Big Telecom Sues New York State For Trying To Bring Cheap Broadband To Poor People
from the do-not-pass-go,-do-not-collect-$200 dept
If there's one thing that the U.S. broadband industry is terrified of, it's price regulation. The idea that the government might eventually cap the rates regional monopolies can charge in the absence of meaningful competition keeps a lot of executives up late at night. But despite a lot of fear mongering by telecom industry folks on this front, the U.S. has never really gotten even close to that reality. Repeatedly, even the most modest of non-price related regulatory telecom oversight efforts (from net neutrality to privacy) are routinely and easily dismantled by powerful lobbyists either before they can take effect or not long after.
Recently New York State passed a new law (pdf) demanding that regional broadband providers (Verizon, Charter Spectrum, and Altice) provide low-income consumers $15, 25 Mbps broadband tiers to help them survive COVID. The goal: to try and help struggling Americans afford the high cost of broadband. Under the proposal ISPs are also allowed to offer $20, 200 Mbps tiers, with any price increases capped at two percent per year.
Regulators engaging in anything even close to price regulation of regional monopolies is, again, said monopolies' worst nightmare. As a result the broadband industry quickly sued New York, insisting that the state is forbidden from passing such a law thanks in part to the Trump administration's net neutrality repeal. While many folks think that repeal just killed net neutrality rules, that was never true. It also killed much of the FCC's consumer protection authority, including its ability to adequately respond to billing fraud (which happens a lot in residential broadband thanks to misleading surcharges and fees).
The repeal even went one step further in claiming that states also aren't allowed to protect consumers from telecom industry shenanigans. The problem: the courts haven't been looking too kindly upon this argument so far. In part because once the FCC abdicated its regulatory authority over telecom, it lost any authority to tell states what they can or can't do. The industry has used similar arguments to try and attack state-level net neutrality rules, and it hasn't gone particularly well for them:
"An agency that has no power to regulate has no power to preempt the states, according to case law,” Stanford Law Professor Barbara van Schewick told Motherboard. “When the FCC repealed the 2015 Open Internet Order, it said it had no power to regulate broadband internet access providers. That means the FCC cannot prevent the states from adopting net neutrality protections because the FCC’s repeal order removed its authority to adopt such protections."
Basically, the broadband industry has spent four years having its cake and eating it too, demanding that nobody on either the state or federal level has any authority to tell broadband providers what to do, whether we're talking about basic rate regulation or even the most basic of consumer protections. While the Trump and Ajit Pai FCC thought that was just nifty, it's an argument that's not being taken particularly seriously by the States, which have simply doubled down on their own regulatory efforts to fill the giant consumer protection void left by Trump-era apathy:
"I knew giant telecom companies would be upset by our efforts to level the playing field, and right on cue, they're pushing back," New York Governor Andrew Cuomo said in a statement. "Let me be abundantly clear—providing internet in the Empire State is not a god-given right. If these companies want to pick this fight, impede the ability of millions of New Yorkers to access this essential service, and prevent them from participating in our economic recovery, I say bring it on."
Keep in mind New York is simply trying to force ISPs to offer low-cost service to low-income families. Despite the posturing here by Cuomo, the state likely lacks the political courage to take this idea one step further and regulate prices for all New York State residents truly upsetting deep-pocketed campaign contributors.
Again, none of this would be necessary if we had adequate competition in residential US broadband. But because pushing policies that increase competition upsets AT&T, Verizon, Comcast, and Charter, a corrupt Congress and captured regulators aren't willing to really do that. Meanwhile, the US telecom sector continues to whine about a "fractured landscape of state-level requirements," hoping you'll ignore the fact that they created this entire mess by repeatedly, brutally attacking absolutely every effort at even the most modest federal consumer protection oversight.
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Filed Under: broadband, competition, digital divide, fcc, low income, new york
Companies: altice, charter, verizon
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'Less money' in a monopoly position is still quite profitable
If there's one thing that the U.S. broadband industry is terrified of, it's price regulation.
As much as price regulation(or any regulation really) might get under their skin I imagine their greatest fear is competition actually, as if there are other viable alternatives then they either offer a product/service worth paying for or they'll quickly find their customers switching providers, something which drastically cuts down on the bargaining power they have and their ability to dictate terms to their customers.
With regulations they have lots of practice in technically adhering to/fulfilling requirements while doing as little as possible and squeezing as much money out as possible, but it's somewhat more difficult for them to work around actual competition as doing so requires them to either spend time and money improving their service, cutting prices to match that of their competitor's, or both.
This I'd say is why they fight so hard to kill off and keep out any viable alternatives from the market, because while it's cheap enough to buy a few politicians to allow them to ignore any regulations or requirements when they're the only game in town if they have to deal with real competition things get a lot harder and a lot less profitable for them.
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competition
NY State should likewise enact a new law demanding that private electronics retailers provide low cost PC's and internet devices to low-income consumers. Same for food and clothing.
Politicians dictating retail prices is a really bad idea under any circumstances.
If absent 'competition' is the key Broadbandproblem, then state government is fully capable of removing the current barriers to fair competition -- but they will not do it.
So the government politicians themselves are the actual problem here.
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Re: competition
As anyone familiar with telecom knows, running wires is a natural monopoly, or in this case duopoly since telcos and cablecos run slightly different wires. There are no legal barriers to overbuilding new networks, only economic ones. If you're aware of ways that NY state can change the laws of economics, I know a lot of people who'd like to hear about it.
Actually there is a way, structural separation, but it would have to happen at the Federal level. It works great in Europe where there are zillions of ISPs sharing utility wires.
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Re: Re: competition
...which can be removed by government, and have been removed by a lot of non-US governments. In Canada, the incumbent cable and landline telephone companies have to allow third parties access to their networks (but due to regulatory capture, people with fiber are still screwed—the third-party wholesale tariff is about double the incumbent retail cost—and there's no help on mobile networks). The UK has gone further: they required BT to form a separate company to own and maintain the wires (because BT was giving its own subscribers preference over third-party subscribers, despite repeated warnings from the regulator).
In the USA, wired network providers tend to have franchise agreements with municipalities. A municipality could presumably prohibit a franchisee from directly selling end-user service, and/or could set open-access requirements.
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Re: Re: competition
"running wires" is absolutely not a natural monopoly, as anyone familiar with the formal economic defintion of natural-monopoly would know.
The actual situation is a government enforced cartel
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Re: Re: Re: competition
Unsurprisingly, the real world definitions disagree with your Libertarian-flavored kool-aid narrative:
https://www.economicshelp.org/blog/glossary/natural-monopoly/
https://www.economicsonline .co.uk/Business_economics/Natural_monopolies.html
https://stats.oecd.org/glossary/detail.asp?ID=3267
https://en.m.wikipedia.org/wiki/Natural_monopoly
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Re: Re: Re: Re: competition
Some of those definitions seem too general. When is having a single producer not the most efficient in terms of production costs?
Wikipedia's definition in terms of infrastructure costs and "overwheming" barriers to entry is more useful. By this definition, the situation may vary by area. In the USA, utility pole attachments rules are quite restrictive, and network providers may require franchise agreements with each city. In areas where any idiot can throw wires onto a pole or under a roadway with little oversight, it may not be a natural monopoly.
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Re: Re: Re: Re: Re: competition
"When is having a single producer not the most efficient in terms of production costs?"
Efficiency isn't the problem. Yes, a monopoly is more efficient. That's not why it is discouraged.
It is because in a monopoly there's an absence of choice and thus that single producer has no incentive to meet consumer demands in any way - either in quality or in cost.
This...should not be a thing a european understands better than an american...
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Re: Re: Re: Re: Re: Re: competition
Well, the point was that two of those definitions (which seem to be from credible sources) said that a natural monopoly was anything where one producer was more efficient than multiple ("if a single firm can serve that market at lower cost than any combination of two or more firms"; "the most efficient number of firms in the industry is one"). Which, in my mind, is true of almost any business, even ones with a lot of competition, because competitors always duplicate each other's work to some degree.
It's a big problem, but doesn't really have anything to do with the definition of "natural" monopoly.
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Re: Re: Re: Re: Re: competition
"When is having a single producer not the most efficient in terms of production costs?"
You can be efficient and a price gouging monopoly that refuses to serve a large portion of the market at the same time.
"In areas where any idiot can throw wires onto a pole or under a roadway with little oversight, it may not be a natural monopoly"
Those areas tend to be unregulated third world nations, who are probably not who you're wanting to emulate. In the developed world, which recognises that last mile infrastructure is a natural monopoly and regulates accordingly, we have far superior competition and choice, which makes moves like New York's attempt here unnecessary.
Where I am in Europe, I don't have a choice of who provides the physical fibre connection to my apartment or who installs the telephone line, but I do have a wide range of choice as to who I get my internet and telephone service provided by. This is how it should be, and the efficiency and pricing fostered by competition reflects this.
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Re: Re: Re: Re: competition
...then just plainly state your "real" definition of natural-monopoly for everyone here to easily be enlightened.
There are thousands of web sites that discuss natural-monopoly.
It's a tired old dodge to shotgun out a few obscure URL's and imply that they somehow conclusively prove your viewpoint.
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Re: Re: Re: competition
""running wires" is absolutely not a natural monopoly, as anyone familiar with the formal economic defintion of natural-monopoly would know."
Only if one is highly unfamiliar with factual reality.
Permanent wiring is as natural a monopoly as power and water. There are physical constraints barring anyone from having the choice of five sets of plumbing and sewage systems as there are when it comes to multiple power grids and multiple fiber networks.
This is something the rest of the world has known for some time which is, I guess, why US broadband ranks among third world nations when it comes to online access.
Seriously, care to tell me how, from the libertarian cool-aid perspective the "superior" unregulated market of the US consistently manages to run the broadband race like a geriatric with a stroller despite having had a few decades worth of head start on everyone else?
To me this looks like the US model is proving its inferior model time and time again while still clinging to it like an old soviet commissar whose first response to confrontation with the4 facts is to spout long debunked ideology.
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Re: competition
Those devices are available, new and used from various retailers.
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Re: competition
They don't need to. I recently purchased a perfectly good PC for $25 at a local thrift shop. They had a whole wall of 'em. They aren't Ryzen or RTX, but they'll run office stuff just fine. If you can afford $15/mo for internet then you can probably afford $25-$50 for a PC that should last at least two or three years.
And the government itself already provides food at least through food stamps, although you are correct that the government isn't setting retail prices there. However, the government also hasn't given grocery stores billions of dollars in grants specifically intended to provide access to low income or otherwise under-served communities, so it's also about time that they actually start asking for some return on those investments...
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Re: Re: competition
that's the unstated point under the lite satire -- open competitive markets provide consumers with ots of choices and wide price spectrum
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Re: Re: Re: competition
"open competitive markets provide consumers with ots of choices and wide price spectrum"
Yeah, and that competition doesn't happen with utilities where physical constraints render such competition impossible. Having a choice of different sets of permanent wiring is as implausible as having multiple sets of power grids or sewage systems.
Every actor in a free market wants to abolish the necessity to compete. That's why government regulation and interference is necessary if you want choice to remain on the market.
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Re: competition
Would you be happier if the gov't said that a certain percentage of some criterion was the requirement, instead of a certain dollar amount? Somehow I doubt you'd be happy with anything that smacks of.... I dunno - communism? facism? socialism? what??
For many of us, it's painfully clear that on your report card, it says "Basic Economics 101 - Failed (Did Not Attend). You need to learn that gov't, in myriad forms, is preventing the "1 percenters", or the mega corporations if you prefer, from running over all of the rest of us, and effectively returning us to a feudal state of affairs. But since you refused to attend classes where this kind of thing is taught by professionals who are eminently qualified, I'm certainly not gonna waste my time on trying to get you understand even the most fundamental concepts of how an economy works - I've already lost enough hair, TYVM.
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Re: competition
AC's false analogy ignores that physical goods have production costs that bits don't.
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Re: Re: competition
Should we be surprised that a libertarian talking about the online environment or network backbone argues in as bad faith as a soviet commissar expounding on the virtues of communism?
Seriously, the US had a decades-wide head start on the internet and all things electronic. Yet today its ISP/Telco markets approach third world level when it comes to choice, price and quality. At some point you'd think the libertarians would actually learn to business and pick up basic math.
It's as if Atlas Shrugged and The Fountainhead is holy scripture to these people, rendering them immune to reality.
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Thanks Karl
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Imagine if states pushed to open up the USF piggy bank to give grants for states to run their own wires (like the telcos don't) to service everyone.
They talk a nice game about free markets & competition, but I don't think they understand what those concepts are supposed to mean.
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this is nothing more than wealth redistribution. steal one person's money and use it to buy broadband for another. great example of government overreach.
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Re:
What money has or will be stolen?
If you really want to talk about stolen money, lets talk about the billions of tax-money the ISP's have gotten to build out their networks which never really happened.
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Re: Re:
government has no money. if gov subsidizes broadband to reduce the price then the taxpayer will pay the bill. that is theft.
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Re: Re: Re:
Sigh, another E-101 failure. (See my above comment.)
Sparky, it's gonna be a bad day for you when it finally sinks in that Government is the money. If it were any other way, each and every one of us as individuals would be "in charge" and fighting over that "in charge-ness" with weapons of doom, trust me on that one.
No, for your purposes (and simplified beyond the pale!), gov't is indeed the source from which money springs. But the method of how that works is far deeper than a few paragraphs on TD is going to be able to illuminate for you. Best you go back to college, and this time listen to the professors that you paid for.
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Re: Re: Re:
Put down the bong, sir.
You're not describing a theft, you're just characterizing a policy as one. And you're doing it wrong, too! No subsidy is being proposed: the lowered prices would be enforced by law.
I think that's technically a mugging, or even a racket. /s
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Re: Re: Re:
As Rocky said above,
Government has already subsidized telecom. Telecom hasn't delivered on what they promised to do in exchange for that money. There's theft going on for sure, but it's not the government doing it in this case.
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Re: Re: Re: Re:
i agree with both of you that the isps do not treat customers fairly. i'm a comcast customer and i know their pricing models and customer treatment is horrible. they get no sympathy from me. and i disagree with any and all subsidies to any industry or business -- ever. it should be ended immediately, but that does not justify stealing my money to pay for someone else's broadband service.
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Re: Re: Re: Re: Re:
Please tell me, how is the government stealing your money when they regulate prices for something?
The government regulate a lot of prices, they also give subsidies to a lot of stuff because it gives a net benefit to the US. Taking the stance that the government should never give out subsidies shows a distinct lack of understanding how the economy works and how it can benefit the public.
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Re: Re: Re: Re: Re: Re:
"Please tell me, how is the government stealing your money when they regulate prices for something?"
They're not, unless you're one of the simple minded folk who consider all taxation to be theft.
What's sad is that the corporations he's defending are stealing his money (taking public money to install infrastructure that never actually gets installed), but some people are conditioned to defend them for some reason.
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Re: Re: Re: Re: Re:
"and i disagree with any and all subsidies to any industry or business -- ever."
A sound principle. And as soon as you abolish the ability of private entities to purchase congressional seats with campaign funding and backscratching you may be able to get somewhere around that.
However, in this, the best of all possible worlds, my dear Tartúffe, it has somehow not panned out the way. The free market, unregulated, consists of companies whose holy grail is to abolish competition altogether.
To arbitrate properly and enforce a level playing field government needs the power to enforce far harsher regulation on business. Since that is, in the US, anathema, then lesser ways of encouraging corporations to act ethically have been utilized - the naked bribery of subsidies.
You want this all to go away then you need to stop giving companies as free a reign on how they go to market. Telcos and ISP's in the US are monopolies with complete strangleholds on the customer base and on every possible competitor. As long as they are they can wave their hand, ask for money, and government must leap to obey or watch their citizenry shafted.
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Re: Re: Re:
If I agreed with you, then I'd also say that you should be way more concerned with the amount being funnelled to billionaires and weapons than with whether or not poor people have access to a jobs market. Especially since, like things like food stamps, such things generate a net income for the government, unlike the military toys you have rotting in the desert.
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Re: Re: Re: Re:
what i'm always concerned with is a constitutional government. national defense is the fed's #1 constitutional role. giving away money for broadband appears nowhere in the constitution.
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Re: Re: Re: Re: Re:
The government gives away money or invest it in a lot of things that's not mentioned in the constitution.
If you want to die on that particular hill, nobody is stopping you, meanwhile the rest of use realizes that the government will continue giving away money or invest in things not mentioned in the constitution for the simple reason that the constitution gives them that power.
I can only come to the conclusion that you have a very poor grasp on how the US constitution and government works.
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Re: Re: Re: Re: Re:
our current defense structure is also nowhere in the constitution
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Re: Re: Re: Re: Re:
As much as I may sympathize with (some of) your view, this isn't a federal initiative. It's a New York one. Frankly, I have no idea if it's allowed by the New York state constitution, but I suspect you don't either.
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Re: Re: Re: Re: Re:
"giving away money for broadband appears nowhere in the constitution"
To my knowledge, neither are roads, aviation, libraries, and all sorts of other things that are both generally accepted and way better for society than surplus tanks and planes rotting away.
This would seem to be one of the fundamental problems with American society - you're generally OK with vast amounts of money being thrown away on useless military endeavours and failed colonialism, but god damn it if a poor American gets a leg up in his time of need.
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Re: Re: Re: Re: Re:
"giving away money for broadband appears nowhere in the constitution."
You realize to which extent the US already subsidizes the entire middle class?
Education.
Emergency services.
Power and gas subsidies.
Etc.
The US has been giving massive, staggering handouts to companies for decades or even centuries, just to ensure that there can be a middle class. Massive tax breaks to ensure power and phone companies extend service to areas outside the high-margin markets. Even more tax breaks around power and water treatment.
Your entire system revolves around government bribing corporations with hefty tax exemptions to extend their markets or keep pricing reasonable for every american.
So if you want to talk about unfair treatment or massive theft from the taxpayer, I have to say, you're currently rearranging deck chairs on the Titanic.
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Re:
As opposed to mega-corporations using their power to overcharge everybody for less that they promise, which is the 0.1% concentrating the countries wealth into their own hands.
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Re: Re:
Billionaires made massive profits during the pandemic, partly due to tax avoidance. Some of these people are in charge of corporations that took massive handouts to install broadband infrastructure they refused to carry out.
Meanwhile, millions were put out of work during the pandemic, a situation that has made having broadband availability a necessity to find new work for many of them, something they cannot afford due to being out of work.
But, of course, it's the evil government who try to provide broadband to its citizens who are the real villains. Some people really are this stupid.
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Re: Re: Re:
Technically the previous government did go out of its way to please large corporations, so this poster would have had a point... if he'd had a history of complaining about preferential treatment to corporate interests. It's funny that these posters will never point out the government overreach unless it's to help out the less fortunate.
(Well, not that funny.)
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Re:
I'm sure you'll provide us with a reason why exercising one of the major roles for which government exists (providing services that private enterprise refuses or fails to provide) is wrong, especially in light of how many billions of tax dollars the ISPs have already received to provide such services.
I await your response.
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Re: Re:
"I'm sure you'll provide us with a reason why exercising one of the major roles for which government exists..."
Given his arguments so far I'm sure his answer is just going to be "Who is John Galt?" or some other line out of the libertarian bible.
I've given up on the libertarians. They've been sitting in the wreckage caused by just some of their philosophy being pursued by the US for the last twenty years and all they can think of is to ask for more of the same.
They do have a point the US government can not be trusted with power, but the cure isn't to keep handing that power over to corporate entities who are primarily beholden to the biggest margin.
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'the absence of meaningful competition keeps a lot of (broadband industry) executives and certain unscrupulous politicians up late at night, the former that they may lose control of the industry and the pricing because competition comes in, the latter because they may lose the back hander and under the table payments they receive atm for keeping the major industry players exactly where they want to be, in the driving seats! all this screwing of the customers is taken as read by both of the sides mentioned above and is an absolute fucking disgrace!!
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New York:
"YOU WILL MAKE A PROFIT AND YOU WILL LIKE IT!"
ISPs: "But it's not enough profit, so we don't want it, waah!"
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Under the proposal ISPs are also allowed to offer $20, 200 Mbps tiers
I'm sure they would gloss ove the space between those two values and decide they'd like to go with that option.
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