Wednesday, April 15, 2015

Six Law Suits Against the FCC over Net Neutrality and Counting

All I can say is -- I told you so. While some believed that the FCC's Net Neutrality/Open Internet Order would make it through unscathed and that cooler heads would prevail... You got to be kidding me. We are now up to six legal actions and counting.

Are We Paying for Their Lawyers Via Rate Increases?

But, before I discuss the start of this onslaught of legal challenges, one thing struck me when writing this...

Why wouldn't they take the FCC to court? We are all paying for their lawyers via rate increases and the dumping of corporate expenses, which have been added to those calculations to justify the increases. Here is a quote from Verizon New York's 2010 SEC filing about 'Verizon Services', which is charged to local phone subscribers.


There it is - legal, which, in fact, is mentioned twice, as well as media relations (PR), and there's probably a kitchen sink in this mumbo jumbo that we've all been charged for. (NOTE: Similar, if not identical language is in every Verizon-state-based annual report in 2010, the last year Verizon published this information. AT&T stopped publishing their state-based SEC reports over a decade ago, and the FCC stopped publishing most financial data in 2007.)

And, I note that in virtually every Verizon state, the state utilities showed massive losses and paid little, if any, state or federal income tax. In New York, the company claimed it had lost over $2.2 billion in just 2010. Yet, this one expense added $1.7 billion alone in that year.

Moreover, Verizon NY got a series of rate increases, over 84%, on basic phone service and ancillary services, starting in 2006 -- claiming very large losses.

In fact, one has to wonder -- Why aren't we suing these companies? Are we actually paying for these companies through rate increases (and made up fees) to use these expensive law firms to block these rules from going through that would protect us from their bad acts?

Law Suits are Them

But, let me get back to the current legal actions where Net Neutrality is the main event. This is just the start of the legal actions as the FCC's Order was finally published in the "Federal Register", setting off the legal feeding frenzy.

Computerworld writes:

"The rush is on to sue the U.S. Federal Communications Commission over its net neutrality rules, with three trade groups and AT&T filing legal challenges Tuesday.

"The agency now faces six lawsuits related to the regulations.

"Mobile trade group CTIA, cable trade group the National Cable and Telecommunications Association [NCTA] and the American Cable Association, which represents small cable operators, all filed lawsuits Tuesday, with AT&T announcing its own lawsuit late in the day.

"The new rules will 'chill investment,' and the FCC's decision ignores a competitive mobile industry, CTIA President and CEO Meredith Attwell Baker said in a statement. 'Instead of promoting greater industry investment in the connected world of tomorrow, the FCC opted to resuscitate a command-and-control regulatory regime, including a process where innovators must first seek permission from the FCC before rolling out new services,' she added."

Add these four to the two previous suits that were filed and will most likely be refiled over the few days.

  • The United States Telephone Association, USTA, the phone companies' association, came out of the box early and will most likely refile to make sure their previous filing doesn't get kicked out of court for being premature.

  • Alamo Broadband is a small Wireless ISP, "WISP" that has an estimated 700 customers outside of San Antonio Texas. We note that this WISP is being represented by Wiley Rein, the law firm that represents Verizon and Comcast.

And we have two former FCC staffers in play -- a former FCC commissioner and a former FCC chairman:

  • Meredith Attwell is a former FCC Commissioner and is now running the wireless association, CTIA. Ironically, current-FCC Chairman Tom Wheeler ran CTIA for years.

  • Michael Powell, former FCC Chairman, is the current head of the NCTA, the cable association. As chairman, he helped to close the phone networks to direct competition in 2004, which caused Net Neutrality issues.

And as far as we can tell:

  • Verizon (including Wireless) is a member of the USTA, CTIA, and NCTA.

  • AT&T, (including Wireless), is a member of the USTA, CTIA and NCTA.

  • Comcast and Time Warner are at least members of the NCTA.

One big happy family.

Charging us for their association activities? And I have to throw in - I assume that the membership fees and lobbying, etc. are also being charged to everyone who has service from these companies and is reading this.

I'd also like to focus on "The new rules will chill investment", in the quote above.

I call your attention to our article documenting that Verizon's entire fiber-to-the-premises (FTTP) networks are all based on using the classification of "Title II", a telecommunications service. This allows the company to charge local phone customers for the costs of construction for the FTTP networks, used not only by FiOS TV, but also for the wires to the cell towers for Verizon Wireless.

And yet, the companies claim that this same "Title II" harms investment.

Where are any actions against the companies or investigations of the flows of money and the use of this "Title II" as the primary investment vehicle?

Time to Fix What's Broken. Time to Take Proactive Cases Against the Companies

With over four million people filing with the FCC to 'Free the Net', one thing is abundantly clear -- customers know something is terribly wrong. Every time you pay your bills you notice that the price of your services keeps going up, you don't have a serious choice for Internet (ISP), broadband or cable service, much less competitors fighting for your business, or maybe you can't even get very fast broadband service. Worse, over the last few years, America's ISPs and cable companies have been rated "the most hated companies in America".

Net Neutrality will be held up in court for years -- while important, it is the wrong fight. It does not fix or resolve most, if not all of the issues about getting people wired or bringing back competition to the wires and letting customers choose their own ISP or cable provider.

I would argue it is time for more law suits, and right now they are going in the wrong direction. The FCC should be taking the companies to court and starting the process of separating the companies from their control over critical infrastructure -- that we paid extra for, over and over. And the state commissions and advocate offices should also join in this effort.

And, at least one regulator should answer the question - Are these companies charging us for the lawyers they have hired to sue the FCC and block Net Neutrality? And what other questionable charges have we paid for?

For more details see: The Book of Broken Promises: $400 Billion Broadband Scandal & Free the Net

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