Broadband Cable Association of Pennsylvania


September 25, 2012

Consumer groups are trying to kill legislation that they say may lead to the elimination of most telephone regulation in California.

Last month, the Legislature overwhelmingly approved a bill to eliminate all oversight of Internet phone service in California. Proponents, led by Silicon Valley companies, assured lawmakers that it would not affect old-fashioned, copper-wire telephone service still regulated by the California Public Utilities Commission. Now the consumer groups are urging Gov. Jerry Brown to veto the bill, saying the nation's big phone companies, including AT&T Inc. and Verizon Communications Inc., are pressuring Washington to phase out the copper-wire-and-switches "legacy" phone service altogether. The result, they complained to the Legislature and now to the governor, may be that California residential and business phone customers could be left without protections that guarantee universal service, transmission quality and understandable billing that long have been enforced by the PUC.

As recent proof of the phone companies' intentions, the consumer groups cite an Aug. 30 memo from phone giant AT&T to the Federal Communications Commission. The memo asked the federal government to "facilitate migration of customers from legacy to [Internet] services and to prevent customers that procrastinate or fail to migrate from holding up the transition." But once that happens, activists warn, phone customers may be left with little federal or state government assistance in dealing with California's deteriorating traditional phone system.

The FCC's current policy is to "monitor" the transition of phone service from legacy networks to the Internet and to pass regulations as needed to ensure that users have access to emergency and other services, the agency said. "The FCC has made it a priority to promote the transition to next-generation broadband networks - which can provide significant consumer benefits and increase innovation and investment - while ensuring consumers and competition are protected as technologies change," agency spokesman Mark Wigfield said. AT&T's letter to the FCC "clearly says it wants to get rid of carrier-of-last resort and discontinue services in rural areas or any other place they want," said Mark Toney, executive director of the Utility Reform Network, or TURN, which lobbies for better telephone service for ratepayers. "They want to eliminate all regulation that tells them to do anything." Proponents of the bill, SB 1161, by state Sen. Alex Padilla (D-Pacoima), dismissed the consumer groups' complaints as meritless. Robert Callahan, the California state director of TechAmerica, a trade group, said critics offered only "sky-is-falling, Chicken-Little" arguments.

Supporters pushed the bill because tech companies need "certainty" that the state won't regulate the Internet and create a disincentive for them to continue to invest in innovative communications technologies that provide constantly upgraded features for carrying both voice and high-speed data signals. "Similar bills have passed in dozens of other states, and none of the catastrophic things have happened" that opponents are complaining about, Callahan said. Padilla, who has contended that passage of his bill would prevent tech companies from leaving the state, could not be reached for comment on his opponents' veto request. The governor and his staff have been gathering information on the Padilla bill, but Brown, who has until the end of the month to sign or veto the measure, has yet to make a decision, his office said.

But Toney at TURN said the FCC filing and the California bill, taken together, are evidence that "the large telephone companies have not bothered to hide their true ambitions: They wish to allow their copper networks to deteriorate, force urban business and residential telephone companies to move to ... [Internet] networks and push rural customers to wireless service." The letter from AT&T Senior Vice President Robert W. Quinn Jr. asked federal regulators to set a "date certain" for abandoning the old phone circuits and to assert that U.S. law trumps any efforts by state agencies, such as the PUC, to require the old lines be maintained.

The governor's signature on the Padilla bill would lead to "the old system being completely abandoned - all the copper lines," and state regulators "would have no ability to enforce the law" on requiring universal service, signal quality or other consumer protections, warned Lenny Goldberg, a lobbyist who led the opposition to the bill. The move to an all-Internet voice-and-data communications system is inevitable, and the FCC is developing a National Broadband Plan to make the transition as efficient as possible, Quinn said. "I don't think anyone would argue that [the legacy phone system] will be here forever." Verizon Chief Financial Officer Fran Shammo recently told analysts that his company is "moving as quickly as it possibly can to shutting down ... copper" and "being as aggressive as we possibly can in those areas." Los Angeles Times

Cablevision has thrown its support behind major U.S. broadcast networks in their bid to stop Aereo Inc, an online television start-up backed by billionaire Barry Diller, from broadcasting TV programming over the Internet.

Cablevision, which was formerly pitted against the parent companies of these same networks it is now supporting in court, filed a brief on Monday saying that the district court's ruling in July to allow Aereo to continue operating should be reversed. In July, a federal judge rejected the broadcasters request to block Aereo, saying that a temporary ban "may quickly mean the end of Aereo as a business." Several broadcasters such as Walt Disney Co's ABC, CBS Corp, Comcast Corp's NBCUniversal and Telemundo, News Corp's Fox, Univision Communications Inc and the Public Broadcasting Service filed lawsuits accusing Aereo of copyright violations two weeks before the product even launched in the New York City area in March for $12 per month.

The Aereo lawsuits are being closely watched because the product is seen as a threat to the TV industry's ability to control subscription fees and generate advertising revenue, their two main sources of revenue. A separate lawsuit filed by the broadcast networks against Dish Network's ad-skipping Hopper device is also being watched. In its July ruling, the court concluded it was bound by a 2008 Second Circuit court's decision in favor of Cablevision for creating a remote-storage digital video recorder that allows consumers to record programs on remote servers. Companies such as Disney and News Corp had sued Cablevision at the time.

Cablevision's filing late Friday said that this case is too different from Aereo's to serve as a precedent. Cablevision argues that Aereo did not obtain permission from broadcasters or pay licensing fees to rebroadcast their programming -- a "critical legal difference" from Cablevision, which pays these fees. The cable company also disagreed with Aereo's claims that its use of individual antennas make the broadcasts private, since they are available to anyone who wants to use the service. Cablevision also said that Aereo has no right to save TV broadcasts on hard drives like the cable company does because it is not offering consumers an independent separate service. Cablevision said it believes that Aereo could have designed its system to allow customers to pause live television without saving all the programming on hard drive copies. An Aereo spokeswoman declined to comment on Cablevision's filing. Reuters

Former Gov. Ed Rendell made a rare return appearance on Moto Harrisburg, where he weighed in on the presidential race, tweaked the state House Majority leader for his widely-criticized comments on the state voter ID law and toyed with the idea of running for vice president.

Rendell, speaking at the Pennsylvania Press Club luncheon, said the first presidential debate - scheduled for Oct. 3 in Denver - will be GOP candidate Mitt Romney's "last best chance" to make inroads against President Obama. "You can turn the dynamic around in first debate," said Rendell. "Romney needs a strong performance to cut into the lead...If it's a draw the campaign's over." Rendell called Romney "a strong debater," compared with Obama, who he thinks has a harder time in the short- answer debate format. But, he said, "definitive trends" are now clearly showing Obama in a strong position to win Pennsylvania and claim a second term in the White House.

If Romney doesn't win the debate and start closing the gap with Obama, he said, the big GOP donors will exit the race. "There's some talk of giving up the ship in Republican circles right now," said Rendell, now a political analyst for MSNBC. "When I say give up the ship, all the super-PAC money that's out there ... will go almost 100 percent to Congressional and and Senatorial races." Rendell said he has tried to play a role like former President George W. Bush with Obama and refrain from criticizing his successor.

Still, he told the audience that Pennsylvanians should remember they got what they voted for with Gov. Corbett, someone who did what he said he would in the campaign: not raise taxes and cut spending. "He stuck to his word," said Rendell of Corbett. Then he went on to unleash a raft of mock praise on House Majority leader Mike Turzai (R., Allegheny) for "courageously" revealing the real motive behind the GOP-driver voter ID law. "He told the truth. They didn't pass that law to prevent voter fraud," said Rendell referring to a comment Turzai made to a GOP party gathering in June. "Representative Turzai told us right what it was all about, to make it easier for Governor Romney to carry the state...I mean, Mike Turzai is one of the most honest and courageous and wonderful persons that I've ever met in my experience in government."

When he departed Harrisburg in January 2011, after two terms as governor, Rendell said repeatedly he was done with elected office after 24 years - including stints as Philadelphia mayor and district attorney. More recently, though, he's said he misses being a public servant. Rendell has often said he doesn't have the temperment for Congress because he'd have to get along with eveyone, and on Monday said he wouldn't run for president because he didn't want to spend three years running back and forth between Iowa and New Hampshire. But he said the prospect of being vice president has some "level of attraction." After all, it's only a nine-week campaign, you don't have to raise money, you get a very nice house and, he quipped, you "don't do very much."

Rendell sidestepped a question about a possible Hillary Clinton/Rendell ticket in 2016, saying he hopes she'll consider a run after getting a chance to rest following her four-year stint in the physically demanding role as Secretary of State. "The fact is the country still faces enormous challenges," said Rendell. "I'm hoping the lure of being the first woman president in the history of United States would be too great for her to resist and I would aid her in any way I could in her run for president."