Crux of Charter Merger: the Digital Divide

Capitol Weekly

Sam Overton | March 30, 2016

The California Public Utilities Commission is about to make a landmark decision about the merger of Charter Communications, Time Warner Cable and Bright House Networks that will have a generational effect on closing—or possibly making permanent—the Digital Divide.

What is the Digital Divide and why is it so important? The Digital Divide is the gap between those who have access to the Internet and those who don’t. And it’s important because the Digital Divide is a mirror of the income divide and the opportunity divide. For low-income kids, adults, seniors, and disabled people, Internet access is now the straightest route into our digital economy—because now everything is online: homework, college and job applications, healthcare services, every single book in the public domain.

Awareness of the Digital Divide is at a high point. The White House Council of Economic Advisers recently issued the report “The Digital Divide and Economic Benefits of Broadband Access,” which states:

“Broadband provides numerous socio-economic benefits to communities and individuals, improving labor market outcomes for subscribers, increasing economic growth, providing access to better health care, and enhancing civic participation; academic research shows that using online job search leads to better labor market outcomes, including faster re-employment for unemployed individuals, yet because of a digital divide, low-income households are less able to use these tools than high-income households; unemployed workers in households with Internet were 4 percentage points more likely to be employed one month in the future than those in households without Internet. This difference persists over time.”

So how it is possible that more than one fifth of U.S. households are still offline—and that the Los Angeles Region lags behind the state average, with only 76 percent of households online and 10 percent of that number with smart phone Internet access only? Given its economic benefits, isn’t home Internet access—especially to low-income people—an economic development no-brainer? Isn’t access delayed, really just access denied?

These are the questions my network at the California Emerging Technology Fund is asking about the pending Charter merger. Charter has committed to an affordable broadband rate of $14.99 per month with a download speed of 30 Mbps for low-income households that have children on free-or-reduced school lunch and seniors on Supplemental Security Income, in order to support its offer to buy competing Internet providers. This is a very good rate for the speed, but Charter’s offer does not include all low-income households, particularly people with disabilities.

Charter refuses to be held accountable for broadband adoption goals, meaning it will not designate the number of low-income households it intends to connect. Nor will it commit funding for community-based organizations, which are crucial in reaching hard-to-reach customers. Nor will it agree to fund specific high-speed deployment in California’s rural areas or network upgrades. Most surprisingly, Charter will not extend its offer to low-income adults without children and people with disabilities.

But Charter is ready to fund a $67 billion acquisition of Bright House Networks and Time Warner Cable, pay up to $170 million in “Golden Parachute Compensations” to the top five executives of Time Warner, and pay up to $500 to buy existing Internet customers out of competitors’ contracts.

It would be one thing if Charter’s service area in Southern California was small. But the merged company will serve more than 6.5 million households and—most importantly—more than 2.3 million low-income households, a third of which are unconnected in the service “footprint.” Charter will become the dominant Internet provider in the Los Angeles Region, where 27 percent of the state’s residents live and where 33 percent of the state’s low-income people reside. The company, in essence, is buying the Digital Divide in Southern California.

The CPUC is in a position to require Charter to make significant public benefit commitments as conditions for approval of the mergers. After all, its mission is to “serve the public interest by protecting consumers and ensuring the provision of safe, reliable utility service and infrastructure at reasonable rates, with a commitment to environmental enhancement and a healthy California economy.”

To help achieve California’s statewide goal of 80 percent broadband adoption, the CPUC must require Charter to reach at least 45 percent of the 2.3 million low-income customers in its California service area. And to do this, Charter must establish a fund—as AT&T, SBC, and Verizon have previously done—to support community-based organizations, schools and libraries that can best reach low-income customers.

The CPUC is in the driver’s seat. If it doesn’t require Charter to make significant commitments to offer affordable Internet to all of its low-income households and if it doesn’t provide funds to connect low-income people—the CPUC will not serve the public interest or economic health of California. It will not be doing its job. And Charter will dominant the Los Angeles Region without actually providing its poor residents high-speed Internet.

Sam Overton, who served from 1976 to 2012 as a deputy attorney general in the California Department of Justice, is the former president of the City of Los Angeles Commission on Disability, where he advocated on behalf of rights for the disabled.

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Should Low-income Americans Get Subsidized Internet? FCC Will Decide

San Francisco Chronicle

Marissa Lang | March 28, 2016

She hadn’t meant to cut it so close, but the library was closed and she couldn’t think of where else to go, so one hour before her midterm paper was due, Shayna Smith sat outside her doctor’s office typing furiously.

Smith, 41, is on a fixed income. She’s HIV-positive and relies on dialysis to prevent her kidneys from failing. Not having the Internet at her El Cerrito home used to be the least of her problems.

Until she decided to go back to school.

“When I first got on the Internet about 15 years ago, it was exciting and new, but it didn’t seem like I needed to be connected all the time,” said Smith, who is studying to earn her associate’s degree at Contra Costa College. “But when I went back to school, I realized how fast technology had advanced. For my classes, you can barely do anything without it.”

This week, the Federal Communications Commission will debate whether to expand the agency’s Lifeline program, which was created in 1985 to offer low-income Americans with subsidies for telephone service. If approved, the expansion would allow low-income people to use Lifeline subsidies for Internet service.

Qualifying Americans would receive a $9.25 monthly subsidy for broadband Internet — which, advocates hope, would cut the cost to consumers to about $10 to $20 per month.

More than 60 million Americans, like Smith, don’t have Internet at home. About half say they can’t afford it, according to the Pew Research Center. About 6 percent of California households have no Internet access whatsoever, according to the California Emerging Technology Fund. That’s about 780,000 homes.

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Digital Divide Is a Key Factor in Government's Review of Charter's Merger

Los Angeles Times

Meg James | March 15, 2016

For Alfonso Escobar, the Internet was once out of reach.

The 55-year-old retired bread baker from Bell had limited computer skills and couldn't afford the monthly service charge.

"It's like you can't see if you don't have glasses," said Escobar, who recently began taking an Internet skills class offered by a community group. "The Internet gives you access to the world. You can pay bills, make doctor appointments ... or keep in touch with your family. You can learn what's going on in your city, in Los Angeles, in Sacramento — and in the whole country." 

Bridging the so-called digital divide — the gulf between people who have ready access to the Internet, and those like Escobar who do not — has long been a priority of President Obama. And addressing the issue has become a key component in the government's review of a mammoth cable merger that could transform the local pay-TV landscape.

Charter Communications' proposed $67-billion plan to acquire two other cable companies — Time Warner Cable and Bright House Networks — would make it the dominant pay-TV and Internet service provider in Southern California, with more than 2 million customer homes.

"Charter is not just buying a big new service area — they are buying the digital divide," said Sunne Wright McPeak, president and chief executive of the nonprofit California Emerging Technology Fund, which is working to bring computers and affordable Internet connections to more California residents.

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Internet for All Now

The Hill

By Sunne Wright McPeak | February 23, 2016

Rarely is there a moment in time when just five people hold in their hands the destiny of millions, but such is the case for the Federal Communications Commission.  In the next few weeks, the five commissioners will decide on a Broadband Lifeline Program and the corporate consolidation application by Charter Communications to acquire Time Warner Cable and Bright House Networks.  Hanging in the balance is whether or not more than one fifth of America’s poorest and most disadvantaged populations will be able to get online and participate in the digital economy.  Will the FCC take bold steps to make the Internet affordable for low-income Americans?  

Today, about one in five households are stuck on the wrong side of the digital divide, left behind at an accelerating pace without 21st-century tools to become self-sufficient taxpayers fully contributing to the nation’s overall economic productivity.  They are almost disenfranchised from the democracy itself, given how much government information and how many public services are available only online.  Students can’t do their homework or apply for college; adults can’t apply for a job or take online courses to improve their workforce skills; and people with disabilities are further isolated.  The lack of affordable high-speed Internet access is part of interrelated factors that constitute a “wall of poverty” for millions of Americans.  

The FCC has been a trailblazer during the Obama administration, including adopting rules on net neutrality, beginning to modernize E-rate for schools and libraries and approving affordable broadband programs offered by Comcast and AT&T.  Under Chairman Tom Wheeler, building upon the foundation established by Commissioner Mignon Clyburn and embracing the imperative to close the “homework gap” highlighted by Commissioner Jessica Rosenworcel—the FCC is moving to approve an affordable Internet subscription offer for low-income households, which will transform a Reagan administration discounted telephone service program called Lifeline.  This is to be commended.  A recent Rutgers University/Joan Ganz Cooney Center study found that more than 20 percent of families rely on mobile-only access with data limits, and don’t have home Internet service because they can’t afford it. 

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CETF Tells FCC To Set Broadband Adoption In Charter Deal

Law 360 

Margaret Harding McGill | January 29, 2016 

Charter Communications is taking steps to bridge the digital divide with its low­income broadband offering, but members of a California nonprofit said the company should go further by setting broadband adoption goals among low­income households in the state, according to filings Friday that detail meetings with Federal Communications Commission officials.

Representatives of California Emerging Technology Fund, or CETF, met with Commissioners Michael O’Rielly, Ajit Pai, Mignon Clyburn, Jessica Rosenworcel and staffers for Chairman Tom Wheeler to discuss imposing a public interest benefit on Charter in order to gain FCC approval of its $55 billion merger with Time Warner Cable and $10.4 billion acquisition of Bright House Networks.

CETF, which did not take a position on whether the overall transaction should be approved, said a condition to approval should be that the new company have a goal of broadband adoption in 696,000 to 960,000 low-­income households in California. 

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Time Warner Cable-Charter Concerns Voiced at CPUC Hearing

CTFN

Robert W. Welkos | January 28, 2016

Many of the questions raised by critics of the proposed $78.7 billion merger of Charter with Time Warner Cable and Bright House Networks, focused on the fuzziness of the local details being presented by the applicants regarding how the transaction would impact millions of customers in Southern California, particularly low-income Internet broadband users.

Representatives of Common Cause, the Greenlining Institute, Stop the Cap!, and DISH Network urged the CPUC to reject the merger because it does not comport with the public benefits required by state law.

One of the chief concerns was the market concentration in Southern California that would result from the merger. “The New Charter will have very high concentration in the Southern California area,” Ana Maria Johnson, program and project supervisor at the Office of Ratepayer Advocates, the consumer advocacy arm of the CPUC, told CTFN during a break in the hearing.

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Banda Ancha Para Todos

La Opinion

Por Virginia Gaglionone | 05 Diciembre 2015

La campaña para que las comunidades en desventaja puedan tener acceso veloz al internet está cobrando fuerza, y ahora cuenta con el apoyo de la Junta de Supervisores de Los Ángeles. Los cinco supervisores votaron unánimemente para apoyar la campaña delFondo de Tecnologías Emergentes de California (California Emerging Technology Fund), para reducir el costo de la banda ancha, y mejorar el conocimiento digital de las comunidades minoritarias.

“El acceso de alta velocidad a la internet es esencial en el mundo digital que está constantemente evolucionando”, indicó la supervisora Hilda Solís, quien propuso la medida junto a la supervisoraSheila Kuehl. “Es necesario hacer más para cerrar la división digital que existe en el condado de Los Ángeles”. La supervisora observó que al no tener acceso a banda ancha, los residentes de comunidades en desventaja están siendo marginalizados e ignorados.

“En el mundo conectado de hoy, es virtualmente imposible conseguir un empleo, o acceder a cuidado de la salud sin una conexión de internet”, señaló la supervisora Sheila Kuehl.

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L.A. County Endorses Internet Access for Seniors and Poor

Los Angeles Times

By Matt Hamilton | November 27, 2015

Recognizing how essential the Internet is for people looking for jobs and social services, the Board of Supervisors voted this week to push for affordable high-speed Internet access for Los Angeles County seniors, low-income residents and people with disabilities.

In a unanimous decision, the five-member board joined the California Emerging Technology Fund's campaign to urge the Federal Communications Commission to establish a comprehensive Lifeline program that lowers the cost of broadband and enhances overall digital literacy among disadvantaged communities.

The board's support comes as the FCC has been taking steps to revamp its original Lifeline program, which was established nearly 30 years ago to provide affordable phone service to low-income Americans. In recent months, commissioners have publicly committed to restructuring the program and focus on access to broadband, calling it "essential to participation in modern society."

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CPUC ALJ Issues Favorable Proposed Decision

Fierce Telecom 

November 10, 2015

Full California Public Utilities Commission Expected to Vote on the Final Order by End of Year

NORWALK, Conn.--(BUSINESS WIRE)-- Frontier Communications Corporation (NASDAQ: FTR) announced that on Friday, November 6, 2015Administrative Law Judge Karl J. Bemesderfer with the California Public Utilities Commission (CPUC) issued a favorable Proposed Decision (PD) proposing approval of Frontier's proposed acquisition of Verizon's local wireline, broadband and video operations, including the FiOS network. The company has already received all other necessary regulatory approvals, including from the Federal Communications Commission (FCC) and theJustice Department. Frontier Communications along with other parties will be filing comments on the PD by November 20, 2015. Pending final CPUC approval in California, Frontier expects to close the transaction at the end of the first quarter of 2016.

Kathleen Abernathy, EVP, External Affairs, Frontier Communications said, "We are pleased that the PD finds that our proposed settlements with theOffice of Ratepayer Advocates (ORA), TURN and Center for Accessible Technology, California Emerging Technology Fund, Greenlining, and others address the public interest requirements to be considered by the Commission. The Public Participation Hearings conducted this summer by Commissioner Catherine Sandoval and Judge Bemesderfer informed these agreements and contributed to the settlements. We will continue to work through any remaining issues raised in the PD and address them in our comments, which are due in a few weeks. As we have publicly stated in all our filed testimony, we look forward to the opportunity to increase our presence in California and bring investment, jobs, and increased broadband availability to consumers across the state, in both urban and rural markets."

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Net Neutrality Lawsuit Delays Lifeline Revamp

Fierce Telecom 

By Samantha Bookman | October 30, 2015 

The move to extend low-cost broadband services to Lifeline recipients continues to draw controversy, with a lawsuit over net neutrality rules delaying the FCC from making a decision on whether to require Universal Service Fund fees of Internet service providers. Proponents of a proposed low-cost broadband option, meanwhile, are continuing to try and convince the commission to move ahead on the issue.

Currently, telecom carriers are required to pay into the USF -- fees that are typically tacked onto consumers' telephone bills to cover the cost. The USF provides basic voice service to consumers with limited income through the federal Lifeline program. With the FCC's net neutrality rules classifying broadband providers as telecommunications services, it's likely that ISPs will need to pay USF fees as well.

However, the FCC has so far delayed making a decision as to whether ISPs will need to pay USF fees as it looks for "more certainty" in its net neutrality decision, according to Commissioner Jessica Rosenworcel, speaking to the Senate Commerce Committee this week.

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