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Opponent of EPB Fiber Expansion: Get ‘Innovative’ Satellite Internet Instead

Cleveland's monument in the downtown district. (Image: City of Cleveland)

Cleveland’s monument in the downtown district. (Image: City of Cleveland)

AT&T, Comcast, and Charter have surrounded the city of Cleveland, Tenn., (population 42,774) for more than 20 years, yet after all that time, there are still many homes in the area that have no better than dial-up Internet access..

An effort to extend municipal utility EPB’s fiber to the home service into the community just northeast of Chattanooga on Interstate 75, has run into organized political opposition campaign, part-sponsored by two of the three communications companies serving the area.

Tennessee state Reps. Dan Howell and Kevin Brooks, both Cleveland-area Republicans, understand the implications. With AT&T, Comcast, and Charter resolute about not expanding their coverage areas anytime soon, the only chance Cleveland has of winning world-class broadband anytime in the reasonable future is through EPB, which has already offered to extend service to at least 1,000 customers in rural Bradley County in as little as three months. Most of those customers now rely on dial-up Internet services, because no broadband is available. Reps. Howell and Brooks are trying to get the the red tape out of the way so EPB can proceed, but the Tennessee legislature hasn’t budged.

EPB provides municipal power, broadband, television, and telephone service for residents in Chattanooga, Tennessee

EPB provides municipal power, broadband, television, and telephone service for residents in Chattanooga, Tennessee

There is a substantial difference between 30kbps dial-up and 100Mbps — one of the “budget” Internet tiers available from EPB. But some Tennessee lawmakers and corporate-backed special interest groups don’t care. To them, stopping public broadband expansion is a bigger priority, and they have attempted to stall, block, or prohibit municipal broadband, just to protect the current phone and cable companies that are among their generous contributors.

In 2010, Chattanooga became the first in America to enjoy gigabit residential broadband speed not because of AT&T, Comcast, or Charter, but because of the publicly owned electric company, EPB. So what’s the problem with that? The fact EPB spent $320 million on the fiber optic network — about $100 million of that coming from a federal grant — keeps some conservatives, corporate executives, and telecom shareholders up at night. They object to the public funding of broadband, calling it unfair competition for the two incumbent cable companies and one phone company, which have their own “privately funded” networks.

Republican Rep. Mike Carter, who serves Ooltewah, thinks that’s a lot of nonsense. He notes AT&T and other providers already receive government funding to service outlying areas that no other providers dare to tread for a lack of return on their investment.

cleveland_tn“[What] convinces me to back expansion of the EPB of Chattanooga is the fact that they received $111 million in stimulus funds, and in the next five years AT&T alone will receive $156 million of your money [in government funding] assessed every month on your bill to provide 10/4-gigabit service in those areas,” Carter explained to the Chattanooga Times-Free Press. “If the EPB’s $111 million matching grant somehow disqualifies those benefits going to my constituents, how do I explain to them that AT&T is receiving non-matching funds?”

“The issue then became, if it is necessary to create the world’s fastest Internet system, why would EPB not offer that for economic growth in its service area?” Carter continued. ” After I heard the story of the [gig’s] creation and realized that the money had already been spent, I asked myself if I would allow a firmly held principle of no competition with private enterprise by government to deny my constituents and neighbors the incredible benefits.”

Justin Owen, president and CEO of the Beacon Center of Tennessee, is dismissive of Carter’s willingness to bend his principles. In his view, those without Internet access have other options instead of getting EPB Fiber on the public dime.

Owen

Owen

“You can get satellite Internet,” said Owen, who added that governments that invest in fiber technology could be “left behind by disruptive innovation,” which in his mind could be satellite Internet. Satellite customers would disagree.

“Horrible, horrible, horrible, and more horrible,” wrote Trey from another Cleveland — this time in Texas. “Speeds are consistently less than 2Mbps and they advertise up to 12. Try a cell phone booster and use that before resorting to satellite Internet.”

Hundreds of customers shared similar stories about their experience with satellite Internet, and they don’t believe it will be disruptive to anything except their bank account.

Owen and his group have not revealed many details about where its funding comes from, but the group is a member of the State Policy Network, which receives financial support from AT&T, Time Warner Cable, Verizon and Comcast. The group’s former leader, Drew Johnson, was also a former opinion page columnist at the Times-Free Press and used column space to criticize EPB and other issues that ran contrary to AT&T’s agenda in Tennessee.

Despite support from the Chattanooga area’s Republican delegation, many legislators from outside the area remain firmly in support of the telecom companies and their wish to limit or destroy community broadband projects like EPB, claiming they are redundant or are based on faulty business plans likely to fail. But while Comcast used to dismiss EPB’s gigabit service as unnecessary and AT&T considered gigabit speeds overkill, both companies are now racing to deploy their own gigabit networks in Chattanooga to compete.

The residents of Cleveland without broadband today probably won’t have it tomorrow or anytime soon. Many are hoping the Tennessee legislature will relent and let EPB solve their broadband issues once and for all. Cleveland resident Aaron Alldaffer is trying to help gin up interest in a renewed legislative push for EPB Fiber expansion with a Change.org petition.

The BBC World Service Global Business program visited Chattanooga in May 2016 to explore EPB Fiber and discuss its implications. (29 minutes)

You must remain on this page to hear the clip, or you can download the clip and listen later.

Slow Broadband = Low Usage, Finds New Study

kcl-logoHow much you use the Internet is often a matter of how fast your broadband connection is, according to a new study.

King’s College London researchers found a clear correlation between bad broadband and low usage rates, as customers avoided high bandwidth apps like online video because they were frustrating or impossible to use. One analyst said the findings show rural areas are being “deprived of the full benefits of broadband.”

One of Britain’s most used apps is the BBC iPlayer, which streams live and on-demand programming from multiple BBC radio and television networks. It is a well-known bandwidth consumer, using a significant proportion of a customer’s broadband connection to deliver up to HD-quality video streams. The study found users in South Ayrshire, Ards, the Isle of Wight, the East Riding of Yorkshire, North Down and Midlothian were among the areas where people used iPlayer the least. It wasn’t because they didn’t want to. Those areas were identified by Ofcom, the British telecom regulator, as receiving some of the worst Internet speeds in the UK. Conversely, areas with robust broadband, including London, south Gloucestershire and Bristol, showed above average usage.

Dr. Sastry

Dr. Sastry

“It is clear that high-speed broadband is an important factor in the use of bandwidth-intensive applications such as BBC iPlayer,” said Dr. Nishanth Sastry, a senior lecturer at King’s College London and the lead researcher. “With technological advancements, it is likely that more services important to daily life will move online, yet there is a significant proportion of the population with inadequate broadband connections who won’t be able to access such services.”

Ian Watt, a telecommunications consultant with the analyst Ovum, said broadband speeds must get higher to assure users can watch HD video and simultaneously share their Internet connection with other members of the household.

“Recent Ovum research indicated a speed of 25Mbps was an appropriate target access speed to provide a high quality experience for video services,” Watt said. In the United States, 25Mbps is the current minimum speed to qualify as broadband, according to the most recent FCC definition.

The findings may also explain why U.S. broadband providers only capable of delivering relatively low-speed Internet access report lower average usage than those capable of providing service at or above 25Mbps. Those offering the fastest speeds are also the most likely to attract higher volumes of Internet traffic as customers take advantage of those speeds.

Middle Mile Madness: Rural Florida Blows $24 Million on Wireless Network Serving Nobody

12126179-florida-rural-broadband-alliance-logoA word to the wise: using public money to build a middle mile broadband network without any customers lined up to sign up is a disaster waiting to happen.

In April, the disaster arrived in the form of a Chapter 7 bankruptcy filing on behalf of the Florida Rural Broadband Alliance (FRBA), which threw away $24 million in federal grants on a network that was so unviable, the contractor that was supposed to run it apparently ran away instead, resulting in confusion and an eventual declaration it was “doomed to fail” anyway.

The sordid story started almost seven years ago when Florida’s Heartland Regional Economic Development Initiative (FHREDI) and Opportunity Florida (OF) — two non-profit organizations dedicated to spurring economic development across rural Florida, discovered federal grant money was available for rural Internet expansion as part of the Obama Administration’s 2009 American Recovery and Reinvestment Act. The two groups fashioned a broadband proposal they were confident would win approval. At the time, rural broadband across northwest and south-central Florida was dismal at best, with only 39% of homes covered. Largely unserved by cable and barely served with DSL from AT&T and other telephone companies, the two groups believed a wireless network would be the best solution for Hardee, DeSoto, Highlands, Okeechobee, Glades, Hendry, Holmes, Washington, Jackson, Gadsden, Calhoun, Liberty, Gulf and Franklin counties.

empty-office

$24 million spent and nothing to show for it.

Although $24 million is not an insubstantial sum, it was clearly never adequate to build a comprehensive rural broadband network reaching homes and businesses. Instead, the two groups envisioned a “middle mile” network funded by the government, with central offices in Orlando and Tallahassee equipped with microwave dishes and computer servers. Unlike most middle mile networks, the one proposed by the FRBA would rely on a network of microwave towers instead of fiber optics, and would ultimately serve all of its customers over a wireless network.

When complete, the wireless network was supposed to deliver up to 1Gbps capacity throughout the region, relying on leased space on existing cell towers to support microwave links that would bounce signals from one area to the next. Initially promising to serve more than 174,000 homes and 16,400 businesses, the one immediate flaw noticed by those skeptical of the proposal was the lack of a definitive plan to sell Internet service to paying residential and business customers. The brochures suggested existing commercial Internet Service Providers would magically step into that role. Early critics called that “wishful thinking.”

Despite what some felt was an untenable business plan and an incomplete application, the group won its federal “BTOP” grant of $24 million in 2010 and began a very lengthy planning process using well-paid consultants to get the network fully scoped out and built. Within a year, controversy quickly threatened to swamp the project, and a congressional oversight investigation quickly found evidence of wasteful spending and put its funding on hold. That would hardly be the first allegation raised against the FRBA and those overseeing it. By 2013, the Columbia County Observer had run more than a dozen stories reporting irregularities and other problems with the project. Few were noticed more than the report Rapid Systems, Inc., one of the contractors on the project, had filed a $25 million lawsuit replete with soap operatic allegations against FRBA for not being paid for its work.

Rapid Systems CEO, Dustin Jurman and CFO/VP Denise Hamilton. (Image: Columbia County Observer)

Rapid Systems CEO, Dustin Jurman and CFO/VP Denise Hamilton. (Image: Columbia County Observer)

Rapid Systems alleged everything from fraud and double-dipping to sexual promiscuity over what it called the “FRBA Fraud Scheme.”

At the heart of the lawsuit were allegations money was being misspent, “to pay inflated salaries to employees, who then fled to South America, and that grant money was used for inflated fees to consulting companies which were owned by FRBA principals.”

Rapid Systems claimed FRBA was very generous paying management consulting fees of $10,000 a month to an entity known as the Government Service Group (GSG), along with a pro rata share (3% of the grant) for a “Grant Compliance Fee” and an additional 13% of the grant as a “Capital Improvement Program Administrative Fee.” And you thought only Comcast and Time Warner Cable were creative conjuring up fees. When added up, it appeared just one consultant — GSG — would walk away with 16% of the entire grant — nearly $4 million in total “management fees” before a single broadband connection would be made.

The lawsuit also claimed the grant money was gorged on by the leadership of both non-profits, one who allegedly relocated to South America the lawsuit states in another aside. The two “were being paid fees in the amount of $8,500 a month to themselves cloaked as administrative and community outreach funds,” according to the lawsuit.

Phillip Dampier: To be a credible supporter of community broadband, it is responsible to call out the disasters so that they are not repeated.

Phillip Dampier: To be a credible supporter of community broadband, it is responsible to call out the disasters so they are not repeated.

Meanwhile, the public eagerly awaiting something better than the non-broadband AT&T and some independent phone companies were supplying in the region couldn’t get answers about the project’s progress. Neither could the media, which reported the business phone number for the FRBA would ring unanswered for hours or days. Those hired to provide community outreach about the broadband project were frequently unable to answer even basic questions about the network or its status, or where the principals involved in the project even met.

By 2014, Opportunity Florida’s Facebook page claimed the network was 90% complete. But the project now decidedly downplayed how many homes and businesses would get service. Instead, the middle mile network promoted itself as an institutional network, dedicated primarily to serving “community anchor institutions:”

The FRBA system provides lower cost, high capacity broadband to Community Anchor Institutions, commonly referred to as “CAIs.” CAIs include local government and public agencies including schools, libraries and hospitals. The NTIA grant was initiated with these unserved or underserved CAIs as the intended target. Most government and public services have moved, or are in the process of moving, to paperless transactions and record-keeping and need the additional broadband and Internet based capabilities. Another benefit of the FRBA system will be capacity to schools and libraries as both those institutions face online and digital mandates.

Commercial ISPs willing to use the network to offer service to individual non-institutional customers were invited to visit an Opportunity Florida webpage (now gone) for more information. There is no evidence any major ISP ever bothered. In fact, even institutional users didn’t seem very interested. We remain unclear if there was ever a single paying customer on the network, despite a report filed by the NFBA with the federal government that claimed through September 30, 2012, the NFBA had 11 anchor institutions, zero residents, and zero businesses hooked up to its network.

A year later, the Columbia County Observer went further and called some of those involved in evangelizing the project “clueless,” and based on the post-mortem of what has happened since, they may be right.

Those directly involved in the project have since displayed a stunning lack of knowledge about its operations and practices, or what has become of the $24 million:

The unfortunate "I see nothing, I hear nothing, I know nothing" brigade.

The unfortunate “I see nothing, I hear nothing, I know nothing” brigade answers questions from the media.

  • Gina Reynolds, the last executive director of FHREDI, which administered FRBA, claimed the network was running fine when she left in the summer of 2015 to start her own economic development consultancy. She may be among the very few that got out before the project ultimately fell apart. Although FHREDI managed to pay her for her services, it suddenly lacked any resources to pay anyone to replace her after she left;
  • Greg Harris, a Highlands County commissioner and FHREDI director, disclosed at a recent county commission meeting FRBA was in Chapter 7 bankruptcy and the group that oversaw it — FHREDI, was being dissolved. But like the phoenix rising from the ashes, some of those involved in FHREDI and FRBA are now associating themselves with a new group called the Florida Heartland Economic Region of Opportunity (FHERO). Says Harris: “We didn’t really know what FHREDI was doing. They were spending most of their opportunity on FRBA and the rural broadband. It got away from what we really needed to focus on.”
  • Terry Burroughs, an Okeechobee County commissioner, is FHERO’s chairman. But last year, the ex-telephone company executive was a FHREDI board member. His memory is excellent about where the taxpayer-funded equipment to run the network eventually ended up: in warehouses in Lake Placid and Tallahassee. But his answers were more vague when asked how things went so wrong. Burroughs tried to put substantial distance between himself and the failed wireless broadband network: “When I first got on the board, they were trying to negotiate with a contractor. Gina [Reynolds] was working with that, and it went on and on and on. There was probably a network at some given time, but I don’t think a last mile ever deployed. When I got there, the last mile was dark. … I never knew of a paying customer. They were trying to build a telephone company, and they were doomed to failure.”
  • Paul McGehee, business development manager for Glades Electric and a FHERO director, did an even better job explaining he knew nothing, saw nothing, and heard (almost) nothing: “The operator who was contracted to run it as a company stepped away from it,” McGehee said, adding he could not recall the contractor’s name. The flaw in FRBA’s plan, according to McGehee, was that while the grant bought the equipment, there were no federal funds for operations. “No one wanted to step up and operate the network, and there was no way to pay the tower leases… The end product wasn’t a viable sustainable thing.”

fhrediToo bad nobody bothered to consider that before spending $24 million of the taxpayers’ money on a non-viable network.

Commissioner Jim Brooks didn’t seem too bothered by the admissions of total failure. After hearing an explanation about the network’s demise and the money spent on it, he told his fellow commissioners he “didn’t have a problem with it.”

A multitude of articles that have documented this disaster (including our own from September 2011) illustrates what can happen when over-enthusiastic consultants overwhelm projects with happy talk not recognized as such by a board that has little or no understanding of the technology, the broadband business, or, in this case, the project itself. The claims and projections consistently simply bore no reality… to reality. What is even more concerning is some of those consultants didn’t work for free, and may have tapped a substantial portion of the total available grant for themselves.

It is also remarkable and disappointing to read candid assessments about a project “doomed to failure” from those with direct knowledge and or involvement only after the liquidator from the federal government turns up. As stewards of public taxpayer money, one expects more than a shrug of the shoulders and a quiet shuffle dance out of FHREDI into a new, reincarnated “rural economic development” initiative. How can we trust the same mistakes won’t be made again?

We remain strong supporters of community broadband, but messes like this hand potent ammunition to corporate-ISP-funded think tanks that use these kinds of failures to sully all public broadband projects. We must call out of the bad ones to be seen as credible supporting the good ones. It also never hurts to learn from others’ mistakes.

Among the biggest reasons this project was a flop (beyond the dubious skills of those in charge of overseeing it) was its size, scope, and technology choice. The biggest challenge to any rural broadband project is always “the last mile” — the point where the connection leaves a regional fiber network and reaches a nearby neighborhood’s utility poles and finally enters your home. It also happens to be the most costly segment of the network, and often the hardest to fund with government subsidies. But it is the one that makes the difference for individual homeowners and businesses who either have broadband or don’t.

Rural Floridians endure more broken promises for better broadband.

Rural Floridians endure more broken promises for better broadband.

Like too many middle mile projects of this type, the story initially fed to the press and supporters is that such networks will somehow alleviate rural broadband problems. Only later do supporters realize they are actually getting an institutional middle mile network that will offer service to hospitals, schools, and public safety buildings — not to homes and businesses. Ordinary citizens cannot access such networks unless a commercial ISP shows interest in leasing it to resell, which is unlikely. The closest most will ever get to experiencing an institutional network they paid for is staring at the fiber cable stretched across the utility poles in front of your house.

FRBA was too ambitious in size and scope, and a credible consultant should have advised those in charge to get credible evidence that a network built with grant money could be sustained without it going forward. If not, scale back the project or don’t apply for the grant.

This project proposed a wireless backbone to power a large regional wireless network. Winning support among anchor institutions was predictably difficult, because many already have existing contracts with commercial telecom companies. With government funding available in many instances, an institution can get full fiber or metro Ethernet service easier than a rural farmer can get 6Mbps DSL from a disinterested phone company.

The evidence shows there were few takers — institutional or otherwise — of what FRBA had to offer. Did the project organizers not see this lack of interest as a problem as the network prepared to launch? After launch, there were almost immediate signs it lacked enough of a customer base to sustain itself. Did the project backers assume the government would bail out the network or dump millions more into it to make it viable to sell to homes and businesses? Such assumptions would have been irresponsible.

There are too many underutilized middle mile or institutional fiber networks already built with taxpayer dollars that remain off-limits to those who paid to build them. Utilizing those networks by extending grant funding for last mile projects would be helpful, as would sufficient subsidies to assure middle mile construction is followed by last mile construction and actual service. We remain big believers in fiber to the home service. Although expensive, such projects are best positioned for success and future viability and can take advantage of the massive amount of dark fiber already laid in many areas. Some cities prefer to run the networks themselves, others contract day-to-day operations out to independent operators. Either would be preferable to a network that took six years to build and fail, without any evidence it could attract, support and sustain enough customers to support anything close to viability.

Federal Court Agrees With FCC: Broadband in a Utility; Net Neutrality Policies Upheld

netneutralityA federal appeals court today sided with the Federal Communications Commission, upholding its view broadband service is an essential utility that can no longer be left unregulated and open to the whims of large cable and phone companies.

The 2-1 decision by the U.S. Court of Appeals for the District of Columbia firmly establishes the FCC’s right to transition broadband from its old designation as a barely regulated “information service” to a “telecommunications service” subject to broad oversight by regulators under the FCC’s “Title II” authority.

The most immediate implication of the court’s decision is upholding the FCC’s Net Neutrality rules, which require Internet providers to grant equal access to all legal Internet content and applications regardless of the source, without favoring or blocking particular products or websites.

“After a decade of debate and legal battles, today’s ruling affirms the commission’s ability to enforce the strongest possible Internet protections — both on fixed and mobile networks — that will ensure the Internet remains open, now and in the future,” said FCC chairman Tom Wheeler.

The ruling left broadband providers smarting, especially wireless carriers that once expected to be exempted from Net Neutrality regulations. Wireless broadband services are now also considered common carrier utility services subject to Net Neutrality.

“The people have spoken, the courts have spoken and this should be the last word on Net Neutrality,” Free Press President and CEO Craig Aaron said in a statement.

At least one Republican FCC commissioner, Ajit Pai, disagreed and was heartened by news a very disappointed AT&T was vowing a quick appeal to the Supreme Court.

“We have always expected this issue to be decided by the Supreme Court, and we look forward to participating in that appeal,” said David McAtee II, the senior executive vice president and general counsel for AT&T.

“I continue to believe that these regulations are unlawful, and I hope that the parties challenging them will continue the legal fight,” Pai added. Pai has been a frequent critic of Net Neutrality.

But AT&T may find itself in the unenviable position of taking their case to the Supreme Court without the late Antonin Scalia on the bench. The ongoing opposition by Senate Republicans to hold hearings to consider President Obama’s nomination of Merrick Garland to fill the open ninth seat on the court opens the door to a 4-4 tie vote on the FCC’s authority to regulate broadband as a utility, which would automatically affirm the lower court ruling.

Comcast Pays Contractors Peanuts; Poor Workmanship, Bad Behavior Result of Low Pay

Phillip Dampier June 13, 2016 Comcast/Xfinity, Consumer News No Comments

raceComcast has systematically sought to flatten wage rates, drive small contractors out of business and overwork the independent contractors that remain, while paying them less than $20 for many service calls.

Those are some of the accusations leveled against Comcast in a federal lawsuit filed in Scranton, Pa., this month by two former Comcast installation contractors.

Owners of Cable-Line Inc. of Perkasie and McLaughlin Communications Inc. of Moosic argue Comcast deceived them in 2010 when it urged both companies to buy trucks and hire experienced installers while “secretly implementing” a cut throat “national subcontractor reduction plan” that gradually reduced the amount of compensation and time expected to complete installations and repairs.

As a result, the number of independent contracting firms Comcast works with has declined in the northeast from 176 in 2009 to 39 in 2012. Even as the number of available contractors have dropped, those that remain are under pressure to find employees willing and able to finish jobs fast and, as far as customers allege, not always completely.

comcastA veteran telecom supervisor told the Philadelphia Inquirer some installers are saddled with 15-20 service calls a day. That leaves little time to troubleshoot problems and as a result many technicians “hope for a quick, loose cable connection so they can move onto the next job.”

Rushing through service calls makes sense when one realizes those independent technicians are paid by the service call.

“Some calls last 20 minutes, and that’s where you’d pick up some time and quick dollars,” the supervisor told the newspaper.

But even if the installer does get a lot of simple jobs in a row, Comcast is still putting constant pressure on their potential earnings.

Triplett

Triplett

“The money that Comcast pays a contractor for each task they do at a house has gotten lower over the years,” said the supervisor. “A cable drop, running the cable from the pole to the house, used to pay about $20. Then it went down. The contractors tell new hires they can make $400/day, it’s like running your own business. That is virtually impossible because of limited time. Some installers may actually complete eight jobs (in a day) and gross $130. That’s not even $20 a stop. It varies, though, by what has to be done at the job site. Most of these guys use their own truck and pay their own fuel and insurance.”

“Every Woman’s Nightmare”

Comcast also makes sure those contractors are non unionized, which gives the cable company the upper hand on just about everything. As a result, the number of people willing to work long hours for what is often declining pay has become a perennial challenge at many contracting firms. Some are accused of lowering their employment standards long ago to accept more applicants, sometimes with disastrous results.

Last month, a Chicago-area jury took just 40 minutes to convict Anthony Triplett, a Comcast subcontracted cable technician, of the sexual assault and murder of Janice Ordidge. Almost a decade ago, Ordidge was found dead in her bathtub two days after Triplett arrived to fix her cable TV. Police immediately considered Triplett a suspect and questioned him several times while also collecting a sample of his DNA. Despite the prominent investigation, Premier Cable Communications, the company performing service work for Comcast, kept Triplett on the job. Seven weeks later, Triplett strangled, sexually assaulted, robbed and killed 23-year-old Urszula Sakowska during a service call in her home.

Prosecutors argued Triplett used his “house calls for Comcast” as a hunting ground for female victims, calling him a “sociopath and psychopath.” He is now serving double life sentences.

Cox’s Data Limbo Dance: Slashes “Ultimate” Allowance in Half, Lies About Why

Cox's data plan limbo dance. How low can they go?

Cox’s data plan limbo dance. How low can they go?

Cox Communications has cut by half the data usage allowance of one of its fastest broadband plans targeting so-called “heavy users,” exposing unsuspecting customers to expensive overlimit fees, while claiming usage caps are now mandated by law.

Stop the Cap! reader John C. wrote to tell us he discovered his allowance for Cox’s “Ultimate” Plan, delivering 200/20Mbps, has been slashed from 2,000GB to 1,000GB, with little warning except in an obscure support FAQ.

“About 95% of Cox customers are currently on a data plan that more than adequately meets the monthly needs of their household,” Cox claimed. “However, some households, particularly those with multiple Internet users that enjoy streaming TV or movies, may want to select an Internet package with a larger data plan. That is why we offer plans for all types of users so you can choose what is best for your household.”

The plan that most customers want is a flat rate, unlimited-use plan, one that Cox has unilaterally decided to stop offering. Just as bad: targeting the most widely available premium plan for a major usage allowance cut with no explanation whatsoever. It’s bad news for John, who says after paying Cox their asking price for Ultimate service, he cannot afford to also pay overage fees on top of that (currently $10 for each 50GB allotment, charged only in the Cleveland, Oh. area for now).

Customers who contact Cox and complain about their usage caps or allowance changes are being told false fables by Cox’s customer service specialists, who claim data caps are now the law in the United States.

Here is an example of an actual support session with Cox employees, (emphasis ours, edited (…) for brevity):

cox say noYou: I also learned that you have internet data cap?

Jenna: Data limits were implemented by the FCC in 2011. By law, we have to have them. If you exceed the limit for 3 consecutive months, you will be contacted to discuss your options for upgrading.

You: FCC? can you send me details about that

[…]

Jenna: As I mentioned, there’s no fee for exceeding those limits. If you exceed the limit for 3 consecutive months, you will be contacted to discuss your options for upgrading. You can save a copy of this chat transcript for your records if you wish.

Jenna: I can also get you over to Customer Care for more information.

You: so why would you mention FCC rules then?

Jenna: Because you asked about our data limits.

Jenna: That’s why we have them.

You: Sure so can you tell me what FCC rule from 2011 you are referrind to?

Jenna: Sure, I’ll get you the link to the FCC website.

[…]

Jenna: Sure thing. Allow me a moment to get you over to Customer Care chat for further information about our Data Caps policies, and why we have them.

[…]

Christian O.: I see, well our Internet packages have a data usage limit however if you exceed that limit we won’t downgrade your speed or restrict your access to Internet or charge you more.

Christian O.: I think I found some information on the date usage and the FCC on 2011. One moment, please.

You: but it says right there that you will cahrge $10 for 50GB after I reach data cap

You: And FCC is very strict about data caps

Christian O.: Give me a moment to check something.

You: ok thanks

Christian O.: If you exceed your data plan, Cox may notify you by email to alert you. Your service will not be interrupted if you choose to stay on your existing package except in the rare cases of excessive usage. In those extremely rare situations, Cox may suspend service after attempting to resolve the issue.

Christian O.: Cox is conducting a limited data usage trial in Cleveland, Ohio. In all other markets, Cox does not currently charge additional fees if your data plan is exceeded.

You: what you are doing with data caps / usage is illegal

You: But please send me the FCC rule from 2011 that Jenna and you mention

You: “Jenna: Data limits were implemented by the FCC in 2011. By law, we have to have them.”

Christian O.: I don’t have such rule that talks about that. Do you have the rule where it says that is illegal?

Christian O.: Just asking.

[…]

Christian O.: Honestly I don’t have any idea about the rule that Jenna was speaking about. Let me go ask my supervisor. One moment, please.

[…]

Christian O.: Unfortunately we couldn’t find any information about that rule established by the FCC.

To clarify, the FCC neither has rules for or against data caps. It has remained neutral on the subject, although FCC chairman Thomas Wheeler recently advocated imposing a moratorium on data caps or usage billing for up to seven years as a condition of approving Charter Communications’ acquisitions of Time Warner Cable and Bright House Networks.

Here are Cox’s current data plans, which are effective for all residential customers. However, only customers in Cleveland will face penalties for exceeding them at this time.

Package Monthly Included Data Speeds

Download / Upload

Starter 200 GB 5 Mbps / 1 Mbps
Essential 250 GB 15 Mbps / 2 Mbps
Preferred 350 GB 50 Mbps / 5 Mbps
Premier 700 GB 100 Mbps / 10 Mbps
Ultimate 1000 GB 200 Mbps / 20 Mbps
Gigablast (Where Available) 2000 GB 1 Gbps / 1 Gbps

Jesse Jackson Compares Set Top Box Competition to Bull Connor’s Fire Hoses

Bull Connor was Birmingham, Ala.'s notorious Commissioner of Public Safety

Bull Connor was Birmingham, Ala.’s notorious Commissioner of Public Safety in the 1950’s and 1960’s.

In an astonishing guest editorial published by USA TODAY, Rev. Jesse Jackson evoked imagery of the 1960s civil rights movement as a backdrop to claim the Federal Communication Commission’s plan to promote an open, competitive market for set-top boxes was racist.

“National news coverage of the snarling dogs, water hoses and church bombings in the American South were the catalysts to exposing the ugly truths of racism and bigotry in the 1960s. Local news outlets gave new meaning to what the struggle looked like for people on its front lines,” wrote Jackson. “That is why a new proposal at the Federal Communications Commission (FCC) to regulate TV ‘set top boxes’ has raised so much concern.”

That “concern” has come almost entirely from the cable and telco-TV industry and their allies, which have compared the potential breakup of a lucrative cable TV equipment monopoly to anti-Americanism, minority television genocide, an invitation to piracy and a pathway for total world domination by Google.

In April, we reported the rhetoric surrounding the proposal, which would create an open standard allowing any manufacturer to make and sell their own set-top box, had already taken Hyperbole Hill. But Rev. Jackson’s latest guest editorial rockets the ridiculousness of the cable industry’s opposition into the stratosphere.

Jackson claims (wrongly) the proposal will lead third-party manufacturers to segregate minority television content, apparently in a way that resembles life in rural Mississippi in 1962. It evokes dreams of hordes of Google vans roaming across the southern countryside looking for trouble by stripping networks like Revolt and Vme TV of their ad revenue and copyright protection. It just isn’t true. But one line in Jackson’s commentary does prove revealing — noting all these terrible events could all take place “without any compensation.”

Jackson

Jackson

This is the diamond in the rough of this near-senseless editorial. Like most things in the world of Big Telecom public policy, it’s all about the money. Jackson’s Rainbow PUSH Coalition apparently isn’t what it used to be. Originally created to promote civil rights and diversity, the organization these days is just as likely to promote Big Telecom mergers and its public policy agenda, usually in exchange for contributions to Jackson’s groups, although such quid-pro-quo is always hotly denied. Therefore, we shall call them monetary “coincidences.” His coincidental association with Comcast, AT&T, Verizon and others runs back more than a decade:

  • Bell Atlantic (later Verizon) coincidentally donated $1 million to Jackson and his groups. In 1999, Jackson coincidentally endorsed the merger of GTE and Bell Atlantic into a new entity known as Verizon, which coincidentally pledged $300,000 to Jackson annually through the year 2002;
  • In 1998 Jackson was strongly opposed to the merger of SBC and Ameritech (which would later emerge as AT&T), suggesting it was anti-democratic. After the two companies donated $500,000 to Jackson’s Citizenship Education Fund (given a dubious rating by Charity Navigator), Jackson coincidentally did a complete 180, praising the merger. It didn’t hurt that Ameritech coincidentally sold part of its cellular business to Georgetown Partners, owned coincidentally by one of Jackson’s closest friends.
  • Not to be left out, AT&T coincidentally donated $425,000 to Jackson’s Citizenship Education Fund in 1999, right after Jackson coincidentally withdrew his opposition to the merger of AT&T and TCI Cable (later sold to Comcast).
  • Jackson coincidentally has maintained a regular presence in proceedings involving Comcast’s various business dealings, particularly its merger with NBCUniversal, which it coincidentally endorsed as “pro-consumer.”

bullhoseJackson mentioned his views have the support of certain other civil rights organization including the National Urban League and the League of United Latin American Citizens (LULAC), two groups Stop the Cap! has written about extensively regarding their ongoing committed support of Big Telecom mergers, deregulation, and other public policy agendas. They don’t work for free — substantial contributions and other compensation from those same companies head into the coffers of both groups. LULAC counts AT&T, Comcast, Cox, the National Cable & Telecommunications Association, Time Warner Cable and Verizon as members of their “corporate alliance.” None of those companies support the FCC’s plan to open up the set-top box marketplace.

Jackson cheapens the legacy of the civil rights movement in his efforts to draw comparisons between the horrible atrocities of the past with the fat equipment profits the cable industry is counting on in the future.

His views are also simply provably wrong. Jackson’s claim that the government was somehow responsible for the destruction of local multicultural newspapers at a time when the entire newspaper industry continues to struggle against online media is ludicrous. His myopic view that the elimination of a minority tax certificate program is the reason minorities don’t own many radio and television stations today ignores the fact many former minority owners cashed out and sold those stations (at a massive profit) after the Clinton Administration deregulated the industry in the late 1990s, which lead to a massive wave of ownership consolidation. Finding individuals, minority or otherwise, that still own local radio and television stations isn’t as easy as it once was.

opinionJackson and his supporters are wasting their time fighting to preserve the dying concept of the 500-channel linear TV marketplace. Consumers, minorities included, are not clamoring for more minority networks littering the cable dial that spend much of their broadcast day airing program length commercials and reruns of Good Times or The Cosby Show. Many of these networks only add to the growing cost of cable TV. Viewers want on-demand access to quality original programming they can actually find and watch.

We’d also remind Jackson minorities also pay the outrageous price of set-top box rentals, something Jackson and his organization should be sensitive about. Busting the set-top box monopoly means every American will pay lower rates for this equipment. We do understand it won’t help Jackson’s bank account, or those of other civil rights groups that kowtow to their corporate friends, but who exactly do they represent?

Daring to suggest that this debate has anything to do with Bull Connor’s outrageous behavior in Birmingham, Ala. in 1963, where Connor ordered the city fire department to turn fire hoses on peaceful civil rights protesters and attacked them with police dogs, tarnishes the reputation of Jackson and his group and demonstrates just how desperate the cable industry is getting trying to credibly defend a monopoly. Jackson should withdraw those remarks.

Verizon: Forget About FiOS, We’re Moving to a Broadband Wireless World

Who needs FiOS when you can get 5G wireless service with a data plan?

Who needs FiOS when you can get 5G wireless service with a data plan?

Fran Shammo has a message for Verizon customers and investors: fiber optic broadband is so… yesterday. Your millennial kids aren’t interested in gigabit speed, unlimited use Internet in the home. They want to watch most of their content on a smartphone and spend more on usage-capped wireless plans.

Shammo is Verizon’s money man – the chief financial officer and prognosticator of the great Internet future.

Like his boss, CEO Lowell McAdam, Frammo has his feet firmly planted in the direction of Verizon Wireless, the phone company’s top moneymaker. If one ever wondered why Verizon Communications has let FiOS expansion wither on the vine, Mr. McAdam and Mr. Shammo would be the two to speak with.

This week, Shammo doubled down on his pro-wireless rhetoric while attending the Bank of America Merrill Lynch 2016 Media, Communications & Entertainment Conference — one of many regular gathering spots for Wall Street analysts and investors. He left little doubt about the direction Verizon was headed in.

Shammo

Shammo

“As we look at the world if you will, and we look at our ecosystem, […] the world is moving to a broadband wireless world,” Shammo told the audience. “Now, I am really – when I say world, I am really talking the U.S., right. So, but I do think the world is moving to a wireless world.”

In Shammo’s view, the vast majority of people want to consume content, including entertainment, over a 4G LTE (or future 5G) wireless network on a portable device tied to a data plan. Shammo predicted wireless usage will surpass DSL, cable broadband, and even FiOS consumption in 3-5 years. If he’s right, that means a mountain of money for Verizon and its investors, as consumers will easily have to spend over $100 a month just on a data plan sufficient to cope with Shammo’s predicted usage curve. In fact, your future Verizon Wireless bill will likely rival what you pay for cable television, broadband, and phone service together.

Millennials don’t want fiber, they want wireless data plans

Shammo argued millennials are driving the transition to wireless, claiming they already watch most of their entertainment over smartphones and tablets, not home broadband or linear TV. His view is the rest of us are soon to follow. Shammo claims those under 30 are turning down cable television and disconnecting their home broadband service because they prefer wireless. Others wonder if it is more a matter of being able to afford both. A 2013 survey by Pew data found 84% of households making more than $54,000 have broadband. That number drops to 54% when annual household incomes are lower than $30,000 per year. But those income-challenged millennials don’t always forego Internet access — some rely on their wireless smartphone to access online content instead.

A microcell

A microcell

Verizon Wireless may be banking on the same kind of “hard choice” many made about their landline service. Pay for a landline and a mobile phone, or just keep mobile and disconnect the home phone to save money. Usage growth curves may soon force a choice about increasing your data plan or keeping broadband service at home. Shammo is betting most need Verizon Wireless more.

Verizon FiOS is really about network densification of our 4G LTE network

Shammo continued to frame its FiOS network as “east coast-centric” and almost a piece of nostalgia. The recent decision to expand FiOS in Boston is not based on a renewed belief in the future of fiber, Shammo admitted, it is being done primarily to lay the infrastructure needed to densify Verizon’s existing LTE wireless network in metro Boston to better manage increased wireless usage. Shammo’s spending priorities couldn’t be clearer.

“Obviously, we said, we would build up Boston now, because it makes sense from a LTE perspective,” Shammo said. “We can spend $300 million over the next three years to make that more palatable to expand FIOS. So we will continue to expand that broadband connection via fiber where it makes financial sense for us.”

verizon 5gIn other words, it is much easier to justify capital expenses of $300 million on network expansion to Wall Street if you explain it’s primarily for the high-profit wireless side of the business, not to give customers an alternative to Time Warner Cable or Comcast. FiOS powers cell sites as well as much smaller microcells and short-distance antennas designed to manage usage in high traffic neighborhoods.

Shammo also believes Verizon must not just be a ‘dumb wireless’ connection. Controlling and distributing content is also critically important, and Shammo is still a big believer in Verizon’s ho-hum GO90 platform, which compared to Hulu and Netflix couldn’t draw flies.

Even Verizon CEO McAdam admitted a few weeks ago at another Wall Street conference GO90 was “a little bit overhyped.” Most of GO90’s content library is mostly short video clips targeted at millennials with short attention spans. The downside of making that your target audience is the rumor many who sampled the service early on have already forgotten about it and moved on.

Forget about congested home and on-the-go Wi-Fi and expensive fiber optics. Verizon will sell you 5G wireless (with a data plan) for everywhere.

Shammo believes the future isn’t good for Wi-Fi in the home and on-the-go. As data demands increase, he believes Wi-Fi will become slow and overcongested.

“There is a quality of service with our network that you can’t get with others,” Shammo said. “I mean, most people in this room would realize that when Wi-Fi gets clogged, quality of service goes significantly down. It’s an unmanaged network. You can’t manage that.”

Instead, Verizon will eventually deploy 5G wireless instead of FiOS in many areas without fiber optic service today. Frammo said 5G would cost Verizon a lot less than fiber, “because there is no labor to dig up your front lawn, lay in fiber, or be able to fix something.”

Shammo doesn’t believe 5G wireless will replace 4G LTE wireless, however.

“LTE will be here for a very long time and be the predominant voice, text, data platform for mobile,” Shammo said.

So instead of unlimited fiber optic broadband, Verizon plans to sell home broadband customers something closer to Wi-Fi, except with a data allowance. It’s a return to fixed wireless service.

Verizon Wireless' existing fixed wireless service is heavily usage capped and no cheap.

Verizon Wireless’ existing fixed wireless service is heavily usage capped and not cheap.

Just a few short years ago, Verizon was looking to fixed wireless as a replacement for rural DSL and landline service. Now Shammo sees the economics as favorable to push a similar service on all of its customers, except those already fitted for FiOS. That changes the dynamics on usage as well, because Verizon Wireless ditched unlimited service several years ago except for a dwindling number of customer grandfathered in on its old unlimited plan.

Current 4G LTE fixed wireless customers can expect 5-12Mbps speeds with data plan options of $60 for 10GB, $90 for 20GB, or $120 for 30GB. The 5G service would be substantially faster than Verizon’s current fixed LTE wireless service, but the company’s philosophy favoring data caps for wireless services makes it likely customers will pay much higher prices for service, higher than Verizon charges for FiOS itself.

Time Warner Cable Says Tiny North Carolina Power Co-Ops Are Bullies

twc repairTime Warner Cable says it is forced to pay monopoly rates to rent space on North Carolina’s publicly owned utility poles and it now wants the state government to settle the issue by regulating prices to better reflect actual costs.

The cable company is suing five rural, member-owned electric cooperatives at the North Carolina Utilities Commission, claiming the tiny utilities are bullies that routinely stonewall, coerce, retaliate and strong-arm the country’s second largest cable company into paying up. Time Warner Cable claimed when it refused to pay one co-op’s rate demands in full, the utility threatened to add the unpaid fees to Time Warner’s electric bill and eventually cut off electricity if it went unpaid. The cable company also claims it has faced penalty fees in the millions of dollars and in one case, a threat to call the local sheriff on a cable technician repairing a line during a service outage.

The News & Observer reports the public utilities and cable operator are at an impasse. Rural utilities claim they are being undercut by a federal rate formula that many for-profit, investor-owned utilities subscribe to that requires cable companies to pay $5-7 per pole per year in rental fees. But many rural co-ops have substantially higher costs, do not generate their own electricity, have wiring and poles stretched between significantly fewer customers and don’t set rates and policies with an aim to compensate investors and shareholders.

Project4.qxdThe five public utilities each serve between 26,800-122,000 customers. Altogether, the five maintain 75,000 utility poles now involved in the dispute. All charge considerably more for pole rentals than Duke Energy, the state’s largest for-profit utility, which gets somewhere between $5-7 a year for each pole. Co-ops South River EMC is seeking $17.40 per year. Carteret-Craven EMC wants $23.60 a year.

The National Rural Electric Cooperative Association explains the disparity in rates is the result of the higher risks co-ops face if the local cable company gets sloppy and damages the pole or creates operational or safety issues.

CCEC Slide“In order to maintain 501(c)(12) cooperative tax-exempt status, cooperatives charge cost-based rates for their services, including pole attachments,” claims NRECA. “Some costs are difficult to identify and quantify, especially operational or safety issues that improper pole attachments may cause. If a federal uniform rate pushed attachment rates lower than actual costs, member owners of the not-for profit electric co-op would wind up subsidizing cable, broadband and telecommunications corporations, many of which are for-profit entities.”

NRECA claims the federal pole attachment rate formula that Time Warner Cable now advocates be applied across North Carolina was set artificially low to promote rural broadband expansion by enticing cable operators to wire areas they have never wired before. While that may sound good for rural consumers looking for cable broadband service, electric ratepayers could end up subsidizing the cable company’s expansion through higher electricity rates to recoup unpaid pole expenses. The electric co-op group also argues that even with artificially low pole attachment rates, that doesn’t guarantee cable companies will actually invest the savings into service expansion or lower prices for their customers.

Ironically, cable operators like Time Warner Cable that show little interest in sharing their infrastructure with others argue rural co-ops should be forced to share their poles.

“Once cable operators have constructed their aerial networks on existing pole infrastructure,” Time Warner wrote, “they are essentially captive because it would be prohibitively expensive and impractical (or impossible) to rebuild those networks underground or to install their own poles.”

Verizon Workers Return to Jobs After Union Declares Victory

cwaThe Communications Workers of America just proved there is strength in numbers. After 39,000 network technicians and customer service representatives employed by Verizon Communications went on strike April 13 after nearly a year without a contract, Wall Street pondered the potential impact of $200 million in lost business for Verizon’s FiOS, phone and television services.

Reports from customers and union observers suggested Verizon’s temporary workforce of strike replacements proved inept and unsafe, putting increasing pressure on Verizon executives to respond to union demands to share a piece of Verizon’s vast and increasing profits.

The CWA and the International Brotherhood of Electrical Workers (IBEW) have also been some of the strongest advocates of pushing Verizon to continue service upgrades, particularly for its FiOS fiber to the home service. The unions believe the fiber upgrades not only benefit the workers who install and maintain the optical fiber network, but also help Verizon sell more products and services to customers who would love an alternative to their local cable company. Although Verizon FiOS has a substantial presence in major Eastern Seaboard cities, vast areas of Verizon territory are still dependent on its aging copper wire networks that can handle little more than basic landline service and slow speed DSL.

The seven week strike was the largest and longest strike action in the United States since 2011, and attracted the attention of the Obama Administration and the two Democratic candidates for president. It was also one of the most effective, from the union’s point of view.

Verizon workers have been on strike since April 13.

Verizon workers have been on strike since April 13.

Verizon executives eventually agreed to ‘share the wealth’ with workers, offering to hire 1,400 new permanent employees and pay raises just above 10 percent. It was a long journey for the workers and the unions, which have fought for a new comprehensive agreement with the company for several years. The CWA last struck Verizon for two weeks after negotiations deadlocked in 2011. Their latest contract ended last August, leading the union to begin several months of “informational picketing,” which effectively meant workers visibly protested Verizon’s policies towards its employees but stayed on the job while doing so.

Conservative groups attacked the unions and defended Verizon officials in editorials and columns. Billionaire Steve Forbes called Verizon employees “bamboozled” and greedy. Unless workers capitulated to Verizon executives’ wise and realistic demands, “Big Labor” would reduce Verizon’s tech revolution to something that “looks more like Detroit than Silicon Valley.” Forbes had nothing to say about Verizon’s explosive growth in compensation and bonus packages for the company’s top executives, or its increased debt load from buying out Vodafone, its former wireless partner, or its generous dividend payouts and share buybacks to benefit shareholders.

Did Verizon Capitulate Because it Intends to Sell Off its Wireline Networks?

Is Verizon planning on selling off its wireline networks?

Is Verizon planning on selling off its wireline networks?

Some on Wall Street were visibly annoyed that Verizon capitulated. Some analysts predicted it was the beginning of the end of Verizon remaining in the wired networks business.

“They needed to end the strike and they bit the bullet,” said Roger Entner of Recon Analytics. He said he thinks the deal “reinforced their commitment to basically exiting [wireline], the least profitable, most problematic part of the business. [The new contract] gives Verizon four years basically to get rid of the unit. Let it be somebody else’s problem.”

That somebody else is likely Frontier Communications. Stop the Cap! has predicted for more than a year our expectation Verizon Communications will continue to gradually sell off its wired service areas, starting with those inland regions not FiOS-enabled, to Frontier as that smaller company’s capacity to borrow money to finance transactions allows. Frontier has a strong interest in staying in the wireline business, and is acknowledged to have stable and friendly relations with its unionized workforce, including former Verizon workers.

Jim Patterson, CEO of Patterson Advisory Group, believes Verizon’s recent investments in fiber optics signals it does intend to stay in the wireline business. But there is a careful line to be drawn between wireline investments in services like FiOS and those made to support its much more profitable wireless unit, Verizon Wireless.

Bruce Kushnick, executive director of New Networks Institute, is increasingly skeptical about Verizon’s FiOS spending priorities.

Shammo

Shammo

“According to the NY Attorney General, about 75% of Verizon NY’s wireline utility budget has been diverted to fund the construction of fiber optic lines that are used by Verizon Wireless’s cell site facilities and FiOS cable TV,” Kushnick wrote last week in a Huffington Post article that questions Verizon’s announced investments in wiring Boston with fiber optics for FiOS. “On the 1st Quarter 2016 Verizon earnings call, [chief financial officer Fran] Shammo said that the build out is for another Verizon company – Verizon Wireless—and it is going to be paid for by the wireline, state utility— Verizon Massachusetts; i.e., it is diverting the wireline construction budgets to do another company’s build out of fiber, to be used for wireless services.”

If Kushnick is right, Verizon may not care whether the service area(s) it sells are well-fibered or not. The fact Verizon recently sold FiOS-enabled service areas in Texas, Florida, and California to Frontier Communications may bolster Kushnick’s case. Shammo’s statements to Wall Street suggest Verizon is primarily attracted to investing in areas where it needs to improve its wireless service, not its landline, broadband, and television services, delivered over FiOS fiber optics.

“We’ll take one city at a time,” Shammo said on the same conference call. “Obviously we still don’t have Alexandria (Virginia) built out or Baltimore. So if we get to a position where we believe we’re going to need to invest in [wireless network/cell] densification in those cities, then that’s an opportunity for us to take a look at it. But at this time we’re concentrating on Boston.”

Unions Can Make a Big Difference for Workers

Nobody believes individual workers could have negotiated the kind of salary and benefits package the CWA and IBEW won for their organized workforces. The New York Daily News heralded the end of the strike as “score one for the middle class — and for the importance of collective bargaining.”

As wages continue to stagnate for most Americans, union supporters call organized labor the last bulwark against a global wage race to the bottom for the middle class. Challenged by cheap labor overseas, increasing health care costs, and government policies some claim only promote accelerating wealth for about 1% of the population, the CWA’s victory forced Verizon to share some of its profits with the workers that helped make those profits possible.

Share the wealth

Share the wealth

“Executives get performance bonuses, stock awards, and retention bonuses for doing a good job, so why shouldn’t we?” argued one picketer outside of a Wall Street event featuring a Verizon executive.

Verizon’s last “final offer” before capitulating was a 6.5% salary hike and little, if any, future job security. Now Verizon will have to hire additional permanent call center workers instead of outsourcing that work to Asian-based call centers. The unions also won other concessions that reduce compulsory relocation to other cities, canceled planned pension and disability insurance cuts, and the CWA got its first contract for Verizon’s previously non-unionized wireless retail force.

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