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from: Sascha Meinrath

[UPDATE 3] AT&T and Legislators Collude to Pass 11-th Hour Telecom Reform. Illinois SB678 Analysis.

Thu, 2007-05-31 11:31

I am only just now getting a chance to make a first read of this amended 128-page document. AT&T's goal is to pass it by tomorrow -- with almost zero debate, due diligence, or public input. From what little I've garnered thus far, this amendment is an utter disaster for Illinois residents. It's being crammed through in a late-night legislative coup because it would never pass if legislators actually had time to read and analyze this massive document -- first I'll begin with most of the "old" language from SB678.

As I first reported yesterday evening, AT&T is attempting to pass an incredibly bad piece of legislation by amending it to a popular bill in the dead of night. Amendment number 3 leads off with a number of great ideas -- the creation of a "Broadband Access on Passenger Rail Plan" and the "High Speed Internet Services and Information Technology Law."

But then the real purposes of this amendment, to limit consumer choice, empowerment, and control over Illinois telecommunications, begins to shine through. A great example is on Page 3-4, Section 10-15:

19 (a) Notwithstanding any other statute, the Lieutenant
20 Governor, with the advice of the Broadband Deployment Council,
21 shall authorize the creation of a nonprofit corporation called
22 Connect IL to implement a comprehensive, statewide high speed
23 Internet deployment strategy and demand creation initiative

Yet a closer look at this non-profit demonstrates demonstrates that its very structure ensures that the private sector (and not consumers, government officials, and/or non-profit organizations) will control the entity (on Page 4):

13 (b) Connect IL's governing board shall be appointed by the
14 Lieutenant Governor, with the advice of the Broadband
15 Deployment Council, and shall not exceed 11 members, with a
16 maximum of 6 representing the private sector and a maximum of 5
17 representing the government and nonprofit sectors. Four of the
18 private sector members shall be from the largest incumbent
19 local exchange carriers, one shall be from the cable television
20 industry, and one shall be from the Internet Service Provider
21 (ISP) industry. Members representing the public sector shall
22 include one member from a public Illinois university, one
23 member that represents Community Technology Centers, one
24 member from the Department of Commerce and Economic
25 Opportunity, one member from the Lieutenant Governor's office,
26 and one member from the Department of Central Management.

As someone who serves on the Broadband Deployment Council, I have watched as incumbent representatives have systematically undermined the very innovations that this group is supposed to foster. The position that Connect IL would be any different is incredibly naive. Right from the get-go, Connect IL is an industry-controlled front group whose purpose is to obfuscate systematic, structural failings of the market sector to deploy affordable high-speed broadband to many Illinois residents and communities.

Section 10-20 (Pages 5-6) further exemplifies just how utterly impotent Connect IL will be:

In Section 10-20(a)(1), Connect IL is empowered to:

13 (1) Create a geographic statewide inventory of high
14 speed Internet service and other relevant broadband and
15 information technology services.
16 (A) identify geographic gaps in high speed
17 Internet service through a method of GIS mapping of
18 service availability and GIS analysis at the census
19 block level; and
20 (B) provide a baseline assessment of statewide
21 high speed Internet deployment in terms of percentage
22 of Illinois households with high speed Internet
23 availability.

Section 10-20(a)(2-5) (Pages 5-6) states that Connect IL will:

24 (2) Track and identify, through customer interviews
25 and surveys and other publicly available sources,
1 statewide residential and business adoption of high speed
2 Internet, computers, and related information technology
3 and any barriers to adoption.
.
.
.
16 (4) Collaborate with high speed Internet providers and
17 technology companies to encourage deployment and use,
18 especially in underserved areas, by aggregating local
19 demand, mapping analysis, and creating market intelligence
20 to improve the business case for providers to deploy.
21 (5) Establish a program to increase computer ownership
22 and Internet access for disenfranchised populations across
23 the State.

This all looks great -- in fact, I'm all for it, and I suspect that most consumer advocates would be happy to hear that these ideas were included in this amendment... and they might even have stopped reading right there, but there's a poison pill. In the very last paragraph of Section 10-20, in subsection "f" there's this clause:

14 ...any information that is designated
15 confidential or proprietary by an entity providing the
16 information to the nonprofit organization or any other entity
17 to accomplish the objectives of this Article shall be deemed
18 confidential, proprietary, and a trade secret and treated by
19 the nonprofit organization, Connect IL's governing board, or
20 anyone else possessing the information as such and shall not be
21 disclosed.

We already know from telecom incumbents' own FCC proceedings that all of the information that Connect IL is supposedly going to measure is considered proprietary. In essence, this entire section is a lark -- there's no intention to ever collect this information, provide it to the public, or otherwise meaningfully aid the general public or decision-makers with useful data.

And just to make the impotence of Connect IL entirely explicit, there's Section 10-25 on pages 7-8:

22 ...Nothing in this Article
23 shall be construed as giving the Lieutenant Governor, the
24 Broadband Deployment Council, the nonprofit organization, or
25 other entities any additional authority, regulatory or
1 otherwise, over providers of telecommunications, broadband,
2 and information technology.

Section 10-30 transfers all money from the "Digital Divide Elimination Infrastructure Fund" under the control of the Connect IL industry front group by creating the " High Speed Internet Services and Information Technology Fund."

And the thing is, this amendment just gets worse from here.

Included in this amendment are provisions that radically change Section 13-505.4 of the "The Public Utilities Act" -- the apply named "Provision of noncompetitive services." The introduced section of law (Paragraph c on pages 10-11) would create both bundling of services and the precedent for service providers (through bundling) to leverage state-wide franchise in one service (for example, the state wide video franchise that AT&T is demanding) into completely new media (for example, Internet service provision). Parsing through the jargon, legalese, and purposeful complexity of this paragraph, it would appear that AT&T is attempting to undermine local control of almost every media but enabling a lowest common denominator approach to franchising.

As an example, if AT&T gets a state-wide video franchise, they can then declare video to be bundled with Internet service provision, and thus ignore local authorities, mandates, consumer protections, etc. by declaring that Internet provision is now covered by the state-wide video franchise. More importantly, it would allow a telecom incumbent to undermine local buildout of telecom services by basically legalizing predatory pricing. If this amendment passes, municipal entities will lose the power to control any "service, service element, feature, or functionality or bundled offering" and have little recourse against telecom incumbents who artificially lower pricing to prevent local authorities from being able to build out publicly-owned infrastructure.

[UPDATE 1]

Sec. 21-101 on Page 14 states:

15 (g) Providing an incumbent cable or video service provider
16 with the option to secure a State-issued authorization through
17 the termination of existing cable franchises between incumbent
18 cable and video service providers and any local franchising
19 authority, is part of the new regulatory framework established
20 by this Article.

In essence, combined with the power to engage in anticompetitive pricing, the intent of this amendment is to legally protect telecom incumbents (or "video service providers") that break their contracts with local municipalities. So, if you received a 5-year franchise in say, 2003, and you've utterly failed to meet your build-out requirements, this law would enable you to break your agreement without compensation or recompense for the communities who these incumbents took advantage of.

The law also explicitly exempts "any person or entity that provides cable television services" (Sec. 21-101.1) -- clearly AT&T doesn't want it's competitors benefiting from this massive corporate welfare program. Sec. 21-201 also exempts satellite video and broadband providers through the defining of "access" to exclude them (very clever, though entirely anticompetitive).

"Broadband service" is defined on Page 16 as:

6 (c) "Broadband service" means a high speed service
7 connection to the public Internet capable of supporting, in at
8 least one direction, a speed in excess of 200 kilobits per
9 second (kbps) to the network demarcation point at the
10 subscriber's premises.

Thus locking the State of Illinois into an absolutely ridiculous legal definition for this service. More importantly, it adds a new twist -- that the speed is only to the "demarcation point." So an apartment building of 20 units would be considered to have "broadband service" if a single line were run into the building that had 200kbps of throughput (in a single direction). This means that the state of Illinois would legally define as "broadband service" speeds that are a tiny fraction of a dial-up modem. It's a remarkable leap backward for Illinois.

[UPDATE 2]

I've just learned that all of Section 10 -- the parts attempting to set up the Connect IL initiative -- have been cut from SB678.

[UPDATE 3]

AT&T's SB678 just passed the Illinois House 113-0.