The Fighting 29th

All about New York's 29th Congressional District

Reader groundhum sent a link to a very interesting article in Ars Technica about Time-Warner, net neutrality and billions of dollars in stimulus money. It shows how TWC continues to try to exert its influence on the future of the Internet to protect its other businesses.

The stimulus bill recently passed by Congress includes $7.2 billion for broadband in unserved and underserved areas. To spend this money, which will be distributed as grants, the agency administering the grants has asked the FCC for help defining "broadband", "unserved" and "underserved". The FCC is also supposed to help define "non-discrimination obligations that will be contractual conditions" for the grants.

"Non-discrimination" or "net neutrality" means, in a nutshell, that an ISP can't block or slow down certain Internet traffic. In Time-Warner's case, the danger is that it will throttle video and voice-over-Internet traffic to force users to continue subscribing to a "full package" of cable, telephone and Internet services.

The FCC has asked for comments on how it should define terms for the grants, and here's what Time-Warner said:

Now is not the time, nor is this the appropriate proceeding, to engage in a debate about the need for net neutrality obligations," two TWC lawyers warned the FCC on Monday. The discussion should stay strictly focused on broadband deployment, the company insists.

This has been Time-Warner's strategy all along. "Focus on deployment" means that we should let Time-Warner use public right-of-way for its fiber network, give them a monopoly on delivering service over that network, and then allow them to charge whatever they wish and limit the service as they please. We don't do that for water, sewer or electric, and there's no reason we should do it for Internet.

The National Republican Congressional Committee (NRCC) is launching robocalls in the 29th which will try to link Eric Massa with Nancy Pelosi. There are also radio and TV ads, but it's not clear if any of those are going to show in the district.

Linking Pelosi with Massa is a long-time Republican strategy that didn't work out too well for Randy Kuhl. Pelosi's approval rating is as good or better than Congress' overall, it pretty much tracks Congressional Democrats' ratings, and it completely overwhelms Congressional Republicans. Republicans are between 18-30% approval, versus 43-50% for Democrats.

While the Republicans flail around trying to find an unpopular Democrat to link to Massa, unless trends change, Massa's job in 2010 will be much simpler. He just needs to point out that his opponent is a Republican.

The Messenger-Post coverage of Eric Massa's Henrietta town hall says that Time-Warner's caps were the main topic of conversation there. Sconsetmonkey has an account of an encounter with Time-Warner reps at the Pittsford town hall, and Rochesterturning promises video of Massa's town hall soon.

As this issue comes to a boil in the 29th, Time-Warner and its industry mouthpieces are laying down fresh new tranches of bullshit. Here's a classic:

"According to industry analysts, the infrastructure may not be able to accommodate the explosion of online content by 2012,” Landel Hobbs, chief operating officer of Time Warner Cable said in an online statement. “This could result in Internet brownouts. It will take a lot of money to fix the problem...”

As has been reported here, the cost for Time-Warner to upgrade its network to support 10X the amount of current traffic is between $20-$100 per subscriber. Also, Time-Warner's per-subscriber bandwidth costs have actually been decreasing. There's something "brown" here all right, but it's not the Internet.

According to Stop the Cap, an industry magazine wonders if Eric Massa's Corning ties are the reason he supports anti-cap legislation. Corning produces fiber-optic cable, and Verizon's FiOS uses fiber-optic cable, so Massa must want FiOS deployment. After more thought, the columnist concludes:

To me, a simpler explanation is that Massa, a freshman congressman, is looking to score populist points and easy press with an anti-corporate tirade.

That is a simpler explanation, if you're an industry shill. "Populism" has become an all-purpose smear word attached to anyone representing citizens' legitimate interests. It's clear that a 4X increase in Internet charges is not in the best interest of Rep. Massa's constituents, and he was elected to represent them, not a corporate monopoly.

According to 13-WHAM, Time-Warner is out with a new proposal for Internet rationing. It's worth a look if you want a good laugh.

On one end, it includes a ridiculously limited RoadRunner "Lite", with a 1GB cap, for $15/month. This special tier will pay double, $2/month, for every extra GB of overage.

On the other end, TWC has finally come up with their number for unlimited Internet access, i.e., what every TWC customer has today. Instead of today's $40/month (if you're a cable subscriber), the new price is $150/month. That's almost a 4X increase -- in the middle of a recession.

It's been clear from the start that Time-Warner execs were asking for immediate, draconian and punitive regulatory oversight, but it wasn't clear until today that they are going to beg for it.

By the way, StoptheCap has been doing a little light reading of TWC's 10-Qs, and they've found that TWC's costs for Internet bandwidth decreased by 11% between 2007 and 2008, and last year TWC said this:

High-speed data costs decreased for the three and nine months ended September 30, 2008 primarily due to a decrease in per-subscriber connectivity costs, partially offset by subscriber growth. [Emphasis added]

So much for the claim that bandwidth hogs are killing TWC revenue.

In addition to his statement about Internet monopolies in this morning's press conference, Eric Massa has issued a press release saying that he "will be taking a leadership role in stopping this outrageous, job killing initiative."

One of Massa's first corporate donations was $1,000 from Time-Warner Cable. Apparently, TWC's donation had little impact on Massa's decision to fight their broadband cap, and that's worth noting.

Is broadband a luxury like cable TV, or is it a necessity like water and sewer? In the US, we act as if it is a luxury, and efforts to treat it like a necessity have been thwarted by cable and telephone companies.

Australia is about to do the opposite. The country has announced plans to build a nationwide fiber network over the next few years. The national government will build and own the network, and Internet providers will compete to provide service on it.

The plan sounds like a good way to deal with the issue of "the last mile". When broadband providers own the cable to the house, they are likely to flex their monopoly muscle. But when government owns that cable, they can create a market where tens or hundreds of providers compete. It's a smart way to create a vibrant market for a service that's critical for economic development.

The New York Times has a story on how incredibly cheap it is for cable companies to upgrade their Internet infrastructure. For $20/home, a Japanese cable company was able to upgrade its network to provide access that's 16 times faster than Time-Warner's. That service costs $60/month in Japan, and it isn't capped. In Rochester, Time-Warner wants to charge almost that much ($55/month) for usage-capped, slower service.

The Times also mentions a rival Verizon service, FiOS. This is a fiber-optic service that runs 5 times faster than Time-Warner's. Unfortunately, in Rochester and probably most of the 29th district, we won't see this service. That's because Frontier, not Verizon, is our Rochester's local phone company. Frontier's capital budget has been gutted by multiple acquisitions, and they have no plans to upgrade their copper infrastructure to fiber.

Time-Warner is only rolling out usage caps in markets where FiOS doesn't compete. Because the 29th is one of those markets, we're going to be at a distinct technological disadvantage compared to other areas that have real Internet competition. The economic development of Rochester and the entire region could be stunted by the Time-Warner/Frontier duopoly.

Reader Michael sends a BusinessWeek piece about Time-Warner Cable's plans to institute consumption-based Internet pricing in the Rochester market. Unfortunately, it's not an April Fool's joke.

This isn't the first such effort in the region. Last Fall, Frontier changed their terms of service to include a very low (5GB/month) cap. After an outcry, including a website dedicated to stop the cap, Frontier backed down.

There's nothing wrong with the concept of usage-based Internet pricing, but all of the usage tiering I've seen is unrealistic. Time-Warner's is no exception: by one calculation, their top tier, which is still pretty limited, would lead to $200/month in overage charges for a family whose use I'd classify as "moderate".

I have yet to see a pricing plan that acknowledges that the average user in 2009 spends a fair amount of time on YouTube, that Internet use will grow, and that the Internet provider's cost for raw bandwidth has been shrinking. These plans also ignore that broadband Internet has been sold on basis of speed, not usage, for the last decade, and that the Internet providers have cut their own throats by promising ever-greater speeds without major price increases.

Most importantly, none of these pricing plans give anything to get their greatly increased profits. These new plans don't guarantee speed or availability. They just demand much more money for less service.

There's little or no competition in the home Internet market -- Time-Warner has a monopoly in large parts of the 29th district. One way to get a real market here and elsewhere is to treat Internet service the way we treat telephone service. Local service - the connection to the nearest switching center - would be the responsibility of Time-Warner or Frontier and have a regulated, low price based on the actual cost of delivering the service. At the switching center, other, nationwide bandwidth providers would be able to compete with Frontier or Time-Warner for our Internet business.

Like long-distance, once real competition hit the market, we'd see an ever-diminishing cost for Internet bandwidth. It's only because TWC and Frontier have a monopoly that they'd even consider $200/month Internet pricing. Their recent actions have shown that their Internet monopoly needs to be broken.

Reader Stanley sends last week's Capitol Newspaper article about the prospects for a 2010 race.

Stanley was nice enough to summarize three points from the piece. I don't think the arguments for any of them are great, and I give my reasons below.

1. Kuhl's problems won the race for Massa.

True, in part, but Massa also ran a top-notch campaign, with grassroots organizing, excellent fundraising, and good GOTV. Massa is not the Democratic equivalent of Joseph Cao -- someone who was elected only because of the missteps of his opponent. As an incumbent, Massa's a formidable opponent, no matter who runs against him.

2. Maggie Brooks is the GOP frontrunner.

Maggie's name gets mentioned a lot, but it's not even clear that she lives in the district. Also, I don't see a Monroe County Republican swaying Southern Tier blanks who might be inclined to vote for a Republican. It's hard to overstate the importance of this seat to the Southern Tier, and Maggie's power base is in Rochester, not Elmira or Corning.

3. The Tedisco/Kolb factor. If Assembly Minority Leader Jim Tedisco loses in NY-20 tomorrow, Brian Kolb, a Canandaigua Republican in line for Tedisco's job, might be more likely to run for Congress.

If so, Mr. Kolb should declare his candidacy on Wednesday because he'll need the time to raise money for a Congressional run. His state office warchest is useless in a federal race. Also, if Tedisco does lose, isn't that a bit of a message to Mr Kolb and other Assembly Republicans who are thinking about making the jump to Congress?

The elephant in the room, redistricting, is never mentioned in the article, and it's a big issue. Before the 2012 race, the boundaries for WNY districts are likely to be redrawn to the benefit of Democrats. A Republican elected in 2010 in NY-29 may be a one-term wonder, and I'd expect a lot of smart politicians (like Maggie Brooks) to sit out next year's race and run in 2012 or 2014 after the redistricting dust has settled.

Update: Stanley writes to point out the Massa vs. Slaughter/Morelle comment in the piece. From what I've seen, Slaughter has been pretty cooperative with Massa, holding joint conferences and inviting him to serve in the new upstate caucus. I'm not saying that Louise and Eric are BFFs, but there doesn't seem to be obvious friction.

This is the economic story of the day (and, probably, the year, and maybe of our lifetime). Yesterday, Ben Bernacke decided, in the words of one economist, to buy "everything in America that isn’t nailed down".

It's telling that this story has gotten little coverage amid all the fussing and fighting about AIG bonuses. The Fed is putting over a trillion dollars behind a massive and risky effort to force liquidity into our financial system. It could lead to hyper-inflation, and it will probably devalue our currency. Since the Fed is led by people who know the consequences of their actions, I can only assume that the alternative was much, much worse.

That said, everyone can feel free to continue complaining about AIG bonuses.