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Frontier FiberHouse Debuts in Connecticut… to Exactly Two Homes in One Development

fiber comingFrontier Communications has topped AT&T’s penchant for grandiose Fiber to the Press Release announcements with a new gigabit fiber to the home service now being promoted in Connecticut, despite being available to only two homes in a single upscale subdivision in North Haven.

Frontier FiberHouse is Frontier’s answer to Verizon FiOS, says Joseph Ferraiolo, Frontier’s regional general manager in New Haven County. Ferraiolo told the New Haven Register Frontier has introduced the service to a pair of homes in Lexington Gardens, a new single-family subdivision.

Frontier’s expansion of the service in 2016 does not appear to be exactly aggressive, with plans to only wire up to 200 newly built homes in the immediate area.

Frontier’s fiber network relies on a Gigabit Passive Optical Network (GPON) and is intended to replace copper telephone wiring.

Ferraiolo admits Frontier is currently favoring new housing developments where fiber can be dropped in a conduit/pre-existing trench during construction without the cost of tearing up yards and streets. But he also claims Frontier will make a commitment to any municipality that gets the fiber service that it will be available to every part of the community, not just those likely to be most profitable. If Frontier keeps its promise, it will be the first time the phone company has provided customers with universal access to uniformly high-speed broadband. Even its acquired FiOS networks in Indiana and the Pacific Northwest are not guaranteed to be available to every resident.

frontier frank“We think this is a good option for us: new builds, small complexes,” Ferraiolo said. “The developer is very happy with it and we’re very happy with it.”

Customers like William Morico will believe it when they see it.

“We have been trying to get ‘high-speed’ Internet in our neighborhood for years, well before the Frontier disaster,” Morico writes. “All we want is the 12-18Mbps service that is advertised and available elsewhere in New Haven. [We] cannot get any answers from Frontier. Even their customer service and tech staff are frustrated with this company. It’s time for the state gig project.”

The company claims it is “exploring” other rollouts of Frontier FiberHouse in Stamford and New Haven, but there are no specifics.

Some observers question the timing of Frontier’s fiber announcement, noting state and local officials are still considering a private-public partnership that could lead to a public statewide gigabit fiber network in Connecticut. News that a private company is willing to shoulder the entire expense of a fiber project could be used in legislative efforts to derail Connecticut’s CT Gig Project. But Frontier has offered no guarantees whether or if it intends to blanket its service area across the state with fiber or limit FiberHouse to a de-facto demonstration project in a handful of homes in new housing developments.

Patrick Drahi’s “Public Interest” Flim-Flam: CWA Opposes Altice-Cablevision Merger

3634flimThe Communications Workers of America today filed comments with the Federal Communications Commission opposing the proposed sale of Cablevision to Patrick Drahi’s Altice NV, arguing the claimed public interest benefits are illusory.

The CWA, which represents some of Cablevision’s workers in Brooklyn, took a hard look at Altice’s merger proposal and the $8.6 billion in debt Altice will take on to close the deal and called it dangerous, resulting in “considerable harm with no offsetting concrete, verifiable benefits for consumers, workers, and communities.”

“Altice’s track record in France and Portugal clearly shows the danger this deal poses to Cablevision’s customers and employees,” said Dennis Trainor, vice president of Communications Workers of America District 1. “Altice takes on too much debt, outsources as much work as possible and then downsizes its workforce. Customers get worse service and employees lose their job. Unless Altice makes commitments to protect customer service and Cablevision employees, the FCC should reject this deal.”

The CWA is also concerned about the disparity between what Altice is telling regulators and what the company is saying to Wall Street.

Altice’s Public Interest Statement, which outlines the benefits to the public of the proposed transaction, stands out for its lack of specificity. In fact, the application’s only concrete commitments are vague promises to bring Altice’s “expertise” and access to capital for Cablevision’s use. Altice also promises to upgrade Cablevision’s IT systems, including customer care, service, and billing systems, and alluded it would expand Cablevision’s fiber optics deeper into its network, but comes short of promising a direct fiber to the home connection. In fact, the only promised benefit of pushing fiber further out would be “the removal or reduction from the network of coaxial RF amplifiers, which consume substantial electricity and can be the cause of difficult-to-detect service outages (RF amplifier failures).”

“Deeper fiber deployment would enable Cablevision to reduce its power costs and to further improve network reliability, resulting, in turn, in a greater ability to invest further in the network and improved service delivery to subscribers,” Altice dubiously claimed.

cwa_logoMany of Altice’s claims appeared “disingenuous and misleading” to the CWA. From the CWA’s filing:

To finance its $17.7 billion acquisition of Cablevision, Altice is taking on $8.6 billion in new debt, which when added to Cablevision’s already heavy debt load of $5.9 billion, will leave the new Cablevision with a total net debt of $14.5 billion.  Given the high cost of the new debt financing, the annual interest payments needed to finance the $8.6 billion in new debt amount to $654 million on top of Cablevision’s current interest payments of $559 million for a total of $1.2 billion in annual interest payments at the new Cablevision, representing a full 112 percent increase in Cablevision debt. The new interest payment ($654 million) plus Altice’s announced $ 1.05 billion in cuts means that the new Cablevision will have $1.7 billion less cash available to spend on the network and service.

“Altice’s business model, the one that it has used to fuel its explosive global growth, requires the acquired company – in this instance, Cablevision — to finance its own acquisition and to provide cash to the parent for future acquisitions,” the CWA argues. “Altice chief financial officer Dennis Okhuijsen explained the capital structure of post-transaction Cablevision: ‘[W]e’re not going to lever up the existing business. This is a stand-alone capital structure, so we’re levering up the target for Cablevision….’”

altice debtTranslation: Cablevision alone is responsible for the debt Altice raised to pay for Cablevision. Or, as Altice explained to investors in its third quarter 2015 earnings report, the parent company operates its various subsidiaries as “distinct credit silos in Europe and the U.S.”

Altice CEO Patrick Drahi’s business formula is always the same. To raise money to help offset the mountain of debt dumped on the acquired company, Altice’s designated managers helicopter in to the acquired company to begin slashing expenses and find money it can send to Altice headquarters to help fill its coffers to acquire even more companies. French telecom giant Numericable-SFR, while on the road to losing one million customers in just one year, was preoccupied borrowing nearly $2 billion, not to improve the company’s service, but rather to pay Altice a special dividend to help pay down the huge amount of debt Altice incurred when it bought the 60 percent stake in the French mobile and cable company it did not already own.

To keep Altice afloat, Drahi’s business strategy requires a steady supply of company acquisitions to deliver the increased cash flows Altice needs to finance its debt. The CWA warned regulators Altice may require Cablevision to spend its cash flow to help Drahi acquire other companies in the future, further reducing the amount of money Cablevision needs to attract and keep subscribers.

To make the deal a long term success, Altice-Cablevision will either have to cut its return to shareholders, raise its prices, and/or slash expenses and jobs. Past experience with Altice shows shareholders come first, which means company management will likely preside over a harvest of Cablevision’s assets to meet the expectations of Wall Street banks and investors. Customers will feel the cuts from the reduction in service and slowed investments and upgrades.

At the same time Altice was promising the FCC it would continue Cablevision’s “first in class” level of service, the company was telling Wall Street it was planning cuts to the bone. Among Altice’s already-proposed cuts for Cablevision:

  • Capital expense: $150 million cut
  • Network and Operations: $ 315 million cut
  • Customer operations: $135 million cut
  • Sales and marketing: $45 million cut
  • Eliminate duplicative functions and “public company” costs: $135 million cut
  • Other unspecified cuts: $135 million cuts.

dilbert-budget-cuts

The impact of these cuts shift costs onto others, argues the CWA, including making the acquired firm pay for its own demise, making the workforce pay through job loss and reduced compensation, making customers pay through deteriorating service, and making suppliers become Drahi’s bankers by delaying payments.

The CWA says customers will also pay for the privilege of getting declining service.

“In Israel, the cable provider Hot Telecommunications has raised prices multiple times since it was bought by Altice, including a cable rate increase of 20 percent in 2014 and the attempt to raise prices again this year,” the CWA argues. “The top Israeli cable regulator called the price hike ‘greed for its own sake’ which was not justified based on the company’s profit margins.”

In the United States, nobody oversees cable pricing.

“In summary, the experience in France, Portugal, Israel, and elsewhere provides concrete evidence that the Altice business model – one that it plans to replicate with its Cablevision acquisition – does not serve the public interest,” concludes the CWA. “Making an acquired company pay off massive debt load with service-impacting cost cutting has serious and negative consequences for customers, suppliers, communities, and workers. The lesson from France is clear: cutting to the bone leads to massive customer defection. It is not a business model that will benefit the people of New York, Connecticut, and New Jersey.”

The Stage Is Set to Kill Telco ADSL: Cable Operators Prepare for DOCSIS 3.1 Competitive Assault

docsis 30 31

Next year’s upgrade to DOCSIS 3.1 will support cable broadband speeds up to one gigabit shortly after introduction.

Telephone companies relying on traditional ADSL service to power their broadband offering will likely face a renewed competitive assault in 2016 that will further reduce their already-challenged market share in areas where cable companies compete.

Cable operators are hungry for profitable broadband customers and the best place to find new prospects is at the phone company, where DSL is still a common technology to deliver Internet access. But while cable Internet speeds have risen, significant DSL speed hikes have proven more modest in the residential market.

In 2016, the cable industry intends to poach some of the remaining price-sensitive holdouts still clinging to DSL with revised broadband offers promising more speed for the dollar.

Cable broadband has already proven itself a runaway success when matched against telephone company DSL service. Over the last year, Strategy Analytics found Comcast and Time Warner Cable alone signed up a combined 71 percent of the three million new broadband customers in the U.S.

“Cable operators continue to increase market share in U.S. broadband,” said Jason Blackwell, a director at Strategy Analytics. “Over the past twelve months, Comcast has accounted for 42 percent of new subscribers among the operators that we track.  Fiber growth is still strong, but the telco operators haven’t been able to shake off the losses of DSL subscribers.  In 2016, we expect to see a real battle in broadband, as cable operators begin to roll out DOCSIS 3.1 for even higher speed offers, placing additional pressure on telcos.”

That battle will come in the form of upgraded economy broadband plans, many arriving shortly after providers upgrade to the DOCSIS 3.1 cable broadband platform. Currently those plans offer speeds ranging from 2-6Mbps. Starting next year, customers can expect economy plan prices to stay generally comparable to DSL, with promises of faster and more consistent speeds. A source tells Stop the Cap! at least two significant cable operators are considering 10Mbps to be an appropriate entry-level broadband speed for 2016, in keeping with FCC chairman Thomas Wheeler’s dislike of Internet speeds below 10Mbps.

slowJust a few years earlier, most providers wouldn’t think of offering discounted 10Mbps service, fearing it would cannibalize revenue as customers downgraded to get lower priced service. Increasing demands on bandwidth from online video and multiple in-home users have gradually raised consumer expectations, and their need for speed.

Unfortunately for many phone companies that have neglected significant investment in their aging wireline networks, the costs to keep up with cable will become unmanageable unless investors are willing to tolerate significant growth in capital expenses to pay for network upgrades. Frontier Communications still claims most of their customers are satisfied with 6Mbps DSL, neglecting to mention many of those customers live in areas where cable competition (or faster service from Frontier) is not available.

Where competition does exist, it’s especially bad news for phone companies that still rely on DSL. Earlier this year, Frontier’s former CEO Maggie Wilderotter admitted Frontier’s share of the residential broadband market had dropped to less than 25% in 26 of the 27 states where it provides service. In Connecticut, the one state where Frontier was doing better, its acquired AT&T U-verse system has enabled the phone company to deliver broadband speeds up to 100Mbps. But even those speeds do not satisfy state officials who are seeking proposals from providers to build a gigabit fiber network in a public-private partnership.

DSL speed upgrades have been spotty and more modest.

DSL speed upgrades have been spotty and more modest.

Frontier’s recent experiments with fiber to the home service in a small part of Durham, N.C., and the unintentional revelation of a gigabit broadband inquiry page on Frontier’s website suggests the company may be exploring at least a limited rollout of gigabit fiber service in the state. But company officials have also repeatedly stressed in quarterly results conference calls there were no significant plans to embark on a major spending program to deliver major upgrades across their service areas.

Some phone companies may have little choice except to offer upgrades where cable operators are continuing to rob them of customers. In the northeast, where Frontier has a substantial presence, cable operators including Charter, Comcast and Time Warner Cable are committing to additional speed upgrades. Time Warner Cable’s current standard speed of 15Mbps will rise to 50-60Mbps in 2016, up to ten times faster than Frontier’s most popular “up to” 6Mbps DSL plan.

Most of the broadband customer gains won by Comcast and Time Warner Cable come as a result of DSL disconnects. AT&T said goodbye to 106,000 customers during the third quarter. Verizon managed to pick up 2,000 new subscribers overall, almost all signing up for FiOS fiber to the home service. No cable operator lost broadband market share, reported analyst firm Evercore. Leichtman Research offered additional insight, finding AT&T and Verizon were successful adding 305,000 U-verse and FiOS broadband customers, while losing 432,000 DSL customers during the same quarter.

The message to phone companies couldn’t be clearer: upgrade your networks or else.

Altice Attempts to Win Over N.Y. Regulators With Promise of Cablevision Fiber Upgrades

atice-cablevisionPatrick Drahi is hoping New York regulators will look more favorably on his proposal to buy Cablevision with a promise to upgrade more than three million of its customers in New York City to fiber-to-the-home service.

The New York Post reports Altice representatives have held private talks with the N.Y. Public Service Commission and the New York City Department of Information Technology, which regulates telecom services in the Big Apple, about fiber optic upgrades.

With news Drahi has proposed major salary and job cuts at Cablevision as part of an effort to wring $900 million in cost savings annually from the Bethpage, Long Island-based cable company, regulators are likely to express concern about the merger and its impact on customers. Promising a fiber upgrade appears to be a calculated effort to win those regulators over, reports the Post.

Altice is capitalizing on the recent negative publicity Verizon has received for failing to meet its obligation to deliver its FiOS service to any New Yorker that requests it. Cablevision is likely to face fewer hurdles performing fiber upgrades, because the company only serves New York City customers in Bronx and parts of Brooklyn, and already operates a hybrid fiber-coax network. Cablevision would only need to replace the last mile of coaxial cable between its fiber connection points and the customer. Verizon has to replace decades-old copper phone wiring in conduits often left in disrepair.

While promising to do better than Verizon, a closer look at Altice’s largest market – France, suggests Drahi’s company isn’t meeting customer expectations either.

Altice’s French operations have lost at least one million customers so far this year, mostly as a result of severe cost cutting. The company’s promise to upgrade 3.1 million New Yorkers to fiber service will likely draw scrutiny in France. Despite similar promises of fiber upgrades to its French customers, Altice admitted in April it has so far only managed to deliver fiber to the home service to fewer than 200,000 of its own SFR customers. At least 5.2 million others are still waiting, still relying on the company’s lower performing DSL service.¹

Union organizers are attempting to step up recruitment efforts at Cablevision in advance of an Altice takeover. The Cablevision99 Facebook page, run by the Communications Workers of America, has been warning Cablevision employees their job security and compensation may be at risk if the company is sold to Altice.

¹ page 21

AT&T U-verse with GigaPower Gigabit Internet Dribs and Drabs Out in 23 New Cities

u-verse gigapowerAT&T has introduced 23 new communities and adjacent service areas in North Carolina, Georgia, Florida, Illinois, Texas, and Tennessee to the possibility of getting gigabit broadband speeds, if customers are willing to wait for AT&T to reach their home or small business.

Here are the latest cities on AT&T’s new launch list:

  • Florida: Coral Gables, Homestead, Miami Gardens, North Miami, Oviedo, Sanford, and Parkland
  • Georgia: Alpharetta, Cartersville, Duluth, East Point, Avondale Estates, Jonesboro, and Rome
  • Illinois: Bolingbrook, Mundelein, Shorewood, Elmwood Park, Volo, and parts of Munster, Ind.
  • North Carolina: Clemmons, Garner, Holly Springs and Salisbury
  • Tennessee: Spring Hill and Gallatin
  • Texas:  Hunters Creek Village and Rosenberg

AT&T claims its fiber to the home service will eventually reach more than 14 million customers across its service area, but adds it will only reach a fraction of them – one million – by the end of 2015. Most customers will have around a 7% chance of getting gigabit speeds from AT&T this year.

Warren

Warren

In Salisbury, N.C., where Fibrant delivers community-owned broadband at speeds up to 10Gbps, AT&T gave space in its press release for Rep. Harry Warren, the local Republican member of the state House of Representatives, to praise the phone company.

“I’m excited about this new development, and appreciate AT&T’s continued investment in Rowan County,” Warren said.

Warren says he fought to protect Fibrant from a 2011 state law — drafted by the state’s largest phone and cable companies — that effectively outlawed community-owned broadband competition. But he, along with most of his Republican colleagues, also voted in favor of it.

Earlier this year, Federal Communications Commission chairman Thomas Wheeler announced the FCC would pre-empt municipal broadband bans in North Carolina and Tennessee. Warren told the Salisbury Post he wondered if Wheeler was guilty of “federal overreach.”

“That’s my biggest concern about it,” he said.

Both AT&T and Time Warner Cable have been regular contributors to Warren’s campaigns since 2010.

Brock

Brock

State Sen. Andrew Brock, also a Republican, told the newspaper Wheeler’s actions show how out of touch the Obama Administration is with “technology and the pocketbooks of American families.”

“I find it interesting that a bureaucrat that is not beholden to the people can make such a claim without going through Congress,” Brock said.

The year Brock voted in favor of banning community broadband competition in North Carolina, he received $3,750 from telecom companies. This election cycle, Time Warner Cable is his second largest contributor. AT&T and CenturyLink also each donated $1,000 to Brock’s campaign fund.

While AT&T is free to expand its gigabit U-verse upgrade as fast or as slow as it chooses, the community providers that delivered gigabit speeds well before AT&T are limited by state law from expanding service outside of their original service areas or city limits. In plain English, that effectively gives AT&T state-sanctioned authority to decide who will receive gigabit speeds and who will not.

The FCC’s pre-emption, if upheld despite ongoing challenges from Republican lawmakers on the state and federal level, could allow Fibrant to join forces with other municipal providers in North Carolina to expand fiber broadband to new communities around the state.

Google Invites Jacksonville, OKC, and Tampa to Contemplate Fiber; Northeast Need Not Apply

google fiberGoogle Fiber today announced it would accept applications from Oklahoma City, Jacksonville, and Tampa to become the next cities qualified for its fiber to the home service.

We’re inviting Oklahoma City, OK, Jacksonville, FL and Tampa, FL, to explore bringing Google Fiber to their communities, as we did last month with three other cities. These growing tech-hubs have a strong entrepreneurial spirit and commitment to small business growth. Their list of accolades is long—from Jacksonville’s title as a top 10 city for tech jobs, to Tampa Bay’s #2 spot on the list of best cities for young entrepreneurs, to Oklahoma City’s recognition as the #1 city to launch a business. One of our goals is to make sure speed isn’t an accidental ceiling for how people and businesses use the Web, and these cities are the perfect places to show what’s possible with gigabit Internet.

Google continues its informal boycott of the northeastern United States, where community interest in fiber service has been rebuffed through a lack of responsiveness.

The three latest cities will have to prove they can meet Google’s extensive list of requirements on everything from zoning to pole attachment access and fees. Things that tend to upset Google include endless zoning paperwork, intransigent bureaucracy, and dealing with an excess of county, city, town, and village governments (states in the northeast are also often notorious for layers of local government, all demanding compliance with local codes.) Communities are even expected to get their arborist on board.

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Local governments that take the attitude Google must win them over are unlikely to ever see the service. Those that bend over backwards to accommodate the fiber project are the ones managing successful applications. In other words, ask not what Google can do for you, ask what you can do for Google.

Tampa is the first city invited to apply that is also served by Verizon FiOS, although Verizon is in the process of selling its wired networks in Florida to Frontier Communications. Tampa’s cable competitor is Bright House Networks, itself in the process of being sold to Charter Communications. Jacksonville is Comcast and AT&T country and OKC is served by AT&T and Cox Communications.

Making it to the invitation list does not guarantee Google Fiber service, although most local governments are lobbied by their constituents to do whatever is necessary to secure fiber competition.

Stop the Cap! Testimony to N.Y. Public Service Commission Advocating Major Telecom Study

logoOctober 20, 2015

Hon. Kathleen H. Burgess
Secretary, Public Service Commission
Three Empire State Plaza
Albany, NY 12223-1350

Dear Ms. Burgess,

New York State’s digital economy is in trouble.

While providers claim portions of New York achieve some of the top broadband speeds in the country, the vast majority of the state has been left behind by cable and phone companies that have never been in a hurry to deliver the top shelf telecom services that New Yorkers need and deserve.

The deregulation policies of the recent past have resulted in entrenched de facto monopoly and duopoly markets with little or no oversight. Those policies, instead of benefiting New Yorkers, are ultimately responsible for allowing two companies to dominate the state’s telecommunications marketplace.

In virtually all of upstate New York, the services consumers receive depend entirely on the business priorities of local incumbent providers, not market forces or customer demand. As a result, New Yorkers face relentless, unchecked rate increases, well-documented abysmal and unresponsive customer service, and inadequate broadband provided by a workforce under siege from downsizing, cost-cutting, and outsourcing.

Certain markets, particularly those in the New York City area, have at least secured a promise of better broadband from Verizon’s FiOS fiber to the home upgrade. But at least 100,000 New Yorkers have languished on Verizon’s “waiting list,” as the company drags its feet on Non Standard Installation orders.[1] In upstate New York, Verizon walked away from its FiOS expansion effort five years ago, leaving only a handful of wealthy suburbs furnished with fiber service while effectively abandoning urban communities like Buffalo and Syracuse with nothing better than Verizon’s outdated DSL, which does not meet the FCC’s minimum definition of broadband – 25Mbps.[2]

Cablevision’s broadband performance dramatically improved because of investment in network upgrades, and the company has been well-regarded for its broadband service ever since.[3] But the proposed new owner of Cablevision – Altice, NV — has sought “cost savings” from cuts totaling $900 million a year, which will almost certainly devastate that provider’s future investments, its engineering and repair crews, and customer service.[4]

At least downstate New York has the prospect for +100Mbps broadband service. In upstate New York, three providers define the broadband landscape for most cities and towns:

  • Time Warner Cable dominates upstate New York with its cable broadband service and has the largest market share for High Speed Internet. As of today, Time Warner Cable’s top broadband speed outside of New York City is just 50Mbps, far less than the 1,000Mbps service cities in other states are now on track to receive or are already getting.[5]
  • Verizon Communications is the largest ILEC in upstate New York. Outside of its very limited FiOS service areas, customers depend on Verizon’s DSL service at speeds no better than 15Mbps, below the FCC’s minimum speed to qualify as broadband;[6]
  • Frontier Communications has acquired FiOS networks from Verizon in Indiana and the Pacific Northwest, and AT&T U-verse in Connecticut. Frontier has made no significant investment or effort to bring FiOS or U-verse into New York State. In fact, in its largest New York service area, Rochester, there are significant areas that can receive no better than 3.1Mbps DSL from Frontier. The vast majority of Frontier customers in New York do not receive service that meets the FCC’s minimum definition of broadband, and some investors predict the company is “headed for financial disaster.”[7]

The competitive markets the DPS staff envisions in its report to the Commission are largely a mirage. When an ILEC like Frontier Communications admits its residential broadband market share “is less than 25% in our 27 states excluding Connecticut,” that is clear evidence the marketplace has rejected Frontier’s legacy DSL service and does not consider the company an effective competitor.[8]

While incumbent cable and phone companies tout ‘robust competition’ for service in New York, if the Commission investigated the market share of Time Warner Cable upstate, it would quickly realize that ‘robust competition’ has been eroding for years, with an ongoing shift away from DSL providers towards cable broadband.[9]

Frontier’s primary market focus is on rural communities where it often enjoys a monopoly and can deliver what we believe to be inadequate service to a captive customer base. The company is currently facing a class action lawsuit in West Virginia, where it is alleged to have failed to provide advertised broadband speeds and delivers poor service.[10]

Verizon’s ongoing investment in its legacy wireline network (and expansion of DSL to serve new customers) has been regularly criticized as woefully inadequate.[11] From all indications, we expect the company will eventually sell its legacy wireline networks, particularly those upstate, within the next 5-10 years as it has done in northern New England (sold to FairPoint Communications) and proposes to do in Texas, California, and Florida.[12] (Verizon also sold off its service areas in Hawaii, West Virginia, and much of its territory acquired from GTE.)

Across New York, service problems and controversial deals between telecom providers have made headlines. Here are just a few:

  1. Superstorm Sandy’s impact on Verizon’s legacy wireline network on Fire Island and in other downstate communities left many without service. Instead of repairing the damage, Verizon proposed to scrap its wireline network and substitute inferior wireless service with no possibility of wired broadband.[13] The DPS received a large number of comments from the public and local elected officials fiercely opposed to this proposal, one that Verizon eventually withdrew in the face of overwhelming opposition.[14]
  2. There are growing allegations Verizon may be underspending on its legacy wireline network and even worse, may be misallocating costs and revenues to deceive the Commission.[15] Some allege much of the company’s ongoing investments, charged to the wireline operation, in reality are for the benefit of its wireless network. This may have allowed Verizon Communications/New York to claim significant losses on its wireline books the company then argued justified rate increases on ratepayers.[16] A full scale accounting of Verizon’s books is essential for all concerned and corrective action may be necessary if these allegations are proven true.
  3. Verizon’s foot-dragging on FiOS buildouts in New York City led to a damning audit report commissioned by New York City Mayor Bill de Blasio this summer and oversight hearings were held last week by the City Council of New York.[17] [18] Despite Verizon’s creative definition of “homes passed,” a substantial number of New Yorkers cannot receive the benefits of “today’s networks” the DPS staff refers to. Instead, many are stuck with poorly-performing DSL or no service at all.[19] Regardless of whether fiber passes in front of, over, in between, or behind buildings, Verizon signed an agreement compelling them to give customers a clear timeline to establish FiOS service. It is apparent Verizon is not meeting its obligations.[20]
  4. The proposed sale of Time Warner Cable to Comcast led the Commission’s staff to admit the majority of respondents to requests for public input were strongly opposed to the merger and without substantial modifications concluded would not be in the public interest.[21] Comcast eventually withdrew its proposal in the face of overwhelming opposition.
  5. The proposed sale of Time Warner Cable to Charter Communications, where the DPS staff concluded as the application stood, there would be no public interest benefits to the transaction.[22]

Those are just a few examples of why aggressive oversight of telecommunications is critical for all New Yorkers. In most of these examples, the DPS never ruled one way or the other. The companies individually made their own decisions, and we believe they would have decided differently if they did not face grassroots opposition from consumers.

New Yorkers deserve an active DPS prepared to aggressively represent our interests, ready to investigate what Verizon is doing with its legacy wireline network, legacy wired broadband services, FiOS and Verizon Wireless. With Time Warner Cable having such a dominant presence in western and central New York, its sale should never be taken lightly, as it will impact millions of New Yorkers for years to come.

While the DPS seems prepared to passively wait around to discover what Time Warner Cable, Frontier and Verizon are planning next, the rest of the country is getting speed upgrades New York can only dream about.

Google Fiber and AT&T, among others, are aggressively rolling out 1,000Mbps fiber service upgrades in other states, while a disinterested Verizon refuses to invest further in FiOS expansion, leaving millions of New York customers with nothing better than DSL.

The lack of significant competition upstate is why we believe Time Warner Cable has not yet chosen any market in New York except New York City for its Maxx upgrade program, which offers substantially faster speeds and better service.[23] There is no compelling competitive reason for Time Warner to hurry upgrades into areas where they already enjoy a vast market share and no threat of a broadband speed race. So much for robust competition.

Charter’s proposed acquisition of Time Warner Cable proposes a modest upgrade of broadband speeds to 60-100Mbps, but as we wrote in our comments to the DPS regarding the merger proposal, upstate New York would be better off waiting for Time Warner Cable to complete its own Maxx upgrades over what will likely be 100% of its footprint in the next 24-30 months.[24] Time Warner Cable Maxx offers maximum broadband speeds three times faster than what Charter proposes for upstate New York, while also preserving affordable broadband options for those less fortunate. Approving a Charter buyout of Time Warner Cable will only set upstate New York back further.

We confess we were bewildered after reviewing the initial staff assessment of telecommunications services competition in New York. Its conclusions simply do not reflect reality on the ground, particularly in upstate communities.

It was this type of incomplete analysis that allowed New York to fall into the trap of irresponsible deregulation and abdication of oversight that has utterly failed to deliver the promised competition that would check rate hikes, guarantee better customer service, and provide New York with best-in-class service. In reality, we have none of those things. Rates continue to spiral higher, poor customer service continues, and New York has been left behind with sub-standard broadband that achieves no better than 50Mbps speeds in most upstate communities.

This summer, the American Customer Satisfaction Index told us something we already know. Americans dislike their cable company more than any other industry in the nation.[25] A survey of more than 14,000 customers by ACSI found service satisfaction achieving a new all-time low, scoring 63 out of 100.

“Customers expect a lot more than what the companies deliver,” said ACSI managing director David VanAmburg, who called poor customer service from cable operators “endemic.”

This year, Time Warner Cable again scored the worst in the country. As the only cable provider for virtually all of upstate New York, if residents in New York are given a choice between Time Warner Cable and the phone company’s slow-speed DSL, they are still likely to choose Time Warner Cable, but only because they have no other choices for broadband that meets the FCC definition of broadband.

Providers are quick to suggest consumers can turn to so-called competitors like satellite broadband or wireless Internet from mobile providers. They conveniently ignore the fact satellite-delivered Internet is such a provider of last resort, less than 1% of New Yorkers choose this option. Those that have used satellite broadband tell the companies providing it they rarely achieve the claimed speeds and are heavily speed throttled and usage capped.[26] It’s also costly, particularly when measuring the price against its performance.

Mobile Internet, which some ILECs have advocated as a possible replacement for rural wireline networks, is also a very poor substitute for wired Internet access. Wireless broadband pricing is high and usage allowances are low. Attempts to convince New Yorkers to abandon Verizon landline service in favor of Verizon’s 4G LTE wireless replacement have led to consumer complaints after learning their existing unlimited Verizon DSL service would be substituted for a wireless plan starting at $60 a month with a 10GB usage allowance.[27]

A customer with a 6Mbps DSL line from Verizon consuming 30GB of usage a month – hardly a heavy user – pays Verizon $29.99 a month for DSL service during the first year. In contrast, that same customer using Verizon Wireless’ home 2-5Mbps wireless LTE plan will pay $120 a month – four times more, with the added risk of incurring a $10 per gigabyte overlimit fee for usage in excess of their allowance.[28]

None of this information is a secret, yet it seems to have escaped the notice of the DPS staff in its report. Part of the reason why may be the complete lack of public input to help illuminate and counter incumbent providers’ well-financed public and government relations self-praise campaigns. If only actual customers agreed with their conclusions, we’d be well on our way to deregulation-inspired broadband nirvana.

Except New Yorkers do not agree all is well.

Consumer Reports:

Our latest survey of 81,848 customers of home telecommunications services found almost universally low ratings for value across services—especially for TV and Internet. Those who bundled the three services together for a discount still seemed unimpressed with what they were getting for their money. Even WOW and Verizon FiOS, which got high marks for service satisfaction, rated middling or lower for value, and out of 14 providers, nine got the lowest possible value rating.

What is it about home telecommunications that leaves such a sour taste in customers’ mouths? When we asked Consumer Reports’ Facebook followers to tell us their telecom stories, the few happy anecdotes of attentive service technicians and reliable service were overwhelmed by a tidal wave of consumer woe involving high prices, complicated equipment, and terrible service.[29]

The effective competition that would rely on market forces to deter abusive pricing and poor customer service is simply not available in a monopoly/duopoly marketplace. New entrants face enormous start-up costs, particularly provisioning last-mile service.

The nation’s telephone network was first constructed in the early half of the last century by providers guaranteed monopoly status. The cable industry developed during a period where regulators frequently considered operators to be a “natural monopoly,” unable to survive sustained competition.[30] Many cable operators were granted exclusive franchise agreements which helped them present a solid business case to investors to fund a costly network buildout. The end of franchise exclusivity happened years after most cable operators were already well established.

Today, those marketplace protections are unavailable to new entrants who face a variety of hurdles to achieve success. Some are competitive, others are regulatory. Google Fiber, which provides competitive service in states other than New York, publishes a guide for local communities to make them more attractive prospects for future Google Fiber expansion.[31]

For many overbuilders, pole attachment issues, zoning and permitting are significant obstacles to making new service available to residential and commercial customers. New York must ensure pole owners provide timely, non-discriminatory, and reasonable cost access. Permitting and zoning issues should be resolved on similar terms to speed network deployment.

Because a long history of experience tells us it is unreasonable to expect a competing telephone or cable company to enter another provider’s territory, in many cases the only significant possibility for competition will come from a new municipal/co-op/public-owned broadband alternative.

The hurdles these would-be providers face are significant. Incumbent provider opposition can be substantial, especially on a large-scale buildout. In rural areas, incumbents can and do refuse to cooperate, even on projects that seek to prioritize access first to unserved/underserved areas currently bypassed by those incumbents.

The effort to wire the Adirondack Park region is a case in point. Time Warner Cable has refused to provide detailed mapping information about their existing network, making it difficult to assess the viability of a municipal and/or a commercial broadband expansion project into these areas. Time Warner Cable maintains it has exclusivity to granular map data showing existing networks for “competitive reasons,” effectively maintaining an advantageous position from which it can strategically apply for state broadband expansion funding to expand its network using public funds.

Time Warner Cable benefits from access to publicly-owned rights of way and sanctioned easements. Without this access, their network would likely be untenable. As a beneficiary of that public access, making granular map data available to broadband planners is a fair exchange, and nothing precludes Time Warner from building its network into those unserved/underserved areas – something that might deter a would-be competitor’s business argument to overbuild a high-cost, rural area. The Commission should ask itself how many rural New York communities have two (or more) competing cable companies serving the same customers. If the answer is none, Time Warner Cable does not have a valid argument.

There is ample evidence the Commission needs to begin a full and comprehensive review of telecommunications in this state. It must build a factual, evidence-based record on which the Commission can build a case that oversight is needed to guarantee New Yorkers get the high quality telecommunications services they deserve.

Broadband and telephone service is not just a convenience. In September 2015, the Obama Administration declared broadband was now a “core utility,” just as important as telephone, electric, and natural gas service. Isn’t it about time the Department of Public Service oversee it as such?[32]

Respectfully submitted for your consideration,

Phillip M. Dampier

Director, Stop the Cap!

[1] http://stopthecap.com/2015/10/19/n-y-city-council-investigates-verizon-foot-dragging-fios-possible-contract-violations/
[2] http://www.wsj.com/articles/SB10001424052702303410404575151773432729614
[3] https://www.fcc.gov/reports/measuring-broadband-america-2014
[4] http://variety.com/2015/biz/news/altice-group-patrick-drahi-cablevision-bid-1201599986/
[5] http://www.pcmag.com/slideshow/story/310861/if-you-want-gigabit-internet-move-here/1
[6] https://www.fcc.gov/document/fcc-finds-us-broadband-deployment-not-keeping-pace
[7] http://seekingalpha.com/article/2888876-frontier-communications-headed-for-financial-disaster
[8] http://seekingalpha.com/article/2633375-frontier-communications-ftr-ceo-maggie-wilderotter-q3-2014-results-earnings-call-transcript?part=single
[9] http://www.leichtmanresearch.com/press/051515release.html
[10] http://www.wvgazettemail.com/article/20141020/GZ01/141029992
[11] http://www.cwa-union.org/news/entry/cwa_calls_for_regulators_to_investigate_verizons_refusal_to_invest_in_landl
[12] http://stopthecap.com/2015/05/05/fla-utility-says-negotiations-with-verizon-make-it-clear-verizon-will-exit-the-wireline-business-within-10-years/
[13] http://money.cnn.com/2013/07/22/technology/verizon-wireless-sandy/
[14] http://documents.dps.ny.gov/public/MatterManagement/CaseMaster.aspx?Mattercaseno=13-C-0197
[15] http://www.cwa-union.org/news/entry/cwa_calls_for_regulators_to_investigate_verizons_refusal_to_invest_in_landl
[16] http://newnetworks.com/publicnn.pdf/
[17] http://www1.nyc.gov/office-of-the-mayor/news/415-15/de-blasio-administration-releases-audit-report-verizon-s-citywide-fios-implementation
[18] http://arstechnica.com/business/2015/10/verizon-tries-to-avoid-building-more-fiber-by-re-defining-the-word-pass/
[19] http://www.nytimes.com/2015/08/27/nyregion/new-york-city-and-verizon-battle-over-fios-service.html?_r=0
[20] http://www.nyc.gov/html/doitt/downloads/pdf/verizon-audit.pdf
[21] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={0A5EAC88-6AB7-4F79-862C-B6C6B6D2E4ED}
[22] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId=%7BC60985CC-BEE8-43A7-84E8-5A4B4D8E0F54%7D
[23] http://www.timewarnercable.com/en/enjoy/better-twc/internet.html
[24] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={FCB40F67-B91F-4F65-8CCD-66D8C22AF6B1}
[25] http://www.marketwatch.com/story/the-most-hated-cable-company-in-america-is-2015-06-02
[26] https://community.myhughesnet.com/hughesnet?topic_list%5Bsettings%5D%5Btype%5D=problem
[27] http://www.verizon.com/home/highspeedinternet/
[28] http://www.verizonwireless.com/b2c/lte-internet-installed/
[29] http://www.consumerreports.org//cro/magazine/2014/05/how-to-save-money-on-triple-play-cable-services/index.htm
[30] http://www.citi.columbia.edu/elinoam/articles/Is_Cable_Television_Natural_Monopoly.pdf (p.255)
[31] https://fiber.storage.googleapis.com/legal/googlefibercitychecklist2-24-14.pdf
[32] http://thehill.com/policy/technology/254431-obama-administration-declares-broadband-core-utility-in-report

N.Y. City Council Investigates Verizon Foot-Dragging FiOS, Possible Contract Violations

fios_logo182More than 100,000 Verizon customers in New York City asking for FiOS fiber optic service are still waiting — 75% of them for more than a year — for a service Verizon promised would be available to every city resident by 2014.

In many of those cases, Verizon gave customers nothing but excuses and false information, sometimes in apparent violation of Verizon’s contract with the City of New York.

That was the opening contention of Vincent J. Gentile, chairman of the New York City Council’s Committee on Oversight and Investigations, in a four and a half hour-long hearing on Verizon FiOS availability held Oct. 14.

City officials are frustrated with Verizon’s performance under its FiOS franchise. Complaints about service availability have persisted for years and Mayor Bill de Blasio has been critical of Verizon’s foot-dragging to make fiber service available to every New Yorker that wants the service. As little as 30 minutes before the hearing, complaints continued to reach public officials from customers being told FiOS was not available. In fact, many were instead steered to a Verizon package that bundled satellite television instead of fiber optics.

special reportNew York City is Verizon’s largest market for FiOS fiber optic service. Verizon’s Leecia Eve, vice president of government affairs for the Tri-State Region, claimed the company has invested more than $3 billion upgrading New York City for fiber service and took umbrage at suggestions the company was reneging on its commitments, telling committee members Verizon fulfilled its FiOS commitments “one thousand percent.”

Such claims cause Verizon FiOS-less customers across New York City to bristle. In August, the New York Times reported Barbara Cooke-Johnson, a resident on Putnam Avenue in Bedford-Stuyvesant, Brooklyn had waited for two years for Verizon to reach her block. She isn’t alone. City Council members have been inundated with complaints from residents unable to get FiOS service, even after placing orders well over a year ago.

“For years, I have heard complaints from residents in my district, who have attempted to sign on to the Verizon FiOS service, but learned their area did not provide coverage, “said council member Annabel Palma, who represents the neighborhoods of Parkchester, Soundview, Castle Hill, Clason Point and Harding Park in the Bronx. “New Yorkers need affordable and reliable high-speed broadband access throughout all the five boroughs, but especially in the Bronx.”

Several council members blamed the prior Bloomberg Administration for negotiating a broadly Verizon favorable contract that maintained a largely hands-off policy on oversight of the company’s fiber optic deployment, with few penalties at the city’s disposal to keep Verizon to its word. The Bloomberg Administrated granted multiple requests made by Verizon between 2008-2011 to reduce the performance bond the company agreed to secure as an assurance to city officials it would meet the terms of its franchise agreement.

Kevin Service (L), vice president, region operations - New York City and Leecia Eve, vice president of government affairs - New York, New Jersey, and Connecticut testify before the City Council of New York.

Kevin Service (L), vice president, region operations – New York City and Leecia Eve (R), vice president of government affairs – New York, New Jersey, and Connecticut testify before the City Council of New York.

Verizon’s agreement with the city required it to “pass all households” with fiber optic service within the franchise service area by June 30, 2014. Verizon blamed Hurricane Irene and Superstorm Sandy for missing that deadline, but claims it finally achieved it in October 2014.

Councilman Gentile pressed Service for more information about the gap between what city officials consider to be “homes passed” and what Verizon considers that term to mean.

“We do consider it to be passed if we’re in the realm of ‘substantial fiber placement,'” responded Kevin Service, Verizon’s vice president of region operations – New York City. “I’m not a lawyer, so here is what I would say. We’ve passed a household if when we get a request for service and have the necessary rights of way, what we have left to do does not create a delay in bringing service to that customer. Under that ‘Kevin Service definition,’ we’ve passed every household in New York City.”

Gentile countered that Verizon officials sent documents to the city admitting 23.6% of New York City blocks that Verizon deems “passed” have no buildings with Verizon FiOS service installed.

Much of the dispute between Verizon and New York City officials now centers on a widening gap between the city’s definition of “homes passed” and the one Verizon is now relying on to defend itself against charges it is violating its agreement.

Both sides agree nobody bothered to precisely define “premises passed” in the contract. The term is commonly used by the cable industry to reflect availability of cable service. Nielsen Media, among others, defines it to mean, “households with the ability to receive a particular cable service, and which may opt to subscribe.” The Fiber to the Home Council offers a more detailed definition, one used by the city’s auditors reviewing Verizon’s performance:

“The number of “Homes Passed” is the potential number of premises to which an operator has capability to connect in a service area, but the premises may or may not be connected to the network. This definition excludes premises that cannot be connected without further installation of substantial cable plant such as feeder and distribution cable (fiber) to reach the area in which a potential subscriber is located.” (emphasis added).

Verizon dismissed the Fiber to the Home Council’s definition as one prepared only “for purposes of its ‘market research,'” and claimed it had no standing because the organization is not party to the agreement between Verizon and the city.

Verizon used a dictionary to create its own definition of the phrase in a rebuttal to the city audit:

“General dictionary definitions of the term refer to going by, past, beyond, or through a place (such as a building), and include no requirement as to how close a place must be approached in order to constitute a “passage.” Thus, there is nothing inherent in the word itself that would require Verizon to run cable directly in front of every building in the City in order to “pass” those buildings.”

NYCDOITT.svg“The argument that ‘passing’ a premises with fiber optic cable includes no requirement of any proximity to that premises is manifestly untenable,” city auditors concluded.

If the dispute ends up in court, Verizon’s definition loophole may not prove much of a defense when a judge reviews the rest of the agreement. Whether Verizon has fiber facilities sufficiently nearby or not may not matter once a customer requests service. Under the terms of the contract, Verizon generally has to deliver FiOS within 6-12 months of a customer request, and there is ample evidence Verizon is not meeting that obligation.

The auditors found Verizon customer service agents were quick to tell customers FiOS service was unavailable to them and often failed to offer customers a “non-standard installation” (NSI), which starts the 6-12 month deadline to provide service. Even requesting an NSI was no guarantee of getting fiber service. Auditors found 74.68% of the 41,928 customer requests for an NSI were still outstanding as of Dec. 31, 2014, more than 12 months after the order was taken.

A raucous audience in the hearing room frequently jeered Verizon’s claims it was in full compliance with its franchise contract. Verizon officials defended the company’s performance, noting it was the first in New York City to offer service to every borough to compete with Cablevision and Time Warner Cable (and their predecessors) — cable companies that built their networks under the protection of a monopoly and given more favorable terms to gradually expand their infrastructure over a decade or more. Eve said Verizon achieved success despite the obstacles that have arisen, including objections from some building owners that have refused to admit Verizon technicians to install FiOS service for tenants.

Service admitted Verizon currently has a backlog of at least 100,000 requests for Verizon FiOS service in the city it has not yet met. Service blamed that number mostly on building access disputes, an excuse that allowed him to insist Verizon was in compliance with its agreement.

Service also suggested the city’s Department of Information Technology and Telecommunications (DoITT – pronounced “Do-It”) and some of the company’s unions have sought to muddy the waters by unilaterally redefining Verizon’s contract with New York.

http://phillipdampier.com/video/WNBC New York Verizon FiOS Not Installing High-Speed Internet for 25 Percent of NYers Who Want It 7-15-15.flv

WNBC-TV in New York reported 25% of New Yorkers seeking Verizon FiOS Internet were turned away by the company. [Report originally aired: July 15, 2015] (2:01)

“To simplify the issue, the pass all homes obligation involves strategically placing fiber optic cables throughout the streets of New York City such that the fiber optic network can then be extended into specific buildings upon request, provided that we can get access to the building and into that building,” Service said. “It does not mean, contrary to some public confusion, that Verizon’s network would have been extended into every New York City household. Where we have not brought our FiOS service to a customer that has requested it, it’s because we haven’t yet secured all the necessary rights of way to do so.”

Verizon workers install fiber optic cables in New York City.

Verizon workers install fiber optic cables in New York City.

“I think it’s important to note that the city’s franchise agreements with Cablevision and Time Warner included an express obligation to run facilities in front of each building in the city,” Service reminded the audience. “In stark contrast, Verizon’s agreement does not include that language. This is no accident. The parties recognized while the agreement was being negotiated that Verizon would deploy its all-fiber network as an upgrade to its existing copper network, running the fiber along the same routes as it historically used to serve the buildings in the city. […] Although there are now attempts by some to unilaterally and retroactively revise the intent and meaning of the agreement, the word ‘passed’ was always understood and used by Verizon and the city in that context.”

Service explained getting FiOS service involves a multi-step process and it is not as simple as passing a fiber cable through a neighborhood.

“In order to fulfill [our] obligation [to provide FiOS] to a resident in an [multi-dwelling unit] not only does the building have to be passed by Verizon’s facilities, as all buildings are today, it also must be network created,” Service said. “In other words, the deployed fiber used to serve the building must be extended into the building from the street or backyard, or is frequently the case, through adjoining buildings to provide service to the individual units in the building.”

Customers can expect delays if they are the first in a building to request FiOS service.

“When a single resident requests service, it is Verizon’s policy to make the entire building ready for FiOS service. After that is complete, subsequent requests for service will no longer be considered NSI requests. Instead they are standard installation requests,” Service added, noting this is more efficient than simply provisioning service one customer at a time.

Union members who work for Verizon scoffed at Service’s explanations, accusing the company of systematically cutting back on FiOS spending and diverting money into its more profitable Verizon Wireless operation.

“They tend to blame landlords,” CWA representative Pete Sikora told Gothamist. “They tend to blame everyone but themselves. They didn’t have a gun held to their heads; they signed that agreement willingly, because they want to make more money. What they’re doing here is effectively picking and choosing which streets to serve.”

http://www.phillipdampier.com/video/CWA Verizon FiOS Broken Promises 10-13-15.mp4

The Communications Workers of America have begun running ads criticizing Verizon for failing to bring FiOS service to New Yorkers. (0:30)

Customers didn’t readily accept Verizon’s explanations either.

“As a board member of my co-op, I’ve been trying to get FIOS in our building for four years now,” wrote one Gothamist reader. “I’ve spoken with everybody at Verizon about this and the outcome has been that Verizon will wire the block and its buildings when Verizon feels like it.

Council member Brad Lander

Council member Brad Lander

Most of those seeking FiOS service and not getting it learn FiOS is “not available” from Verizon’s website or a customer service agent. When asked when the service might be available, it is common for representatives to answer they have no idea. Critics say that violates the terms of the contract, which requires Verizon to make a good faith effort to give an estimated wait time before an installation can be made. Service was on the defensive explaining why customers are routinely told no service is available.

“There is no area in the city [we do not service] and nobody should be told that,” Service said. “Having said that, we have 12,000 employees — we have a large employee body that we are constantly training and retraining and to the extent that they have told somebody that service is not available, that’s an indication that we have more to do in that area.”

“I must tell you that Councilman Lander just whispered in my ear that he was told 30 minutes ago that where he lives in Brooklyn is not serviced,” responded Councilman James Vacca.

Councilman Brad Lander, the deputy leader of policy, later confronted the two Verizon representatives about his own unsuccessful attempts to get FiOS service at his own home in Park Slope and questioned their solution to the problem.

“It sounds to me like you are saying the problem is not that FiOS is unavailable at my house, the problem is that Stacy [a Verizon customer service representative] didn’t say to me ‘Mr. Lander it’s available in your neighborhood, just not to you.'”

http://www.phillipdampier.com/video/Council Member Brad Lander Takes Verizon Apart.mp4

Council member Brad Lander shares his experience not being able to get FiOS service from Verizon at last week’s City Council hearing. (2:45)

Comcast, Frontier: It’s Too ‘Hilly and Woodsy’ to Bring Broadband to Rural Connecticut

no signalAn aversion of open, hilly landscapes and trees is apparently responsible for keeping residents of rural Connecticut from getting broadband service from the state’s two dominant providers — Comcast and Frontier Communications.

In the Litchfield Hills of northwestern Connecticut, you can visit some of the state’s finest antique shops and Revolutionary War-era inns, tour vineyards and even establish roots in the Upper Naugatuck Valley in towns like Barkhamsted, Colebrook, Goshen, Hartland, Harwinton, Litchfield, Morris, New Hartford, Norfolk, Torrington, and Winchester. Just leave your cellphone, tablet, and personal computer behind because chances are good you will find yourself in a wireless dead spot and Internet-free zone.

Obtaining even a smidgen of cell phone service often means leaning out a second story window or worse, climbing the nearest church steeple. The wealthiest residents, often second-homeowners from New York or California, can afford to spend several thousand dollars to entice the cable company to extend a coaxial cable their way or buy commercial broadband service at eye-popping prices from Frontier Communications, which acquired AT&T’s wireline network in the state. But for many, dial-up Internet remains the only affordable or available option.

Despite the area’s significant number of high income residents ready and willing to pay for service, Comcast and Frontier blame hilly terrain and dense woods for staying away. Those excuses get little regard from residents who suggest it is all about the money, not the landscape.

Northwest Connecticut region is shown in green and the Litchfield Hills region in blue.

Broadband-challenged areas in northwest Connecticut are shown in green and the often “No signal” and “No Internet” Litchfield Hills region is shown in blue.

Despite the need for service, deregulation largely allows cable and phone companies to decide where to offer broadband service, and arguments about fulfilling a public need and performing a community service don’t get far with Wall Street and shareholders that constantly pressure companies to deliver profits, not expensive investments that may never pay off.

State Rep. Roberta Willis (D-Salisbury) told the Register Citizen News the status quo is not acceptable — telecommunications companies are not doing enough to build out their networks.

“You just can’t say it’s the topography and walk away,” she told the newspaper. “If electricity companies were deregulated like this there would be no electricity in my district.”

Comcast spokeswoman Laura Brubaker Crisco claims the company extended cable service nearly 62 miles in northwest Connecticut since 2005 (ten years ago) and completed nearly 100 projects extending fiber more than 10 miles in the past two years. But many of those projects overhauled Comcast’s existing middle-mile network and extended cable service to profitable new markets serving commercial customers, especially office parks and commercial storefronts. Comcast’s other priority was to reach new high-income residential developments being built as the area continues to grow. Rural customers who could not meet Comcast’s Return On Investment formula in 2005 are still unlikely to have service in 2015 unless population density increases in their immediate area.

Connecticut's effort to extend gigabit fiber statewide is dismissed as a waste of money by incumbent cable operators.

Connecticut’s effort to extend gigabit fiber statewide is dismissed as a waste of money by incumbent cable operators.

Crisco admits Comcast does not wire low density areas and isn’t surprised other providers won’t either.

Frontier prefers to blame the area’s topography for keeping broadband out.

David Snyder, vice president for engineering for the east region of Frontier Communications, told the newspaper “it’s just natural the investment and the time become more challenging.”

Frontier does say it has expanded broadband to 40,000 additional households in Connecticut since taking over for AT&T a year ago. But nobody seems to know exactly who can get broadband in the state and who cannot. The have-nots are the most likely to complain, and those businesses that serve visitors are in peril of losing business without offering reasonable Wi-Fi or Internet access. Rural families with school-age children are also at risk from having their kids fall behind those that can get broadband.

Wireless Internet Service Providers, which offer long-range wireless broadband in rural areas, complain the federal government is wasting money on studies instead of helping to underwrite solutions that can quickly bring Internet access to the rural masses.

Others believe talking to Frontier and Comcast is futile. They prefer to follow the lead of western Massachusetts, where 24 small communities across the region have joined forces to build a public fiber to the home broadband network. One estimate suggests 22 Connecticut towns covering 200,000 residents could be reached with a bond-financed fiber network completed by 2018. That network would likely reach more unserved customers than Frontier or Comcast will elect to serve over the next three years combined.

A separate effort to establish gigabit fiber broadband across the state — the CT Gig Project — promptly ran into a buzzsaw of opposition, primarily from incumbent telecommunications companies that refuse to offer that service now. With a threat to current profitable business models, it was not unexpected to hear opposition from Paul Cianelli, CEO of the New England Cable & Telecom Association — a cable company lobbying group.

He called public broadband unnecessary and “potentially disastrous.” He wants assurances no government subsidies or loan guarantees are given to the project. He also said providing gigabit service was unnecessary and faster Internet speeds were not important to the majority of customers in the state. Public broadband proponents respond Cianelli should tell that to the residents of Litchfield Hills and other unserved and underserved communities.

Comcast Dragged Into Upgrade for Santa Cruz After Public Broadband Initiative Announced

Before and after competition

Before and after competition

The best way to guarantee service upgrades from Comcast is to threaten to launch your own competing service provider, which is precisely what worked for the community of Santa Cruz, Calif., where Comcast suddenly found the resources to upgrade the local cable system to support speeds faster than 25Mbps.

For more than two years, customers and local governments across Santa Cruz County have been begging Comcast to upgrade the cable system that would have been state-of-the-art if it was still 1997. Customers could not exceed speeds of 25-28Mbps, but Comcast continued advertising its “Performance” tier (50Mbps), Blast! (105Mbps) and even Extreme option (150Mbps), collecting dozens of extra dollars a month from customers while their broadband speeds maxed out below 30Mbps.

The cable system is so antiquated, it could not officially support consistent service above 25Mbps, and many locals complain their speeds were slower than that.

“The most popular speed in this county is 16/2Mbps, which is the fastest one Comcast will actually give you what you paid for,” said Stop the Cap! reader Jim, who lives in Santa Cruz. “It’s so bad, people are actually envious of Charter, which services customers to the south.”

comcastOokla’s Net Speed Index rated the community of 62,000 447th fastest out of 505 California broadband-enabled cities.

Comcast’s performance was so bad, a frustrated employee began leaking internal company documents exposing the fact the cable system could not deliver speeds above 29Mbps, despite marketing and advertising campaigns selling customers more expensive, faster broadband local employees knew it could not deliver.

“We’ve been complaining to the company in Philadelphia for years, asking them to stop promising something they weren’t delivering,” a Comcast  technician told GoodTimes, a community newspaper. “But they ignored us.”

When customers complained, they were told their equipment was at fault or their cable modems needed to be replaced. In fact, the cable system’s local infrastructure needed to be upgraded, something Comcast has not done until recently.

santa cruzThis summer, the City of Santa Cruz joined forces with Cruzio, a California-based independent Internet Service Provider, to plan a new fiber to the home network within the city.

Under the terms of the partnership, the city will own the network, and Cruzio will act as the developer during engineering and construction and as the operator when the network is complete. Financing for the development of the network will be through city-backed municipal revenue bonds, repaid through the revenue from the sale of network services (and not by the taxpayers). The project will be financially self-sustaining and 100% of the profit generated will stay in the City of Santa Cruz.

Much of that money is likely to flow away from Comcast and into the community fiber provider, which will support speeds up to 1 gigabit. The announcement of impending competition inspired Comcast to upgrade its local cable infrastructure and the cable company suddenly announced service upgrades less than two months after the city announced their fiber project. In August, Comcast added 30 new channels, raised the speeds of two of its residential Xfinity Internet tiers at no additional cost to customers, and introduced four new tiers of Internet service for commercial business customers.

cruzio-logoThe Performance tier speed jumped overnight from 16/2Mbps to 75/5Mbps. Blast! speed increased from 25/4Mbps to 150/10Mbps.

For many local residents, it is too little, too late.

“Comcast can kiss me goodbye when Cruzio rolls into my neighborhood,” said Jim. “They ignored and overbilled us for years and the only time things changed is when competition was announced. Cruzio keeps their money here, Comcast sends it off to Philadelphia. If I have a problem, I know I’m going to get better service in person than dealing with Comcast’s customer service which has no idea where Santa Cruz even is.”

For Comcast customers who paid extra for Internet speeds they never received, company officials suggested they write a letter and ask for a refund, something Comcast will consider on a case-by-case basis.

“Comcast is a fundamentally deceitful company, at the leadership level,” responded local resident Charles Vaske. “They can not be trusted to stick to their word, and they certainly should not be trusted with infrastructure as vital as Internet access. A mere refund for this type of deceit is not appropriate, there should be severe penalties for such intentional crime.”

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  • T.J.: Whoops, chose the wrong bill when going back thru, gotta love smart phones. Gotta get rid of this windows phone, my bad. Lol....
  • Dave Hancock: T. J.: What is your point??? H.R. 1301 is an entirely different bill! It relates to restrictions on Amateur Radio towers. That is quite a differ...
  • T.J.: https://www.congress.gov/bill/114th-congress/house-bill/1301/cosponsors Read it and weep....
  • Dave Hancock: BUT: Those in favor of this are ALL REPUBLICANS!!...
  • T.J.: So I have one thing only to say about this is that this isn't all Republicans vs democrats, it is a small group, there many Republicans opposing this ...
  • Dave Hancock: This could (and should be) a SIGNIFICANT ELECTION ISSUE. A direct attack on consumers via unregulated internet rates! My note already in to my "re...
  • Joe V.: I wonder Phil how much longer are Americans going to continue to put up with s**t like this before we finally as a collective come together and realiz...
  • Web Stuff: I live in a CenturyLink service area and my dealings with them lead me to believe that they are not really interested in having customers... They onl...
  • shelley Haitko: 2/9/16 Decades changed their format recently , Will classic shows be seen on weekends? Comcast New Haven, Ct. 06515 won,t let me have you guys. Shelle...
  • Telephone Man: Okay I am in no way sticking up for this practice however I am going to explain something to all that do not know how this little game works. Let m...
  • BobInIllinois: Comcast owns 49% of Midco, per Wikipedia https://en.wikipedia.org/wiki/Midco...
  • Tony: Data caps have been updated. Better, but still annoying. Web Surfer - 200GB G5 - 450GB G10 - 550GB G15 - 700GB Dream 60 - 800GB Dream 100 - 10...

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