In what some believe may be the beginning of the end of the U.S. Postal Service, the plan to eliminate Saturday mail delivery this week was formally introduced to the Postal Regulatory Commission, an important step on the journey to sever home delivery to homes and businesses over the weekend.

In what the Commission called one of the most significant changes the Postal Service has ever presented to them for review, the proposal to sack Saturday mail seeks to take a bite out of a deficit the post office claims will reach $238 billion in ten years.

As more Americans move to broadband for online banking and bill paying, e-mail, and online commerce, mail volume continues to decline.  The recession isn’t helping either, as increasing postal rates challenge the torrent of profitable junk mail that reaches every American home.

But one decidedly-digital company is cringing at the thought of losing Saturday mail delivery — Netflix, the DVD-rent-by-mail firm whose sea of red envelopes moving to and from post offices around the country is a bright spot for a postal service under financial siege.  This single company expects to spend $600 million in postage this year alone.

The prospect of Netflix customers facing several days in a row with nothing new to watch horrifies those who’ve become accustomed to Saturday DVD delivery.

Netflix has tried to move towards video streaming movies and television shows over broadband connections.  Last week Netflix began offering Nintendo Wii owners the opportunity to stream the company’s on-demand library directly through the video game console, joining the PS3.

But Slate reports on-demand streaming at the prices studios are demanding means it will be a very long time before Netflix’s 100,000 title library is available for instant viewing:

While instantly streamed movies obviously eliminate postage costs, they are not a cost-free proposition for Netflix. Analysts suggest that the streaming technology itself is very cheap—it costs roughly five cents to stream 90 minutes of content—but the licensing fees can be exorbitant. Netflix won’t release the data on how much it pays for online licensing, but can apparently be quite expensive. Dan Rayburn, an analyst with Streaming Media, has said that he’s seen some streaming movies that cost as much as $4 per play.

The other potential skunk at the garden party is your Internet Service Provider, should they implement Internet Overcharging schemes like usage caps or usage-based billing.  That five cent price tag for 90 minutes of content Netflix pays would be considerably higher from ISPs seeking to charge thousands of percent markup for bandwidth.

America’s social commentators are concerned five day delivery is the beginning of the end for an institution that reaches every American.

CNN contributor Bob Greene notes no business has ever gotten ahead in the long term by reducing service to customers even as they continue to increase prices:

If mail delivery goes from six days to five, more and more Americans may decide they just don’t need it. People have available to them, as none of us needs to be reminded, computers with e-mail capability. You can correspond with friends and family and business associates; you can pay bills; you can send greetings.

Using the U.S. mail already means accepting that letters will be held up for a day between Fridays and Mondays. Elimination of Saturday mail would extend the bottleneck. And this is a country that increasingly demands speed; you’d think that someone, if only in an effort not to fall further behind, would be suggesting a seventh day of delivery be added.

Last year, the volume of U.S. mail fell by 26 billion pieces — from 203 billion to 177 billion.

The Postal Service, in gambling that doing away with a day of delivery will help heal its financial wounds, may be risking a lot.

There’s not much of a track record in American business for cutting back on services and then seeing the long-term bottom line grow. Companies that boldly announce they are going to cut their way to prosperity often cut their way to death.

If delivery is reduced to five days, and the number of letters mailed each year plunges further, the Postal Service could find itself in the position of having to eliminate even more services. Five days could conceivably go to four, or three; and if that didn’t stop the plummet in available funds, what would be the next step?

The letter carriers’ union isn’t happy about it either.  They’re convinced the post office’s plan will never survive Congressional oversight, and that in the end Saturday delivery will survive.

“We don’t see this thing — despite the hoopla that the postal service management has come up with — being approved by Congress,” said Drew Von Bergen, chief spokesman for the union that represents about 200,000 mail carriers, and 100,000 retirees.

Von Bergen told a reporter for KCRG-TV the mail carriers union sees the proposal as an overreaction to the dramatic decline in mail volumes that has resulted from a deep recession. If the postal service cuts Saturday delivery now, it will accelerate the demise of the postal service as other delivery services take up the slack, and Americans become disaffected with mail delays.

“It’s not just delivery,” Von Bergen said. “It’s delivery and collection. You’re talking about a two-day stoppage of mail movement in this country: Prescriptions, DVDs, packages people ordered by mail.”

On holiday weekends, the mail would stop for three days, Von Bergen added.

The unions are convinced the source of the nightmarish budget deficits comes from one thing: health care funding for retirees.  The recent health care reform legislation passed by President Obama does almost nothing to address the relentless immediate increases in health care costs which the Post Office must pre-fund in a type of escrow account.  If the government eliminated the pre-funding requirement, the U.S. Post Office would have finished 2009 with a cumulative surplus of $3.7 billion over its last three fiscal years according to American Postal Workers Union President William Burrus.

KESQ-TV in Palm Springs, California pondered the loss of Saturday mail delivery with area residents and mail carriers in this report that aired Monday evening.  (3 minutes)

One of the frustrations communities filing for federal grant money often face are the onerous terms and conditions that arrive with the application.  In many cases the rules are so complex, an entire industry of paid consultants to advise would-be grant applicants has grown up with the bureaucracy.  Miss one qualification and your potentially worthwhile application gets an automatic rejection.  Hiring an expensive consultant (often formerly employed in a government agency as an application processor) can often work miracles for a potentially dubious application.

Although some terms and conditions are included to prevent potential waste, fraud, and abuse or are intended to close potential loopholes, many others are influenced by elected officials trying to steer funding into projects they want to “pre-qualify.”  Often the intentions are obvious to would-be applicants, who discover only one company in their midst is capable of meeting all of the requirements of a grant program.  It never hurts to have a powerful member of Congress sign a cover letter of support for an application either, especially if that member of Congress helps oversee your agency’s annual budget.

And so we come to the broadband stimulus program, which has its own bureaucratic red tape and pre-conditi0ns to be met before funding becomes available.  Big phone and cable interests have already been rigging the system through broadband mapping projects that magically show broadband service in areas where none exists.  That’s critically important, because an application can be rejected out of hand if it seems to duplicate or overlap an existing broadband provider’s service area.  Incumbent players have wasted no time filing objections to thousands of broadband grant applications, often citing broadband maps which show a would-be applicant wants federal tax dollars to compete against them.

Mount Washington Resort - Bretton Woods, New Hampshire (left), Town Office - Minneiska, Minnesota (right)

Larger players sat out most of the first round of broadband stimulus applications, which often involved “last mile” projects which would deliver real results to those stuck on dial-up.  These projects actually provide service to individual homes and businesses where none existed before.  Many of the largest telecommunications companies are seeking a better deal for themselves from so-called “middle mile” project grants which allow them to improve their broadband infrastructure without actually hooking up a single new customer.

The collateral damage of this high stakes poker match is visible in rural communities in states like Minnesota, where some found their stimulus applications rejected because they couldn’t afford a requirement for 50 percent in matching funds.  That won’t be a problem for a New Hampshire community that did win $1 million in stimulus funding.  They are lucky enough to host the Mount Washington Resort at Bretton Woods, which will have broadband available in every room, in part thanks to taxpayers.  The resort, now undergoing a $50 million dollar luxury renovation, encouraged the local phone company to apply.  A single night booked for this weekend at the Omni Mount Washington Resort starts at $259 on the economy rate.  The “Winter Wonderland Inclusive Package” will set you back at least $569 a night.  At least now you can Twitter about it with all of your followers.

In contrast, Minneiska, Minnesota (population 116) doesn’t have a hotel, or broadband access, but you can drive down the road to the Winona Days Inn and get a room this weekend with a queen-sized bed for $65 a night.  Winona is big enough to get DSL service, so Days Inn throws in Internet access for free.  You can contemplate that over your free hot waffle breakfast.

CNN asks the question, are we wiring the wrong America for much-needed broadband service?  Before you answer, yes we noticed CNN used the sounds of a fax line to simulate the sounds of a dial-up connection, too.  (3 minutes)

Governor Jay Nixon has announced support for 12 different proposals from across Missouri that would expand broadband Internet access in rural and underserved parts of the state for health care, business, education and consumers.

As part of the MoBroadbandNow initiative, Missouri is coordinating efforts among private companies, local governments and rural electric cooperatives to extend broadband access to 95 percent of Missouri residents over the next five years.  Much of the funding to support rural broadband expansion would come through federal stimulus money from the Recovery Act, and those backing the Missouri effort hope a coordinated approach improves the state’s chances to secure funding.

“These proposals were closely reviewed, and we identified the ones we believe are most likely to receive federal funding and most closely aligned with the vision of MoBroadbandNow,” said Governor Nixon.

Five of the applications supported by the State of Missouri are for developing middle-mile infrastructure for broadband, which would help extend existing broadband service to additional homes previously deemed too rural; six are for developing last-mile projects which directly reach customers; and one is for developing public computing centers, which will provide broadband access in public locations, often targeting a specific vulnerable population such as low-income, minority, disabled or unemployed Missourians.

Gov. Nixon

The middle-mile proposals that received letters of support from the Governor included:

• BlueBird Media, of Columbia, which plans to build a middle-mile network in northern Missouri;
• Boycom Cablevision, of Poplar Bluff, which plans to build a middle-mile network along the U.S. Highway 60 corridor in southern Missouri and into the Bootheel;
• Sho-Me Technologies, of Marshfield, which plans to build a middle-mile network in central and south central Missouri;
• SpringNet, a division of City Utilities of Springfield, which would provide broadband to customers in the metropolitan Springfield area; and
• American Fiber Systems, of Rochester, N.Y., which plans to provide connections to several Metropolitan Community College facilities in Jackson County.

The last-mile proposals that received letters of support from the Governor included:

• Big River Telephone Company, of Cape Girardeau, which would provide broadband to households and businesses in southeast Missouri;
• Cass County, which would provide broadband to households and businesses in western Missouri;
• Co-Mo Electric Cooperative, of Tipton, which would provide broadband to households and businesses in west-central Missouri;
• Finally Broadband, of Seymour, which would provide broadband to households and businesses in south central Missouri;
• Socket, of Columbia, which would provide broadband to households in central Missouri; and
• United Electric Cooperative, of Savannah, which would provide broadband to households and businesses in northwest Missouri.

The public computing center proposal supported by the governor is being submitted by YourTel America, which would create eight public computing centers at retail centers, including five in the Kansas City area, two in the St. Louis area, and one in St. Joseph. These public computing centers also will focus on bringing broadband access to vulnerable populations of Missourians.

Currently, 77 percent of Missouri residents can obtain broadband from DSL service from AT&T and smaller independent phone companies, cable modem service from providers like Charter, Mediacom, and Cable One, and mobile broadband provided by several carriers.  Most the remaining residents have little/no access to broadband service except through satellite fraudband, which promises far more than it delivers.

We have two reports – the first from KYTV-TV in Springfield which comes from August 12, 2009 exploring the state of Missouri broadband and the launch of the MoBroadbandNow coordinated stimulus funding effort and the second from KOLR-TV in Springfield discussing Governor Nixon’s announcement yesterday.  (4 minutes)

This AT&T customer was billed $12.95 in cramming charges. (Click image for more information)

AT&T and Verizon are among the top recipients of ill-gotten gains from so-called “cramming” incidents — customers who find unauthorized charges on their phone bill placed there by third party companies that maintain a cozy billing relationship with the two phone companies.

Boston-area resident Mike Cunningham paid $567 in phone charges billed “conveniently” to his Verizon Wireless phone bill.  Only he didn’t authorize them.

Cunningham recently sat down and reviewed nearly two years’ worth of dozen-page phone bills scrutinizing them for unauthorized charges.  Speaking to the Boston Globe, Cunningham didn’t initially notice the “enhanced voice mail’’ charges of $14.95 and $13.22 buried on pages five and six.  That’s not surprising, since many Verizon Wireless customers are now billed online and most customers don’t wade through multi-page online billing statements.

After Cunningham added several years of these monthly charges up, totaling $567, that got his attention.

Cunningham was billed by ILD Teleservices Inc., which said Cunningham’s grandson — then 10 years old — ordered its services while on a website that offers free video games. Cunningham said his grandson, who doesn’t have a cellphone, did not intentionally order voice mail — and knew nothing about it.

ILD generates an enormous number of complaints about unauthorized charges placed on consumer phone bills.  The company describes itself as a leading payment processor of online transactions between merchants and consumers, processing more than 120 million billing transactions per year totaling $500 million of third party charges placed on telephone bills.  Although the company claims to put its potential clients through a rigorous screening process, the avalanche of customer complaints, including the fact a 10-year old was able to be victimized by one of ILD’s clients, suggests otherwise.

Even worse, companies like AT&T and Verizon profit handsomely from fees paid by payment processors like ILD to gain the lucrative ability to charge customers’ phone bills for services, ordered or otherwise.  With a profit incentive to protect, consumers are getting the short end of the stick when calling Verizon or AT&T to complain.  More often than not they pass the buck (while keeping the change for themselves) back to the third party billing agency to try and secure refunds.

Only a staggering amount of potential earnings from such billing practices would seem enough to make risking the customer’s relationship with their phone company worthwhile.  After customers spend hours dealing with unruly and hostile customer service representatives working for such billing agencies, there is little chance that customer will be endeared to the phone company that put them through the nightmare in the first place.

Susan from Ambler, Pennsylvania is an excellent example:

“ILD Teleservices placed a charge on my Verizon phone bill for a service that was not requested, authorized or that would even work (ringtones for a land line!) on Feb 22, 2010. When I called Verizon to question the bill, they informed me the charge was not a Verizon charge but from a third party company,” she told Consumer Affairs.

David in Galt, California was billed by ILD on his AT&T phone bill for ordering a service over his home computer, an amazing feat considering he doesn’t have one.

“I received a charge of 14.95 on my AT&T phone bill from ILD Teleservices. They claimed that someone in the household went online and ordered the service. We did not have the capability to do that with no computer at the house,” he writes.

More than 3,000 complaints have been logged against ILD by Consumer Affairs, with customers highly annoyed that their phone companies refuse to stand by them when illegitimate charges show up on their phone bills. John from Wisconsin got no help from AT&T when identify theft allowed someone to add unwanted services to his phone bill under his wife’s name.

It turns out someone signed him up for TotalContactSolutions, a Florida-based company that charges $14.95 a month to alert up to 10 people with text or voice messages “during catastrophic events such as terrorist attacks or natural disasters.”  Perhaps the service will come in handy to contact those 10 friends and family members when you discover the charges on your phone bill and pass out on the floor.

John reports his credit rating is being terrorized by a company that refuses to refund the unauthorized charges unless he can prove, with an e-mail from AT&T no less, that nobody could have signed up for the service from John’s home.  Unfortunately for John, AT&T’s surveillance of its customers doesn’t extend that far, and the company refused to forgive the charges, instead threatening him with collections.

Unfortunately, your tax dollars are hard at work paying for state utility commissions, the Federal Communications Commission, and consumer service agencies to assist consumers who are victimized twice by cramming charges — once by Verizon or AT&T for allowing them on their bills in the first place, and a second time trying to deal with a third party company to reverse them.

A Boston Globe review of more than 200 cramming-related complaints from consumers — filed with the Massachusetts Department of Telecommunications and Cable and the attorney general since 2007 — found that state workers reviewing complaints sometimes spent hours trying to resolve a single one.

The case of Soren Jensen, a retired engineer who lives in Duxbury, is typical. Jensen said he spotted four charges of $9.99 apiece for text messages on his wife and son’s cellphone bills starting in 2008. There was a common thread: Jensen’s wife and son said they had both taken IQ tests online, entering their cellphone numbers to receive the results. He suspected they mistakenly signed up for text messaging in the process.

After reviewing the fine print on his bill and doing some online sleuthing, he found Verizon Wireless had an agreement with Solow, a computer gaming website that contacts players using a text message service that charges $9.99 per message.

Jensen said he called Verizon Wireless to complain, and the company agreed to remove one of the $9.99 charges.

“I just don’t get why Verizon doesn’t want to protect us, as the customer,’’ Jensen said. “Verizon should not allow this kind of stuff. It raises a lot of questions.’’

The answers aren’t difficult to find when you follow the money.  Both AT&T and Verizon collect plenty from fees charged to cramming companies and billing agencies for the right to bill their services directly on your phone bill.  Neither company will disclose exactly how much they profit from such arrangements, but they are clear about who is responsible when mystery fees turn up on your phone bill:  you are.

Both companies told the Boston Globe they “encourage customers to scrutinize their bills to make sure they are not improperly charged for services.”

And they make that very easy by labeling mystery fees with such helpful billing descriptions as “enhanced calling service” or “enhanced voicemail.”  One of Stop the Cap!‘s readers was billed for services described as an “enhanced recovery fee” and another for “customer support and assistance.”

Verizon claims complaints about third-party charges are “infrequent” and says customers can contact the company and block all third-party charges from their bills, something we strongly recommend you consider doing before being victimized.

AT&T won’t go that far.  It told the Globe:

AT&T, which also allows third-party billing, advises customers to direct their complaints to the company assessing the fee. Names of third-party vendors are disclosed on AT&T bills, the company said. “AT&T’s third-party billing contracts require service providers to address cramming complaints appropriately, including issuing credits if customers have been crammed,’’ an AT&T spokeswoman said in an e-mail.

But AT&T is still in the business of scaring its customers.  TotalContactSolutions maintains a required AT&T customer disclaimer on their website, which includes several states where AT&T can disconnect your phone line over billing disputes:

You have the right to dispute the Employee Notification Services charges billed on your local telephone bill. You are not legally responsible for Employee Notification Services charges incurred by minors or vulnerable adults without your consent. Your local telephone service will not be disconnected because you fail to pay a charge by Employee Notification Services, except that nonpayment of certain regulated telecommunications charges may result in disconnection of service in AL, FL, GA, KY, LA, SC, and TN.

And we know what phone company lobbied their way into obtaining the right to cut your service off if you don’t pay, don’t we?

In the end, Cunningham got refunds for the unauthorized fees on his Verizon Wireless bill, after the companies discovered a minor child was involved.

ILD claims to have sent Cunningham $1,000 in coupons as part of a settlement, something Cunningham claims is a lie.  Cunningham is better off without them.  The $1,000 in coupons ILD offered is suspiciously similar to an offer from another ILD client that promises that amount in grocery coupons you can print on your computer… if you sign-up for enhanced voicemail service for $12.95 a month.

Was this the $1,000 in "free coupons" offered to Mike Cunningham? If so, it comes with some very expensive strings attached.

Cunningham is so disgusted with Verizon Wireless for putting him through this ordeal, he wanted to cancel his service and move on.  But Verizon knows how to hold customers captive.  Instead of sending him a refund check for $567, they applied it as a credit that can only be redeemed by remaining a Verizon Wireless customer until the credit is exhausted.

“It’s like salt in the wound,’’ he told the Globe. “I can’t leave. I’m a captive audience.’’

Stop the Cap! notes the Federal Communications Commission is overwhelmed with cramming complaints that number well into the thousands every year.  Since telephone companies refuse to stand up for their customers, it is imperative that the FCC order phone companies to stop allowing all third-party billing unless and until a customer “opts-in” to such billing, in writing.  No third party “opt-in” requests should be permitted, and customers should not have to chase their phone companies to opt-out of a service that has a built-in profit incentive for funny business, fraud, and costly scams that cost customers enormous time and money to resolve.

http://www.phillipdampier.com/video/CBS News Cramming Charges 2-23-08.flv

The CBS Evening News ran this item about cramming charges and the problems they cause customers more than two years ago, interviewing a representative from Verizon Wireless.  Very little has changed as the money, and complaints, keep pouring in.  (3 minutes)

Verizon Communications is indefinitely finished expanding FiOS — its fiber to the home triple-play package of broadband, phone, and TV — to new cities across its service area.  In short, if your community isn’t already engaged in franchise negotiations with the telecommunications company, there is no fiber from Verizon in your immediate future.

The company said after spending $23 billion upgrading its aging copper wire phone network, it needs to finish construction and improve its reach in existing FiOS-wired communities.  When the company ceases FiOS construction, it hopes to pass 18 million customer homes across its multi-state service area.

The decision to stop expansion of advanced fiber optics threatens to leave hundreds of communities behind, too late to the party or simply too far down Verizon’s priority list.  Among important cities Verizon will pass up include Alexandria, Virginia, Boston and Baltimore.

That concerns city officials, especially in Baltimore which already considers itself on the disadvantaged list.

“My take on it is that Baltimore is not equipped for the future,” Rev. Johnny Golden, past president of the Interdenominational Ministerial Alliance and an advocate for improved access to technology in the city told the Baltimore Sun. “We have a decent broadband system for today, but it does not have the infrastructure to take us into the future where we need to go.”

Despite the fiber bypass, the company will continue negotiations with about a dozen communities where negotiations were already underway – mostly in New York, Massachusetts, and Pennsylvania.  Despite company spin, the decision to drop the shovels and wheel away the spools of fiber does represent a dramatic change of plans, evidenced by the company’s decision to bypass the aforementioned lucrative urban communities.

For cable companies like Comcast and Time Warner Cable, Verizon’s announcement brings a sigh of relief.  Both cable operators handily beat Verizon’s DSL offerings and are swiping increasing numbers of Verizon’s phone customers who are disconnecting their landline service in favor of cell phones or “digital phone” service from the cable companies.

Both Time Warner Cable and Comcast have also kept a larger percentage of their customers than Verizon hoped.

In markets where FiOS is available, Verizon has only achieved 25% penetration for television service and 28% for Internet, far below the 40 percent penetration Verizon CEO Ivan Seidenberg hoped to achieve.  The reasons consumers didn’t switch to Verizon FiOS vary, but include:

• Pricing was not always lower than what the incumbent cable operator offered, and in many cases prices for some service were higher once the promotional rate expired;
• Cable operators in competitive areas improved service, offered more aggressively priced bundles, and increased broadband speed;
• Many cable operators locked their customers into two year “price protection agreements” which hold customers in place until agreements expire (if they don’t auto-renew);
• Installation can prove disruptive because of the elaborate rewiring required in many homes;
• Consumers didn’t see enough compelling reasons to switch.

Seidenberg

Still, Verizon has future-proofed their fiber optic service areas and are better positioned to deliver extremely high broadband speed and HD offerings than their cable counterparts.  But that has never impressed short-term focused Wall Street.  Many in the financial press have attacked Verizon for the costly fiber upgrades they believe will not work for the short-term investor seeking immediate return from their Verizon stock purchase.  With the rumor mill predicting upcoming retirement for Seidenberg, his likely successors are hardly FiOS fanboys.

John Killian, Verizon’s current chief financial officer, is a short-term results man.  Samuel Greenholtz, an analyst with the Gerson Lehrman Group, doesn’t see Killian sharing much of Seidenberg’s visionary long term thinking.  Lowell McAdam, another prospect for the top job, is currently the president of the Wireless Services division, and would likely bring a wireless “solution” for broadband customers left off the FiOS list.  Neither man seems particularly interested in restarting the push for fiber in the future.

For 2010, capital expenses are flat or down across the company except in the Wireless Services division.  Verizon already declared copper phone wiring dead, and has elected to abandon its rural and suburban customers,  systematically sold off to America’s “rural phone companies” Frontier, CenturyLink, or Windstream.  Those still with Verizon but without FiOS will find the future of their landlines increasingly perilous.  Greenholtz notes Verizon has terminated another 1,200 line technicians and the company intends to spend two percent less on its copper wire network this year over last.

Greenholtz witnessed first hand what happens when a company starts to ignore its legacy network — his residential phone line quit working:

Having worked at Verizon and its predecessors for over 25 years, I expected a fix would be swift and trouble-free.  Wrong. I was offered a two-week appointment date for repair people to come out and look at the problem. I might add here that my wife does not use the cellular device that she carries around anymore than necessary and certainly never uses it when in close proximity to the hardwired set. By resorting to measures that I certainly would never have thought of using 10 years ago, I was able to get attention brought to the problem much quicker — and the issue has been resolved satisfactorily.

It seems that Verizon’s residential repair and maintenance has sunk to a new low.  Neighbors and other people on copper cabling are often experiencing problems. If there is static on the line, subscribers are frequently told nothing can be done to correct the situation because they need to replace the cable or do cable maintenance – but there is no budget available to do the work.   So, repairmen take the brunt of the public’s unhappiness with the service they are receiving. In contrast, when I spoke with some friends regarding FiOS and its maintenance issues, I found a much better response time to any difficulties the customers were experiencing.

Shockingly for a Wall Street-focused “expert network,” Greenholtz was allowed to offer his belief the only real solution to phone companies ignoring their undesirable customers is to regulate the heck out of them.

What can be done to cure the situation with residential landline services?   Unfortunately, it is going to have to come down to regulation.  Verizon, and no doubt, AT&T, has been doing what they want for many years now.  The PUCs have given them a lot of opportunities to offer advanced services that the commissions thought would spread throughout the serving areas, but they are increasingly realizing that is not in the plans.  They are going to have to force these companies to be responsive to the needs of the entire footprint, not just the Fortune 500 territories — and the nearby residential homes.

[Update 4/1/2010: While working on another story, I was amused to discover we had written about Mr. Greenholtz before, back on April 15th, when he was telling his readers "do-gooders" forced Time Warner Cable to attempt usage caps on customers.  I wonder if we would have heard something different from him had his broadband service faced an Internet Overcharging scheme.]

Blind deregulation and legislative-friendly handouts to companies like AT&T and Verizon have never resulted in better service for consumers.  They haven’t proven to save consumers any money either.  Ultimately, the decision to provide FiOS and U-verse came with investor consent, and when the economic downturn threatened the value of the stock and dividends, no deregulation or statewide franchise agreement is going to keep the fiber party from coming to a close.

WSYR-TV in Syracuse reports on the demise of Verizon FiOS’ expansion plans, which have a significant impact on central New York where many communities will be left behind.  One saving grace for New Yorkers ticked off at Albany — they’re now off the FiOS list indefinitely.  (2 minutes)

Apple iPhone

The Wall Street Journal reports Apple is developing two new iPhones for launch this June, including one that’s designed to work with Verizon Wireless.

According to the report, the new iPhone models can run on CDMA networks, such as the one Verizon Wireless uses.  The introduction of such a phone would mark an end for the three year exclusivity agreement Apple has with AT&T in the United States.

“There has been lots of incorrect speculation on CDMA iPhones for a long time. We haven’t seen one yet and only Apple knows when that might occur,” an AT&T spokesman told the Wall Street Journal.

For AT&T, the Apple relationship has been crucial, helping to make the carrier the U.S. leader in lucrative smart-phone market share. According to comScore Inc., AT&T has over 43% of all U.S. smart-phone customers, compared with 23% for Verizon. These customers are especially attractive because they generally pay higher monthly rates for data plans.

For several quarters, AT&T’s growth has come almost single-handedly from the iPhone. In the fourth quarter of 2009, the carrier said it activated 3.1 million new iPhones. In comparison, it counted only a net total of 2.7 million new subscribers as some customers moved from other phones to iPhones.

“You’re not going to lose the iPhone [exclusivity] and make up growth somewhere else without bearing the cost,” said Sanford C. Bernstein & Co. research analyst Craig Moffett.

The impact on Verizon Wireless data network will be an important measure of whether American wireless broadband networks can sustain the demand customers have for wireless broadband service and speed.

CNBC carried three reports about the Verizon Wireless iPhone story published in the Wall Street Journal and its potential impact on the American wireless marketplace.  (11 minutes)

The Wall Street Journal included this “web-extra” report on their story and what it means for consumers.  (2 minutes)

AT&T may have put the safety of its Salt Lake City customers at risk by diverting cell phone 911 calls intended for local authorities to a 911 call center in Seattle, Washington hundreds of miles away.

Starting last Thursday, AT&T customers who tried to report an emergency by dialing 911 ended up speaking with confused operators in Seattle who couldn’t understand why customers were calling them about problems several states away.  Company officials took until the following day to fix the problem, and it took calls from a local television station to alert local officials and the company that a serious problem existed with the area’s 911 system.

Although the problem has now been fixed, company officials have not released an explanation about what caused the glitch.

KSL-TV broke the story about the 911 diversion, interviewing one customer whose local Salt Lake City cell phone mysteriously reported his caller ID as in Seattle, Washington.  Part two of this report is from the following day, after service was restored. (4 minutes)

Denver, Colorado

Comcast, like Time Warner Cable, is slowly transitioning many of its traditional analog channels to digital, making more room for additional HD channels and faster broadband.  The latest city about to experience what Comcast calls its “all-digital migration” is Denver, Colorado.

“As part of the technology enhancement, Comcast is making available up to three devices to customers so they can hook up their (analog) televisions and not miss any channels,” said Cindy Parsons, a spokesperson for Comcast in Denver.  “What this allows us to do is provide hundreds of HD channels in the future, faster Internet speeds, better picture quality, and more ethnic programming.”

Customers with any level of service above Limited Basic with an existing digital set-top box may receive two digital adapters at no additional monthly cost; customers without an existing digital set-top box may receive one standard digital set-top box and two digital adapters at no additional monthly cost.

Parsons claims up to 90 percent of Comcast’s Denver customers already subscribe to digital cable on at least one television set in the home.  Comcast is offering free self-install kits through its Digital Now website.

Comcast intends to commence the transition to digital channel delivery starting this spring continuing into the summer.  The entire state of Colorado will follow, with the transition to digital complete by the end of the year.

Of course, customers with many analog televisions, or who dislike the notion of having to deal with add-on equipment, are out of luck.

KUSA-TV Denver talked with Comcast’s Cindy Parsons about the city’s imminent “all-digital-migration” to digital cable television. (3 minutes)

I ran across this “public service announcement” about the perils of cable television coming from the over-the-air broadcasters terrified of the implications of a new concept in television delivery — coaxial cable.

Back in the 1960s and early 1970s, big lobby dollars from broadcasters kept a foot on the throat of the newly-born cable television industry, prohibiting them from showing sporting events, movies and programs offered in syndication, unless they were from local stations of course.

To allow this new competitor to gain access to lucrative programming would cost local jobs, hurt investment in television stations providing local community service, and ruin it for everyone!

Ironically, broadcasters are still using these arguments when confronting intransigent cable companies that won’t write checks to pay those “free TV stations” for the right to carry them on the cable lineup.

Whenever a new player enters the marketplace, the existing ones panic.  That’s why the National Broadband Plan, Net Neutrality, and the concept of open networks terrifies incumbent players.  It’s a whole new world — one they aren’t comfortable with — market instability and players out of their comfort zones always invoke a fear-based response, especially on Wall Street.

Forty years after the pay television monster envisioned in this advertisement, we are still watching local over-the-air broadcasters.  In fact, the only harm viewers have experienced comes from an industry that treats local TV stations like commodities, bought and sold for millions of dollars, even as many stations cut local programming and community service.  These days, it’s not uncommon to find a major local affiliate not even producing a newscast any longer.

We now face another transformation in telecommunications with the release of a national blueprint for improved broadband.  Existing players have no problem with it, as long as they define it, benefit from it and get to implement it.  But the idea of opening their networks and providing consumers with additional choice, as well as protection from meddling providers who want to monetize all-things-Internet, just cannot be entertained.  To do so would … you know, cost jobs, harm investment, and ruin it for everyone.

Much like a broken record, this rhetoric is obsolete.

Martin

The former chairman of the Federal Communications Commission under President George W. Bush says the FCC doesn’t have as much authority over broadband as it might think, and cannot tell service providers not to implement policies designed to limit broadband consumption.

Kevin Martin, speaking last week in Seattle at the Mobile Broadband Breakfast told attendees he doubts the Commission has the authority under current law to implement the full scope of the National Broadband Plan, and probably cannot control what providers do with the marketing and pricing of their broadband services.

“The further it is pushed out the more difficult it is for the commission to address it,” Martin said. “The FCC’s core regulatory authority is on wireless and carriers, so its direct authority is less and less the further out you go.”

Martin is especially skeptical about controlling classic Internet Overcharging schemes like usage caps and usage-based billing.

Broadcast Engineering notes Martin doesn’t believe the Commission has any authority to stop the recent efforts of carriers and ISPs to introduce metered wired broadband, except in instances where price discrimination occurs.

Of course, Congress can grant additional authority to the Commission at any time, and with decisions looming in several broadband-related legal challenges in federal court, what authority the FCC believes it has today may not actually exist should court rulings find otherwise.  That could result in explicit increased authority granted by Congress.

Martin believes broadband improvement will ultimately come from increased deployment of fiber optics, which can also improve wireless network backhaul connections used in mobile broadband.