Materials given to Maine legislators at Time Warner Cable?s 2015 Winter Policy Conference. Maine State Policy Winter Conference January 22 & 23 Inn by the Sea, Cape Elizabeth Thursday, January 22 5:30pm cocktails, 6:30pm dinner Key Note Speakers –Tom Targett and Judy Moore, Pets for Vets Friday, January 23 Session 1 8:00am – Breakfast 8:30am – 9:30am Moderator: Jadz Janucik, National Cable & Telecommunication Association Federal Update on Telecommunications Issues This panel will provide an overview of telecommunications issues before Congress, the FCC and other agencies, including Net Neutrality, Municipally Owned Networks, Cyber Security and the Internet Tax Freedom Act. Panelists  Dave Thomas, Sheppard Mullin Richter & Hampton LLP  Lisa Schoenthaler, National Cable & Telecommunication Association Session 2 9:30am – 10:30am Moderator: Charlie Williams, Time Warner Cable Broadband in Maine This panel will discuss current broadband trends for deployment and adoption. Panelists will cover the benefits of public-private partnerships, rural applications, federal subsidy programs as well as economic issues facing rural areas. Panelists  Charles Davidson, Advanced Communications Law and Policy Institute at New York Law School  Joe Gillan, Gillan Associates  Michael Santorelli, Advanced Communications Law and Policy Institute at New York Law School Break 10:30am Session 3 10:45am-11:45am Moderator: Tom Federle, Federle Law Provider of Last Resort – Maine Universal Service Fund Panelists will discuss the recent PUC report to the Legislature concerning Providers of Last Resort and Universal Service, how they affect all Mainers as well as lessons from other states. Panelists  Robin Casey, Enockever LLP  Joe Gillan, Gillan Associates Maine State Policy Winter Conference Session 4 Lunch Session 5 11:45am – 12:30pm Presentation: Telecommunications in Maine Today Presenter: Mary Ellen Fitzgerald, Critical Insights 12:30pm – 1:00pm 1:00pm – 2:00pm Moderator: Melinda Poore, Time Warner Cable A look ahead to the 2015 Legislative Session Panelists  Senate Majority Leader Garrett Mason  Assistant Senate Majority Leader Andre Cushing  Senate Minority Leader Justin Alfond  House Majority Leader Jeff McCabe  Assistant House Majority Leader Sara Gideon  Assistant Minority Leader Ellie Espling Excerpt from UNDERSTANDING THE DEBATE OVER GOVERNMENT-OWNED BROADBAND NETWORKS: Context, Lessons Learned, and a Way Forward for Policy Makers Executive Summary Charles M. Davidson Director, ACLP at New York Law School Michael J. Santorelli Director, ACLP at New York Law School Executive Summary Policy makers have debated the efficacy and viability of government-owned broadband networks (GONs) in the United States for many years. At their core, these debates reflect fundamental disagreement over the broadband market’s competitive and innovative health, as well as the appropriate role of government in this space. This report seeks to inform the debate by grounding it in data and relevant context. The report offers a number of resources and tools for use by policy makers when evaluating the efficacy of GONs and developing targeted and cost-effective approaches to bolster broadband connectivity from both the supply side and demand side. Report Overview and Summary of Findings Historical Analysis of GONs and GONs Advocacy. The report begins by tracing the historical evolution of arguments for government broadband ownership in the United States. Understanding how these arguments evolved and how they have fared in the real world is essential to understanding the contours and drivers of current GONs advocacy. Key point: Many current rationales for GONs are variations of themes and advocacy about broadband regulation in the early and mid-2000s. These themes informed much of the municipal Wi-Fi advocacy in the late 2000s and now inform the current debate over GONs. Key point: Despite a number of failed municipal Wi-Fi projects in the mid-2000s, advocacy for GONs persisted. Many blamed the failures on too little government involvement and began to embrace broadband deployment models that were exclusively public in nature and built around particular technologies (e.g., fiber) and subjective speed benchmarks. These efforts ultimately sought to “future-proof ” advocacy by asserting what the “end-state” of broadband in the United States should be and then advocating for that outcome. Contextualizing the Modern GONs Debate. The report then sets forth the relevant context in which to evaluate GONs proposals. This analysis encompasses two categories of issues. First, the report examines the state of the U.S. broadband market. Critics argue that broadband is too expensive, too slow, and offered by too few providers, and that GONs offer viable redress. A comprehensive, datadriven and historical analysis of both the supply side (i.e., availability) and demand side (i.e., adoption and use) yields more optimistic findings regarding the broadband market’s competitive and innovative health. Key point: Throughout the evolution of the GONs debate, diagnoses of failing or failed broadband have proven inaccurate. The data make clear that the U.S. broadband market is robust in terms of speed, affordability, and choice, and well-positioned to keep improving in response to evolving consumer demand. Key point: Ample data demonstrate that, by nearly every metric, broadband availability and performance have greatly improved—and continue to improve—across the entire country. Over the last 15 years, consumers have been getting increasingly more value for their money; average speeds have increased and the number of service options has multiplied. Understanding the Debate over Government-Owned Broadband Networks Challenges nevertheless remain. On the supply side, some remote parts of the country remain unserved. The Federal Communications Commission (FCC) and state governments, in partnership with service providers, are helping to plug these gaps. But on the demand side, data highlight a number of important challenges that require concerted, collaborative action by public, private, and nonprofit stakeholders. Key point: Some of the most pressing public and social policy challenges remain on the demand side. Adoption rates in key user groups—senior citizens, people with disabilities, low-income households, and certain minority communities—remain below the national average. This is due in large part to an array of community-specific barriers that impede more robust adoption and use of broadband-enabled services. The second set of issues involves the ability of municipalities, and, by implication, states, to construct and maintain these networks—and the opportunity costs of doing so. Foremost among the many factors that influence municipal action of any kind are the volatile state of public finances and the immediate need to invest more resources in shoring up basic public infrastructure like roads, bridges, dams, the electric grid, and water systems. Key point: The Great Recession exposed a number of critical weaknesses in local finances that, taken together, create an inhospitable environment for taking on the risks and making the massive new investments associated with redundant long-term construction projects like GONs. Key point: By nearly every measure, basic public infrastructure in the United States is crumbling and in need of trillions of dollars of investment. To the extent that new funding is available for investment in towns, cities, and states, data indicate that those dollars should be allocated in support of repairing existing infrastructure. Calls to prioritize public spending for the purposes of deploying a GON should be carefully examined in light of these many existing and future obligations. Case Studies of Major GONs. To better understand the real-world issues of municipal broadband projects, the report profiles the GONs that have been built in Chattanooga, Tennessee; Bristol, Virginia; Lafayette, Louisiana; Monticello, Minnesota; Cedar Falls, Iowa; Danville, Virginia; UTOPIA, Utah (a consortium of 16 cities); Groton, Connecticut; Provo, Utah; and Wilson, North Carolina. These networks represent a broad spectrum of municipal broadband efforts undertaken across the country in recent years. While the networks share many traits—notably, volatile business models, significant debt, and uncertain financial futures—the story of each individual GON highlights why the network should be seen as a cautionary endeavor rather than a replicable model. Findings about GONs’ Efficacy in the United States. The data included in the case studies, along with analyses from other sections of the report, support an array of findings regarding GONs. Finding One: Failed and failing GONs offer much-needed perspective about the complexities and challenges associated with building and deploying advanced communications networks. Overly optimistic assumptions about costs and take-rates often doom networks before they are even launched. In addition, moderately successful municipal networks generally had their genesis in unique circumstances that are extremely difficult, if not impossible, to replicate. Oftentimes, these unique factors include the availability of one-time grant funding that offsets the significant costs associated with building a broadband network. And many “successes” offered by GONs proponents have not, in fact, endured over the long term, raising key concerns about the viability of any kind of municipal broadband network. Finding Two: GONs, especially those deployed by municipal utilities, raise fundamental concerns regarding sustainability, fair competition, and consumer welfare. As regulated monopolies, municipal utilities operate according to a distinct set of rules, regulations, and incentives relative to private firms. These incentives are not primarily focused on spurring innovation or engaging in competitive markets. New York Law School Finding Three: Calls for achieving subjective speed benchmarks should not supplant actual consumer demand as the primary driving force shaping the broadband ecosystem. Data indicate that the vast majority of consumers are satisfied with their broadband connections and that, in general, the supply of bandwidth and the speeds of Internet connections are being shaped, in fact, by consumer demand and actual usage patterns. Finding Four: The direct economic impact of GONs, especially in job creation, can be difficult to attribute. Data do not indicate that GONs actually serve as the nucleus of renewed economic activity in cities and towns where they have been deployed. On the contrary, they appear to be playing minor roles in creating relatively few new jobs as companies continue to respond more favorably to other, more tangible incentives (e.g., tax breaks). Finding Five: Governments are not well-equipped to compete in dynamic markets. In general, municipal governments do not have a strong record of keeping pace with technological advances or in shaping policies that reflect rapidly evolving consumer preferences for new services. Moreover, because of the various interests represented in government policy- and decision-making, and because of other factors like institutional inertia, government is illequipped to act quickly or drive the type of creative destruction evident throughout the broadband ecosystem. Finally, increasing use of public-private partnerships (PPPs) and privatization of many municipal functions evince a growing recognition by government entities that there are viable alternatives to “going it alone.” Finding Six: The substantial costs of building, maintaining, and operating GONs outweigh real benefits. The asserted benefits are often attributable to other factors. And there are important opportunity costs associated with a decision to pursue a GON instead of spending money on other infrastructure (e.g., water and wastewater systems) or public policy needs (e.g., education). Finding Seven: Pursuit of a GON often diverts scarce public resources from more pressing priorities. Many states have laws limiting the amount of debt a municipality can accrue. Cities contemplating a municipal system will have to determine whether debt assumed as a result of a GON may limit additional bond issuances in support of other projects. Pursuit of a GON often necessitates real trade-offs that may negatively impact core aspects of local governance. Finding Eight: A GON will not spawn the next Silicon Valley. Numerous cities have successfully nurtured vibrant information sectors, high-tech clusters, and start-up communities by using public resources to create or enhance the economic and innovative conditions necessary to foster an environment conducive to these industries. But this outcome is the result of many factors and policies having nothing to do with a GON. Finding Nine: GONs are not remedies for perceived or actual broadband connectivity challenges. Positioning a municipal network as a vehicle for spurring competition in a local broadband market could ultimately undermine market forces and harm consumers. Finding Ten: State-level policy makers have important roles to play in the GONs context. The costs associated with building and maintaining a GON are significant, which raises the risk of financial default by local government, the diversion of resources from other priorities, or other negative outcomes (e.g., credit downgrades). States, which maintain ultimate responsibility for the financial health of the cities and towns in their borders, have strong interests in overseeing the process by which GONs proposals are vetted and approved. Well-established legal precedent supports such a close relationship between states and their political subdivisions. Understanding the Debate over Government-Owned Broadband Networks Roles for State and Local Policy Makers in Enhancing Broadband Connectivity. The final substantive section of the report examines the wide array of roles that policy makers can and should play in bolstering broadband connectivity from both the supply side and demand side. Key point: The most effective public efforts in the broadband space are well defined and narrowly tailored to address actual problems. Often, public-private partnerships, which leverage the expertise, resources, and economic incentives of stakeholders in the private and nonprofit sectors, can reduce public risk and optimize outcomes on both the supply side and demand side. Numerous examples of PPPs are provided for consideration by policy makers. Key point: In general, the most successful PPPs tend to be those that position government as a conduit for channeling available funding to support the efforts of expert firms in the private and nonprofit spaces, and as hubs for facilitating collaboration and frank discussions about workable, impactful solutions in a given community. Additional Resources for Policy Makers: The Policy Maker Toolkit presented in section 1 provides a step-by-step guide for evaluating proposals for a government-owned broadband network. Because these networks typically require long-term commitments of limited public resources and entail the assumption of substantial risk, decision-making processes should be as informed and comprehensive as possible. Additional Perspectives on GONs are included in section 7 in an effort to provide further insight into the efficacy of government-owned broadband networks. These brief essays have been authored by a range of subject-matter experts who have firsthand experience with GONs or who have examined the contours of municipal broadband. New York Law School About New York Law School Founded in 1891, New York Law School is the second oldest independent law school in the United States. Drawing on its location near the centers of law, government, and finance in New York City, its faculty of noted and prolific scholars has built the school’s curricular strength in such areas as tax law, labor and employment law, civil and human rights law, telecommunications and information law, corporate and commercial law, and interdisciplinary fields such as legal history and legal ethics. The mission of NYLS is to provide an extraordinary and innovative educational experience that embodies the fundamental values of the legal system and creates a bridge from scholarship and service to leadership and practice; to offer a vibrant, diverse, and forward-thinking center of legal studies where students develop the knowledge, skills, and professional values to serve their clients and have successful careers advancing justice, building the economy, and serving the various needs of modern society; and, to serve as an incubator of ideas and actions to be emulated throughout New York City, the nation, and the world. For more information, please contact: New York Law School 185 West Broadway New York, NY 10013 (212) 431-2100 www.nyls.edu About The Advanced Communications Law & Policy Institute The Advanced Communications Law & Policy Institute (ACLP) at New York Law School is an interdisciplinary public policy program that focuses on identifying and analyzing key legal, regulatory, and public policy issues facing stakeholders throughout the advanced communications sector. ACLP’s mission is to promote data-driven and solution-focused dialogues amongst local, state and federal policy makers, academe, consumers, service providers, and the financial community concerning changes to the regulatory regimes governing wireline, wireless, broadband, and IP platforms. Recent research has focused on modernizing communications regulations at the federal, state, and local levels, identifying barriers to more robust broadband adoption in key demographics and sectors, and public policy strategies to spur innovation and investment in broadband. For more information, please contact: Charles M. Davidson, Director Michael J. Santorelli, Director 185 West Broadway New York, NY 10013 (212) 431-2163 http://www.nyls.edu/advanced-communications-law-and-policy-institute/ Support the Internet Tax Freedom Act Keep Internet Access Tax Free The Internet has become an indispensable part of life in the 21st Century. Internet access allows families far apart to stay in touch, students to further their education from home, and workers to be retrained remotely with new skills. Internet access also helps small businesses get off the ground and find new markets around the world, enables rural Americans to access state-of-the-art healthcare capabilities, ensures breaking news is instantly available everywhere, and provides individuals and families with an ever-evolving and never-ending selection of entertainment options. The Internet has also become a major contributor to our nation’s economic growth and our GDP. In 2010, the Internet accounted for $684 billion, or 4.7 percent of all U.S. economic activity. This is expected to increase to $1 trillion, and 5.4 percent, by 2016. If it were considered its own separate industry, the Internet would be larger than America’s education, construction or agricultural sectors . The “Industrial Internet,” the growing network of machines and sensors across all sectors of the economy, could potentially add an estimated additional $1.5 to $2.3 trillion annually to the United States’ Gross Domestic Product by 2020. The Internet Tax Freedom Act (ITFA) has been a part of the Internet’s growth and expansion. First passed in 1998, ITFA prevents states and localities from taxing Internet access and prevents the imposition of multiple or discriminatory taxes on Internet commerce. This is particularly important as currently 23 percent of U.S. households have access to broadband service but choose not to subscribe. ITFA helps to hold down the cost of “getting online,” which means more people can subscribe to broadband service and reap the innumerable benefits that come with being online. ITFA is different from the Marketplace Fairness Act, as ITFA does not address the issue of collecting sales tax for products sold online. The back story Originally passed in 1998, ITFA has been extended four times. The most recent extension passed at THE end of 2014 sunsets on september 30, 2015. The last 18 years have seen an explosion in the growth of The Internet and broadband services. Cable operators alone have invested $230 billion in this period and now offer Internet service of 50 Mbs and faster to over 115 million households. While in 1998, only 1 percent of U.S. households had broadband, now 75 percent, or 87 million households, subscribe to high-speed Internet service. Support a permanent extension of ITFA. A permanent extension of ITFA will help ensure the continued deployment of broadband networks and adoption of broadband service. This in turn will enable individuals, businesses, schools, health care centers, and more to have access to and take advantage of all that is available online while also helping our economy to continue to grow. National Cable & Telecommunications Association 25 Massachusetts Ave NW Suite 100 Washington DC, 20001-1431 www.ncta.com Key Conclusions of Maine PUC Report to Legislature on “Options for Decreasing the Cost of Ensuring That There are Adequate and Affordable Basic Telephone Service Options throughout the State” The Maine Public Utilities Commission (“PUC” or “Commission”) recently presented to the Legislature a report on the options for decreasing the cost of maintaining universal service in Maine (“Report”). The recommendations in the Report were drawn directly from the evidentiary record established in the investigation of FairPoint Communications-NNE’s (“FairPoint”) request for $62.8M annually in Maine Universal Service Support (“MUSF”). The Report is remarkable for the scope of the proceeding that informed it, the breadth and depth of the PUC’s analyses and, as a result, the strength of its conclusions. The MUSF proceeding developed the most extensive evidentiary record in the nation addressing the contemporary costs of (and threats to) universal service, taking 14 months, involving extensive discovery and factual analysis, and drawing the focused attention of 19 parties, including the representatives of consumers, wireline competitors (including Time Warner Cable) and wireless providers. When evaluating the Report, an important contextual fact is that all of FairPoint retail services - with the sole exception POLR service - are no longer regulated by the Commission. The Key Conclusions • The cost of universal service (i.e., MUSF support) can be reduced if policymakers depart from the view that universal service can only be achieved if “particular providers are required to offer ubiquitous service.” (p. 7) • Limiting MUSF support to geographic areas with limited basic service competition would reduce the size of the MUSF and the amount of money that needs to be collected to fund the MUSF. (p. 7, 43) • MUSF support for POLR service should not be linked to broadband policy. (p. 60) • A phased approach to eliminating regulated POLR service, concurrent with reductions in MUSF support, might be accomplished over several year period. (p. 69) The Supporting Facts • FairPoint is able to provide the same local exchange service that it now provides (denominated as POLR service), and it has always provided, without financial assistance from the MUSF. (p. 23) • The Commission could not identify any geographic area for which it would be in FairPoint's economic interest to abandon service. (p. 24)   1   • The implicit assumption of FairPoint’s position – that the entire FairPoint network is needed to fulfill a specific public purpose – is simply not supported by the evidentiary record. (p. 10) • The record (in the MUSF proceeding) presented the Commission no rational basis for awarding any particular amount of MUSF support. (p. 15) • FairPoint’s “residual revenue requirement methodology” creates the perverse incentive for FairPoint to underprice its services in an attempt to gain, or preserve, market share because the MUSF would fill the gap in revenues resulting from these low prices. • The Commission recommended that the Legislature consider (1) establishing   a maximum budget for the MUSF program to guide the Commission in any subsequent requests by FairPoint for MUSF support and (2) adopting legislation that expressly prohibits the use of a residual revenue requirements methodology” (which is currently used by the rural ILECs that request subsidy from the MUSF). (p. 22) • Based on the information available to the PUC, only 5,908 addresses located within FairPoint’s service territory in Maine could not be served by either wireless or cable voice providers. Each of these locations could, however, be served by a satellite VoIP carrier, which is available ubiquitously throughout FairPoint’s service area. (p. 25) • It would cost roughly $3.6 million per year to provide subsidy vouchers to each of the almost 6,000 persons residing in FairPoint’s territory who are unable to obtain cable VoIP or wireless cellular service so that they may purchase satellite VoIP service (based on certain assumptions used by the PUC). (p. 34) • Eliminating the requirement that voice service remain uninterrupted during a power outage would make it more likely that carriers could use more modern technologies (that are also capable of broadband service) to provide “POLR service” in a particular geographic area. (p. 35) Conclusion Time Warner Cable supports the Commission’s findings because they recognize the realities of Maine’s telecommunications marketplace, a market where most Mainers have access to one or more competitive providers of phone service and do not want to be burdened by increased fees on their phone bills. This pervasive competition is the result of fundamental changes in technology, buttressed and furthered by the pro-competitive policies enacted by the Legislature and implemented by the PUC (in addition to federal laws and regulations), including the 2012 legislation giving FairPoint freedom from most regulations applicable to local telephone companies. Moreover, as noted above, the only retail service offered by FairPoint that remains regulated by the PUC is POLR service, and the record showed that it is in FairPoint’s financial interest to offer POLR service provide because its network is fullybuilt and the incremental revenues it receives adds to its profitability. These realities support the Commission’s core conclusion that FairPoint does not require MUSF support.   2   http://www.sun-sentinel.com/opinion/commentary/fl-viewpoint-internet-20150112-story.html       Net regulation carries hidden costs   Fred Campbell   January 12, 2015     The president's post-election left turn has led him to join a handful of online activists and tech company special interests seeking to regulate the Internet as a public utility style service.     This has roiled what was already a contentious debate over Internet regulation, and could do serious damage to the web. The "Title II" approach advocates are pushing isn't needed to protect the open Internet. The courts have said the FCC has the power to prevent blocking and discriminatory fast lanes without resorting to Title II.     Ironically, Title II actually permits discrimination in pricing and services, which could result in the very fast lanes its own supporters decry while choking the Internet's growth with unnecessary price and service regulations that would kill deployment of faster, more reliable networks.     But these weaknesses pale in comparison to a far more serious problem with Title II — its destabilizing impact on the critical "back office" systems that link networks and services together and make the Internet work, known as "interconnection." Interconnection sets the rules by which vast troves of data — everything from email to music and movies — are passed from one backbone network to the next on their way to the "last mile" connections to individual subscriber homes.     It's widely acknowledged that this system works well today. It's a free and efficient market in which different backbone operators and other companies work out deals to cover the cost of moving data across the Internet's vast backbone. Sometimes this involves direct connections between large networks, such as those run by Comcast or AT&T; other times it involves "middleman" companies that specialize in carrying data for a price. Competition in this market is fierce, and as technology has galloped forward, prices have fallen 99 percent.     The specter of utility style rules is nevertheless giving companies that send a lot of data — the "edge providers" who offer applications, movies and videos, and services online — a whole new set of games they can play to shift their costs of doing business with backbone operators onto consumers.     For a better idea of how these edge providers can game the system and leave consumers holding the bag, take the case of Netflix. In order to lower its traffic costs, Netflix recently cut deals to eliminate the middlemen and connect its network directly to Comcast, Verizon and other Internet service providers.     Netflix then cynically asked the government to use Title II as a hammer to force backbone operators to eliminate Netflix's backbone payments altogether — even the reduced payments it had just negotiated. Why on earth would regulators agree to that? Because Netflix claimed the Internet providers had "throttled" (or slowed down) its movies to pressure it into interconnection agreements.     It's a captivating story that's been repeated online for months — and it's a lie. Netflix's own CFO has acknowledged "there was no throttling going on," and a recent MIT study proved it.     The study found that Netflix's traffic slowed down because Netflix chose to route it through a middleman called Cogent whose networks were too saturated to handle the load. Cogent admits the crush of traffic was so bad that it delayed Netflix's traffic to ensure timely delivery of other customers' data. Ironically, as the net neutrality debate focused on the risk of ISPs creating "slow lanes" — which no ISP ever has — it turns out that Netflix's partner Cogent had created a secret slow lane of its own.     Cogent even manipulated data from supposedly independent speed tests to shift the blame for this slowdown away from itself and Netflix and onto the ISPs — a very convenient storyline for Netflix as it worked to convince unhappy customers that ISPs were to blame. Netflix and Cogent also cited this bogus record to pressure regulators into considering Title II. It was a disgraceful, but clever scam that was difficult to debunk.     Netflix was particularly clever in the way it has conflated interconnection with net neutrality. The world of interconnection on the Internet's backbone has nothing to do with the open Internet. Interconnection deals with traffic on commercial backbone networks, while open Internet or "net neutrality" rules protect consumers as traffic moves over "last mile" connections to their homes.     Title II threatens to destroy the healthy competition among backbone operators. That might create an opening for regulatory profiteers like Netflix, but it will leave the rest of us picking through the wreckage, mourning the loss of the thriving Internet we were somehow hoodwinked into giving up.     Fred Campbell is director of the Center for Boundless Innovation in Technology and served as chief of the FCC Wireless Telecommunications Bureau under FCC Chairman Martin.   Maine  Voter  Issue  Poll   Summary  Report  of  Findings   Prepared  for:     Time  Warner  Cable       December  2014   Full Service Market Research and Public Opinion Polling 172 Commercial Street, 2nd Floor t Portland, Maine 04101 www.criticalinsights.com December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 1 IntroducBon   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 2 Background   •  Time  Warner  Cable  commissioned  Cri2cal  Insights,  Inc.  of  Portland,  Maine,  a   nonpar2san  public  policy  polling  firm,  to  conduct  a  strategic  research  effort  to   gauge  how  Maine  consumers  view  telephone  and  broadband  services  in  the   State.   •  Specifically,  the  quan2ta2ve  research  effort  aimed  to:   –  Establish  the  daily  ac2vi2es  of  Mainers  in  terms  of  phone  and  Internet  usage;   –  Measure  support  for  the  current  prac2ce  of  subsidizing  landline  services  to   residents  through  surcharges  on  current  account  holders;   –  Gauge  the  aKtudes  and  percep2ons  of  Mainers  regarding  broadband  availability;   and   –  BeMer  understand  the  mindset  driving  voter  sen2ment  as  it  relates  to  the  above   issues.   •  This  report  summarizes  the  results  from  this  informa2on  gathering  effort,   conducted  in  December  2014.     December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 3 Methodological  Overview   Error  Margin   Number  of   Respondents   Dates  Research  Conducted   90%   95%   Length  of   Interview   600   December  10  –  17,  2014   3.4   4.0   8  minutes   •  The  ques2onnaire  used  in  the  research  was  developed  by  Cri2cal  Insights  in   collabora2on  with  Time  Warner  Cable.   •  A  total  of  600  interviews  were  completed  with  randomly  selected  voters   across  the  state.   •  All  interviews  were  conducted  by  telephone  and  coordinated  from  the   Cri2cal  Insights  Informa2on  Center  in  Portland,  employing  a  computer-­‐ assisted  telephone  interviewing  (CATI)  system.     •  Eligible  par2cipants  for  the  survey  were  screened  using  the  following  criteria:   –  Residents  of  Maine  at  least  six  months  of  the  year;  and   –  Registered  voters  similar  in  relevant  demographics  to  Maine’s  voter  base.     December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 4 Research  Results   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 5 Phone  Usage  &  Preferences   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 6 About  one-­‐third  of  survey  respondents  claim  to  have  only   one  household  phone  line,  while  results  for  two,  three   and  four  or  more  lines  are  fragmented.   How  many  total  phone  lines  do  you  have  in  your  household?   2   19%   3   23%   1   36%   Don't  know   1%   Perhaps  not  surprisingly,   respondents  with  a   greater  likelihood  than   others  of  having  only  one   line  include  the  oldest  age   group  (65+),  those  with  a   lower  annual  income,  and   residents  of  the  Northern   region  of  Maine.     4  or  more   21%   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 7 Fully  9-­‐in-­‐10  Mainers  polled  reportedly  use  both  a  landline   and  a  cell  phone  at  different  frequencies.  Majority  cell   phone  usage  tends  to  trend  higher  among  men,  the   younger  age  groups,  households  with  children,  and  those   with  a  higher  socio-­‐economic  status  (educaBon  &  income).   Which  one  of  the  following  best  describes  your  use  of  telephones?  Would  you  say…   You  have  both  and  use  each  equally   35   You  have  both,  but  mostly  use  the  cell   phone   31   You  have  both,  but  mostly  use  the  landline   Both  landline  and  cell  phone,  91%   Conversely,  women  with  both  a  landline  and  a   cell  phone  have  a  greater  tendency  than  men   to  use  the  landline  more  ofen.  Other   subgroups  repor2ng  majority  landline  usage   include  older  residents,  those  with  no  children   living  in  the  home,  and  respondents  with  a   lower  SES.   25   You  only  have  a  landline   8   You  only  have  a  cell  phone   1   0   20   40   60   Percent   80   100   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 8 Time  Warner  Cable  and  FairPoint  are  the  top  carriers  for   landline  service  among  Mainers  polled,  each  garnering   about  a  one-­‐third  share.  Results  are  highly  fragmented  for   smaller,  alternate  service  providers.   Who  is  your  carrier  for  landline  service?  *   FairPoint   36   Time  Warner  Cable   33   Verizon   3   GWI   3   Turner  Broadcas2ng  System  (TBS)   3   MetroCast   2   Oxford  Networks   2   Comcast   2   AT&T   2   Don't  know   7   0   20   40   60   80   100   Percent   *  Asked  of  respondents  who  have  a  landline  (n=592).  Top  responses  shown.   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 9 ConsideraBon  for  abandoning  a  landline  in  favor  of  using   only  a  cell  phone  is  split  evenly  among  Mainers   responding  to  the  survey.   Have  you  ever  considered  abandoning  your  landline  and  using  only  a  cell  phone?*   MORE  LIKELY  THAN  OTHERS:   Age  18-­‐64   College  degree   At  least  $50K  annually   Children  at  home   Mostly  cell  usage  (70%)   Yes   48%   No   52%   MORE  LIKELY  THAN  OTHERS:   Older  respondents   Less  highly  educated   Lower  income   No  children  in  household   Mostly  landline  (67%)   *  Asked  of  respondents  who  have  a  landline  (n=592).   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 10 Nearly  three  quarters  of  Maine  residents  disagree  with   the  idea  that  all  of  Maine’s  telephone  users  should  pay  a   fee  to  subsidize  local  telephone  companies,  versus  only  2-­‐ in-­‐10  who  say  they  agree  with  the  fee.   Please  tell  me  whether  you  agree  or  disagree  with  the  following  statement:     All  of  Maine’s  telephone  users  –  including  those  who  only  use  a  cell  phone  –  should  pay  a  fee  on  their   monthly  phone  bill  to  subsidize  local  telephone  companies  that  provide  affordable,  basic  landline   service  to  residents  of  Maine.   Agree   20%   Respondents  with  a   significantly  greater  likelihood   than  others  of  agreeing  with   the  fee  include  self-­‐reported   Democrats.  Conversely,   Republicans  and  Unenrolled   Mainers  are  more  likely  to   disagree.   Don't  know   7%   Disagree   73%   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 11 Internet  Usage  &  Preferences   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 12 A  majority  of  survey  respondents  state  that  they  uBlize   their  home  Internet  connecBon  to  stay  in  touch  with   people.  Shopping,  games,  and  educaBon  are  also  popular   Internet  acBviBes.   What  acJviJes  do  you  use  the  Internet  for  at  home?  *   53   Stay  in  touch  with  family/friends   Shopping   26   23   Entertainment/Games   Educa2on   Staying  in  touch  with  family  and   friends  is  especially  prevalent   among  women  (60%).     Not  surprisingly,  games  tend  to  be   most  popular  among  the  younger   age  bands.   21   14   TV/Movies/Videos   Banking/Paying  bills   11   Telework   9   Research   7   Social/Government  services   5   Job  search   5   Business   5   0   20   40   60   80   100   Percent   *  Among  respondents  with  Internet  access  at  home  (n=566).  Top  responses  shown.  Mul2ple  responses  accepted.   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 13 More  than  half  of  respondents  state  that  they  use  the   Internet  for  acBviBes  including  banking,  educaBon,   shopping,  entertainment,  and  videos  at  least  “someBmes.”   Please  indicate  how  oKen  you  use  the  Internet  for  each  of  the  following  acJviJes:   Banking  /  Paying  bills   45   Educa2on   32   Shopping   31   Entertainment  /  Games   31   TV  /  Movies  /  Videos   Social  /  Government  services   21   33   Healthcare   7   Job  search   6   0%   31   13   35   24   22   40   29   15   43   20   20%   Ofen   16   16   26   Subgroups  with  a  greater   tendency  than  others  to   engage  in  these  ac2vi2es   “ofen”  include  younger   respondents,  higher  SES,   households  with  children,  and   majority  cell  phone  users.   22   16   23   27   26   14   37   26   10   8   59   40%   60%   Some2mes   80%   Rarely   100%   Never   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 14 Laptop  and  desktop  computers  are  the  most  frequently   noted  devices  for  accessing  the  Internet  by  an  equal   proporBon  of  respondents.   What  type  of  devices  do  you  use  to  access  the  Internet?  *   Laptop   51   Desktop   Notably,  tablets  are  significantly  more   popular  among  women  than  men   (39%  compared  to  29%,  respec2vely),   while  laptops,  smart  phones,  and   tablets  tend  to  be  more  prevalent  in   households  with  children.  Conversely,   desktop  computer  usage  is  greater   where  no  children  are  present.   49   Smart  Phone   38   35   Tablet   0   20   40   60   80   100   Percent   *  Top  responses  shown.  Mul2ple  responses  accepted.   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 15 Broadband  AdopJon,  Accessibility,   and  PercepJons   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 16 Virtually  all  Mainers  polled  note  that  they  have  an   Internet  connecBon  at  home.  Among  the  few  who  do  not,   nearly  three-­‐fourths  say  it  is  unavailable.   Do  you  have  an  Internet  connecJon  at  home?   Is  Internet  available  at  your  home?  *   Yes   19%   Yes   94%   No   6%   Don't  know   8%   No   73%   *  Asked  of  respondents  who  do  not  have  an  Internet   connec2on  at  home  (n=34).     December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 17 Fully  6-­‐in-­‐10  residents  who  have  Internet  at  home   connect  via  cable  –  double  the  proporBon  who  get  their   Internet  service  through  the  phone  company.   Do  you  get  your  Internet  connecJon  from  cable,  mobile,  phone  company,  or  satellite?  *   Cable   60   Phone  company   Mainers  who  are  age  45  and  older,   college-­‐educated,  more  affluent,  or  live   in  Southern  Maine  are  more  likely  than   others  to  use  a  cable  Internet   connec2on.     By  contrast,  younger  respondents  and   those  residing  in  the  other  three  regions   of  the  state  (Northern,  Coastal,  Central)   are  significantly  more  likely  to  connect  to   the  Internet  via  phone.   31   Satellite   4   Don't  know   5   0   20   40   60   80   100   Percent   *  Asked  of  respondents  who  have  an  Internet  connec2on  at  home  (n=566).   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 18 A  majority  of  respondents  do  not  agree  that  exisBng   customers  should  pay  fees  to  build  broadband  where  no   service  exists,  and  nearly  three-­‐quarters  disagree  with   this  pracBce  where  broadband  is  already  available.     The  ConnectME  program  uses  fees  collected  from  telecommunicaJons  companies  and  their   customers  to  fund  public/private  partnerships  to  build  broadband  infrastructure  in  rural,  unserved   parts  of  Maine.  Do  you  agree  or  disagree  that  the  State  should  collect  fees  from  exisJng  customers   and  companies  to  build  broadband  where…   College+  and   Democrats   <  College  and   Republicans   42   58   No  broadband  service  currently  exists   Broadband  services  are  already  available   0%   College+   Democrats   Men   Phone  Internet   <  College   Republicans   Women   Cable  or  Satellite  Internet   26   74   20%   40%   Agree   December 2014 60%   80%   100%   Disagree   172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 19 More  than  6-­‐in-­‐10  Mainers  responding  to  the  survey  do   not  approve  of  the  state  taxing  consumers  to  subsidize   public  enBBes  to  compete  with  private  businesses.   Notably,  a  sizable  bloc  are  unable  to  offer  an  opinion.   Do  you  approve  or  disapprove  of  the  current  pracJce  of  Maine’s  State  Government  using  tax   dollars  and  fees  on  consumers  to  subsidize  public  enJJes  to  compete  with  private  businesses?   MORE  LIKELY  THAN  OTHERS:   College  degree+   $75K+  annually   Democrats   Age  35-­‐64   Southern  Mainers   Approve   22%   MORE  LIKELY  THAN  OTHERS:   <  College  degree   Annual  income  <  $75K   Republicans  and  Unenrolled   Don't  know   16%   Disapprove   62%   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 20 One-­‐third  of  respondents  favor  using  taxpayer-­‐supported   debt  to  build  government-­‐owned  broadband  networks   where  no  broadband  is  available;  even  fewer  support  this   where  broadband  services  already  exist.   Should  taxpayer-­‐supported  debt  be  used  to  build  government-­‐owned  and  operated  broadband   networks  that  sell  broadband  services  to  the  public  where…   College+   $75K+   Democrats   <  College   <  $50K   Republicans   36   64   No  broadband  service  currently  exists   <  Age  65   Some  college+   Democrats   Age  65+   HS  or  less   Republicans   17   Broadband  services  are  already  available   0%   83   20%   40%   60%   Yes   December 2014 80%   100%   No   172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 21 Just  over  half  of  Maine  residents  polled  feel  it  is   important  for  all  residents  to  have  access  to  low-­‐cost   broadband,  36%  of  whom  state  it  is  “very  important.”   Using  a  scale  of  1  to  5  where  a  “1”  means  “not  at  all  important”  and  a  “5”  means  “very  important,”   in  your  opinion,  how  important  is  it  that  all  residents  of  the  State  of  Maine  have  access  to  low-­‐cost   broadband?   100   NET  More   Important   55%   Percent   80   60   40   20   0   NET  Less   Important   22%   36   21   12   1-­‐-­‐>  Not  at   all   important   19   10   2   2   3   4   Subgroups  who  are  significantly   more  inclined  than  others  to  say   low-­‐cost  broadband  access  is  “very   important”  include  college-­‐ educated  Mainers  and  self-­‐ reported  Democrats.     Those  with  a  greater  tendency  to   say  it  is  “not  at  all  important”  are   men,  Republicans,  and  Unenrolled   residents.   5-­‐-­‐>  Very   Don't  know   important   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 22 While  over  half  of  the  survey  respondents  believe  it  is   important  for  Maine  residents  to  have  access  to  low-­‐cost   broadband,  only  one-­‐third  assert  a  willingness  to  pay   more  in  taxes  or  fees  to  support  this.   Would  you  be  willing  to  pay  more  in  taxes  and  fees  to  support  this?   Those  who  are  more  willing   than  others  to  pay  more  taxes   or  fees  are  Mainers  with  a   higher  SES  and  those  who   connect  to  the  Internet  via   phone,  as  well  as  self-­‐reported   Democrats.   Yes   33%   No   63%   Don't  know   4%   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 23 Sample  Profile   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 24 Stated  Voter  PoliBcal  AffiliaBon   In  what  poliJcal  party  are  you  registered  to  vote?   Republican   26%   Unenrolled/Other   31%   Democrat   34%   DK/Ref.   9%   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 25 Socio-­‐Demographic  Profile   100   Percent   80   60   47   53   40   35   29   20   24   17   13   17   22   22   20   0   Gender   Age   Educa2on   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 26 Socio-­‐Demographic  Profile   100   80   Percent   62   60   40   32   20   13   20   19   17   11   8   0   None   One   Two   Three  or   <  $35K   $35K  to  <   $50K  to  <   $75K+   more   $50K   $75K   Children  in  Household   Annual  Household  Income   December 2014 172 Commercial Street, 2nd Floor Portland • Maine www.criticalinsights.com 27 If Wheeler does take this route, as he now seems to determined, we’ll end up with an Internet that is more regulated, more subject to regulatory uncertainty in the near-term, and more like a public utility from another era than an information delivery service for the modern age. It’ll be 2015—but for the Internet, it’ll be 1934 all over again. http://reason.com/blog/2015/01/08/will-2015-be-the-year-the-fcc-regulates Will 2015 Be the Year the FCC Regulates the Internet Back to 1934? Peter Suderman Jan. 8, 2015 2:03 pm In June of 1934, the United States passed the Communications Act, a sprawling law regulating the delivery of telephone service and radio communications. It reorganized much of the existing law governing the regulation of radio, telegraph, and telephone service, transferring power to the Federal Communications Commission (FCC) from the Federal Radio Commission (which was scrapped) and creating several categories of regulation. Those classified as Title I "information services" would be regulated with a less heavy hand, while those deemed "telecommunications services," a category of utilities dubbed "common carriers," like telephone service, would be subject to stricter rules and oversight. The passage of the Communications Act of 1934 set the stage for the modern era of communications and telecom regulation, and while it was amended in 1996 by the Telecommunications Act, much of its essential structure remains in place, including the critical distinction between Title I and Title II services. That distinction is at the forefront of the current debate over net neutrality, a regulatory principle which is sometimes vague but which broadly states that Internet infrastructure should be prohibited from discrimination against certain types of information or content. It’s a sometimes-dense, sometimes-abstract policy debate that has raged through multiple administrations and FCC leaders, through multiple high-profile court cases and a seemingly endless number of regulatory proposals and comment periods and responses and arguments over the last few years. It is a policy argument that remains in a perpetual state of flux; something is always on the verge of happening, or something that has happened is on the verge of being taken down. The debate over net neutrality has, over the years, spawned a vast ecosystem of argument, professionalized and organized, one that often seems designed more for self-perpetuation than resolution. The most recent stage of that argument began when Tom Wheeler was appointed Chairman of the Federal Communications Commission at the end of November 2013. Like his predecessor, Julius Genachowski, he picked up work on net neutrality, a key issue in Obama’s first campaign and a priority for many of the administration’s young, tech-savvy supporters. Under Genachowski, the FCC had put in place net neutrality rules at the end of 2010. Those rules were thrown out in court after a drawn-out legal challenge. The FCC, the court said, did not have the statutory authority to impose net neutrality on Internet service providers (ISPs), at least not in the particular way that the FCC had chosen to go about it. This left Wheeler with two options: Either attempt to establish a modified set of net neutrality rules that might pass a legal challenge, or reclassify broadband internet service from its current status as a Title I "information service" provider to a Title II "telecommunications service"— which would, many advocates hoped, give the FCC far more authority to set rules of the road for the Net. For the last year or so, then, we’ve been in a holding pattern, with the FCC releasing a draft proposal of new rules regulating net neutrality, a slew of comments and arguments over those rules, and a related push by liberal advocacy groups and activists urging the FCC to make a big, splashy move and reclassify broadband under Title II. At least initially, Wheeler seemed resistant to the idea, preferring a middle ground proposal he hoped would mostly satisfy net neutrality advocates but not anger the broadband providers who were adamantly opposed to regulation. The providers argued that Title II would stifle innovation, preventing investment in what would essentially be a public utility. Title II reclassification has, for years, been the big prize many of the most hardcore net neutrality advocates. Only with the stricter regulatory apparatus of Title II, they believed, could the FCC keep broadband providers in check. But until Wheeler arrived, the ideas was never taken very seriously. Moving to Title II would be a complicated, legally fraught process; even backers of a switch tend to agree that applying the full weight of Title II regulations would be too onerous. The FCC, they allowed, would need to rely on "forbearance," a process in which the agency essentially swears off certain regulatory requirements, like, for example, the Title II price controls. The particulars of the forbearance process were likely to be challenged in court however, probably along with the larger Title II switch. A move to Title II was a giant legal landmine. The FCC was trying to avoid the sort of endless legal disputes that had plagued the net neutrality process, not wade in further. But the Title II advocates gained a significant ally last year when President Obama released a statement urging Wheeler and the rest of the FCC to start the process of reclassification and forbearance. Wheeler is the head of what is technically an independent agency, but he was appointed by the president; the administration couldn’t order Wheeler to comply, but its wishes carried great weight. Which is why it wasn’t too surprising to see that, at a speech at the Consumer Electronics Show yesterday, Wheeler strongly hinted that he’ll proceed with a move to Title II reclassification. (Flickr/Federal Communications Commission) "We’re going to propose rules that say that no blocking, no throttling, [no] paid prioritization, all that list of issues, and that there is a yardstick against which behavior should be measured. And that yardstick is ‘just and reasonable,’" Wheeler said, referencing the "just and reasonable" standard required under Title II. In explaining his thinking, Wheeler said that he was struck by how well the wireless phone industry had flourished under Title II plus forbearance. "For the last 20 years, the wireless industry has been monumentally successful," he said. But as Jon Healey of the L.A. Times notes, Wheeler’s story about the success of the wireless industry left out an important caveat: Wireless data networks were shielded from Title II by the FCC back in 2007—right when wireless data services began to really take off. There are other potential issues with Title II as well; it might result in as much as $15 billion in tax and fee hikes annually, because it would be subject to local utility levies. And of course it would almost certainly trigger another round, or rounds, of intense litigation. If Wheeler decides to go forward with reclassification, the proposal will be put to a vote amongst the five FCC commissioners. The outcome is practically predetermined: If Wheeler puts Title II on the table, it’s virtually certain it will pass with his vote and the votes of the two other Democratically appointed commissioners. We’ll find out which route he takes on February 26, when his proposal is expected and a vote likely to be held. If Wheeler does take this route, as he now seems to determined, we’ll end up with an Internet that is more regulated, more subject to regulatory uncertainty in the near-term, and more like a public utility from another era than an information delivery service for the modern age. It’ll be 2015—but for the Internet, it’ll be 1934 all over again.