Back in 2006, Alaska Senator Ted Stevens emphatically declared that the Internet was not a truck, but rather a series of tubes.  That’s why Net Neutrality was such a bad idea, get it?

Senator Ted Stevens Infamous “Series of Tubes” Speech from 2006.  (11 minutes)

Fundamentally misunderstanding technology and the Internet is not exclusively the domain of an ex-senator from the State of Palin, however.

North Carolina State Senator David Hoyle (D-Gaston County) managed to illustrate he didn’t know what he was talking about either.

Hoyle’s pretzel-like logic, in opposing municipal fiber broadband projects in the state, is that fiber optics could be obsolete within five years, so we shouldn’t even bother with them:

“You know the technology’s changing daily. Five years, ten years from now … wireless could replace most of fiber optics of coaxial cable or, or copper even. Might become not totally obsolete, but their ability to, uh, you know, to fund the debt service from the hard assets they had to put into the ground.”

If one extends that reasoning to his good friends in the cable and telephone industry — if fiber is potentially obsolete in five years, what about the phone company’s copper wires and the cable company’s coax?  Copper wiring was used for telegraphy starting in the 1830s and is still the backbone of today’s telephone networks.  Coaxial cable was invented in 1880 and still runs into virtually every cable subscriber’s home.  The first commercial application for a fiber optic communications system came in 1977.  In fact, most experts believe fiber optics will be the platform for America’s telecommunications network for at least the next quarter century.  The cable industry promotes its own use of fiber, and forward thinking phone companies like Verizon are relying on fiber to the home networks to stay relevant for the future.

Sen. David Hoyle (D-NC)

Fiber optic has all of the advantages:

• SPEED: Fiber optic networks operate at high speeds – up into the gigabits and still rising
• BANDWIDTH: large carrying capacity, and growing larger as advances continue
• DISTANCE: Signals can be transmitted further without needing to be “refreshed” or strengthened.
• RESISTANCE: Greater resistance to electromagnetic noise such as radios, motors or other nearby cables.
• MAINTENANCE: Fiber optic cables costs much less to maintain, and upgrades can occur without disturbing existing cable — just switch the laser technology used.

The costs to construct fiber networks, which used to be in the thousands of dollars per household, is now well under $1,000 for companies like Verizon.  Keeping happy customers and having the ability to market phone, broadband, and television services across an all-fiber network open new revenue streams which help defray initial expenses.  Fiber is an investment in the future.

Why isn’t wireless going to make fiber networks obsolete?

Allocating sufficient spectrum to support today’s high bandwidth applications is a practical impossibility, especially considering the politics and in-fighting from current spectrum holders to keep their allocations.  Spectrum is a limited resource, which guarantees limited competition, limited bandwidth, and higher prices.  While wireless applications will continue to be an important part of our communications future, it is unlikely they’ll be the favored method to support high bandwidth content in the near term.  Considering the implications of all of the new cell sites required to provide blanket coverage, it may never survive the inevitable howls of protest from neighborhoods who have to live with the eyesores.

Senator Hoyle opened his mouth and stupid fell out.  He’s not just wrong — his comments also carry implications for his constituents.

The City of Gastonia, along with Gaston County jointly filed an application alongside 35 others here in North Carolina seeking to get Google’s 1 Gigabit Fiber Optic to the Home Network.

How do city officials feel about their representative in the state legislature actively trashing fiber networks?  I will have that answer for you soon.

Senator David Hoyle (foreground, with back to camera) tells meeting fiber could be obsolete within five years.  (25 seconds)

Today’s merger between CenturyTel (soon to be CenturyLink) and Qwest will combine 10 million Qwest customers and 7 million from CenturyTel into a single company serving 37 states in every region of the country except the northeast and much of California and Nevada.  CenturyLink gains access to Qwest’s highly valued portfolio of services sold to business customers and Qwest gets a partner that can help manage its $11.8 billion debt and help grow the last remaining Baby Bell, formerly known as US West, into a national player capable of withstanding ongoing erosion of landline service.

The deal will impact consumers and businesses, and will challenge regulatory authorities to consider the implications of ongoing consolidation in the traditional telephone service marketplace.  It brings implications for broadband service strategies for both companies, which we’ll explore in greater detail.

Breaking Up Was Too Hard to Do, So Let’s Put It Back Together

Ultimately, the genesis of this, and most of the other big telecom deals that we’ve witnessed over the past few years comes from the 1996 Communications Act, which deregulated large parts of the telecommunications industry and triggered a massive wave of consolidation that is still ongoing.  That legislation was the antithesis of the 1984 court ruling which ultimately led to the breakup of AT&T and the Bell System monopoly in 1984.  When President Clinton signed the 1996 bill into law, it allowed much of the Bell System to eventually recombine into two major entities:

• AT&T ultimately pieced itself back together with the acquisitions of:

BellSouth — serving the southeastern United States

Ameritech — serving the upper Midwest

SBC/Southwestern Bell — serving Texas and several southern prairie states

Pacific Telesis — serving California and Nevada

• Verizon became a regional powerhouse by combining:

NYNEX — serving New England and New York

Bell Atlantic — serving mid-Atlantic states

Qwest Tower - Denver

The remaining orphaned Baby Bell was US West, which comprised Mountain Bell serving the Rocky Mountain states, Northwestern Bell which covered the Dakotas, Minnesota, the prairie states not covered by SBC, and Pacific Northwest Bell which managed service for Oregon, Washington, and northern Idaho.  US West was subjected to a hostile takeover in 2000 by an upstart telecommunications company that was laying fiber optic cable in the late 1990s alongside the railways its owner, Philip Anschutz, also happened to own.  Qwest assumed control of US West that summer and rechristened it with its own name.  Owned by a Bell outsider, Qwest has always been the company that didn’t quite fit with the rest.

The company gained respect for its enormous fiber backbone that weaves across many American cities, including several in the northeast.  It is best known for its services to business customers.  On the residential side, the story is less impressive.  The company’s customer service record is spotty and the company has accumulated an enormous amount of legacy debt left over from earlier acquisitions.  Despite the company’s repeated efforts to find a partner, it took until today for it to finally find one.  There are several reasons for this:

1. Qwest’s service area is notoriously rural and expensive to serve.  Outside of its corporate headquarters in Denver, the majority of its service area is either mountainous or rural.  Even today, Qwest serves only 10 million residential customers, almost matched by CenturyTel’s own seven million largely rural customers scattered across the country.
2. Qwest’s history has been littered with financial scandals, starting with a series of deals with disgraced Enron from 1999-2001.  That was followed with charges of fraud and insider trading in 2005.
3. Qwest does not own its own wireless division and its previous efforts to deliver television service to customers were largely unsuccessful.  That made Qwest’s ability to withstand erosion in its core business – landline phone service, more difficult.
4. Qwest’s debt is downright frightening for would-be suitors.

Why Does CenturyTel Want to Buy Qwest?

CenturyTel claims such a transaction allows a combined company to become a larger player on the national scene.  By combining Qwest’s good reputation in the business telecommunications sector with combined efforts to deliver broadband products including high speed Internet, the company thinks the combination can’t be beat.  CenturyTel envisions packages of video entertainment, data hosting and managed services, as well as fiber to cell tower connectivity and other high bandwidth services to deliver replacement revenue lost from disconnected landlines.  It also believes it can realize cost savings from the merger and keep the company relevant on a stage dominated by Verizon, AT&T, and a few large cable companies.

But there are other reasons.  For the three super-sized independent phone companies that Americans are growing increasingly familiar with — Frontier Communications, Windstream Communications, and CenturyTel, their business models depend on their ability to constantly engage in deal-making and acquisitions.  All three companies have built their businesses on investors who see their stocks as “investment grade” financial instruments that dependably return a dividend back to shareholders.  As we’ve seen in countless quarterly financial results conference calls, all three companies are preoccupied answering questions from Wall Street about the all-important dividend.  TV personalities like Jim Cramer has specifically recommended these telecom stocks based, in part, on their dividend payout.  If that dividend dramatically shrunk or stopped, the share price for all three stocks would likely plummet.

One of the side effects of companies dependent on dividend payouts is their constant need to be on the lookout for additional merger and acquisition opportunities.  Here’s how it works.  Let’s say CenturyTel’s debt load and reduced revenue, caused by customer defections to cell phones or cable phone service, delivered a bad fiscal quarter for the company.  Cash flow was down, and company officials simply couldn’t keep the dividend payout at the same level as the previous quarter.  Since many people hold CenturyTel stock specifically because of the dividend, a downward turn in that payout could cause some to sell their shares, driving the stock price downwards.

CenturyTel is still digesting a previous merger with EMBARQ, which led it to rechristen the company CenturyLink

One way around this is to seek out a new merger or acquisition target.  By bringing two companies together, preferably one with a healthy cash flow, suddenly the big picture changes.  Your balance sheet now reflects the combined revenue from both companies, which incidentally makes the percentage of debt versus revenue look a lot healthier.  Cash flow immediately improves, especially if you can slash redundant costs.  Come next quarter, that dividend payout is right back up in healthy territory.

Sometimes companies become so preoccupied with their dividend and corresponding stock price, it can lead them to pay out more in dividends than a company earns in revenue.  While that’s great for investors, it is unsustainable in the long run.

Many critics of telecommunications companies employing this strategy claim it’s evidence that a company is biding time and unwilling to invest in innovation for the future.  Some also believe dividend payouts shortchange customers because they can eventually bleed a company’s ability to invest in service improvements, research and development, and capital investments to maintain their network and expand service.

As consolidation continues, the number of new buyout opportunities begins to shrink, and one shudders to think what happens when there is no one else to buy.  How long is this business model sustainable?

Both CenturyTel and Qwest also recognize the impact of ongoing disconnections from landline service, now averaging 10 percent of their customers a year.  Those departing customers are now relying on their cell phones or alternative calling services like cable company “digital phone” service or broadband-based calling from companies like Vonage or Skype.

The one service they hope can stem customer defections is broadband.  Unfortunately, telephone companies are increasingly losing ground against their cable modem competitors, who have an easier time increasing broadband speeds for customers now seeking online video and other high bandwidth applications.

Of course, one of the benefits of being a “rural phone company” is the fact cable competition is often unlikely.  In fact, some of the lowest erosion rates for landline service are in rural communities where the telephone company is the only game in town.  There is plenty of money still to be made offering high priced slow speed DSL service in communities with no cable competitor and spotty wireless broadband that is often slower and usage-limited.

All three of these big independent players are well aware of this, and maintaining a strong position in relatively slow speed DSL service also protects another revenue stream — Universal Service Fund revenue given to rural providers to equalize telephone rates.  CenturyTel recognizes the increasing likelihood much of that money will be diverted to stimulating broadband expansion, something the phone company is more than willing to do if it means preserving their subsidies.

The new combined Qwest-CenturyTel company hopes the merger can help both survive obsolescence.

For Qwest, a debt reduction may make it possible to spend more to deliver fiber-to-the-curb service, similar to AT&T U-verse.  That could increase broadband speeds and prompt them to reconsider their earlier decision to abandon IPTV in the western half of the country.

CenturyTel can continue to offer traditional DSL service with a more incremental upgrade approach in its more rural service areas, but tap into Qwest’s fiber network to reduce backhaul expenses and potentially pick up new business customers by offering Qwest-branded business services.  Company officials strongly hinted that, at least for now, CenturyTel’s existing customers will continue to find the video portion of their “triple play” package delivered by DirecTV satellite service, so no IPTV for them.

CenturyTel and Qwest's combined local service areas

What Does This Mean for Employees of Both Companies?

Mergers like this always generate great excitement over “cost savings” made possible by the merger.  Much of these savings typically come from employee expenses.  When you hear “cost savings,” think layoffs and pay cuts for all but top management.  Based on past precedent, Qwest employees can anticipate some serious job losses if this transaction closes, especially in the business office.  The combined company will be henceforth known as CenturyLink, with headquarters remaining in Monroe, Louisiana.  That is potentially bad news for Qwest’s employees in Denver.

The transaction is expected to generate annual operating cost savings (which CenturyTel calls “synergies”) of approximately $575 million, which are expected to be fully realized three to five years following closing.  The transaction also is expected to generate annual capital expenditure “synergies” of approximately $50 million within the first two years after close.  That means spending less on infrastructure improvements.

Billing and customer service are traditionally handled by CenturyTel when a company joins the CenturyTel family.  North Carolina customers can attest to that as EMBARQ, an earlier CenturyTel target, finally moves to CenturyTel’s billing system in the coming weeks.

For the sake of pushing the merger through state regulatory agencies, cutbacks in unionized technicians who handle service installations, repairs, and maintain the lines are not expected.  The Communications Workers of America issued a statement today that mildly acknowledged the merger announcement, saying the union “looked forward to serious negotiations with both companies” regarding employment security and assurances of aggressive high speed broadband rollout throughout both companies’ territories.

How the combined CenturyTel-Qwest company stacks up against other independent phone companies. (Q-Qwest, CTL-CenturyTel, FTR-Frontier, WIN-Windstream)

What Does This Mean for Qwest and CenturyTel Customers?

In the short term, nothing.  This merger will take at least a year to complete, assuming regulatory approval in every state where a review is required by state officials.  In 2011, should the merger be approved, Qwest customers can anticipate transition headaches as the Denver-based company winds down operations in favor of CenturyTel.  Billing and customer service will both be impacted.  Long term plans for major projects are likely to be stalled until the merger settles into place.  CenturyTel business customers will eventually see Qwest’s strong business products line become available in many CenturyTel service areas.  Eventually, some larger CenturyTel-served cities may find Qwest’s more advanced DSL service arriving on the scene delivering faster speeds.

Although CenturyTel has hinted it may review whether it’s now large enough to operate its own wireless mobile division, for the near term, expect the partnership to resell Verizon Wireless service to continue.

What is the View of Stop the Cap! on the CenturyTel-Qwest Merger?

Generally speaking, most of the industry consolidation that has been fueled by a deregulatory framework established by the Clinton Administration has not benefited consumers anywhere near the level promised by deregulation advocates.  The three largest independent phone company consolidators — Frontier, Windstream, and CenturyTel are spending more time and resources looking for new acquisitions and schemes to pay out dividends than they are working to enhance service in their respective service areas.  Smaller independent phone companies are deploying fiber to the home networks and answer to the communities where they work and live.  From companies like Frontier, we get Internet Overcharging schemes combined with slow DSL service, tricks and traps from “price protection agreements” that automatically renew, rate increases, and cost cutting.  Windstream plagues some of their customers with extended service outages, and CenturyTel’s promised broadband speeds often don’t deliver.

Unfortunately, bigger is not always better in telecommunications.  While the biggest players like Verizon seek to discard rural American customers, getting one of these three companies instead doesn’t always represent progress.  Our regulators are too often satisfied with basic answers to questions about broadband and service improvements that come with few details and deadlines.  It is just as important to ask what kind of broadband service a company will bring, at what speeds and price, and what usage limits, if any, will accompany the service.

Companies engaged in these mergers hope regulators don’t pin them down to specific service commitments and standards, which could harm the financial windfall these deals bring to a select few.  But they must be the first thing on the table, guaranteeing that customers also get the enjoy the “synergies” these deals are supposed to bring.

CenturyTel Inc. agreed Thursday to buy Qwest Communications International, Inc. in an all-stock deal that values the last legacy “Baby Bell” at nearly $10.6 billion, in one of the nation’s largest telecommunications deals.

The merger would dwarf Frontier Communications’ purchase of Verizon landline service and create the nation’s largest independent phone company with operations in 40 states.

Qwest has been off and on the sales block for years, considered the weakest player among the split-up remnants of the old Bell System.  Qwest has fallen well behind AT&T and Verizon in adopting next generation technology to keep landline service relevant in a changing marketplace.  CenturyTel’s business model, like that of Windstream and Frontier, depends on serving rural areas with basic broadband and phone services, without incurring the costs larger providers have in deploying fiber to the home or fiber to the curb networks needed to compete with cable television providers.

Critics contend the consolidation of independent phone companies has left them preoccupied with their stock value and dividend payouts, unwilling to make substantial investments many believe are essential to keep such companies relevant in the long term.  Cell phones continue to eat away at landline service, and the kind of slow speed DSL service available from most of these players cannot compete effectively against cable and fiber broadband service, except in rural communities where customers have just one choice.

We will have additional coverage on this important development shortly.

Report on Today’s Legislative Meeting

Sen. David Hoyle (D-NC)

As I have been reporting here, the moratorium on municipal broadband is alive and well in the legislative halls of Raleigh.  Senator David Hoyle (D-Gaston), sponsor of last year’s consumer atrocity HB1252, is back again asking Senator Daniel Clodfelter (D-Mecklenburg County) for a vote May 5th on a proposed moratorium for municipal broadband projects.  Hoyle is not running for re-election.

While no new legislation has surfaced yet, several legislators continue to hint that a new bill is forthcoming.  Be assured any such legislation will be designed to protect today’s monopoly/duopoly marketplace for broadband service in North Carolina.

Senator David Hoyle calls on the legislative committee to introduce and vote for a moratorium on municipal broadband projects in North Carolina. (April 21, 2010) (1 minute, 30 seconds)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Meeting Highlights:

Senator Daniel Clodfelter (D-NC)

• Senator Clodfelter opened the meeting stating that he “wants to focus on revenue issues/financing, not whether or not high speed Internet is a good thing.”

• Heather Fennell, from the research division at the General Assembly gave a presentation citing laws that govern cities, the original lawsuit that established precedent for cities to construct municipal fiber networks, what cities have them, and who pays the taxes on different systems.

• Vance Holloman, Deputy Treasurer-State and Local Finance Division spoke next.  He assured the committee and attending audience that North Carolina’s existing municipal systems are in good standing and he expected they would be able to pay down debts incurred from initial construction and deployment costs.  Holloman added the Local Government Commission, which has to approve the financing of these systems, believed these projects represent “solid economic development investments.”  Holloman’s strong presentation should have encouraged legislators to favor economic development from fiber optic broadband, but we had a strong sense several members had already made up their minds made up to oppose these projects.  You will have to convince them to reconsider.

• The next part of this session divided 50 minutes between private commercial providers and municipalities to share their views.

The commercial providers went first, beginning with attorney Marcus Trathen from the law firm Brooks/Pierce.  Today, he was representing the North Carolina Cable Communications Association (NCCCA).  Trathen has also appeared at prior meetings representing the interests of Time Warner Cable.

Trathen’s presentation was about as expected – talking points loaded with misrepresentations and misinformation.  Trathen told the committee the industry does not object if cities build private networks for internal communications (how generous), but doesn’t want those networks competing with NCCCA members.

Kelli Kukura, NC League of Municipalities

Suddenlink Communications’ Bill Paramore and AT&T lobbyist Herb Crenshaw also spoke, speaking in glowing terms about investments already made to improve service in the state.  Crenshaw claimed AT&T is providing U-verse service in North Carolina after spending $1.2 billion dollars on system upgrades, an amount some have questioned (a 2007 press release pegged it at $350 million.)  Of course, North Carolina’s cable and broadband customers who were promised savings from all this “robust competition” have instead been stuck paying annual rate increases that more often than not exceed the rate of inflation.

Next up were the municipalities.

Kelli Kukura from the North Carolina League of Municipalities started by challenging industry propaganda designed to downplay the benefits of municipal broadband.  Kukura noted at least 30 North Carolina communities enthusiastically applied for Google’s proposed 1 gigabit fiber to the home network, illustrating intense interest in fiber networks.  Google has also been an active proponent of municipal broadband, Kukura noted, reminding legislators the search engine giant defended the rights of municipalities seeking to deploy next generation broadband networks.

Among the communities that have their own municipal systems, job growth grew by an average of 6.4 percent.  Kukura cited broadband success stories in Bristol, Virginia and Wilson, North Carolina.

Salisbury small businessman Brad Walser, owner of Walser Technology Group testified that North Carolina community’s new municipal broadband network Fibrant would meet his company’s needs for broadband capacity not available from commercial providers.  Walser noted Salisbury is suffering from an unemployment rate exceeding 14 percent.  Advanced broadband, he believes, could help the city attract new businesses that will help create new, high paying jobs.  Fibrant is expected to launch later this year.

EPB provides broadband service for residents in Chattanooga, Tenn.

Some of the strongest testimony came from Colman Keane, senior strategic planner for municipally-owned EPB Telecom. Keane traveled all the way from EPB’s home in Chattanooga, Tennessee to share his experiences confronting a telecommunications industry hostile to the prospect of facing a new competitor.  Keane has seen and heard the industry arguments all before, noting Chattanooga heard the exact same scare stories legislators in Raleigh were hearing today.  Chattanooga also faced a proposed one year moratorium and a blizzard of industry-backed lawsuits, all which were won by the city.

The benefits of fiber optic broadband in Chattanooga include dramatically-improved broadband speeds as well as a more efficient power grid made possible from smart meters that help Chattanoogans reduce their peak power usage, saving money.  I want to thank Colman for making the long journey on behalf of consumers in North Carolina.

• Finally, Raleigh community activist and former city council candidate Octavia Rainey spoke out against municipal broadband, which concerned me.  Rainey spent her time seated with the telecom lobbyists, and her presentation illustrated the impact of astroturf efforts to co-opt good-hearted consumers into the industry cause. I hope to establish a dialogue with Ms. Rainey to share our information with her and learn more about how she reached her views on this subject.  More to come.

The complete hearing of the Revenue & Laws Committee of the North Carolina Legislature on the issue of the financial implications of municipal broadband, chaired by Senator Daniel Clodfelter (D-Mecklenburg County) (April 21, 2010) (2 hours, 8 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

[Octavia has a long history of community involvement in Raleigh, trying hard to improve her neighborhoods and life in general for area residents, something she is to be applauded for doing.  I suspect Ms. Rainey has formed her views on municipal broadband in part from her close working relationship with AT&T, who has a long history trying to make friends with various community groups in part to win favor for their corporate agenda.  In this case, Octavia admits AT&T's Cynthia Mitchell and her have become "great partners."  AT&T provided support in building an area playground and also paid for lunch for volunteers working on the project, adding the company wanted to be a part of the Raleigh community.  There is nothing wrong with that, of course, but one wonders if the conversation also drifted into AT&T's talking points along the way.

Ms. Rainey also praised AT&T for delivering free Internet service to 290 Raleigh-area families last fall, which would make it ironic if she didn't support municipal broadband, which has a proven track record of erasing the digital divide and lowering prices for hard-pressed consumers.  These are the people that need some fact-based information about the true benefits of municipal broadband.  -- Phillip Dampier]

Today was expected, but disappointing nonetheless.  Hoyle actually suggested that fiber networks may be obsolete in five years and we may be moving to wireless.  If that were true, why is he hellbent on a moratorium and the banning of such networks at the industry’s behest?  Why would the telecommunications industry be concerned about “obsolete fiber networks?”  The only thing obsolete here are the broadband networks owned by big cable and phone companies Hoyle wants to preserve and protect.

Rep. Pryor Gibson (D-NC)

Rep. Pryor Gibson, who we noted is a manager for Time Warner Cable Construction agreed to recuse himself from this issue after it became a point of contention and sat in the back corner of the room.

All of your e-mails and calls have been getting through to the legislators.  This kind of attention makes them nervous and I ask you to continue.  I can assure you that we here at Stop the Cap!, along with Communities United for Broadband, Broadband for Everyone NC, and Save North Carolina Broadband are going to ratchet up attention on this issue.

WHAT YOU CAN DO TO HELP

Continue writing and calling the legislators below and asking them to oppose a moratorium on municipal broadband.  Make plans on May 5th to come to Raleigh and be part of the crowd that opposes the moratorium.  I will post meeting details as they develop.

Please thank the legislators we have identified on this committee as friends of our cause:

• Sen. Daniel T. Blue, Jr. Wake Dan.Blue@ncleg.net (919) 733-5752 Democrat (919) 833-1931 Attorney
• Sen. Fletcher Lee Hartsell, Jr. Cabarrus, Iredell Fletcher.Hartsell@ncleg.net (919) 733-7223 Republican (704) 786-5161 Attorney
• Sen. Josh Stein Wake Josh.Stein@ncleg.net (919)715-6400 Democrat (919)715-6400 Lawyer
• Rep. Paul Luebke (Co-Chair) Durham Paul.Luebke@ncleg.net 919-733-7663 Democrat 919-286-0269 College Teacher
• Rep. Jennifer Weiss Wake Jennifer.Weiss@ncleg.net 919-715-3010 Democrat 919-715-3010 Lawyer-Mom

The rest of the lot either doesn’t support North Carolina consumers or have not yet made their views known on this issue.  We must pin them down and identify those elected legislators that represent the people versus those representing big cable and phone interests.  Be sure to tell them you will interpret any support for a moratorium on municipal broadband to mean they are opposed to competition, opposed to lower prices for consumers, opposed to job creation and economic growth, and obviously for the cable and phone interests that will stop at nothing to keep these systems from being built.

Ask them how they could possibly support keeping North Carolina 41st in the country in broadband rankings, why they are against reducing the 11.2 percent unemployment rate (10th worst in the country) in North Carolina, and how they can justify a vote that guarantees exactly more of the same.  If you are from a city that applied for Google Fiber, remind your legislator passing this kind of hostile moratorium delivers a strong message this state is not serious about the next generation of broadband, and Google should look elsewhere.

Above all, note now that they understand the true implications this moratorium will have on constituents, you are confident there is no way they could ever support such a bad idea.  Their delivery of a strong “no” vote reminds you why you supported them in the last election and will consider doing so again in the next.

Always be polite, professional, and persuasive in your correspondence, but deliver a clear and firm message that supporting a moratorium is completely unacceptable.  Finally, be sure to ask them to get back in touch with you regarding their position on this issue as soon as possible.  Then let us know!

• Sen. Daniel Gray Clodfelter (Co-Chair) Mecklenberg Daniel.Clodfelter@ncleg.net (919) 715-8331 Democrat (704) 331-1041 Attorney
• Sen. Peter Samuel Brunstetter Forsyth Peter.Brunstetter@ncleg.net (919) 733-7850 Republican (336) 747-6604 Attorney
• Sen. David W. Hoyle Gaston David.Hoyle@ncleg.net (919) 733-5734 Democrat (704) 867-0822 Real Estate Developer/Investor
• Sen. Samuel Clark Jenkins Edgecomb, Martin, Pitt Clark.Jenkins@ncleg.net (919) 715-3040 Democrat (252) 823-7029 W.S. Clark Farms
• Sen. Jerry W. Tillman Montgomery, Randolph Jerry.Tillman@ncleg.net (919) 733-5870 Republican (336) 431-5325 Ret’d school teacher
• Rep. Harold J. Brubaker Randolph Harold.Brubaker@ncleg.net 919-715-4946 Republican 336-629-5128 Real Estate Appraiser
• Rep. Becky Carney Mecklenberg Becky.Carney@ncleg.net 919-733-5827 Democrat 919-733-5827 Homemaker
• Rep. Pryor Allan Gibson, III Anson, Union Pryor.Gibson@ncleg.net 919-715-3007 Democrat 704-694-5957 Builder/TWC contractor
• Rep. Dewey Lewis Hill Brunswick, Columbus Dewey.Hill@ncleg.net 919-733-5830 Democrat 910-642-6044 Business Exec (Navy)
• Rep. Julia Craven Howard Davie, Iredell Julia.Howard@ncleg.net 919-733-5904 Republican 336-751-3538 Appraiser, Realtor
• Rep. Daniel Francis McComas New Hanover Danny.McComas@ncleg.net 919-733-5786 Republican 910-343-8372 Business Executive
• Rep. William C. McGee Forsyth William.McGee@ncleg.net 919-733-5747 Republican 336-766-4481 Retired (Army)
• Rep. William L. Wainwright Craven, Lenoir William.Wainwright@ncleg.net 919-733-5995 Democrat 252-447-7379 Presiding Elder

The future of North Carolina’s economic growth is at stake here.

Cox Cable is joining a steady parade of broadband providers giving the boot to one of the Internet’s oldest services – Usenet newsgroups, telling customers if they want to keep receiving the service, they’ll have to pay someone else to get it.

Broadband Reports notes Cox customers are receiving e-mail notifications about the imminent demise of a service that many newer subscribers probably know nothing about:

Declining newsgroup usage in recent years has highlighted the need to focus our resources on other priorities, such as increasing our Internet speeds and providing new services, including Cox Media Store and Share. We understand that our newsgroup subscribers may want to continue accessing Usenet. Therefore, we have worked with leading newsgroup service provider Giganews to offer special pricing for Cox subscribers.

Giganews is a well-respected, albeit expensive newsgroup service provider offering more than one year of message retention, useful for those using the service to obtain older files. Copyright enforcement on newsgroups is lax, which is one reason some Internet Service Providers may not wish to bother with the service any longer.  But it’s not entirely a piracy haven.  Old time radio show enthusiasts trade programs back and forth and others use the service to discuss wide-ranging topics with an international audience.

Despite the end of newsgroup service, Cox Cable does not plan to compensate customers with a lowered broadband bill.

A Giganews representative visited the Cox users forum on Broadband Reports to promote the deal:

The “deals” Giganews is offering Cox users are fairly standard, and include a two month 50% discount off of Giganews’ “Diamond Plan” (and 10% for the rest of your subscription). Users interested in less expensive plans will get 50% off of those plans for a month (and 10% for the rest of your subscription). That 10% lifetime discount is being offered for the first time ever, according to a GigaNews rep that has stopped by our Cox forum.

There are cheaper alternatives.

Chama, New Mexico

Emergency officials trying to warn residents of Chama, New Mexico about the threat of potential flooding were stymied by widespread service outages from Windstream Communications, the area’s broadband and telephone service provider.

The loss of service even impacted cell phone companies, whose cell tower sites relied on Windstream to get cell phone traffic into the telephone network.

More than 30,000 customers lost long distance and Internet service in the Chana area, leaving a local radio station as the primary source for communications to and from officials and Chana residents.

Residents began calling KZRM Radio asking about the service outages, leaving one local DJ to shrug his shoulders, noting he didn’t know because he couldn’t call out either.

Windstream kept 911 service running by call forwarding incoming emergency calls to cell phones in Española, located on the other side of Rio Arriba County.

Information about the flooding ultimately traveled primarily by word of mouth.

Windstream blamed the outage on a power surge.

KOAT-TV in Albuquerque reports on the plight of 30,000 Chama residents left without cell, long distance, or Internet service during a potentially dangerous flood.  (2 minutes)

Bell Labs, a division of Alcatel-Lucent, has found a way to extract more speed over aging copper wire most phone companies still rely on to deliver service.  Its latest achievement, in the lab anyway, proved those wires could accommodate 300Mbps downstream speeds, at least if you were within 400 meters (that’s just over 1,300 feet) from phone company facilities.  Further on, the company was able to achieve 100Mbps speeds over a distance of one kilometer (0.62 miles).

Stop the Cap! reader Jeff writes wondering what impact such improvements have when they are measured in distances more commonly associated with a sprinting event.  Phone companies are well aware of the limitations of their legacy networks.  Some, like Verizon, decided the network designed more than a century ago was destined for the scrap heap.  They began to deploy fiber-optic based networks instead.  Others are trying to extract as much as they can from copper, as cheap as they can for as long as they can.

The problem with copper wiring is that the longer the distance, the slower the data speed those lines will support.  Interference or crosstalk from neighboring cables crammed together into a bundle can also create major problems, especially at longer distances.

Bell Labs says it has devised a way around the crosstalk problem with the testing of its “DSL Phantom Mode” solution:

At its core, DSL Phantom Mode involves the creation of a virtual or “phantom” channel that supplements the two physical wires that are the standard configuration for copper transmission lines. Bell Labs’ innovation and the source of DSL Phantom Mode’s dramatic increase in transmission capacity lies in its application of analogue phantom mode technology in combination with industry-standard techniques: vectoring that eliminates interference or “crosstalk” between copper wires, and bonding that makes it possible to take individual lines and aggregate them.

In the eyes of Alcatel-Lucent, Bell Labs has found an answer to the dilemma of what role phone companies can play in a 100Mbps broadband future.

“We often think of the role innovation plays in generating technologies of the future, but DSL Phantom Mode is a prime example of the role innovation can play in creating a future for existing solutions and injecting them with a new source of value,” said Gee Rittenhouse, head of Research for Bell Labs. “What makes DSL Phantom Mode such an important breakthrough is that it combines cutting edge technology with an attractive business model that will open up entirely new commercial opportunities for service providers, enabling them in particular, to offer the latest broadband IP-based services using existing network infrastructure.”

Before getting too excited, remember these demonstration tests occurred in a laboratory environment.  No squirrels chewed up the cables. No water leaking into cracks in the cable’s insulation or a connection box caused issues.  No aging splices of corroded copper wiring up on poles since the late 1960s were found.  Your home’s own phone wiring was also never part of the equation.

Distance is still a considerable limiting factor in DSL deployments.  Most of the benefits of this research will go to companies like AT&T, which uses a hybrid fiber-copper wire network in its U-verse areas.  The fiber cuts down the distance from a phone company office to a neighborhood.  Once in your neighborhood, traditional copper wires run the rest of the way, right up into your home.  If AT&T can leverage additional speed from its weakest link — the copper-based phone line — it may be able to use the additional bandwidth to boost broadband speed or accommodate more concurrent applications they cannot support today.

For phone companies still dependent on long distances of copper wiring, the expense of bootstrapping Alexander Graham Bell’s century-old network begins to look silly.

Sometimes it’s better to build anew instead of repeatedly trying to fix the old.  And many are doing exactly that.

Hundreds of small independent telecoms, broadband service providers, municipalities and cable television companies have brought gigabit-enabled, all-fiber service to a total of more than 1.4 million North American homes – about a quarter of all fiber to the home connections on the continent – according to the Fiber-to-the-Home (FTTH) Council.

The FTTH Council noted in a recent study more than 65 percent of small independent telephone companies that have not upgraded to FTTH said they would very likely do so in the future, with another 11 percent saying they were somewhat likely. More than 85 percent of those that have already deployed FTTH said they would be adding more direct fiber connections going forward.

Surprisingly most of this expansion outside of Verizon’s FiOS service comes from small family-owned companies, cooperatives, and the remaining independent phone companies not snapped up by Frontier, Windstream, and CenturyLink.

“To continue to meet the rapidly growing bandwidth requirements for emerging applications and services, these companies know that they have to ‘future-proof’ their networks by running fiber all the way to the premises – and that’s why we are seeing all this activity,” says Joe Savage, President of the FTTH Council.

“In many cases, these small telephone companies are longtime family-owned businesses that are deeply involved in local affairs and are responsive to their community needs for faster broadband as a key to future economic development,” said Mike Render, president of RVA LLC and the author of the study. “That’s why so many of these companies are looking to get into FTTH or expand their deployments,” he said.

Bachmann

Rep. Michele Bachmann (R-Minnesota), appeared on Sean Hannity’s show last night to go way over the top, telling Fox News viewers the Obama Administration was supporting Net Neutrality as part of an effort to censor the Internet.

Oh sure, that’s all they have left now, is they use pejorative terms, hateful terms, against those who are carrying the message. So whether they’re attacking conservative talk radio, or conservative TV, or whether it’s Internet sites — I mean, let’s face it, what’s the Obama administration doing? They’re advocating Net Neutrality, which is essentially censorship of the Internet.

This is the Obama administration advocating censorship of the Internet. Why? They want to silence the voices that are opposing them.

This isn’t the first time this talking point has been used.  Glenn Beck fancies Net Neutrality in much the same world view, helped along by the likes of astroturfers like Americans for Prosperity’s Phil Kerpen.  Kerpen’s group, among others, receives corporate money to drag down consumer protections that would stop Internet providers from delivering less service to you at an ever-increasing price. If it takes suckering Fox News viewers into believing Net Neutrality is an Obama plot to shut down freedom of speech on the Internet, so be it.

Of course, Bachmann’s tirade is the opposite of reality.  She is either clueless about the concept, or has cynically bought a ticket on the PsychoTalk Express, delivering fear-based, fictional talking points about online freedom.  Net Neutrality preserves freedom of speech on the Internet, even for misinformed folks like Michele Bachmann, in at least two ways:

1. Your Internet Provider cannot shut down your website if they oppose your views;
2. A provider must assure access to your website unencumbered by speed throttles or other impediments they say can be removed… for the right price.

Rep. Michele Bachmann’s views on Net Neutrality were aired on Sean Hannity’s show last night.  (1 minute)

Average measured connection speed (All graphics courtesy: Akamai)

America is marching backwards with a gradual decline in broadband speeds, according to a new report issued today.

Akamai’s State of the Internet Report for the final quarter of 2009 (report only available with permission from Akamai) rates America 22nd fastest in broadband connections, averaging 3.8Mbps, and declining.  Speeds dropped 0.9 percent for the quarter, 2.5 percent for the year.

Still on top are South Korea, Hong Kong, and Japan, now joined by former Soviet bloc countries Romania, Latvia, and the Czech Republic — all rapidly improving broadband speeds by double digit percentages.

Within the United States, among the top 10 individual states — five rated increased speeds and five measured lower speeds.  Some attribute this to network congestion, others suspect some customers have downgraded service in a poor economy.  But the biggest reason for the speed drop comes from wireless broadband.  Some Americans are increasingly relying on broadband service delivered to smartphones or other wireless devices over slower speed networks.

Overall, 31 states saw average connection speeds increase in the fourth quarter – up from 25 in the prior quarter. Notable gains included South Dakota’s 18 percent jump to 4.5 Mbps. Fourth quarter decreases in average connection speeds were seen in 19 states and the District of Columbia, and included Virginia’s 13 percent drop to 4.0 Mbps. Akamai believes that the significant decline in Virginia was likely due, in part, to increased traffic seen from lower-speed mobile connections that entered the Internet through gateways within those states.

Increased speeds year over year were seen in 29 states, with Hawaii growing 33 percent to 4.7 Mbps.

South Korea’s introduction to the iPhone drove their average speeds down by a whopping 24 percent.  KT (formerly Korea Telecom) is at fault here — the national wireless carrier has slow wireless Internet speeds.

Stop the Cap! readers  in Rochester and Austin should notice both cities made the top ten fastest list, measured by Akamai.

[Thanks to Stop the Cap! reader Rob who sent us details.]

Fastest American Broadband Cities by Unique IP

Fastest Broadband States

Best Average Measured Connection Speeds (not suprisingly most are college towns)

Top 10 States

Why would bloggers imply a relationship between Rightnetwork and Comcast?

Simon, a frequent reader of Stop the Cap! dropped us a note to let us know reports that Comcast was backing a new right wing cable network might be premature.

Talk about passing the buck.  Comcast this morning issued a statement on their company blog denying any involvement in the Rightnetwork project Stop the Cap! and other blogs reported over the weekend:

Over the weekend there were some stories on a number of blogs about a new network called Right Network, and some of these rumored that Comcast might be involved as an investor, partner or distributor. Here is a statement from Comcast to clear up any confusion:

“The blog reports that Comcast is an investor in, or partner of the Right Network are inaccurate. We have no partnership with this venture and have no plans to launch or distribute the network. As we have done with hundreds of other content providers, we have met with the network’s representatives. We do carry a number of independent networks on Comcast representing a wide variety of interests and diverse viewpoints.”

"Through partners including Comcast..." prominently appears in Rightnetwork's own promotional literature (click to enlarge)

How could we have been so wrong? 

1. The network’s founder is Ed Snider, chairman of Comcast-Spectacor, whose parent company is guess-who?
2. Rightnetwork’s own promotional “lookbook” (which they took down this morning, but which you can still get from us right here) says, “On television, through partners including Comcast….”

Somehow, Comcast forgot to call out Rightnetwork for making claims they absolutely don’t want to have associated with their company at such a politically-sensitive time, what with the Comcast-NBC merger on the table and all.  It was much easier to blame the bloggers.

It’s not as if the idea of Comcast launching a right wing network comes straight out of fantasy land.  In fact, Politico got David L. Cohen, Comcast’s executive vice president to toy with launching its own right-wing network to compete with Fox News:

A major Democratic donor and fundraiser, Cohen — who oversees the company’s Washington operation spent last week pitching the deal to regulators, editorial boards and reporters —described himself as “a news junkie” who watches MSNBC, CNN and Fox News. He didn’t dismiss out of hand the possibility of launching a right-leaning network to compete with Fox News, and he said Comcast wouldn’t tamper with NBC or MSNBC’s operations (Olbermann told POLITICO, “I’m confident they know exactly what they’re doing and exactly how valuable a commodity MSNBC has become”).

Cohen explained that Comcast’s job is not “to shape the content that people receive. It is our job to facilitate the delivery of a diverse set of voices and opinions to consumers, and we believe it’s up to the consumer to decide which of that content he or she would like to listen to or watch and which of that content he or she would like to avoid.”

Rightnetwork has remained silent on the matter, so we’ll apologize on their behalf for misleading you.