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Republican-Controlled FCC Votes to Deregulate Business Data Services; Huge Win for AT&T, Verizon

WASHINGTON (Reuters) – The U.S. Federal Communications Commission voted on Thursday to effectively deregulate the $45 billion business data services market in a win for companies like AT&T Inc, CenturyLink Inc and Verizon Communications Inc that will likely lead to price hikes for many small businesses.

The 2-1 vote is a blow to companies such as Sprint Corp and others that claim prices for business data are too high and backed a 2016 plan under former President Barack Obama that would have cut prices.

It marked a significant step in FCC Chairman Ajit Pai’s aggressive agenda to roll back many existing telecommunications rules and Obama era regulations.

Small businesses, schools, libraries and others rely on business data services, or special-access lines, to transmit large amounts of data quickly.

The services are used, among other applications, to connect banks to ATM machines or gasoline pump credit card readers. Wireless carriers rely on them to get data from an end user to a node in a major network or the so-called backhaul of mobile traffic.

Thursday’s vote scrapped most regulatory requirements in the business data services market, although some price caps in areas with little competition will be retained.

Democratic FCC Commissioner Mignon Clyburn, who accused her Republican colleagues of siding with “the interests of multibillion-dollar providers,” said the ruling “opens the door to immediate price hikes” to small businesses. The rule deregulates pricing in a majority of counties and more than 90 percent of buildings using the services.

Pai defended the decision, saying regulatory requirements had threatened competition and investment.

Pai plans as early as next week to unveil plans to dismantle the Obama administration’s “net neutrality” rules, even as he favors a free and open internet under a different regulatory scheme.

He declined to discuss his plans, but said he had met this week with executives at Facebook Inc, Oracle Corp, Cisco Systems Inc and Intel Corp to discuss internet issues.

In recent days, the independent Small Business Administration Office of Advocacy, the European Union and Democratic members of Congress have raised concerns about the lifting of net neutrality rules.

Under Obama, then FCC Chairman Tom Wheeler in April 2016 proposed a sweeping reform plan for business data services that aimed to reduce prices paid. Wheeler had proposed maintaining and lowering lower price caps using legacy data systems with a phased-in 11 percent price reduction.

Sprint, which backed Wheeler’s proposal, told the FCC in a March 22 letter that “thousands of large and small businesses across the country were paying far too much for broadband because of inadequate competition.”

CenturyLink praised Thursday’s decision as something that aligned regulations with “competitive market realities.” Comcast Corp said the vote would help minimize “burdensome and investment-killing regulations, specifically on new entrants.”

Advocacy group Public Knowledge said the decision “doubles down on incumbent market power, forcing businesses, hospitals, schools, and ultimately consumers to pay more for essential connectivity.”

(Reporting by David Shepardson; editing by Andrew Hay and Tom Brown).

Netherlands, Luxembourg and Belgium Now Tops in European Broadband Connectivity Index

Denmark, Finland, Sweden and the Netherlands have the most advanced digital economies in the EU followed by Luxembourg, Belgium, the UK and Ireland, while Romania, Bulgaria, Greece and Italy are at the bottom of the latest European Digital Economy and Society Index (DESI).

DESI is a composite index that summarizes how well European states are performing in the 21st century digital/knowledge economy and how well they are evolving in digital competitiveness. The index helps countries track the likelihood of their success in the global market, and gives countries relative goals they should achieve to be ready to compete with North America and Asia.

In 2016, every EU Member State improved on the DESI, with Slovakia and Slovenia turning it the biggest growth. However, growth was so slight in Portugal, Latvia, and Germany it appeared almost static.

In general, the best scoring nations also scored highly in all the categories measured in the DESI: Connectivity, Human Capital/Digital Skills, Citizen Use of the Internet, Business Digital Technology Integration, and Digital Public Services.

In terms of internet connectivity scores which track broadband deployment and quality, the Netherlands scored highest in 2016 followed by Luxembourg and Belgium. The weakest EU performers were Croatia, Bulgaria, and Poland. Europe has made better inroads in guaranteeing access to broadband, with 98% of Europeans able to access at least one provider. About 76% of Europeans can today choose high-speed broadband at speeds of at least 30Mbps.

Wireless 4G mobile networks cover on average 84% of the EU’s population (measured as the average of each mobile telecom operator’s coverage within each country). At least 74% of European homes subscribe to wired broadband, and over one-third of these connections are high-speed. The number of high-speed connections went up by 74% in two years.

Having a skilled population comfortable with the digital economy and knowledgeable enough to navigate it are also important for commerce, education, and employment. Denmark, Luxembourg, Finland, Sweden, and the Netherlands scored the highest in 2016, while Romania, Bulgaria, Greece and Italy got the lowest scores.

Europeans still do not spend as much time on the internet as their American and Asian counterparts. Last year, 79% of Europeans went online at least once a week, up 3 points compared to 2015. But 44% of Europeans still lack basic digital skills. The most popular online activity in Europe is reading news online (70%), followed by online shopping (66%), social media (63%), and online banking (59%).

FCC Considering Making It Easier for Telcos to Kill Landline/DSL Service

The FCC has circulated a draft rulemaking that proposes to make it easier for phone companies to end landline and DSL service in areas they are no longer interested in maintaining existing infrastructure.

“We propose eliminating some or all of the changes to the copper retirement process adopted by the Commission in the 2015 Technology Transitions Order,” according to the draft, which would allow phone companies to end service “where alternative voice services are available to consumers in the affected service area.”

The proposed new policy would depart significantly from the one put in place during the Obama Administration because it would end assurances that competing providers would have reasonable and affordable access to wholesale broadband and voice services after phone companies mothball their copper wire networks in favor of wireless or fiber alternatives. If the FCC proposal passes, incumbent phone companies like Verizon and AT&T could end rural landline and DSL service and not make provisions for competitors to have access to the technology alternatives the phone companies would offer affected customers.

Verizon immediately praised the FCC proposal, saying it was “encouraged the FCC has set as a priority creating a regulatory environment that encourages investment in next-generation networks and clears away outdated and unnecessary regulations,” wrote Will Johnson, senior vice-president of federal regulatory and legal affairs at Verizon. “This action is forward-looking, productive and will lead to tangible consumer benefits.”

Previous attempts by Verizon to discontinue landline and DSL service did not lead to “tangible consumer benefits” as Verizon might have hoped. Instead, it led to a consumer backlash, particularly in areas affected by Superstorm Sandy in 2012. Verizon elected not to rebuild its copper wire infrastructure in affected coastal communities in New York and New Jersey. Instead, it introduced a wireless landline replacement called Voice Link that proved unpopular and caused a revolt among residents on Fire Island. The wireless replacement did not support data, health monitoring, credit card transaction processing, faxing, and was criticized for being unreliable. Verizon eventually relented and opted to expand its FiOS fiber to the home network on the island instead.

Verizon also attempted to market Voice Link to New York residents in certain urban and rural service areas affected by extended service outages in lieu of repairing its existing infrastructure. Under the proposed changes, the FCC would ease the rules governing the transition away from copper-based services, which include traditional landline service and DSL, in favor of wireless technology replacements and fiber optics.

Because telephone companies like AT&T and Verizon have made mothballing rural wireline infrastructure a priority, the FCC strengthened its rules in 2015 by doubling the notification window from 90 to 180 days, giving more time for affected customers to make other service arrangements or complain to regulators that there were no suitable alternatives. The FCC wants to roll back that provision to its earlier 90-day notification window in response to telephone company complaints that maintaining copper wire infrastructure is expensive and diverted investment away from next-generation networks.

AT&T has been lobbying for several years to win permission from state legislatures to abandon copper wireline infrastructure, mostly in rural areas, where the company has chosen not to upgrade to fiber optic networks. AT&T claims only about 10% of their original landline customer base still have that service.

Both Verizon and AT&T have shown an interest in moving rural consumers to more proprietary wireless networks, preferably their own, where consumers would get voice and data services. But consumer advocates complain customers could lose access to competitive alternatives, may not have a guarantee of reliable service because of variable wireless coverage, could pay substantially more for wireless alternatives, and may be forced to use technology that either does not support or works less reliably with home security systems, medical monitoring, faxing, and data-related transactions like credit card processing.

Other consumer groups like AARP and Public Knowledge have complained that shortening the window for a transition away from basic landline and DSL service to alternative technology could disproportionately affect the customers most likely to still depend on traditional wireline service — the elderly, poor, and those in rural areas.

AT&T Blames Labor Costs for High Cost of Fiber Expansion

Phillip Dampier April 5, 2017 AT&T, Consumer News No Comments

AT&T wants to pass 12.9 million homes with its fiber to the home upgrade, but is upset about the price of those doing the work.

In an effort to cut costs, Fierce Telecom reports AT&T is discontinuing the practice of having two technicians prepare a home or business for fiber — one working outdoors on the fiber drop to the home and the other installing inside equipment like wiring, set-top boxes and gateways. Now one AT&T technician or subcontractor is expected to do it all.

“Originally we had a technician who placed the fiber drop and ONT [optical network terminal] on the side of the home and then they turned it over a technician inside the house that get the customer going with their services,” said Kent McCammon, lead member of technical staff at AT&T Labs. “The desire was to have what was formerly called the inside technicians perform the fiber drop, but in order to do that we had to train technicians who were not using to dealing with fiber.”

An AT&T Fiber cable placed on a pole in Dunwoody, Ga. (Image: Heneghan’s Dunwoody Blog)

To simplify training and cut costs, AT&T has been using field installed mechanical connections and pre-connectorized fiber drops, which means the installer no longer has to manually splice fiber cable connections, saving time. But as a result the technicians can no longer test the actual performance of the fiber connection to the home.

“When the technicians did a mechanical connection, you don’t have the visibility like you do with a fusion splicer where you can actually see it’s a good connection,” McCammon said. “[Once] the ONT’s green light turned on […] they left whether it was well done or not.”

That has been a risk AT&T is willing to take to speed expansion of fiber service to more of its customers, but it has also increased the number of service calls when customers are left with substandard service.

“In our recent analysis we did a few weeks ago, we’re seeing lines with variable optical power,” McCammon said, a sure sign there is a technical fault. “It’s 5% of the areas where we have installed fiber so 95% of the cases have a good connection.”

In most cases, McCammon said problems are usually the result of a bad connector and when it is replaced, power levels return to normal. It’s up to customers to notice a problem and call it in for now, but AT&T is studying whether optical time-domain reflectometer (OTDR) capability could be deployed to detect problems like air gaps or high reflection points inside the fiber.

AT&T is also reviewing how future fiber technologies can co-exist with AT&T’s current GPON fiber network. The technologies that can currently overlap AT&T’s GPON network are XGS-PON and NG-PON2. AT&T is currently reviewing XGS-PON to see if it would be suitable to deploy symmetrical 10Gbps service in the future.

“We’re getting started XGS-PON,” McCammon said. “We have it in the lab and we’re starting the IT work on that system right now, and unless something changes, that’s where we’re headed after GPON for consumer and potentially for business.”

John Malone’s Liberty Interactive Buying Alaska’s GCI for $1.12 Billion

Phillip Dampier April 4, 2017 Consumer News, GCI (Alaska) 1 Comment

Cable magnate John Malone’s Liberty Interactive today announced it would acquire Alaska’s largest cable operator General Communication, Inc. (GCI) for $1.12 billion in an all-stock transaction.

Malone is the biggest individual shareholder of Charter Communications, Inc., and has decades of experience running cable companies in the lower 48 states and abroad. He also has experience structuring deals to avoid the U.S. tax authorities, and this deal is no different. Malone will pay zero taxes on the transaction by creatively spinning off the cable operator, first rechristening it as QVC Corp (named after his home shopping channel), then combining QVC Corp with Liberty Ventures and splitting off the combined company to existing Liberty Ventures shareholders. When the transaction is complete, Malone will again rename the cable company GCI Liberty and keep all the proceeds for himself and his shareholders.

GCI’s 108,000 customers won’t see any changes at the cable company and wireless venture this year. The deal is not scheduled to close until 2018.

GCI’s oldest customers may recall John Malone used to own the Alaskan cable operator, but under a different name. Until 1986, it was part of Malone’s Tele-Communications, Inc. (TCI) empire.

Expensive and usage-capped.

Malone’s operating philosophy these days is best represented by Charter Communications. GCI customers can eventually expect to see a dramatically simplified menu of choices for broadband, television, and telephone service. Broadband from GCI is expensive and usage-capped. Its $60 entry-level plan offers 50/3Mbps service that is “speed reduced” after 50GB of usage a month. For that reason, many customers prefer GCI’s “Faster” plan of 100/5Mbps service for $84.99 a month, with speeds curtailed after 250GB of usage. A gigabit tier is available in certain locations offering 1,000/50Mbps for $174.99 a month, speed-throttled after 1TB of usage.

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