Lexington should stand firm on protections for cable customers

October 11, 2014

timewarnerAssociated Press Photo by Mark Lennahan

 

Bravo to Mayor Jim Gray and a unanimous Urban County Council for taking on Time Warner Cable. It’s about time somebody stood up to the giant cable television and Internet companies and their frustrating game of monopoly.

For far too long, the cable industry has abused the local franchise system across America to provide mediocre service at ever-increasing prices.

Meanwhile, cities have become pawns in the industry’s merger-and-acquisition game, which has left fewer companies owning more of the nation’s critical broadband infrastructure.

The Urban County Council last Thursday gave first reading to resolutions that would deny transfer of ownership of the local cable system as part of the industry’s latest deal, which would split Time Warner’s assets between Comcast and Charter Communications in a $45 billion stock swap. The systems in Lexington, Louisville and Cincinnati would go to Charter.

Gray’s re-election campaign also is tapping into public anger at Time Warner. The campaign is urging voters to sign a petition demanding that the company “improve customer service, deliver better speeds and give us what we pay for.”

Few cities have taken as aggressive a stand as Lexington has. Not that others aren’t concerned.

The Federal Communications Commission and the U.S. Justice Department are both reviewing the deal proposed by Comcast, Time Warner and Charter, which are, respectively, the nation’s first, second and fourth-largest cable operators. Dozens of consumer advocacy groups have spoken out against it.

It’s hard to say how all of this will end. But here is how we got to this point:

Time Warner bought Insight Communications in 2012, but never negotiated a new franchise agreement with the city. It also has ignored some consumer-protection provisions of Insight’s franchise agreement, which the city has never enforced.

Since the acquisition, Time Warner has invested little in Lexington’s infrastructure while steadily raising prices. The company’s cost-cutting measures have hurt customer service, and public frustration has been rising. City officials say they have been flooded with citizens’ complaints about cable service and pricing.

Time Warner officials claim they have improved service, and their own surveys show high rankings for customer satisfaction. Yea, right. A J.D. Power & Associates’ survey last month of residential television service providers in the South ranked Time Warner dead last. (Comcast was second-to-last.)

Lexington officials say they are not seeking any new consumer protections in the franchise agreement negotiations — they just want to preserve the things Insight agreed to. Those include staffing the company’s customer service center beyond normal business hours, so customers with day jobs can actually get there.

The city also wants to preserve some way of holding the cable company financially accountable for service problems short of canceling the franchise agreement. Currently, the city can fine Time Warner $100 a day — although officials say that has never actually happened.

Time Warner has not been willing to agree to those modest terms, nor does it want to continue paying for the public-access television studio. It’s all pretty small potatoes, considering that Time Warner’s Lexington revenues probably exceed $100 million a year and the company has made little investment in its system.

If Time Warner and Lexington officials are unable to reach agreement by Oct. 23, when the council could take a final vote on the ownership transfer resolutions, it is unclear what will happen. Mostly likely, the issue would end up in federal court.

Time Warner, Comcast and Charter have deep pockets, but Lexington officials should not back down. Citizens these days need more protection from corporate abuse, not less.

More importantly, city officials need to make sure whatever agreements they reach leave the door open for more competition. With only two major Internet providers — Time Warner and Windstream — Lexington needs more broadband competition.

Cities such as Chattanooga, which are lucky enough to have municipally owned utilities, have invested public dollars in creating high-speed fiber-optic networks. Those networks are attracting entrepreneurs who are creating the high-tech jobs of the future. Unfortunately, that’s not a practical option in Lexington, whose existing utility infrastructure is privately owned.

Lexington officials must embrace creative approaches for seeking private investment in new fiber-optic networks, such as Gray’s proposed Gigabit City initiative. And they must stand firm in trying to hold accountable the revolving door of local cable and telephone monopolies.


When it comes to broadband, why is Kentucky stuck in slow lane?

August 17, 2014

broadband

 

When Dr. Pamela Graber traveled in Uzbekistan and Turkey, she was surprised to find fast, reliable Internet connections. She just wishes she could get that kind of service at her home, 20 miles from Kentucky’s State Capitol building.

“I sit here and wait for things to come up” on the screen, said Graber, an emergency physician who lives in the Beaver Lake area of Anderson County.

She and neighbors have petitioned a major Internet provider in their area for service, with no luck. So they use a satellite dish service. With data charges, Graber’s monthly bill is more than $100 — much higher than she pays for excellent service in Florida, where she lives and works each winter.

While slow Internet is annoying for Graber and her husband, Melvin Wilson, it’s a serious problem for two neighbors who have home-based online jobs. “When there’s a wind storm, they can’t work,” she said.

“Internet’s the main infrastructure we’re going to need to work in the future,” Graber said. “It’s going to be a huge issue.”

It already is. Akamai Technologies’ quarterly State of the Internet report last week highlighted Kentucky — and not in a good way. It said that while Alaska has the nation’s worst average Internet connection speed, at 7.0 megabits per second, Kentucky, Montana and Arkansas are almost as bad, at 7.3 Mbps.

By comparison, 26 states have average connection speeds of 10 Mbps or above, which is now considered a minimum by tech-savvy homeowners. The fastest average speeds are above 13 Mbps in Virginia, Delaware and Massachusetts.

Kentucky also was near the bottom of the list when it came to improvement of average speeds over the past year. And when Akamai measured states’ “readiness” for ultra-high definition (4k) video streaming, Kentucky was dead last.

“Embarrassing, actually,” is how Brian Kiser described the report. He is executive director of the Commonwealth Office of Broadband Outreach and Development, and I called to ask him why Kentucky is so far behind.

“Our broadband speeds are left up to the providers, and I’m not sure the providers are investing enough in infrastructure,” said Kiser, who takes between three and 10 calls a day from citizens wanting help with Internet service.

Other studies rank Kentucky 46th nationally in broadband availability, with 23 percent of state residents having no access at all.

Part of the issue is a chicken-and-egg problem. Virtually all of Kentucky’s Internet providers are private companies, which are reluctant to invest in infrastructure if they can’t see a potential return on their investment. Providers usually want at least a dozen customers per mile in rural areas. “The problem is that 10 minutes outside our biggest cities it’s rural,” Kiser said.

Kentucky has one of the nation’s lowest demand rates for home Internet, at about 60 percent. “Surveys show people say either it’s too expensive or they don’t see a need for it,” he said.

(It’s worth noting that Kentucky has a high adoption rate for smart phones. Kiser said that’s because smart phones can be a more economical way for poor people to meet many needs — phone, Internet, camera, entertainment — especially in rural areas under-served by broadband.)

Kiser said his office has partnered with Community Action Kentucky to build 30 public Internet facilities in rural parts of the state to encourage technology literacy and use. The centers have proven quite popular for things such as résumé writing and social media use. “We just want people to not be intimidated by it,” he said.

Internet costs in Kentucky are comparable to neighboring states. But Internet all over the United States is much more expensive than in many other countries. “The real problem, I think, is we don’t have enough competition,” Kiser said.

Connected Nation, a national broadband advocacy group, says that improving Internet service requires a two-prong strategy: pushing Internet providers to offer better service and making the public more technologically literate and savvy, so they will create the business demand for that better service.

Tom Ferree, the president of Connected Nation, said the states with the best Internet infrastructure are those that have had strong leadership on the issue at both state and local levels, plus a lot of grassroots advocacy.

Many states got a jump on Kentucky because they were well-positioned with “shovel ready” broadband expansion plans in 2009 when Congress and the Obama administration put about $7 billion in economic “stimulus” money into data network development.

But there may be more funding opportunities ahead, Ferree said. The Federal Communications Commission is changing policy to shift subsidies away from traditional telephone service to digital data networks. That could be a big opportunity for states that develop good broadband plans.

As an outgrowth of the bipartisan Shaping Our Appalachian Region initiative, Gov. Steve Beshear and U.S. Rep. Hal Rogers have proposed a $100 million public-private effort to begin building a 3,000-mile, high-speed fiber optic network across Kentucky to connect with local Internet providers.

“I cannot emphasize enough the need for local planning and plan building,” Ferree said. “I think that plan holds great promise. I hope Kentucky makes the most of it.”


Eastern Kentucky jobs outlook: health care and more broadband

August 11, 2014

crouch1Ron Crouch is the director of research and statistics for the Education and Workforce Development Cabinet in Frankfort. He says a growing health care industry in Eastern Kentucky should help offset jobs lost to coal’s decline. Photo by Mark Mahan

 

There is more talk than usual about the need to create jobs and a more diverse economy in Eastern Kentucky because of the coal industry’s decline.

It made me wonder: what are the latest trends? For some answers, I called Ron Crouch, director of research and statistics for the Education and Workforce Development Cabinet. He previously headed the Kentucky State Data Center for two decades and is better than anyone I know at analyzing this sort of information.

People are alarmed because coal-industry employment in Eastern Kentucky has dropped to about 7,300 — half what it was five years ago. Coal-mining jobs have been important to the region because they pay well: about $65,000 a year.

President Barack Obama’s critics have blamed stricter environmental regulations for the sudden drop in coal employment. But the biggest factors have been cheap natural gas and the fact that Eastern Kentucky’s best coal seams have been depleted over the past century; the coal that is left is more costly (and environmentally damaging) to mine.

But Crouch notes that coal employment in Eastern Kentucky has been declining steadily for more than six decades — even accounting for periodic booms and busts — mainly because of mechanization. Coal production peaked in 1990, but coal employment peaked in 1950, when there were 67,000 miners.

Some Eastern Kentucky leaders have pursued manufacturing as a source of new jobs. But Crouch says the long-term prospects for manufacturing aren’t too good, either, also because of automation.

“Manufacturing is coming back to the United States, but not necessarily manufacturing jobs,” he said. “We’re producing far more goods, but with far fewer workers.”

Still, Crouch sees hopeful signs for Eastern Kentucky.

While the region still lags the state in college degrees, high school graduation rates have improved significantly, as have the number of people completing other levels of training between high school and a bachelor’s degree. Many new, good-paying jobs are for people with that level of education.

Those areas include health care as well as professional, scientific and technical services. Some of these jobs pay well. For example, the number of registered nursing jobs, which pay about $55,000, is growing significantly.

Eastern Kentucky’s health care industry should see big growth in coming years. One reason is demographics. Baby Boomers are now entering their 60s and 70s and will require more health services. Another reason is the Affordable Care Act.

“You’re going to see a huge increase in the number of people in East Kentucky who have health insurance,” Crouch said.

Because Eastern Kentucky families are smaller than in the past, there will be less pressure for young people to leave.

“You now have a population with more people in their 40s, 50s and 60s than in their teens and 20s,” Crouch said. “If those young people can get the education and training they need after high school, there will be jobs for them in East Kentucky.”

But many of the growing economic sectors in the region, such as health care, have traditionally been dominated by women, while shrinking sectors, such as mining and manufacturing, have been mostly male. In some Eastern Kentucky counties, women now have higher employment rates than men.

“The good news is the economy has been transitioning to a broader economy,” Crouch said. “But how do you transition a population of males who have been involved in mining and manufacturing to jobs in professional, technical services and food services and health care, which have largely been female?”

Crouch said improving broadband service in Eastern Kentucky, which has the state’s poorest connections to the Internet, is vital.

“That would accelerate the growth in higher-skilled jobs,” he said.

Crouch is troubled that many Eastern Kentucky counties have high percentages of working-age people not in the formal labor force. He thinks many are “getting by” in the cash and barter economy, some of which is illegal.

He also is concerned that much of the job growth has been in low-wage service industries. Because the legal minimum wage hasn’t kept pace with inflation, full-time work in many low-wage jobs doesn’t produce a living wage for a family.

“The good news is that East Kentucky is not having a brain drain, despite what people think; it’s having a brain gain,” he said. “But, as the saying goes, we’re halfway home and have a long way to go.”


Kentucky broadband effort a national model

February 8, 2010

A century ago, farm-to-market roads were the new infrastructure Kentucky needed to move its economy forward. A half-century ago, it was interstates and parkways.

Now, it’s the information superhighway.

As the federal government begins taking applications Feb. 15 for $7.2 billion in second-round stimulus money to expand broadband, it’s a good time to check in on a Kentucky program that has become a model for other states.

ConnectKentucky was launched as a public-private partnership in 2004 to map high-speed Internet access in Kentucky, find gaps in coverage and work county-by-county with citizens, local officials and service providers to fill them. Much of the work focused on rural areas and the mountains.

From 2004 to 2007, broadband availability grew from 58 percent of Kentucky households to 95 percent, ConnectKentucky says.

The organization’s newest initiative uses money from coal severance taxes and the Appalachian Regional Commission to expand broadband access in Breathitt, Powell, Estill and Lee counties.

ConnectKentucky also works to teach people how to use computers and to promote broadband as a way to improve economic and community development, education and health care.

That’s because broadband availability and affordability aren’t the only issues, said René True, executive director of ConnectKentucky. “Sometimes there’s a lack of understanding of the value that broadband can bring to a household or an individual,” he said.

ConnectKentucky’s Computers 4 Kids program has distributed 3,203 computers to low-income families and non-profit organizations. Many of those were older models refurbished by state inmates, who in the process learned skills they can use to get jobs when they leave prison.

The organization’s Web site — www.connectkentucky.org — includes county-by-county information and broadband speed-testing software.

ConnectKentucky has become a national model for broadband expansion. After Ohio and Tennessee wanted to copy ConnectKentucky’s approach, a national non-profit, Connected Nation, was formed as an umbrella organization. Connected Nation also now works with 10 other states and Puerto Rico.

ConnectKentucky and Connected Nation haven’t escaped controversy. Critics complain that the public-private partnership favors major telephone and cable companies at the expense of small providers and public broadband solutions.

The organizations dispute that, saying they work with all providers in a given area. Nationally, 19 big corporations now provide 93 percent of all broadband services, according to Leichtman Research Group, an industry consultant.

They also have been caught up in a larger debate about national broadband policy. Critics say America needs a more ambitious national broadband strategy than simply supporting the individual business strategies of private providers.

Connected Nation has attracted bipartisan political support, as has ConnectKentucky, which was launched by then-Gov. Ernie Fletcher, a Republican, but built on work begun by his predecessor, Gov. Paul Patton, a Democrat.

Still, in the scramble to balance the two-year state budget in 2008, Gov. Steve Beshear vetoed $1.2 million in annual funding for ConnectKentucky, which surprised some lawmakers. True said the organization hasn’t asked for state funding for the next budget cycle.

ConnectKentucky is being kept afloat now by Connected Nation, $100,000 in corporate support and other revenue from grants and consulting work, True said. Rather than statewide projects, it is focusing on local efforts where it can secure grants and other funding.

One such project begins in April, when ConnectKentucky will use a $134,000 Kentucky Housing Corp. grant to provide computers, broadband connectivity and training to low-income residents in the redeveloped Equestrian View neighborhood of Lexington’s East End. Lexmark is donating printers.

True said ConnectKentucky plans to apply for some of the new federal stimulus money to expand that kind of program to other public housing in Kentucky.

“It’s a key component for participating in the 21st-century economy,” he said of computer knowledge and broadband access. “Without it, we’re going to be left behind.”