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Verizon Takes N.Y. Landline Customers to the Cleaners: Finds $1,500

Phillip Dampier March 28, 2016 Consumer News, Public Policy & Gov't, Verizon, Video No Comments

ShakedownVerizon’s loyal landline customers are subsidizing corporate expenses and lavish spending on Verizon Wireless, the company’s eponymous mobile service, while their home phone service is going to pot.

Bruce Kushnick from New Networks Institute knows Verizon’s tricks of the trade. He reads tariff filings and arcane Securities & Exchange Commission corporate disclosures for fun. He’s been building a strong case that Verizon has used the revenue it earns from regulated landline telephone service to help finance Verizon’s FiOS fiber network and the company’s highly profitable wireless service.

Kushnick tells the New York Post at least two million New Yorkers with (P)lain (O)ld (T)elephone (S)ervice were overcharged $1,000-$1,500 while Verizon allowed its copper wire network to fall into disrepair. Kushnick figures Verizon owes billions of dollars that should have been spent on its POTS network that provides dial tones to seniors and low-income customers that cannot afford smartphones and laptops.

Verizon’s copper network should have been paid off years ago, argues Kushnick, resulting in dramatically less expensive phone service. What wasn’t paid off has been “written off” by Verizon for some time, Kushnick claims, and Verizon customers should only be paying $10-20 a month for basic phone service. But they pay far more than that.

To ensure a proper rate of return, New York State’s Public Service Commission sets Verizon’s basic service charge of regulated phone service downstate at $23 a month. Deregulation has allowed Verizon to charge whatever it likes for everything else, starting with passing along taxes and other various fees that raise the bill to over $30. Customers with calling plans to minimize long distance charges routinely pay over $60 a month.

Unregulated calling features like call waiting, call forwarding, and three-way calling don’t come cheap either, especially if customers choose them a-la-carte. A two-service package of call waiting and call forwarding costs Verizon 2-3¢ per month, but you pay $7.95. Other add-on fees apply for dubious services like “home wiring maintenance” which protects you if the phone lines installed in your home during the Eisenhower Administration happen to suddenly fail (unlikely).

verizonIn contrast, Time Warner Cable has sold its customers phone service with unlimited local and long distance calling (including free calls to the European Community, Canada, and Mexico) with a bundle of multiple phone features for just $10 a month. That, and the ubiquitous cell phone, may explain why about 11 million New Yorkers disconnected landline service between 2000-2016. There are about two million remaining customers across the state.

New York officials are investigating whether Verizon has allowed its landline network to deteriorate along the way. Anecdotal news reports suggests it might be the case. One apartment building in Harlem lost phone and DSL service for seven months. Another outage put senior citizens at risk in Queens for weeks.

“They don’t care if we live or die,” one tenant of a senior living center told WABC-TV.

Verizon claims Kushnick’s claims are ridiculous.

“There is absolutely no factual basis for his allegations,” the company said.

http://www.phillipdampier.com/video/WABC New York Seniors vent against Verizon after phone service outage 3-9-16.flv

WABC’s “7 On Your Side” consumer reporter Nina Pineda had to intervene to get Verizon to repair phone service for a senior living center that lasted more than a month. (2:50)

Attacks on Tennessee’s EPB Municipal Broadband Fall Flat in Light of Facts

latinos for tnThe worst enemy of some advocacy groups writing guest editorial hit pieces against municipal broadband is: facts.

Raul Lopez is the founder and executive director for Latinos for Tennessee, a 501C advocacy group that reported $0 in assets, $0 in income, and is not required to file a Form 990 with the Internal Revenue Service as of 2014. Lopez claims the group is dedicated to providing “Latinos in Tennessee with information and resources grounded on faith, family and freedom.”

But his views on telecom issues are grounded in AT&T and Comcast’s tiresome and false talking points about publicly owned broadband. His “opinion piece” in the Knoxville News Sentinel was almost entirely fact-free:

It is not the role of the government to use taxpayer resources to compete with private industry. Government is highly inefficient — usually creating an inferior product at a higher price — and is always slower to respond to market changes. Do we really want government providing our Internet service? Government-run health care hasn’t worked so well, so why would we promote government-run Internet?

Phillip Dampier: Corporate talking point nonsense regurgitated by Mr. Lopez isn't for the good of anyone.

Phillip Dampier: Corporate talking point nonsense regurgitated by Mr. Lopez isn’t for the good of anyone.

Lopez’s claim that only private providers are good at identifying what customers want falls to pieces when we’re talking about AT&T and Comcast. Public utility EPB was the first to deliver gigabit fiber to the home service in Chattanooga, first to deliver honest everyday pricing, still offers unlimited service without data caps and usage billing that customers despise, and has a customer approval and reliability rating Comcast and AT&T can only dream about.

Do the people of Chattanooga want “the government” (EPB is actually a public utility) to provide Internet service? Apparently so. Last fall, EPB achieved the status of being the #1 telecom provider in Chattanooga, with nearly half of all households EPB serves signed up for at least one EPB service — TV, broadband, or phone service. Comcast used to be #1 until real competition arrived. That “paragon of virtue’s” biggest private sector innovation of late? Rolling out its 300GB usage cap (with overlimit fees) in Chattanooga. That’s the same cap that inspired more than 13,000 Americans to file written complaints with the FCC about Comcast’s broadband pricing practices. EPB advertises no such data caps and has delivered the service residents actually want. Lopez calls that “hurting competition in our state and putting vital services at risk.”

Remarkably, other so-called “small government” advocates (usually well-funded by the telecom industry) immediately began beating a drum for Big Government protectionism to stop EPB by pushing for a state law to ban or restrict publicly owned networks.

Lopez appears to be on board:

Our Legislature considered a bill this session that would repeal a state municipal broadband law that prohibits government-owned networks from expanding across their municipal borders. Thankfully, it failed in the House Business and Utilities Subcommittee, but it will undoubtedly be back again in future legislative sessions. The legislation is troubling because it will harm taxpayers and stifle private-sector competition and innovation.

Or more accurately, it will make sure Comcast and AT&T can ram usage caps and higher prices for worse service down the throats of Tennessee customers.

epb broadband prices

EPB’s broadband pricing. Higher discounts possible with bundling.

Lopez also plays fast and loose with the truth suggesting the Obama Administration handed EPB a $111.7 million federal grant to compete with Comcast and AT&T. In reality, that grant was for EPB to build a smart grid for its electricity network. That fiber-based grid is estimated to have avoided 124.7 million customer minutes of interruptions by better detection of power faults and better methods of rerouting power to restore service more quickly than in the past.

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

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

Public utilities can run smart grids and not sell television, broadband, and phone service, leaving that fiber network underutilized. EPB decided it could put that network to good use, and a recent study by University of Tennessee economist Bento Lobo found EPB’s fiber services helped generate between 2,800 and 5,200 new jobs and added $865.3 million to $1.3 billion to the local economy. That translates into $2,832-$3,762 per Hamilton County resident. That’s quite a return on a $111.7 million investment that was originally intended just to help keep the lights on.

So EPB’s presence in Chattanooga has not harmed taxpayers and has not driven either of its two largest competitors out of the city.

Lopez then wanders into an equally ridiculous premise – that minority communities want mobile Internet access, not the fiber to the home service EPB offers:

Not all consumers access the Internet the same way. According to the Pew Research Center, Hispanics and African-Americans are more likely to rely on mobile broadband than traditional wire-line service. Indeed, minority communities are even more likely than the population as a whole to use their smartphones to apply for jobs online.

[…] Additionally, just like people are getting rid of basic at-home telephone service, Americans, especially minorities, are getting rid of at-home broadband. In 2013, 70 percent of Americans had broadband at home. Just two years later, only 67 percent did. The decline was true across almost the entire demographic board, regardless of race, income category, education level or location. Indeed, in 2013, 16 percent of Hispanics said they relied only on their smartphones for Internet access, and by 2015 that figure was up to 23 percent.

That drop in at-home broadband isn’t because fewer Americans have access to wireless broadband, it’s because more are moving to a wireless-only model. The bureaucracy of government has trouble adapting to changes like these, which is why government-owned broadband systems are often technologically out of date before they’re finished.

But Lopez ignores a key finding of Pew’s research:

In some form, cost is the chief reason that non-adopters cite when permitted to identify more than one reason they do not have a home high-speed subscription. Overall, 66% of non-adopters point toward either the monthly service fee or the cost of the computer as a barrier to adoption.

What community broadband provides communities the big phone and cable companies don't.

So it isn’t that customers want to exclusively access Internet services over a smartphone, they don’t have much of a choice at the prices providers like Comcast and AT&T charge. Wireless-only broadband is also typically usage capped and so expensive that average families with both wired broadband and a smartphone still do most of their data-intensive usage from home or over Wi-Fi to protect their usage allowance.

EPB runs a true fiber to the home network, Comcast runs a hybrid fiber-coax network, and AT&T mostly relies on a hybrid fiber-copper phone wire network. Comcast and AT&T are technically out of date, not EPB.

Not one of Lopez’s arguments has withstood the scrutiny of checking his claims against the facts, and here is another fact-finding failure on his part:

Top EPB officials argue that residents in Bradley County are clambering for EPB-offered Internet service, but the truth is Bradley County is already served by multiple private Internet service providers. Indeed, statewide only 215,000 Tennesseans, or approximately 4 percent, don’t have broadband access. We must find ways to address the needs of those residents, but that’s not what this bill would do. This bill would promote government providers over private providers, harming taxpayers and consumers along the way.

Outlined section shows Bradley County, Tenn., east of Chattanooga.

Outlined section shows Bradley County, Tenn., east of Chattanooga.

The Chattanoogan reported it far differently, talking with residents and local elected officials on the ground in the broadband-challenged county:

The legislation would remove territorial restrictions and provide the clearest path possible for EPB to serve customers and for customers to receive high-speed internet.

State Rep. Dan Howell, the former executive assistant to the county mayor of Bradley County, was in attendance and called broadband a “necessity” as he offered his full support to helping EPB, as did Tennessee State Senator Todd Gardenhire.

“We can finally get something done,” Senator Gardenhire said. “The major carriers, Charter, Comcast and AT&T, have an exclusive right to the area and they haven’t done anything about it.”

So while EPB’s proposed expansion threatened Comcast and AT&T sufficiently to bring out their lobbyists demanding a ban on such expansions in the state legislature, neither company has specific plans to offer service to unserved locations in the area. Only EPB has shown interest in expansion, and without taxpayer funds.

The facts just don’t tell the same story Lopez, AT&T, and Comcast tell and would like you to believe. EPB has demonstrated it is the best provider in Chattanooga, provides service customers want at a fair price, and represents the interests of the community, not Wall Street and investors Comcast and AT&T listen to almost exclusively. Lopez would do a better job for his group’s membership by telling the truth and not redistributing stale, disproven Big Telecom talking points.

Frontier’s Showboating of Verizon Deal in Fla., Calif., and Tex. Called Out by Citi

Phillip Dampier March 9, 2016 Competition, Consumer News, Frontier, Rural Broadband 3 Comments

frontier new logoFrontier Communications stock took a beating this afternoon after Citi analyst Michael Rollins downgraded the company’s stock from Neutral to Sell after announcing he didn’t believe Frontier’s rosy promises of synergy savings from its acquisition of Verizon’s wired networks in Florida, Texas, and California.

Rollins believes Frontier’s legacy copper networks, long overdue for significant upgrades, will continue to pose a greater-than-expected drag on Frontier’s financial performance, substantially reducing any benefits of its latest acquisition deal with Verizon. Frontier executives previously admitted they have less than a 25% market share in many of their service areas, evidence customers are dumping Frontier landlines and DSL broadband and never looking back.

citiFrontier was depending on the Verizon acquisition, scheduled to close March 31, to help stabilize its revenues and OIBDA numbers. That isn’t likely, according to Rollins, because Frontier customer revenue is down in all-copper service areas. Frontier’s revenues from its legacy service areas dropped more than 4 percent in 2015.

The news is slightly better in areas where Verizon has acquired fiber to the neighborhood (Connecticut) and fiber to the home (Pacific Northwest, Indiana) networks from AT&T and Verizon. Frontier FiOS has helped keep the company’s revenue stable to modestly down, but there are no clear signs Frontier plans to build its own fiber networks in its legacy service areas, outside of an experimental network in North Carolina.

As a result, Rollins is convinced the “synergy realization” numbers need to be run again. He predicts they will turn out much lower than anticipated. Experience with Frontier’s earlier acquisitions from AT&T and Verizon demonstrated lower than anticipated synergies.

Newest Google Fiber Cities Rely on Pre-Existing Fiber Networks; Is Google Cost-Cutting?

google fiberTwo of Google Fiber’s newest fiber cities will only get the gigabit fiber-to-the-home service because someone else already laid the fiber.

In the last week, residents of San Francisco and Huntsville, Ala. were told they were next in line for Google Fiber service. But instead of proposing to build a citywide fiber network for all residents, Google will rely almost entirely on pre-existing fiber networks they will use to reach customers.

In San Francisco, only an unspecified portion of the metro area will qualify for Google Fiber, namely certain apartments, condos, and subsidized housing units already served by a fiber optic connection. Single family homes and apartments not currently connected to fiber may never qualify for Google’s service.

A Google Fiber executive seemed to signal Google may be taking a harder look at the cost of building fiber service, and future expansion may rely on renting space on someone else’s cable.

“To date, we’ve focused mostly on building fiber-optic networks from scratch,” said Michael Slinger, Google Fiber’s business operations director. “Now, as Google Fiber grows, we’re looking for more ways to serve cities of different shapes and sizes.”

That suddenly makes existing municipal and private dark fiber networks very attractive and in demand. Many municipalities have underused institutional fiber networks that serve anchor institutions, public safety, and government offices. Public access is often limited to non-existent. The prospect of Google paying to use those networks to reach more customers may prove attractive to cash-strapped cities. Private fiber overbuilders and those with excess capacity may also find a new revenue stream renting space to the search engine giant. In Huntsville, Google will have non-exclusive access to the city’s publicly owned fiber network. Any competitor could technically offer their services over the same network.

Competitors and analysts seemed ready to dismiss Google’s latest expansion announcements. Diffusion Group analyst Joel Espelien told the San Jose Mercury News Google Fiber’s plans to wire affordable housing in San Francisco was nothing more than “pure PR.” He’s unimpressed with Google Fiber generally, dismissing it as “Costco Internet,” delivering bulk sized connections at prices most consumers are unaccustomed to paying for Internet access.

“It’s both cheap and it isn’t cheap,” Espelien said. “It kind of depends on your point of view.”

Google’s reasons to offer service to only a few locations in San Francisco are clearly pegged to the costs of wiring the entire city.

“We considered a number of factors, including the city’s rolling hills, miles of coastline, and historic neighborhoods,” Google said in a blog post. All of those features that tourists love to see are also expensive because of costly engineering efforts to hide the cables from view to stay within zoning regulations.

Frontier Plans National IPTV Service for Up to 50% of Their Customers

Phillip Dampier February 23, 2016 Broadband Speed, Competition, Consumer News, Frontier 2 Comments

frontier new logoFrontier Communications plans to leverage their existing fiber-copper infrastructure to offer broadband-powered television service for up to half of their national customer base over the next four years.

Like many Frontier initiatives, the company’s IPTV effort relies on minimal spending, with just $150 million in capital budgeted for the project, spread out over several years.

“Our plans are to introduce video service to more than 40 markets representing approximately three million households over a three- to four-year period,” said Frontier CEO Daniel McCarthy. “Once complete, video service will be available to about 50% of the 8.5 million households in Frontier’s existing footprint, not counting the pending Verizon acquisition.”

Frontier intends to sell the service to the 57% of customers it claims can receive at least 20Mbps broadband speed. The video streams will co-exist with customers’ data service.

“Our IPTV applications employ the latest very advanced compression technology,” said McCarthy. “[Each] HD television channel will require approximately 2.5Mbps of capacity, meaning a household with four HDTVs active at once will require 10Mbps of capacity into the home, leaving the remainder available for data usage.”

Frontier’s IPTV approach is similar to AT&T U-verse. The company will depend on fiber to the neighborhood service already in place in certain markets, coupled with existing copper wiring already on telephone poles or buried underground in each neighborhood. To further minimize expenses (and customer inconvenience), Frontier will rely on customer-installable wireless set-top boxes that can be relocated to any television in the home.

McCarthy

McCarthy

Frontier has experimented with its video service since last fall in its test market of Durham, N.C. That city also benefits from an extensive fiber upgrade undertaken by Frontier. Frontier’s website sells the service as Frontier FiOS TV, even though Durham’s fiber network was built by Frontier, not Verizon.

For customers, it will likely be a welcome change from Frontier’s ongoing dependence on its partnership with satellite provider Dish Networks to offer video service. One clue Frontier has not well withstood heavy competition from competing cable operators comes from the company’s latest quarterly earnings report. Frontier executives admitted voice service disconnects are accelerating beyond expectation and average revenue per customer dropped 1.1% to $63.14 for the fourth quarter of 2015.

Frontier also continues to feel the wrath of former AT&T customers in Connecticut that withstood a messy “flash cut” from AT&T to Frontier that left some customers without service for days. Despite the expiration of special pricing promotions for Connecticut customers resulting in the prospect of higher revenue, Frontier still recorded a $7 million decline from Connecticut alone, which it mostly blamed on customers ditching landlines. In the rest of the country, Frontier’s “legacy service areas” (those still dependent on aging copper infrastructure) delivered another $4 million decline in revenue for the quarter.

Where are those customers going? Cable operators continue to grab Frontier’s unhappy DSL customers and wireless companies continue to benefit from landline disconnects.

To prevent a repeat of Connecticut in the Frontier-acquired Verizon territories in Florida, California, and Texas, Frontier will keep Verizon’s service plans and only gradually shift services away from Verizon, with the ability to back out of the transition immediately if something goes wrong.

Frontier’s IPTV service will depend on the classic cable television model — 100+ local, network, and cable channels delivered in a bundle with broadband and voice service. At the outset, Frontier won’t be emphasizing skinny bundles of TV channels, but will allow existing Verizon FiOS customers to keep the slimmed down packages they already have.

Google Fiber Testing New Landline Phone Service: Google Fiber Phone

Phillip Dampier February 1, 2016 Competition, Consumer News, Google Fiber & Wireless No Comments

Google-Fiber-Rabbit-logoDespite predictions Google Fiber had no interest in offering customers landline telephone service, Google has quietly begun testing a new residential voice service called Google Fiber Phone that appeared to be powered by its Google Voice service.

Google hoped to keep the trial confidential, but one of its subscribers shared their invitation with the Washington Post:

We are always looking to provide new offerings to members of our Fiber Trusted Tester program which gives you early access to confidential products and features.

Our latest offering is Google Fiber Phone, which gives you the chance to add home phone service to your current Fiber service plan and offers several advanced features:

  • A phone number that lives in the cloud. With Fiber Phone you can use the right phone for your needs whether it’s your mobile device on the go or your landline at home. No more worrying about cell reception or your battery life when your home.
  • Voicemail the way it should be. Get your messages transcribed delivered directly to your email.
  • Get only the calls you want when you want. Spam filtering, call screening, and do not disturb make sure the right people can get in touch with you at the right time.

With Fiber Phone you have the option to get a new number or transfer an existing landline or cell number. If you’re interested in testing this product please fill out this form within one week.

Please be aware that testing Google Fiber Phone will require a service visit in which a Fiber team member will come to your home to install a piece of equipment. If you’re selected for this Trusted Tester group, we will be actively seeking your feedback – both good and bad – so that we can improve Fiber Phone once we launch it to all of our customers.

Please remember that the Trusted Tester Program gives you early access to features which are not yet available to the public, so please help us keep this confidential.

Thanks,

The Google Fiber Team

Google-voiceThe feature set sounds almost identical to Google Voice, which offers free phone service. For the first time, Google is prepared to allow customers to port existing landline numbers to its phone service. Previously, Google Voice customers could only port a cell phone number or select a new number to start the service.

Google Fiber has only sold single or double-play packages of Internet and/or television service. Customers looking for telephone service had to select a third-party provider like Vonage or Ooma or be technically proficient to get Google Voice service up and running with Voice over IP equipment. Including Google Fiber Phone would allow Google to sell a triple-play package.

The technician visit required is likely to involve wiring Google Fiber’s beta test phone line into a home’s existing telephone wiring, which will let customers use their current home and cordless phones.

Google has not announced a price for the service, but there is every chance it could come free with Google Fiber, which starts at $70 a month for 1 gigabit broadband service.

Despite the increasing frequency of announcements promoting new Google Fiber cities, Google’s currently operating fiber network remains modest. In October 2015, Bernstein Research estimated Google Fiber passed about 427,000 homes and 96,000 business locations, primarily in Kansas City and Provo, Utah, according to Multichannel News. Bernstein estimated Google Fiber has about 120,000 paid customers nationwide.

West Virginia Lawmakers Battle Slow Broadband; Propose to Fine ISPs for False Speed Claims

frontier speedFrontier Communications is the obvious target of an effort by members of West Virginia’s House of Delegates to embarrass the company into providing at least 10Mbps broadband service or face steep penalties if it does not stop advertising slow speed DSL as “High-Speed Internet.”

State lawmakers continue to be flooded with complaints about the poor performance of Frontier Communications’ DSL service, which customers claim delivers slow speeds, unreliable service, or no service at all.

Although Frontier frequently advertises broadband speeds of 10Mbps or faster, customers often do not receive the advertised speeds, and the service can be so slow it will not work reliably with online video services.

West Virginia’s broadband problems remain so pervasive, the state legislature this year will entertain several broadband improvement measures, including a proposal to spend $72 million to build a publicly owned middle mile fiber optic network. The bill’s sponsor, Sen. Chris Walters (R-Putnam) claims the new fiber network would boost Internet speeds, improve service, and force down broadband pricing.

With cable broadband available only in major communities, much of West Virginia is dependent on DSL service from Frontier Communications, the telephone company serving most of the state. That is a unique situation for Frontier, which typically serves smaller and medium-sized cities in-between other communities serviced by larger providers like Verizon, AT&T, and Qwest/CenturyLink. Frontier’s problems meeting customer expectations have been well heard in Charleston, the state capitol, if only because most members of the state legislature have Frontier customers in their districts.

Legislators have found they have little recourse over a business that operates largely without regulation or government oversight, as Delegate John Shott (R-Mercer) told the Charleston Gazette. Shott heads the House Judiciary Committee and gets plenty of complaints from his constituents.

“[Customers] feel they never get the speed the Internet providers represent,” said Shott. “There doesn’t seem to be any recourse or regulatory body that has any ability to cause that to change.”

In the absence of regulation or direct oversight, a class action lawsuit on behalf of Frontier DSL customers in the state is still working its way through court. In December 2015, a separate action by West Virginia Attorney General Pat Morrisey resulted in a settlement agreement with Frontier. The company agreed to guarantee at least 6Mbps speeds for around 28,000 customers, or give them a substantial monthly discount off their broadband bill.

frontier wvShott’s bill, HB 2551, targets “unfair or deceptive acts or practices” of Internet Service Providers that advertise fast speeds but never deliver them. The bill would expose a violating ISP to damages up to $3,000 per customer, a $5,000 state fine, and allow customers to walk away from any outstanding balance or contract:

It is an unfair or deceptive act or practice and a violation of this article for any seller or Internet service provider to advertise or offer to provide “high speed Internet service” that is not at least ten megabytes per second.

If a seller or Internet service provider violates […] this section, the consumer has a cause of action to recover actual damages and, in addition, a right to recover from the violator a penalty in an amount, to be determined by the court, of not less than $100 nor more than $3,000. No action brought pursuant to this subsection may be brought more than two years after the date upon which the violation occurred or the due date of the last scheduled payment of the agreement, whichever is later.

If a seller or Internet service provider violates […] this section, any sale or contract for service is void and the consumer is not obligated to pay either the amount due, the amount paid or any late payment charge. If the consumer has paid any part of a bill or invoice, or of a late payment fee, he or she has a right to recover the payments from the violator or from any [collection agency] who undertakes direct collection of payments or enforcement of rights arising from the alleged debt.

The Attorney General of this state shall investigate all complaints alleging violations […] and has a right to recover from the violator a penalty in an amount, to be determined by the court, of not less than $500 nor more than $5,000 per violation, with each advertisement or contract to sell or provide “high speed Internet” being a separate violation. The Attorney General also has the power to seek injunctive relief.

As of today, the bill counts Delegates J. Nelson, Border, Kessinger, Arvon, Moffatt, A. Evans, Wagner, Cadle, and D. Evans as sponsors.

Delegate Shott

Delegate Shott

“The list of sponsors of this bill [HB 2551] are from a broad geographic area,” Shott told the newspaper. “They’ve identified this as a problem in their areas.”

Some legislators believe West Virginia should enforce the FCC’s latest minimum definition of broadband – 25Mbps, but the Gazette reports that kind of robust speed definition could be difficult for a DSL provider to achieve without significant additional investment. Some worry companies like Frontier could have difficulty justifying further rural broadband expansion in a state traditionally challenged by its number of rural areas and difficult terrain.

Despite those difficulties, incumbent providers like Frontier, Suddenlink, and Comcast have not appreciated efforts to help expand public broadband networks in the state, including the proposal outlined in Sen. Chris Walters’ SB 315, which would authorize about $72 million to build a public middle mile fiber network that would be offered to ISPs at wholesale rates.

Frontier strongly objects to the project because it would use public dollars to compete with private businesses like Frontier. The phone company’s opposition raised eyebrows among some in Charleston, who note Frontier had no objections to accepting $42 million in state dollars in 2010 to construct and install a fiber network it now operates for hundreds of public facilities across the state and $283 million in federal dollars to expand rural broadband. The 2010 fiber project was rife with accusations of waste, fraud, and abuse. Critics allege Frontier overcharged the state, installing service for $57,800 per mile despite other providers routinely charging about $30,000 a mile in West Virginia.

The West Virginia Cable Television Association, representing cable operators in the state, called the project a money-waster, noting it would not result in a single new hookup for broadband service. Middle mile networks do not reach individual homes and businesses and the bill does not authorize the state to get into the ISP business.

Sen. Walters

Sen. Walters

Much of the support for the public network comes from smaller ISPs like Citynet, which predominately serves commercial customers, and equipment vendors like Alpha Technologies. Walters believes if West Virginia builds the network, broadband providers will come to use it. The state’s dominant cable and phone companies vehemently disagree. The cable association has launched an all-out PR war, hoping to attract opposition from conservative lawmakers with claims the project will mandate state and local governments to buy Internet connectivity exclusively from the state-owned network and would trample on corporate rights by using eminent domain to seize parts of the cable industry’s fiber networks to complete the state network.

Walters brushed away the accusations, telling the Gazette there is no mandate that state agencies use the network and there are no plans for the government to take any fiber away from a private company.

Cable operators prefer an alternative measure also introduced in the West Virginia Senate. SB 16 would grant tax credits of up to $500 per address for any phone or cable company that agrees to wire a previously unserved rural address. The bill would limit total tax credits to $1 million.

The difference between the two measures? Walters’ bill would use public money to build a public broadband network owned by the public and answerable to the state. The cable industry-backed proposal would use public money in the form of tax offsets to wire homes and businesses to broadband owned by private businesses answerable to shareholders.

AT&T Announces 38 New Markets for Gigabit U-verse, Omits Availability Numbers

Phillip Dampier December 8, 2015 AT&T, Broadband Speed, Competition, Consumer News 6 Comments

uverse gigapowerOn Monday, AT&T announced 38 additional cities that will eventually have access to its gigabit broadband offering – AT&T U-verse with GigaPower, but the company remains coy about the number of customers that can actually order the service today across the 56 metro areas that will eventually be served by AT&T’s fiber to the home network.

“Nearly two years ago, we successfully launched the first AT&T GigaPower metro in Austin, Tex.,” AT&T wrote in its press release. “This launch led to a major expansion in multiple metros beginning in 2014. Recently we marked a major milestone deploying the AT&T GigaPower network to more than 1 million locations, and we expect to more than double availability by the end of 2016.”

Stop the Cap! asked AT&T for information about its claim of offering service to more than “one million locations” and received a response that this number may not reflect strict availability of the gigabit service, but rather the likely number of potential customers served by a central office/exchange where GigaPower was enabled. In reality, not every customer within a central office immediately qualifies for U-verse service, as many customers have complained.

At the current rollout rate of about one million customers per year, it will take AT&T at least 12 years to achieve its goal of more than 14 million residential and commercial locations, probably in the year 2027.

The 38 metro areas that AT&T will be entering, starting with the launch of service in parts of the Los Angeles and West Palm Beach metros today, are:

  • Alabama: Birmingham, Huntsville, Mobile and Montgomery
  • Arkansas: Fort Smith/Northwest Arkansas and Little Rock
  • California: Bakersfield, Fresno, Los Angeles, Oakland, Sacramento, San Diego, San Francisco and San Jose
  • Florida: Pensacola and West Palm Beach
  • Georgia: Augusta
  • Indiana: Indianapolis
  • Kansas: Wichita
  • Kentucky: Louisville
  • Louisiana: Baton Rouge, ShreveportBossier, Jefferson Parish region and the Northshore
  • Mississippi: Jackson
  • Missouri: St. Louis
  • Michigan: Detroit
  • Nevada: Reno
  • North Carolina: Asheville
  • Ohio: Cleveland and Columbus
  • Oklahoma: Oklahoma City and Tulsa
  • South Carolina: Charleston, Columbia and Greenville
  • Tennessee: Memphis
  • Texas: El Paso and Lubbock
  • Wisconsin: Milwaukee

For more information on where the AT&T GigaPower network is and will become available, visit att.com/gigapowermap.

Verizon: Ignore Our Adamant Denials of Not Being Interested in Selling Our Wired Networks

carForSaleDespite denials Verizon Communications was interested in selling off more of its wireline network to companies like Frontier Communications, the company’s chief financial officer reminded investors Verizon is willing to sell just about anything if it will return value to its shareholders.

In September, rumors Verizon planned to sell more of its wireline network where the company has not invested in widespread FiOS fiber-to-the-home expansion grew loud enough to draw a response from Verizon CEO Lowell McAdam at the Goldman Sachs 24th annual Communicopia Conference.

“When people ask me, and I know there’s some speculation that we might be interested in selling the wireline properties, I don’t see it in the near-term,” McAdam said.

Today, Shammo seemed to clarify McAdam’s pessimistic attitude about another Verizon landline sell off in the near future.

“We’re extremely happy with the asset portfolio we have right now, but as we always say we continue to look at all things,” Shammo said. “Just like the towers, we said we would not sell the towers and then we got to a great financial position and we sold our towers. If something makes sense [and] we can return value to our shareholders and it’s not a strategic fit we’ll obviously look at that.”

Shammo

Shammo

For most of 2014, Verizon denied any interest in selling its portfolio of company-owned wireless cell towers. In February 2015 the company announced it would sell acquisition rights to most of its cell towers to American Tower Corporation for $5.056 billion in cash.

Some analysts believe the early indicators that suggest Verizon is ready to sell include its lack of upgrades in non-FiOS service areas and Verizon’s willingness to walk away from up to $144 million from the second phase of the FCC’s Connect America Fund to expand Internet access to more of Verizon’s rural landline customers.

Verizon’s decision to take a pass on broadband improvement funds infuriated four southern New Jersey counties that claim Verizon has neglected its copper network in the state. As a result of allegedly decreasing investment and interest by Verizon, customers in these areas do not get the same level of phone and broadband service that Verizon customers receive in the northern half of New Jersey.

More than a dozen communities have signed a joint petition sent to the Board of Public Utilities, New Jersey’s telecom regulator, insisting the BPU take whatever measures are needed to preserve the availability of telecommunications services in southern New Jersey. The towns also want the BPU to consider funding sources to help improve broadband service that public officials claim is woefully inadequate. Outside of Verizon FiOS service areas, Verizon offers customers traditional DSL service for Internet access.

Verizon-logoThe communities:

  • Atlantic County: Estell Manor and Weymouth Township.
  • Gloucester County: South Harrison Township.
  • Salem County: Alloway Township, Lower Alloways Creek, Mannington Township, Township of Pilesgrove, and Upper Pittsgrove Township.
  • Cumberland County: Commercial Township, Downe Township, Hopewell Township, Lawrence Township, Maurice River Township, City of Millville, Upper Deerfield Township, and Fairfield Township.

Officials claim Verizon has pushed its wireless alternatives to customers in the region, including its wireless landline replacement. But officials suggest Verizon’s wireless coverage and the quality of its service is not an adequate substitute for wireline service.

Verizon's Home Phone Connect base station

Verizon’s Home Phone Connect base station

Verizon has proposed decommissioning parts of its wireline network in rural service areas and substitute wireless service in the alternative. At issue are the costs to maintain a vast wireline network that reaches a dwindling number of customers. Verizon reminds regulators it has lost large numbers of residential landline customers who have switched to wireless service, making the costs to maintain service for a dwindling number of customers that much greater.

But for many communities, the focus is increasingly on broadband, especially in areas that receive little or no cable service. Telephone companies serving rural communities are surviving landline disconnects by providing broadband service.

For companies like Frontier Communications, CenturyLink, and Windstream, investments in providing broadband service are among their top spending priorities. At larger phone companies like Verizon and AT&T, highly profitable wireless divisions get the most attention and are top spending priorities.

Speaking this morning at the UBS 43rd Annual Global Media and Communications Conference, Shammo told investors Verizon will continue to allocate the majority of its capital allocation around Verizon Wireless to help densify its wireless network. Verizon, Shammo noted, plans further spending cuts for its wired networks next year as FiOS network buildouts start to taper off.

This will make expansion and improvement of Verizon DSL unlikely, and may put further cost pressure on maintaining Verizon’s wireline networks, which could further motivate a sale.

Verizon’s chief financial officer Fran Shammo is likely looking at three alternatives for the future:

  1. Increase investment in Verizon Communications to further expand FiOS fiber optics;
  2. Look at cost savings opportunities to improve the books at Verizon Communications, including decommissioning rural landline networks (if Verizon can win regulator approval);
  3. Consider selling Verizon’s non-core wireline assets in areas where the company has not made a substantial investment in FiOS and refocus attention on serving the dense corridor of customers along the Atlantic seaboard between Washington, D.C. and Boston.

Britain Adopting American Broadband Business Model: Less Competition, More Rate Hikes

british poundA decision by Great Britain’s broadband industry to follow America’s lead consolidating the number of competitors to “improve efficiency” and wring “cost savings” out of the business resulted in few service improvements and a much bigger bill for consumers.

A Guardian Money investigation examining British broadband pricing over the past four years found customers paying 25-30 percent more for essentially the same service they received before, with loyal customers facing the steepest rate increases.

It’s a dramatic fall for a market long recognized as one of the most competitive in the world. In 2006, TalkTalk — a major British ISP — even gave away broadband service for free in a promotion to consumers willing to cover BT’s telephone line rental charges.

But pressure from shareholders and investment bankers to deliver American-sized profits have spurred a wave of consolidation among providers in the United Kingdom, similar to the mergers of cable companies in the United States. Well known ISPs like Blueyonder, Tiscali, AOL, BE, Tesco, O2, and others in the United Kingdom have all been swallowed up by bigger rivals – often TalkTalk. As of last year, just four major competitors remain – BT, Sky, TalkTalk and Virgin, which together hold 88% of the market. If regulators allow BT’s takeover of EE, that percentage will rise to 92%.

talktalk-logo-370x229As consumers find fewer and fewer options for broadband, they are also discovering a larger bill, fueled by runaway rate increases well in excess of inflation. While consolidated markets in the United States and Great Britain increasingly lack enough competition to temper rate increases, heavy competition on the European continent has resulted in flat or even lower prices for broadband along with significant service upgrades. British consumers now pay up to 50% more for broadband than many of their European counterparts in Germany, France, the Benelux countries, and beyond.

Also familiar to Americans, the best prices for service only go to new customers. Existing, loyal customers pay the highest prices, while those flipping between providers (or threatening to do so) get much lower “retention” or “new customer” pricing. But only those willing to fight for a better deal get one.

In October, TalkTalk, responsible for much of the consolidation wave, raised broadband prices yet again — the second major price hike this year. Customers are reeling over the rate increases, despite the fact they still seem inexpensive by American standards. Landline rental charges are increasing from $25.40 to $26.91 a month, and are a necessary prerequisite to buying Internet access from TalkTalk. Its Simply Broadband entry-level package is jumping another £2.50 a month just four months after the last rate hike. That means instead of paying an extra $7.60 a month for broadband, customers will now pay $11.40. The average British consumer now pays an average of $57.79 a month for a phone line with enhanced DSL broadband service.

btIn France, competition is forcing providers to move towards fiber optic broadband and scrap DSL service. But French consumers are not paying a premium for upgrades necessitated by competition on the ground. While British households pay close to $60 a month, a comparable package in France from Orange known as L’essentiel d’internet à la maison costs only $36.50 a month, including a TV package and unlimited calling to other landlines. But the deal gets even better if you shop around. Free, a major French competitor, offers a near-identical package for just $32.19 a month. In the United States, packages of this type can cost $130 or more if you do not receive a promotion, $99 a month if you do.

In France, providers rarely claim they need to cap Internet usage or raise prices to cover the cost of investing in their networks. That is considered the cost of doing business in a fiercely competitive marketplace, and it forces French providers to deliver good value and service for money. Providers like Patrick Drahi/Altice’s SFR-Numericable attempted to reap more profits out of its cable business by cutting costs, discontinuing most promotions and marketing, and offshoring customer support to North African call centers. At least one million customers left for better service elsewhere in 2015.

logo_freeIn Britain, there are fewer options for customers to seek a better deal, and the remaining providers know it. As a result, marketplace conditions and an increasing lack of competition have made conditions right for rate increases. BT, Sky, Virgin, and Plusnet (controlled by BT) have all taken advantage and hiked prices once again this year between 6-10%, on top of other large rises.

Ewan Taylor-Gibson, broadband expert at uSwitch.com, told the Guardian, “it’s the existing customers that have borne the brunt of the increase in landline and package costs over recent years.”

Many British consumers are afraid of disrupting their Internet access going through the process of changing providers in a search for a better deal. Some report it can take a few days to a week to process a provider change that should take minutes (because most providers rely entirely on BT’s DSL network over which they offer service). Those willing to make a change are about the only ones still getting a good deal from British providers. Customers are starting to learn that when their new customer promotion ends, asking for an extension or signing up with another company is the only way to prevent a massive bill spike that Taylor-Gibson estimates now averages 89%.

BT spent $1.36 billion dollars securing an agreement with Champions League football.

BT spent $1.36 billion dollars securing an agreement with Champions League football.

Providers with the largest increases use the same excuses as their American counterparts to defend them. BT claims a reduction in income from providing landline service is forcing it to raise prices to make up the shortfall. Critics suggest those increases are also helping BT recoup the $1.36 billion it controversially paid for the rights to carry Champions League football — money it could have invested in network upgrades instead.

The current government seems predisposed to permit the marketplace to resolve pricing on its own, either through competition among the remaining players or allowing skyrocketing prices to reach a level deemed attractive by potential new entrants into the market. The usually protective British regulator Ofcom also seems content taking a light hand to British ISPs, enforcing price disclosures as a solution to increasingly costly Internet service and making it easier for consumers to bounce between the remaining providers many think are overcharging for service.

Things could be worse. British consumers could face the marketplace duopoly or monopoly most customers in the United States and Canada live with, along with even higher prices charged for service. The Guardian surveyed telecom services across several European countries and found that, like in the UK, most customers are required to bundle a landline rental charge and broadband package together to get Internet access, but they are still paying less overall than North Americans do.

Here is what other countries pay for service:

United Kingdom: Basic BT home phone service with unlimited “up to 17Mbps” DSL broadband costs $31.12 per month, plus a monthly landline charge of $27.35 including free weekend calls. An unlimited calling plan with no dialing charges costs an extra $12 a month. Competitor TalkTalk charges $11.40 for unlimited broadband on its entry-level Simply Broadband offer, plus $26.91 for the monthly landline rental charge.

France: Many Orange customers sign up for the popular L’essentiel d’internet à la maison plan, which bundles broadband, a phone line with unlimited calling to other landlines, and a TV package available in many areas for $36.50 a month. Competitor Free.fr charges $32.19 for essentially the same package.

Germany: Deutsche Telekom offers its cheapest home phone/broadband package for $37.75 after a less expensive promotional offer expires. One of its largest competitors, 1&1, offers the same package for $33.29 a month after the teaser rate has ended.

Spain: Telefónica, Spain’s largest phone company, offers service under its Movistar brand combining an unlimited calling landline and up to 30Mbps Internet access for $46.21 a month. Its rival Tele2 offers a comparable package for a dramatically lower price: $29.11 a month.

Ireland: National telecom company Eircomis is overseeing Ireland’s telecom makeover, replacing a lot of copper phone lines with fiber optics. Basic broadband starts with 100Mbps service on the fiber network with a promotional rate of $26.82 for the first four months. After that, things get expensive under European standards. That 100Mbps service carries a regular price of $66.51 a month, deemed “hefty” by the Guardian, although cheaper that what North Americans pay cable companies for 100Mbps download speeds after their promotion ends. For that price, Irish customers also get unlimited calling to other Irish landlines and mobiles. If that is too much, rival Sky offers a basic phone and broadband deal for $32.18 with a one-year contract.

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