleverly designed customer acquisition program that benefits Comcast's bottom line. 

The Internet Essentials program, while offering a temporary respite to a small segment of low-income families, draws attention away from the real solution - policies that ensure affordable, reliable, and fast Internet access to all. As long as we continue to allow the consolidation of some of the most hated companies in the country, Internet Essentials is the best we can expect.

Process Matters: Harold Feld's Guide to the Time Warner Cable/Comcast Merger

The proposed Comcast/Time Warner Cable deal will be on everyone's mind for many months to come. Thanks to Harold Feld, it is now possible to follow the process as it moves forward. Feld began a series of posts earlier this month that map out the review as it moves from the Department of Justice Antitrust Division to the Federal Communications, and finally to Congress. As Feld notes, the entire process will last six months at least and could run for more than a year. 

In addition to drawing a process map, Feld provides insightful subtleties on the purpose behind each step in the review. He also offers political analysis that may influence the outcome. Feld gets into the unique review process, burdens of proof, and relevant definitions at each stop along the way. Highly recommended, especially for law students.

Part I - Introduction

Part II - Antitrust Review at the DOJ

Part III - Federal Communications Commission analyzes public interest

Part IV - The proposal moves through the committee process and the public has a chance to express themselves to their elected officials (including lobbyists)

 

Lexingtonians Consider Municipal Network Options in Kentucky

Community leaders in Lexington are the latest to stand at a fork in the broadband road. In September, the franchise agreement between the Lexington-Fayette Urban County Government (LFUCG) and Time Warner Cable expired, resulting in a month-to-month agreement continuation. As they negotiate a new contract, local citizens have called for consideration of a municipal network.

When the contract was originally negotiated in the 1990s, the community was primarily interested in cable TV servce. As broadband has become critical infrastructure for residents, businesses, and government, the community's focus shifted. Lexington customers have complained repeatedly about Internet and cable TV service from Time Warner Cable. A February Kentucky.com article noted that local consumers complained over 300 times to Lexington's Urban County Government, the entity responsible for contract negotiations. According to the article:

The biggest single category of complaints was about price and the volatility of monthly rates. Other complaints were that the cable TV service "repeatedly fails, resets or freezes"; that there was an extended wait time and/or "unhelpful responses" in customer service; and that email and Internet "had declined in service" and showed "significantly slower service."

The City Council considered the situation bad enough to debate whether or not to appoint an ombudsman to advocate for Lexington consumers.

The community wonders how the proposed merger between Time Warner Cable and Comcast will impact their current service. While the Vice Mayor seems to think it is an "almost golden opportunity" to deal with a different provider, local citizen Roy M. Cornett has a different perspective. He wrote for Business Lexington.com:

We can choose to maintain the status quo and allow out-of-state corporations to continue to control our access to the Internet, or we can rescind the franchise agreements to the copper and fiber lying in the ground around our community and treat the Internet as the piece of infrastructure essential for our future economic growth that it is. 

We would just note that this is not an either/or proposition. They can both develop a new franchise or not separately from deciding to move forward with some smart municipal investments.

As the LFCUG has moved forward with franchise negotiations, they opened up the discussion at City Council meetings. Cornett attended a Cable Franchise Workshop to learn about the process. What he learned is that the LFCUG possesses very little power in negotiations, due to federal law. In fact, if Time Warner Cable meets a very low standard, the LFCUG has no option but to renew.

Lexington Kentucky Logo

Cornett and others in the community wonder if Lexington wants to go down the same Internet road again - expensive, unreliable, and ruled from a far off corner office. He addresses the question in another article on the Barefoot and Progressive site:

If the Time Warner [Cable] and Comcast merger goes through, Lexington will not only have piss poor download speeds, but caps on the amount of data you can use in a month. Comcast currently has a cap of 300 gigabytes per month for customers in Elizabethtown and Campbellsville, Kentucky. To put this in perspective, my family’s usage as of February 15, was 99 gigabytes for the month and we still have two weeks to go. I am terrified of what it will be in a few years when my youngest kids become teenagers. 

Cornett reached out to us when he wanted to learn more about the possibilities of a muni for Lexington:

The City of Chattanooga just recently built a municipal ISP to provide gigabit service to 147,000 homes at a cost of $330 million (of which $111 million was provided by the feds). Christopher Mitchell, the director of Telecommunications as Commons Initiative for the Institute for Local Self-Reliance, did some very rough back-of-the-envelope calculations for the City of Lexington and estimates that a full gigabit fiber network to every resident and business would be somewhere in the $200 million range. 

Those are huge numbers and should give anyone pause, but consider that we are spending $1.6 million on sidewalks for Tates Creek Road, $17 million for resurfacing a few blocks of South Limestone and $310 million dollars renovating Rupp Arena. Ask yourself if any of the above projects could come close to offering the economic impact that gigabit internet service would bring. It isn’t even close.

In his Business Lexington.com article, Cornett encourages a new coalition, the Bluegrass Economic Advancement Movement (BEAM), to take up the muni possibility. The group is a collaboration between Louisville and Lexington with support from the Brookings Institute. The goal of BEAM is to bring quality jobs to the Bluegrass and increase export activity.

Cornett, who we expect to hear more from, writes in his Barefoot and Progressive article:

I won’t speculate on the motives of the corporations for attempting to kill competition, but the issue of our city possessing a modern, reasonably priced, continually upgraded network is essential to our future.

This is not a fight we should shy away from. On the contrary, this is a fight we need to embrace, and it can be the lynchpin that takes the BEAM super region from a good idea to a shining success. I urge Mayors Gray and Fischer to – at the very least – explore the option of retaking control of this vital component of our infrastructure.

On the Media Talks Cable Consolidation, Municipal Networks With Crawford and Baller

The possible merger between Comcast and Time Warner Cable and the FCC's recent announcement to review state barriers have created a significant buzz in the world of telecommunications. Two recent NPR interviews with Susan Crawford and Jim Baller provide insight into how the merger may affect consumers and why a new light is shining on municipal networks.

Crawford spoke with Brooke Gladstone for a recent interview for On the Media. The two addressed some of the consequences of the potential merger. Crawford also discussed the option of municipal broadband investment is an alternative gaining traction. As our readers know, Crawford authored Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age. Crawford joined us in a past episode of the Communiy Broadband Bits podcast.

Jim Baller, President of the Baller Herbst Law Group, also joined On the Media when he spoke with Bob Garfield. Baller and Garfield talked about the cable and telecom lobby's efforts to block municipal authority to build networks. Baller supplied a few of the many examples of successful communities that have blossomed as a result of their investment. We have interviewed Baller three times for our podcast.

 

Each interview is a little over six minutes.

Krugman Calls out the Barons of Broadband

We should probably be thanking Comcast for its attempt to take over Time Warner Cable. It has inspired a shocking amount of vitriol against the cable monopolies, including an entertaining but NSFW video with strong language from Funny or Die.

Whereas people were largely content to mostly silently hate Comcast and Time Warner Cable separately, the idea of them officially tying the knot to screw consumers even more has apparently hit a tipping point. As I noted a few days ago, we are seeing a more communities considering their own networks to avoid being stuck with a Wall Street monopoly forever.

Paul Krugman was inspired to write "Barons of Broadband," which accurately reflects the modern dynamic:

The point is that Comcast perfectly fits the old notion of monopolists as robber barons, so-called by analogy with medieval warlords who perched in their castles overlooking the Rhine, extracting tolls from all who passed. The Time Warner deal would in effect let Comcast strengthen its fortifications, which has to be a bad idea.

Krugman talks about monopoly as well, reminding me of one of our most important podcasts - Barry Lynn, Monopoly Expert.

And the same phenomenon may be playing an important role in holding back the economy as a whole. One puzzle about recent U.S. experience has been the disconnect between profits and investment. Profits are at a record high as a share of G.D.P., yet corporations aren’t reinvesting their returns in their businesses. Instead, they’re buying back shares, or accumulating huge piles of cash. This is exactly what you’d expect to see if a lot of those record profits represent monopoly rents.

It’s time, in other words, to go back to worrying about monopoly power, which we should have been doing all along. And the first step on the road back from our grand detour on this issue is obvious: Say no to Comcast.

There is no public benefit to this merger - none. Meanwhile it will give even more power to a corporation already slowing our economy by refusing to invest in communities that desperately need better connections so businesses can remain competitive. Allowing this merger will be just another step in the direction of powerful corporate lobbyists officially running the country rather than unofficially.

In Fear of Comcast Warner Cable

It is hard to say just how bad of an idea it is for us to allow Comcast to buy Time Warner Cable. This is not just about consumers having to pay more, which they do every time we allow massive consolidation, but about access to information.

I can't help but think back to our conversation with Barry Lynn on monopoly a few weeks ago. People get so focused on consumer prices and a narrow view of competition that they miss important impacts of consolidation.

One impact is moving Comcast from the seventh biggest DC lobbyist to the fourth.

This consolidation is a recognition that the private sector simply will not provide meaningful competition for Internet access. Communities need to recognize what a do-nothing approach means: relying on a distant cable monopoly for the most important services of the 21st century.

If I had to guess what will happen - Comcast will buy Time Warner Cable but have to sell off some pieces to get approval. Comcast will grow larger and more powerful, making future mergers even more difficult to stop despite more and more evidence that these firms are strangling our economy. We can stop it - but will we? Specifically, will we force our representatives in DC to stop it?

Stay tuned to the organizations that are covering it well - Free Press, Karl Bode, Public Knowledge, Common Cause, and many others.

Over the Top Video: A Peak or a Path Forward?

About six months ago, I was quite bullish on advances in over-the-top (OTT) video making it easier for communities to build fiber networks because they would no longer have to deal with the challenges of securing and delivering traditional cable television channels. I explored these challenges in a recent post.

OTT video includes Hulu, Netflix, Apple TV, and similar services that deliver video content over your broadband connection, ideally to your television. Last summer, we were anticipating more devices and services that would expand OTT options.

In the time since, I have been disappointed. There have been advances - the Google Chromecast dongle works well (if you have a good Wi-Fi signal near your TV - no ethernet option unfortunately). But Chromecast works with a limited suite of video services.

Hulu works well enough, but seems to have fewer shows that I want to watch available on Hulu plus. Also, Comcast owns it and won't always be shackled by the temporary conditions it agreed to in order to secure permission to buy NBC Universal.

Aereo continues to be a very interesting model but will be fighting in the courts for awhile yet, creating an air of uncertainty over its future. Additionally, its business model hurts public access media (locally produced content), which often depends on franchise fees that Aereo and broadband providers don't have to pay. On the other hand, Aereo solves the problem of getting sports programming over the top and that is a big deal.

We had high hopes for an announcement from Intel that it would begin marketing a service offering television channels over the top but it ran into the steep barriers to entry we have previously noted. Now the Intel effort is dead to us: Verizon has purchased it.

Maybe Sony or Samsung or some other manufacturer will suddenly come out with a breakthrough, but given my experience with their user interfaces, I would be shocked if it were usable, to say nothing of desirable.

It is distinctly possible that we will see breakthroughs that make OTT video more accessible and therefore help to drive new investment in fiber networks that don't require large investments in cable head end technology and acquiring hundreds of channel contracts. But I think it more likely that we are going to see OTT content hold steady or even draw back - we may see still fewer popular programs available on Hulu in the near future, for instance.

Regardless, we should not assume that we are in the midst of a linear progression from little OTT video to much more. Given the massive power of Comcast, Time Warner Cable, and the channel owners, we could well see a return to content only being available to those who pay ever-increasing fees to the local cable monopoly.

There is a reason Google decided it needed to offer television channels to get enough subscribers to make their investment worthwhile. Communities may not need the same high subscriber rates that Google wants, but it is a sign of where they think the market is staying.

Network Neutrality Decision and Importance of Community Owned Networks

In a decision announced a few hours ago, the DC Circuit of Appeals has largely ruled against the Open Internet, or network neutrality. These are rules established by the Federal Communications Commission to prevent massive ISPs like Comcast and AT&T from degrading or blocking access to certain sites on the Internet. Decision here [pdf].

The goal is to prevent these big firms from being able to discriminate - to pick winners and losers. For instance, Comcast could charge subscribers an extra $10 per month to access Netflix while not charging to visit similar sites that it owns. The rules were intended to prevent that.

However, the FCC has a history of decisions that have benefited big telecom corporations more than citizens and local businesses. Those decisions limited how it can protect the public interest on matters of Internet access.

This court decision decided that the way the FCC was attempting to enforce network neutrality was not allowed because of how it has decided to (de)regulate the Internet generally. In essence, the FCC said that it didn't want to regulate the Internet except for the ways it wanted to regulate the Internet. And the Court said, somewhat predictably, that approach was too arbitrary. Moving forward, the FCC has the power to enforce this regulation, but it will have to change the way the Internet is "classified," in FCC lingo - which means changing those historic decisions that benefited the big corporations.

Groups like Free Press are pushing to make this change because it will ensure the FCC has the authority it needs to ensure everyone has access to the open Internet.

The lesson for us is that communities cannot trust Washington, DC, to ensure that residents and local businesses have universal, fast, affordable, and reliable access to the Internet. Communities should be investing in themselves to build networks that are accountable to the public and will not engage in anti-consumer practices merely to maximize their profits. Such behavior is inappropriate on matters of essential infrastructure.

Even if the FCC now gets this right and protects the public interest, that may last only as long as this FCC is in power. Communities that trust the FCC to protect them in this matter of incredible importance to their local economy may find that with a new administration, companies like Comcast have a free hand to again insert themselves as a tollbooth between subscribers and the Internet.

As a final word, this is nothing new. In putting together the Standard Oil monopoly, Rockefeller knew the value of cutting special deals with the railroads to benefit his firm at the expense of any potential competitor. When the Schuylkill Canal was built in Pennsylvania, the state decreed that the canal owner could not have an interest in mining, because the ownership of the canal meant it could disadvantage any competitors that needed to use it to ship their materials.

Network neutrality is a common sense regulation so long as we have to deal with monopolies like Comcast - we cannot stand to let Comcast or any other firm impose itself as a gatekeeper between us and anyone with whom we want to communicate or do business.

Addendum: Thanks to Harold Feld for noting that the opinion reinforced the FCC's Section 706 authority, which we believe could be used by the FCC to strike down state laws that limit local authority to build networks:

As we explain in this opinion, the Commission has established that section 706 of the Telecommunications Act of 1996 vests it with affirmative authority to enact measures encouraging the deployment of broadband infrastructure.

Read our further coverage of how this decision impacts muni networks.