SUBSIDIZING GIANTS

Charlie Baker’s $4.1 million gift to the cable industry

On July 12, the Internet-Wide Day of Action to Save Net Neutrality, millions of Americans sent comments to the Federal Communications Commission urging that body to keep the internet open and fair. Massachusetts Gov. Charlie Baker’s administration chose a different approach. It gave a gift of $4.1 million to a telecommunications industry giant.

Critics of the cable TV and internet industry have long maintained that the marketplace has failed America. Most households are served by a single provider, one offering second-class service at premium prices. Rural America has it worse. In many rural towns, including those in western Massachusetts, there is no high-speed internet or cable TV provider all. Low-speed internet service, Verizon’s DSL, has only had limited availability and is disappearing almost as quickly as Verizon can rip that copper wiring from the ground. These towns remain locked in the 20th century while eastern Massachusetts is, for better or for worse, inventing the 21st century. The Baker administration should be applauded for recognizing this market failure and for engaging the hand of government in the service of social justice and equity. Rural Massachusetts deserves the same access to the internet as anyone else. But to subsidize the corporations whose investment choices led to this injustice rewards bad behavior.

The Baker administration calls this $4.1 million gift a grant, evoking the notion of an organization in need of government support. But the recipient was Charter Communications, which, just to confuse matters, sells its services as “Spectrum.” Charter, with 50 million subscribers, describes itself as the nation’s fastest-growing TV, internet and Voice provider. Recently merged with Time Warner Cable, it reports that, in the first quarter of 2017, it had $10.1 billion in revenue, $155 million in profit, and spent an additional $826 million to buy back its own stock. In return for that $4.1 million grant, Charter agrees to acquire 3,600 new customers in the towns of Egremont, Hancock, Peru, Princeton, and Tyringham.

It wasn’t really that long ago that the internet was a fragile government-funded innovation and over-regulation was a concern. But without society having a chance to think, it’s become a necessary lifeline, one controlled by a handful of monopolistic corporations whose business practices seem beyond regulation. In giving Charter $4.1 million dollars, we now have governments paying those corporations tribute for the privilege of allowing citizens to buy their internet services.

Government largess to corporations, particularly from the Baker administration, is nothing new. What makes this particularly jaw-dropping is that almost everyone hates their internet service provider. Customers understand intuitively how terrible these corporations are and how their focus on Wall Street-satisfying profitability has made service a bad joke. Yet the Baker administration has lined up five state legislators, four of them Democrats, to laud this giveaway. It is a profound statement on this political moment that, in supposedly progressive Massachusetts, Democrats will pay no political price for directing tax dollars at a highly profitable, universally despised corporation.

Elsewhere on Beacon Hill, the legislature’s Joint Committee on Economic Development and Emerging Technologies is considering S.2062, a bill that would require internet service providers to gain your permission before selling your personal data in order to increase their profits. Passage of this bill remains uncertain as telecommunications companies assert that over-regulation will harm competition and innovation.

Saul Tannenbaum is a member of, but not speaking for, the Cambridge Broadband Task Force.