If they build it, will Verizon, Time Warner Cable, or Comcast come?

The Massachusetts Broadband Institute (MBI) has just received a major shipment of cable it will use to construct part of its 1,300-mile fiber optic network, designed to provide better-than-dialup service to over 120 communities in western and north central Massachusetts.  That is, if providers show any interest in selling access to it.

The news that the broadband blockade in the western half of the state may finally come to an end is being trumpeted by local newspapers and TV newscasts from Springfield.  WSHM used the occasion to celebrate with current AOL dial-up user Ryan Newhouser, of Worthington:

A high-speed informational highway will be set up with thousands of miles of high-speed fiber optic cables. Those fibers will now be installed on utility polls across Western Mass.

Now residents sitting at their computers in frustration can finally look forward to high-speed internet access.

Perhaps.

As Stop the Cap! first explored earlier this year, the new fiber network is good news for western Massachusetts.  But it alone will not deliver service to the masses who desperately want faster Internet access.

The incumbent phone and cable companies have certainly not shown much interest.  Verizon treats western Massachusetts much the same way it served its landline customers in the rest of northern New England (Maine, New Hampshire, and Vermont.)  The company’s landline network was allowed to deteriorate along with Verizon’s interest in providing service in the largely rural states.  Eventually, it sold its operations north of Massachusetts to FairPoint Communications.  Comcast and Time Warner Cable are missing in action in many parts of the region as well.  As big phone and cable companies concentrate investments in more urban areas like Boston, many residents in places like Worthington can’t buy broadband service at any price.

MBI optimistically hopes the presence of its new fiber backbone and middle-mile network will change all that.  But outside of AT&T’s apparent interest it to provide service to its cell towers, there has been no publicly-expressed enthusiasm by Verizon or cable operators to begin serious investment in broadband expansion across the region.

The Last Mile Network Challenge

So what is holding western Massachusetts back?  The same thing that keeps broadband out of rural areas everywhere — the “last-mile” problem.  Traditionally, operators target urban and suburban areas for their investments because the construction costs — wiring up your street/home/business — can be recouped more easily when divided between a pool of potential customers.  Every provider has their own “return on investment” formula — how long it will take for a project to pay for itself and begin to return profit.  If your street has 100 homes on it, the chances of recouping costs are much higher than in places where your nearest neighbor needs binoculars to see your house.  Pass the ROI challenge and providers will invest capital to wire your street.  Fail it and you go without (or pay $10,000 or more to subsidize construction costs yourself.)

That is why eastern Massachusetts has plentiful broadband and the comparatively rural western half often does not.

MassBroadband 123 is the state’s solution to the pervasive lack of access across the western half of The Bay State.  It will consist of a fiber backbone and “middle mile” network, solving two parts of a three-part broadband problem.  The project’s commitment to deliver open access to institutions and commercial ISPs across the region is partly thanks to the availability of broadband grant money, particularly from the federal government.

Projects similar to MBI’s MassBroadband 123 typically include the hoped-for-outcome that private companies will step up and invest to ultimately make service available to end users.  Unfortunately, large incumbent providers often remain uncommitted to wiring the last-mile, and communities promised ubiquitous broadband end up with an expensive institutional network that only serves local government, public safety, schools, libraries, and health care facilities.

Thankfully, it does not appear MBI is depending on Verizon, which has shown no interest in spending significant capital on its legacy landline network or cable operators that are unlikely to break ground in new areas.

Communities are increasingly learning if they don’t have service today, the only real guarantee they will get it is by providing it themselves.  That is where WiredWest comes in.  It is a community-powered partnership — a co-op for broadband — pooling resources from 22 independent towns (with 18 more expected to join) to build out that challenging last mile, and deliver future-proof fiber to the home service.  No last generation DSL, slow and expensive fixed wireless, or limited capacity coaxial cable networks are involved.

WiredWest Members

Founding member towns span four counties, including Berkshire County towns of Egremont, Great Barrington, Monterey, New Marlborough, Otis, Peru, Sandisfield, Washington and West Stockbridge; Franklin County towns of Ashfield, Charlemont, Conway, Heath, New Salem, Rowe, Shutesbury, Warwick and Wendell; Hampshire County towns of Cummington, Heath, Middlefield and Plainfield; and the Hampden County town of Chester.

Most of the construction costs for the new network will likely come from municipal bonds, because government grants typically exclude last mile network funding.  Commercial providers often lobby against municipal-funded networks as “unfair competition,” a laughable concept in long-ignored western Massachusetts, where Verizon pitches slow speed DSL, if anything at all.

WiredWest compares rural broadband with rural electrification.  Community-owned co-ops provide service where few private companies bothered to show interest:

Think back to the rural electrification of America. Then, as now, it wasn’t profitable enough for private companies to build out electrical service to rural communities. Imagine where those communities would be today if the government hadn’t stepped in to help fund this essential service – which over time has sustained itself and become a profitable enterprise.

Rural fiber-to-the-home is affordable when you use an appropriate financing and business model that isn’t subject to the same short-term measures of profitability as a private company. A municipal model for example, allows capital investment that can be written off over a longer period of time.

This type of business model isn’t limited to community-owned broadband.  Other countries that treat broadband as an essential utility have, in some cases, boosted broadband beyond a simple cost/benefit “ROI” analysis.

Constructing a broadband network for western Massachusetts still presents some formidable challenges, however:

1. There is a serious imbalance in government grant programs.  A largesse of government funding for institutional broadband has delivered scandalously underused Cadillac-priced networks communities, libraries and schools cannot afford to operate themselves once the grant money ends.  Meanwhile, funding to cushion the cost of wiring individual homes and businesses is extremely scarce.  Isn’t it time to divert some of that money towards the most difficult problem to overcome — wiring the last mile?
2. Government impediments to community broadband must be eliminated.  Repeal laws that restrict public broadband development.  Early experiments in municipal telecom networks have taught valuable lessons on how to operate networks efficiently and effectively.  But the broadband industry engages in scare tactics that highlight failures of older public projects like community Wi-Fi in an effort to keep superior publicly-owned fiber-to-the-home networks out of their markets.
3. The public is not always engaged on the broadband issue and accepts media reports that misunderstand institutional broadband as a solution for those stuck using dial-up.  No matter how good a network is, if the “last mile” problem remains unsolved, the closest consumers like Mr. Newhouser will get to fiber service is looking at the wiring on a nearby telephone pole.  In many communities, fiber broadband paid for by public tax dollars is only accessible at the local public library.  Taxpayers must demand more access to networks they ultimately paid for out of their own pockets, and should support existing public broadband initiatives wherever practical.

WSHM in Springfield says if you don’t have broadband in western Massachusetts now, it should be coming to your area soon.  But will it?  (3 minutes)

FairPoint Communications is under fire for counting customers “broadband ready” when, in fact, they can’t buy DSL service from the northern New England phone company at any price.

One of the commitments FairPoint made to regulators who approved their buyout of Verizon landlines in Maine, New Hampshire, and Vermont in 2007 was that the company would expand broadband availability to at least 87 percent of residents in states like Maine.  In October, FairPoint claimed it had met that target, but now the Office of the Public Advocate has found instances where the phone company counted customers who live too far away from the phone company’s facilities to buy the service as “served.”

FairPoint is apparently counting most customers within a DSL-equipped exchange as reachable by broadband, even if only some of them actually are.  The rest either live too far away to get proper broadband speeds, or are connected to inferior lines that will not sustain a serviceable connection.

Maine’s Public Utility Commission (PUC) is upset FairPoint seems to be padding the numbers in its favor.  Maine’s Public Broadcasting Network talked with commissioners:

“I just find it hard to reconcile that it’s in the public interest to include in the definition of addressable lines, a line on which no customer can be connected and to which Fairpoint has made no planning or economic commitment to serve in the future,” said Vendean Vafiades. She, along with fellow commissioner David Littell, voted in favor of a decision which is likely to require Fairpoint to re-calculate the 87 percent figure using a stricter methodology.

“And I do believe that Fairpoint has a commitment to be economically viable in this state and to provide good quality service. And at a minimum I think Fairpoint should be required to provide actual access to meet its merger condition and obligations,” said Vafiades.

The holdout vote was that of PUC Chairman Tom Welch, who sympathized with Fairpoint on this issue.

The vote in Maine is likely to force FairPoint, which had hoped it was “all done” fulfilling broadband obligations, to spend more to upgrade its network to sufficiently service customers it promised it would.

FairPoint defends their interpretation of the numbers, noting the company has spent more than $169 million across their northern New England territories on broadband, making good on their commitment.  The state’s consumer advocate and PUC disagree, so now all parties will be re-evaluating their numbers, and FairPoint customers still waiting for DSL might still have a chance to get it after all.

Maine’s Public Broadcasting Network reports on the controversy over FairPoint’s promise to serve at least 87% of Maine with broadband service. Maine’s public utility commissioners voted to ramp up the pressure on Fairpoint Communications with regard to their broadband rollout. The expansion of high-speed internet to most areas of Maine was one of the conditions of Fairpoint’s purchase of Verizon’s former landline operation in 2007. (3 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Verizon Communications and AT&T together represent the largest providers of legacy copper wire landline phone service in the United States.  Over the past ten years, the traditional landline business has taken a beating as consumers increasingly turn their backs on the technology Alexander Graham Bell helped invent more than 100 years ago.  No utility service faces more customer defections than the phone company, and providers are increasingly rewriting their business models or lobbying to abandon unprofitable service areas altogether.

For some customers, investments in network improvements have brought advanced fiber optics straight to the home.  But in smaller communities, customers are making due with a deteriorating network phone companies no longer want to maintain.

The Glorious Growth Years

Back in the late 1980s, before most of us realized there was an Internet (or that you might be able to access it from home), the concept of connecting computers together to share information meant buying a 300-1200bps modem and using your home phone line to dial up hobbyist computer bulletin boards, CompuServe, PeopleLink, Delphi, GEnie, and QuantumLink.

Landline service was never perfect, but it worked reliably enough to make and receive phone calls and connect to low speed data networks.  As the 1990s arrived, an explosion in data and wireless services would bring both growth and unprecedented challenges for traditional telephone companies. Businesses demanded access to additional phone lines to power dedicated data lines and fax machines.  Residential customers wanted extra phone lines as well, mostly to keep data traffic off the primary house line. It was the era of frenzied area code splits, cell phones for all, and talk America could even run out of seven digit phone numbers to assign to all of the new lines.

NYNEX is today known as Verizon

As revenue and earnings exploded with the installation of new voice, data, and fax lines, Wall Street investors soon took notice.  Sleepy and safe phone company stocks were suddenly hot, and a deregulation-fueled consolidation frenzy soon resulted as phone companies merged and acquired one another.  Among the Bell System operating companies, familiar names like NYNEX, Bell Atlantic, BellSouth, Southwestern Bell, Pacific Telesis, Ameritech, and US West were gone, replaced by AT&T, Qwest, and Verizon.  Independent phone companies were not immune to the merger and acquisition game.  Today’s largest independent phone companies including Frontier Communications, CenturyLink, FairPoint, and Windstream have all grown mostly through buyouts of other providers.

The Bottom Drops Out

The rapid growth years of the traditional wired phone line came to an end around the same time as the dot.com crash and accompanying recession from 2000-2002.  While cell phone growth would continue, new competitors — especially cable-delivered “digital phone” service and other Voice Over IP providers like Vonage seriously cut into market share and revenue.  The need for additional phone lines to access the Internet subsided with the growth of DSL and cable broadband.  As household income stagnated, choices began to be made about where to cut back, and the traditional landline was a popular favorite.  Why pay for both a landline and a cell phone?  The cell phone stayed, the landline went.  Even dedicated fax machines are increasingly deemed unnecessary in an e-mail world.

The growing realization that the traditional copper wire telephone line was at risk of being the next “horse and buggy business” forced companies to consider a handful of options: ride out the landline declines and lower shareholder expectations, transform their existing networks to sustain new products like faster broadband and television service to give customers reasons to stay, or transition focus on business customers who bring more revenue.

AT&T and Verizon have adopted all three strategies, depending on where customers happen to live.

AT&T: If You are Still Waiting for DSL From Us, Forget It

In October, John J. Stephens, chief financial officer and executive vice-president at AT&T made it clear to investors the company’s interest in growing its legacy wired business had come to an end.  The company had lost landline customers for years, most switching to cell phone alternatives, sometimes sold by AT&T itself.  Spending enormous sums to upgrade AT&T’s copper landline network just didn’t make financial sense in every area.  Instead, AT&T split its operating territories in two: those suitable for upgrades to the company’s U-verse/IP platform, and those in smaller communities who will soon find themselves pushed to switch to AT&T wireless service instead.  That makes the prospects for customers still waiting for wired DSL service from AT&T pretty dim.

“We’ll continue to focus on transforming [existing] DSL lines into high speed [U-verse].” Stephens said. “In those areas where we don’t have U-verse, I think our plans have been fairly clear. We expect to have an LTE [wireless mobile broadband] rollout to 97% of the country. [...] We believe that’s going to be able to provide a wireless solution at a high speed, good quality, good cost on a profitable basis for us. That’s the long-term solution to the non-U-verse areas.”

AT&T’s lobbyists have signaled this agenda for years, pressing state and federal lawmakers to get rid of “universal service” requirements that mandate reliable, basic landline telephone service to any customer in their service area who requests it.  AT&T wants the definition of “basic telephone service” expanded to allow the company the option of discontinuing its landline network and selling rural residents cell phone service instead.  The expense associated with maintaining AT&T’s degrading copper wire network is always cause for grumbling on Wall Street, most recently after this year’s repair costs from storms that impacted some of AT&T’s service areas.  Storm damages brought outages in the southern United States, flooded regions along the Mississippi, and rained-out areas of California.

Those problems were exacerbated when AT&T’s repairs don’t always correct the problems.  Repeated outages blamed on inadequate repairs and investment brought negative publicity for the phone company, as well as a number of requests to disconnect service as customers find other providers.

In places where AT&T will never deploy U-verse, AT&T has been content asking lawmakers to ease up on the phone company, urging that minimum service standards and oversight be abolished, along with the power of regulators to fine the company for repeated transgressions.  AT&T argues increased competition makes regulation unnecessary.

AT&T: Wants to eliminate universal service for rural America.

AT&T’s bean counters have calculated investment in U-verse only makes sense in urban-suburban areas.  In more distant suburbs and rural areas, the return on investment isn’t fast enough to justify spending money up-front on service improvements.  Maintaining the decades-old landline network doesn’t make much sense to AT&T either.  Instead, the company sees wireless service as the best prospect to serve its rural customers (and deliver the company higher profits from the more expensive service plans that come with the phones).

“What I see happening with LTE and data is just a huge growth opportunity,” said Ralph de la Vega, CEO and president of AT&T Mobility & Consumer Markets. “We mentioned today that our smartphones now make up 52% of our postpaid base. But I think the way we need to think about smartphones in the future is the smartphone is going to equal the phone in the future. It will be 100% in the next 2 or 3 years. These devices are so good and the costs are coming down so much that I think in the future, you could look at close to 100% penetration.”

Some customers may find AT&T penetrating their wallets, but for the phone company, better days may be ahead:

• Moving customers to the wireless platform exposes them to higher revenue, higher-priced wireless service plans;
• Basic cell phones, which come with lower-priced voice plans are being increasingly replaced with smartphones which come with required, extra-cost data plans;
• Getting rid of the rural landline network slashes AT&T’s upkeep costs and holds customers in place with two-year service contracts common with wireless phones.

Consumers happy with their existing landline service may be less than impressed with AT&T’s cellular network coverage, its dropped call-problem, and the company’s alternative for rural broadband – heavily usage-capped and expensive LTE network access.  AT&T sells wired DSL plans for as little as $14.95 a month with a 150GB usage limit.  AT&T’s wireless LTE network will cost considerably more and is accompanied with usage limits a fraction of that amount.

Verizon: A Tale of Two Networks

Big Red has two wired landline networks: screaming fast FiOS fiber to the home for some, slow speed DSL over a decrepit copper wire network for everyone else.

Verizon is less opaque than AT&T regarding which service areas it treats as valued assets and which aren’t worth the time of day.  The company began selling off its undesirable customers several years ago, starting with Hawaii.  Northern New England was next, followed by several former GTE territories Verizon acquired in 2000.

While Verizon enjoyed the proceeds of the tax-free transactions, most of the impacted customers did not.  Hawaiian Telcom floundered for a few years with bad service and an outrageous debt load before declaring bankruptcy.  Maine, New Hampshire and Vermont suffered through a year-long transition to buyer FairPoint Communications, complete with poor service and notoriously inaccurate billing before that company also declared bankruptcy.  Former Verizon customers in the Pacific Northwest, Indiana, and West Virginia (among others) are coping with Frontier Communications own billing and service problems.

The FairPoint Trust called the $2.3 billion acquisition of Verizon’s New England operations “disastrous.”  It also echoed what Verizon obviously understood itself: its landline operation in New England had been allowed to deteriorate into “inferior assets that had no future.”

Frontier Communications itself judged the network it purchased from Verizon in West Virginia in need of serious upgrades and repairs.  Critics of the deal called Verizon’s West Virginia network “a technical disaster area.”

But while Verizon is capable of landline neglect, it is also the only major phone company delivering true fiber-to-the-home service over its award winning (and expensive to build) FiOS network.

The feast or famine approach Verizon has used for capital investments has resulted in amazing service for some, a loss of reliable service to many others.

FiOS has allowed Verizon to remain a serious player, particularly in the northeast, despite the onslaught of competition from Cablevision, Comcast, and Time Warner Cable.  Average revenues earned from FiOS customers are much higher than what the company earns from customers on its copper wire telephone network.

Some Verizon shareholders have never liked the price for the company’s fiber future.  When the economy tanked in late 2008, an indefinite suspension of FiOS expansion soon followed, leaving Verizon’s network expansion plans in limbo.  The company is still slowly completing the portion of its fiber network promised under existing agreements, but has avoided introducing the service in new cities and towns.  At the same time, Verizon is loathe to maintain investment in its antiquated copper wire landline network, which in some areas was supposed to be retired in favor of FiOS.

Bistro Chat Noir: Reliable Verizon phone service is not on the menu.

As long as Verizon’s older network can be held together, with fingers crossed, customers still have a dial tone.  But when things start to fail, customers are in for serious headaches.  They are popping aspirin almost daily at Bistro Chat Noir, a prestigious French restaurant along Madison Avenue on Manhattan’s Upper East Side.  If you plan to dine there, it is best to bring cash.  Even if the management wanted to take your Visa or Mastercard, the restaurant’s phone lines are out so often, they can’t easily process your payment.

These days, the resourceful owners rely on a neighbor’s graciously shared Wi-Fi connection (presumably powered by competitor Time Warner Cable) to process credit card transactions manually.

Waiting for FiOS

The New York Times wrote Verizon’s atrocious level of service isn’t isolated to one bistro:

“Obviously, this is not the way we want to do business,” said Ms. Latapie, who has started giving clients her personal cellphone number to avoid missing reservations when the restaurant’s phone is not performing properly. “When people can’t get through, I tell them it’s Verizon. And if they live in this area, they know — because they have the same problem.”

However irritating, sporadic utility failures are not uncommon. But along a a stretch of Madison Avenue in what is arguably the city’s most expensive shopping and eating district, phone and Internet blackouts have become a nightmarish routine of life for many expensive restaurants, stores and hotels.

For weeks now, mundane tasks — making dinner reservations and paying for purchases by credit card — have become a frustrating challenge.

“We are in the highest rent district in North America and we don’t have communication,” said Jillian Wright, whose spa on East 66th Street is on the second floor of a brownstone building and not ideal for walk-ins. Ms. Wright said she was losing clients daily, and her spa’s phone number goes straight to a voicemail message apologizing to clients for Verizon’s service.

The service failures have affected dozens of businesses, primarily in the East 60s along Madison Avenue. The scope of the problem varies, with some businesses having no phone or Internet service at all for the past several weeks and others experiencing blackouts that last days or a few hours.

Meetings with Verizon officials have deteriorated into spin-and-excuse sessions where company officials promise results but continue to deliver lousy service.  It turns out the problem is Verizon’s ancient copper wiring found underneath the streets in the area.  Just two feet away from Verizon’s cables are steam heating pipes, which warm the tunnels and create major condensation problems.  Couple that with water runoff from the streets above — salt-laden in the winter time — and you have a recipe for corrosion that destroys reliable phone service.

Eventually, Verizon plans to wire FiOS fiber across a large section of Madison Avenue, but with the company’s unwillingness to invest appropriate sums to get the job done, business and residential customers are simply kept waiting.

Or they can switch to Time Warner Cable, and many are.

Your Telephone Is Temporarily Out of Service…

A traditional overhead phone cable is packed with cable pairs for neighborhood phone service

Verizon’s service woes are not just for big city dwellers.  Residents in Virginia are coping with Verizon landline problems in suburban neighborhoods, too.  Verizon employees openly admit they are fighting a losing battle with management to replace defective cables and equipment that should have been replaced years ago.  Management keeps winning and customers keep losing.

“When we come to this area, we dread it,” admits Alex Long, a cable splicer at Verizon for 22 years.

Long just pulled up to a pole off Burksdale Road in Norfolk and found nothing he had not seen many times before  — untrimmed tree branches overgrown into the overhead wires.  The branches had managed to rub the phone cable’s insulation down to bare copper wire.

As a result, whenever it rains, telephone service in the neighborhood becomes sporadic.  If tree branches don’t knock service out, cable-chewing squirrels do.  The lines, the equipment, and the technology is well past its prime, but Verizon management insists repair crews fix what is already there instead of replacing it with something better.  It’s all a matter of money, and Verizon wants to spend as little as possible on its copper landline network.

Long’s experiences were the highlight of a piece published by the Virginian-Pilot, which has heard complaints from readers about dreadful Verizon phone service across the region.

The repairman discloses Verizon technicians have known about the bad cable for at least five years, but requests to replace it have been repeatedly rejected.

“The cable’s totally shot,” Long told the newspaper. “It needs to be replaced, and the company’s budget doesn’t allow for it. That’s what engineering keeps telling us.”

In Hampton Roads, Va., it is a case of the fiber haves and have nots.  The parts of Hampton Roads that have been upgraded to Verizon’s fiber to the home network are virtually trouble-free in comparison to neighborhoods where copper cables still deliver service.  Verizon’s legacy network is of such concern, the Virginia State Corporation Commission has increasingly taken a close look at the level of service Verizon is providing in non-FiOS areas.

William Irby, director of the commission’s Division of Communications, has heard plenty of concerns that Verizon is neglecting their copper network in favor of FiOS fiber.

Verizon’s copper wire neglect might not be such a big problem had the company provided a date certain for upgrade relief.  But with FiOS expansion also stalled, some cities are now wondering if Verizon is abandoning them.

Boston is one of them.

Left Behind: The Cities Without FiOS

Verizon FiOS is well-known in eastern Massachusetts.  There are those who have it and those who want it.  Verizon had been aggressively pursuing franchise agreements with 111 communities across the state until the company announced it was putting on the brakes and ceasing further expansion efforts in new areas.  That leaves Boston and other communities like Quincy behind because they didn’t sign agreements with the company fast enough.

Verizon FiOS customers get the good life: $90 a month for a triple-play package with a $300 Visa debit card reward for signing up.

“If you’ve got FiOS, lucky you,” shares Quincy resident Roger Jones. “If you don’t, good luck.”

Jones says Verizon has left Quincy with a neglected landline network the company doesn’t seem interested in maintaining, much less replacing with fiber optics.

“The company believed in fiber optics because they saw the opportunities fiber could deliver, like additional revenue from selling TV channels,” Jones says. “But then Wall Street caught up to them and said it was all too much.  I might even understand that, except they won’t spend a nickle maintaining what they already have either, unless the regulators twist their arms and threaten fines over the bad service.”

Jones says his Verizon phone line was out three times earlier this year.

“Three strikes and they were out — I switched to Comcast,” Jones says. “A Verizon repair guy that came to my house the third time said all of his relatives switched to Comcast because service got to be so unreliable with Verizon’s old network.”

Back on Burksdale Road in Norfolk, Long was trying to track down another customer’s phone troubles — a loud hum on their line.  Hours later, Long decided it was a futile effort and began looking for an unused replacement pair of good wires he could switch to for the customer.  With the growing number of Verizon customers disconnecting their landline service permanently, that task gets easier every day.

Long told the newspaper it was no surprise Burksdale Road customers were experiencing problems.  Closures which were designed to protect the cable where it splits off individual phone lines were supposed to be water and air-tight.  Instead, he was working with a deteriorating rubber enclosure that showed its age after years of service.  Unfortunately, he explains, Burksdale Road customers will simply have to make due.

Not only won’t Long be able to replace the deteriorating infrastructure he finds, he’ll be forced to improvise with Verizon’s latest cost-cutting solution for wet cables — covering them with sheeting that resembles a plastic garbage bag.  Even that is nothing new for Burksdale Road.  Several houses down, a cable “rain-slicker” was already tightly wrapped around a section of cable where the rubber closure had gone missing altogether.

After getting the dial tone back, Long handed the customer his business card with his direct number and apologized.

“You may have problems again,” he said, advising the customer to call him directly the next time his phone line stops working.

Verizon better hope the customer doesn’t call the local cable company to switch providers or disconnect his landline altogether.

Phillip Dampier on USF Reform: It might have been great, it could have been a lot worse, but ultimately it turned out to be not very good.

Last week, the Federal Communications Commission unveiled their grand plan to reform the Universal Service Fund, a program originally designed to subsidize voice telephone service in rural areas deemed to be unprofitable or ridiculously expensive to serve.  Every American with a phone line pays into the fund through a surcharge found on phone bills. Urban Americans effectively subsidize their rural cousins, but the resulting access to telecommunications services have helped rural economies, important industries, and the jobs they bring in agriculture, cattle, resource extraction, and manufacturing.

The era of the voice landline is increasingly over, however, and the original goals of the USF have “evolved” to fund some not-so-rural projects including cell phone service for schools, wireless broadband in Hollywood, and a whole mess of projects critics call waste, fraud, and abuse.  For the last several years, USF critics have accused the program of straying far from its core mission, especially considering the costs passed on to ratepayers.  What originally began as a 5% USF surcharge is today higher than 15%, funding new projects even as Americans increasingly disconnect their landline service.

For at least a decade, proposals to reform the USF program to bridge the next urban-rural divide, namely broadband, have been available for consideration.  Most have been lobbied right off the table by independent rural phone companies who are at risk of failure without the security of the existing subsidy system.  Proposals that survived that challenge next faced larger phone company lobbyists seeking to protect their share of USF money, or by would-be competitors like the wireless industry or cable operators who have generally been barred from the USF Money Party.

This year, FCC Chairman Julius Genachowski finally achieved a unanimous vote to shift USF funding towards the construction and operation of rural broadband networks.  The need for broadband funding in rural areas is acute.  Most commercial providers will candidly admit they have already wired the areas deemed sufficiently profitable to earn a return on the initial investment required to provide the service.  The areas remaining without service are unlikely to get it anytime soon because they are especially rural, have expensive and difficult climate or terrain challenges to overcome, or endure a high rate of poverty among would-be customers, unable to afford the monthly cost for the service.  Some smaller independent phone companies are attempting to provide the service anyway, but too often the result is exceptionally slow speed service at a very high cost.

The new Connect America Fund will shift $4.5 billion annually towards rural broadband construction projects.  Nearly a billion dollars of that will be reserved in a “mobility fund” designated for mobile broadband networks.

The goal is to bring broadband to seven million additional households out the 18 million currently ignored by phone and cable operators.

The FCC believes AT&T will take a new interest in upgrading its rural landline networks, even as the company continues to lobby for the right to abandon them.

Unfortunately, the FCC has set the bar pretty low in its requirements for USF funding.  The FCC defines the minimum level of “broadband” they expect to result from the program — 4/1Mbps.  That’s DSL speed territory and that is no accident.  The phone companies have advocated a “less is more” strategy in broadband speed for years, arguing they can reach more rural customers if speed requirements are kept as low as possible.  DSL networks are distance sensitive.  The faster the minimum speed, the more investment phone companies need to make to reduce the length of copper wiring between their office and the customer.  Arguing 4Mbps is better than nothing has gotten them a long way in Washington, but it also foreshadows the next digital divide — urban/rural broadband speed disparity.  While large cities enjoy speeds of 50Mbps or more, rural towns will still be coping with speeds “up to” 4Mbps.

The FCC does not seem too worried, relying heavily on a mild incentive program to prod providers to upgrade their DSL service to speeds of 6/1.5Mbps.

The irony of asking AT&T to invest in an aging landline network they are lobbying to win the right to abandon is lost on Washington, and future speed upgrades for rural America from companies like Verizon are in serious doubt when they sell off their rural areas to companies like FairPoint and Frontier and leave town.

Critics of USF reform suggest the program is still stacked in favor of the phone companies, and considering the state of their copper wire networks, would-be competitors are scratching their heads.

The cable industry, in particular, is still peeved by reforms they feel leave them at a disadvantage.  Of course, Washington may simply be recognizing the fact cable companies are the least likely to wire rural America, but when they do, the service that results is often faster than what the phone company offers.  The nation’s biggest cable lobbyist — ironically also the former chairman of the FCC, Michael Powell — still feels a little abused after reading the final proposal.

“While we are disappointed in the Commission’s apparent decision to ignore its longstanding principle of competitive neutrality and provide incumbent telephone companies an unwarranted advantage for broadband support,” said National Cable & Telecommunications Association President Michael Powell, “we remain hopeful that the order otherwise reflects the pro-consumer principles of fiscal discipline and technological neutrality that will bring needed accountability and greater efficiency to the existing subsidy system.  We are particularly heartened by the Commission’s efforts to ensure that carriers are fairly compensated for completing VoIP calls.”

Wireless operators are not happy either, because the arcane requirements that come with the USF bureaucracy were written with the phone companies in mind, not them.  Small, family-owned providers find it particularly difficult to do business with the USF, if only because they don’t have the staff or time to navigate through endless documents and forms.  Phone companies do.

Your phone bill is going up.

Many consumer groups are relieved because it could have been much worse.   The FCC could have simply capitulated and adopted the phone companies’ wish-list — the ABC Plan.  Thankfully, they didn’t, but the FCC has naively left the door open to substantial rate increases for consumers by not capping the maximum annual outlay of the fund.  That follows the same recipe that invited higher phone bills and questionable subsidies awarded in an effort to justify the original USF program even after it accomplished most of its goals. Consumers may face initial rate increases of $0.50 almost immediately, and up to $2.50 a month five years from now.

The FCC, unjustifiably optimistic, suspects phone companies and other telecommunications interests won’t gouge customers with higher prices.  They predict rate increases of no more than 10-15 cents a month.  I wouldn’t take that bet and neither will consumer groups.

“We’re going to press the FCC to ensure that these are temporary increases, because history has shown that these types of costs tend to stick around and go on and on and on,” said Parul Desai, policy counsel for Consumers Union.

An even bigger question left unanswered is just how far the FCC will get into the broadband arena when it refuses to take the steps necessary to ensure it has an admission ticket.  The agency has avoided classifying broadband as a telecommunications service, an important distinction that would bolster its authority to oversee the industry.  Without it, some members of Congress, and more importantly the courts, have questioned whether the FCC has any business in the broadband business.  Just one of the many high-powered players in the discussion could test that theory in the courts, and should a judge throw the FCC’s plan out, we’ll be back at square one.

Verizon’s chief lobbyist Tom Tauke spent a half hour last weekend on C-SPAN taking questions about USF reform and the side issues of IP Interconnection and Net Neutrality policies. Tauke supports consolidation of small phone companies into fewer, larger companies.  He also expands on his company’s lawsuit against Net Neutrality, which fortuitously (for Verizon) will he heard by the same D.C. Court of Appeals that threw out the FCC’s fines against Comcast for throttling broadband connections.  Politico’s Kim Hart participates in the questioning, which also covered wireless spectrum issues impacting Verizon Wireless, AT&T’s stumbling merger deal with T-Mobile, and Verizon’s latest lawsuit against the FCC for data roaming notification rules.  (28 minutes)

FairPoint Communications, which took control of Verizon landlines in Maine, New Hampshire, and Vermont in 2009 and then promptly went bankrupt is now appealing to New Hampshire’s regulators and legislature for deregulation.

Teresa Rosenberger, the company’s New Hampshire president, told the Nashua Telegraph that before FairPoint Communications took over Verizon’s northern New England landlines in 2009, that means of communication was the “only game in town.” Now that Verizon’s “monopoly” no longer exists, FairPoint wants the “shackles [removed from] our ankles.”

Setting aside the fact Verizon and FairPoint both faced identical competitors — Comcast and AT&T in parts of the state, the primary difference between the incumbent landline phone company and its cable competition is that the latter enjoys the right to choose its customers.  Landline providers must deliver universal access to basic service, something both FairPoint and Verizon managed for more than a century.

Rosenberger claims that with the rapid decline of landlines, FairPoint should be free from regulatory constraints it argues limits its ability to compete on pricing and service.  Rosenberger uses FairPoint’s biggest failure — its rapid loss of customers — as the core argument for allowing deregulation, which would deliver few checks and balances from state regulators.

FairPoint’s market share in New Hampshire is now down to 49% and dropping.  Its competition — Comcast and wireless mobile providers, now account for the majority of phone lines in the state.  FairPoint’s line losses spiked when the company took over providing service in northern New England from Verizon Communications.  Many FairPoint customers would describe that level of service as poor, with billing and service complaints reaching epic proportions before the company ultimately declared bankruptcy.

Rosenberger points out that the traditional way utility services deal with changing business models is to sell off non-performing or excess assets.  Electric utilities sell excess power, but phone companies like FairPoint have few things other providers want.

In particular, FairPoint is upset it is saddled with a statewide network of telephone poles that “nobody wants.”

“We lose a ton of money on these poles” when work has to be done on them, Rosenberger told the newspaper. “There is the flag rate, the excavation fee, paying for a cop out there – and that’s before taxation and reporting requirements.”

FairPoint notes their competitors gets to use those poles, and are not necessarily contributing their fair share towards their upkeep.

FairPoint isn’t asking to abandon its universal service obligation, something AT&T has lobbied for throughout its territories.  But it does want to do away with pricing regulations and reporting requirements.  If FairPoint offers a business customer a special discount rate, it must file that rate publicly with state regulators, which is public information.  FairPoint says its competitors may be using that information to undercut them in contract negotiations.  But the public price regulations are in place to prevent a phone company from offering dirt cheap service for a select few, effectively subsidized by other ratepayers.

FairPoint also wants quality of service reporting regulations eased, and that comes as a concern to some New Englanders who lived through FairPoint’s messy transition from Verizon service.  Even today, there are ongoing disputes over whether FairPoint is meeting state obligations on everything from how quickly they answer customer calls to whether or not service problems are resolved on a timely basis.

The primary backers of the ABC Plan

Today, Federal Communications Commission Chairman Julius Genachowski is scheduled to deliver a major announcement on reforming the Universal Service Fund (USF) — a federal program designed to subsidize the costs of delivering telecommunications services to rural America.

The reform, long overdue, would transition a significant percentage of USF fees every telephone customer pays towards broadband deployment — a noble endeavor.  For years, Americans have paid more than $5 billion annually to phone companies large and small to maintain rural landline service.  Small co-op phone companies depend on the income to deliver affordable service in places like rural Iowa, Kansas, and Alaska.  But large companies like AT&T and Verizon also collect a significant share (around $800 million annually) to reduce their costs of service in the rural communities they serve.

That’s particularly ironic for AT&T, which time and time again has sought the right to abandon universal rural landline service altogether.

Genachowski’s idea would divert USF funding towards broadband construction projects.  The argument goes that even low speed DSL requires a well-maintained landline network, so phone companies that want to deploy rural broadband will have to spend the money on necessary upgrades to provide just enough service to earn their USF subsidies.  The lower the speed, the lower the cost to upgrade networks and provide the service.  Some may choose wireless technology instead.  Since the telephone companies have fought long and hard to define “broadband” as anything approaching 3-4Mbps, that will likely be the kind of speed rural Americans will receive.

At first glance, USF reform seems like a good idea, but as with everything at the FCC these days, the devil is always in the details.

Dampier: Another day, another self-serving plan from the phone companies that will cost you more.

While headline skimmers are likely to walk away with the idea that the FCC is doing something good for rural broadband, in fact, the Commission may simply end up rubber stamping an industry-written and supported plan that will substantially raise phone bills and divert your money into projects and services the industry was planning to sell you anyway.

Stop the Cap! wrote about the ABC Plan a few weeks ago when we discovered almost all of the support for the phone-company-written proposal comes from the phone companies who back it, as well as various third party organizations that receive substantial financial support from those companies.  It’s a dollar-a-holler astroturf movement in the making, and if the ABC Plan is enacted, you will pay for it.

[Read Universal Service Reform Proposal from Big Telcos Would Rocket Phone Bills Higher and Astroturf and Industry-Backed, Dollar-a-Holler Friends Support Telco’s USF Reform Plan.]

Here is what you probably won’t hear at today’s event.

At the core of the ABC Plan is a proposal to slash the per-minute rates rural phone companies can charge big city phone companies like AT&T and Verizon to connect calls to rural areas.  You win a gold star if you correctly guessed this proposal originated with AT&T and Verizon, who together will save literally billions in call connection costs under their plan.

With a proposal like this, you would assume most rural phone companies are howling in protest.  It turns out some are, especially some of the smallest, family-run and co-op based providers.  But a bunch of phone companies that consider rural America their target area — Frontier, CenturyLink, FairPoint and Windstream, are all on board with AT&T and Verizon.  Why?

Because these phone companies have a way to cover that lost revenue — by jacking up your phone bill’s USF surcharge to as much as $11 a month per line to make up the difference.  In the first year of implementation, your rates could increase up to $4.50 per line (and that fee also extends to cell phones).  Critics have been widely publicizing the increased phone bills guaranteed under the ABC Plan.  In response, advocates for the industry are rushing out the results of a new study released yesterday from the Phoenix Center Chief Economist Dr. George S. Ford that claims the exact opposite.  Dr. Ford claims each customer could pay approximately $14 less per year in access charges if the industry’s ABC Plan is fully implemented.

Genachowski

Who is right?  State regulators suggest rate increases, not decreases, will result.  The “Phoenix Center,” unsurprisingly, has not disclosed who paid for the study, but there is a long record of a close working relationship between that research group and both AT&T and Verizon.

But it gets even worse.

This shell game allows your local phone company to raise rates and blame it on the government, despite the fact those companies will directly benefit from that revenue in many cases.  It’s a real win-win for AT&T and Verizon, who watch their costs plummet while also sticking you with a higher phone bill.

The USF program was designed to provide for the neediest rural phone companies, but under the new industry-written rules being considered by the FCC, just about everyone can get a piece, as long as “everyone” is defined as “the phone company.”  There is a reason this plan does not win the hearts and minds of the cable industry, independent Wireless ISPs, municipalities, or other competing upstarts.  As written, the USF reform plan guarantees virtually all of the financial support stays in the Bell family.  Under the arcane rules of participation, only telephone companies are a natural fit to receive USF money.

Genachowski will likely suggest this plan will provide for rural broadband in areas where it is unavailable today.  He just won’t say what kind of broadband rural America will get.  He can’t, because the industry wrote their own rules in their plan to keep accountability and oversight as far away as possible.

For example, let’s assume you are a frustrated customer of Frontier Communications in West Virginia who lives three blocks away from the nearest neighbor who pays $50 a month for 3Mbps DSL broadband.  You can’t buy the service at any price because Frontier doesn’t offer it.  You have called them a dozen times and they keep promising it’s on the way, but they cannot say when.  You may have even seen them running new cable in the neighborhood.

Frontier has made it clear they intend to wire a significantly greater percentage of the Mountain State than Verizon ever did when it ran things.  Let’s take them at their word for this example.

The telephone companies have helpfully written their own rules for the FCC to adopt.

Frontier’s decision to provide broadband service in West Virginia does not come out of the goodness of their heart.  At a time when landline customers are increasingly disconnecting service, Frontier’s long-term business plan is to keep customers connected by selling packages of phone, broadband, and satellite TV in rural markets.  Investment in DSL broadband deployment has been underway with or without the assistance of the Universal Service Fund because it makes financial sense.  Our customer in West Virginia might disconnect his landline and use a cell phone instead, costing Frontier any potential broadband, TV and telephone service revenue.

Under the ABC Plan, Frontier can be subsidized by ratepayers nationwide to deliver the service they were planning to provide anyway.  And what kind of service?  The same 3Mbps DSL the neighbors have.

If your county government, a cable operator, or wireless competitor decided they could deliver 10-20Mbps broadband for the same $50 a month, could they receive the USF subsidy to build a better network instead?  Under the phone company plan, the answer would be almost certainly no.

Simon Fitch, the consumer advocate of the Federal-State Joint Board on Universal Service, which advises the FCC on universal service matters, says the ABC Plan is a consumer disaster.

“Although a stated goal of the FCC’s reform effort is to refocus universal-service funding to support broadband, the industry’s ABC plan requires no real commitment to make broadband available to unserved and underserved communities,” Fitch writes. “Companies would receive funds to provide broadband with upload and download speeds that are already obsolete. States would be given no real enforcement power.”

Fitch is certain companies like AT&T and Verizon will receive enormous ratepayer-financed subsidies they don’t actually need to provide service.

Back to AT&T.

In several states, AT&T is seeking the right to terminate its universal service obligation altogether, which would allow the same company fiercely backing the ABC Plan to entirely walk away from its landline network.  Why?  Because AT&T sees its future profits in wireless.  Under the ABC Plan, AT&T could build rural cell towers with your money to provide “replacement service” over a wireless network with or without great coverage, and with a 2GB usage cap.

At the press conference, Genachowski could still declare victory because rural America would, in fact, get broadband.  Somehow, the parts about who is actually paying for it, the fact it comes with no speed, coverage, or quality guarantees, and starts with a 2GB usage cap on the wireless side will all be left out.

Fortunately, not everyone is as enamored with the ABC Plan as the groups cashing checks written by AT&T.

In addition to state regulators, Consumers Union, the AARP, Free Press, and the National Association of Consumer Advocates are all opposed to the plan, which delivers all of the benefits to giant phone companies while sticking you with the bill.

There is a better way.  State regulators and consumer groups have their own plans which accomplish the same noble goal of delivering subsidies to broadband providers of all kinds without increasing your telephone bill.  It’s up to the FCC to demonstrate it’s not simply a rubber stamp for the schemes being pushed by AT&T and Verizon.

Burlington Telecom offices in Burlington, Vt.

Citibank has sued the city of Burlington, Vt., and the city’s legal firm demanding municipal-provider Burlington Telecom hand back their fiber-to-the-home network and pay damages in excess of $33.5 million dollars.

Citicapital, which owns the equipment that operates Burlington’s community network, says Burlington Telecom has defaulted on their lease payments, and has demanded the city “de-install and return” the fiber network — everything from set-top boxes and in-home wiring to ripping fiber cables directly out of underground vaults and off telephone poles.  Citi also wants BT’s vehicle fleet turned over to them.

Burlington Telecom has been a poster child of poorly-planned and implemented city-owned broadband, and a series of financial and operational scandals led state investigators to consider criminal charges for misappropriating taxpayer funds to sustain the network.  While prosecutors ultimately declined to file charges, the resulting scandal in the mayor’s office has left the city with a network it stopped paying for, and the potential much of it could be auctioned off to the highest bidder, which could turn out to be Comcast or FairPoint Communications.

Citicapital claims the city has not made a direct lease payment since November, 2009.  The bank had been drawing down funds deposited in a special escrow account the city was required to open as part of the lease-to-purchase transaction.  That account has also run dry, and the bank claims it has received no payments since May of 2010.

Citibank’s attorneys filed suit:

“BT continues to use Citibank’s equipment and vehicles unlawfully and without its permission and continues to depreciate the value of Citibank’s assets in order to generate revenue for itself,” the bank’s attorneys charged.

Citibank wants a judge to award punitive damages in excess of its remaining loan balance “because Burlington’s intentional breach of the agreement amounts to a reckless or wanton disregard of Citibank’s clear contractual rights.”

“It’s ironic that a bank that received a taxpayer-financed multi-hundred-billion-dollar bailout now wants taxpayers in Burlington to pay them excessive damages,” shares Stop the Cap! reader and Burlington resident Joe, who shared the story with us.  “I think we should be calling it even after three years of big bank bailouts.”

The lawsuit has city residents worried because attorney fees, and any resulting damages or settlement agreement with the bank, will likely run well into the millions of dollars.  Every month the city remains in arrears, Citibank’s agreement calls for at least $235,000 in missed payment fees and interest.  Taxpayers will likely cover most, if not all of that amount.

“I don’t think anybody should be surprised,” City Councilor Paul Decelles, R-Ward 7 told the Burlington Free-Press. “I always believed this day was going to come. Now we have enormous mess on our hands.”

Citibank wants their fiber back.

Christopher Mitchell from Community Broadband Networks notes Burlington Telecom was an aberration in a country with many successful community-owned broadband networks.

“We have watched in dismay as Burlington Telecom transitioned over the past four years from a model community network to the worst case scenario,” Mitchell wrote on the group’s blog. “This situation proves only that community networks can suffer from bad management in some of the many ways private telecom companies can suffer from bad management (resulting in anything from bankruptcy to prison).”

“Communities can learn lessons from Burlington’s situation — chief among them that transparency is important,” Mitchell observed. “As with other public enterprise funds, the operation should be regularly audited and oversight must be in place to catch errors early, when corrections are easier and less costly.”

Among Burlington Telecom’s problems included overpriced, uncompetitive broadband service that never took full advantage of fiber’s speed and versatility.  Earlier news accounts included speculation BT had trouble securing sufficient connectivity with a backbone provider to sustain faster speeds, but it left the company at a competitive disadvantage against incumbent cable operator Comcast.  Burlington Telecom also failed repeatedly to build community support to establish a firewall against frequent political shots fired at the network as it became a partisan hot potato.

The city promises a “vigorous defense” against the lawsuit, and observers suspect a judge will not order the city to shut the network down, because it would cease the only revenue stream the company generates that could be used to pay a negotiated settlement with the bank.

WCAX in Burlington explores how much of a case Citibank has in its lawsuit against the city and its attorneys over Burlington Telecom.  (4 minutes)

So who is for the ABC Plan?  Primarily phone companies, their business partners, and dollar-a-holler astroturf friends:

American Consumer Institute:  SourceWatch called them a telecom industry-backed astroturf group.  Karl Bode from Broadband Reports discovered “the institute’s website is registered to ‘Stephen Pociask, a telecom consultant and former chief economist for Bell Atlantic [today Verizon].”  The group, claiming to focus “on economic policy issues that affect society as a whole,” spends an inordinate amount of its time on telecommunications hot button issues, especially AT&T and Verizon’s favorites: cable franchise reform and opposition to Net Neutrality.

Anna Marie Kovacs:  Determining what is good for Wall Street is her business, as founder and President of Regulatory Source Associates, LLC. RSA provides investment professionals with analysis of federal and state regulation of the telecom and cable industries.

Dollar-a-holler support?

Consumer Awareness Project: A relatively new entrant, CAP is AT&T’s new darling — a vocal advocate for AT&T’s merger with T-Mobile.  But further digging revealed more: the “group” is actually a project of Washington, D.C. lobbying firm Consumer Policy Solutions, which includes legislative and regulatory advocacy work and implementation of grassroots mobilization.

That is the very definition of interest group-“astroturf.”

Randolph May from the Free State Foundation supports "state's rights," but many of them want no part of a plan his group supports.

Free State Foundation: A misnamed conservative, “states rights” group.  Leader Randolph May loves the ABC Plan, despite the fact several individual states are asking the FCC not to impose it on them.

Hispanic Technology & Telecommunications Partnership:  Whatever Verizon and AT&T want, HTTP is also for.  The group was embroiled in controversy over its unflinching opposition to Net Neutrality and love for the merger of AT&T and T-Mobile.  Its member groups, including MANA and LULAC, are frequent participants in AT&T’s dollar-a-holler lobbying endeavors.

Robert J. Shapiro: Wrote an article for Huffington Post calling the ABC Plan worth consideration.  Also worth mentioning is the fact he is now chairman of what he calls an “economic advisory firm,” which the rest of the world calls a run-of-the-mill D.C. lobbyist firm — Sonecon.  It comes as no surprise AT&T is a client.  In his spare time, Shapiro also writes reports advocating Internet Overcharging consumers for their broadband service.

Indiana Exchange Carrier Association: A lobbying group representing rural Indiana telephone companies, primarily owned by TDS Telecom.  It’s hardly a surprise the companies most likely to benefit from the ABC Plan would be on board with their support.

Indiana Telecommunications Association: A group of 40 telephone companies serving the state of Indiana.  For the aforementioned reasons, it’s no surprise ITA supports the ABC Plan.

Information Technology and Innovation Foundation:  Reuters notes this group received financial support from telecommunications companies, so lining up behind a plan those companies favor comes as little surprise.  ITIF also believes usage caps can deter piracy, so they’re willing to extend themselves way out in order to sell the telecom industry’s agenda.

Internet Innovation Alliance:  Another group backed by AT&T, IIA also funds Nemertes Research, the group that regularly predicts Internet brownouts and data tsunamis, which also hands out awards to… AT&T and Verizon.

The Indiana Exchange Carrier Assn. represents the phone companies that will directly benefit from the adoption of the ABC Plan.

Bret Swanson:  He penned a brief note of support on his personal blog.  When not writing that, Swanson’s past work included time at the Discovery Institute, a “research group” that delivers paid, “credentialed” reports to telecommunications company clients who waive them before Congress to support their positions.  Swanson is a “Visiting Fellow” at Arts+Labs/Digital Society, which counted as its “partners” AT&T and Verizon.

Minority Media & Telecom Council: Tries to go out of its way to deny being affiliated or “on the take” of telecom companies, but did have to admit in a blog posting it takes money from big telecom companies for “conference sponsorships.”  Some group members appear frequently at industry panel discussions, and mostly advocate AT&T’s various positions, including strong opposition to reclassify broadband as a utility service.

MMTC convened a Broadband and Social Justice Summit earlier this year that featured a range of speakers bashing Net Neutrality, and the group’s biggest highlighted media advisory on its website as of this date is its support for the merger of AT&T and T-Mobile.  Yet group president David Honig claims he can’t understand why some consumer groups would suspect groups like his of engaging in dollar-a-holler advocacy, telling The Hill, “We’ve seen no examples of reputable organizations that do things because of financial contributions. It’s wrong to suggest such things.”

Mobile Future: Sponsored by AT&T, Mobile Future curiously also includes some of AT&T’s best friends, including the Asian Business Association, LULAC, MANA, the National Black Chamber of Commerce, and the United States Hispanic Chamber of Commerce.

Montana Independent Telecommunications Systems: Primarily a group for Montana’s independent telephone companies, who will benefit enormously from the ABC Plan.

What major corporate entity does not belong to this enormous advocacy group?

The National Grange:  A group with a long history advocating for the interests of telephone companies.  Over the years, the National Grange has thrown its view in on Verizon vs. the RIAA, a request for Congress to support industry friendly legislation, a merger between Verizon and NorthPoint Communications, and USF issues.

The Keep USF Fair Coalition was formed in April 2004. Current members include Alliance for Public Technology, Alliance For Retired Americans, American Association Of People With Disabilities, American Corn Growers Association, American Council of the Blind, California Alliance of Retired Americans, Consumer Action, Deafness Research Foundation, Gray Panthers, Latino Issues Forum, League Of United Latin American Citizens, Maryland Consumer Rights Coalition, National Association Of The Deaf, National Consumers League, National Grange, National Hispanic Council on Aging, National Native American Chamber of Commerce, The Seniors Coalition, Utility Consumer Action Network, Virginia Citizen’s Consumer Council and World Institute On Disability. DSL Prime helps explain the membership roster.

Taxpayers Protection Alliance:  One of the tea party groups, TPA opposes higher USF fees on consumers.  The ABC Plan website had to tread carefully linking to this single article favorable to their position.  Somehow, we think it’s unlikely the group will link to the TPA’s louder voice demanding an end to broadband stimulus funding many ABC Plan backers crave.

TechAmerica: Guess who is a member?  AT&T, of course.  So is Verizon.  And CenturyLink.  TechAmerica call themselves “the industry’s largest advocacy organization and is dedicated to helping members’ top and bottom lines.”  (Consumers not included.)

Tennessee Telecommunications Association: TTA’s independent phone company members stand to gain plenty if the ABC Plan is enacted, so they are happy to lend their support.

Rep. Terry's two biggest contributors are CenturyLink and Qwest.

Representative Greg Walden (R-Oregon):  His top five contributors are all telecommunications companies, including CenturyLink, Pine Telephone, and Qwest.  He also gets money from AT&T and Verizon.  It’s no surprise he’s a supporter: “We are encouraged by the growing consensus among stakeholders as developed in the ‘America’s Broadband Connectivity Plan’ filed with the Federal Communications Commission today, and we hope that consensus will continue to grow.”

Representative Lee Terry (R-Nebraska): He co-signed Rep. Walden’s statement.  Rep. Terry’s two biggest contributors are Qwest and CenturyLink.  Now that CenturyLink owns Qwest, it’s two-campaign-contributions-in-one.  And yes, he gets a check from AT&T, too.

Representative Steve Scalise (R-Louisiana): “Today’s filing of the ‘America’s Broadband Connectivity Plan’ is welcomed input on the intercarrier compensation and Universal Service Fund reform front,” Scalise said.  Now Scalise is ready to welcome this year’s campaign contribution from AT&T, which he has not yet reportedly received.  In 2008, Scalise received $13,250.  In 2010, $10,000.  This cycle, so far he has only been able to count on Verizon, which threw $2,500 his way.  Scalise voted earlier this year to overturn the FCC’s authority to enact Net Neutrality.

USTelecom Association: The only news here would be if USTA opposed the ABC Plan.  Included on USTA’s board of directors are company officials from: Frontier Communications, AT&T, CenturyLink/Qwest, Windstream, FairPoint Communications, and Verizon.  That’s everyone.

Wisconsin State Telecommunications Association:  Their active members, including Frontier Communications, are all telephone companies inside Wisconsin that will directly benefit if the ABC Plan is enacted.

A new proposal from the nation’s six largest telephone companies would double or triple Universal Service Fund (USF) fees on many telephone lines, extending them to wireless, broadband-based phones, cable TV “digital phone” products, and potentially even Internet accounts, providing billions from consumers for the companies proposing the plan.

Universal Service Fund reform has been a hot topic this year in Washington, as regulators attempt to reform a long-standing program designed to help keep rural landline telephone service affordable, subsidized with small charges levied on customer phone bills that range between $1-3 dollars, depending on the size of your community.

The original goals of the USF have largely been achieved, and with costs dropping to provide telephone service, and ancillary services like broadband DSL opening the door to new revenue streams, some rural phone companies don’t need the same level of support they received in earlier years.  As a result, USF funds have progressively been disbursed to an increasing number of projects that have little to do with rural phone service.  Several funding scandals over the past decade have underlined the need for USF reform, and FCC Chairman Julius Genachowski has been a strong advocate for directing an increasing amount of USF resources towards rural broadband deployment projects.

But now some of America’s largest phone companies want to establish their own vision for a future USF — one that preserves existing funding for rural phone service -and- levies new fees on ratepayers to support broadband expansion.

The ABC Plan's chief sponsors are AT&T...

America’s Broadband Connectivity Plan (ABC), proposed jointly by AT&T, Verizon, CenturyLink, Windstream, Frontier Communications and FairPoint Communications, departs markedly from Genachowski’s vision for a revised USF that would not increase the overall size of the Fund or its cost to consumers.

That’s why some ratepayer consumer groups and utility regulators have taken a dim view on the phone companies’ plan.

Colleen Harrell, assistant general counsel to the Kansas Corporation Commission says customers would find USF fees doubling, if not tripling on their home phone bills under ABC.  That could mean charges of $6 or more per month per phone line.

While the plan substantially benefits the companies that propose it, critics say ABC will do little to enhance service for ordinary consumers.  In fact, some language in the proposal could open the door for landline companies to discontinue universal landline service, a long time goal of AT&T.

In fact, protection for incumbent phone companies seems to be the highest priority in most of the ABC’s framework:

1. The proposal provides a right of first refusal to the incumbent phone company, meaning USF grant funds effectively start at the landline provider, and are theirs to accept or reject.  This has competitors howling, ranging from Wireless ISPs, mobile data providers, cable companies, and even fiber networks.  The ABC proposal ignores who can deliver the best broadband most efficiently at the lowest price, and is crafted instead to deliver the bulk of funding to the provider that has been around the longest: phone companies.
2. Provisions in the ABC Plan provide a convenient exit door for landline providers saddled with providing service to some of America’s most rural communities.  An escape clause allows “satellite service” to be provided to these rural households as a suitable alternative to traditional wired service, sponsored by an annual $300 million Advanced Mobility/Satellite Fund.  This, despite the fact consumer ratings for satellite providers are dismal and existing providers warn their services are often unsuitable for voice calls because of incredibly high latency rates.
3. Provisions in the ABC Plan adhere to a definition of acceptable broadband well within the range favored by telephone company DSL providers — 4Mbps.  Setting the bar much higher could force phone companies to invest in their networks to reduce the distance of copper wire between their offices and customer homes and businesses, allowing for faster speeds.  Instead, lowering the bar on broadband speeds assures today’s deteriorating rural landline network will make-do, leaving a rural/urban speed divide in the United States.
4. To “resolve” the issue of the increased fees and surcharges that could result from the plan’s adoption, it includes a subjective cap of $30 a month on residential basic landline home phone service (without calling features).  But since most ratepayers pay substantially less for basic home phone service, the maximum rate cap provides plenty of room for future rate increases.  Also, nothing precludes phone companies from raising other charges, or creating new “junk fees” to raise rates further, ignoring the “cap.”

...and Verizon

Rural states seem unimpressed with the phone companies’ proposal.  The Kansas Corporation Commission (KCC) called various provisions of the plan “a train wreck.”  Kansas is one of several states that developed their own state-based Universal Service Fund to help the state’s many rural agricultural areas receive acceptable telecommunications services.  Kansans initially paid one of the highest USF rates in the country when their state plan was enacted in 1996.  But Kansas phone companies used that money to modernize their networks, especially in rural communities — some of which now receive fiber-based phone service, and the rates have fallen dramatically as upgrade projects have been completed.  Today, most Kansans pay just $1.45 in USF fees to rural phone companies, while AT&T customers in larger Kansas towns and cities pay an average of $2.04.

If the ABC Plan is enacted as-is, Kansans will see phone bills spike as new USF fees are levied.  That’s because the federally-based USF Fund reform program would require today’s 6.18% state USF rate double or triple to sustain various programs within its scope.

And forget about the $30 ‘smoke and mirrors’ “rate cap”, according to the KCC:

[...] The ceiling will not preclude carriers from increasing the basic rate beyond $25 or $30 through higher state USF surcharges or higher local rates.  Multiple states including Kansas  have partially or totally deregulated basic local phone service rates, and the only component of retail  local service pricing that the FCC regulates is the federal Subscriber Line Charge.  Thus, a carrier may face no constraint whatsoever in increasing basic local rates to the point that total local rates are well above the illusory ceiling.

The state of Wyoming was also unimpressed with a one-size-fits-all national approach advocated primarily by big city phone companies AT&T and Verizon, the chief sponsors of the ABC Plan.

The Wyoming Public Service Commission filed comments effectively calling the ABC Plan boneheaded, because it ignores the plight of particularly rural states like Wyoming, chiefly served by smaller phone and cable companies that face challenges in the sparsely populated, mountainous state.

First among the Wyoming PSC’s complaints is that the plan ignores business realities in rural states.  No matter how much USF funding becomes available or what compensation schemes are enacted, dominant state phone companies like CenturyLink are unlikely to “invest in broadband infrastructure unless it is economically opportune to do so.”

The PSC points to the most likely outcomes if the ABC Plan is enacted:

• Phone companies not challenged by a broadband competitor will make due with their current copper wire wireline infrastructure the PSC says has been deteriorating for years.  The PSC fears broadband expansion funds will be used to improve that copper network in larger areas where cable competition exists, while the rest of the more-rural network gets ignored;
• In areas like larger towns or suburbs where phone companies suspect a cable (or other) competitor might eventually expand or launch service, USF funding could be spent to bolster the phone company’s existing DSL service to deter would-be competitors from entering the market;
• 

  We'll pass, too.

  The Wyoming PSC believes phone companies will spend broadband funds only where it would improve the phone company’s competitive position with respect to cable competitors.  Providers are unlikely to expand into currently-ignored rural areas for two reasons: lack of ongoing return on investment and support costs and the ABC Plan’s willingness to abandon rural America to satellite providers.  “We are familiar to a degree with satellite service at it presently exists in Wyoming markets, and we are not particularly enamored of the satellite solution,” the PSC writes.  But if adopted, no rural phone company would invest in DSL service expansion in areas that could be designated to receive federally-supported satellite service instead.

Wireless competitors are not happy with the ABC Plan because it ignores Wireless ISPs and sets ground rules that make them unlikely to ever win financial support.  Many also believe the ABC Plan picks technology winners and losers — namely telephone company provided DSL service as the big winner, and everyone else a loser.

The Fiber to the Home Council also heaped criticism on the ABC Plan for the low bar it sets — low enough for any phone company to meet — on broadband speeds.  The FTTH Council notes the ABC Plan would leave rural America on a broadband dirt road while urban America enjoys high-speed-rail-like service.

Coming Next… Who *Really* Supports the Phone Companies’ ABC Plan.

Cablevision: Don't Call Us

By the time Hurricane Irene reached upstate New York and New England, it was a tropical storm some say was over-hyped from the outset, but don’t tell that to utility companies facing weeks of service restorations that will leave some of their customers offline until October.

The worst damage to infrastructure was done in this region, with utility poles swept away in flood waters right along with the homes they used to serve.  Telephone and cable companies in several parts of the region cannot even begin to restore service until higher-priority electric service is brought back.  Besides, you can’t use a broadband connection if your power has been out for a week plus.

Those addicted to their online connection are making due in parking lots and other Wi-Fi hotspots where service prevailed over Irene.  Wireless connectivity from cell phone companies is also getting a workout, assuming customers are aware of usage caps and limitations which could make September’s bill much higher than expected.

Stop the Cap! has learned some DSL service restoration appointments in upstate New York, Massachusetts, Vermont, and New Hampshire are now extending into October, although companies suggest outside work may resolve problems.  Customers with the worst luck face a lengthy wait for the replacement of utility poles, new utility lines to be strung across them, and replacement of individual lines connected from the pole to individual homes.

Some FairPoint Communications customers are finding Irene did a real number on their DSL service even if power outages were limited.

In southwestern New Hampshire, Robert Mitchell was presented with a unique error page on his computer after the lights came back on:

“…we are improving the security of your broadband connection. As such, you have been redirected to the FairPoint Communications broadband service page to install a security update.”

That was a fine idea, except its implementation left customers like Mitchell with the most secure broadband connection around, resistant to all malware and viruses — namely, by not having any connection at all.

My annoyance only increased when I realized that FairPoint may have provided a link to download the security update software, but they were not going to make the process of accessing that software easy.

“Your Web browser (Firefox) and Operating System (Mac) are not compatible with the DSL Security improvement process…please re-open this page on a Windows XP, Vista or Windows 7 PC using Internet Explorer,” the message continued.

Bully for me, I have two Macs in the office. Time to call technical support? Nope, sorry. Both of my phone lines use Vonage, a VoIP service that relies on a working DSL modem for dial tone. Cell service at the house was sketchy at best — if I could even get through to technical support during a hurricane.

With the help of an old Windows XP machine, Mitchell managed to finally get back online.  Later, he learned the power spikes and brownouts that preceded the blackout in his neighborhood had caused his DSL modem to resort to its original default settings.  When FairPoint customers first connect a DSL modem, the company prompts them to perform the aforementioned “security update.”  Only FairPoint stopped offering that update more than eight months earlier.  Now, according to Mitchell, it’s just the default start page for newly activated DSL modems.

Customers further east in downstate New York, Massachusetts, Maine, Long Island, Connecticut, and New Jersey are finding getting service restoration highly dependent on which provider they use.

Time Warner Cable customers numbering about 350,000 found their service out Wednesday after leftover flooding and debris tore up fiber cables serving Maine, New Hampshire and Vermont.  Service was restored that evening.

Cablevision customers in Connecticut are still experiencing new outages caused by flooding, and with power company workers contending with more damage in that state than further south in New York, cable crews can’t restore service until the lights are back on.

Cablevision customers on Long Island are still being told not to bother calling the cable company to report outages.  Those that do are often given a date of Sept. 15 for full service restoration, although it could be sooner if damage in individual neighborhoods is less severe.  A Cablevision spokesman said, “Cablevision is experiencing widespread service interruptions, primarily related to the loss of power.  Cablevision crews are in the field and we will be working around the clock to make necessary repairs, in close coordination with local utilities.  Generally, as electricity is returned to an area, customers will be able to access Cablevision service.”

Verizon customers in downstate New York and New Jersey faced lengthy hold times to report service outages, and are given a range of dates from later this week until mid-September for full service restoration.  Some pockets of very badly damaged infrastructure may take even longer to access and repair.  Verizon’s largest union workforce, under the auspices of Communications Workers of America District 1 are accusing Verizon management of slowing repairs with denials of overtime work requests, in part to punish workers for their recent strike action.  John Bonomo, a Verizon spokesperson, denies that accusation, but added the company is not treating the thousands of customers still without service as an emergency, noting landline service “is not as vital as it had been in past years.”

Comcast customers, mostly in Pennsylvania, Vermont and Massachusetts, are turning to smartphones to cope through extended service outages, according to the Boston Globe:

Comcast Corp. customer Soraya Stevens turned to her iPhone when her cable blew out, logging on to Twitter from her Bedford home for the latest power outage updates. “I would not have any communication or insight without my smartphone,’’ said Stevens, a software engineer.

Some customers who lost cable service lost their TV, Internet, and landline phone, which are often bundled and sold together. Many turned to their smartphones, operating on batteries and the signal from cellphone towers, or friends and family who still had cable service.

AT&T, which serves landline customers in Connecticut, experienced more outages a day or two after Irene departed as battery backup equipment installed at landline central offices finally failed.  Those equipped with diesel generators are still up and running, but many AT&T customers sold a package of broadband and phone service may actually be receiving telephone service over a less-robust Voice Over IP network, supported with battery backup equipment that shuts down after 24 hours, when the batteries are exhausted.  This has left customers with standard copper wire phone service still up and running, but customers on Voice Over IP completely disconnected.

Bill Henderson, president of Communications Workers of America Local 1298, told the Hartford Courant those landlines aren’t considered landlines by the Department of Utility Control, and aren’t regulated for reliability, as the old system is.

“Technology has risen. Some of the things we’ve given up in that system is reliability,” he said. “This is what I’ve been screaming about to the DPUC. It’s a telephone! We need to regulate this service.”

Customers are also complaining loudly about AT&T’s poor wireless performance during Irene, with many tower outages and service disruptions that are still ongoing.

Remember, when services are restored, be sure and contact your provider and request a full service credit.  You will not receive one unless you ask.