Capitalism doesn’t give a flying fuck

Leela Yellesetty explains why the abysmal conditions endured by airline passengers and workers alike have everything to do with the bosses’ bottom line.

Airlines are cramming more and more passengers onto each flight

Airlines are cramming more and more passengers onto each flight

DURING HIS brief but memorable tenure as White House communications director, Anthony “The Mooch” Scaramucci attempted to explain Trump’s vision for health care reform:

What the president is trying to do is make the health care system freer. So why not disrupt and decentralize the system, make it more price competitive, increase competition for the insurance companies and trust the process of the free market, like in telecom, like in airlines?

Really? Yes, the health care system is awful, but did the Mooch really think a good selling point for reform would be to make it more like Comcast, the most hated company in America? Or United Airlines, which wasn’t able to beat out Comcast even by dragging a bloodied man off a plane, so they decided to kill a bunny rabbit for good measure?

“No one wants health care to be like the airlines!” talk-show host Seth Meyers quipped in response, “‘How was the hospital?’ ‘Not great. My surgery was three hours late, my bed was double-booked so they dragged me out of the OR, and then they sent my appendix to Albuquerque!'”

What’s to blame for the awful treatment of passengers and airline workers alike? The problem isn’t bad business decisions, but the drive for sky-high profits.

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FOR THOSE of us who hate the elaborate torture that is U.S. air travel–that is, all of us who can’t afford first class–we have some tentative good news. A recent ruling by the U.S. Court of Appeals directed the Federal Aviation Administration (FAA) to address “the Case of the Incredible Shrinking Airline Seat,” as one judge put it.

The ruling came in response to a petition filed by the consumer advocacy group Flyers Rights, which pointed out that the distance between seats, known as the “pitch,” has decreased from an average of 35 inches to 31, with some as low as 28, while seat widths have shrunk by an inch and half in the past decade–at the same time as the average passenger has grown larger.

The group argued that this posed a health and safety hazard by making it difficult to evacuate in an emergency and increasing the risk of passengers developing deep vein thrombosis (DVT), a potentially fatal condition caused by a blot clot as a result of prolonged sitting in cramped space.

The FAA rejected the petition, claiming–with “research” to back it up–that the issue of seat size was one of comfort and not safety. While the court agreed that the danger of DVT was not well established, on the safety claims, it blasted the FAA for a “vaporous record” of “off-point studies and undisclosed tests using unknown parameters.”

Indeed, the FAA refused to disclose most of the tests used to make its decision, claiming they were proprietary.

While the ruling simply directs the FAA to revisit the petition and doesn’t directly compel the agency to set minimum standards for seat size, it is certainly a positive development in the face of the ongoing airline assault on our safety and comfort, not to mention dignity.

Apparently not everyone is cheering this development, though.

In article sneeringly titled “Let Them Shrink: FAA Should Not Regulate Airline Seat Space,” Forbes‘ Omri Ben-Shahar argued that the airlines are actually giving consumers exactly what they asked for. That is, if we want cheaper flights, we should be prepared to suffer for them.

If you want better seats, just pay more–indeed, one reason our seats are shrinking is to make room for “premium” options for the lucky few.

William McGhee, author of the airline industry expose Attention All Passengerssummed up the attitude of Forbes writers and airline executives this way:

Things are just fine in business class and first class. I don’t think that’s coincidental. It reflects the larger issues we face as a society right now, the 99 Percent vs. the 1 Percent. I’ve talked to execs about deteriorating conditions in the back, and their response is basically, ‘You should pay for and sit up front,’ which is a bit of a ‘Let them eat cake’ response.

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AS EASY as it can be to dismiss an argument inspired by Marie Antoinette, it’s worth probing some of the claims that Ben-Shahar makes more closely.

For one thing, it’s true that airline travel is more affordable and accessible to the average person that it was in the glory days of free food and adequate legroom.

Back then, air travel was largely a preserve of the wealthy. For free-market enthusiasts like Ben-Shahar and the Mooch, therefore, the deregulation of the airline industry in 1978 was a victory for consumers, increasing competition and thereby lowering fares and improving service.

This sounds good, but it doesn’t remotely depict what has actually happened in the decades since deregulation. Instead, what’s played out is a sordid tale of rampant inefficiencies, corruption, bankruptcies, mergers and deteriorating conditions for both passengers and workers.

Right after deregulation, there were more than 400 certified carriers and 10 major airlines. Today, just four airlines control 80 percent of all domestic flights. Rather than encourage competition, deregulation removed antitrust provisions, allowing airlines to collude in raising fares while reducing service.

The 2013 merger of American and US Airways to create the world’s largest airline was accomplished by an army of corporate lobbyists, lawyers and economists, while executives and their Wall Street backers salivated at the profits to be made from the deal:

Indeed, government investigators had uncovered documents showing airline executives crowing about how mergers allow them to charge travelers more. “Three successful fare increases–[we were] able to pass along to customers because of consolidation,” wrote Scott Kirby, who became the president of the new American Airlines, in a 2010 internal company presentation…

A 2014 Goldman Sachs analysis about “dreams of oligopoly” used the American-US Airways merger as an example. Industry consolidation leads to “lower competitive intensity” and greater “pricing power with customers due to reduced choice,” the analysis said.

Another useful tool in the industry playbook is bankruptcy. All of the four remaining airlines filed for bankruptcy in the past decade–and they are now the four most profitable airlines in the world.

In fact, they were doing just fine before, but bankruptcy allowed them to slough off inconvenient costs of providing decent pay and benefits to their employees. As United Auto Workers activist Gregg Shotwell commented on American’s 2011 bankruptcy:

Capitalism isn’t above the law in the United States–it is the law. Peace and solidarity activists are hounded, harassed and arrested, but the forcible transfer of wealth from the working class to the investing class is protected concerted activity.

American Airlines’ debt doesn’t outweigh its cash and assets. In fact, American is financing its own bankruptcy. That’s not distress, it’s brass-knuckles union busting. The business press makes no bones about American Airlines’ plan to profit off the broken backs of labor contracts. In fact, they crow about it.

American Airlines ordered 460 new planes from Boeing and Airbus less than five months ago, at a cost of $38 billion. Those contracts will be honored even as American plans to dump pensions underfunded by about $10 billion for approximately 130,000 workers and retirees.

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THIS UNION busting comes with real consequences for passenger safety as well. Abysmal pay and working conditions for pilots in budget regional carriers has resulted in an increase in crashes, to give just one example.

While cutting corners on workers’ rights has helped boost airline profits and executive compensation, the impact on fares for passengers is less than meets the eye. As Carl Finamore explained in a 2010 article republished at SocialistWorker.org:

Champions of the free market boast about upwards of a 20 percent reduction in fares since 1978 when airlines were freed to set their own prices without the nuisance of government regulators. But this is very misleading. There are several factors contributing to the decline in prices. For example, booking online has almost entirely eliminated the large commissions of travel agents. Experts state these fees normally accounted for a full 10 percent of ticket prices.

And while it is true that fares to large cities has benefited from increased competition, where it exists, smaller communities have, conversely, seen substantial fare increases as their airports have experienced reduced or lost service. Millions of travelers are also forced to purchase tickets to major hub airports they otherwise would have bypassed during the period of regulation where direct flights to and from smaller markets were offered.

The last major factor making the price of flights misleading is the explosion of fees for everything from luggage to meals to wifi to the ability to board early–coming soon: the surcharge if you would like to not be beaten and dragged off the plane. This has been the single largest source of profits for airlines in the last decade, with Delta alone pulling in $5.7 billion from such fees in 2013 alone.

As Tim Wu pointed out in the New Yorker, this pricing model sets up a perverse incentive:

Here’s the thing: in order for fees to work, there needs be something worth paying to avoid. That necessitates, at some level, a strategy that can be described as “calculated misery.” Basic service, without fees, must be sufficiently degraded in order to make people want to pay to escape it. And that’s where the suffering begins.

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IS THERE any way out of calculated misery?

The current trajectory we’re on doesn’t seem promising. While the past few years saw record profits for airlines in part due to lower fuel costs, as costs begin to rise, we should expect new rounds of crisis, bankruptcies and mergers, all of which will, of course, be apaid for by further attacks on worker and passenger dignity.

Ultimately, we would be wise to heed the words of former American Airlines CEO Bob Crandall that “market forces alone cannot and will not produce a satisfactory airline industry, which clearly needs some help to solve its pricing, cost and operating problems.”

Nationalizing and making the airlines a public utility would be a rational response to the anarchic yet calculated misery of deregulation. In a sane system, we would also look for ways to reduce the amount of air travel, given its carbon footprint, but this would require reorganizing corporate practice and providing affordable, sustainable travel alternatives, such as high-speed rail, as well as providing workers more vacation days to make slower forms of travel feasible.

Of course, we should expect none of these solutions to be forthcoming from the airline executives–least of all under a certain president who, within weeks of taking office, gleefully told a group of them: “You’re going to be so happy with Trump.”

Instead our salvation from the unfriendly skies lies, as an anonymous Delta employee put it recently, in passengers and airline workers joining forces in support of each other:

Instead of indicting each other (employees and passengers), we should focus on fostering solidarity. Many of our interests are the same.

Most obviously, a passenger’s flying conditions are also an airline employee’s working conditions…The declining emphasis put on passenger comfort and airline employee working conditions can be traced back to a common cause: the deregulation of the U.S. airline industry and the relentless pursuit of profit.

https://socialistworker.org/2017/08/10/capitalism-doesnt-give-a-flying-f–k

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5 Worst Things About the Techno-Libertarians in Silicon Valley

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There’s a lot wrong with the tech industry, and it’s increasingly impacting ordinary Americans.

Nowadays the Silicon Valley is either celebrated as a hotbed of creativity or condemned as a cauldron of greed and wealth inequality.

While there are certainly some talented and even idealistic people in the Valley, there’s also an excess of shallow libertarianism, from people who have enriched themselves with government-created technology who then decide they’re being held back by government. That’s shortsighted and vain. And yes, there are serious problems with sexism and age discrimination – problems which manifest themselves with some ugly behavior.

But such ethical problems aren’t solely, or even primarily, the product of individual character defects. They’re the result of self-reinforcing cultural norms at work. Anthropologists and sociologists could do worse than study the tech culture of the Silicon Valley. It would be important work, in fact, because this insular culture is having a deep and lasting impact on our economy and society.

Here, to star them off, are five socially destructive aspects of Silicon Valley culture:

1. Tech products become the byproducts of a money-making scheme rather than an end unto themselves.

It’s almost inevitable when big money enters the picture: Smart or talented people are drawn to a field for the chance to get rich, not necessarily because it’s where their greatest talents or dreams lie.  The same thing has happened to fields as diverse as film, pop music, and the financial sector.  There’s nothing wrong with getting rich, but it should be the byproduct of a happy marriage between talent and  inspiration.

But here’s how it works instead: The goal of entrepreneurs and innovators was once summed up in the cliched phrase, “build a better mousetrap.” But for  many Silicon Valley products and services, including services like Uber and AirBnB, the goal now is to build a product which can be hyped into a multi-billion-dollar valuation – preferably by winning as much market share as possible, and then using that market position to engage in the kinds of practices usually reserved for monopolies and monopsonies (markets in which there is only one buyer). This process is described in more detail here.

Instead of building a better mousetrap, the new Silicon Valley business model works like this:

i. Give your “mousetrap” away for free, or as close to free as you can make it. (Since you’re working with digital signals transmitted over a government-invented network, that can usually be done at minimal cost. In other cases it pays to benefit from a government tax loophole (see Amazon) or make an end run around the regulations your competitors must follow (see Uber, Lyft, and AirBnB).

ii. Use these government-conferred advantages, along with your own aggressive market moves, to gain a large or decisive marketshare.  (See Amazon, Facebook, etc.) In exceptional cases, actually build brilliant and superior software to win your market share. (See Google.)

iii. Use your newfound market share to a) bend government to your will wherever possible, b) screw down your suppliers’ prices, c) hit your customers with increased prices and/or new ads or other profit-making devices, and d) manipulate your customers without their knowledge. (See Uber, Amazon, Google, Facebook, et al.)

This business model has directed much of the Valley’s efforts away from inventing genuinely creative new products – and toward the kinds of aggressive tactics that, as we’ve written before, would be very familiar to the Robber Barons of the 19th century.

2. Even inspired leaders internalize a worldview which places profits over humane behavior.

Steve Jobs is a prime example of this phenomenon. As an early innovator in the tech field, Jobs – however interested he was in making money – was not drawn to the field for the sake of money alone. Nor was he following in the footsteps of others, seeking to replicate the successes of a Zuckerberg or a Sergey Brin, as newcomers to the field are now. Jobs possessed a genuinely inspired design vision, from the earliest days of his career to his last.

And yet, for all his gifts, the pursuit of wealth led Jobs to commit some morally reprehensible deeds. As “white collar criminologist” William K. Black Jr. told me in a 2012 radio interview, Jobs’ drive to maximize profits – and his craving to get new products to market as quickly as possible – almost certainly led him to knowingly ignore abuses and safety threats to the Chinese workers who built his products.  That, in turn, led to dormitory-based workers being forced to work under extreme conditions. These unheeded warnings also led to the horrific burning deaths of several workers.

Amazon’s Jeff Bezos is also unquestionably an innovator. But the working conditions which Amazon’s warehouse workers endure would seem familiar to their Apple counterparts in China. As documented by Simon Head in his book “Mindless: Why Smarter Machines Are Making Dumber Humans” (excerpthere), Amazon’s American warehouse workers are subjected to ever-harsher production expectations and invasive measurement techniques. Head documents the case of a Pennsylvania employee who worked 11-hour shifts and was ultimately fired for “unproductive periods” which lasted only minutes. GPS devices in an England warehouse tell workers which routes they must travel – inside the warehouse – and their expected travel time.

Amazon’s German operations employed “a security firm with alleged neo-Nazi connections that … intimidated temporary workers lodged in a company dormitory … with guards entering their rooms without permission at all times of the day and night.” An Allentown facility which lacked air conditioning repeatedly reached temperatures of more than 100 degrees one summer. More than fifteen workers collapsed, but supervisors refused to open garage doors. Reports Head: “Calls to the local ambulance service became so frequent that for five hot days in June and July, ambulances and paramedics were stationed all day at the depot.”

A number of Silicon Valley CEOs were also implicated in a widespread conspiracy to illegally suppress wages and prevent job-seeking from engineers and other key employees. Mark Ames, who has reported extensively on the conspiracy, wrote that “confidential internal Google and Apple memos … clearly show that what began as a secret cartel agreement between Apple’s Steve Jobs and Google’s Eric Schmidt to illegally fix the labor market for hi-tech workers, expanded within a few years to include companies ranging from Dell, IBM, eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and London-based public relations behemoth WPP.”

These incidents are by no means exceptions in the Silicon Valley culture. The most generous way to interpret behavior like this is to assume that Steve Jobs and operated in a culture whose worldview downplayed the human impact of business practices. That, in fact, is reinforced by other aspects of Silicon Valley’s leadership society.

3. The culture encourages a solipsistic detachment from reality, even as its brute economic strength colonizes everything it touches.

A dispassionate observer might be tempted to wonder how a culture filled with so many smart people can remain so unaware of, and/or disinterested in, their effect on other people’s lives?

For many of them, the evidence is literally right before their eyes: San Francisco’s richness and diversity is being drained away, as the city becomes unaffordable for more and more of its citizens.  They are all good with numbers, so the statistics on growing wealth inequality should not be hard for them to understand. And their arguments – e.g., that the “sharing economy” will benefit struggling Americans – are easily punctured by even a superficial look at US demographics. (Are struggling Milwaukee residents going to get rich driving tourists around their battered town, or renting out their inner-city apartments on AirBnB?)

Most of the tech executives I’ve known aren’t bad guys. (To be clear, I haven’t met Uber’s leadership – with the exception of a brief encounter with former Obama advisor David Plouffe – and they certainly appear to be an exception.)   But even many of the “good” ones seem oblivious to the effect of their own behavior.

To a certain extent that’s an occupational hazard. I’ve spent just enough time hammering out software in the glow of a computer screen to see how easily a synthetic world can replace the one inhabited by other human beings.

But there are correctives for that: reading, contemplation, speaking with human beings from different walks of life. The Valley’s tech culture doesn’t seem to encourage that – to its detriment, and that of society as a whole.

4. The Valley gets fixated on lame (and sometimes antisocial) buzzwords.

“Move fast and break things,” said Mark Zuckerberg in a much-repeated quotation. Other tech types prattle on about “the next Big Idea.” And almost everyone wants to “disrupt” an existing industry.

Why is it good to “move fast and break things”? Isn’t it usually wiser to move carefully and build things? There may be times when it’s wise to act rapidly, or break with conventional ways of doing things. But there are also times when a hastily-executed rollout dooms a product. Sometimes it makes sense to improve the established ways of doing things, rather than upend them altogether.

When you think about it, what does this expression even mean? It’s only repeated because a) it sounds smart, and b) it was spoken by someone who is extremely wealthy, and such people are to be imitated whenever possible in the hope that some of their magic will rub off.

As for “Big Ideas”: do they really correlate with tech success? Google was a smarter search engine, but search engines were no longer a new or “big” idea by the time it came along. Craigslist? It’s online classified ads.  Facebook was originally conceived as the online version of the printed “facebooks” traditionally given to incoming freshmen so they could get to know their classmates. Neither Zuckerberg nor those Harvard twins knew what it would someday become.   There is surprisingly little correlation between tech success and actual “Big Ideas.”

Disruption’s overrated, too. Sure, it can work. Instagram disrupted home photography, for example. But Twitter, one of the smarter ideas to come from the Valley in recent years, didn’t disrupt anything. Instead it created a new market and a new medium. Sometimes “disruption” is a euphemism, whose real meaning is “use tax loopholes to undercut law-abiding vendors” or “employ Robber Baron business practices to cut suppliers prices.”

Sometimes it means nothing at all.

5. Silicon Valley’s culture is hurting our economy.

Politicians like to celebrate the tech industry as a boon to the economy, but for most Americans the opposite is true. As economist Joseph Stiglitz and others have documented, monopoly practices exert a significant drag on the economy. The economy becomes increasingly capital-driven, rather than labor-driven. Monopolies suppress wages, overcharge consumers, mistreat suppliers, and drive the economy increasingly off-course.

There’s also a price to be paid for product inefficiency. Monopolies can sometimes squander human capital – that is, waste people’s time – by forcing them to struggle with inefficient products like Microsoft’s operating system or Facebook’s user interfaces. (More on this topic here.) Multiply every minute wasted on a Windows inefficiency or Facebook’s privacy settings by millions of users, and the cost begins to add up.

The Valley’s hurting our economy in another way, too. Somehow, some of the titans of tech have gotten the misguided idea that they are exemplars of libertarian self-created success. Nothing could be further from the truth. The Silicon Valley runs on government-subsidized technology, from microchips to the Internet itself. Corporations like Amazon used government-created tax breaks to build near-monopoly leverage and turn it against their suppliers.

And now, having enriched themselves through government generosity, some of the Valley’s billionaires are using their publicly-assisted wealth to back political candidates and organizations under a “libertarian” label that is better described, at least economically, as a far-right agenda. These candidates and organizations push our political dialogue in a more conservative direction – which in turn creates a political climate which tends to permit more of the things that have already wounded our economy, like deregulation and lower taxes for the wealthy and corporations.

All of the Valley’s cultural traits, from the profound to the trivial, reflect a culture that is urgently in need of maturation and change. One thing’s for sure: If I hear another tech titan say he plans to “disrupt” an industry, I’m going to move fast and break something.

Richard (RJ) Eskow is a blogger and writer, a former Wall Street executive, a consultant, and a former musician.

http://www.alternet.org/culture/5-worst-things-about-techno-libertarians-solidifying-their-grasp-our-economy-and-culture?akid=12994.265072.5R9qHL&rd=1&src=newsletter1034621&t=1

AT&T, Comcast, Time Warner Cable use statehouses to curb public Internet service

How big telecom smothers city-run broadband

By Allan Holmes

5:00 am, August 28, 2014 Updated: 5:00 am, August 28, 2014

Janice Bowling, a 67-year-old grandmother and Republican state senator from rural Tennessee, thought it only made sense that the city of Tullahoma be able to offer its local high-speed Internet service to areas beyond the city limits.

After all, many of her rural constituents had slow service or did not have access to commercial providers, like AT&T Inc. and Charter Communications Inc.

But a 1999 Tennessee law prohibits cities that operate their own Internet networks from providing access outside the boundaries where they provide electrical service. Bowling wanted to change that and introduced a bill in February to allow them to expand.

She viewed the network, which offers speeds about 80 times faster than AT&T and 10 times faster than Charter in Tullahoma according to advertised services, as a utility, like electricity, that all Tennesseans need.

“We don’t quarrel with the fact that AT&T has shareholders that it has to answer to,” Bowling said with a drawl while sitting in the spacious wood-paneled den of her log-cabin-style home. “That’s fine, and I believe in capitalism and the free market. But when they won’t come in, then Tennesseans have an obligation to do it themselves.”

At a meeting three weeks after Bowling introduced Senate Bill 2562, the state’s three largest telecommunications companies — AT&T, Charter, and Comcast Corp. — tried to convince Republican leaders to relegate the measure to so-called “summer study,” a black hole that effectively kills a bill. Bowling, described as “feisty” by her constituents, initially beat back the effort and thought she’d get a vote.

That’s when Joelle Phillips, president of AT&T’s Tennessee operations, leaned toward her across the table in a conference room next to the House caucus leader’s office and said tersely, “Well, I’d hate for this to end up in litigation,” Bowling recalls.

The threat surprised Bowling, and apparently AT&T’s ominous warning reached her colleagues as well. Days later, support in the Tennessee House for Bowling’s bill dissolved. AT&T had won.

“I had no idea the force that would come against this, because it’s just so reasonable and so necessary,” Bowling said.

AT&T and Phillips didn’t respond to emails asking for comment.

A national fight

Tullahoma is just one battlefront in a nationwide war that the telecommunications giants are fighting against the spread of municipal broadband networks. For more than a decade, AT&T, Comcast, Time Warner Cable Inc., and CenturyLink Inc. have spent millions of dollars to lobby state legislatures, influence state elections and buy research to try to stop the spread of public Internet services that often offer faster speeds at cheaper rates.

The companies have succeeded in getting laws passed in 20 states that ban or restrict municipalities from offering Internet to residents.

Now the fight has gone national. The Federal Communications Commission in Washington, D.C., is considering requests from Chattanooga, Tennessee, and Wilson, North Carolina, to pre-empt state laws that block municipalities from building or expanding broadband networks, hindering economic growth, the cities argue.

If the FCC rules in favor of the cities, and the ruling survives any legal challenges, municipalities nationwide will be free to offer high-speed Internet to residents when they aren’t satisfied with the service provided by private telecommunications companies.

To better understand the municipal broadband debate, the Center for Public Integrity traveled to two southern cities. Tullahoma, which has a broadband network, and Fayetteville, North Carolina, which doesn’t.

City-provided broadband widespread

More than 130 cities from Norwood, Massachusetts, to Clallam County, Washington, currently offer fiber or cable Internet connections to their communities, according to the Institute for Local Self-Reliance, a group that supports municipal broadband. The municipalities are mostly small to mid-sized cities that critics say large Internet providers avoid because the return on investment is too low.

Cities build broadband networks to support businesses, improve health care and education, and attract jobs, they say. About 89 cities offer gigabit speeds, a rate that can download a 4.5 gigabyte movie in 36 seconds. The same file takes an hour at 10 megabits per second. Slower DSL or dial-up connections, which are common in rural areas, would take many hours longer.

http://www.publicintegrity.org/2014/08/28/15404/how-big-telecom-smothers-city-run-broadband

Contributions to House Members Lobbying against Net Neutrality from Cable Interests

Rep. Greg Walden (R-Ore.) pictured in foreground
 
The FCC voted 3-2 on Thursday to approve a notice of proposed rulemaking, initiating a public comment period on several approaches to “protecting and promoting the open internet,” including reclassifying the internet as a public utility under Title II of the Communications Act.
 
The 28 representatives signing letters to the FCC against Title II reclassification of the internet as a public utility, a position allied with the cable industry, have received, on average, $26,832 from the cable industry, 2.3 times more money than the average for all members of the House of Representatives, $11,651.

Republicans signing the letters against Title II reclassification of the internet as a public utility have received, on average,$59,812 from the cable industry5 times more than the average for all members of the House$11,651.

Democrats signing the letters against Title II reclassification of the internet as a public utility have received, on average, $13,640 from the cable industry, 1.2 times more times more than the average for all members of the House,$11,651.

Letter signer Rep. Greg Walden (R-Ore.) has received more money from the cable industry than any other member of the House of Representatives: $109,250 over the last two years. Walden is Chairman of the Subcommittee on Communications and Technology, which has jurisdiction over the FCC.

Top Five Recipients (Letter Signers) of Contributions from Cable Interests:

  • Greg Walden (R-Ore) has recieved $109,250
  • Eric Cantor (R-Va.) has received $80,800
  • John Boehner (R-Ohio) has received $75,450
  • Fred Upton (R-Mich.) has received $65,000
  • John Barrow (D-Ga.) has received $60,500

Twenty-nine members of Congress own stock in Comcastmaking Comcast the 25th most held stock among members of Congress. Minority Leader Rep. Nancy Pelosi (D-Ca.) owns more Comcast stock than any other member.

Methodology: MapLight analysis of campaign contributions to members of Congress from PACs and employees of organizations in the cable and satellite TV production and distribution industry, from January 1, 2012 – December 31, 2013. Data source: OpenSecrets.org Personal Financial Disclosure data sourceMapLight analysis of United States Senate’s Select Committee on Ethics: http://www.pfd.senate.gov/index.cfm/searchSelect/ and U.S. House of Representatives Office of the Clerk: http://clerk.house.gov/public_disc/financial.aspx

Background:

Letters from members of the House of Representatives to Federal Communications Commission (FCC) Chairman Tom Wheeler:

Letter 1: Signed by Energy and Commerce Committee Chairman Fred Upton (R-Mich.), Subcommittee on Communications and Technology Chairman Greg Walden (R-Ore.), Energy and Commerce Committee Vice Chairman Marsha Blackburn (R-Tenn.), and Subcommittee on Communications and Technology Vice Chairman Bob Latta (R-Ohio) expressed “grave concern” over a proposal supported by net neutrality advocates to reclassify the internet as a public utility under Title II of the Communications Act, “Such unwarranted and overreaching government intrusion into the broadband marketplace will harm consumers, halt job creation, curtail investment, stifle innovation, and set America down a dangerous path of micromanaging the Internet.”

Letter 2: Led by Rep. Gene Green (D-Texas) and signed by John Barrow (D-Ga.), Sanford Bishop (D-Ga.), George Butterfield (D-N.C.), Bobby Rush (D-Ill.), Corrine Brown (D-Fla.), Joaquin Castro (D-Texas), Alcee Hastings (D-Fla.), William Owens (D-N.Y.), Loretta Sanchez (D-Ca.), Albio Sires (D-N.J.), Nick Rahall (D-W.Va.), Kurt Schrader (D-Ore.), Bennie Thompson (D-Miss.), Marc Veasey (D-Texas), Lacey Clay (D-Mo.), Gregory Meeks (D-N.Y.), Scott Peters (D-Ca.), Henry Cuellar (D-Texas), and David Scott (D-Ga.), “While we still have further to go to ensure that the benefits of broadband reach all Americans, we are concerned that opening the door to subjecting broadband service to a wide array of regulatory burdens and restrictions, including imposing Title II, might halt this progress.”

Letter 3: Signed by House Speaker John Boehner (R-Ohio), House Majority Leader Eric Cantor (R-Va.), House Majority Whip Kevin McCarthy (R-Ca.), and House Republican Conference Chair Cathy McMorris Rodgers (R-Wash.), “As we continue to ask the world to keep their hands off the Internet and to allow people to freely engage with each other, we should lead by example and reject calls to return to a bygone model of network regulation.”

Comcast, America’s largest cable internet provider, agrees with the four Republicans. In a recent FCC filing, Comcast said, “Title II would spark massive instability, create investor and marketplace uncertainty, derail planned investments, and slow broadband adoption.”

Image source: House GOP Leader/Flickr

About MapLight: MapLight is a 501(c)(3) nonprofit, nonpartisan research organization that reveals money’s influence on politics. If our work has been helpful to you, please consider supporting us.

The FCC Has Been Surrounded by Corporate Lobbyists for Too Long, Now It’s Our Turn


We’re camping out day and night on the FCC’s doorstep to defend net neutrality and keep the Internet free from discrimination and “slow lanes.”

Photo Credit: Margaret Flowers & Kevin Zeese

This article is a modified version of material fromSave The InternetandPopular Resistance.

Last week we wrote about the importance of taking action to save the Internet.  The Chairman of the FCC, Tom Wheeler, is proposing new rules that will be great for Comcast, AT&T, and Verizon, but terrible for the rest of us. The FCC has been surrounded by corporate lobbyists for too long, now we must make our voices heard.

On Wednesday, we decided that we had to follow our own advice and take stronger action. After a kick-off rally at noon in front of the FCC, we set up an encampment next to the Maine Ave, SW doors of the FCC. We are taking action each day to push the people’s interest in a free, open and equal Internet. These next few days leading up to the meeting of the FCC Commissioners on the May 15 are a critical time for us to set the agenda and protect the public interest.

Help us surround FCC with people who love the Internet and understand the importance of keeping it open. Before May 15 when the FCC holds its next Open Meeting, citizen pressure needs to continue to build to demand reclassifying the Internet as a common carrier, putting into law net neutrality and removing all obstacles that prevent locally-controlled public Internet. Join us in DC, take action online or organize a protest at an FCC office in your community.

Immediate Impact Of The Encampment

FCC Chairman Tom Wheeler is already struggling to defend his proposal for new rules that will allow fast lane net discrimination by his corporate allies at Comcast, Verizon and AT&T – but we need to keep building the pressure to get the other FCC commissioners on our side and to return the Internet to its previous status as a public utility.

Activists are joining our camp in Washington, DC to protest the new net discrimination rules. We will be there until the next public meeting at the FCC to make sure that the proposed rules protect net neutrality, instead of taking the agency off track and ending net neutrality. The encampment adds to the great work done by numerous organizations like Fight for the Future and Free Press online which resulted in more than one million people writing the FCC urging net neutrality and thousands of phone calls demanding withdrawal of Wheeler’s proposal.

This negative response is bigger than anything the FCC expected. But in order for us to be successful, we need activists to come out and be a part of the action in DC or create one at an FCC office close to home.  We are at a crucial turning point and more people getting involved will make a tremendous difference.

From the first moments, we found that the encampment was having an impact.  Before a single protester had even shown up at the FCC’s doorstep, we got a call from Chairman Tom Wheeler’s office asking what we were doing, what our message was, how long we were staying and saying they may be interested in meeting with us. That’s particularly interesting, since even with more than 1 million net neutrality signatures to the FCC last month, Chairman Wheeler wouldn’t meet with us.

The first afternoon we saw divisions emerging among the Commissioners.  Two Democratic Commissioners came out against moving forward on Wheeler’s proposal. One said the FCC should take at least a month to listen to the public, and the other said she would oppose any fee-based divisions on the Internet.  The Republican commissioners want no regulation – which would be a disaster since it would let the biggest corporations profit and prevent them from being challenged by entrepreneurs. Right now, Wheeler seems to be standing alone for a fee-based division of the Internet

Feeling the pressure, Wheeler responded to thousands of emails sent to him from Popular Resistance with a carefully phrased response that did not answer our demands, but highlighted the differences between industry and the public interest.

On the third day one, of the five FCC Commissioners came out to talk with us. Republican Commissioner Ajit Pai was very friendly; he is quite a joke-ster. This seems to be his way of avoiding discussion. When we noted that it was embarrassing that the country that invented the Internet was now ranked at 30 or lower (depending on the rankings) in quality of the Internet.  Pai’s response “We’re better than Estonia.” Kevin’s response — “Yeah, but not by much!”

After some friendly back and forth, he asked if it were a choice between the Wheeler’s proposal and doing nothing, which would we choose. Pai essentially presented the choice of two evils — the Democrat’s rig the market for the wealthiest; and the Republican’s take off all controls so the wealthiest can dominate the market.  The interesting thing about this choice of evils is that they end up in the same place: Comcast, Verizon and AT&T will get wealthier and dominate the market, keeping challengers out; and the people and small businesses will be screwed.  The Internet’s creativity and our full access to information will be ended.

We can’t keep letting the corporate duopoly restrict our choices to two lousy ones; we need to break-free of their obvious manipulation. We told Pai that we are not limited to those choices. We want:

– Reclassification as a common carrier so the Internet could be regulated in the public interest;

– Net neutrality put into law so that there is no Internet discrimination and everyone has equal access to all of the web; and

–  Remove barriers to public Internet at the municipal and local levels so communities can develop public ownership of the Internet in the public interest as many areas are already doing successfully.

Throughout the encampment, FCC employees have been telling participants how much they appreciate us being out there, that they agree with us and that they hope we succeed.  Many inside the FCC want to serve the public interest, not the corporate interests. While lawyers from industry have been hired to work inside the FCC, they seem to be outnumbered by staff of the FCC who are on the side of the people. Participants have been handing out literature during lunch hour urging people in the FCC to blow the whistle and let the public know what is going on inside the agency. To be democracy heroes, people inside the FCC need to let the public know how the mega-corporations and their allies inside the FCC are working to undermine the public interest.

If you cannot come to DC we urge people toorganize similar encampments at other FCC branches in 27 other cities.  People in Los Angeles rallied outside an Obama fundraiser to protest the proposal to end net neutrality. It is important for President Obama — who appointed all five Commissioners of the FCC — and members of the Senate — who confirmed all five Commissioners — to hear from the public and let them know that if net neutrality is ended, so do their careers.

Now we know for sure that we have the FCC’s attention, since they walk past our encampment every day when they come to work. We’ve heard from our contacts in DC that Tom Wheeler was not expecting this kind of massive backlash to his net neutrality announcement last week. We need to let the FCC know that if they move forward with this proposal they are lighting the fuse to a massive citizen’s revolt that will impact their agency as well as the elected officials who put them in power.

Divisions Building in the Business Community

At the same time that public pressure to withdraw Wheeler’s proposal is building, so is pressure in the business community. Two letters were sent to the FCC this week demonstrating broad opposition to Wheeler’s proposal as well as widespread support for reclassifying the Internet as a common carrier.

The first letter was signed by almost 150 tech companies. It included those from 3 person start-ups to giants like Google, Amazon, Twitter and Facebook and describes Wheeler’s proposal as “a grave threat to the Internet” as they would allow companies to “discriminate both technically and financially.”  They opposed the end of net neutrality. The letter says FCC rules should not permit “individualized bargaining and discrimination,” and tells the FCC to “take the necessary steps to ensure that the internet remains an open platform for speech and commerce.”

The second letter was sent by 50 tech investors who told Wheeler that his proposal would undermine creativity and investment in the development of the Internet.  The letter says that “If established companies are able to pay for better access speeds or lower latency, the internet will no longer be a level playing field . . . startups with applications that are advantaged by speed (such as games, video, or payment systems) will be unlikely to overcome that deficit no matter how innovative their service.”

The group includes investors from around the country, including Union Square Ventures, Andreessen Horowitz, First Round Capital, and many more. Collectively they have funded companies like Twitter, Facebook, Foursquare, Tumblr, and others. You can read their full letter here.

The Next Few Days are Critical to the Future of the Internet

We have made tremendous progress since Chairman Wheeler put out his proposal. But, AT&T, Verizon, and Comcast have dozens of paid lobbyists pressuring the FCC daily and many lawyers and others working inside the agency.  This is a battle for the future of the Internet that we can win but we have to keep expanding the pressure and fight back against Wheeler’s proposal.

Before May 15 when the FCC holds its next Open Meeting, citizen pressure needs to continue to build to demand reclassifying the Internet as a common carrier, putting into law net neutrality and removing all obstacles that prevent locally controlled public Internet. We must define the agenda in the public interest as we move into the next phase of public comment and voting on the new rules. We will be in a stronger position if we defeat Wheeler’s proposal and replace it with ours.

There will be a rally outside the FCC before the public meeting on May 15, but this struggle doesn’t end that day. Be prepared to continue mobilizing this summer to save the internet. The time is now. The Internet is critical for the democratized citizen’s media, for access to information, for communication with people all over the world and for organizing for justice. Join PopularResistance.org and FightfortheFuture.org to get involved.

If you want to get involved in escalating actions in Washington, DC beginning Wednesday, May 7th contact us at info@PopularResistance.org.

This article is produced by Popular Resistance in conjunction withAlterNet.  It is a weekly review of the activities of the resistance movement.

Why Comcast’s rise and net neutrality’s downfall will change everything

Say goodbye to TV’s golden age:

The economic model that sustains quality TV is under assault. Does the future have room for any more Walter Whites?

Say goodbye to TV's golden age: Why Comcast's rise and net neutrality's downfall will change everything
Bryan Cranston as Walter White in “Breaking Bad” (Credit: AMC/Frank Ockenfels 3)

Viewers be warned! The golden age of television is coming to an end, and here’s how it’s going to happen: An unholy cabal of judges, government regulators and “cord-cutting” millennials will decapitate it. Like the similarly beheaded Ned Stark, on HBO’s “Game of Thrones,” we will miss it dearly when it’s gone.

For years, the “future of TV” has been an evergreen topic of discussion, but rarely have we seen weeks like the one just past, in which a cascade of news-breaking developments all but overwhelms our ability to make sense of them.

To recap: On Tuesday, Netflix lambasted the proposed Comcast-Time Warner merger, declaring it “a long-term threat” to the healthy ecosystem of the Internet. Comcast promptly riposted, dismissing Netflix as a querulous, hypocritical whiner with a shaky grasp on the facts. Then, on Wednesday, HBO sucker-punched Netflix by agreeing to stream HBO shows through Amazon Prime, and AT&T fired a warning shot across everyone’s bow by announcing its own plans to get into the streaming video business with a “Netflix-like” service. Also on Wednesday, the Supreme Court heard arguments in the case of American Broadcasting Companies, Inc. v. Aereo, Inc., which could end up resulting in the most influential high court ruling regarding how TV programs are distributed in decades.

And, to cap it all off, the FCC on Thursday released a tentative set of new guidelines for net neutrality that were immediately greeted by critics as an appalling sell-out of “net neutrality,” and the hallowed guiding principles of the “Open Internet.”

Whew!



To fully explore the intricacies of what’s at stake in any single one of these industry-reshaping eruptions would gobble up more hours than a marathon binge-watch of all five seasons of “Breaking Bad.” But there’s a crucial common thread: In every case, the economic model that currently underpins television (and bankrolls our amazing proliferation of high-quality productions) is under sustained assault. This is happening both from the bottom-up, as so-called cord-cutters seek an à la carte programming future; and from the top down, as telecom companies consolidate near-monopoly control of broadband. In the process, an inevitable transfer of power — from the content creators who make “Mad Men,” “Game of Thrones” and “Justified,” to the cable and satellite and telephone companies that distribute those TV shows — is underway.

It’s a complex witches’ brew: The changing habits of television consumers, the disrupting influence of technological innovation, and the decisions of both courts and regulators are enabling this shift. How everything will shake out is far from certain, but there’s a more-than-good chance that when we get to the other side, the landscape of television will be altered for the worse.

The reason why is simple: Great television requires an awful lot of money. If content creators end up with a smaller piece of a shrinking pie … well, you don’t have to be Don Draper to figure out which way the wind will blow.

 

 

* * *

Before we can figure out how all the pieces in this crazy jigsaw puzzle fit together, we need to take a close look at how the TV business currently functions, and understand why so many people are unhappy with it. Because here’s the funny thing about the golden age of television: Even though there are more outstanding shows on the air than we can squeeze into our overstuffed DVRs, there’s also no shortage of grumbling. Specifically, there is widespread dissatisfaction with how hundreds of TV channels are packaged into all-or-nothing “bundles.” And people just don’t seem to like bundling.

It’s easy to see why. If you aren’t a sports fan, why should you be paying for ESPN or the NBA on TNT? If you don’t have kids, what’s the use of Nickelodeon and the Disney Channel? If all you crave is “The Americans” and “Fargo” and “Girls” and “Silicon Valley” why must you still be forced to flip through scores of channels stuffed with reality TV and “Big Bang Theory” reruns? This isn’t how we consume our music or our news in the Internet era. Why are we still stuck in this antediluvian age when it comes to TV?

Last Friday I ranted against the notion that the rising numbers of “cord-cutters”– people canceling their cable TV subscriptions (or never signing up in the first place) — posed any kind of meaningful threat to the profitability of Comcast and the handful of other cable TV giants. After all, even cord-cutters need to get their Internet bandwidth from someone, and most often, that someone involves a “cord” owned by their local cable company. Indeed, just this week, when Comcast announced its bang-up second quarter earnings, the company reported 383,000 new Internet subscribers. (Comcast also added 24,000 cable TV subscribers, undermining the “cord-cutter apocalypse” hypothesis.)

Readers challenged my thesis. Cord-cutting might not kill Comcast, they argued, but the practice of switching from cable to online consumption of TV did present a serious threat to bundling. The future, they declared, will be an “à la carte” utopia in which we only pay for exactly what we want. Just as iTunes ended the tyranny of albums over singles, the Internet will blow up the TV bundle. That’s just the way things work in our point, click and consume era.

The argument makes intuitive sense. Why spend $80 a month for Comcast, when some combination of Netflix and Hulu and YouTube and Amazon Prime and iTunes (and BitTorrent!) can get you almost as far as you’d like to go for a lot less than a cable subscription? But there’s a missing piece, and it’s the key to understanding everything that’s going on in the crazily evolving world of TV: Bundling is what pays the rent. An unbundled world weakens content creators, strengthens the ISPs, and puts net neutrality under huge pressure. So be careful what you wish for.

Without bundling, most channels that currently exist wouldn’t be economically feasible, and those channels that do survive would cost considerably more than they do now. Today, bundling funnels billions of dollars from the owners of the distribution infrastructure — the cable companies and satellite operators — to the networks and channels that create the shows that we want to watch. But all that will change if bundling goes away. In the worst-case scenario, the producers of content will actually be forced to pay the distributors to get their shows to the people.

The current system works like this: Popular channels charge a “subscriber fee” to the cable and satellite companies for the right to rebroadcast their shows. The fees can run as high as $5 per subscriber (as in the case of ESPN, the most valuable cable property). The fees are under constant negotiation, rising and falling according to the channel’s perceived popularity. In an environment where advertising revenue is under constant assault from technological innovation (your DVR) and Internet competition, those subscriber fees can add up to as much as half the total revenue for a channel.

In this system, the popular channels subsidize the unpopular ones, because the pay-TV distributors group everything together and charge a single fee to their own subscribers that more than makes up for the costs of acquiring programming. However, unbundling would undo that arrangement. If you subtract the subscriber fee revenue, even the most popular channels would be forced to raise their direct-to-consumer prices to cover their costs. For example, if sports fans were to buy ESPN directly, for ESPN to maintain its current profitability, it would have to charge its audience vastly more than it charges the cable companies. In an apocalyptic research note published by Needham Research last year, analyst Laura Martin predicted that unbundling would devastate the TV economy:

Unbundling dwarfs any other risk to the TV ecosystem, as we calculate that ~50% of total TV ecosystem revenue (about $70 billion) would evaporate and fewer than 20 channels would survive in an a la carte world where consumers are required to bear 100 percent of the cost of the channel.

Martin may or may not be exaggerating the total damage from unbundling, but the key insight to grasp here is that there is a significant flow of funds from cable companies like Comcast to ESPN and ABC and FX and TBS. Unbundling attacks that flow of funds. Yes, in many cases those channels may be raking in more revenue than they would be able to in a purely competitive market. But a purely competitive market would constrict the flow of cash necessary to produce great television. In a purely competitive market, low-traffic, high prestige channels like AMC would be struggling to survive, because many of us would be unwilling to pay the high premiums necessary to cover the costs of making something like “Mad Men.”

* * *

With all that in mind, let’s return to the events of the past week and see how they plug into the picture.

Let’s start with the HBO-to-Amazon announcement, along with the news that AT&T is getting into the streaming business. Both business moves implicitly acknowledge the fundamental change in user behavior that’s going on. Audiences are moving online, and they’re picking and choosing what they want to see. They’re not actually cutting cords, but they are voting with their feet against the bundling status quo. We are headed to an extraordinarily competitive future — one in which a handful of players compete on both price and selection to get us to hit the buy button.

But the move to online means that whoever controls the bandwidth pipes has extraordinary power. That’s why, for example, Netflix is opposed to the Comcast-Time Warner merger. The merger would give Comcast a dominating position in the provision of broadband Internet access. That dominance, in principle, would grant Comcast the power to dictate terms to anyone who wanted to deliver content over the Internet, be that Netflix or Amazon or Apple or Google. Hey, guess what — Comcast happens to own a big stake in Hulu, which raises the obvious question: Does Hulu get a break on bandwidth charges? Is Hulu subject to data caps? Right now, no. But …

Of course, price discrimination à la the Hulu hypothetical  is exactly what net neutrality is supposed to stop, but the new guidelines released by the FCC — now chaired by Tom Wheeler, a former lobbyist for the cable industry — strongly suggest that, going forward, the telecom companies will be allowed to charge content providers for access to their Internet pipes — except when “commercially unreasonable,” whatever that means.

I’m predicting a great deal of litigation, in the future, over exactly what constitutes “commercially unreasonable,” but for now, it is clear that the FCC has given Internet service providers such as Comcast a leg up over the content companies. To get “House of Cards” to you, Netflix is already paying Comcast a hefty fee. It seems crazy, but what happens when HBO has to pay Comcast to stream “Game of Thrones” via Amazon? Maybe  ”Game of Thrones’” humongous production budget takes a hit?

Interestingly, the Supreme Court’s Aereo case may be the most relevant of all this week’s developments to the future of TV. The details and legal issues at play in that case are fascinating and complex. (For a comprehensive explanation you can’t do better than SCOTUS Blog. And, for a more digestible introduction to the issues, Salon’s own Sarah Gray has an excellent Q&A right here.) But the bottom line is that this is a fight about money. Aereo has figured out an (arguably) legal technological hack that allows it to distribute broadcast TV content over the Internet without paying the same fees that cable companies or satellite TV operators are forced to pay to distribute that same content to their subscribers. If Aereo can get away with this, the pay-TV operators are likely to argue that they too should be able to do so. And whooooosh – there goes another huge stream of income previously enjoyed by the broadcast TV channels.

And if Aereo doesn’t get away with it, that opens up another huge can of worms, potentially affecting the entire emerging industry of cloud computing. But that’s a separate issue. The truth is, whether Aereo succeeds or fails in court may be moot. So far, content companies have had about as much success resisting the disruptive influence of Internet technologies as English kings have had in resisting the tide. We’ve seen this narrative play out before, when Internet distribution models upended the traditional business models of the music and publishing industries. You can even argue, as does Needham’s Laura Martin, that the Internet resulted in the “unbundling” of both the album and the newspaper — and in the process, sucked a huge amount of revenue out of both industries.

The great mystery is how TV has managed, so far, to resist this disruption. The answer, now that we’ve digested all the things that have happened this week, is that it might just be a matter of time. Yes, we are paying too much for cable bills, and we will find more inexpensive options as time goes on. But that, in turn, may make the next “Game of Thrones” a lot chintzier than the current offering. Enjoy it while it lasts.

 

 

The Comcast/TWC Merger Is About Controlling Information

“Comcast and proposed merger partner Time Warner Cable claim they don’t compete because their service areas don’t overlap, and that a combined company would happily divest itself of a few million customers to keeps its pay-TV market share below 30%, allowing other companies that don’t currently compete with Comcast to keep not competing with Comcast. This narrow, shortsighted view fails to take into account the full breadth of what’s involved in this merger — broadcast TV, cable TV, network technology, in-home technology, access to the Internet, and much more. In addition to asking whether or not regulators should permit Comcast to add 10-12 million customers, there is a more important question at the core of this deal: Should Comcast be allowed to control both what content you consume and how you get to consume it?”

~Slashdot~