I don’t watch much live television. But I do like to watch ballgames and golf and certain types of British television programming. I’m not out of the mainstream. Lots of people liked “Downton Abbey.”
So, the other day I decided that the old antenna TV system might finally have to go. I can’t put up an antenna where we live. And indoor antennas for today’s television don’t seem to to work well enough for us to get channels clearly enough.
Looking around for some way to experience television while remaining solvent financially, I hit upon a Comcast promotion. It was for $40 per month, which sounded affordable for us, retired people, and it offered both the Internet, which we need, and cable television, which we don’t particularly need, unless you consider it important to watch a television image that does not suddenly disintegrate into thousands of little pixels. This happens when the digital image sent from an antenna to our indoor receptacle is distorted by rain or wind or snow or apparently even someone outside moving abruptly in the dark of night.
So we decided to investigate, once again, cable television. In our neck of the woods, there are only two cable television options. One is Comcast; the other is AT&T. So, take your pick. Scylla or Charybdis. We decided on Scylla, as they were offering this attractive and seemingly generous promotion of $40 per month for both cable television (albeit a very limited number of channels) and the Internet at its lowest speed.
So I contacted Comcast. First of all, unless you are willing to turn your monthly payment over to Comcast’s accountants, then you will pay another $10 per month. Comcast will say…why not let us handle this? We’ll automatically dip into your bank account each month and take what we need. But Comcast has a bad habit of adding things and then automatically billing you, hoping you don’t notice. Then it becomes your job, with long wait times over the phone to get your money back. My suggestion is that…if you ever do try Comcast…do your own bill paying, even for the extra ten bucks a month. Yes. Ten bucks. So, now you are paying $50 per month instead of the $40 per month “deal.” Just because you want to pay the bill normally.
Next, you need equipment. What equipment? (For fifty bucks a month, you would think they would give you the “equipment.”) By equipment they mean a modem that actually brings the Internet and the TV picture into your house. That is another $13 per month. Comcast maintains that this equipment is “ours” (theirs) and you, the customer must rent it or buy it. You can buy it yourself for about $150 somewhere, like Best Buy, but annualized that is almost the same, at least over the term of the contract. (one year) They get you either way. So, now, before you see anything on your screen, the cost is $63 per month. (It gets worse. Much, much worse.)
Next comes the fees.There is something called a “broadcast fee.” What is that? Well, since the cable companies lobbied to take over delivery of television to homes, refused to make basic over-the-air stations free or at a minimal charge, they now can charge pretty much whatever they want and justify it in almost any way they want. This “broadcast fee” is basically to cover the costs that broadcast channels charge Comcast for using their content. But, frankly, I thought that was what the basic forty bucks a month is all about–about Comcast delivering television to our homes (and, remember this is about the supposed “best” promotional price with a one-year commitment. Oh…didn’t I mention that? Yes. Comcast wants to lock you up for a year. If you are not satisfied for any reason, and cancel, they hit you with a big cancellation fee. So…to resume…we are now at $73 per month instead of $40 per month. Almost double already.
What’s left? Well, there is a fee for a set-top box. I assume that is something that sits on top of your television set and does something…we know not what. A mystery, but one that costs $5 per month for one box, $10 for two boxes (presumably to deliver television to two sets) and so on. So, assuming that you have more than one tv set, you are now at a monthly charge of $83. Plus maybe $5 in taxes, and you’re all set for $88 per month. Or are you?
Who is going to set this all up once you decide on this most basic, by the way, of plans? You…Mr Nimblefingers? No. The Comcast guy is going to come and install everything. That will cost you another $70. But, lucky you, without this virtually philanthropic “special offer” it would have cost you $120. So, if you want to amortize that over the year of your contract, the total actual amount per month on the basic $40 per month offer is now virtually $94 per month.
But…wait..you’re not through with fees yet. Whether or not you love sports, you will pay a Regional Sports Fee. Yes…$8.50 per month, sports fans, to rake in a little extra change for Comcast, even though one would presume that there is some way (there’s always a way when they want to do something) to charge only the real sports fans. Now your total (on the munificent “$40 per month” promotion for both Internet and cable) is $102.50 per month. And you’re not done yet.
The state and federal government have a little thing called taxes. That’s at least another $5.00 per month. So your bill is now a minimum of $107.50 per month. Rather than dropping in other fees that Comcast will collect for a variety of other options, let’s just leave it at the roughly $1,200 per year. Not $480. Well over a grand.
And this promotion was for the basic, bare bones, stuff. In other words this is the limited-channel television and lowest speed Internet. From forty bucks a month to almost a hundred and ten. How can they get away with such a thing? Well, my friends, that is the story you really need to know.
A Brief History of Cable TV and the Internet
The story of Comcast and AT&T and their duopoly over cable television and the Internet, in northern Illinois, and the control over consumers by similar corporate-telecommunications-giant duos in other states is a story of merger and acquisition and failed promises and political corruption on a monumental scale. It goes all the way back to a time before the Telecommunications Act of 1996.
In the mid 1980s, the monopoly national telephone company, AT&T, was broken up into seven regional “Baby Bells.” That is, seven regional dial-up local telephone companies. In the northeast,there was NYNEX (for New York/New England exchange.) Along the mid-Atlantic coast was Bell Atlantic (later merged with NYNEX.) In the southeast was Bell South. In the south central and Texas was Southwestern Bell or SBC. In the north central was Ameritcch. In the far west except California was U.S. West. And in California there was Pacific Telesis. AT&T remained as a strictly long-distance telephone service.
By the early 1990s the technology for Al Gore’s “Information Superhighway” was in place and the Bell operating companies saw a connection. They could offer television and Internet services, including entertainment and merchandising to the same customers who were already wired for the telephone. It seemed a good fit. But it didn’t work out that way .
It turned out that these new services would require a new transmission method to be efficient…something called “fiber-optic” cabling, not the old copper wire of phone systems. To do this efficiently, the companies combined into two new companies TELE-TV and Americast. These two companies, owned by the Bell operating companies, plus GTE and Disney, would become the new and major players in setting up both cable systems and the Internet. But it turned out to be more expensive than they had planned.
So many of the smaller cable companies began to sell out and recover some of their investments. What had seemed like a good business was taking longer to recover costs than they had anticipated. And the Bell companies had ready-made subscriber bases, as did other local telephone companies.
So it is no surprise that companies like Southern Bell and NYNEX and Ameritech, the spin offs from the original AT&T, as well as numerous other cable and broadband startups began to merge or be acquired. Not inconsequentially, the solidification of the telecommunications industry, after the Telecommunications Act of 1996, has been constant, with many large corporations combining at a rate that was head spinning. Names like Sprint and Embarq and Nextel and Centel in telecommunications gave way to names like like Centurylink and Comcast and Verizon and even a new AT&T.
The result of the combining of local telephone service and long distance and satellite and fiber-optics and DSL and cable and Internet is a handful of companies with virtual monopolies in their areas. In the Chicago area, for example, in most neighborhoods you have two choices for Internet and cable TV. If AT&T stinks, you can get an equally stinky, equally priced (enormously over-priced) service called Comcast. That’s it. Nothing else, except perhaps in one or two limited areas, an expensive business Internet service.
Some would categorize these state telecommunications services as oligopolies. And technically they are. But in almost all cases, they involve not a few companies competing, but only two companies competing. In other words, if you are totally screwed over by your basic service you have only one alternative vendor.
While that situation of limited choice may be significant to you, but it is more important to that other telecommunications company. It means that they can offer you whatever they want, in whatever form they want and at whatever price they want.They only have to compete with the other company, which, since you are coming to them, must stink worse than they do. In other words, it is a competition of the stinkies, all the way to the bottom of the barrel.
The Origins: One National Company called “the Telephone Company.”
Let’s go back to simplicity. In the beginning (without sounding too Biblical I hope,) there was only telephone service, and one, huge corporation called colloquially “the telephone company. It was local service and long distance, all rolled into one. AT&T, which most people tolerated because the service was good and simple and seemed relatively cheap, except perhaps for long distance.
It had had always been that way from the beginning. But from the 1980s, when the system was broken into the 7 companies that were the “Baby Bells” life had become more complicated. By the time of the planned competitive expansion of all the different new telecom services in 1996, cable and Internet and telephone and wireless and long distance were all mixed together and the bewildering number of mergers and acquisitions has never let up.
One principle had always guided the telephone service in the U.S. Each home or residential building, and businesses, had the right to a telephone line. Since telephone lines were delivered by copper wire, virtually all homes were wired. More important to companies was the fact that these homes were customers, subscribers to a monthly service that was already hooked up and working–an immensely profitable business.
At about the same time that the one, true, telephone company was breaking up, homes around the country were being wired to receive a new form of television: cable television. In places like Kansas and Montana and Colorado, companies were signing up customers and building new subscriber bases, over time, in the tens of thousands. Still, many young cable companies struggled to grow. This was a time of mergers and acquisitions.
By the mid-1970s, there were over 10 million cable TV households. Bell companies, sitting with thousands of profitable monthly telephone subscribers, were in a perfect position to gobble up both some of the fledgling cable companies, and later, broadband companies. A decade later, after 1984, when the Bell system, was converted into the seven retional “Baby Bells” some latitude was given to telecommunications companies.
Since the first regulation, in 1934, outlining the distinction between telephone lines and radio communication, the model within the U.S. had always been one of trusteeship. In other words, both telephone lines and radio transmissions were developed in the “public interest.” Some would say that the public model changed to a market enterprise model with the election of Conservative President Ronald Reagan in 1980. Suddenly, not only were corporations simply assumed to have the public interest always in mind, but, in 1987, Reagan abandoned the old “equal time” rule for controversial public issue debate on radio or television, called The Fairness Doctrine. This effectively meant that radio and television commentators no longer were obliged to tell the truth.
With the emphasis on strong marketplace competition becoming the predominant attitude among economists, the Clinton Administration passed the Telecommunications Act of 1996. This piece of legislation was designed to create fair and strong competition among companies across a wide spectrum of offerings..telephone, cable and Internet, and all the technologically advanced permutations that would arise in those same general businesses. The fact is, however, that both cable tv and the Internet and broadband and wireless and wired telephone are in the hands of very few competitors.
When it comes to cable about four brands, Xfinity(Comcast,) Spectrum (Charter), Cox and Optimum, hold sway over about three-quarters of the whole market. In wireless, Verizon is far and away the largest with AT&T Mobility and T-Mobile following close behind.
How Telecom Became Politicized and Monopolized
In the late 1970s the nation’s largest private oil company decided to start spreading its excess money around. The company’s owners, the Koch brothers had been raised by a father who loved Fascism and hated Communism, both having to do with how he was received by the leaders of Russia and Germany. So the sons of the founder of the Right Wing John Birch Society became “Libertarians.” If you’re a billionaire, as each of them was (one is still alive and active) then being Libertarian is the easy way to say…”I’m rich and I don’t want to pay taxes to help people who are not rich.”
So they founded a group called ALEC and many giant Right Wing corporations joined it. The idea was…and still is…to become the organization that creates legislation. That legislation achieves what corporations want. The legislators are paid off with stipends as much as $10,000 to $20,000 to pay for meetings and parties to discuss the corporate objectives.
The legislators then often introduce legislation that is actually written by the members of the ALEC staff in conjunction with the local Republican party. By combining the money of oil companies like the Kochs or EXXON, with the money of telecommunications companies like AT&T or Comcast, with that of groups like the NRA or anti-abortion advocates, then corporations could and did take over state governments. Naturally, the Republicans became tied to ALEC and are now the paid political party of giant corporations and interest groups that support corporate and Right Wing causes.. Of the last count mad by ALEC of state legislators who were leaders in the ALEC movement, 103 were Republican and one was a Democrat.
Over the period from the late 1970s until today, several telecommunications companies became “state telecommunications sponsors. This meant that they received special access to those writing telecommunications legislation. What did these corporations receive for their donations. The following is from “ALEC Exposed” the web site for the several major organizations that have followed ALEC activities over the last few decades.
“At closed-door ALEC meetings, state legislators sit down with lobbyists for corporations like AT&T, Time Warner Cable, Verizon, Comcast, and News Corp to be handed changes to our laws that further the right wing agenda and directly benefit the corporate bottom line.”
Here’s an example of just one agenda. Restricting competition in order to raise your phone, cable and Internet bills, making them almost 100% profitable. It is called the “Municipal Telecommunications Private Industry Safeguards Act”
Here’s the way ALEC Exposed describes what it does. “Promoted under the guise of “fair competition” and “leveling the playing field,” this big telecom-supported bill imposes regulations on community-run broadband that they would never tolerate themselves. Iterations of this anti-municipal broadband bill passed in 19 states to stop local governments in communities like Wilson, North Carolina from wiring their communities with fiber.”
It’s pretty simple legislation. It says that if cities or town get fed up with poor service, they still cannot start their own Internet service within that state in order to lower costs or improve service (or even to introduce service into small communities where the big companies do not find it profitable. So much for telecom in “the public interest.”
Another bill that profited telecom was the “Cable and Video Competition Act.” This act so clearly benefits the cable companies that it hardly seems possible even the most corrupt Republican could support it.. Here’s how ALEC EXPOSED describes it. “…attacks municipal cable franchises and frees cable companies from oversight. The bill creates a single state franchising authority and releases the companies from requirements to wire the entire state, and allows companies to decide when — or if — to build out cable, and through that cable, to provide adequate internet access.”
Remember, these are bills written by corporate lobbyists for the telecommunications companies and simply handed over to Republican state legislators at winter meetings in places like Palm Springs or Marco Island, where “scholarshi” local legislators are invited to attend in the dead of winter. Not bad, eh? Well you could do the same–if you had the money. Obviously, these corrupt Republican legislators will sell out tot the highest bidder. This law is in effect in 23 states, restricting competition, raising rates, contributing to poorer service, and even removing some funding for public access television.
We’re not done yet. There’s the ALEC “Broadband and Telecommunications Deployment Act.” As everyone knows, telephone lines, in the early 20th century were so important to the public and telephone service was so valuable, that the telephone company was given access to “public rights of way.’ in other words, they could put up telephone poles or dig under streets and sidewalks to lay telephone lines. But that work has long been done. This new act would give the state franchise…AT&T or Charter or Cox or Comcast(or only a combination of two “state sponsors”) the exclusive right, superseding the rights of counties or local communities in a state.
The Anti-Populist Market Focused Social/Political/Economic Contract
The result of corporate lobbying, is always an attack on the public interest, although these groups would not call it ‘lobbying.” They would describe it merely as exercising their First Amendment rights, just as they call corrupting a state legislator by giving him a “scholarship” to a winter meeting rather than a payoff.
But this does have an effect. If you have duopolies in telecommunications, you can automatically set prices because you only have to read the other telcom company’s prices once to know where to set them. And you don’t need to improve service because you know that the other company will only have to compete with you.
And so you can do what the telecommunications companies do, until we rein them in, or nationalize them if necessary. You can, if you are Comcast, get state legislators to add meaningless fees to your services. You can charge outrageous fees for your “equipment” and simply raise your rates to any prices that seem remotely reasonable for services that are some of the worst in among all advanced nations. You an be among the several corporations rated the “worst corporations” in the country and still make huge profits, year after year.
You know about this. You have,or had, cable television. You have, or had, the Internet. You understand how much it costs, as we showed above, for the average citizen. Anyone can treat you this way. All they need is money, and the desire to do only one thing: make more money at your expense.