Your Friendly Internet traffic cops Time Warner Cable and Comcast paid for research that suggests those Internet speed slowdowns are your fault (or at least not theirs).

A study from MIT suggests that broadband speed test results that show “real world” broadband speeds far below what your provider promises are actually better than you think, and if they’re not — it’s not your provider’s fault.  The paper, Understanding Broadband Speed Measurements, finds slow Internet speeds are often your problem, because you run too many applications on your computer, visit inaccurate speed measurement sites, use a wireless router, or have run into an Internet traffic jam outside of the control of your ISP.

The research comes courtesy of MIT’s Internet Traffic Analysis Study (MITAS) project, financially backed by some of North America’s largest cable and phone companies — Clearwire, Comcast, Liberty Global (Dr. John Malone, CEO), and Time Warner Cable in the United States, Rogers Communications and Telus in Canada.  Those providers also deliver much of the broadband speed data MITAS relies on as part of its research.  Additional assistance came from MIT’s Communications Futures Program which counts among its members Cisco, an equipment manufacturer and promoter of the “zettabyte” theory of broadband traffic overload and cable giant Comcast.

The study was commissioned to consider whether broadband speed is a suitable metric to determine whether an ISP provides good or bad service to its customers and if speed testing websites accurately depict actual broadband speeds.  Because Congress and the Federal Communications Commission have set minimum speed goals and have expressed concerns about providers actually delivering the speeds they promise, the issue of broadband speed is among the top priorities of the FCC’s National Broadband Plan.

“If you are doing measurements, and you want to look at data to support whatever your policy position is, these are the things that you need to be careful of,” Steve Bauer, technical lead on the MIT Analysis Study (MITAS) told TG Daily. “For me, the point of the paper is to improve the understanding of the data that’s informing those processes.”

Bauer’s 39 page study indicts nearly everyone except service providers for underwhelming broadband speeds:

While a principal motivation for many in looking at speed measurements is to assess whether a broadband access ISP is meeting its commitment to provide an advertised data service (e.g. “up to 20 megabits per second”), we conclude that most of the popular speed data sources fail to provide sufficiently accurate data for this purpose. In many cases, the reason a user measures a data rate below the advertised rate is due to bottlenecks on the user-side, at the destination server, or elsewhere in the network (beyond the access ISP’s control). A particularly common non-ISP bottleneck is the receive window (rwnd) advertised by the user’s transport protocol (TCP).

In the NDT dataset we examine later in this paper, 38% of the tests never made use of all the available network capacity.

Other non-ISP bottlenecks also exist that constrain the data rate well below the rate supported by broadband access connections. Local bottlenecks often arise in home wireless networks. The maximum rate of an 802.11b WiFi router (still a very common wireless router) is 11mbps. If wireless signal quality is an issue, the 802.11b router will drop back to 5.5mbps, 2mbps, and then 1 mbps. Newer wireless routers (e.g. 802.11g/n) have higher maximum speeds (e.g. 54 mbps) but will similarly adapt the link speed to improve the signal quality.

End-users also can self-congest when other applications or family members share the broadband connection. Their measured speed will be diminished as the number of competing flows increase.

The study also criticizes the FCC for relying on raw speed data that does not take into account the level of service being chosen by a broadband customer, claiming many service providers actually deliver higher speed service than their “lite” plans advertise.

In short, it’s everyone else’s fault (including yours) for those Internet speed slowdowns.

Ultimately, the report’s conclusion can be summed up in three words: change the subject.  It’s not slow broadband speeds that are the problem — it’s the lack of understanding about what you can accomplish with the speeds you do get from your ISP:

In the next few years, as the average speed of broadband increases, and the markets become more sophisticated, we expect that attention may shift towards a more nuanced characterization of what matters for evaluating the quality of broadband services. Issues such as availability (reliability) and latencies to popular content and services may become more important in how services are advertised and measured. We welcome such a more nuanced view and believe it is important even in so far as one’s principal focus is on broadband speeds.

One thing the paper does effectively deliver at top speed are industry talking points, particularly the one that says less regulation is better (underlining ours):

Our hope is that progress may be made via a market-mediated process that engages users, academics, the technical standards community, ISPs, and policymakers in an open debate; one that will not require strong regulatory mandates. Market efficiency and competition will be best served if there is more and better understood data available on broadband speeds and other performance metrics of merit (e.g., pricing, availability, and other technical characteristics).

These kinds of research reports are often tainted by the industry money that pays for them.  Researchers and universities routinely deliver industry-pleasing, sober-sounding studies in return for considerable financial contributions, grants, and other forms of underwriting.  This report lacks full disclosure about who is helping to pay for it — North America’s largest cable operators, who also deliver much of the data MITAS relies on for their research.

Ask yourself how much longer these companies would be writing checks to MIT had they delivered a report implicating them in false advertising of speeds they do not deliver or for relying on inadequate upstream providers to handle their Internet traffic?  The report pulls any and all punches delivered to the companies who finance it — a clear sign of bought-and-paid-for research in action.

Alltel's logo, in use before 2006

Alltel Wireless is back.  Two years after Alltel was bought by Verizon Wireless, some 900,000 customers in Georgia, Illinois, North and South Carolina, Ohio and Idaho not included in the transition to Verizon will remain Alltel customers under new management.

For many customers, that suits them just fine.  In fact, with an increasing number of complaints from the 13.2 million former Alltel customers forced into a shotgun cellular wedding with Verizon or AT&T, many wish they could have the choice to return to Alltel themselves.

The demise of Alltel is another classic example of a telecommunications deal that made sense (and dollars) for Wall Street and a handful of Alltel executives, but left thousands of employees out in the cold in the unemployment line and customers coping with broken promises and higher bills.

It’s a story familiar to most of our readers, because the game plan for most telecom mergers and acquisitions delivers all of the benefits to a select few and ends up costing consumers plenty.  That these deals get almost routine approval from the Federal Communications Commission is ironic, considering that same agency commissioned studies that unsurprisingly found increased consolidation and lack of competition in the wireless marketplace.

The end of Alltel is a great example of what happens when an industry achieves near-total deregulation. Lobbyists sell deregulation as directly benefiting consumers with increased competition, more innovation, and lower prices.  In reality, from broadcasting to broadband, deregulation sparks escalating rounds of mergers, acquisitions, and buyouts.  Wall Street doesn’t want increased competition — it wants fewer options, less costly innovation, and higher prices to sustain profits.  When Wall Street speaks, most of these companies listen.

Since 1996, when the Telecommunications Act was passed, more than two dozen telecommunications companies have been swallowed up in mergers and buyouts.  Consumers find themselves with new providers and higher bills.  But not everyone is hurting from laissez-faire tele-economics.  For a handful of top executives, the result has been riches beyond their wildest dreams.  Even when they are forced out through merger deals, the golden parachutes that follow brings tears of joy.  Just ask Alltel’s last CEO — Scott T. Ford — he said goodbye to Alltel in 2007 with a parting bonus of nearly $150 million dollars.

Alltel’s History — Keeping It In the Family

Alltel’s history in the telephone business traces all the way back to 1943, with the formation of the Allied Telephone Company of Little Rock, Arkansas.  Back then, telephone service in the U.S. was mostly a monopoly of AT&T and several smaller independent phone companies. Allied’s business began as a pole and wiring provider for those phone companies.  In 1983, Alltel – the traditional phone company – was created from a merger between Allied Telephone and Mid-Continent Telephone.  In 1985, Alltel Wireless service began from its first cellular system in Charlotte, N.C.  In less than a decade, the wireless division would expand service in smaller cities and towns across mid-America and the south, often where larger carriers didn’t want to provide service.

Just about everything in the telecommunications industry changed with the passage of the 1996 Telecommunications Act, signed into law by President Bill Clinton.  The law that promised to open the doors to better service and more competition actually deregulated most of the industry into an “anything-goes” circus of money-fueled mergers, buyouts, and consolidation.  Important consumer protections were discarded along the way.

The implications of the Act were well understood by corporate executives in the industry, and companies spent millions to lobby for its passage.  They considered it a down-payment for better days to come.  The biography of Alltel’s then-CEO Joe T. Ford noted the passage of the law changed everything, even leading to a violation of an agreement he made with his son when he was only 12 years old:

Scott T. Ford, the president and chief executive officer of the Alltel Corporation, made his first business deal at the age of 12 with his father, Joe T. Ford. The two agreed that Scott would never work at Alltel. Joe wanted to spare his son what he himself had endured since coming to work for his father-inlaw, Hugh Wilbourne Jr., in 1959. After the passage of the Telecommunications Act of 1996, however, the Fords rethought their agreement, and, at age 35, Scott Ford became executive vice president of Alltel. Within two years he was appointed CEO, following in the footsteps of his grandfather Wilbourne, who formed Allied Telephone Company in 1943 in Little Rock, Arkansas.

All that hard work by earlier generations was about to pay some serious dividends in a laissez-faire telecommunications world.

Beebe literally drew his own road map depicting his idea of success - remaining on top after a flurry of mergers and ongoing industry consolidation

The Dot.com Boom… for Some

At the end of the 20th century, the telecommunications industry was in the middle of the dot.com boom.

The impact of the 1996 Telecom Act did fuel change among traditional telecom companies.  While some new players were wildly upgrading networks and building fiber optic networks to sustain the dot.com book, most of the traditional phone and cable companies were spending their time and attention on mergers and leveraged buyouts.  The Baby Bell-AT&T empire that was broken up in the mid-1980s was nearly restored to its former glory with super-sized Verizon and AT&T.  Independent phone companies which operated for a century were suddenly the targets of buyouts, now consolidated by regional players like CenturyTel, Embarq, Alltel and Citizens.

Alltel didn’t just buy up other independent phone companies.  It also bought wireless providers and soon merged its landline and wireless divisions into a single company.  This was the era when the “full service phone company” was trendy — capable of delivering local, long distance, and wireless service all from one company, usually on one bill.

Alltel’s executives, like then-Alltel group president Kevin Beebe, delivered presentations to Wall Street bankers like Credit Suisse/First Boston promoting Alltel and its made-for-consolidation balance sheet.  He literally drew his own road map showing his route to success, depicting himself on top after successive mergers with smaller players.

Unfortunately, the high-powered, cash rich days of the dot.com deal were about to end.  By the start of the new century, it was all over.  An oversupply of infrastructure was built to support web-based businesses that would never launch.  Many of those already in business shuttered their virtual doors.  Venture capital for telecommunications projects dried up.  But there was still plenty of money to be made in wireless, and Alltel did obtain financing to launch mergers and buyouts with as many small cell phone providers as possible.  By the early 2000s, the mentality in the telecommunications business was “small is bad.”  The only path to success was to buy your competition, or be bought by them.

The business of mergers and acquisitions earned countless millions for Wall Street banks, who charged fees to help structure the deals and usually helped finance them.  Executives always won, even if a merger brought an end to their career at the company.  Golden parachutes kept the top floor happy.  The only losers were the soon-to-be-ex-employees and middle management declared redundant and escorted from the building.  They were the “cost savings” promoted as a benefit of the merger months earlier.  Meanwhile, customers were stuck dealing with the transition changes, service interruptions, and the eventually higher bill that always result from reduced competition.

During the first half of this decade, it was Alltel doing the acquiring — spending fortunes to acquire other regional wireless phone companies:

• 2002: Alltel acquires 700,000 wireless customers from CenturyTel Inc. in Arkansas, Louisiana, Michigan, Mississippi, Texas and Wisconsin for $1.5 billion.
• 2003: Alltel purchases wireless properties in Mississippi from Cellular XL.
• 2004: Alltel acquires wireless properties from MobileTel, U.S. Cellular and TDS Telecom.
• 2005: Alltel merges with Western Wireless Corp., acquires wireless properties from Public Service Cellular, certain wireless assets from Cingular and exchanges properties with U.S. Cellular of Chicago to meet divestiture requirements related to Alltel’s merger with Western Wireless Corp. Alltel agrees to purchase Midwest Wireless for $1 billion in cash.

Despite the shopping spree, Alltel’s executives like Beebe continued to let it be known Alltel itself was “well-positioned for wireless consolidation” — available for a buyout… for the right price.  By 2006, Alltel had become the fifth largest telecommunications company in the country, with operations in 34 states.  Thanks to lengthy roaming agreements with Sprint and Verizon Wireless, Alltel could deliver national service even from a regional network.

Alltel also enjoyed a satisfied customer base, thanks to innovative calling plans and services that were unheard of from other cell companies.  In 2006, it introduced the popular My Circle calling plan, which allowed customers to make unlimited wireless calls to up to ten numbers, regardless of whether they were landlines or other Alltel wireless customers.  That same year, U Prepaid was introduced, which included unlimited calling and text messaging to a pre-designated number — perfect for those needing to call home.  Alltel prepaid customers could also roam on many other carrier’s networks without paying enormous roaming fees.

Alltel Sells Out Its Landlines

Until the 1996 Telecom Act, most publicly-owned telephone companies were considered a safe utility stock.  In rural communities, many of the phone companies that established service where AT&T’s Bell System did not have been around since the 1890s.  Often owned by a family or cooperative, these independent phone companies popped up when Alexander Graham Bell’s telephone patents expired.  The companies were hardly growth hotbeds, traditionally serving communities that saw little growth and lots of expenses from the wide-open country they had to wire.

After deregulation, venture capital moved aggressively into the wireless and cable sectors.  For the first time, many rural phone companies faced competition from rural cellular providers and cable companies experimenting with “digital phone” service delivered over cable television lines.  But unlike the phone company, these providers were not required to deliver service to everyone.  Most of these services would only challenge the phone company in population centers within towns and villages, that also happened to be where most of their customers lived and worked.

The business model was changing.  As rural phone companies began losing customers to cable and wireless providers, some of them looked to mergers and acquisitions to reduce costs and improve revenues to keep revenue stable, even as customers disconnected.  To maintain interest and  investment from stockholders, many traditional publicly-held phone companies began paying shareholders increased dividends, which attracted attention from Wall Street.

On July 11, 2004, one independent phone company set a new bar for dividends and probably changed the long term business models of rural phone companies for years to come.  Citizens Communications Corporation, as part of a corporate re-shuffle, announced the resignation of its then-CEO Leonard Tow, changed its name to Frontier Communications, and announced an incredible one-time payout of a $2 dividend for every share of common stock, and an ongoing annual $1 dividend, payable every quarter.

With a payout like that, investors began demanding increasing dividends from other phone companies, Alltel included.  To pay that kind of dividend, you need revenue, and slow-growth rural phone companies cannot just generate millions in new revenue selling voicemail, long distance plans, and caller-ID.  That kind of money comes from new lines of business, such as broadband, or from cash-generating mergers and buyouts.

Broadband required millions of dollars in new investments, increasing short term costs and having to wait several years to see a return.  Mergers and acquisitions delivered fast cash and instant results — short term benefits Wall Street loves to see.

So while phone companies continued to lose landline customers at rates up to 7 percent per year, another round of frenzied consolidation through mergers and buyouts erupted.

For Alltel, already established with a strong wireless division, seeing the long term prospects of trying to sustain its landline business as it lost customers seemed pointless.  In December 2005, Alltel announced it was dumping its 3,000,000 landline customers, combining them with another 500,000 customers of Irving, Texas-based Valor Communications in a $9.1 billion dollar tax-free deal to create a new independent landline company — Windstream Communications.

Alltel would henceforth be a wireless phone company-only, and a much richer one at that.  Unfortunately, despite its ranking as America’s fifth largest wireless provider, Alltel still remained a regional player, far behind its fourth largest rival T-Mobile.  With a dwindling number of wireless companies to acquire, speculation grew Alltel itself would soon become a takeover target.

KLRT-TV in Little Rock covered the announced acquisition of Alltel by Goldman Sachs on May 20, 2007 in these three reports.  (15 minutes)

Goldman Sachs Moves In

Within two years, Alltel’s independence would come to an end.  In 2007, Alltel formally opened an auction to sell the company’s wireless assets to the highest bidder.  But in a surprise move, company executives suddenly canceled the auction and accepted a $26 billion leveraged buyout takeover offer from TPG Capital and the buyout arm of Goldman Sachs.  Now, Wall Street investment bankers would own and control Alltel outright.

Speculation in the financial press about why Alltel canceled the auction and didn’t even entertain other bidders for the company raised eyebrows at the time.  The windfall payouts to Alltel’s executives disclosed in later Securities & Exchange Commission filings may have had something to do with it.  Company executives won the equivalent of the Powerball Lotto:

• CEO Scott T. Ford received nearly $150 million dollars.
• Richard Massey, former chief strategy officer and general counsel walked away with almost $50 million.
• Alltel Chief Operating Officer Jeff Fox cleared more than $70 million.
• C.J. Duvall, who was EVP of human resources earned nearly $10 million.
• Kevin Beebe, group president of operations went home with more than $60 million.

That’s quite a haul for the top floor executives at Alltel heading for the exits.

But Goldman Sachs had no intention of running its own phone company for long.  Analysts predicted the investment bank would hold onto Alltel for a year or two in hopes of selling it at a premium to one of the other wireless carriers, probably AT&T or Verizon.

That’s exactly what happened, except it only took seven months.

Bloomberg News took an in-depth look at the 2007 Alltel acquisition by Goldman Sachs and ongoing wireless consolidation. (Corrected Video) (5 minutes)

Verizon Takes Over – The Dog & Pony Approval Circus

With the collapse of the banking sector in 2007 and 2008, Goldman Sachs needed to get rid of assets to raise money.  The subprime mortgage mess left banks with $386 billion in asset writedowns and credit losses.  By putting Alltel up for sale, Goldman would earn $28.1 billion, enough to pay off the loans financing Alltel’s buyout months earlier, and even come out ahead.

The buyer, Verizon Wireless, sought to combine Alltel’s rural cell tower network with its own to expand coverage and pick up a stronger presence in middle America.

In the high stakes, high cost consolidation of telecommunications in the United States, what few regulatory hurdles Verizon would face getting the deal approved meant bringing forth the dog and pony show from Verizon’s lobbyists.  The Federal Communications Commission could alter or even kill its deal.  To make sure that didn’t happen, Verizon counted on the usual assortment of “dollar a holler” advocacy groups, heavy lobbying in Congress, and other friendly allies to help get the deal approved.

Unsurprisingly, Verizon can always count on help from free market allies and alleged community service groups with whom it has a financial relationship or contributes executive talent to serve on their boards.  Most of these have no involvement in telecommunications matters, except when it interests or impacts Verizon.  Suddenly they spring to action, conveniently submitting similar comments supporting whatever Verizon had on the agenda before the FCC.

KLRT and KTHV-TV in Little Rock, Ark., where Alltel was headquartered, ran a series of reports explaining the impact the Verizon-Alltel merger would have on Alltel’s service and jobs in Little Rock. (23 minutes)

Selected Members of the Verizon Friendship Crew Filing Comments Supporting the Verizon Purchase of Alltel (click the names to read their letters to the FCC):

• Institute for Policy Innovation
• Communications Consumers United
• Native American Television
• ASPIRA Association
• Organization of Rural Education
• The Free State Foundation (Political)
• U.S. Hispanic Chamber of Commerce
• U.S. Pan Asian American Chamber of Commerce
• Pacific Research Institute
• Small Business and Entrepreneurship Council
• National Hispanic Council on Aging
• Women Impacting Public Policy
• American GI Forum
• U.S.-Mexico Chamber of Commerce
• Hispanic Alliance for Prosperity Institute
• Latino Coalition
• Consumers for Competitive Choice (Astroturf)
• Dominican American National Roundtable
• National Black Chamber of Commerce
• National Indian Council on Age
• Freedom Works Foundation (Political and Associated With Corporate Lobbying)
• American Association of Peoples with Disabilities
• U.S. Cattlemen’s Association
• League of United Latin American Citizens

Alltel's service areas were carved up between three major providers - Verizon, AT&T, and ATN

Bloomberg News considered the business/industry implications of the Verizon-Alltel merger in these reports. (9 minutes)

Consumers Get Broken Promises & More Expensive Service

The benefits list of what Verizon promised to bring Alltel customers was heavily redacted in FCC filings as “highly confidential.”  What was promised, in public, was that Verizon would deliver improved service to Alltel customers who could continue with their existing service plans..

What consumers really got were major headaches, bad service, and much higher bills.  Former Alltel customers continue to tear up Verizon Wireless’ support forums with page after page of complaints.  As one former Alltel customer puts it, “we are the abandoned children of the redheaded stepchild.”

Some readers of Stop the Cap! shared their own experiences with the Alltel sale. Penny writes:

I first had Midwest Wireless that was bought out by Alltel which was just bought out by Verizon. With each switch I had to change my phone because something on the new system would not work on my old “previous provider” cell phone. Verizon has yet again said that for the “data charges” I can not block anything as my cell phone is too old and that I need to get a “Verizon” phone. My phone is not even a year old.

Enough about phones, data charges, rude customer service. You want to talk about dishonesty and unfair practices…just say Verizon.

In May I called and asked what I should do about leaving for a trip in which I would go out of my phone zone. The customer assistant that I talked to informed me that to avoid roaming charges I should temporarily switch to a national plan. I asked several times if I would be able to go back to my previous plan and was promised that I could set the start and end date for the new national plan. Well can you guess what they did? Yep they did the old bait and switch and from what I know about law….or what I thought about law was that this practice is illegal. Verizon started the new plan almost after I got back from my trip and plus would not set me back to my old plan. So now I had over 2 times the old bill plus roaming charges and less minutes. All I can say is my last call to Verizon was asking when my contract was up and what the termination fee is. By the way the $200 might be well spent.

Penny was switched away from her grandfathered Alltel plan to a new Verizon service plan, and potentially also ended up with a brand new two year contract, without new phones to accompany it.  Any Verizon customer on a grandfathered service plan should never consider allowing a customer service representative to make substantial plan changes — you could lose your old plan.  Grandfathered customers can make certain changes from the Verizon website (adding text plans, changing calling features on phones, etc.) without terminating their existing plan, but be cautious.  Once you lose an old plan, you may never get it back.

Steve, another Stop the Cap! reader, writes:

I was with Alltel for 15 to 20 years and a very happy customer — never a problem. Then Verizon took over and it has been a problem ever since. First off let me tell you that we are truck drivers and travel all over the US. We were in Texas when our laptop died so we went and bought a new one.  Our Alltel air card would not work in the new computer. This was at the time when Verizon was taking over, so we had to go to Verizon and get a new air card. By the way we had unlimited with Alltel. The sales person in Verizon sold us a new card and got us on the road again. From that day forward we have had to visit a Verizon store about our bill every month. Last month was the final straw. We did not like the 5 gig limit to begin with and did not trust it so we were watching it closely so we thought. When the MB’s got up near 4100 we called Verizon and they said you are no where near your 5 gig. Well when the bill came in it said we used over 8 gig and instead of our bill being 200.00 it was over 400.00 for the month . Since this has happened we have already dropped their phone service and may have to drop the Internet and pay the penalties.

Verizon's wireless modem

Steve ran into the problem former Alltel customers frequently encounter when traveling or moving outside of their old Alltel service area.  Many Verizon representatives are not well trained about their new Alltel customers.  Until the transition is complete, many Alltel customers still use equipment that gives priority to Alltel’s network first.  If not correctly provisioned, equipment may not work properly outside of areas where Alltel had service.

Alltel and Verizon were accused of bill cramming in the state of Florida — subjecting customers to monthly charges for “free” ringtones and other services.  The Florida Attorney General’s office ordered refunds for all affected Floridians.  Cell phone companies have an incentive to allow these services to get away with loading up customers’ bills with unauthorized charges — they receive a cut of the action.  WTVT-TV in Tampa reports.  (3 minutes)

Verizon’s 5GB usage cap also includes a steep overlimit penalty.  We’ve seen reports that customers who use service around the country do not immediately see correct numbers for data usage.  That can cause a sudden traffic spike as usage from other areas finally shows up on one’s account.  Verizon customers should have the ability to opt-out from overlimit penalties.  When their 5GB is used up, they should be presented with a screen that requires them to acknowledge they wish to continue using the service and face the consequences on their bill.

Verizon’s tricks and traps for Alltel customers always pay off for Verizon, almost never for customers:

1. Verizon is doing everything possible to get Alltel customers to “upgrade” their service to Verizon plans so they can get them away from Alltel’s legacy plans offering more features for less money.  Once a customer renews a contract with a new Verizon phone or makes a significant change to their service plan, they are switched to a new Verizon plan… often including tricks and traps.  Unlimited texting costs extra on Verizon, as do many other features.  Customers who mistakenly buy what they thought was a comparable service plan learn the errors of their ways when the $1,100 Verizon bill arrives a month later.  Forgetting to add text and data plans can be an expensive mistake on Verizon’s network.
2. Dangling a free or discounted phone upgrade for former Alltel customers often also requires an “upgraded” service plan… from Verizon.  If you want a new subsidized phone, you may lose your old Alltel plan.
3. In many areas, Alltel phones gravitate towards Alltel’s legacy cell network.  That means the phone will choose a weaker cell tower formerly operated by Alltel instead of a closer Verizon cell site.  A roaming/software upgrade normally would correct this and help route calls to the best possible cell site, but customers overwhelmingly complain that doesn’t happen with Alltel-provided phones.  Customers are encouraged to choose a new Verizon phone instead… with a new Verizon service plan.

http://www.phillipdampier.com/video/WTKR Hampton Roads Norfolk NC man overcharged 400 dollars when switching from Alltel to Verizon 1-19-10.flv

This former Alltel customer in North Carolina was charged $400 for an unjustified early termination fee when his service switched to Verizon Wireless as part of the merger.  Despite repeated calls, Verizon-owned Alltel turned his account over to a collection agency. Verizon told him to pay off the Alltel collection agency account and they’d credit him $400.  He paid and then Verizon refused to credit his account and turned him over to their collection agency who started calling him at work.  They also ruined his credit.  It took WTKR-TV in Hampton Roads, Virginia airing this story on the 6 o’clock news to get Verizon’s attention after seven months.  (2 minutes)

Things are even more complicated in areas where the FCC has forced Alltel to divest its wireless assets and not transfer them to Verizon.  In most areas, those customers will shortly discover they are becoming part of AT&T’s wireless family, as AT&T bought the majority of those divested markets.  AT&T, however, does not operate with the same wireless standard Alltel and Verizon do.  AT&T phones work on the GSM standard while Alltel and Verizon work on CDMA.  For the time being, AT&T will simply operate the existing CDMA network Alltel used to own, but eventually every affected customer will get a free upgrade to a new GSM phone.  That upgrade better come quick for frequent travelers who are former Alltel customers switched to AT&T.  They’ll find getting service from AT&T outside of their home areas difficult on a network that uses an entirely different standard.  AT&T will likely have to maintain roaming agreements with Verizon for former Alltel customers until conversion is complete.

KELO and KSFY-TV, both in Sioux Falls, South Dakota, informed South Dakota’s former Alltel customers they’d soon have AT&T as their cell phone company, making Apple’s iPod available in stores in the state for the first time. (3 minutes)

A handful of customers won’t end up with either Verizon or AT&T.  In parts of Wisconsin, Element Mobile will take control of their Alltel account. But nearly a million customers will find their former Alltel service is now provided by… Alltel?

The Return of Alltel Wireless

McGill

Allied Wireless Communications Corp., which is staffed by former Alltel employees, has acquired the remaining leftover pieces of Alltel’s network, including its name, for $223 million dollars.  The all-new Alltel will have the same logo and calling plan features the old Alltel offered, and for 900,000 customers, it will be as if they never left.

“We feel like it’s putting the bank back together here in Little Rock,” Wade McGill, chief administrative officer for Alltel Wireless and AWCC told RCR Wireless. The original Alltel Corp. was headquartered in Little Rock, Ark., before being acquired by Verizon Wireless for $28 billion in early 2009. As part of the acquisition, Verizon Wireless was forced to divest some markets, a majority of which were acquired by AT&T Mobility for $3 billion, with most of the rest picked up by what will remain Alltel.

The company will have extensive roaming agreements for nationwide coverage and will focus on maintaining high quality customer care.

“The ability to retain the brand was key in these markets and you can’t underestimate the value of that,” McGill noted, adding that more than 50% of its current customer base have been Alltel customers for more than six years.

“We need to have a laser focus on the customer experience and being local,” McGill explained, citing a common mantra of rural carriers forced to compete against large, nationwide operators. “That’s how we want to think about our plans moving forward. … I think our plan is to grow organically at first and just focus on providing excellent customer service and support.”

But that doesn’t preclude Alltel from starting to expand operations to other parts of the country, perhaps even in areas now taken over by Verizon.

The new Alltel will remain a CDMA provider with plans to move to the LTE standard, which will deliver a 4G-like experience.

Going Back to the Future

In the end, many of the 13 million former Alltel customers probably wish they could have their old Alltel back, too.

Instead, they got wheeled and dealed away, first by an investment bank/casino that later used taxpayer dollars to bail itself out of its own greed, then by Verizon and AT&T who promise a future of higher bills and poorer service for many trapped in two year contracts. Too often, what’s in the best interests of consumers are an afterthought in these kinds of transactions, even today. Despite the FCC’s own findings that wireless competition is shrinking in a consolidating wireless world, they still found a way to green light deals like this that reduce competition even further.

This man could be one of five helping to guide the future of your broadband service. Kyle McSlarrow is the head of the cable industry lobby.

Free Press, the pro-consumer advocacy group, spent $42,000 to alert the public the fix was in at the Federal Communications Commission.

The agency has been holding secret meetings with four (now five) contenders in the battle for consumer broadband reform: Verizon, AT&T, Google, and Skype.  The Washington Post reports this morning the lack of cable industry participation we reported last night has apparently not been a problem after all.  The cable industry lobbying group NCTA is also invited.

Consumers aren’t invited.  Neither is the press.

Josh Silver from Free Press:

“It looks like yet another federal agency is catering to big business behind closed doors and ignoring the American public. It’s inexcusable that the FCC is brokering backroom deals with industry lobbyists, while pretending to run a transparent process. After the financial crisis and the oil spill, you would think the Obama administration would have learned a lesson. But we won’t stand by and watch the Internet go the way of Wall Street and the Gulf of Mexico.”

“Despite the chairman’s campaign to be transparent, it’s doing the same things as the previous administration,” added Silver.

A source at the meeting said the sides were far apart on the issues — telecommunications companies oppose Net Neutrality, content producers favor it.  Telecom companies don’t want broadband oversight, some content producers do.

AT&T: 'If you don't do what we say, we're taking U-verse away!'

AT&T is threatening to pick up its toys and go home if the Federal Communications Commission tries to bring back its oversight powers over broadband.

CEO Randall Stephenson threw a major hissyfit in the pages of the Wall Street Journal, annoyed the company doesn’t have free rein to do whatever it wants.

“I’m a 3-2 vote away from the next guy coming in and [trying to regulate us], [and] I take it away,” Stephenson said, referring to it’s U-verse IPTV service.

AT&T has threatened to cut spending on U-verse deployment if AT&T faces regulations like Net Neutrality in its broadband business.

“If this Title 2 regulation looks imminent, we have to re-evaluate whether we put shovels in the ground,” Stephenson said, claiming the company planned to spend a “couple billion” dollars a year on the service… until now.

But AT&T has already cut spending on U-verse, slashing $2 billion in U-verse investments in 2009 alone — news trumpeted to shareholders.  Additionally, AT&T has laid off thousands of employees.  In short, the threats the company made this week have already come to pass… more than a year ago.

Many analysts claim AT&T is bluffing.  Like most landline providers, AT&T is losing traditional phone customers who are disconnecting their wired phone lines.  Its wireless division has been pummeled for inadequate 3G coverage, poor customer service, and lousy reception in many areas.  AT&T can’t afford -not- to upgrade their services if they wish to retain customers.

The cable television industry certainly hopes AT&T isn’t bluffing.  They are enjoying AT&T’s disconnect business as customers dump inadequate DSL service and overpriced phone lines for cable-provided alternatives.

As expected, the Federal Communications Commission today voted 3-2 along party lines to move forward with a Notice of Inquiry on Chairman Julius Genachowski’s proposed “third way” of “light touch” regulation to restore the agency’s authority over broadband matters.

A Democratic majority approved Genachowski’s proposal after debate among Commission members.  Democratic Commissioner Michael Copps, long critical of the Bush Administration’s efforts to deregulate broadband, was among the most forceful in calling for some oversight over the industry.  Copps contended that the Bush Administration bent over backwards for large telecommunications companies in unprecedented ways, even stripping away basic consumer protection policies relating to privacy and billing.  The result, he contends, has been a disaster for broadband consumers.

“We need to reclaim our authority,” said Copps. “I, for one, am worried about relying only on the good will of a few powerful companies to achieve this country’s broadband hopes and dreams.”

Copps dismissed rhetoric from industry groups in opposition to the proposal, claiming broadband oversight was not a government takeover or regulation of the Internet.

“We are not talking, even remotely, about regulating the Internet,” Copps said. “We are talking about meaningful oversight of the infrastructure and services that allow Americans to get to the Internet.”

Genachowski’s proposal would correct flawed policy enabled by former Bush Administration FCC Chairman Michael Powell, who supported the classification of broadband as an “information service.”  Powell claimed that classification would include ancillary authority to back FCC enforcement.

That authority would be put to the test.

In 2007, Comcast secretly imposed speed restrictions on customers using peer-to-peer software.  Using the authority Powell claimed the agency had, the FCC ordered the broadband provider to cease and desist its speed throttling. Although Comcast discontinued the practice, replacing it with a 250 GB monthly data cap, the company also sued in federal court a year later, claiming the FCC’s broadband authority was flawed.

Earlier this year, the court agreed, ruling the FCC could not extend ancillary authority under its “information service” classification of broadband.  In that one decision, the FCC lost most, if not all of its oversight powers over broadband matters.

By reclassifying broadband as a “telecommunications service,” the Commission believes it can win back its oversight powers.  The Supreme Court, in an earlier case, upheld similar authority in another matter.

But telecommunications companies have claimed the proposed reclassification would subject broadband providers to 1930′s era regulations established for telephone landline companies.  They objected strongly to today’s vote.

Tom Tauke

Tom Tauke, Verizon executive vice president for public affairs, policy and communications said, “Reclassifying high-speed broadband Internet service as a telecom service is a terrible idea.  The negative consequences for online users and the Internet ecosystem would be severe and have ramifications for decades.  It is difficult to understand why the FCC continues to consider this option.”

Tauke, along with several other phone and cable companies have asked the Commission to turn the matter over to Congress.  Tauke referenced the industry-backed effort that secured nearly 300 signatures from members of Congress opposing reclassification.

But industry critics contend turning the matter over to a polarized Congress would represent a delay at best.  At worst, it could open the door to even more industry-backed, campaign contribution-fueled deregulation.

“There is a real urgency to this because right now there are no rules of the road to protect consumers from even the most egregious discriminatory behavior by telephone and cable companies,” said Markham Erickson, executive director of the Open Internet Coalition, which includes Internet heavyweights like Google and Amazon.com.

Aparna Sridhar, Free Press’ policy counsel said, “The FCC’s Third Way proposal presents a measured response to a problem created by a Comcast lawsuit: Without restoring its authority over broadband, the Commission won’t be able to bring broadband to rural and low-income Americans or promote policies that encourage innovation, creativity, free speech and job creation online. These are goals that we can all agree on, and we support the Commission’s effort to achieve them by first establishing a sound legal foundation for its policies.”

Republican commissioners largely adopted the broadband industry position that any additional regulation would harm investment and hurt consumers.

“I recognize that industry alone will not solve every challenge and no commercial market is perfect, but I fear that a more proactive broadband regulatory approach would adversely affect consumers, competition, and investment,” said Republican Commissioner Meredith Baker, who voted against the proposal.

At least one Republican congressman went all out for the industry in a letter to Genachowski that accused him of engaging in a “blind power grab.”

“Despite overwhelming opposition within a Congress that possesses the actual authority that the FCC covets, the Commission now inexplicably appears poised on Thursday to take another misguided leap towards its investment-suffocating attempt to regulate broadband providers as common carriers,” Rep. Fred Upton (R-Michigan) wrote.

Upton counts AT&T among his top-five contributors, giving the congressman and his leadership PAC $20,000.  Upton also accepted $15,000 from the National Cable & Telecommunications Association, $10,250 from Verizon, $10,000 from Comcast, and $7,500 from Deutsche Telekom, owner of T-Mobile.

Despite all the rhetoric, at least one carrier was forced to live under most of the rules Genachowski proposes for all of America’s broadband providers, with little difficulty.  AT&T agreed to maintain a Net Neutral policy from 2006-2009 as part of its merger agreements with SBC and BellSouth.  While doing so, the company increased investments in deploying its IPTV service U-verse, which included better broadband service for U-verse customers.

Stop the Cap! will provide detailed instructions on how to submit comments to the FCC as part of today’s Notice of Inquiry soon and will hopefully have video of today’s event up shortly.

West Liberty, Iowa is home of Liberty Communications

One of the side effects of insatiable telecom industry consolidation is that hard-working, honest, and consumer-friendly providers are swept up by corporate machinery that ends up providing Americans with the least amount of service for the highest possible price.  Remarkably, there are still some top-shelf independent providers out there that actually stand with their customers, fighting to bring better broadband service to everyone in their service areas.

A letter to the editor in the West Liberty Index caught my eye.  It chastised the Federal Communications Commission for its plans to treat rural Americans as second class broadband citizens with speed goals 25 times slower than those enjoyed by their urban cousins.  The FCC, the writer wrote, was simply not going far enough for consumers.  What was so remarkable about the letter?  It was signed by an Internet Service Provider — Jerry Melick, manager of Liberty Communications.

What would happen if the federal government decided that city roads, bridges and infrastructure should be better-constructed and more efficient than the roads in rural America? What about if the policy-makers determined that urban consumers should be able to get where they are going and get what they need faster than rural consumers? A new government plan intends to make that true of our nation’s information superhighway — the Internet. And, while it is not the highway coming into town, as rural consumers, we should still be very concerned.

[...]

The FCC’s plan will make rural Americans second class citizens in the new broadband world, because it establishes a speed goal for rural areas that is 25 times slower than for urban areas. Shouldn’t rural residents have access to the same broadband services as our larger towns and cities? Despite the construction of our state of the art Fusion network, we still face the challenge of how to bring broadband to our rural customers living outside of the communities of West Branch and West Liberty. Without a National Broadband Plan that supports further investment in rural areas, this will be difficult if not impossible to accomplish.

Melick supports broadband reform efforts at the FCC and changing the Universal Service Fund to provide assistance to companies like his, serving rural eastern Iowa, to build out its fiber to the home Fusion network to nearly every resident in its service area.  That’s a refreshing change of pace from the usual rhetoric from AT&T, Frontier, Verizon, and others.

Liberty Communications began service as the independent West Liberty Telephone Company in 1899.  It delivered telephone service for more than 100 years until January 2008, when the company announced it was going to construct its own fiber to the home network to provide television, telephone, and broadband service to its customers.  The Fusion network would expand later that year to start construction in nearby West Branch, the birthplace of Herbert Hoover, the nation’s 31st president.  By April 2009 the fiber network offered a true triple play package of services to customers in both cities. Fusion broadband customers can buy up to 20/2 Mbps service from Liberty.  For the rest of its service area, Liberty still relies on DSL service providing up to 3 Mbps, but believes fiber is the future for all of its customers.

The only question remaining is when forward-thinking policies at the FCC will be enacted to help that goal?

A pro-consumer group has released a new report that refutes claims from the telecommunications industry that broadband reform represents an investment killer and takeover of the Internet by the Obama Administration.

Free Press this week challenging 10 of the wildest claims in its report, “The Truth About the Third Way: Separating Fact from Fiction in the FCC Reclassification Debate.” Aparna Sridhar, Free Press’ Policy Counsel used publicly available evidence to effectively debunk the multi-million dollar lobbying campaign to stop broadband reform.

Unfortunately, more than a handful in Congress have accepted those discredited claims as fact.  Free Press hopes truth will prevail over the enormous money-fueled opposition effort, especially as the FCC begins proceedings next week on its proposed “Third Way” approach to broadband oversight. The agency is expected to issue a Notice of Inquiry and to seek public comment on the issues of broadband reform and reclassification.

A sampling from the report, which we encourage you to read:

Fiction #3: Placing broadband services back under the Commission’s explicit authority will stifle investment in broadband networks.

Fact: The FCC’s proposed policy merely preserves the status quo prior to the recent uncertainty created by the federal appeals court ruling. As a result, it should have little to no effect on company investment decisions.

Many industry representatives and investment analysts have dismissed the notion that the FCC’s Third Way will deter investment. Furthermore, history contradicts the claim that applying some of the rules contained in Title II of the Communications Act to broadband service providers (as the Commission has proposed) will adversely affect investment in the networks. Telecommunications industry investments soared during the period when carriers were subject to the full panoply of rules contained in Title II. Investments only began decreasing once the FCC began dismantling many of the pro-competition rules stemming from this part of the Communications Act.

As we've said at Stop the Cap! for two years now, providers' investments in upgrading and expanding their networks are declining, even as demand (and prices) for those services are increasing.

Fiction #4: Placing broadband services back under the FCC’s explicit authority will lead to job losses in the telecom sector.

Fact: The telecommunications sector accelerated its job-shedding following industry consolidation and FCC deregulation, a trend that continues unabated even as company revenues reach historic highs.

The notion that the FCC’s move to re-establish its authority over broadband networks will harm employment is also nothing more than unsupported rhetoric. The simple reality is this sector accelerated its job-shedding following industry consolidation and FCC deregulation. And this trend continued even as overall revenues in the sector continued to expand. Unfortunately, the underlying market economics and company statements suggest this trend will continue regardless of how the FCC acts on the regulatory authority question.

So much for the argument that regulation will cause job losses. As this plainly illustrates, even as profits fatten at AT&T, Qwest and Verizon, employment numbers are on a steep decline in today's deregulated marketplace.

Fiction # 7: The FCC’s Third Way proposal is an unprecedented power-grab which departs from Congress’s intent to leave the Internet unregulated.

Fact: The FCC’s proposal will bring the Commission’s approach to broadband networks in harmony with longstanding principles in communications policy. The law always has recognized a distinction between communications infrastructure (like broadband networks) and the content that travels over that infrastructure (such as websites on the Internet). In fact, it was the Powell FCC’s decision to abandon oversight over broadband networks that represented a radical and irresponsible shift — by treating basic connectivity services just like content, the Powell FCC undermined the Commission ability to make pro-competitive, pro-consumer policies in the broadband space. This FCC’s proposal would return to the first principles of communications policy that fostered innovation, competition and investment in the first place.

Fiction #8: The FCC’s proposal would amount to a “government takeover of the Internet.”

Fact: The FCC’s proposal would draw a line between basic two-way communications — which have always been regulated by the FCC — and Internet applications and websites, which would remain unregulated by the FCC. None of the parties in the debate before the FCC have suggested that the FCC impose any kind of content regulation on the Internet. Nor has anyone suggested that the government take over the physical infrastructure that forms the Internet. Rather, the FCC is proposing to apply some basic, light-touch rules of the road to the owners of broadband networks.

These rules will attempt to encourage private investment, promote competition, and foster innovation, economic growth, and job creation. Further, restoring its regulatory framework back in harmony with the law will insure the FCC has basic consumer protection authority.

Walt Mossberg (left) discusses the current state of American broadband with FCC Chairman Julius Genachowski (right)

FCC Chairman Julius Genachowki told attendees at the D: All Things Digital conference America scores dead last in a study measuring the rate of change in broadband innovation.  American broadband is stuck in neutral while every other ranked nation is moving forward faster in understanding the importance of deploying fast, reliable, and universal broadband.  Genachowski directly ties broadband to improving local economies, propelling growth in jobs, and improving education and health care.

Unfortunately the American duopoly most Americans cope with maintains a stranglehold on efforts to bring America literally up to speed with competing nations.  Worse, there is no end in sight as long as America relies entirely on incumbent providers to get the job done.

Americans pay some of the highest prices in the world for mediocre broadband, and it’s only getting worse with the introduction of usage limiting schemes like data caps and so-called consumption billing.

Genachowski is attempting to facilitate improved broadband across the United States, but is hampered by private industry undermining the FCC’s authority to help push improvements forward.  Recent industry-driven court challenges to the FCC’s authority have led to the agency seeking a different path to regain its regulatory footing.

The FCC chairman sees the biggest challenges coming in wireless broadband, where a spectrum shortage is limiting potential capacity and available bandwidth.  Genachowski seeks an accommodation with the nation’s television stations to relinquish UHF spectrum where possible to bolster wireless networks.

Conference host Walt Mossberg challenged Genachowski on why more isn’t getting done and why accepting the current state of the marketplace is acceptable.  He also criticized providers for charging high prices for slow service and attacked Comcast for its set top box, claiming if there was an open market for these things, no one would buy it, that it would be the worst thing on the shelf.

Excerpts from FCC Chairman Julius Genachowski’s visit with Walt Mossberg at the June 2nd D: All Things Digital conference.  (6 minutes)

The CTIA is the wireless industry's lobbying group

While the phone and cable companies attempt to fight off broadband reclassification at the FCC, the wireless industry has been pulling its own weight in an effort to convince legislators everything is wonderful in wireless, and no consumer protection regulations are necessary.

The CTIA, the wireless lobbying group, has been blogging on overdrive lately, trying to sell the idea Americans are already soaking in broadband options and competition that keeps prices low and innovation high.  Why regulate an industry that isn’t broken?

If only it were true.

While Americans in larger communities do have choices for broadband, for most it’s a matter of picking the phone or cable company for service.  That’s called a duopoly.  In the wireless marketplace, it’s hardly much better.  The nation’s largest wireless phone companies, AT&T and Verizon, have essentially colluded with near-identical pricing and service plan requirements that demand customers add mandatory “options” like data plan add-ons that raise wireless bills higher than ever.

The smaller providers eke out an existence mildly competing over pricing, but with their inherent coverage limitations or history of providing poor customer service, many consumers won’t consider doing business with them.  Relying on most wireless providers for broadband threatens the kind of huge bills you see on TV news reports, as carriers limit consumption to 5GB per month, and most charge enormous overlimit fees to customers exceeding the limit.

The Federal Communications Commission recently found one in every six Americans suffer “bill shock” syndrome — that all-too-familiar panicky feeling when you open a cell phone bill and discover an extra zero on the end of the dollar amount due.  More than a third of people who experienced bill shock said their bills jumped by at least $50 — around 23 percent said the increase was $100 or more.

Settles

That amounts to more than 30 million Americans, but the CTIA’s “see no evil, hear no evil” blog carries on claiming life is good for wireless consumers.  Besides, writes Steve Largent, president of the CTIA, consumers who took their complaints to the Better Business Bureau had them resolved 97.4 percent of the time.

Of course, that begs the question why consumers had to approach the BBB about their poor service experience in the first place.

I’m not the only one asking questions.  Craig Settles, an industry analyst, co-administrator of Communities United for Broadband and author of the report “Fighting the Next Good Fight: Bringing True Broadband to Your Community,” is also pondering the industry campaign to block broadband reform.

Settles penned a piece in today’s Roll Call exposing the fallacies from the industry’s PR machine:

The state of broadband — for consumers, businesses and nonprofits — isn’t the rosy picture the industry powerhouses attempt to paint. Ignoring this reality can lead to bad policy decisions and bad legislation.

[...]

Most states may technically have 60 to 80 Internet access providers. However, in practically every state, the combined statewide market share of all but the top five or six providers might total 5 percent, if you’re lucky. In at least half of the states, data show the combined market share of the top two providers ranges from 70 percent up to 95 percent. That represents near or actual duopolies, most often with one wireless and one cable provider as the undynamic duo.

Life at the local level, which is where your true subscriber options exist, further challenges the industry’s claim that people have choices. If you count “having choices” as living in an area where several companies advertise broadband service, or consider dial-up speed as broadband, OK.

But go door to door in rural counties and small towns. The reality you often find is one major carrier providing fair to poor service to some and no service to the rest, plus some small local providers with 2 percent or 3 percent market share struggling to provide decent service in the face of endless efforts to smite them from the planet. If you’re in one of the few states with four or five providers that each have statewide market share of 8 percent to 15 percent, it’s likely each provider is concentrated in a portion of the state, creating a local reality that’s worse than state statistics.

Settles notes that claims of “billions invested” only invites more questions about what carriers are doing with all that money.  Settles questions whether its wise to brag about spending $20 billion on infrastructure costs when municipal broadband projects in states like North Carolina, with IT staffs of fewer than 12, have built superior networks delivering 10 times the speed of its competitors.

The CTIA loves to tout the innovation wireless providers bring to customers, but in many cases they are claiming credit (and often getting a cut in the action) for someone else’s innovation, especially from the third-party apps market.

Too often the real innovations in wireless broadband have often come in spite of carriers that have sought to block, control, or “manage” someone else’s vision.

Watch as the CTIA wireless lobby tries to sell Americans on wireless innovation, much of which didn’t come from wireless companies at all.  (1 minute)

Take the money and run

The Federal Communications Commission’s approval of Frontier’s takeover of 4.8 million Verizon landline customers in 14 states comes a year after the company announced the deal.  Frontier joins three other independent phone companies — FairPoint Communications, Windstream Communications, and CenturyLink zealously trying to grow their companies with additional mergers and acquisitions to avoid being swallowed up themselves.

What is common among all four companies is they rely heavily on dividend payouts to keep their stock price as high as possible.  That was a formula for disaster for FairPoint, the first of the four to end up in bankruptcy after a similar deal with Verizon in northern New England caused the company to falter.  Service and billing deteriorated, customers fled, and promises for better broadband were broken.  Now Frontier is following in FairPoint’s footsteps with more than 4.8 million new customers Frontier hopes they can swallow.

The FCC’s statement approving the merger reads like a press release for all involved, and delighted FCC Chairman Genachowski, who called these meager requirements “robust”:

Coming one week after the final state approval for the transaction, the FCC’s Order holds the applicants, Verizon and Frontier, to enforceable voluntary commitments, including:

• Extend faster broadband to more Americans: Frontier will significantly increase broadband deployment for the lines involved in this transaction, only 62 percent of which are broadband-capable today. Specifically, Frontier will deploy broadband with actual speeds of at least 3 Mbps downstream to at least 85 percent of transferred lines by the end of 2013, and actual speeds of at least 4 Mbps downstream to at least 85 percent of the transferred lines by the end of 2015, with all new broadband deployment offering actual speeds of at least 1 Mbps upstream.

Frontier's Fast One: 3 Mbps DSL Service with a 5GB Monthly Usage Allowance

Frontier’s broadband commitment gives the company a full five years to meet the bare minimum speed considered to constitute broadband in the National Broadband Plan.  One hopes Frontier doesn’t break into a sweat offering a piddly 3 Mbps service to homes using yesterday’s DSL service until then.  While Verizon’s rural castoffs get stuck eventually with 4 Mbps DSL, many of the company’s remaining customers are enjoying 50Mbps service over an all fiber network.  The FCC is accepting an urban-rural divide for broadband which will benefit the phone companies while leaving rural customers in the dirt.

Deploy fiber to libraries, hospitals, and other anchor institutions: Frontier will launch an anchor institution initiative to deploy fiber to libraries, hospitals, and government buildings, particularly in unserved and underserved communities.

Fiber for these locations sure, but no fiber for you or I.  Frontier, like most other telecom companies, loves to promote the benefits of fiber without actually deploying it to homes.

Promote competition: Frontier and Verizon have made a series of commitments to protect wholesale customers, including honoring all obligations under Verizon’s current wholesale arrangements that are in effect at closing.

Since wholesale customers often depend on the same network other customers do, if a company doesn’t deliver robust broadband into a state like West Virginia, there isn’t a robust service to sell to those wholesalers.

Improve data quality and collection: Frontier will make available to the Commission data on its broadband deployment progress at an unprecedented level of detail to enable effective monitoring of Frontier’s compliance with its commitments.

The Commission concluded that the commitments that applicants have offered, coupled with monitoring and enforcement by the Commission, will minimize the risks of harm and ensure that this transaction is in the public interest.

Phillip "Living on the Frontier" Dampier

Considering how weakly the FCC is committing itself to protecting rural customers from being dumped into the broadband backwater Frontier has on offer (complete with the 5GB monthly usage allowance), does collecting statistics help when things go sour?  Regulators collected statistics in New England when FairPoint failed, but that didn’t get service levels back until Maine, New Hampshire, and Vermont threatened to toss FairPoint out.  Now the company is in bankruptcy and regulators are negotiating which of the promises FairPoint made can be let go ‘for the sake of the company.’

That’s why it’s so ironic to read editorials that proclaim the FCC is on some sort of power grab when they seek to restore what meager authority they exercised over broadband before a DC Court effectively excluded broadband oversight from their portfolio.

It will be a good day when federal agencies like the FCC start worrying first and foremost about consumers instead of how to make a parade of overpriced mergers and acquisitions succeed for the companies involved.

WANE-TV in Fort Wayne warns viewers their landline company is about to change asVerizon vacates the area by July 1st.  (1 minute)

Too late.  The Communications Workers of America ran this ad spot asking the West Virginia governor to intervene and stop the sale.  (1 minute)