Industry lobbying keeps public in the dark about broadband

March 12, 2010

The government is spending up to $350 million of taxpayer money to create a map that will show where there is high-speed Internet service in the United States and where there is not.

Despite the large expenditure of taxpayer funds, it will display no information on price or subscriber numbers. Internet connection speeds will be averaged over an entire metropolitan area and an as-yet unknown portion of the data collected to make the map will be off-limits to the public.

And in an odd twist, state grantees getting paid to collect the information are expected to get some of their data from the Federal Communications Commission, begging the question – why not require the FCC to create the map and save $350 million?

The mapping program is being paid for by the Obama administration’s 2009 stimulus package, which includes $7.2 billion for broadband projects. The text of the plan, though, comes from a different piece of legislation: the Broadband Data Improvement Act, a 2008 law passed by a Democratic Congress and signed by Republican president, George W. Bush.

The lack of a requirement for robust, public data in the legislation is no accident.

It is a testament to the lobbying power of the nation’s providers of high-speed Internet service, which for the past decade have stifled government efforts to collect and make public data that could help the nation determine the width and depth of the so-called digital divide.

Broadband, wireless groups spent $873 million lobbying

telecomm lobbying

Since 1999, the eight largest broadband providers – which account for 88 percent of the market – and the competitors they have acquired, plus their two major trade associations, spent $714 million on lobbying, according to research by the Investigative Reporting Workshop. Add in the top wireless providers and their trade group and the total is $873 million.

The top four companies – Comcast Corp., AT&T Inc., Verizon Communications Inc. and Time Warner Cable – control 73 percent of the market, according to data collected by Leichtman Research Group, Inc.

Even the FCC now admits its existing data is inadequate. The national broadband plan – to be presented March 16 – will contain recommendations for dramatically increased data collection in an attempt to better measure competition in the broadband industry, according to agency officials familiar with the plan.

Broadband companies have consistently argued that they cannot release detailed information about where they deploy their services and how much they charge because it amounts to “trade secrets” and may give competitors an edge.

Critics of that position argue such data can simply be gathered by calling up customer service and asking for it – and that companies already possess far more information about their competitors than anything contained in a government database.

“I don’t think it’s about trade secrets,” said Ben Scott of Free Press, a Washington, D.C., watchdog group.

Scott says it’s about showing that cable and DSL (digital subscriber line) companies own the national market and that the “the biggest companies are the worst actors when it comes to failure to deploy in rural America and in low-income areas.”

With an accurate data set, “we can show in poorer neighborhoods slower speeds, higher prices and less competition,” Scott said. “That portrait sounds a lot like red-lining.”

It could also provide ammunition to those who want to see more government regulation of Internet service providers.

“They’re trying to avoid any kind of regulatory scrutiny,” said Jeffrey Chester, executive director of the Center for Digital Democracy, another watchdog group. “And that’s the game they’ve been playing all along and they’ve been very successful. They don’t want to be forced to subsidize and they don’t want to change the game.”

The industry disagrees, vehemently.

"The entire premise of this conspiracy theory is inaccurate, fabricated and just plain silly,” David Fish, a spokesman for Verizon Communications Inc., said “We've invested more than $50 billion over the past three years in our advanced networks and are rolling out 4G (fourth generation) wireless to advance America's broadband future."

Broadband access a top priority

telecomm lobbying

Universal access to the Internet has long been a top government priority. Congress, in its 1996 rewrite of telecommunications laws, ordered the FCC to track how quickly Americans were adopting the new technology. In 1999, FCC staff began work on a data collection requirement for the industry. The agency, in introducing its plan, was insistent about making the information it collected publicly available.

“We think it is extremely important that all (emphasis FCC) local competition and broadband information collected pursuant to the proposed survey be made available to the public,” staff wrote in 1999.

It even went as far as to say that if companies sought confidentiality, that the FCC may “for good cause” release even “otherwise protectable information” if the release is deemed to be in the public interest.

Independent review would “provide a desirable adjunct to the Commission’s own expert analysis and will help ensure the quality of the analysis.”

The agency wanted broadband providers to report a state-by-state breakdown of how many subscribers they had and what type of technology they used.

Industry opposes opening data to public

The National Cable Television Association protested that the proposals “place unnecessary burdens on nascent broadband telephone operations of cable operators…” and argued in favor of confidentiality.

“The competitive marketplace and small, competitive enterprises may suffer serious harm if this data is made available to the public,” the NCTA argued in comments to the agency.

Apparently the commission listened. The rules released in March 2000 allowed providers to remain anonymous. It even streamlined the process for seeking non-disclosure by providing a handy check-off box. It went a step further by blocking release of company information, even if companies did not ask for such protection.

It was an extraordinary move in that it did not require companies to make any sort of case that their data should be kept secret.

“They just checked a box,” said Scott, of Free Press.

The FCC soon began releasing summary reports based on the data, with no company-specific information. They showed a steady annual increase in the number of Internet connections but shed little light on which parts of the nation had service and which parts did not.

The one geographic measure was a requirement that providers indicate ZIP codes where they had at least one customer. The agency did not, however, require providers to report how many total subscribers they served in that ZIP code. Democratic FCC commissioner Michael Copps called the measurement “stunningly meaningless.”

Estimates of access vary widely

By the end of 2006, the FCC was reporting that more than 99 percent of all U.S. ZIP codes received broadband service and that former President George W. Bush’s 2004 pledge that all Americans should have affordable access to broadband by 2007 was largely achieved.

But outside studies and surveys are at odds with that conclusion. The Pew Research Center’s Internet & American Life Project reported in January of this year that only 60 percent of American adults use broadband connections at home.

Reports released by the Obama administration have been downright gloomy compared to the sunny reports of the Bush years. In a telephone survey, the agency found that “affordability and lack of digital skills” are why 93 million Americans are not connected to high-speed Internet at home.

The lack of good agency data has become a big problem for the authors of the national broadband plan. The team said in November that consumers “lack information about actual performance” of service providers and “cannot compare performance across providers.”

In a Feb. 15 agency blog posting, two top FCC officials bemoaned the state of broadband data collection.

“We’ve tried to gather and analyze all the data we can get our hands on, which has made us increasingly aware of the shortcomings of the data historically collected by the commission,” wrote Sharon Gillett, chief of the FCC’s Wireline Competition Bureau, and Paul de Sa, chief of the office of strategic planning.

“In the plan we’re certainly going to recommend other data on broadband (be collected) – that’s absolutely critical for us to do,” de Sa told the Workshop in a recent interview. The focus will be on “truth in advertising” regarding connection speeds and quality of service.

A more sensitive issue – price – is also on the list.

“We don’t want to be price regulating or micromanaging,” he said. “On the other hand you want to make sure people don’t get sticker shock when they’re six months into their plan.”

According to FCC officials, who asked not to be named because the plan is not yet public, the plan authors want to collect data at the Census block level rather than the much larger tract level. Provider names, technology used and advertised speed for that block would also be collected.

To better understand competition, they want to collect price information, the cost to consumers of switching carriers (like early termination fees), advertised and actual prices, information on plans, bundles and promotions and how those packages and prices change over time. They also want to make the data more publicly available.

The recommendations will require a majority vote by commissioners. They will no doubt be met with resistance from providers.

Congress steps in

Democrats in Congress, frustrated with the U.S.’s consistently low ranking in broadband adoption internationally and the FCC’s largely useless data, introduced five data improvement bills in 2007. In 2007 and 2008, political action committees funded by the industry contributed $141,000 to the five sponsors of the bills.

Seven of the eight of the top broadband providers and all three of their trade associations indicated on their 2008 reports that they lobbied on at least one broadband data bill. Exactly how much of the $873 million in lobbying over the past decade was spent on issues related to disclosure of information is impossible to tell. Lobbying laws do not require a breakdown.

The legislation that eventually passed included a grant program that calls for the creation of a national “broadband inventory map,” which will be “comprehensive, interactive and searchable.”
 
The National Telecommunications and Information Administration (NTIA) – part of the Department of Commerce – is paying nonprofits and local governments to collect broadband data in all 50 states, the District of Columbia and U.S. territories.

The data will be used to create a map that will show whether broadband service is offered in a particular Census block, the smallest geographic subdivision the government surveys. The map will be displayed on the NTIA Web site by no later than Feb. 17, 2011, according to the law.

The bill was heavily lobbied, but it was a small nonprofit that seemed to garner the most attention.

Industry-backed nonprofit plays key role in data collection

Connected Nation – which spent $40,000 lobbying broadband bills in the second half of 2008 – was met with open arms by industry and members of Congress. But the fact that it had accepted corporate money and used industry data – which could turn out to be self-serving – to make its maps was a concern.

Connected Nation spokeswoman Jessica Ditto said in 2008, the private sector provided less than 2 percent of Connected Nation's funding.

Ditto said the group’s data comes from “diverse and independent sources in government and industry” and that the firm independently verifies its data through field testing, phone surveys, and online consumer feedback.

The nonprofit lists Verizon, Comcast and the nation’s top wireless and cable lobbying associations as national advisers. It has also has had top industry lobbyists on its board of directors.

The group’s lobbying efforts appear to have paid off.

According to NTIA records, so far, state affiliates of the national organization have won $17.4 million in grants for broadband mapping and planning in nine states – Texas, Iowa, Michigan, Minnesota, Nevada, South Carolina, Kansas and Tennessee out of the $102 million awarded so far.

FCC steps up to improve data

Months before the broadband data law was signed, the FCC voted to improve its own data-gathering process. The agency began requiring companies to report subscriber numbers by Census tract.

The agency recently released its first report using the data. It said in 200 counties in the U.S. no more than 20 percent of households had home broadband connections. The new data presents information about 66,287 Census tracts, and 3,232 counties.

The report, while a vast improvement over the previous ZIP Code version, still fell short according to some. For example, it offered “no way to assess competition” Gillett and de Sa wrote in their blog.

The data is also still off limits. A request for it from the Workshop was denied.

The FCC data will be made available to the mapping grantees in an “aggregated” form, the meaning of which has yet to be determined. The fact that the grantees – who are collecting millions from taxpayers – will be using data collected by a government agency – has raised questions about why the FCC isn’t doing the map itself.

“It’s a $350 million joke,” said Sascha Meinrath, research director of the Wireless Future Program at the New America Foundation. “We’re paying hundreds of millions of dollars to re-collect data that’s being collected at another agency.”

NTIA spokeswoman Jessica Schafer disagrees.

“We are collecting data at the Census block level, of which there are more than 8 million, as opposed to the Census tract level, of which there are approximately 65,000,” she said. 

Agency relents under industry pressure

It is somewhat unclear what data will be released under the broadband data law, though the NTIA says some “non-confidential” datasets will be released. The legislation says a grantee shall “treat any matter that is a trade secret, commercial or financial information, or privileged or confidential as a record not subject to disclosure….”

“No one has actually explained what the trade secrets are that would somehow be magically revealed,” said New America’s Meinrath. “The notion that AT&T hasn’t figured out how to get Verizon’s information and Qwest’s information – you’d have to be an idiot to believe that.”

Not long after President Bush signed the bill into law, the NTIA released a detailed set of rules in the Federal Register describing information grantees are required to collect from providers.

It required information be collected at the address level and sought “average revenue per user” data, which provides a very rough sense of  pricing among users. It sought details on connection speeds, also at the address level, plus information on infrastructure.

A month after the federal notice, on Aug. 6, 2009, a letter came to NTIA chief Lawrence Strickling, signed by 14 broadband providers and trade associations. They sought “specific clarifications and discrete modifications” of the NTIA rules.

They sought to report data by Census block rather than by address. As for speed, they argued it should be reported by metropolitan statistical area. They also asked that the requirement to collect revenue data be eliminated altogether. Finally, they wanted the NTIA to make it clear that state mapping grantees be “required to enter into confidentiality agreements where requested by providers.”

Six days later, the NTIA published a “clarification” in the Federal Register, agreeing to all the demands. In return, however, the providers agreed to be identified on the maps.

The maps will display provider names, type of technology used, spectrum used if the connection is wireless and advertised, market-wide speeds – all public information. It appeared that the agency had caved to industry pressure.

That’s not the case, said agency spokeswoman Schafer. She said the agency listened to feedback from a variety of stakeholders and decided that these “targeted clarifications make sense because they will improve the quality of the data submitted to the program, enhance transparency and ensure broad-based industry participation.”

As of Friday, the NTIA has awarded 54 grants totaling $102 million to all 50 states, the District of Columbia and three U.S. territories.

Why the secrecy?

Broadband has been billed as a sort of cure-all for everything that ails America and the rhetoric coming from Washington has been, at times, over the top.

President Obama’s choice for FCC chairman, Julius Genachowski called broadband’s transformative power “akin to the advent of electricity.”

In 2008, Obama the candidate set a high bar: “As president, I will set a simple goal: every American should have the highest speed broadband access – no matter where you live, or how much money you have.”

This idea is “great in theory,” said Craig Moffett, an industry analyst with Sanford C. Bernstein, “until somebody has to pay for it.”

In a little more than a decade, access to broadband seems to have become a right rather than a privilege. That reality has created a looming clash between the for-profit companies that control the broadband pipelines, and the government that is making all those high-flying promises about universal access.

The Workshop asked the top four companies specific questions about political influence, secrecy and poor broadband reporting and was directed to piles of previously published documents and canned statements.

AT&T spokesman Mike Balmoris said the company is supportive of government efforts to assess broadband adoption and availability but also seeks a regulatory balance that will not “burden the further deployment of broadband nor inhibit competition.”

Comcast spokeswoman Sena Fitzmaurice said “as to broadband mapping, we believe legislators and administration officials can confirm we have been a constructive participant."

Time Warner spokesman Alex Dudley declined to comment.

But the industry position can be summed up fairly easily. Increased regulation is burdensome and can lead to higher prices. It also discourages investment in new networks, which is bad news for everyone. And data needs to stay private for the same reasons given in 2000 – disclosure would lead to competitive harm.

In the end, the argument comes down to economics. The top broadband companies answer to shareholders first and they have no interest in building out networks in areas where there is no chance to make a profit.

So ironically, according to Scott from Free Press, they will probably be offered government incentives.

“As it stands they could be in line to be rewarded with subsidies,” he said. “Even though they neglected to build out their networks to rural America for years.”

 



Mia Steinle contributed to this story.