Nobody's Fools, Part Deux
Expanded from the 4-8-2007 Daily Sparks (Nev.) Tribune
Updated 4-15, 5-10, 5-17, 5-20, 5-28-2007

"I think your support of AB 530 needs a little rethinking," a reader stated in an e-mail about my comments last week supporting the creation of state consumer advocate for minority affairs.

"When you add minority at the end, you exclude a lot of the people of Nevada. If you are going to create a job, make it for all the people not just a select few. You are headed entirely in the wrong direction. Don't you think you should create two positions with one titled 'for minorities only' and the other titled 'for non-minorities only'? If you as a government representative want to divide up society, you seem to be headed in the right direction," the reader stated.

I responded that his point was both well made and well taken. The March 30 hearing on the bill showed that there's a lot of abuse which the existing state consumer agency is not addressing. I hope that all consumers may be helped by bringing attention to the situation through the minority focus. We'll see what good comes of it. Stay tuned.

Deregulation has not lowered Texas cable rates — they've risen
BARBWIRE 5-27-2007

Corporate pillage and
Jim Crow cable

BARBWIRE 5-20-2007

Nevada lawmakers vote to deregulate phone and cable companies
Las Vegas Sun/AP 5-11-2007

Phone company executives ask Nevada lawmakers to drop caps on rates
Carson City Nev. Appeal 5-9-2007

State consumer advocate
calls for rate caps

Report on the hearing
Las Vegas Review-Journal

Will cable law cut cost or convenience?
Consumer groups and local officials warn that the bill, aimed at eliminating locally negotiated franchises in favor of state licensing, would make it harder for disgruntled customers to get problems fixed.
Orlando Sentinel 5-4-2007

Telecom Oligopoly Watch
Barbwire 4-1-2007

TV ABOUT TV. On last Thursday's Nevada Newsmakers program on KRNV TV-4, Randi Thompson asked AT&T Nevada President Hal Lenox if current legislative attempts at deregulation could lead to oligopoly. (A monopoly exists where there is just one seller of a product or service. An oligopoly is close to the same thing when there are very few suppliers, which is how the big five oil companies manipulate and control the retail price of gasoline. See the Oilogopoly Archive at Barbwire.info.)

Mr. Lenox deflected the question by stating that there is a lot of competition for telecom services, noting satellite and cable companies.

His own company's record undercuts his position. He noted that AT&T is still in many ways Ma Bell.

A quarter-century ago, AT&T was broken into seven "baby bells" and largely deregulated.

Today, just as the pieces of the old Rockefeller Standard Oil trust have been mostly re-assembled, Ma Bell has largely been reconsolidated as the baby bells have swallowed each other.

Any good marketing consultant will tell you that even when competition appears, whomever was there first can retain most of the market share because of the built-in advantages of longtime dominance.

I haven't been able to determine AT&T's northern Nevada market share, but its Gomorrah South counterpart provides a pretty good parallel.

The Las Vegas Review-Journal reported last week that the residential phone service of Embarq (formerly Sprint, formerly Centel) "dropped to 73 percent in 2005 from 97 percent in 1997."

Under Nevada court decisions, 50 percent plus one still constitutes monopoly status. A timeline on the campaign by AT&T, Embarq, Charter and Cox cable to form an oligopoly may be accessed with the web edition of this column at Barbwire.info.

Lawmakers beware. (AT&T has not responded to my request for a statement.)

THE ALBERTO GONZALES EFFECT. The City of Reno apparently thinks it a pretty good idea to have a compliant, council-appointed city attorney. (Just look at all the good such an arrangement has done for George W. Bush.) The City of Sparks asked the legislature for a charter change allowing the council to hire outside lawyers without the permission of its elected city attorney, in this case the disgraced Chet Adams. Sen. Randolph Townsend, R-Reno, opined that Reno and Sparks city attorneys should be appointed. Lo and behold, a bill is now in play calling for the elimination of elected lawyers.

Reno city government spends upwards of a million a year making its citizens think all is well at city hall – Damn the potholes, pay for another full-color insert in the Reno Gazette-Journal! The Reno council long chafed against Patricia Lynch, a good lawyer of high integrity who would not let herself or her staff get pushed around by the McNeely administration. When Lynch moved on to a judgeship, former justice court judge John Kadlic won the job over the anointed candidate of the city hall establishment.

Sparks should get its charter change regardless of Reno's power grab. And both burgs should continue to elect their city attorneys.

CORRECTIONS AND CLARIFICATIONS. Assemblyman Harvey Munford, D-Las Vegas, is in his second legislative term. Also, last week's item regarding attorney Joe Laub should have made clear that the Northern Nevada Disciplinary Board of the State Bar of Nevada has recommended to the Nevada Supreme Court that Mr. Laub be suspended from the practice of law for six months and one day. I apologize for the errors. (Download the State Bar of Nevada decision in Adobe Acrobat Reader by clicking here. Additional Laub disciplinary docs at DoctorLawyerWatch.com.)

WHEN HARRY MET THE VETS. Sen. Reid got hit hard in his meeting with a group of veterans last week. The good man really couldn't tell them the awful truth: You're screwed.

Warriors have always been recruited with waving flags, moist eyes and brass bands. The reality has always been that the medical care they receive after getting their bodies broken has often been substandard. The warmongering Bushies have been no exception.

Several of the vets took out their frustration on Reid, which is understandable. He's in a powerful position to help. What doesn't help is the O'Reillyesque statement by Rep. John Porter, R-Nev.

The Associated Press reported the southern Nevada congresscritter's cockamamie comment last week that raising taxes hasn't been necessary to finance the war.

"I don't think that $600 billion a year on child welfare that's not even going to the kids is a good use of money," AP quoted him, adding "the money goes to a bureaucracy that's 'fat and bloated.'"

What planet is this guy from? That $600 billion is roughly the annual budget of our war machine without supplements, add-ons or ongoing expenses in Iraq. The $600b is double the Pentagon budget under President Clinton. We are not spending anywhere near that on all programs for children combined.

I wish we would spend more on life than death, but death is much more profitable — at least for a select few.

ISN'T IT RICH? In a country where the dominant religion is predatory corporate conglomerate capitalism, we rate our presidential candidates according to how much money they have.

Be well. Raise hell.

Smoking Guns

Warning signs on the road to telecom oligopoly

The language in section 15 of Assembly Bill 518 is almost blackmail in its ruthlessness. Go back to my Greenspun story in last Sunday's column. If AB 518 were to become law, the minute Milton Schwartz starts acquiring programming by satellite and distributing it to his southern Nevada housing complex, Embarq (formerly Sprint formerly Centel) would be free to black out that complex from phone/cable/telecom service as a "provider of last resort." (The definition of "exclusive rights" begs the question of whom defines same. Also, what the hell is "the functional equivalent of such service through any form of telephony technology "? Who defines it?)

This is quite anti-competitive and echoes an old technique of cable companies. Back when Reno had two cable providers, TCI and Continental, they absolutely avoided competitive bidding for new neighborhoods. It was the ultimate in deferential defensiveness:

    "After you."
"No, after you."
    "Not at all, after you. I insist."
"No, you take it" ...ad infinitum, each begging the other to take the new territory.

Why? Because in the few cases around the country where there was actual cable competition, prices dropped 90 percent. Better to have an unspoken oligopoly fixing high prices without ever consulting with each other. (Just like BigOil.)

Under this bill, the senior citizen complex near my house, where all residents have no choice but Charter, would have to start getting phone service from Charter because AT&T could walk away if AT&T decides that management is providing what AT&T defines as exclusivity. That is the essence of anti-competition. (Please note that in winning a new franchise with almost no consumer safeguards, AT&T promised to roll out service competitive with Charter in Reno by last September.)

I love the use of "unduly burdensome conditions." (Sec. 15, subsection 4)

I thought I'd heard the last of undue burden now that Sandra Day O'Connor is no longer writing abortion decisions. Again, who decides what that vague term means?

All of this reinforces this as the latest chapter in the unholy marriage between supposed competitors (cable and phone companies) to cut up the market between them and freeze out anyone else. They began a few years back by pretty much disallowing wholesale sales, which had spawned a lot of competitive companies. Nowadays, any small telco that wants to start selling service must pay full bore to use AT&T/Embarq/Verizon/et al. lines, which means no profit. So small telephone providers have largely disappeared.

The Greenspuns won a legislative ban on any municipality providing telecom service in 1997. Lawmakers couldn't figure out why the bill was needed since only Fallon had ever done so. The answer came less than a year later when the Greenspuns sold majority interest in their LV cable franchise (which they had sat on for 20 years and deprived Las Vegas of cable TV service until the end of the 1970s) for $1.4 billion.

I submit that the market price went up by several hundred million because of the restrictive legislation.
Then came the "broadband parity" bill of 2001. No less than Assemblymember Dawn Gibbons, R-Reno, currently first lady of Nevada, said that even after her committee had heard extensive testimony, she still couldn't figure why the bill was needed. The real answer: to pull the ladder further up behind the major telecoms. (The latter day version of broadband parity is now before congress, labeled "net neutrality." See the Bill Moyers link at BarbanoMedia.com)

Next came my fight in 2003 to allow the City of Reno to take over operation of the Charter system if the company melted down and could not provide service. (Charter's chronic financial problems were and remain glaring and directly impact service.)

Cox, Charter, Sprint (now Embarq) and SBC (now AT&T) coordinated efforts to pull the ladder further up behind them and kill Sen. Joe Neal's bill. Those chickens are starting to come home to roost.

Today, if a Nevada cable company stops providing service, all a city can do is try to find a buyer for the system. The Emergency Broadcast System, public/government/educational access, weather and news channels could all go begging for months or years because corporate influence has hamstrung government from being able to provide for its citizens in case of emergency.

In John G. Edwards' piece in the April 2 Las Vegas Review-Journal, he notes that "(Embarq's) annual report shows that its residential telephone service penetration dropped to 73 percent in 2005 from 97 percent in 1997."

That's still a monopoly. A Nevada court ruled (in a gasoline pricing case) a decade ago that the definition of monopoly is 50 percent plus one.

Satellite companies allow Charter to set the retail price, then come in 25% or so below, when true competition would drop the price by 50-75%. The more than 500 non-profit municipal systems in the country today give us a benchmark of true cost. In 2003, AP ran a piece on Glasgow, Kentucky. Full service digital cable with all the movie channels cost $19 in 2003. In Reno, I was paying over $80.

The Telecommunications Act of 1996 was touted by Bill Clinton, Al Gore and Newt Gingrich as heralding a new era of competition and low prices. Instead, we have seen more than a decade of price fixing and lack of competition where cable prices have risen by about 4 times the rate of inflation.

Section 18 of AB 518 defines as a deregulated "competitive supplier" any big Nevada operator. Section 22 removes "competitive suppliers" from almost all public disclosure except what they might have to publish in federal filings like annual reports. Sec. 25 says that the Public Utilities Commission "shall not decrease the rates or pricing of basic network service provided by a competitive supplier."

Especially with this last provision, isn't this entire scenario an instant replay of the 1996 Telecommunications Act which saw cable companies gut basic cable service, the only remaining regulated level, by moving most of what people want to higher-priced tiers?

AT&T and Embarq would now be able to keep what they define as basic at an artificially high level even if actual cost significantly dropped in the future, the equivalent of the old power company catch-all "customer charge." (Check your Sierra Pacific Power bill — it's still there.)

Do not Embarq and ATT still enjoy well over 50% of the telephone service in their respective service areas? Is that not a monopoly? The 1996 telecommunications act gave us more than a decade of cable monopoly with prices rising four times the rate of inflation. Why do they need to have their de facto monopolies deregulated?

(Consumer word to the wise: Don't fall for the standard company line that "congress and the FCC define as competitive any cable market wherein a competitor to the entrenched monopolist has 15%." That's just lobbying and corruption, not reality.)

Prediction comes true

Deregulation has not lowered Texas cable rates — they've risen
BARBWIRE 5-27-2007

If we needed a warning, it was given by Embarq's rep at the April 2 hearing: Kristin McMillan, vice president and general manager of Embarq's Southern Nevada operations, acknowledged that telephone prices could increase in a deregulated market.

But, he said, "It's more likely, based on what's happening in the market today, that they should come down...."

Instant replay, 1996.

Watch your wallet.

Be well. Raise hell.

State consumer advocate
calls for rate caps

Report on the hearing
Las Vegas Review-Journal

The Dean's List

   The Dean of Reno Bloggers could very well be Andrew Barbano, self-described "fighter of public demons," who started putting his "Barbwire" columns online in 1996 and now runs 10 sites.

 RENO NEWS & REVIEW 11-9-2006





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Copyright © 2007 Andrew Barbano

Andrew Barbano is a 38-year Nevadan, editor of NevadaLabor.com and JoeNeal.org, and a member of the Reno-Sparks NAACP. As always, his opinions are strictly his own. Barbwire by Barbano has originated in the Daily Sparks (Nev.) Tribune since 1988.


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