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Last year, when Comcast unveiled its Internet Essentials program, the corporate powerhouse received accolades from FCC Chairman Julius Genachowski. The program was promoted as an example of corporate philanthropy helping to bridge the digital divide.
Comcast received all kinds of positive media coverage for its program. Most of that coverage failed to note that the FCC required Comcast to integrate the program as one of the supposed concessions offered in return for Comcast being able to take over NBC -- giving the largest cable monopolist in the US even more market power.
DSLReports has publicly exposed what many of us suspected all along -- the program was not a concession on Comcast's part. Internet Essentials was originally conceived as a program that would offer slower connections to certain low income households at affordable rates that nevertheless remain profitable for Comcast.
A recent Washington Post Technology profile on Comcast's Chief Lobbyist David Cohen, notes how the program was actually conceived in 2009, but:
At the time, Comcast was planning a controversial $30 billion bid to take over NBC Universal, and Cohen needed a bargaining chip for government negotiations.
“I held back because I knew it may be the type of voluntary commitment that would be attractive to the chairman” of the Federal Communications Commission, Cohen said in a recent interview.
Eligibility depends on four factors:
We have long argued that smart antitrust policy promotes investment and competition in the market. Allowing a few firms to consolidate too much power allows them to ignore our needs because we lack alternative service providers. In economic terms, they can use their market power to prevent market entry from innovative new firms.
Harold Feld recented provided more empirical evidence for our view by comparing the present cellular wireless market against that of 20 months ago. He notes new investment from abroad in T-Mobile and Sprint and that U.S. Cellular plans to expand its footprint; AT&T is planning upgrades in its spectrum holdings. Bottom line - investment is starting to happen, which was not the case a year ago.
Feld breaks out details in FCC and DoJ activities to show the relationship. In addition to the DoJ and FCC mutual block of the AT&T/T-Mobile deal, Feld notes the FCC's new attitude regarding regulatory reform. From the Feld blog:
On top of this, the FCC sudden[ly] started getting all serious about regulatory reforms designed to keep carriers other than AT&T and Verizon in the game as serious players. This included not just the long-awaited data roaming order (which now looks like it will probably survive review by the D.C. Circuit after all), but also revisiting special access, 700 MHz Interoperability, and renewed interest in clarifying the spectrum screen/possibly reviving the spectrum cap. While the last three are still in progress, the fact that the FCC is even talking about them in a serious way is so radically different from what folks expected at the beginning of 2011 that it puts heart into investors and competitors who were looking for some sign that anyone in DC gave a crap or if competitive wireless would end up going the way of competitive telecom and competitive ISPs.
Feld acknowledges that there will be those that jump to conclusions and discourages an all-or-nothing viewpoint in favor of a more measured approach. Also from his blog post:
Once again, consumers must fight to preserve their landline telephone service. This time, the Ohio General Assembly is pondering legislation that can end traditional service for up to 1 million Ohio residents.
Our readers know about the efforts of ALEC and AT&T to drastically reduce their obligation to provide landlines across the country. Up to now, telephone companies were required to serve everyone, but those requirements are under attack, state by state. Bills have emerged in Mississippi, Kentucky, New Jersey and California.
The very real fear is that Ohio's Senate Bill 271 (SB271) will increase telephone prices, reduce service quality, and cause many to lose access to reliable 911 service. Many of those who still depend on landlines, include senior citizens. From an article on the Public New Service:
AARP Ohio State Director Bill Sundermeyer says, besides preserving social contact, land-line phones are needed to protect seniors' health and safety. For instance, some seniors use the phone line to transmit routine health information from equipment in their home to their doctor's office, he says.
"They can make an evaluation of a person's heart and how's it working, of their lungs, etc. That information would be very difficult to transmit over a cell phone."
(on a personal note, I can attest to this….my father routinely uses his landline telephone to send data to the clinic about his pacemaker to make sure it is functioning correctly)
The Office of the Ohio Consumers' Counsel (OCC) also expresses concern with the bill because it would allow telephone companies to stop providing local service in places labeled as "fully competitive." In the SB271 Fact Sheet (read the PDF, which offers a map of the qualifying areas), the OCC explains the problem with this definition:
Just this week, FCC Chairman Julius Genachowski highlighted the success of Chattanooga at a speech at VOX Media and SBNation on Winning the Global Broadband Race. From his speech (the entire speech in PDF format is available here):
First, as we said in our National Broadband Plan, we need “innovation hubs” with ultra-fast broadband, with speed measured in gigabits, not megabits.
There have been some positive recent developments on this front.
In Chattanooga, the community-owned utility installed a 100% fiber-to-the-premises network, making speeds up to 1 gigabit per second available to all businesses, residences, and institutions
Genachowski also commented on Chattanooga's place in the competitive environment:
Promoting competition also means we need to keep a close eye on developments in places like Chattanooga and Kansas City to see what additional steps we can take to encourage game- changing investments by disruptive broadband competitors.
This is not the first time Chairman Genachowski has referred to municipal networks as a valuable asset. In his August comments on the Google Fiber roll-out, he referred to the importance of municipal infrastructure investments as a way to push the boundaries and compete globally.
The Department of Justice released a statement on August 16th, that it will allow the controversial Verizon/SpectrumCo deal to move forward with changes. We have watched this deal, bringing you you detailed review and analysis by experts along with opinions from those affected. One week later, the slightly altered deal was also blessed by the FCC.
Many telecommunications policy and economic experts opposed the deal on the basis that it will further erode the already feeble competition in the market. In addition to a swap of spectrum between Verizon and T-Mobile, the agreement consists of side marketing arrangements wherein Verizon agrees not to impinge in the market now filled with SpectrumCo (Comcast, Time Warner Cable, Cox, and Bright House Communications).
Verizon has been accused of hoarding spectrum it doesn't need. The marketing arrangements constitute anti-competitive tools that the DOJ has decided need some adjusting. From the announcement:
The California Legislature recently passed SB 1161 (dubbed "California's Worst Telecom Bill Ever") and the bill is on the Governor's desk. Utility reform group, TURN, and the New America Foundation are two groups that have opposed this ALEC supported bill from the start. We reported on it in June and shared with you how it will negatively impact the ability for local communities to invest in broadband.
The Humboldt County Board of Supervisors sent a letter to Governor Brown formally opposing the legislation and asking for a veto. According to the an Access Humboldt press release:
In a letter yesterday (August 28, 2012), the Humboldt County Board of Supervisors requested Governor Brown to veto SB 1161, noting: "SB 1161 weakens open Internet protections and subverts long held State policy 'To continue our universal service commitment...' Why abandon our commitment to least served people and places?"
The Board officially expressed their opposition to the bill in May, noting that holes in the legislation ignored public safety, privacy, and consumer protection issues. No amendments were adopted to address those concerns.
You can also read Susan Crawford's take on it and similar efforts in other states.
In December, 2010, Verizon Wireless began operating its network via C-Block spectrum with licenses it acquired in the 2008 auction. In keeping with net neutrality rules unique to C-Block usage, Verizon agreed long ago that it would not block or limit consumers' ability to tether on their 4G LTE network.
Tethering allows a consumer to use a device, such as a smartphone, as a modem to funnel Internet access to an additional device. On July 31, the FCC agreed to end an investigation into whether or not Verizon Wireless had violated this rule. In exchange, Verizon Wireless would make a $1.25 million "voluntary contribution." Verizon Wireless did not admit it broke the rules. The FCC's consent decree requires the practice cease and that Verizon Wireless implement policies to curtail the behavior.
The story began in 2011. Verizon Wireless began charging its customers an addition $20 per month to allow them to tether additional devices to their smartphones and called the feature "Mobile Broadband Connect."
The Free Press filed a complaint. The FCC began their investigation in October, 2011. From the Free Press website:
Free Press argued that by preventing customers from downloading these applications that allow customers to use their phones as mobile hotspots, Verizon violated conditions of its 700 MHz C Block licenses, the spectrum in which Verizon operates its LTE service. When Verizon purchased the licenses, it agreed to abide by conditions that it not “deny, limit or restrict” its customers’ ability to use the applications or devices of their choosing.
The company also asked the Google Play Store store to block Verizon Wireless customers from accessing software that would enable tethering. Google complied with the request, even though it has often advocated for net neutrality, but were not investigated because they are not an ISP.
In 2010, the Institute for Policy Integrity at the New York University School of Law released a report titled Free to Invest: The Economic Benefits of Preserving Net Neutrality. The report, authored by Inimai Chettiar and J. Scott Holladay, is a great resource - substantial and very digestible - on what net neutrality really is, how it is (or is not) regulated, and the economic possibilities policy makers must consider when moving ahead.
The Institute looks at the economic relationships between content providers, ISPs, and consumers. In addition to the current economic structure, the report examines possible alternate pricing models that are contrary to our current net neutrality policies. We have extracted just a few excerpts and encourage you to get the full report.
There are five main findings that are examined in depth:
Internet Market Failure: The report explains how ISPs lose potential dollars under today's market structure. There is ample motivation for them to find a way to charge content providers based on delivery, and open up a whole new market far beyond our net neutrality policy.
The FCC’s nondiscrimination rule would prohibit an ISP from treating any content, application, or service in a “discriminatory” manner, subject to reasonable network management. This clearly bans pure price discrimination (charging different content providers different prices to access their subscribers). The regulation also bans ISPs from offering content providers a “take it or leave it” offer on access to their users. For example, an ISP like Verizon could not charge a website of a company like The New York Times a certain price for access to its subscribers by threatening to block the website from its network and therefore from its Internet subscribers.
Smart Policy Can Help: The authors of the report stress how the Internet must be viewed as a two pronged market - infrastructure to deliver the content and the content itself - and how both are equally important. Effective policy must recognize the delicacy of that balance.
If you are a current or potential Verizon customer, by now you know that you no longer have the option to order stand alone DSL. When the business decision became public knowledge in April, DSL Reports.com looked into the apparent step backward and found existing customers were grandfathered in but:
However, if you disconnect and reconnect, or move to a new address -- you'll have to add voice service. Users are also being told that if they make any changes to their existing DSL service (increase/decrease speed) they'll also be forced to add local phone service. One customer was actually told that he needed to call every six months just to ensure they didn't change his plan and auto-enroll him in voice service.
By alienating customers from DSL, Verizon can begin shifting more customers to its LTE service, which is more expensive. Susie Madrak, from Crooks and Liars, speculated on possible repercussions for rural America:
Rural areas could see the biggest impact from the shift, as Verizon pulls DSL and instead sells those users LTE services with at a high price point ($15 per gigabyte overages). Verizon then hopes to sell those users cap-gobbling video services via their upcoming Redbox streaming video joint venture. Expect there to be plenty of gaps where rural users suddenly lose landline and DSL connectivity but can't get LTE. With Verizon and AT&T having killed off regulatory oversight in most states -- you can expect nothing to be done about it, despite both companies having been given billions in subsidies over the years to get those users online.
The belief is that current DSL customers who don't want (or can't afford) the switch to the LTE service will move to Verizon's cable competition. Normally, losing customers to the competition is to be avoided, but when your new marketing partners ARE the competition, it's no big deal.