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Verizon Abandoning Copper Network in Multiple Northeastern/Mid-Atlantic Cities

Phillip Dampier September 21, 2017 Consumer News, Public Policy & Gov't, Verizon No Comments

Verizon Communications will decommission its existing copper wire facilities in multiple markets in Delaware, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, and Virginia starting in 2018.

In a series of requests filed with the Federal Communications Commission, Verizon is asking to compel customers to switch service to Verizon’s FiOS optical fiber network or find another provider. While Verizon’s fiber network has a better reliability record than Verizon’s deteriorating copper facilities, some residential customers may be compelled to pay more for FiOS service than they used to pay for landline and DSL service over Verizon’s copper network. Their phone service may also no longer work in the event of a power failure.

“We will offer the service at a special rate for customers who migrate from copper to fiber as a result of the retirement of our copper facilities,” Verizon said, but the company did not guarantee that rate would not reset to regular priced FiOS service down the road.

Businesses may also have to invest in technology upgrades to switch to fiber optic service when Verizon pulls the plug on copper-delivered services.

The wire centers (central offices) where copper decommissioning is planned are disclosed in these company documents (click on links below to see if you are affected):

DELAWARE

MARYLAND

MASSACHUSETTS

NEW JERSEY

NEW YORK

PENNSYLVANIA

RHODE ISLAND

VIRGINIA

 

Even Frontier Hints Without Major Broadband Upgrades, It’s Dead

Phillip Dampier September 18, 2017 Consumer News, Frontier 5 Comments

Frontier Communications spent $2 billion in 2014 to purchase AT&T’s Connecticut wireline business, believing it could make a fortune selling internet and cable television service to wealthy Nutmeg State residents over a network AT&T upgraded to fiber-to-the-neighborhood service several years earlier.

But thanks to a combination of management incompetence, cord-cutting, and Frontier’s competitors, the phone company’s dreams have turned bad in Connecticut, where the company lost hundreds of millions in the last three years along with at least 22% of its customers in the state. As a result, Frontier has turned a business that made AT&T $1.3 billion four years ago into one that earned Frontier $901.9 million last year.

Hartford Business notes Frontier’s biggest challenge is holding on to customers once they disconnect their landline service. In Connecticut between 2014 and 2016, Frontier lost 154,000 landline customers in the state, leaving just under 522,000 remaining landline customers. That is way down from the 675,000 customers AT&T had just before it sold the service area to Frontier. AT&T struggled with a similar problem, having more than one million landline customers in 2011, according to numbers from Connecticut’s Public Utilities Regulatory Commission (PURA). What made AT&T different is its investment in U-verse — AT&T’s answer to the challenge of lost landline customers. AT&T invested in a new fiber to the neighborhood network to boost broadband speeds and sell television service, giving departing landline customers a reason to continue doing business with AT&T.

For millions of Frontier Communications customers in its “legacy service areas” — owned and operated by Frontier for years, if not decades, those upgrades have been slow to come, if they have come at all. As a result, dropping Frontier service in favor of a wireless or cable company is not a difficult decision for many customers, and cable operators report significant growth where their only competition is DSL service from Verizon or Frontier.

Frontier’s own executives admit broadband upgrades are essential if Frontier is to survive the challenges of landline disconnects.

Customers are increasingly taking a pass on landline service.

“It’s a surprise to no one that we have voiceline declines in Connecticut,” Mark Nielsen, Frontier’s general counsel and executive vice president told the business newspaper. “The challenge is to build our internet and video business so as to offset the declines in voice. We are very committed to the Connecticut operation, we see great potential in it.”

That commitment is coming in the form of internet speed upgrades. Frontier’s primary competitors in the state are cable operators Comcast, Charter, and Cox, some offering speeds as high as a gigabit. Frontier is trying to compete by introducing speeds at or greater than 100Mbps, but so far only in a few parts of the state.

According to Nielsen, Frontier’s profitability is less important to investors than maintaining positive cash flow, which means assuring more money is coming into the operation than going out.

“Cash is what’s available to make investments to return capital to shareholders,” Nielsen said.

But that represents a conflict for Frontier, because many shareholders are attracted to the stock’s long history of returning money to shareholders in the form of dividend payouts. If Frontier has to invest more of its capital on upgrades and network upkeep, that can result in a dividend cut, which usually causes the share price to decline, sometimes dramatically. If Frontier can manage to invest less and cut costs, that frees up more money that can be paid to investors.

For the past several years, Frontier’s business plan has been to avoid spending large sums on network upgrades. But the company was willing to spend handsomely to acquire more customers from a three-state deal with Verizon that cost $10.5 billion. Frontier’s acquisition of Verizon landline customers in Florida, California, and Texas made sense for many shareholders because it would dramatically increase the number of customers served by Frontier, and that in turn would boost revenue and cash flow, from which Frontier’s dividend to shareholders would be paid. Frontier acquired a fiber rich, FiOS service area in all three states, which automatically meant the company would not need to undertake its own significant and costly upgrades.

But Frontier did have to transfer its newest customers from Verizon’s systems to those operated by Frontier. If a company spends enough time and money to protect customer data during such “flash cutovers,” they are usually successful. A company that attempts it without careful planning causes service to be disrupted, sometimes for weeks, which is exactly what happened after Frontier switched customers in the three states to its systems. Customers have never forgotten, and have left every quarter since the deal was first announced.

Financial analysts see where this is headed.

“Each and every quarter their revenues decline, and each and every quarter their customer totals decline,” David Burks, a financial analyst at Hilliard Lyons, told the newspaper. He called Frontier a company that is struggling. He added Frontier needs to stem revenue erosion. He downgraded Frontier’s stock last month after the company reported a second-quarter net loss of $662 million. He could not ignore what he called “disturbing trends,” such as an 11.5 percent year-over-year decline in total customers across Frontier’s entire operation.

 

To win new customers Frontier must improve its network with upgrades that will cost the company billions — spending that is certain to affect Frontier’s shareholder dividend. Even if it does spend money to upgrade, some analysts are wondering whether it is too late.

“The time to play catch up has passed, given the time to market advantage that cable has, and we expect continued pressures from cable as DOCSIS 3.1 steps up the speed advantage that cable already enjoys,” wrote Jeffries in a a report written about by FierceTelecom. “In our view, it is far too late for the ILECs to ramp spend to compete, particularly given high leverage and the significant cost required to expeditiously play catch up.”

Deutsche Telekom: We’ll Build a Nationwide Fiber Network If You Let Us Monopolize It

German Chancellor Angela Merkel examines fiber optic telecommunications cables.

Germany has an internet access problem not very different from the one afflicting the United States and Canada. The national phone company, still partly owned by the government, remains mostly dependent on a decades-old wireline telephone network to deliver landline and DSL broadband service. The only way Deutsche Telekom will invest adequately to replace it with optical fiber is if they get assurances from the federal government they will be allowed to monopolize access to it.

According to the business weekly WirtschaftsWoche, a sister publication of Handelsblatt, Telekom executives have agreed to build a fiber-optic network everywhere in Germany provided that it is excluded from European anti-monopoly rules so that Deutsche Telekom wouldn’t be forced to open its network to competition.

The proposal from the German telecom giant was particularly audacious because many in the country blame it and its uncompetitive behavior for creating Germany’s slow broadband problem, but that did nothing to stop the company from asking to be shielded from competition.

“A fundamental departure from the kind of logic that viewed regulation of Deutsche Telekom (DT) as the normal state in the last 20 years is urgently needed,” the company said in a filing with the German Federal Network Agency, which regulates the internet in the country.

For most Germans, DT is the problem. The phone company has proven itself a formidable competitor across many parts of eastern Europe, where it bought control of privatized telecommunications companies that used to operate as government monopolies. But back home in Germany, it has been happy to continue offering DSL service that the rest of Europe cannot get rid of fast enough. In certain larger cities like Munich and Cologne, upstart fiber to the home providers have filled the broadband gap and have wired significant parts of both cities, and DT has responded with a fiber offering of its own without complaining about the cost of building a fiber network or the return on its investment.

Oberbürgermeister Wolff

But in smaller towns and villages across Germany — particularly in the eastern states, broadband has been terrible for years and under DT’s “leadership” it has not gotten much better, allowing other countries in the EU to sail past Germany in broadband rankings. Like AT&T and Verizon in the U.S., DT claims that where it has not upgraded its network, there is either no demand for fiber fast internet speed or inadequate return on investment. Also like in the U.S., DT has spent its money on other technologies, notably wireless, while investment in landline networks has not kept up.

Some German communities like Bretten, fed up with inaction, have taken charge of their own broadband future and are building their own fiber to the home networks. Martin Wolff has dreamed of a digital economy boost for his town of 28,000 located near Karlsruhe in western Germany.

As mayor, he has begged and pleaded with DT to give Bretten something beyond lackluster DSL service, which is now too slow to handle the kind of 21st century internet applications that better wired communities take for granted. Mayor Wolff wants Bretten known as a gigabit city. DT, in contrast, wants to leave Bretten as a forgotten digital backwater. The phone company had repeatedly told the community the broadband it gets now is more than good enough and nobody should hold their breath waiting for something better. DT’s few competitors, including Britain’s Vodafone, weren’t interested either. Bretten is too small… too… irrelevant to matter to their investors.

“They are only interested in serving the cream of the crop in the cities and don’t come to rural areas,” the mayor said.

Like in North America, Germans are asking themselves who should be in charge of their digital future — investor-owned telecom companies or the community itself. The country’s continued embarrassing showing in European broadband rankings has become an issue of national pride and has sparked a loud debate between established telecom companies and the public that wants faster and better broadband.

The noise of the debate has attracted the politicians, and the issue of German broadband has now taken center stage in the parliamentary elections, which will be held Sept. 24. Handelsblatt reports the issue of inadequate broadband now interests German voters more than the latest economic policy position paper or how Germany will manage to deal with U.S. President Donald Trump for the next three years. Many Germans have plenty of time for these kinds of offline debates, because online, it can take a minute to load a webpage on some of the country’s dial-up like DSL connections.

“Germany is one of the most under-supplied countries in Europe, especially in terms of rural coverage,” wrote Bernd Beckert, an internet expert at the Fraunhofer Institute for Systems and Innovation Research, in a recent study of European broadband. He said countries such as Switzerland, Spain and even tiny Estonia are far ahead of Germany. In fact, the Baltic states and many former Eastern bloc countries are moving towards a fiber future while Germany considers wrapping itself even tighter in copper wiring installed in the 1960s. More than 70% of German internet users get internet access through a DT-provided, ADSL-equipped landline. Many connect at just 1-6Mbps, about the same speed users were getting in the late 1990s when DT’s internet monopoly was abolished.

Since then, DT has done everything possible to encourage “competitors” to not build competing networks. In fact, most competing ISPs like 1&1, Versatel, Telefonica Deutschland, and Vodafone rent DT DSL-capable landlines to provision service to their customers. That means they cannot compete on speed and they are forced to rely on DT to maintain its wireline network. It is no accident that German adoption of fiber optics is stuck at only 1.8%, fifth from last place among the 35 member states of the Organization of Economic Cooperation and Development (OECD). In comparison, Japan and South Korea have more than 70 percent of their customers on fiber to the home connections.

Germany’s largest political parties that have been in government since 2005, the Christian Democratic Union (CDU) and the Christian Social Union in Bavaria (CSU) have tolerated DT and its anemic upgrade policies. Broadband stagnancy, many believe, would not be possible without acquiescence and appeasement by those in control of the country. That conspiracy theory is backed by many of Germany’s smaller political parties which believe it is time to change the government’s involvement with DT.

The Left Party’s platform supports nationalizing DT and returning it to a state-owned enterprise that will answer to the public policy priorities of the next government. The capitalist, pro-business Free Democratic Party wants to get the government completely out of its 32% remaining stake in DT and hope that free market solutions will emerge. In the meantime, that party proposes to use the proceeds of any sale to fund a national broadband subsidy fund to convince private telecom companies to upgrade their networks in underserved areas.

DT has not stayed quiet in the public policy debate either. After disappointing the German public by rejecting a proposal to build an open, nationwide fiber to the home network, the company has instead promised to upgrade existing DSL lines to newer technologies like VDSL and vectoring, which DT claims could deliver up to 100Mbps service. American phone companies like Verizon have been reluctant to head in a similar direction, admitting many of the next generation DSL technologies work better in the lab than in the field. Many of the technologies promoting the most dramatic speed improvements have also proved to be vaporware so far.

Deutsche Telekom HQ Bonn, Germany

“We are committed to vectoring, because it is the only way to provide people in rural areas with faster lines quickly,” Deutsche Telekom said in a blog post published in August. “If we are fixated on [fiber to the home], those in the countryside will remain left behind for years. It is simply impossible to roll out fiber lines to homes everywhere in the country. Neither the construction capacity nor the funding is available for that. Plus, there is quite simply no demand for it.”

Some of the other competitors in the market seem to agree with DT.

“No provider can achieve fiber optic expansion on its own,” said Valentina Daiber, a member of the board of Telefonica. Daiber said DT was already nearly $60 billion in debt. Daiber said she hoped a solution could be found after the election.

But just a week after Daiber made that claim Vodafone announced it will spend $2.4 billion on a new fiber to the premises network targeting 100,000 companies in 2,000 German business parks. The company will also spend up to $450 million partnering with municipalities to extend the network to about one million rural homes, in addition to boosting its current broadband speeds delivered to German cable customers to 1Gbps.

That announcement could cause DT’s DSL plans to eventually collapse, if Vodafone follows through on its fiber buildout.

Mayor Wolff has no intention of waiting to see how it all plays out. Wolff has convinced private fiber optics company BBV to install the fiber infrastructure and has a Dutch investor partner arranging $12 million in financing, which is always the biggest stumbling block to get fiber buildouts underway. Upfront construction costs often deter many municipalities and would-be competitors from launching. But for Wolff, where there is a will, there is a way to deliver fiber fast broadband, and he is making certain it happens sooner rather than later.

Verizon Has No Interest in G.fast, Other DSL Improvements

Phillip Dampier August 17, 2017 Broadband Speed, Competition, Consumer News, Verizon 1 Comment

VDSL2 vectoring and G.fast are only as good as the copper wiring that extends to each customer. Up to 45 percent of North American wire pairs are in some state of disrepair.

Verizon has no interest in using advanced forms of DSL as part of its next generation broadband service.

Speaking at ADTRAN’s Broadband Solutions Summit, Verizon’s director of network planning Vincent O’Byrne made it clear DSL variants and copper wiring were not going to be a part of Verizon’s future network platform.

“We have no strategy for G.fast,” O’Byrne told Telecompetitor in response to a question about whether the company would upgrade or deploy advanced forms of DSL as part of overhauling its broadband networks.

Some telephone companies with large legacy copper networks have promoted DSL advancements including bonding, VDSL, and G.fast in lieu of costly fiber upgrades to shareholders and customers to improve the sluggish 6-10Mbps speeds many customers get from DSL service. But O’Byrne said Verizon has had nothing but headaches trying to make its legacy copper network actually deliver the improved broadband speeds those technologies promise on paper.

O’Byrne admitted Verizon’s copper network has not aged well, calling it “poor” in some areas. Verizon’s previous efforts to deploy VDSL and ethernet over copper to multiple dwelling units (MDUs) like apartment buildings and condos turned out so poorly, O’Byrne does not want to repeat those mistakes in the future.

For urban areas and MDUs, O’Byrne stressed he plans to take fiber all the way to each condo unit or apartment and get rid of the copper.

Verizon’s next generation fiber strategy will depend heavily on NG-PON2 technology, which is managed by unpowered splitters and filters — dramatically cutting the hardware costs associated with active fiber networks. Many PON networks are fiber to the premises, but then rely on Wi-Fi or Ethernet wired networks once inside a building. Verizon prefers an all-fiber solution, which is unusual among U.S. carriers. AT&T, CenturyLink and Windstream still use G.fast for relatively short runs of existing copper phone wiring inside MDUs and homes.

Verizon’s O’Byrne believes an all-fiber solution may cost more upfront, but will deliver better longevity, value, and fewer problems over time.

Verizon’s 18-Day Phone, DSL Outage in Tribeca

Phillip Dampier August 16, 2017 Consumer News, Public Policy & Gov't, Verizon 6 Comments

Verizon has left an undetermined number of its landline customers in the Tribeca neighborhood of New York City without phone or DSL service since Aug. 4 and has no plans to restore it before Aug. 22.

The phones at The Architect’s Newspaper stopped ringing almost two weeks ago and Verizon blames a cable cut they are in no hurry to deal with. The phone company has informed complaining customers they will have to wait at least 18 days before they will have a dial tone once again.

The outage is affecting Verizon’s legacy copper wire infrastructure which dominates in areas where Verizon FiOS is still not widely available. The newspaper filed a complaint with the N.Y. Public Service Commission in hopes it will prompt Verizon to work faster, but the company has shown no sign of that happening so far.

“If you are affected by this outage and have already reported the same to Verizon, we will see a better response if you also join us in filing a complaint with the Commission,” the newspaper asks its readers.

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  • LG: It is now Sept. 23rd, and the same is true. I am using a neighbor's satellite internet while my Comcast is still out. Many promises of "by 7pm if n...
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