Previous month:
December 2014
Next month:
February 2015

12 posts from January 2015

Rachel From Cardholder Services: Did You Receive This Robocall?

Earlier this month, I received two mobile phone calls from "Rachel from Cardholder Services." Perhaps, you received a call, too. I recognized it as a robocall and hung up immediately. The Better Business Bureau (BBB) reported in 2012 how the scheme works:

"Con artists use a friendly female voice and generic name to try to get you to pay to reduce your credit card rates, some making as many as 2.6 billion calls per year. According to the Federal Trade Commission, almost 13 million people who got these robocalls were fooled into speaking to an agent in 2010."

The Topeka Capital-Journal in Kansas reported that consumers received robocalls during 2014. Last week, the U.S. Federal Trade Commission (FTC) announced that it will send $700,000 in checks to 16,590 consumers who lost money in the robocall scheme. The refunds are based upon a November 2013 settlement with several companies that performed robocalls.

If you receive one of these robocalls, the BBB advises consumers to:

  • Never provide personal or financial information over the phone. You really don't know who they are.
  • If you are curious, ask the caller to identify their self with an address and phone number you can contact them at. If it is your credit card company, they should already know your credit card number.
  • If it's a scam, file a complaint online with the National Do Not Call Registry, or with the Federal Trade Commission (FTC)

Have you received any of these robocalls? What did you do?

Chief Executive At JPMorgan Claims "Banks Are Under Assault." Really?

J.P.Morgan logo Today's blog post is about one of my "favorite" banks. Earlier this month, several news outlets reported that during a call with reporters to discuss the bank's quarterly performance, Jamie Dimon, the Chief Executive of JPMorgan Bank, said:

"Banks are under assault... We have five or six regulators coming at us on every issue..."

Dimon's comments referred to the dip in JPMorgan's quarterly profits by 6.6 percent to $4.93 billion or $1.19 per share. The dip was due to legal costs of $!.1 billion pre-tax (and $900 million after tax). Measured by assets, JPMorgan is the biggest bank in the country. It is still very profitable... just a little less so. Listening to Dimon you'd think that the sky is falling, the bank did nothing wrong, and was (is) a poor, hapless victim of over-zealous government regulators.

This begs the question: are banks really under assault? Is JPMorgan under assault? Is the bank being unfairly targeted by regulators? Let's look briefly at the bank's history:

1.2010 through 2012: the bank paid about $3 billion in fines. That's "B" as in billions, and not "M" as in millions. CounterPunch summarized the bank's history (links added for reference):

"Between June 2010 and November 2012 JPMorgan Chase paid more than $3 billion in fines and settlements... overcharging active-duty service members on their mortgages, misleading investors about a collateralized debt obligation it marketed, rigging at least 93 municipal bond transactions in 31 states... In August 2012 alone it paid a fine of $1.2 billion to resolve a lawsuit that alleged it and other institutions conspired to set the price of credit and debit card interchange fees... February 2012 it paid $1.8 billion to settle claims that it and other financial institutions improperly carried out home foreclosures after the housing crisis..."

2. September 2013: American Banker reported, based upon internal JPMorgan e-mails, that the bank was simplifying its businesses and would improve its compliance:

"In the lengthy email, Dimon said the bank is also working to confront the regulatory challenges facing it, including reviewing its foreign correspondent banking business, improving oversight of outside vendors, and adding regulatory compliance staff. The email comes as JPMorgan Chase nears a $750 million to $800 million settlement with regulators related to last year's "London Whale" trading scandal..."

Now, remember that. the bank restructured to improve its compliance. What happened next? Keep reading.

3. September 2013: the CFPB ordered the bank to refund $309 million to more than 2.1 million customers for illegal credit card practices. Also, the OCC levied a $60 million fine against the bank for billing practices that allegedly violated Section 5 of the Federal Trade Commission (FTC) Act 15 U.S.C. § 45(a)(1), which prohibits unfair and deceptive acts or practices. Plus, the SEC announced a $200 million penalty against the bank for allegedly misstating financial results and no internal bank controls to detect and prevents its traders from fraudulently overvaluing investments.

4. October 2013: the Justice Department and JPMorgan reached a tentative deal where the bank will pay $13 billion to resolve alleged wrongdoing with its mortgage-backed securities practices.

5. December 2013: a data breach at the bank affected 500,000 prepaid card holders.

6. December 2013: U.S. taxpayers learned that of the staggering $13 billion total the bank paid in fines, $7 billion is tax deductible. In effect, U.S. taxpayers subsidized the bank's fines since the fines lowered the bank's tax liability. It's not like the USA has a federal debt problem to worry about. We have this cash just lying around waiting to be used. Not! If anyone can claim they are under assault, it is U.S. taxpayers.

Viewed another way: politicians in Congress believe that the USA can afford to give a $7 billion tax break to an already highly profitable bank, but can't afford unemployment checks for the unemployed, and food stamps for the poor? Our current Congress seems to be Robin-Hood-in-reverse: take from the poor and give to the rich.

7. January 2014: Dimon was paid $20 million for his management of the bank during 2013. His pay had been reduced in 2012 to $11.4 million after huge trading losses previously. Under assault, eh? Somebody, or the bank's owners, think that Dimon is doing a wonderful job.

8. November 2014: the bank agreed to pay $1 billion in fines for foreign exchange market abuses and alleged rigging of the Libor interest rates.

9. January 2015: politicians in the U.S. House voted 276-146 in favor of changes to the 2010 Dodd-Frank rules regulating banks. Thankfully, the measure failed to gain the required two-thirds vote, but the vote signaled support for easing regulations on banks despite the above history of fines and wrongdoing:

"The measure won a 276-146 majority but failed under fast-track House rules that required a two-thirds vote. It's likely to pass soon under rules that require a simple majority. At issue is the so-called Volcker rule, part of the financial overhaul law, which would limit banks' riskiest trading bets that could implode at taxpayers' expense. That kind of risk-taking on Wall Street helped trigger the 2008 financial crisis."

It's amazing, and infuriating, that politicians would vote for such a measure, which effectively says: let's make it easier for those banks that have a clear record of flouting the laws and have paid huge fines. Let's make it easier for the same banks to make more risky bets... err, investments... similar to those bets that caused the last economic recession in 2008. And, if those bets fail (again) why the taxpayers will surely bail out the banks. Seems like taxpayers are under assault, not the big banks.

I guess that large campaign contributions by lobbyists outweigh common sense and voters' desires.

10. January 2015: last week, JPMorgan and three other national banks agreed to pay a total of $2.7 milllion as part of a consent judgment with the Massachusetts Attorney General about alleged illegal foreclosing on home owners in the state.

11. January 2015: after an investigation, a lawsuit alleged that six former JPMorgan Chase loan officers accepted kickbacks for referring business to the now defunct Genuine Title. As part of a consent order with the Consumer Financial Protection Bureau (CFPB), JPMorgan was fined $600,000 and must pay $300,000 to customers. Two of the six former employees were fired. The other four already left the bank.

If you review the above history, no bank executives went to prison. Often, the bank did not have to admit any wrongdoing or guilt. The bank paid a lot in fines. Is that an assault? If bank executives were going to prison, then I could, maybe, agree with Dimon's "assault" comment. But, the bank(s) can easily afford the fines assessed; especially if about half of the total is tax deductible. My view:

Don't whine. Don't do the crime if you can't afford the fines.

The Washington Post reported in November 2013 a telling comment by Peter Scher, global head of corporate responsibility at JPMorgan:

"We’re continuing to play the role we think we should play in terms of being a constructive part of policy discussions... Jamie and our management team do a lot of outreach with our regulators and continue to spend time on the Hill. We have not waned at all in our activity in D.C."

That role includes using lobbyists and outreach to specific politicians sympathetic to the bank (or to the banking industry). From the same Washington Post article:

"In the crowd at the Flying Bridge reception were Sens. Charles E. Schumer (D-N.Y.), Max Baucus (D-Mont.), John Boozman (R-Ark.), John Cornyn (R-Tex.) and Rep. Carolyn B. Maloney (D-N.Y.)... The bank, whose $8 million in lobbying expenses last year outstripped those of every other commercial or investment bank, has a long laundry list of concerns... JPMorgan said it has focused on the Business Risk and Price Stabilization Act of 2011, trying to make sure that Dodd-Frank financial legislation isn’t applied to swaps between bank affiliates, shaping fair debt collection procedures and fighting the Volcker rule, which would restrict banks’ latitude to engage in trading."

So, JPMorgan is not the hapless victim of over-zealous government regulators Dimon and much of the news media would have consumers believe. It considers itself operating in a necessary and important role within the economy and political process. Dimon's "assault" comment is nothing more than a plea to his political stooges... err, allies, for help.

Would you say that the bank improved its compliance since September 2013? To me, the history is clear. The pattern of wrongdoing is clear. If there wasn't any wrongdoing, the bank would have received the attention it received from regulators. Nor would the staggering amounts of fines been assessed, since 2010.

What are your opinions of Dimon's comments? Are banks under assault?

4 Banks To Pay $2.7 Million To Settle Allegations Of Unlawful Foreclosures On Home Owners

The Office of the Attorney General of Massachusetts announced a settlement agreement with four national banks about claims of unlawful foreclosures on homeowners in the state. The four banks are Bank of America, CitiGroup, JPMorgan Chase, and Wells Fargo:

"The consent judgment, entered today in Suffolk Superior Court, resolves the AG's allegations that Bank of America, JP Morgan Chase Bank, Citi, and Wells Fargo Bank violated Massachusetts foreclosure law and the Massachusetts Consumer Protection Act by illegally foreclosing upon Massachusetts residents’ homes when the banks lacked the legal authority to do so."

The events that led up to this announcement:

"The Supreme Judicial Court ruled in the Ibanez decision that mortgagees seeking to foreclose must strictly comply with Massachusetts foreclosure laws. Under the statutory power of sale and Massachusetts law, a foreclosure is void unless a bank or other foreclosing party is the mortgagee of record or holds the mortgage through a valid assignment before publishing the notice of foreclosure sale... The banks’ failure to obtain a valid assignment of the mortgage prior to foreclosure has adversely impacted titles to numerous properties in the Commonwealth."

The AG's office is still pursuing a judgment against defendant GMAC Mortgage, LLC, which filed bankruptcy in May 2012. Experts have said that the illegal foreclosure problem is widespread across the United States. A 2012 settlement agreement included $25 billion paid by five banks: Ally Financial, Bank of America, Citigroup,  JPMorgan Chase, and Wells Fargo. That 2012 settlement, between federal officials and 49 states (what's up Oklahoma?), included mortgage abuses such as robo-signing and incomplete/inaccurate record keeping. A 2013 analysis found that banks illegally foreclosed on more than 700 military personnel. And, in February 2014:

"... Ocwen, the nation’s fourth largest mortgage servicer, entered into a $2.1 billion national settlement with the federal government, and 49 states, including Massachusetts, resulting in an estimated $80 million in principal reduction and cash payments to Massachusetts homeowners over claims of loan servicing misconduct and so-called “robo-signing.” Massachusetts homeowners also received approximately $1.5 million in cash payments from that multistate settlement..."

Terms of the latest consent judgment:

"... the banks are obligated to assist a consumer who makes a claim that the title to his or her residence is void from an unlawful foreclosure by conducting a thorough title review, providing curative documents, releasing junior liens held by the banks, and, in cases where consumers do not have title insurance, paying reasonable costs associated with the title cure. In addition, the banks will pay $2.7 million, $700,000 of which will be allocated to the Attorney General’s Local Consumer Aid Fund to provide consumer assistance. The remaining $2 million of the settlement will be paid to the Commonwealth's General Fund."

While settlements and consent judgments are nice, this wrongdoing will stop only when bank executives go to prison.

Senators Introduce Bill To Allow More Broadband Internet Competition To Help Consumers

After The White House announced last week several programs to bring affordable high-speed Internet services to more citizens, three U.S. Senators have introduced related legislation. The Community Broadband Act is designed to encourage competition within the broadband Internet industry by prohibiting local laws that currently prevent cities, towns, and citizens from forming municipal broadband networks in 19 states.

A prior study found that broadband offerings in the United States lagged services available in other developed countries that provide affordable and faster high-speed Internet connections. The study analyzed services in 24 cities worldwide, and found that consumers in the United States pay more and get slower speeds than people in other countries. The study produced several rankings of cities and broadband services. The only offerings in the United States that ranked well (e.g., provided the best value to consumers) were areas with municipal broadband networks; not the incumbent corporate Internet Service Providers (ISPs). Yet, local laws in 19 states prevent or restrict consumers from building municipal broadband services.

U.S. Senators Cory Booker (D-New Jersey), Edward Markey (D-Mass.), and Claire McCaskill (D-Missouri) introduced the Community Broadband Act on Thursday, January 22:

"... No statute, regulation, or other legal requirement of a State or local government may prohibit, or have the effect of prohibiting or substantially inhibiting, any public provider from providing telecommunications service or advanced telecommunications capability or services to any person or any public or private entity."

Senator Booker said in a statement:

"As Mayor of Newark, I saw firsthand the value of empowering local communities to invest and innovate. The Community Broadband Act provides cities the flexibility they need to meet the needs of their residents... This legislation will enhance economic development, improve access to education and health care services, and provide increased opportunity to individuals in underserved areas. At a time when local governments are looking for ways to ensure their communities are connected and have access to advanced and reliable networks, the Community Broadband Act empowers local governments to respond to this ever-increasing demand.”

Senator McCaskill said in a statement:

"Folks in small towns and rural communities should have the same access as everyone else to the Internet, and the jobs and business opportunities it brings... Large Internet providers too often aren’t willing to offer service in rural America, so this bill ensures local communities can come together to provide their residents with access to the opportunities high-speed broadband offers."

Well said, since the Internet is critical to both businesses and consumers. How did this happen? Who enacted these local laws in 19 states that hamper local communities from meeting the needs of their residents?

How did things get this way? Who lobbied for restrictions in the above states? PR Watch reported:

"The ALEC "Municipal Telecommunications Private Industry Safeguards Act" is a "model" bill for states to thwart local efforts to create public broadband access. Promoted under the guise of "fair competition" and "leveling the playing field," this big telecom-supported bill imposes regulations on community-run broadband that they would never tolerate themselves. Iterations of this anti-municipal broadband bill passed in 19 states to stop local governments in communities like Wilson, North Carolina from wiring their communities with fiber... At closed-door ALEC meetings, state legislators sit down with lobbyists for corporations like AT&T, Time Warner Cable, Verizon, Comcast, and News Corp to be handed changes to our laws that further the right wing agenda and directly benefit the corporate bottom line..."

The 19 states with restrictive local laws: Alabama, Colorado, Florida, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming. While 72+ percent of households in the USA have high-speed Internet services, studies have proven that American pay more monthly for high-speed Internet services, and get slower speeds than consumers in other countries.

So, the same political party that usually touts less government regulation and free-market capitalism with competition actually introduced more government regulation to limit competition. That politicial party usually touts "consumer choice," but the local laws in these 19 states do the opposite: limit consumers' choice. And, the lawmakers in these 19 states went along with this charade to place corporate profits ahead of their residents' needs for the fastest and affordable high-speed Internet services.

Also last week, House Republicans introduce legislation that protects net neutrality principles but removes the Federal Communications Commission's (FCC) authority to regulate telecommunications corporations, many of who are ISPs. The House  bill does not address lagging broadband services in the USA compared to other countries, nor does it remove local laws in 19 states so cities, towns, and citizens can form municipal broadband networks.

Ars Technia reported that the Community Broadband Act:

"... stands little chance because of Congress' Republican majority..."

Hopefully, both pieces of legislation will be negotiated and merged into a single bill with compromises to benefit consumers. Every voter, regardless of your politics, should contact your elected officials and demand that they explain what they are doing to lower your monthly broadband bills, not keep your monthly bills bill to benefit their corporate campaign contributors. And, tell your elected officials you want local laws removed to encourage more broadband competition.

What are your opinions of this?

Politicians Try A "Bait-And-Switch" With Broadband Internet, Net Neutrality, And The FCC

There is a must-read article in the New York Times about the rapidly shifting politics with net neutrality, high-speed Internet services, and the regulatory ability of the Federal Communications Commission (FCC). The article:

"... a simple fight over big government versus small has put Republicans in the awkward position of aligning themselves with the cable giants, among the most maligned industries in the country, against the sad Netflix viewer... politics on the so-called net neutrality issue have shifted so much that House and Senate Republicans are circulating legislation that would ostensibly do exactly what the president wants: ban the blocking or “throttling” of web traffic and prohibit the creation of paid “fast lanes” for Internet content providers willing to pay for faster delivery..."

Why the change? The GOP realizes it has been on the wrong side of the net neutrality issue. So, in order to appear as supporting net neutrality, they have proposed legislation that eliminates the capability of the FCC to regulate telecommunications companies:

"... it would also prohibit the Federal Communications Commission from issuing regulations to achieve those [net neutrality] goals — the approach favored by the Obama administration and most Internet companies."

Some consumers might call this hard-ball politics. Others might say this is trying to pull a fast one. Football fans might call it a flea-flicker play, where the quarterback hands the ball to a running back who runs, stops, turns around, and laterals the ball back to the quarterback who then throws a long pass down field. The tactic's goal is to fool the defense. Now, House and Senate Republicans are trying to fool the public, and especially net neutrality advocates. I call this a bait-and-switch ploy:

"... Senator John Thune, the South Dakota Republican who now heads the commerce committee, hopes to have legislation ready the following week — ahead of the F.C.C.’s February meeting..."

Yes, Senator Thune and his cronies are trying to pull a fast one. Thune's proposed legislation supports net neutrality, prohibits paid prioritization (e.g., publishers pay fees to have their content delivered fastest), prevents fast lanes, prevents the FCC from categorizing Internet access as a utility, and prevents throttling but at a high cost: removes the FCC authority to regulate.

Previously, Republicans were willing to shut down the government to get their way, Now, they are willing to blow up the telecommunications regulatory system to get their way, regardless of the consequences. What consequences? Keep reading.

In a written statement released yesterday before today's hearings with the House Subcommittee on Communications and Technology, retail giant Amazon criticized the GOP-proposed legislation (Adobe PDF). First, Amazon explained:

"... now there is widespread acceptance of the need for government action to ensure Internet openness; now policymakers need only decide how to ensure that the Internet openness of net neutrality is maintained and effective. Amazon currently supports net neutrality through the Internet Association, as well as directly and through other organizations... we take our position from our customers’ – consumers’ – point of view. Consumers want to keep the fundamental openness of the Internet and the choice it provides..."

Sensible approach: putting consumers first. Amazon recognizes that without consumers, it would not have a business. Politicians and the FCC need to adopt this mindset. Without consumers who vote, they wouldn't be in office.

Next, Amazon explained why the proposed legislation is flawed and needs to be modified:

"... the draft clearly acknowledges that throttling and paid prioritization must be banned; that net neutrality protections must apply to wireless, as well as wireline; and that providers must disclose their practices. Of course, for these excellent principles of Internet openness to be meaningful to consumers, they need to be effective. In at least three instances, however, the Discussion Draft could be interpreted to undermine that effectiveness, so the bill should be modified accordingly to ensure that the Internet openness of net neutrality is maintained and effective."

And, there are loopholes in the proposed legislation. Bad ones:

"... in Subsection (d), while requiring “Consumer Choice,” the bill would explicitly exempt “specialized services” from that requirement. This could create a huge loophole if, for example, specialized services involved the prioritization of some content and services, just like proscribed “paid prioritization,” the only difference being that the content or service prioritized came from the broadband Internet access service provider itself, instead of a third party... it is not obvious what part of the bill might be construed as limiting consumer choice. Almost explicitly, therefore, the bill acknowledges that the provision of such specialized services would defeat consumer choice and the Internet openness of net neutrality, despite the limitations of Subsection (d)(2)."

Amazon saw another problem with the proposed legislation:

"... the Discussion Draft bill is unclear or silent on an important point of clarification: Which parts of a broadband Internet access service provider’s network are covered by the net neutrality protections? As indicated earlier, a consumer will not care where in her service provider’s network any interference with net neutrality occurs, only whether it occurs..."

And another:

"... We believe that the FCC should be empowered to create adequate legal certainty and detail through effective enforcement tools and notice and comment rulemaking. But the Discussion Draft bill would limit the FCC in several ways... it is not necessary to rescind the FCC’s authority under Title II of the Communications Act, as in Subsection (e). Summarily blocking the FCC’s use of existing statutory enforcement authority could leave the agency helpless to address improper behaviors well within its authority under the ceiling created in Subsection (b), and would leave consumers and businesses in the Internet ecosystem without adequate certainty about the FCC’s enforcement..."

So, the proposed legislation is deeply flawed in several areas. It insincerely uses "consumer choice" language, but is about anything but customer choice. The proposed bill should be roundly rejected.

The important messages for net neutrality advocates:

  • Recognize the bait-and-switch tactic. The bill says: support net neutrality and give up the store: prevent the FCC from regulating telecommunications corporations.
  • Nobody should support a deeply flawed bill. Broadband Internet is critical to so many business and consumer applications, things need to be thought out carefully. This bill seems the result of political maneuvering, not well considered and reasoned.
  • No matter what they claim, House and Senate Republicans are still carrying water for the large, corporate broadband providers... at the expense of consumers. If successful, the telecommunications companies' (and their Republican stooges') efforts will keep your monthly Internet bills higher and speeds slower than what consumers get in other countries. This is great for telecommunication companies' profits, and bad for your wallet.
  • The proposed legislation does nothing to increase competition. It does nothing to remove the local laws in 19 states that prevent citizens from forming municipal broadband networks to get more affordable and faster high-speed Internet.
  • The proposed legislation ensures that the FCC could never reclassify broadband as a utility. As reported previously, consumers in areas of the USA with municipal broadband networks get the best, affordable, and fastest speeds.
  • The proposed legislation enables the telecommunications companies to operate as duopolies and/or oligopolies, since many areas of the country consumers have only two or three choices for high-speed Internet services. And, there's no guarantee that after the legislation were approved, the House and Senate won't revisit it and then eliminate net neutrality.

Devious politics. Crony capitalism. Consumer unfriendly.

Will the public fall for this bait-and-switch? I think not. Voters are smart. Hopefully, Democratic officials will fight back vigorously and not run for cover (e.g., do nothing and blame it all on the Republicans, since the GOP controls both the House and Senate).

Every voter, regardless of your politics, should contact your elected officials and demand that they explain what they are doing to lower your monthly broadband bills, not keep both your monthly bills and corporate profits high.

What are your opinions of Thune's proposed legislation? Of the politicians' strategy? What should net neutrality advocates' response be?

Report: Researchers Compare High-Speed Internet Services Worldwide. Consumers In The USA Pay More And Get Slower Speeds

Since President Obama will mention competition and high-speed Internet services in his 2015 State of The Union address to the nation Tuesday evening, it seemed appropriate to discuss the state of high-speed Internet services (a/k/a broadband) in the United States. The "Cost of Connectivity 2014" annual report by the Open Technology Institute compared Internet prices and speeds in 24 cities around the world. The overall finding:

"... the data that we have collected in the past three years demonstrates that the majority of U.S. cities surveyed lag behind their international peers, paying more money for slower Internet access."

The researchers investigated both home and mobile high-speed Internet prices and speeds. Data was collected between July and September of 2014. The list of cities:

  • Americas: Bristol (Virginia), Chattanooga (Tennessee), Kansas City (Kansas), Kansas City (Missouri), Lafayette (Louisiana), Los Angeles (California), Mexico City (Mexico), New York (N.Y.), San Francisco (California), Toronto (Canada), Washington (D.C.)
  • Asia: Hong Kong, Seoul (So. Korea), Tokyo (Japan)
  • Europe: Amsterdam (Netherlands), Berlin (Germany), Bucharest (Romania), Copenhagen (Denmark), Dublin Ireland), London (United Kingdom), Paris (France), Prague (Czech Republic), Riga (Latvia), Zurich (Switzerland)

For home usage, the researchers looked at "broadband-only" plans. If a provider didn't offer a broadband-only plan, then they looked for the cheapest bundle (e.g., phone plus Internet, "triple-play bundles of phone, Internet, and television, etc.). Prices in foreign currencies were converted to U.S. Dollars using:

"... the World Bank’s purchasing power parity (PPP) metric."

The researchers used the broadband definition by U.S. Federal Communications Commission (FCC): a minimum of 4 Mbps download and 1 Mbps upload. The researchers collected the following information about each broadband service:

  • Network technology (e.g., DSL, cable, fixed wireless, fiber optic),
  • Download and upload speeds,
  • Monthly subscription costs (excluding promotional prices),
  • Data caps and any penalties (i.e. overage fees or throttled speeds),
  • Activation and installation fees,
  • Modem and equipment rental or purchase fees, and
  • Contract lengths (e.g., number of months, no contract)

Consumers in Asia and Europe get the best value (e.g., highest speeds at the lwest prices):

"Most Asian and European cities provide broadband service in the 25 to 50 megabits per second (Mbps) speed range at a better value on average than North American cities (with a few key exceptions). In addition, when it comes to the estimated speeds a customer could expect to get for $50 in each of the cities we surveyed, the U.S. is middling at best, with many cities falling to the bottom of the pack. Our analysis also finds that, in terms of speed and price, cities with municipal networks are on par with Hong Kong, Seoul, Tokyo, and Zürich and are ahead of the major incumbent ISPs in the U.S."

This merits repeating. The areas in the USA that offer the best value for consumers are municipal broadband networks and not the corporate Internet Service Providers (ISPs). Yet, local laws in 19 states prevent or restrict consumers from building municipal broadband services. Yet politicians in the United States are quick to promote privatization (e.g., corporations are good; government is bad) as a catch-all solution.

And, it is worse for mobile phone and tablet users:

"In the mobile broadband space, USB dongle and wireless hotspot device offerings continue to be expensive substitutes for home broadband connectivity, with consumers in some other countries paying the same price for mobile plans with data caps that are up to as 40 times higher than those offered by U.S. providers."

Providers of home services in cities with the fastest broadband speeds both increased speeds and reduced prices in 2013 compared to 2012, and again in 2014 compared to 2013:

"Virtually every city in this ranking has seen an annual increase in its top speed offering since 2012. In cases where ISPs offer the same speed as last year, those ISPs have tended to lower their prices. For instance, Lafayette, LA charged $999.95 per month for its gigabit service in 2013 and dropped that price to $109.95 per month in 2014. In Mexico City, a 200 Mbps package was available for nearly $100 less than the price offered for that speed by a different provider in 2013. The average download speed of plans in this ranking increased from 233 Mbps in 2012 to around 500 in 2013, and almost 650 Mbps in 2014. Nearly half of all cities in this ranking offer gigabit speeds, and more than two-thirds of all cities offer service over 500 Mbps."

The researchers look at what consumers could get with spending $40 monthly:

"In 2014, five providers offered gigabit service for under $40, up from just one in 2013 and none in 2012. The U.S. cities on this list that are ranked at the middle or higher (Kansas City, KS; Kansas City, MO; and San Francisco, CA) are represented by local, innovative providers who offer competitive alternatives to the services provided by incumbents."

Incumbents are the large, national corporate ISPs (e.g., Verizon, AT&T, etc.). So, the top five best deals under $40 monthly:

Rank - CityMonthly Cost ($ U.S.)ProviderSpeedsNetwork Technology
1. Seoul $30.30 HelloVision 1,000 Mbps download & upload Fiber
2. Hong Kong $37.41 Hong Kong Broadband 1,000 Mbps download & upload Fiber
3. Tokyo $39.15 KDDI 1,000 Mbps download & upload Fiber
4. Paris $38.81 SFR 1,000 Mbps download & 200 Mbps upload Fiber
5. Bucharest $32.35 RCS & RDS 1,000 Mbps download & 30 Mbps upload Fiber

Now, compare the above prices to what you pay and the speed you get. I did. Here in Boston, Comcast charges $66.95 per month for what it calls "Performance Internet." That's the regular price, and not the promotional price. The Comcast website states:

"Restrictions apply. Not available in all areas. Limited to new residential customers. Not available in all areas. Requires subscription to Performance Internet service. Equipment, installation, taxes and fees, and other applicable charges extra, and subject to change during and after the promo. After 12 mos., service charge for Performance Internet increases to $54.99/mo. After promo, or if any service is cancelled or downgraded, regular rates apply. Comcast's service charge for Performance Internet is $66.95/mo. (subject to change). Service limited to a single outlet. May not be combined with other offers. Internet: Wi-Fi claim based on the September 2014 study by Allion Test Labs. Actual speeds vary and are not guaranteed."

So, the site doesn't even disclose what speed consumers get for $66.95 per month. The true price is higher once you add in equipment and taxes. And that is for older cable technology; not fiber. So, it is difficult for consumers to determine the value of Comcast Internet. Yes, Comcast offers a promotion price of $39.99 per month for 12 months, and then the monthly rate increases. I ignored this promotional price since the researchers compared regular rates. You should, too, so you know what the service really costs. And Comcast includes enough caveats that if you change anything in your subscription, regular rates apply.

Verizon FiOS is a fiber Internet service here in Massachusetts. Below are the service's prices:

Verizon FiOS prices in January 2015. Click to view larger image.

The prices are very high, and the speeds are slower than the above leaders mentioned in the "Cost of Connectivity 2014" report. So, it seems appropriate to ask: are you getting good value (e.g., monthly price divided by download speed) for home Internet where you live? Probably not; unless you live in an area with a municipal service provider. Do you have a state-of-the-art fiber connection? Probably not.

The researchers compared high-speed Internet services between Europe and the USA. They found:

"... median prices are higher in the U.S. for speeds equivalent to those in Europe. Except for the lowest speed tier reported in this graph, the median price in every other tier is noticeably higher for the U.S., indicating that customers pay more for the same broadband packages than their European peers."

The researchers analyzed and compared Internet services in several ways. Since consumers often set a household budget for items, the researchers looked at what consumers get with a monthly budget of $50 for Internet services. Providers in the USA didn't fare well:

"Figure 7 demonstrates the estimated speeds a customer could expect to get for $50 in each of the cities we surveyed. Hong Kong and Seoul are far ahead, with around 300 Mbps at $50, while Tokyo and Paris both hover around 200 Mbps. Most of the U.S. cities cluster between 25 and 45 Mbps, with only San Francisco, CA, and Chattanooga, TN, falling out of that range on the high and low end, respectively. Mexico City ranks last with an average of around 8 Mbps."

Sometimes, consumers seek a certain Internet speed to perform certains tasks. So, the researchers looked at which countries provided the best value with a download speed of 25 Mbps or faster. 25 Mbps download is fast enough to download a short video clip in 1.3 seconds, 10 songs in about half a minute, or a 2-hour video in 13 minutes. That speed allows you to do most things you'd want to do, especially since most mobile devices store your files in the cloud. Once again, the USA lagged other countries:

"Figure 8 demonstrates the estimated monthly price for 25 Mbps in each of the cities we surveyed. The results are largely consistent with our other observations, although in this analysis London comes out at the top of the list at around $24 a month, followed closely by Seoul, Bucharest, and Paris. The U.S. cities are still clustered in the bottom half of the pack, with the exceptions of Kansas City, KS and Kansas City, MO. Notably, Hong Kong drops much lower in this analysis, which reflects the fact that some providers offer speeds ranging from 8 to 100 Mbps at very similar or identical prices."

Feeling proud about American exceptionalism? The next time you hear pundits or politicians profess American exceptionalism, ask them what they are doing to lower your monthly high-speed Internet prices, and speed up your connection, so you get the same (or better) value as consumers in other parts of the world. Write to your elected officials and tell them high-speed Internet prices are too high.

What are your opinions of this report? Of the monthly prices you pay? Do you think that ISPs in the U.S.A. are doing a good job?

White House Calls For FCC To Support The Removal Of Local State Laws That Prevent High Speed Internet Competition

This week, the White House called on the Federal Communications Commission (FCC) to remove laws in 19 states that limit broadband competition. Those states' laws have prevent competition, which has several consequences:

  • Robs citizens of the freedom of local choice to form municipal broadband services,
  • Prevents competition, which keeps Internet and broadband prices high and unaffordable for many Americans
  • The high prices stifle job creation and new businesses,
  • Consumers in many areas cannot get high-speed or fiber Internet access, and
  • Often, the Internet speed is slower and not as fast as could, or should, be

The Broadband Fact Sheet by the White House mentioned several community success stories, including Cedar Falls, Iowa:

"Communities like Cedar Falls have banded together to commit to broadband that works by bringing in new competition, leveraging municipal investments, and forming new partnerships to bring world-class Internet to places like this small Iowa town. High-speed, low-cost broadband is paving the way for economic revitalization not just in Cedar Falls, but in places like Chattanooga, TN, Kansas City, MO, and Lafayette, LA — all of which have Internet speeds nearly 100 times faster than the national average and deliver it at an affordable price."

How did things get this way? Regular readers of this blog are familiar with the issues and the 19 states with local laws that prevent or restrict citizens from forming competitive high-speed, municipal Internet services. Those states: Alabama, Colorado, Florida, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming. While 72+ percent of households in the USA have high-speed Internet services, studies have proven that American pay more monthly for high-speed Internet services, and get slower speeds than consumers in other countries.

How did things get this way? Who lobbied for restrictions in the above states? PR Watch reported:

"The ALEC "Municipal Telecommunications Private Industry Safeguards Act" is a "model" bill for states to thwart local efforts to create public broadband access. Promoted under the guise of "fair competition" and "leveling the playing field," this big telecom-supported bill imposes regulations on community-run broadband that they would never tolerate themselves. Iterations of this anti-municipal broadband bill passed in 19 states to stop local governments in communities like Wilson, North Carolina from wiring their communities with fiber... At closed-door ALEC meetings, state legislators sit down with lobbyists for corporations like AT&T, Time Warner Cable, Verizon, Comcast, and News Corp to be handed changes to our laws that further the right wing agenda and directly benefit the corporate bottom line..."

So, the same political party that usually touts less regulation and free-market capitalism with competition have engineered a situation with more laws and less competition. And, the lawmakers in these 19 states went along with this charade to place corporate profits ahead of their constituents' (e.g., consumers') needs for the fastest and affordable high-speed Internet services.

But, it's even worse than that. There's also an effort to limit cable TV competition. PR Watch also reported:

"The ALEC "Cable and Video Competition Act" attacks municipal cable franchises and frees cable companies from oversight. The bill creates a single state franchising authority and releases the companies from requirements to wire the entire state, and allows companies to decide when -- or if -- to build out cable, and through that cable, to provide adequate internet access. In North Carolina, for example, the bill passed under the name "the Video Service Competition Act" in 2006 with the promise that deregulation would result in greater investment by cable broadband providers; but instead, the state is tied for last place in terms of the number of homes with a basic broadband connection. An estimated twenty-three states have enacted statewide video franchising laws..."

The White House suggested several changes and programse to address the high-speed Internet access problems. First:

"... President Obama is announcing a new effort to support local choice in broadband,formally opposing measures that limit the range of options available to communities to spur expanded local broadband infrastructure, including ownership of networks... the Administration is filing a letter with the Federal Communications Commission (FCC) urging it to join this effort by addressing barriers inhibiting local communities from responding to the broadband needs of their citizens."


".. 50 cities representing over 20 million Americans have joined the Next Century Cities coalition, a nonpartisan network pledging to bring fast, community-supported broadband to their towns and cities. They join 37 research universities around the country that formed the Gig.U partnership to bring fast broadband to communities around their campuses."

In June, the White House will host an event to recognize these efforts and the individuals involved. The third change:

"... the Department of Commerce is launching a new initiative, BroadbandUSA, to promote broadband deployment and adoption. Building on expertise gained from overseeing the $4.7 billion Broadband Technology Opportunities Program funded through the Recovery Act, BroadbandUSA will offer online and in-person technical assistance to communities; host a series of regional workshops around the country; and publish guides and tools that provide communities with proven solutions to address problems in broadband infrastructure..."

If you operate a rural farm, are a recognized Insian Tribe, or operate an eligible non-profit, cooperative, or private company, then you may be interested in the fourth item:

"... Department of Agriculture is accepting applications to its Community Connect broadband grant program and will reopen a revamped broadband loan program, which offers financing to eligible rural carriers that invest in bringing high-speed broadband to unserved and under served rural areas."

The fifth and last change:

"...The President is calling for the Federal Government to remove all unnecessary regulatory and policy barriers to broadband build-out and competition, and is establishing a new Broadband Opportunity Council of over a dozen government agencies with the singular goal of speeding up broadband deployment..."

I applaud the Obama Administraton for making these changes and programs.

Will the newly Republican controlled House and Senate support these actions to remove and reduce regulations? The GOP usually supports actions to promote competition and reduce regulations on corporations. So, will the GOP support these efforts or cave in to the demands of ISP lobbyists?

What are you opinions of the above recommendations? Of the like GOP response?

DaVita Healthcare To Pay $22 Million To Settle Medicaid Fraud Allegations

Last week, the Attorney General for the State of Florida announced a settlement agreement between DaVita Healthcare Partners, Inc., several states, and the Federal Government. The settlement resolves allegations:

"... that DaVita paid illegal kickbacks to induce the referral of patients to its dialysis clinics, causing false claims to be submitted to the Medicaid program."

The settlement resulted after a whistleblower lawsuit which alleged that:

"... between March 1, 2005 and Feb. 1, 2014 DaVita identified physicians that had significant patient populations suffering renal disease and offered them lucrative opportunities to partner with DaVita by acquiring and/or selling an interest in dialysis clinics to which their patients would be referred for dialysis treatment. DaVita further ensured referrals of these patients to the clinics through a series of secondary agreements with the physicians, including entering into agreements in which the physician agreed not to compete with the DaVita clinic and non-disparagement agreements that would have prevented the physicians from referring their patients to other dialysis providers."

This is not the first settlement involving DaVita. In October 2014:

"... DaVita agreed to pay the United States $350 million in a federal settlement to resolve claims that it violated the False Claims Act by paying kickbacks to induce the referral of patients to its dialysis centers. DaVita agreed to a Civil Forfeiture in the amount of $39 million. Additionally, DaVita entered into a Corporate Integrity Agreement with the Office of Counsel to the Inspector General of the Department of Health and Human Services, which requires it to unwind some of its business arrangements and restructure others, and includes the appointment of an Independent Monitor to prospectively review DaVita’s arrangements with nephrologists and other health care providers for compliance with the Anti-Kickback Statute.

DaVita Healthcare Partners, headquartered in Denver (Colorado), will pay $22 million total in the settlement. The State of Florida will receive $5.6 million. According to its website, total company annual revenue was $11,764 million. Other states participating in the settlement include California, Colorado, Kentucky, and Ohio.

Net Neutrality: Leahy And Matsui Reintroduce Legislation To Help Consumers. Netflix Explains The Problem

Last week, Senator Patrick Leahy (D-Vermont) and Representative Doris Matsui (D-California) reintroduced the Online Competition and Consumer Choice Act of 2015 (Adobe PDF) to prevent the Federal Communications Commission (FCC) from developing Internet rules to allow Internet Service providers (ISPs) to charge companies with extra fees for faster content delivery, and prohibit ISPs from giving preferential treatment to their own content or content by affiliates.

Almost four million American wrote to the FCC last year to keep the Internet fair and open. Leahy and Matsui first introduced the bill in June, 2014. The bill faces opposition by House and Senate Republican members. Reportedly, the FCC commissioners will vote on net neutrality during their February 26, 2015 session.

Also last week, Netflix released a statement on its blog about net neutrality. Some consumers are confused about net neutrality. Netflix explained in its blog:

"First, what’s a fast lane on the Internet?  Simply put, a fast lane is where one person’s data traveling on an Internet Service Providers (ISPs) last-mile network gets priority delivery over another’s. A helpful way to think about fast lanes is by visualizing cars on a multi-lane highway where one of the lanes can only be used if you pay a toll. The toll lane only becomes attractive because the other lanes are too slow. Only the person controlling the network -- the ISP -- can slow down traffic to make someone else’s go faster."

Fast lanes create a couple problems:

"Allowing fast lanes gives ISPs a perverse incentive to boost revenues by allowing their networks to congest. It also gives them outsize power to pick winners and losers on the Internet. Those who can’t pay for fast lanes will suffer, entrenching incumbents while undermining the innovative power of the Internet... It is at these points -- where our traffic enters an ISPs network -- where Netflix and others have been forced to pay Comcast, Verizon, AT&T and Time Warner access fees to reach our mutual customers. Without those payments, ISPs allowed these connection points to congest, resulting in a poor video streaming experience for Netflix users on those networks. While Netflix was able to meet the demand for payments, we continue to believe this practice stands in contrast to an open Internet and all its promise."

So, when ISPs charge extra fees and pick what Internet sites consumers can visit, then consumers have lost big. Consumers lose the freedom to go where they choose on the Internet, and will likely pay more as content providers pass along those costs to their customers. The extra fees are great for ISPs' profitability; bad for consumers and everyone else. Netflix also explained:

"Right now, there are no paid fast lanes on the Internet. That’s a good thing. A large part of the debate about net neutrality is focused on ensuring it stays that way. If ISPs are allowed to sell fast lanes, competition for various Internet sites and services will become less about the value of what’s offered and more about who can pay the most to deliver it faster. It would be the very opposite environment than the one the Internet created."

In a free and open Internet, consumers have the freedom to decide where to surf on the Internet. Without a free and open Internet, ISPs decide and consumers likely pay more.

Just Energy Agrees To Pay $4 Million To Settle Deceptive Marketing Allegations

Just Energy logo The Attorney General's Office for the Commonwealth of Massachusetts announced earlier this week that it had reached a settlement with Just energy, an electricity supplier, to resolve several deceptive marketing allegations. The lawsuit, filed in Suffolk Superior Court, alleged that:

"... Just Energy, through a third-party telemarketing vendor and door-to-door agents, engaged in deceptive marketing and sales that misled consumers into signing contracts based on attractive introductory pricing, only to later increase their electricity supply costs."

This blog first reported about Just Energy in 2010. After that blog post, consumers in the United States and Canada summited comments, followed by sales and sales management representatives of the electricity supplier. I did not see any mention of the settlement agreement in the Just Energy website. Based in Mississauga, Ontario (Canada0, the company lists a local office for Massachusetts residents in Buffalo, New York. Affiliated companies include Amigo Energy, Commerce Energy, Hudson Energy, and Tara Energy.

The Attorney General's announcement also stated:

"... ust Energy sales representatives allegedly failed to disclose complete and accurate pricing information to its customers by promising savings or representing that they could help consumers keep their electricity bills low. Instead, consumers were charged rates that were higher than the rates for the electricity supply provided by NSTAR and National Grid. Just Energy also allegedly induced elderly and non-native English speaking consumers by continuing to offer electricity supply services even after it became clear that they did not understand the terms of the proposed contract."

"Slamming" is when a consumer's service is switched without their consent. The allegations included slamming:

Consumers were allegedly switched from their distribution company to Just Energy without their authorization... The AG’s Office alleges that Just Energy made false representations concerning its electricity products, including that its products would provide “green” or “renewable” energy at prices comparable to basic service, and that its products were offered as part of a state-run program..."

Terms of the settlement agreement require Just Energy to pay $3.8 million into an independent trust to provide restitution to affected residents, and to pay $200,000 to the Commonwealth. To avoid slamming and deceptive marketing, the Attorney general's Office advises consumers to do these four things:

  1. Check your utility bills: to make sure that your service has not be switched to a different provider
  2. Protect your sensitive information: do not show your utility bills to door-to-door sales people. Only show your utility bills after you have decided to do business with a provider.
  3. Be cautious: your current service provider does not send door-to-door sales people.
  4. Know your rights: do not let door-to-door sales people into your home unless you know them personally. Contact local police if the sales agent refuses to leave or you believe you are threatened.

I congratulate the Attorney General's Office for protecting consumers and enforcing the laws.

Survey: What Americans Know About The Internet

Pew Research announced the results of a survey of Internet users about their knowledge of technologies related to the Internet. The survey was conducted September 18 - 25, 2014, and it included a nationally-representative sample of 1,066 Internet users in the United States. Some key findings:

"Substantial majorities of internet users are able to correctly answer questions about some common technology platforms and everyday internet usage terms. Around three-quarters know that a megabyte is bigger than a kilobyte, roughly seven in ten are able to identify pictures corresponding to terms like “captcha” and “advanced search,” and 66% know that a “wiki” is a tool that allows people to modify online content in collaboration with others."

Somewhat troubling is the following finding:

"Americans also have challenges accurately describing certain concepts relating to internet policy. Six in ten internet users (61%) are able to correctly identify the phrase “Net Neutrality” as referring to equal treatment of digital content by internet service providers. On the other hand, fewer than half (44%) are aware that when a company posts a privacy statement, it does not necessarily mean that they are actually keeping the information they collect on users confidential."

23 percent of participants correctly identified the following statement as false:

"Internet and WWW are the same"

College graduates scored higher on the quiz than others. While younger Internet users knew more about social networking terms and technologies like "captcha," there are areas where both young and older Internet users didn't perform well:

"... Internet users of all ages are equally likely to believe—incorrectly—that the internet and the World Wide Web are the same thing. There are also no major age differences when it comes to the meaning of phrases like “Net Neutrality” or “privacy policy,” and older and younger internet users correctly identify pictures of Bill Gates and Sheryl Sandberg at comparable rates."

Study: Web Pages At News Sites Load More Slowly Than At Other Sites

Adweek reported the results of a study about website performance:

"Research by Web performance monitoring company Catchpoint Systems suggests that news sites may be in trouble because publishers are putting too many assets on their Web pages, forcing the content and the advertisements to load too slowly... search engines loaded the quickest. Travel-related pages and Internet retailers loaded at about the same speeds, with retailers loading slightly faster. But overall, news sites tended to load the slowest..."

Wesite pages at the Financial Times took about 29.5 seconds to load. Website pages at Bloomberg averaged about 27 seconds, while pages at CNN averaged 18.8 seconds and The Wall Street Journal averaged 18.6 seconds.

Have you noticed slow load times at websites? If so, please share which sites. I've found pages often load slowly at The Huffington Post. I doubt that most users would wait half a minute for a web page to load. I wouldn't. Would you? Do you wait or go elsewhere?