President Obama came to Cedar Falls ahead of next week’s State of Union to discuss one of themes from the upcoming speech: expanding access to broadband services across the United States. But, his speech left Iowa’s largest cable and Internet service provider far from a loss for words.
Mediacom CEO Rocco Commisso wasn’t pleased, and almost immediately took to BloombergTV to express his outrage. Meanwhile, his company released the following press release regarding the president’s event:
Mediacom is deeply concerned with the comments made by President Obama during his visit to Cedar Falls Utilities (CFU) today. CFU is a municipal utility that leverages its government-conferred monopoly over electric, water and gas service to unfairly compete with private enterprises for cable television and high-speed Internet customers.
The President’s remarks combined with the selection of CFU as the venue for his speech clearly show that the White House wants to waste taxpayer dollars to supplant our Nation’s private sector broadband providers with government-owned utility companies.
According to Mediacom’s CEO and founder, Rocco B. Commisso: “I am a strong believer in our free market system, both as a matter of principle and because, as an entrepreneur, I know firsthand that there is no better way of furthering the economic well-being of American citizens.
“I started Mediacom in 1995 because I believed the residents of small and mid-sized communities deserved to have access to advanced telecommunications services second to none, and I risked my own life savings and raised billions more of private capital in order to act on that belief.
“Since 1999, Mediacom has invested $2.8 billion in Iowa so that communities like Hamilton, with 35 households, and Goose Lake, with 98, can enjoy cable television, broadband and VoIP telephone services comparable to those available in Chicago, Los Angeles, New York City and Washington, D.C. I believe that Mediacom has invested more money in Iowa than any other private company over the last 15 years, and I am proud that not one dime of that investment has come from the government or taxpayers.
“I think it is fair to say,” he continued, “that the only reason the vast majority of Iowans are able to enjoy broadband speeds that are significantly faster than dial-up, DSL or cellular 3G and 4G service, for that matter, is because Mediacom has honored its commitment made 15 years ago. At a time when no one else was willing to spend the money, we promised to take the necessary risks to ensure that the citizens of Iowa were not mere bystanders in the digital revolution, but active participants in the broadband economy. Mediacom has enriched the lives of Iowans and provided fertile ground for businesses, large and small, to prosper and grow.”
“I mean no disrespect to the President,” Mr. Commisso said, “but traveling to Iowa in order to be a cheerleader for government-owned and taxpayer-funded broadband networks while ignoring the far more significant contributions of Mediacom is an insult to our 1,600 dedicated employees who live and work in Iowa.”
“More importantly,” Mr. Commisso stated, “there is no reason to invest even more government dollars in municipally-owned broadband ventures, many of which wind up in financial difficulty. That is especially true at a time when wages are stagnant even as taxes constantly rise, and when there are more pressing needs that are actually proper areas for government action, such as saving the social security system from insolvency, dealing with massive unfunded state and local pension obligations and investing in our schools, bridges and roads.”
Mr. Commisso concluded by saying: “The plain, simple truth is that Mediacom, without spending taxpayer money or exposing electric utilities and their customers to financial risk and increased rates, is giving Iowa families, businesses and communities faster, cheaper access to broadband so they can succeed in the digital age.”
According to Ed Pardini, Mediacom’s Senior Vice President of Field Operations based in Des Moines, “While CFU serves a single college-town of about 14,000 households, Mediacom has built a network of over 200,000 fiber miles in Iowa that passes 1,000,000 homes in more than 300 communities across 87 counties, representing 83% of Iowa’s total households.
“Mediacom offers affordable advanced broadband services not only in Iowa’s biggest cities like Ames, Cedar Rapids, Davenport, Des Moines, Dubuque, Iowa City and Waterloo, but also in small towns and rural areas like Eagle Grove, Eddyville, Red Oak and Spirit Lake. We give residential customers in all of our markets—from the largest to the smallest—the flexibility of choosing a combination of speed and price that is right for them, with the options ranging from 3 to 150 Mbps, and we are in the process of rolling out a 305 Mbps residential service. Since 2001, we have increased the download speed of our flagship residential offering by more than 3,000%, while keeping the price essentially unchanged.”
Mr. Pardini says that Mediacom is attuned to evolving customer needs and preferences, and upgrades its network and services to keep pace with the demand for faster speeds. “Despite the hype about 1 Gig residential speeds, the only real demand for 1 Gig services currently resides within the commercial space,” noted Pardini. “Mediacom has played a major role in attracting new business to Iowa, creating jobs and generating economic activity. Businesses, colleges, school districts, hospitals and other institutions across the state are today receiving dedicated, fiber-based data connections of up to 10 Gigabits from Mediacom Business,” he continued.
Pardini noted that Mediacom contributes to Iowa in many ways besides offering broadband and other advanced services. “We give free Internet service to hundreds of schools across the Hawkeye State, pay tens of millions annually in Iowa taxes and franchise fees and provide financial and other support to a host of worthwhile community causes,” he stated. “Moreover, Mediacom employs over 1,600 Iowans who live and work in the communities they serve across the State, as compared to the estimated 50 employees in CFU’s telecommunications operations. The commerce generated and taxes paid by Mediacom and our employees are major contributors to Iowa’s robust economy and the State’s fiscal health,” said Pardini.
“The great irony of the President choosing Iowa as the location to promote his federal takeover of broadband agenda is that our state is home to the Iowa Communications Network, a technologically decaying government owned system,” explained Pardini. “When the state attempted to sell the ICN to the private sector last year, none of the bids it received came close to covering the $300 million that Iowa taxpayers spent on the project.”
The statement was at odds with the views expressed by the American Cable Association, whose president and CEO, Matthew M. Polka, issued his own statement in support of the president’s visit to Cedar Falls. He said:
“ACA applauds President Obama for recognizing the key role Cedar Falls Utilities and other municipal providers play in bringing high-speed broadband to consumers. Cedar Falls Utilities and some 100 other municipal providers are ACA members, along with hundreds of private sector cable operators and telephone companies. These range from mid-sized entities, like Mediacom, with hundreds of thousands of customers, to smaller operators serving just hundreds.
“What ties Cedar Falls Utilities, Mediacom and all of these providers together is a drive to give American consumers broadband service that enables them to access entertainment content, exchange social information, and engage in civic debate. Consumers consider this connectivity critical, and ACA members, whether public or private, are responding by investing in innovative services and new infrastructure to make even higher speed service a reality.
“However, it is important to understand that the investments by small and medium-sized broadband providers come with substantial risk. Moreover, these providers continue to confront barriers that deter new investment. For instance, ACA members, face the possibility that the FCC soon will impose burdensome Title II regulations on their broadband service. The application of utility rules on smaller broadband service providers – entities that pose no risk to an open Internet — will serve only to create disincentives to upgrade plant and expand service areas.
“Municipal providers, cable providers, and telephone companies also have to deal with runaway video programming costs that can eat into their investment budget. ACA has consistently asked lawmakers and policymakers to address this concern. An immediate step the FCC can take is to conclude a long-pending rulemaking and ensure that the program buying group used by nearly all smaller broadband providers is protected from non-discriminatory treatment by video programmers under the FCC’s program access rules.
“Finally, to further deployment of high-speed broadband infrastructure throughout the country, we should encourage communities to work to facilitate deployments by private sector providers by finding ways to lower the costs of deployment and accelerate demand. This teamwork is essential to ensuring that all Americans have this key tool to participate fully in our economy and society.”
Other telecommunications industry organizations seemed to take Mediacom’s position on the subject. USTelecom president Walter McCormick issued this statement:
“The president’s Title II reclassification and state preemption proposals, taken together, call for the federal government to regulate the Internet, and for municipal governments to own the Internet. If acted upon by the Federal Communications Commission, they would be sweeping exercises of authority – raising constitutional concerns related to separation-of-powers, the scope of an independent agency’s Congressionally delegated authority, and the role of the states in our federal system. And, how will these expanded government roles be financed? With higher costs to consumers, and new taxes and fees on local citizens. As an industry that is investing billions of dollars in advanced Internet infrastructure, and competing with cable, wireless and satellite providers to bring the fastest fiber-based broadband to consumers at the lowest possible price, we believe there is no reason to burden consumers with new costs, and citizens with new taxes, when the private sector is risking its own capital to meet demand. If the Administration wishes to accelerate investment further, it should focus on the need for eliminating uneconomic regulation, removing barriers to deployment, and reforming federal taxation. It should not be seeking to manage the Internet, to impose its will on state governments, or to prohibit elected officials who seek to protect their citizens from unnecessary taxes from doing so.
Across the nation, USTelecom’s member companies are demonstrating their commitment to competition, investment and innovation. Our industry is setting the pace on fiber deployments. AT&T is the nation’s leader when it comes to expansion of gigabit networks, with current plans to cover up to 100 cities and municipalities. CenturyLink is making gigabit service available in 16 cities. Verizon FiOS led the way on gigabit fiber deployment as the prime mover in this field. And, virtually every member of this association, large and small, urban and rural, is engaged in fiber upgrades. These positive actions should be encouraged through pro-investment policies, not discouraged through burdensome new regulation and taxpayer subsidies to duplicative government enterprises.”
Meanwhile, the National Cable & Telecommunications Association said:
“The cable industry has invested over $230 billion to build robust broadband networks that reach 93 percent of U.S. homes. We agree with the President that connecting all Americans to this critical technology should be a national priority, and that is why we have long supported the use of scarce government funding to support universal service in areas where private networks are not economically viable.
“America’s decades-long policy of promoting private investment and exercising a light regulatory touch has yielded substantial benefits for American consumers. As evidence, cable’s top broadband speeds have increased over 3200 percent in a decade, Akamai recently reported that 12 American states are among the 20 fastest regions of the world and our markets remain the envy of the world. While government run networks may be appropriate in rare cases, many such enterprises have ended up in failure, saddling taxpayers with significant long-term financial liabilities and diverting scarce resources from other pressing local needs.
“Broadband policy will continue to play a central role in the social and economic fabric of our society. But rather than chase false solutions, government policies should be directed at overcoming barriers to adoption and extending the reach of broadband to places yet unserved. We welcome sensible government policies that will build on our successes and convince even more Americans to take advantage of the broadband opportunity.”
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