Just days before its possible October 22 vote on new “net neutrality” regulations, the Federal Communications Commission is being bombarded with messages from high-ranking elected officials telling the commissioners to tone it down.

The messages, from both Republicans and a surprisingly high number of Democrats, seek to persuade the FCC commissioners to slow down and take a deep breath before placing oppressive regulations on an Internet industry that has brought innovation and investment to communities across America.

As the Wall Street Journal reported:

At last count, there have been 11 letters from governors (a mix of Republicans and Democrats), 18 Republican Senators, House minority leadership and now, the 72 House Democrats, which includes 18 members of the Congressional Black Caucus, 31 Blue Dog Democrats and 10 members of the House Energy & Commerce Committee, which has jurisdiction over the FCC.

In the letter signed by 72 House Democrats, the lawmakers conclude, “In light of the growth and innovation in new applications that the current regime has enabled, as compared to the limited evidence demonstrating any tangible harm, we would urge you to avoid any tentative conclusions which favor government regulation.”

Of the 72 House Democrats signing the letter, six are from states where MCA operates:

Arkansas
Rep. Mike Ross

Kansas
Rep. Dennis Moore

Missouri
Rep. Wm. Lacy Clay
Rep. Russ Carnahan
Rep. Emanuel Cleaver

Oklahoma
Rep. Dan Boren

These six account for two-thirds of all House Democrat members from the MCA states.

And anytime 72 Democrat Members of the U.S. House of Representatives agree that increased regulation is bad, people should take notice. In this case, the people taking notice should be the FCC commissioners.

The big question is why are so many lawmakers from both sides of the aisle coming to the conclusion that “net neutrality” regulations would be harmful? Here are several reasons:

1. Competition and innovation are thriving without burdensome regulations

As MCA pointed out in this opinion piece, competition in the wireless market has benefitted millions of consumers by providing more choice, more innovation, and the lowest cost in the world for wireless service. Americans use their wireless devices more than the citizens of any other country because a light regulatory structure has allowed competition to thrive. There is no reason for the FCC to fix something that isn’t broken.

2. Network investment will suffer if “net neutrality” regulations are imposed by the FCC.

As House Minority Leader John A. Boehner, R-Ohio, and House Republican whip Eric Cantor, R-Va., recently wrote in a letter to President Obama, “We believe that network neutrality regulations would actually thwart further broadband investment and availability, and that a well-reasoned broadband plan would confirm our view,” Boehner and Cantor concluded, “So to hastily begin the process of adopting network neutrality rules months before issuing such a plan implies that politics are driving the FCC’s decision-making process.”

3. The Internet must remain free to be an economic driver for the U.S. economy.

“As Americans wade through the current economic situation, a decision by the FCC to discourage broadband investment would be irresponsible,” Boehner and Cantor wrote. “The United States needs broadband providers to increase investment and create jobs. This will not occur if broadband providers are saddled with unnecessary, burdensome requirements that interfere with their ability to manage their networks and create innovative broadband products that maximize consumer choice and benefit.”

4. Proposed “net neutrality” regulations would hamper President Obama’s goal of universal broadband access and threaten minority communities.

In a recent letter to FCC commissioners, numerous minority groups including the NAACP, the League of United Latin American Citizens, and the National Disability Institute argued that imposing new rules on Internet traffic could impede Obama’s goal of 100% broadband access for America. The groups stated, “As organizations that serve communities that are among the most severely impacted by a lack of access to technology, we urge you to keep your number one focus on the need to get everyone connected. We are concerned that some of the proposed regulations on the Internet could, as applied, inhibit the goal of universal access and leave disenfranchised communities further behind. We are also concerned that some proposed regulations could inhibit investments being made by companies employing hundreds of thousands of workers and connecting millions to the opportunities that broadband technology affords to those in our community – from telemedicine to distance learning to applying for jobs online.”

But if the flood of bipartisan objections to the their proposed “net neutrality” rules isn’t enough for the FCC commissioners, now members of the general public can voice their opposition to the proposed regulations as well.

If you agree with these bipartisan groups and numerous Republican and Democrat lawmakers that “net neutrality” regulations would be bad for America, MCA urges you to click this link to post on the FCC’s blog and let them know how you feel.

Also, feel free to leave a comment here in our blog!

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Recent announcements that the U.S. Department of Justice’s Antitrust Division and the Federal Communications Commission plan to conduct inquiries into how wireless telecommunications firms operate have left many industry observers wondering just what DOJ officials are thinking. After eight years of relatively lax antitrust investigations under President George W. Bush, many consider reinvigorated antitrust efforts to be a good thing.

Clearly, from a consumer perspective, it makes sense to ask questions of companies and industries regarding antitrust issues where a clear lack of competition exists. However, the recent moves by Justice and the FCC are puzzling because in the case of wireless communications today, competition is alive and well.

Throughout Missouri, wireless competition is evident. In urban St. Louis, the hundreds of thousands of residents have numerous choices when it comes to wireless service. According to the independent website myrateplan.com, people living in Saint Louis city have no less than seven options for a wireless carrier among prepaid and postpaid providers. Even more impressive, is that the 1,493 residents of Steelville, Missouri can choose between five different prepaid and postpaid providers.

Overall, 95% of the U.S. population has a choice of three or more wireless service providers and 60% have a choice of five or more. The choices are even more staggering when it comes to the number of wireless devices. Currently, U.S. consumers can choose from over 30 different manufacturers and from over 600 devices. In comparison, consumers in the United Kingdom have only 147 devices to choose from.

While choice is certainly a valuable measure of competition, so is price. On this front, U.S. consumers come out on top. A Banc of America Securities study from earlier this year showed that since 1994, the cost of a wireless minute in the U.S. has fallen nearly 90% to just five cents per minute. This is the lowest cost per minute among 26 industrialized member nations within the Organisation of Economic Co-operation and Development. This low cost per minute is probably why U.S. customers lead the world with an average of 829 minutes of usage per month – nearly twice as many minutes as runner-up, Hong Kong.

So whether the measuring stick is number of choices among service providers, number of choices among wireless devices, or cost for usage, the American wireless industry is not only competitive, but it is among the most competitive in the world. As the Justice Department’s Antitrust Division and the FCC continue to look at the wireless industry, it should become apparent that their efforts would be better focused on industries where a true lack of competition really exists.

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The Wall Street Journal ran a great editorial questioning the reasoning behind a new Justice Department investigation of cellphone carriers.

The currently informal investigation will reportedly look into whether or not antitrust violations occur when cellphone carriers enter into exclusive contracts with handset manufacturers.

Following this line of logic, the Justice Department should also investigate car rental companies for the exclusive contracts they have with GPS manufacturers and fast-food outlets for the exclusive marketing deals they have with toy manufacturers and movie studios.

MCA believes that protecting consumer interests should be about ensuring that consumers have choices. And as the WSJ editorial points out, “96% of Americans have a choice of at least three carriers.” Among those carriers, consumers have a multitude of options as to which handset they prefer to use.

American consumers have long benefitted from exclusive marketing deals that service providers have with handset manufacturers. The nature of these agreements provide the impetus for innovation and competitive pricing. The Justice Department should quickly recognize this to be the case and move on to more pressing matters.

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By Todd Abrajano

Recent Tribune opinion pieces by J. Scott Christianson and others imply that Senate Bill 284 – the video competition bill – is anti-consumer. Nothing could be further from the truth.

As the spokesman for the Missouri Communications Alliance, I speak on behalf of nearly 23,000 individual consumers from all across Missouri. Our organization has supporters in nearly every community in the state. In the state senate district encompassing Columbia, over 1,000 consumers have joined us in supporting SB 284. Overwhelmingly, these consumers want one thing: choice in their video service provider. And choice is exactly what this legislation hopes to bring.

Opponents of the legislation who have voiced their opinions in the Tribune are incorrect on several fronts. First, Mr. Christianson is terribly misguided when he makes the claim that SB 284’s main objective is “letting companies cherry-pick the areas where the most profit can be had.” On the contrary, the video competition bill is about just that: bringing Missouri consumers much-needed competition. At its core, SB 284 provides Missourians exciting new choices and opportunities that benefit consumers. History tells of numerous examples of how competition brings consumers lower prices, better service, and more choice. The video services market is no exception.

Additionally, others in these pages have questioned whether these benefits will be realized by consumers in Missouri. In his February 11 Tribune letter, Jeff Bassinson stated, “Proponents of this bill – cable and telephone companies – claim that this will increase competition and lower cable bills. Of the 11 states that have passed similar bills, however, I know of no state in which either of these things has happened.” I would encourage Mr. Bassinson to do some research and take a closer look at the facts.

Just last month, a policy study released by the nonpartisan Reason Foundation concluded, “Where enacted thus far, franchise reforms benefits have been undeniable. Consumers have enjoyed greater choice and a range of new services, including on-demand video and ‘a la carte’ content selection, at lower cost. Legacy cable providers have responded to new competition by lowering costs and improving service.” Moreover, Bank of America studies have concluded that prices have dropped by over 42 percent in various communities across the country where statewide video franchises have been introduced and new competitors have entered the market.

Finally, Mr. Christianson misrepresents the facts when he claims that continuing deregulation of cable and telephone companies has not resulted in the benefits outlined above. The evidence proves his claims are incorrect. In a Federal Communications Commission report released on December 27, 2006, Chairman Kevin Martin stated, “In 1996, Congress passed a comprehensive statute that embraced the idea that competition was preferable to regulation. Since then, the price for every service the Commission regulates has decreased—except for cable.” Chairman Martin offered that the reason why cable prices have not decreased is that there is not enough real competition for video services.

The bottom line is that Missouri consumers want a choice. SB 284 will enable competitors to bring that choice to Missourians as soon as the bill becomes law. Members of the Missouri Senate, both Republican and Democrat, have worked tirelessly with telephone companies, the Missouri Cable and Telecommunications Association, consumer groups, and even representatives from Columbia’s public, education, and government channels to craft a bill that takes all interests into consideration. The time for video competition is now. The Missouri legislature should quickly pass SB 284.

Todd Abrajano serves as spokesman for the Missouri Communications Alliance.

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The Missouri Communications Alliance supports the concept of this legislation.

A more stringent regulatory environment for VoIP erects barriers to entry for new competitors, stifling competition.

Less regulation of VoIP service is beneficial for consumers:

More competition
As a result of VoIP technological advances, VoIP providers and start-ups are charging into the Internet voice market at unprecedented rates. VoIP is enabling a host of new non-traditional competitors to enter the voice market which was once the sole purview of a incumbent telephone company. Software, hardware, networking gear companies and innovators in their basements are now able to program new voice applications and become global voice providers with the reach of the global Internet.

Lower prices
To respond to growing VoIP Competition, the New York Times reports the traditional Bell operating companies have been strategically dropping the price of traditional phone service. In New York, Verizon recently sent letters to customers offering a calling plan that includes unlimited phone service for $35 a month, instead of $60, a 42 percent cut. For people signing up for service through its Web site, AT&T now offers unlimited local and long distance service for $40, down from $50 a year ago. (NY Times, Internet Calling Pressures Bells to Lower Rates, July 3, 2006)

More options
For consumers, the benefits of VoIP technology are profound. With a broadband connection, consumers will be able to choose directly the type of services and the specific provider they want to deliver it independent of the incumbent broadband provider, and regardless of the type of services the incumbent has to offer.

VoIP gives competitors alternative routes to the subscriber – phones are no longer tied to phone lines. VoIP services can be reached over Cable, Fixed wireless, 3G wireless, Broadband over Power Line, Wi-Fi, Wi-Max, and even satellite broadband networks in the most remote locations.

Inhibiting competition in Missouri’s VoIP market through increased regulation would be detrimental to increasing broadband build-out in rural areas of the state, and hamper opportunity for smaller firms to provide access and choice in rural communities.

Nowhere is VoIP opportunity as profound as it is in rural America. It can bring jobs, deliver new economic opportunities, and reconnect distant families. This transformation will enable consumers to bridge the distance between urban and rural America, people to do things never before thought possible, rural telecom companies to extend broadband more affordably, businesses to transform the way they do business, rural communities to connect to a new world of remote job opportunities, and rural economies to become an engine for higher paying information age jobs.

VoIP: Helping Rural Providers Become More Profitable:

Rural Texas Co-op Uses VoIP to Ring Up Savings and Advanced Features. Coleman County Telephone Cooperative (CCTC) in rural Texas was able to use VoIP together with other technologies to deliver cutting services to its rural subscribers and put the company on a more profitable footing. Using VoIP, CCTC deliver a profitable Triple Play of next-generation services — voice, video and data. Instead of getting a month for traditional voice service, CCTC’s average monthly subscriber rate is predicted to reach $57 voice, $92 for voice and data, over $100 for all three.

Rural Oklahoma Phone Company With Declining Revenues Uses VoIP to Create a More Profitable Cross Telephone in rural Okalahoma faced declining subscriber revenue. But it embraced VoIP and a voice, video and data over a converged IP network. This end-to-end IP solution enabled Cross Telephone new advanced services, increasing the average subscriber rate from $45 per month for local telephony calls) to approximately $105 per month to include VoIP, digital TV, and high-speed Internet access.

“Broadband voice (also known as Voice Over Internet Protocol or VoIP) is at a watershed moment and must be dealt with through clear national standards. Subjecting it to individual state jurisdictions is the wrong approach, and one that would hamper investment and slow its deployment to consumers.”
— U.S. Senator John Sununu (New Hampshire)

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The Missouri Communications Alliance (MCA) applauds any progress on video competition that benefits consumers. Missourians have waited far too long for real competition in the video services marketplace, and the thousands of MCA members throughout Missouri are saying the time for video competition is now.

As Missouri’s largest consumer advocacy group dealing with communications issues, we are pleased that Senator John Griesheimer has filed legislation - SB 284 - that would allow new competitors to enter the video services arena on a statewide level. Once passed, the video competition provisions of SB 284 will bring new jobs, millions in new investment dollars, and state-of-the-art technology, as well as lower prices and better service to consumers across the state of Missouri.

As the video competition bill moves through the legislative process, the MCA will emphasize that the main focus of SB 284 should be the elimination of barriers to entry in the video marketplace, and we will strongly advocate for the provisions in the bill that open markets and bring consumers choice in video service providers.

Throughout the 2007 legislative session, the MCA will to continue to vigorously support Missouri consumers by working with the members of the Missouri General Assembly and encouraging them to join the eleven states that have embraced choice in the video market. Across the country, when lawmakers have been given the opportunity to vote on video competition, 93 percent of those lawmakers have voted in favor of competition. The MCA is confident that Missouri legislators will feel the same way about this issue and swiftly move to make video competition a reality for consumers across the state.

The Missouri Communications Alliance is a statewide coalition, thousands of members strong, that advocates on behalf of Missouri consumers who deserve lower costs, better service and real choice in their television, phone and internet service.

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I am puzzled by assertions made by Nancy Yendes, Springfield’s assistant city attorney. In her News-Leader submission of Nov. 29, Yendes attempts to justify the recent enactment of Springfield’s anti-consumer video services ordinance by stating that the City Council simply has a “different approach” to achieving competition.

Yendes’ claims that city officials actually want competition are extremely suspect because, unfortunately for consumers, the city’s misguided approach basically eliminates any possibility that a real competitor to incumbent cable providers will emerge as long as the city ordinance stands.

Yendes correctly argues that Creve Coeur’s recently approved agreement does not guarantee that AT&T will provide video service. But she fails to see what the Creve Coeur agreement does guarantee: the removal of barriers to entry and an opportunity to provide video service in a truly competitive environment.

It is this opportunity that the Springfield ordinance lacks and is the main reason why the Springfield ordinance is the prime example of what not to do. Springfield chose to erect a Berlin Wall around incumbent cable providers. Creve Coeur instead heeded the words of Ronald Reagan and chose to tear down that wall.

In defending Springfield’s position, Yendes touts the position of the cable industry by claiming that the city is just ensuring a “level playing field.” However, in passing their agreement, Creve Coeur officials rightly recognized that prospective competitors should not be hamstrung by the same rules that exist for monopoly operators.

That realization makes it extremely likely that AT&T will bring its technology to Creve Coeur and that its citizens will reap the rewards of real competition: lower prices, better service and more choice.

Luckily, while the Springfield ordinance is a setback for local citizens who are tired of ever-increasing cable bills, the fight is not over. Another opportunity to bring real video competition to the city is just weeks away. Beginning in January, state legislators will begin debating new legislation aimed at creating a statewide video franchise. Several members of the legislature, including Rep. Charlie Denison who served on the Springfield City Council in a more enlightened era have expressed their strong support for this issue and should be applauded for their stance.

Recently, similar legislation has been enacted in numerous states across the country including Texas, Indiana, Kansas and California bringing billions of dollars in high-tech infrastructure investment, high-paying new jobs, lower prices and consumer choice. Missouri legislators and Gov. Matt Blunt should quickly follow suit.

Additionally, some lawmakers may be concerned by another allegation made by Yendes: that statewide video franchise legislation or agreements like the one in Creve Coeur would only benefit the “wealthiest few.” But this is absolutely untrue. The Missouri chapter of the NAACP recognized this when it passed a resolution in support of statewide legislation which states, “The impact of immediate legislative action would serve as a catalyst for increased capital investment and job growth in Missouri, which leads to overall economic growth and deployment of advanced communications networks, services and applications to Missouri consumers, particularly to low-income and underserved communities.”

As Missouri’s leading consumer advocacy group on communications issues, the Missouri Communications Alliance encourages consumers to add their voices to this debate by visiting www.MoComm.org and joining with us in our cause.

By encouraging lawmakers to make the right choice in support of statewide video franchise legislation, Missourians in Springfield and all across the state can eventually experience the benefits of real video competition.

I am puzzled by assertions made by Nancy Yendes, Springfield’s assistant city attorney. In her News-Leader submission of Nov. 29, Yendes attempts to justify the recent enactment of Springfield’s anti-consumer video services ordinance by stating that the City Council simply has a “different approach” to achieving competition.

Todd Abrajano is a spokesman for the Missouri Communications Alliance

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Cable Competition Would Benefit Missouri

In a commentary piece published in the Springfield News Leader, Show-Me Institute policy analyst, Timothy B. Lee, explains how cable competition should work in Missouri.

Several different companies compete for your business, and you choose the one that offers the best service at the lowest price. But that’s not how the cable TV industry works in Missouri. For most consumers, the only alternatives to your local cable company are satellite TV or rabbit ears, said Lee.

Lee points to new studies by the Mercatus Center at George Mason University and the Progress and Freedom Foundation that show cable franchise reform not only increases competition, but saves Missouri consumers millions of dollars per year. Lee also found that the benefits of cable competition stretch beyond month to month savings on bills. Those who switched to a cable competitor found they received higher-quality, more responsive service.

Unfortunately for Missouri, the interests of consumers seem to have taken a backseat. That’s especially problematic because Missouri is in competition with other states for new investment, said Lee.

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