Several staff members working for the Washington Utilities and Transportation Commission (WUTC), the regulatory agency reviewing the proposed Frontier purchase of Verizon territories in Washington state, have reversed their opposition to the Frontier-Verizon deal because of concessions they believe will better serve consumers impacted by the deal.  But the provisions don’t come close to protecting consumer rights and do not sufficiently protect local telephone and broadband service.

The WUTC must be told that broadband expansion from a service provider that insists on a 5 gigabyte usage limit in its Acceptable Use Policy makes such expansion barely worth the effort.  The WUTC must insist on a permanent exemption from any usage limits for Washington state consumers, especially because many may find Frontier DSL to be their only broadband option for years to come.  To allow a company with such a paltry limit to be the monopoly provider of broadband puts Washington residents and small businesses at a serious economic disadvantage in the digital economy.

Would you choose to reside or locate your business in a community with one broadband provider offering a limit so low, your broadband usage will be limited to web page browsing and e-mail?

High Speed Internet Access Service

Customers may not resell High Speed Internet Access Service (“Service”) without a legal and written agency agreement with Frontier. Customers may not retransmit the Service or make the Service available to anyone outside the premises (i.e., wi-fi or other methods of networking). Customers may not use the Service to host any type of commercial server. Customers must comply with all Frontier network, bandwidth, data storage and usage limitations. Frontier may suspend, terminate or apply additional charges to the Service if such usage exceeds a reasonable amount of usage. A reasonable amount of usage is defined as 5GB combined upload and download consumption during the course of a 30-day billing period. The Company has made no decision about potential charges for monthly usage in excess of 5GB.

Frontier will be a part of the lives of almost 500,000 state residents, including those in Wenatchee and other parts of North Central Washington.  That covers a lot of rural residents with no hope of cable competition or other broadband options.  Verizon is the second-largest local telephone service provider in Washington, serving cities such as Redmond, Kirkland, Everett, Bothell, Woodinville, Kennewick, Pullman, Chelan, Richland, Naches, Westport, Lynden, Anacortes, Mount Vernon, Newport, Oakesdale, Republic and Camas-Washougal.  Currently, Verizon has approximately 1,300 employees in Washington, who would be transferred to Frontier once the deal is complete.

Frontier’s concessions don’t come close to assuring residents they can get the kind of broadband service they need in the 21st century, especially from a company that could easily find itself swamped in debt.  Let’s look at what Frontier has offered:

• Invest $40 million to expand high-speed Internet access in Washington.
• Submit quarterly financial reports to identify merger savings.
• Branding and transition costs to be paid by stockholders, not ratepayers.
• Increase financial incentives to prevent a decline in service quality.
• Adopt Verizon’s existing rates and contracts for at least three years.

Frontier would also be required to pay residential customers $35 for missed service repairs or installation appointments. That’s $10 more than Verizon now pays. Current Verizon customers would also have 90 days after the transition to choose another provider without incurring a $5 switching fee. Low-income customers who qualify through the Washington Telephone Assistance Program will also receive a one-time $75 credit if the company fails to offer appropriate discounts or deposit waivers.

Our take:

• Investing $40 million in low speed DSL service with a 5GB usage allowance saddles residents with yesterday’s technology with a usage allowance that rations the Internet.
• Customers don’t care about merger cost reductions because they’ll never enjoy those savings, but they’ll feel their impact if they include layoffs and reduction in investment.
• Consumers will be more concerned about what happens to their phone and broadband service when the “transition” results in service and billing problems.  Will stockholders pay inconvenienced customers?
• Vague promises of increased financial incentives for a company to do… its job, without declines in service quality, exposes just how unnecessary this deal is.  Why not offer incentives for Verizon to stay?
• Freezing rates for three years doesn’t prevent massive increases to make up the difference in year four and beyond.

The WUTC staff had it right the first time when it opposed the deal.  A healthy, financially secure Verizon is still a better deal than a smaller independent company saddled with debt.  Frontier seals the fate of Washington state residents from the benefits of fiber optics wired to the home, delivering high speed broadband for the future because Frontier doesn’t do fiber to the home on its own.  With a tiny usage allowance, just waiting for the company to decide to enforce it means you won’t be using your broadband account too much anyway.

The WUTC is accepting comments and you need to start calling and writing.  Make sure to tell the Commission it must secure a permanent exemption for Washington from any Internet Overcharging schemes like consumption/usage-based Internet billing and any usage limits Frontier defines in its Acceptable Use Policy.  Better yet, tell them Frontier’s concessions don’t come close to making you feel good about Verizon turning over your phone service to a company that is traveling the same road three other companies took all the way to bankruptcy.

Customers who would like to comment on the provisions can call toll-free: (888) 333-9882 or send e-mail to [email protected]. The deadline for comments is January 10th.

Cablevision serves communities surrounding the metropolitan New York region

Despite the tight economy for most Americans, executives at some of the nation’s largest cable players will enjoy millions from their contract extensions, bonuses, and eye-popping stock options that could net upwards of $10 million more for a select few.  And you thought your rate increase was due to “increased programming costs.”

Cablevision is where the real Money Party has just gotten started.  The top three executives alone could receive a combined $50,000,000 next year… that is fifty million dollars, just for running a regional cable company with just north of three million subscribers.

Here is the breakdown:

Dolan

Cablevision CEO James Dolan: Cablevision has always been under the control of the Dolan family, who own a controlling interest in the stock.  James Dolan gets a five-year extension in his contract, with a base salary of $1.5 million per year plus a bonus of up to four times that amount.  In 2010, Dolan is also entitled to an additional bonus package in cash and equity worth around $7 million.  He is also on track to get that same bonus each of the next five years, but only if the company does well.  Dolan is also CEO of Madison Square Garden/MSG/Radio City Music Hall.  For managing those assets, he’ll receive an extra $500,000 in salary, a bonus up to four times that amount, and an extra cash and equity bonus expected to be about $1.75 million per year.

Dolan founded Cablevision in 1973.

Ratner

Cablevision Vice Chairman Hank Ratner: Ratner gets a base salary of $500,000 a year, an annual bonus up to four times that salary, $1.2 million annually for his role with MSG, and extra cash and equity around $1.4 million annually.  And just because he’s a great guy — a one-time stock award worth $1.75 million due on March 31, 2010.  But wait, there’s more.  He also deserves extra cash and equity as MSG’s chief, targeted at $5.4 million in 2010 and each year thereafter.

Ratner joined Cablevision in 1987.  Ratner helps to set corporate direction and strategy, and is the primary executive overseeing major business partnerships and transactions.  Prior to being appointed Cablevision vice chairman, he served as vice chairman of Rainbow Media Holdings, the company’s programming subsidiary.

Rutledge

Tom Rutledge, Cablevision’s chief operating officer: He’ll get $1.63 million annually in salary, plus an annual bonus up to four times that amount.  He’s a special guy, so he also gets a “special payment” of $7.75 million within ten days of putting his ‘John Hancock’ on the new contract.  Call it a signing bonus.  But he also gets extra cash and equity compensation aiming at $6.8 million in 2010.

Cablevision isn’t alone is spreading around the walking around money.

Liberty Media, one of those programmers that keeps upping the rates charged to cable and satellite providers, who in turn pass those increases on to you, have a reason for doing so.  Their salary costs keep going up for the special few on the top floor.

Maffei

Greg Maffei, prexy-CEO of the company, just got his own five year contract renewal taking effect January 1st.  He’ll earn a base salary of $1.5 million per year, with a guaranteed 5 percent raise every year and an annual bonus amounting around $3 million.  But he’ll also get more than 10 million options of Liberty’s three stocks, most in the high-tech Liberty Interactive, which is developing online applications and services.

What do you get?  A rate increase and programming you don’t want but have to pay for, and now you know why.

FCC Commissioner Mignon Clyburn

At least one FCC commissioner remains unconvinced that Verizon Wireless’ recent decision to double the fee consumers pay for service cancellation is justified.  Virtually every carrier offering discounts on handsets and other equipment tie those savings to a two year service contract, with a stinging early termination fee (ETF) if one decides to leave before the contract is up.

Commissioner Mignon Clyburn released a public statement Wednesday questioning Verizon’s logic in their explanation that doubling the cancel fee from $175 to $350 helped defray costs ranging from network expansion and marketing to paying to keep the lights on in Verizon Wireless retail stores.  Clyburn called Verizon’s answers unsatisfying at best, alarming at worst.

“I am concerned about what appears to be a shifting and tenuous rationale for ETFs. No longer is the claim that ETFs are tied solely to the true cost of the wireless device; rather, they are now also used to foot the bill for ‘advertising costs, commissions for sales personnel, and store costs.’ Consumers already pay high monthly fees for voice and data designed to cover the costs of doing business. So when they are assessed excessive penalties, especially when they are near the end of their contract term, it is hard for me to believe that the public interest is being well served,” Clyburn wrote in a public statement.

Verizon also continues to get heat over mysterious fees appearing on some Verizon Wireless customer bills.  As Stop the Cap! reported back in September, consumers with basic service plans occasionally find $1.99 “data charges” on their monthly bills, and several have obtained refunds from the carrier after pointing out they do not use data features on their phones.

The mystery was suggested solved when a purported, unnamed Verizon Wireless employee engaged in some whistleblowing at The New York Times:

“The phone is designed in such a way that you can almost never avoid getting $1.99 charge on the bill. Around the OK button on a typical flip phone are the up, down, left, right arrows. If you open the flip and accidentally press the up arrow key, you see that the phone starts to connect to the web. So you hit END right away. Well, too late. You will be charged $1.99 for that 0.02 kilobytes of data. NOT COOL. I’ve had phones for years, and I sometimes do that mistake to this day, as I’m sure you have. Legal, yes; ethical, NO.

“Every month, the 87 million customers will accidentally hit that key a few times a month! That’s over $300 million per month in data revenue off a simple mistake!

“Our marketing, billing, and technical departments are all aware of this. But they have failed to do anything about it—and why? Because if you get 87 million customers to pay $1.99, why stop this revenue? Customer Service might credit you if you call and complain, but this practice is just not right.

“Now, you can ask to have this feature blocked. But even then, if you one of those buttons by accident, your phone transmits data; you get a message that you cannot use the service because it’s blocked–BUT you just used 0.06 kilobytes of data to get that message, so you are now charged $1.99 again!

“They have started training us reps that too many data blocks are being put on accounts now; they’re actually making us take classes called Alternatives to Data Blocks. They do not want all the blocks, because 40% of Verizon’s revenue now comes from data use. I just know there are millions of people out there that don’t even notice this $1.99 on the bill.”

Verizon's new termination fee appears random and capricious, some company critics charge.

Verizon Wireless denies it charges consumers for accidental web usage that lands on their mobile phone home page, which they claim is exempt from charges.  But Clyburn isn’t buying that explanation either.

“I am also alarmed by the fact that many consumers have been charged phantom fees for inadvertently pressing a key on their phones thereby launching Verizon Wireless’s mobile Internet service. The company asserted in its response to the Bureau that it ‘does not charge users when the browser is launched,’ but recent press reports and consumer complaints strongly suggest otherwise,” Clyburn writes.

“These issues cannot be ignored. Wireless communications are an essential part of our lives, linking us to our places of business, our communities, and our loved ones. The bottom line is that wireless companies can truly earn their desired long-term commitments from consumers by focusing primarily on developing innovative products, maintaining affordable prices, and providing excellent customer service. I look forward to exploring this issue in greater depth with my colleagues in the New Year,” she adds.

Verizon Wireless is also the only carrier that has not responded to a campaign by a Times columnist to let customers get rid of the airtime-wasting 15 seconds of voicemail instructions people wait through when trying to leave messages, something the wireless industry admits is there precisely to use up airtime and maximize revenue.

Clyburn joined the Commission this year, appointed by incoming President Barack Obama.  Her father James is the third-ranking Democrat in the House behind House Speaker Nancy Pelosi and Majority Leader Steny Hoyer.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WIVB Buffalo Best and Worst Cell Providers 12-7-09.flv[/flv]

WIVB-TV Buffalo reviewed Consumer Reports’ findings regarding the nation’s best and worst cell phone providers.  Despite Verizon’s controversial fees, it remains top-rated by the magazine’s readers. (12/7/09 – 2 minutes)

Person County, North Carolina

For north-central North Carolina, it’s often not a matter of how many choices you have for broadband service — it’s whether you can obtain any service at all.

Person County, located just south of the Virginia border, is a good example.  The county’s 36,000 residents technically reside in North Carolina’s Research Triangle, a high-tech growth area.  You wouldn’t know it from the broadband options available in many parts of the county, however.

The dominant phone company, CenturyLink (formerly EMBARQ), offers DSL service in the larger communities in Person County, but wide areas remain without any service at all.

Randy King

A Roxboro-based computer store and Internet Service Provider decided that with CenturyLink unwilling to expand into low population density areas to supply service, they would, with the help of broadband stimulus funding available from the Obama Administration.

Randy King, president of Electronic Solutions, Inc. (ESI), planned to expand broadband into 26 previously unserved Person County areas, and filed a stimulus application requesting $3 million in funding to begin construction.

King believes wireless broadband is the most cost-effective way to reach parts of the 400 square mile county that are simply too rural to upgrade wired service.  Today, that’s nearly 40 percent of the county that still does not have access to broadband service. The Person County High Speed Internet Committee and the County Commissioners endorsed ESI’s proposal.

But CenturyLink would have none of it, despite the fact it was not willing to provide service to those unserved areas either.  The phone company filed an objection with the agency administering the stimulus program claiming ESI would be overbuilding a competing broadband provider in its service area:

CenturyLink can certify that its affiliates currently offer broadband service in some or all of the applicant’s proposed service areas. We attach a representative sample of areas where the application overlaps our existing broadband deployment. This data is not exhaustive; the application may include other areas also currently served with broadband by CenturyLink or other providers. We will provide additional information on request if that will further assist the agency’s review.

CenturyLink also provides data showing broadband availability in local telephone exchanges within the proposed service areas. This includes areas served by CenturyLink and/or other broadband providers. This data further shows the applicant would duplicate and overlap existing broadband services in the proposed service areas.

Connected North Carolina's map shows large areas in grey that suggest broadband service is already available. (click to enlarge)

Because the government will judge the merit of applications based, in part, on reaching the unserved, map data purporting to illustrate who does and who does not have access to broadband service is critically important to applicants.  Some providers have used map data produced by a politically well-connected group filled with telecom industry executives that has spent millions of taxpayer dollars and produced maps that are less than illustrative of the true nature of broadband service.  When a map from Connected Nation’s North Carolina chapter can show citizens have access to broadband, even when they do not, what’s a regulator to do but consider that stimulus grant application unnecessary.

Randy King, President of ESI, has responded to the CenturyLink opposition:

“We are extremely disappointed that CenturyLink has opposed the Person County project. The project would provide high speed Internet (broadband) in areas that currently do not have service in our county. CenturyLink as recently as April 2009 met with county officials and members of the public and stated that they did not intend to expand DSL in low density areas which do not make economical sense.  We are now aware that CenturyLink is not only not going to serve these areas but is attempting to block anyone else from serving these areas.”

ESI claims its wireless system could deliver more capacity to Person County’s rural unserved than CenturyLink provides its more urban counterparts.

“It should be noted that the wireless system will have at minimum 50-100Mbps capability at each tower site which far exceeds current DSL speed of 1-10Mbps. This allows customers to have sufficient bandwidth to have services such as VOIP, IPTV and streaming capabilities whereas DSL is not capable,” King writes.

King is also concerned that CenturyLink won’t provide true detailed maps of exactly what service it provides in what areas.

Person County and area residents have been requesting street level coverage maps from CenturyLink and Charter (the city’s cable company) for years without success. King wants the ability to review these maps, preferably in color with speed capabilities identified down to the 911 address location.  That way, he says, he can work on building capacity to areas not getting service at all.

Providers have traditionally been loathe to disclose this information to the public, and even government regulators, claiming it represents proprietary, competitive information.  That leaves everyone but providers guessing about what broadband service really looks like across America.

The more credible e-NC mapping project shows large swaths of southern Person County without any broadband options at all. (click to enlarge)

Kevin McCarter, CenturyLink’s general manager for central North Carolina seems primarily concerned with potential government funding of his competition.  McCarter told The Courier-Times CenturyLink “interpreted that” the towers King proposed to place in order to provide wireless service “would cover 95 percent” of the entire county. King explained that his intent was not to cover the whole county with wireless access, but to place towers so that those living in areas of the county not currently served by DSL lines would have the option of wireless broadband. He said he never intended his service to replace the DSL lines CenturyLink has in place.

That ESI doesn’t seem intent on competing directly with CenturyLink may have resulted in a breakthrough this month.  The two companies met December 15th to discuss their respective broadband plans for Person County, and may have come to an agreement that could divide up the unserved and get them broadband service from one company or the other, but likely not both.

Jamie Averett Mitchell, spokesperson for CenturyLink, issued the following statement Monday:  “On Tuesday, Dec, 15, representatives from CenturyLink met with Randy King, president of Electronic Solutions, Inc., to review broadband coverage for Person County. Maps detailing both existing and planned coverage areas were presented and reviewed by both parties. Areas that were not covered on either company’s maps were discussed and both companies are aware of those sites. CenturyLink and ESI are working together to determine the most efficient way to provide 100 percent of the population in Person County with the best broadband coverage possible.”

So it seems that broadband applications that do not challenge incumbent providers are acceptable, but those that could expand the quality of service to those living with rural, slow speed DSL service are not.

Comcast has agreed to settle a $16 million dollar class action lawsuit filed on behalf of broadband customers who experienced slowed speeds while using peer to peer applications.  The original lawsuit, Hart v. Comcast, accused the company of advertising broadband speeds that were unavailable to customers when using certain applications the company allegedly impaired from April 1, 2006 to December 31, 2008.  As part of the proposed settlement, Comcast denies any wrongdoing but has agreed to modify its “network management” policies and feels further litigation over the matter would not be in the company’s best interests.

Customers are eligible for a settlement up to $16:

If you live in the United States or its Territories, have a current or former Comcast High-Speed Internet account, and either used or attempted to use Comcast service to use:

• The Ares, BitTorrent, eDonkey, FastTrack or Gnutella P2P protocols at any time from April 1, 2006 to December 31, 2008; and/or
• Lotus Notes to send e-mail any time from March 26, 2007 to October 3, 2007.

Starting January 5, 2010 affected customers can file a claim online or by mail for their share of the settlement.  Additional information is available on the settlement website P2PCongestionSettlement.com.

BitTorrent's peer to peer protocol was impacted by Comcast's speed throttle

The Comcast throttling incident helped make the case for Net Neutrality proponents that broadband providers would, in certain instances, be willing to impede traffic it deemed undesirable or burdensome.  Peer to peer traffic has been blamed by several providers for creating congestion problems on their broadband networks, particularly those that share a limited amount of bandwidth among hundreds of customers.  Unlike typical file transfers, which originate in one location and deliver content to consumers, peer-to-peer relies on groups of people sharing individual pieces of files with one another until everyone obtains the complete file.  Because many peer to peer networks consider it good etiquette to share as much as one receives, upstream bandwidth is consumed at a much higher than average rate.

For consumers who leave file sharing applications running 24/7, the amount of traffic can build to considerable levels.  Many providers consider such traffic a nuisance that clogs their networks, and some have sought to artificially reduce the speed of such traffic.