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Frontier Communications Promises Gigabit Broadband Will Be Available… to Almost Nobody

Frontier's "High Speed" Fantasies

Frontier’s “High Speed” Fiber Fantasies

Frontier Communications has jumped on the gigabit broadband promises bandwagon with an announcement to investors the company will make available 1,000Mbps broadband speeds available later this year to a small handful of customers.

“I want to note that nearly 10% of our households are served through a fiber to the home architecture,” said Frontier’s chief operating officer Dan McCarthy. “Over the next several quarters we will introduce expanded speed offerings in select markets including 50-100Mbps services. Some residential areas will also be able to purchase up to 1Gbps broadband service. We are excited to bring these new products to market and look forward to making these choices available to our customers.”

Most of Frontier’s fiber customers are part of the FiOS fiber to the home infrastructure Frontier adopted from Verizon in Fort Wayne, Ind., and in parts of Oregon and Washington. The rest of Frontier customers accessing service over fiber are in a few new housing developments and some multi-dwelling units. The majority of customers continue to be served by copper-based facilities.

Despite the speed challenges imposed by distance-sensitive DSL over copper networks, Frontier customers crave faster speeds and more than one-third of Frontier’s sales in the last quarter have come from speed upgrades. As of this month, 54% of Frontier households can receive 20Mbps or greater speed, 75% can get 12Mbps and 83% can get 6Mbps. Here at Stop the Cap! headquarters, little has changed since 2009, with maximum available Frontier DSL speeds in this Rochester, N.Y. suburban neighborhood still maxing out at a less-impressive 3.1Mbps.

Frontier’s plans for the next three months include a growing number of partnerships with third-party equipment manufacturers and software companies, as well as integrating former AT&T service areas in Connecticut into the Frontier family:

Sale of AT&T Connecticut Assets to Frontier Communications Wins Approval from State Attorney General

frontier frankConnecticut’s Attorney General has announced a deal with Frontier Communications to approve its acquisition of AT&T’s wired assets in the state. The office asked for and got a three-year rate freeze on basic residential telephone rates and a commitment to keep selling standalone broadband at or below Frontier’s current rates. Low-income military veterans would receive basic broadband service for $19.99 per month, a substantial discount off the regular price of $34.99. The first month of service is free.

Frontier will make $500,000 in donations annually to various Connecticut charities, give $512,500 to the University of Connecticut basketball teams, and commit $75,000 to sponsor the Connecticut Open tennis tournament in New Haven.

The phone company has also committed to invest $64 million on network upgrades between 2015-2017, primarily to expand DSL broadband and U-verse service. The company also must undertake to inspect the wireline network it is buying from AT&T and replace deteriorating infrastructure including lines and telephone poles as needed.

Frontier announced it was buying AT&T’s wired assets in December for $2 billion. AT&T will continue to own and operate its wireless network assets in the state. Connecticut was home to AT&T’s only significant landline presence in the northeast. The Southern New England Telephone Company of Connecticut was originally bought by SBC Communications for $4.4 billion in 1998. After SBC purchased AT&T, the telephone company changed its name to AT&T Connecticut. Its primary competitor is Cablevision Industries, which also serves eastern New York and parts of New Jersey. AT&T has aggressively deployed its U-verse platform in Connecticut. Frontier will continue to run and expand U-verse in the state.

Frontier Services and Partnerships Expand

  • Customers may have already received marketing for Frontier’s Emergency Phone, a $4.99/mo landline that can only reach 911. Frontier CEO Maggie Wilderotter told investors that global climate change has made weather patterns more unpredictable, making the reliability and resiliency of traditional landlines a “true life line” in the event of an emergency knocking out Voice over IP lines or cell phone service;
  • Frontier Texting, powered by Zipwhip, allows customers send and receive text messages using their existing landline numbers. The service appears most popular with business customers, with more 800 signed up so far;
  • Frontier third-party technical and security support offers a large range of computer security, home automation, and support services for both hardware and software. Frontier added the Nest thermostat during this quarter, as well as tech support for Intuit QuickBooks and Dropcam remote video monitoring.

Wilderotter Flip-Flops on Gigabit Broadband: You Don’t Need a Gig

Less than three weeks ago, Wilderotter told the Pacific Northwest readers of The Oregonian they didn’t need gigabit broadband speeds:

“Today it’s about the hype, because Google has hyped the gig,” said Wilderotter, in Portland this week for a meeting of her company’s board. She said Google is pitching something that’s beyond the capacity of many devices, with very few services that could take advantage of such speeds, and confusing customers in the process.

“We have to take the mystery and the technology out of the experience for the user because it’s a bit disrespectful to speak a language our customers don’t understand,” said Wilderotter, in Portland this week for a meeting of her company’s board.

Frontier’s pitch: Better prices for more modest speeds. For most people, Wilderotter said, 10 to 12 megabits per second will be perfectly adequate for at least the next couple years. She said Frontier is upgrading its networks in rural communities where it doesn’t offer FiOS to meet that benchmark.

Now that Frontier proposes to offer those speeds, company officials are excited they will be available. Customers shouldn’t be. Most won’t have access for some time to come, if ever.

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Syracuse Wants More Choices Than Comcast and Verizon: Considers Building Publicly-Owned FTTH Alternative

Downtown Syracuse (Image: Post-Standard)

Downtown Syracuse (Image: Post-Standard)

The city of Syracuse is facing an unpleasant broadband reality: the current cable company is about to be bought out by Comcast (which has usage caps in store for broadband customers) and the phone company has thrown in the towel on further expanding FiOS — fiber to the home broadband.

Mayor Stephanie Miner isn’t willing to let the city get trapped by a lack of broadband options from Comcast and Verizon, so she’s developing a plan to build a publicly owned alternative.

“I’m putting together a plan that we can do it ourselves, as a community,” Miner told the Post-Standard

If approved, Syracuse would join Chattanooga, Lafayette, La.,  Wilson and Salisbury, N.C., and several other cities providing local citizens with broadband speeds up to 1,000/1,000Mbps.

“Would we have to do that in phases? What would that look like? How would we pay for it? What would the model be? Those are all things that we are currently looking at, ” Miner noted.

Many of those questions have already been worked out by the best clearinghouse Stop the Cap! knows for excellent community broadband project development: the team at the Institute for Local Self Reliance.

The Community Broadband Networks Initiative of the Institute for Local Self-Reliance, works with communities across the United States to create the policies needed to make sure telecommunications networks serve the community rather than a community serving the network. The Institute for Local Self-Reliance is a non-profit organization that started in Washington D.C. in 1974.

ILSR’s Mission:

The Institute’s mission is to provide innovative strategies, working models and timely information to support environmentally sound and equitable community development. To this end, ILSR works with citizens, activists, policymakers and entrepreneurs to design systems, policies and enterprises that meet local or regional needs; to maximize human, material, natural and financial resources; and to ensure that the benefits of these systems and resources accrue to all local citizens.

No community should attempt to build a community broadband network without first consulting with ILSR. They are particularly effective at helping combat the misinformation campaigns that often arise when an incumbent duopoly discovers they are about to get serious competition for the first time.

If your community wants something better than the local cable and phone company, have your local official(s) E-mail or call Christopher Mitchell at ILSR: 612-276-3456 x209

With entrenched providers unwilling to meet the needs of communities for affordable fast Internet, more American communities are providing the service themselves, much as they take care of local roads, bridges, and other public infrastructure. Comcast’s toll information superhighway may work wonders for shareholders, but it leaves most customers cold. Syracuse, like most upstate New York cities, has also watched Verizon flee from investments in FiOS expansion beyond a handful of wealthy suburbs. Verizon has diverted much of its investment away from wired networks in favor of wireless, a much more profitable business.

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How Comcast’s Volume Discounts Will Kill Cable-TV Competition

psctest

You can still read a book instead of everything else.

You can still read a book instead of everything else.

Allowing Comcast to dominate New York’s cable television marketplace will deter future competitors from entering the market, particularly for television programming.

One of the arguments made by proponents of the merger is the possibility of decreased wholesale television programming costs won through volume discounts available to the largest nationwide providers. Unfortunately for consumers, Comcast has already declared customers will not benefit from those discounts in the form of lower cable bills.

A prospective new entrant considering providing cable television service will face competition with Comcast without any benefit of volume discounts on programming.[1] That makes it unlikely a provider will offer a competing television package.

This is not a theoretical problem.

In Ohio, independent cable company MCTV discovered that while large cable operators like Comcast were benefiting from volume discounts, it faced contract renewal prices more than 40 times the rate of inflation.[2] Cable ONE, owned by the Washington Post, had to drop more than a dozen Viacom owned channels for good because it could not afford the asking price.[3]

MCTV president Bob Gessner reminds us of just how concentrated the entertainment business has become, noting that nine media companies (Comcast is one of them) now control 95% of all paid video content consumed in the United States.[4]

MCTV’s survival plan includes membership in the 900-member National Cable Television Cooperative, the only way smaller providers can pool resources and win discounts of their own. It is no longer effective as mergers and acquisitions continue to consolidate the cable and telco-TV business. All 900 NCTC members serve a combined five million customers. Comcast has 21 million, DirecTV: 20 million, Dish Networks: 14 million, and Time Warner Cable: 11 million.[5]

media_consolidation

AT&T confesses it cannot compete effectively with Comcast and other larger competitors for the same reason. AT&T’s solution, like Comcast, is to buy a competitor, in this case DirecTV.[6]

Frontier Communications faced a similar problem after adopting Verizon FiOS franchises in Indiana and the Pacific Northwest after purchasing Verizon landline networks in several states. When Frontier lost Verizon’s volume discounts on programming, Frontier’s solution was to begin a marketing campaign to convince its fiber customers to abandon the technology and switch to one of its satellite television partners.[7]

[1]http://www.fiercecable.com/story/comcast-twc-deal-will-squeeze-programming-and-technology-vendors/2014-02-13
[2]http://stopthecap.com/2014/06/05/independent-cable-companies-unify-against-cable-tv-programmer-rate-increases/
[3]http://online.wsj.com/articles/viacom-60-cable-firms-part-ways-in-rural-u-s-1403048557
[4]http://stopthecap.com/2014/06/05/independent-cable-companies-unify-against-cable-tv-programmer-rate-increases/
[5]http://stopthecap.com/2014/06/05/independent-cable-companies-unify-against-cable-tv-programmer-rate-increases/
[6]http://www.bloomberg.com/news/2014-05-02/dish-or-directv-need-deal-most-in-at-t-love-triangle-real-m-a.html
[7]http://stopthecap.com/2011/08/16/frontiers-fiber-mess-company-losing-fios-subs-landline-customers-but-adds-bonded-dsl/
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Major Verizon FiOS Speed Upgrade: Upstream Speed Now Equals Downstream

Phillip Dampier July 21, 2014 Broadband Speed, Competition, Consumer News, Verizon No Comments

faster fiosVerizon Communications today announced its FiOS Internet customers will be getting free speed upgrades that match upload and download speeds — the only provider in FiOS markets to offer speed equality.

Verizon will start transitioning qualifying current residential customers to higher upload speeds for free throughout the coming months, but we can help get you higher on the upgrade list if you keep reading. Later this year, existing and new FiOS small-business customers also will receive this upgrade.

“Faster upload speeds means better sharing experiences,” said Mike Ritter, Verizon’s chief marketing officer for consumer and mass business. “All Internet sharing – whether videos, large photo files or gaming – starts with uploading. FiOS all-fiber-optic technology offers a unique opportunity to enhance our customers’ Internet experience on a mass scale by increasing our upload speeds to equal to our industry-leading download speeds. As the Internet of Things becomes a reality, equal download and upload speeds will become essential.”

Verizon’s upgrade also lets the company point out a shortcoming of most of its cable competitors, upstream speeds lag far behind downstream speeds. Many cable operators still only offer no better than 5Mbps upload speeds, even while offering 50, 100, or 150Mbps for downloads.

Verizon says it noticed upload activity has been on the increase for some time, and with the upstream speed upgrades, it expects double the upload activity it sees today by 2016.

“Verizon’s decision to give every FiOS Internet customer upload speeds that mirror its industry-leading download speeds is a step forward for U.S. digital consumers – and unique among the major U.S. broadband Internet providers,” said Matt Davis, program director of consumer multiplay and broadband services research for IDC. “Because the upgrade is free, it delivers tremendous value to FiOS subscribers and strongly positions Verizon to meet the growing demand for upstream Internet speed.”

Verizon FiOS also lacks usage caps or consumption billing, giving customers a worry-free Internet experience that does not carry the risk of surprise charges on a future bill.

Here are Verizon’s new speed tiers:

140720_BenefitsofFast_432x315

  • 15/5Mbps is now 15/15Mbps
  • 25/5Mbps is now 25/25Mbps
  • 50/25Mbps is now 50/50Mbps
  • 75/35Mbps is now 75/75Mbps
  • 150/65Mbps is now 150/150Mbps
  • 300/65Mbps is now 300/300Mbps
  • 500/100Mbps is now 500/500Mbps

The free speed upgrades will begin with customers enrolled in Verizon’s My Rewards+ program. You can get on the upgrade list today by enrolling in the rewards program on the My Rewards+ websiteMy Rewards+ is Verizon’s free loyalty program that rewards customers for paying a bill online, renting or buying videos on demand, or in recognition of a birthday, service anniversary or other event. My Rewards+ members can use earned points for Visa Prepaid Cards or other gift cards good at participating merchants such as Starbucks Coffee, L.L. Bean, Panera Bread, Target, Amazon, Dunkin’ Donuts, Staples and others. Customers can also choose to donate their rewards to a charity of their choice.

Verizon is running several promotions (until 9/20/2014) for new customers who want in on the new FiOS speeds. The most popular Triple Play promotion is their 25/25Mbps Internet service, which also includes Preferred HD TV and nationwide home phone service (equipment rental required). This includes a two-year price guarantee for $89.99 per month when ordered online and $99.99 per month otherwise (not including equipment charges, taxes and fees). In addition, new customers can receive a free LG G Pad 8.3 LTE or up to $200 off any other tablet available from Verizon Wireless if they are willing to take out a new, two-year service agreement. This part of the promotion is less attractive to us because the offer requires the tablet be activated on the Verizon Wireless network, which means ongoing charges.

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Netflix Rankings Slam FiOS, Speed Alert Messages Prompt Cease & Desist Letter from Verizon

http://www.phillipdampier.com/video/CNN Netflix Slowdown Who is to Blame 6-6-14.flv

CNN explores who is responsible for Netflix’s streaming problems on Verizon FiOS and AT&T U-verse. While one industry analyst seems keen to blame Netflix, his other articles on the subject show an increasing bias towards big ISPs like Verizon and AT&T. (2:54)

Netflix’s May speed rankings confirm Verizon FiOS customers are likely to find a degraded video streaming experience while using the otherwise speedy fiber to the home service. Netflix performance on Verizon FiOS dropped considerably last month — so much so that Frontier and Windstream DSL customers now get better Netflix performance than any Verizon customer receives. AT&T U-verse customers fared even worse with streaming performance below that offered by Mediacom — America’s bottom-rated cable company and CenturyLink DSL. In fact AT&T U-verse customers receive only marginally better service than Hughes satellite and Clearwire wireless customers. Verizon’s DSL came in dead last.

usa

Coincidentally, both Verizon and AT&T, following Comcast’s lead, have been in negotiations with Netflix to receive payment from the streaming video provider to better handle its traffic. Verizon CEO Lowell McAdam said he’s confident about getting payments from Netflix, and he turned out to be correct — Verizon and Netflix reached an agreement in late April that is still being implemented. AT&T also says it is negotiating with Netflix. Verizon’s streaming video partnership with Redbox has not been affected by the sudden deterioration in online video streaming on Verizon’s network.

verizon att

The problems with Netflix on some ISP’s have gone all the way to the top.

“My wife and I like to lay in bed and watch Netflix,” Tom Wheeler, chairman of the US Federal Communications Commission, said in January. The two companies serving Wheeler’s neighborhood are Comcast and Verizon. When enough customers launch streams on Netflix, saturating the inbound connection to either ISP, the video stops. When it does, Wheeler’s wife joins the parade of irritated customers.

“You’re chairman of the FCC,” she says to him. “Why is this happening?”

Last week, Netflix decided to answer that question with a more informative error message appearing when available bandwidth is insufficient to support a high quality stream.

verizon throttle

“The Verizon network is crowded right now,” the message says. Netflix then attempts to restore the stream by serving up a degraded, lower quality/bit rate version to the paying customer.

http://www.phillipdampier.com/video/Bloomberg Netflix-Verizon War of Words 6-6-14.flv

Bloomberg interviews Todd O’Boyle from Common Cause. He places the blame for this debacle solely on the shoulders of Verizon and other ISPs. (5:39)

The inability to successfully maintain a stable stream of Netflix content that ranges from 256kbps to 5.8Mbps seems odd on ISPs that offer customers connections far faster than that. The average Netflix stream is 2Mbps, slow enough to be comfortably supported on even a 3Mbps DSL connection. Netflix’s problems with Comcast evaporated after agreeing to pay the cable company to maintain a better connection between its customers and Netflix’s content delivery network. The same cannot be said for perfomance on AT&T’s U-verse platform. Although Verizon signed an agreement with Netflix, it has clearly not been implemented as of yet.

netflix-download-speeds-in-the-united-states-time-warner-cable-verizon-fios-charter-comcast_chartbuilder-2

“We started a small-scale test in early May that lets consumers know, while they’re watching Netflix, that their experience is degraded due to a lack of capacity into their broadband provider’s network,” said Netflix’s Joris Evers. “We are testing this across the U.S. wherever there is significant and persistent network congestion.”

netflix-logoThe companies with the biggest drops in Netflix performance are the same ones strongly advocating special paid “fast lanes” on the Internet for preferred traffic to resolve exactly these kinds of performance problems.

“Some large US ISPs are erecting toll booths, providing sufficient capacity for services requested by their subscribers to flow through only when those services pay the toll,” said Evers. “In this way, ISPs are double-dipping by getting both their subscribers and Internet content providers to pay for access to each other. We believe these ISP tolls are wrong because they raise costs, stifle innovation and harm consumers. ISPs should provide sufficient capacity into their network to provide consumers the broadband experience for which they pay.”

The error message fingering Verizon as the culprit for a poorer Netflix experience brought an angry response from Verizon on its blog:

Reports from this morning have suggested that Netflix is engaging in a PR stunt in an attempt to shift blame to ISPs for the buffering that some of its customers may be experiencing. According to one journalist’s tweet from last night, Netflix is displaying a message on the screen for users who experience buffering which says: “The Verizon network is crowded right now.”

This claim is not only inaccurate, it is deliberately misleading.

The source of the problem is almost certainly NOT congestion in Verizon’s network. Instead, the problem is most likely congestion on the connection that Netflix has chosen to use to reach Verizon’s network. Of course, Netflix is solely responsible for choosing how their traffic is routed into any ISP’s network.

[...] It is sad that Netflix is willing to deliberately mislead its customers so they can be used as pawns in business negotiations and regulatory proceedings.

It would be more accurate for Netflix’s message screen to say: “The path that we have chosen to reach Verizon’s network is crowded right now.”

However, that would highlight their responsibility for the problem.

Milch

Milch

That was quickly followed by a cease and desist letter from Verizon demanding Netflix remove error messages that blame Verizon for the problem. It also demanded a list of Verizon customers that received the Netflix notification.

“Failure to provide this information may lead us to pursue legal remedies,” wrote Verizon general counsel Randal Milch in a letter to Netflix general counsel David Hyman.

“This is about consumers not getting what they paid for from their broadband provider,” Netflix spokesman Jonathan Friedland said. “We are trying to provide more transparency, just like we do with the ISP Speed Index, and Verizon is trying to shut down that discussion.”

“Verizon’s unwillingness to augment its access ports to major Internet backbone providers is squarely Verizon’s fault,” Netflix general counsel David Hyman wrote.

“Netflix does not purposely select congested routes,” added Evers. “We pay some of the world’s largest transit networks to deliver Netflix video right to the front door of an ISP. Where the problem occurs is at that door — the interconnection point — when the broadband provider hasn’t provided enough capacity to accommodate the traffic their customer requested.”

Despite all that, Netflix also admitted it plans to drop the error messages after the “small-scale test” ends on June 16.

http://www.phillipdampier.com/video/CNBC Buffering Blame Game 6-6-14.flv

CNBC explains how Netflix content gets to end viewers over a complicated series of Internet connections between Netflix and your ISP. (1:31)

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Frontier to Introduce $4.99 Security Landline Service, Gives Up on Expanding Video Services

Frontier is introducing a new $5 a month disaster landline service in June.

Frontier is introducing a new $5 a month disaster landline service in June.

With plenty of talk about the impact of global climate change, Frontier Communications will soon introduce a new inexpensive landline service to help customers plagued by weather disasters.

Frontier Security Phone is a $5 a month landline that can only reach 411 and 911 — perfect for those who lose their Voice over IP phone service in a power failure or find cell service clogged or otherwise unavailable.

“Our [service areas] are very prone to severe weather, lots of hurricanes, tornadoes and the mud slides in Washington State,” said Frontier CEO Maggie Wilderotter. “We have markets that are very plagued by bad weather and having a landline phone that works when your power goes out where we have a density of 34 homes a mile is important.”

Frontier will market the bare bones landline service to customers planning to disconnect service in favor of another provider as well as those that already have. Unlike basic budget service, Frontier Security Phone will not be able to make or receive regular phone calls — it is intended for emergency-use only.

Little known to most Frontier customers (and only mentioned on their website in a thicket of tariff filings) is that different types of landline service are available. By switching away from flat rate service to a measured-rate plan, where each local outgoing call is charged at a prevailing per-call rate (usually under 10 cents), customers can still have the option of making and receiving calls on a budget, especially considering incoming calls are free. In large cities like Rochester, Frontier charges $18.03 a month for flat rate local calling. If one switched to a measured-rate plan, the charge is $12.07 a month. Those interested will have to call Frontier at 1-800-921-8101 and specifically inquire about measured rate local telephone service.

Frontier is also exploring a market trial of a new Voice over IP landline service sold as a bundle with DSL.

Wilderotter told investors attending the JPMorgan Global Technology, Media and Telecom Conference that Frontier believes streaming, on-demand video is the future of Frontier, not traditional linear/live television.

Wilderotter

Wilderotter

Therefore, despite the fact Frontier will continue to support legacy FiOS TV services in adopted Verizon markets in Indiana and the Pacific Northwest, and will likely take ownership of AT&T U-verse in Connecticut, the company has no plans to introduce cable-TV service anywhere else. The biggest reason is the cost of video programming for smaller competitors like Frontier.

“We’re never to going to be big like some of these big guys are, which is why we have a partnership with the Dish Network, because they’re big,” Wilderotter explained. “They go negotiate all the content deals and then we offer those packages to our customers and we get paid a sales commission and a monthly customer service and billing fee from Dish on behalf of that service.”

Although Frontier applauded AT&T for its announced intention to acquire DirecTV, Frontier customers in Connecticut currently subscribed to DirecTV through AT&T will eventually be switched to Dish Network — Frontier’s chosen video partner.

Wilderotter explained that Frontier can leverage its broadband network to support streaming video services without assuming the costs of licensing the content. As Comcast and AT&T grow larger, they can negotiate better volume discounts unheard of among smaller competitors, keeping companies like Frontier at a major cost disadvantage. But if a customer wants Netflix or YouTube, they will need a broadband connection to get it, which is where Frontier comes in.

“If you think about Frontier, we’re in 27 states today, soon to be 28 with the Connecticut acquisition, about 30,000 communities, predominantly rural and suburban. That’s sort of our footprint,” said Wilderotter. “So when we think strategically about the assets that we have as a company, first and foremost is [the] networks in all of those markets, and those networks have been upgraded. So for us, the cost of adding another customer to broadband is really the upfront sales cost, because the network is already in place and the capabilities are already [there].”

Wilderotter adds Frontier’s average payback on its investment to hook up a new broadband customer is about three months.

“We also have industry-leading margins in our company,” Wilderotter said. “Our margins are in the mid-40% range and we’ve typically always had very strong margins in terms of how we run the business from an efficiency and effective perspective.”

Wilderotter also told investors that Frontier plans to add several additional services powered by its broadband network over the course of this year.

“We’re really looking in the categories of home automation, security, lifestyle products and monitoring products,” Wilderotter said. “And with that, there is ongoing monthly recurring revenue in terms of the tech support that we put with that product set when we sell it to a customer.”

When Wilderotter was asked about recent price hikes implemented by Frontier, she admitted the primary reason for the increase was the lack of competitive cable pricing in the market.

“If you look at what cable is offering in our markets, they offer a standalone broadband product somewhere $35 and $65,” she said. “And that doesn’t include the modem. So we felt we could increase the price, still be very competitive in the marketplace and have a product set that made more sense for our customers at a convenient price.”

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Two Wrongs Don’t Make a Right: Comcast/Time Warner Cable “Worst Companies in U.S.”

Another satisfied customer

Comcast and Time Warner Cable have achieved new lows in the most important customer satisfaction survey in the United States, winning bottom honors as the two most despised companies in the United States.

The American Customer Satisfaction Index found Comcast and Time Warner Cable the only two companies in the country that scored below 60 on the ACSI’s 100 point scale. Comcast fell 5% to 60, while Time Warner Cable plunged 7% to 56, its lowest score to date.

“Comcast and Time Warner assert their proposed merger will not reduce competition because there is little overlap in their service territories,” says David VanAmburg, ACSI director. “Still, it’s a concern whenever two poor-performing service providers combine operations. ACSI data consistently show that mergers in service industries usually result in lower customer satisfaction, at least in the short-term. It’s hard to see how combining two negatives will be a positive for consumers.”

Broadband service seems to be a significant issue for customers. High prices, slow data transmission, and unreliable service drag satisfaction to record lows, as customers have few alternatives beyond the largest Internet service providers. Customer satisfaction with ISPs drops 3.1% to 63, the lowest score in the Index.

Verizon FiOS is the one bright spot in the survey, managing to grab a 71 score, beating AT&T U-verse, CenturyLink, and other providers. Cable broadband providers continued to score lowest. The best of the lot was Cox Communications, which isn’t saying much. It only managed a 6% fall to 64.

Customer satisfaction is also deteriorating for all the largest pay TV providers. Viewers are much more dissatisfied with cable TV service than fiber optic and satellite service (60 vs. 68). Though both companies drop in customer satisfaction, DirecTV (-4%) and AT&T (-3%) are tied for the lead with ACSI scores of 69. Verizon Communications FiOS (68) and DISH Network (67) follow. DISH Network may be the lowest-scoring satellite TV company, but it is better than the top-scoring cable company, Cox Communications (-3% to 63).

Among wireless carriers, things have not changed much this year.

Verizon Wireless achieved first place after climbing 3% to 75. T-Mobile (69), Sprint (68) and AT&T Mobility (68) are tightly grouped behind. As smartphone adoption continues to grow, network demands increase along with costs to the consumer, each contributing to stagnant customer satisfaction.

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Verizon: If Your Town Doesn’t Already Have a FiOS Commitment, Forget About Fiber

Verizon's FiOS expansion is still dead.

Verizon’s FiOS expansion is still as dead as Francisco Franco.

Verizon is prepared to watch up to 30% of their copper landline customers drift away because the company is adamant about no further expansion of its FiOS fiber to the home network.

Fran Shammo, chief financial officer at Verizon, told attendees of the Jefferies Global Technology, Media & Telecom Conference that Verizon will complete the buildout of its fiber network to a total of about 19 million homes, and that is it.

“Look, we will continue to fulfill our FiOS license franchise agreements,” Frammo said. “[We will] cover about 70% of our legacy footprint. So 30%, we are not going to cover. That is where we are still going to have copper.”

That is bad news for Verizon customers stuck with the company’s copper network because Verizon isn’t planning any further significant investments in it.

“We will continue to harvest that copper network and those customers and keep them as long as we can,” Frammo said. “But we will not be building FiOS out for those areas.”

In fact, Frammo admitted ongoing cost-cutting at Verizon’s landline division is allowing the company to shift more money and resources to its more profitable wireless network.

verizon goodbye

Verizon CEO Lowell McAdam doesn’t want to spend money on non-FiOS areas when more can be made from its wireless network.

“It is also taking cost structure out,” Frammo said.  “As I mentioned, the migration of copper to fiber has been very big for us. Our Lean Six Sigma projects have really significantly helped us in our capital investment in the wireline which is why I can put more money into the wireless side of the business.”

Verizon has shifted an increasing proportion of its capital investments towards its wireless division year after year, while cutting ongoing investment in wireline. Ratepayers are not benefiting from this arrangement, and critics contend Verizon landline customers are effectively subsidizing Verizon’s wireless networks.

Verizon will still complete the FiOS buildouts it committed to earlier, particularly in New York City, but it is increasingly unlikely Verizon will ever start another wave of fiber upgrades.

In fact, Michael McCormack, the Jefferies’ Wall Street analyst questioning Shammo at the conference foreshadowed what is more likely to happen to Verizon’s legacy copper customers.

“We have talked extensively in the past about the non-FiOS areas and I guess in my second reincarnation as a banker, I will try to help you get rid of those assets,” said McCormack.

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N.J. Approves Verizon-Friendly Settlement; Verizon Now Off the Hook for Fiber Upgrades

bpuThe New Jersey Board of Public Utilities today voted unanimously to approve a Verizon-friendly settlement that lets the phone company off the hook for its 1993 commitment to offer broadband service to every resident in the state who wants it.

Critics call the decision a “total capitulation” by state regulators that proved “very amenable to Verizon’s agenda.”

Verizon will now be allowed to substitute its costly, usage-capped, high-speed 4G LTE wireless service in rural areas instead of expanding DSL or its fiber optic network FiOS.

Verizon won deregulation two decades ago in an agreement known as “Opportunity New Jersey” in return for a commitment to expand high speed Internet access to all of New Jersey by 2010 — a deadline long missed. Critics charge Verizon collected as much as $15 billion in unregulated service revenue it would have otherwise never received, yet stopped its fiber optic rollout more than two years ago.

A number of rural New Jersey communities including Hopewell, Alloway and Pilesgrove townships opposed Verizon’s settlement proposal because it would let the company walk away from its earlier commitments and leave parts of southern New Jersey without any broadband service. Now those communities may eventually be served by Verizon Wireless, but at a significant cost starting at $50 a month for up to just 4GB of broadband usage.

Verizon gets to keep its current deregulation framework in place as part of the settlement.

The New Jersey Board of Public Utilities consists of five commissioners all appointed by the governor and confirmed by the state Senate for six year, staggered terms. Gov. Chris Christie’s appointees now dominate the BPU, and critics charge he uses the regulatory agency as a political patronage dumping ground. Earlier this year, he faced criticism for appointing the wife of a longtime Christie ally to lead the board. Dianne Solomon served on Christie’s transition team and brought a very thin resume to the position — serving as a paralegal and an umpire certified by the United States Tennis Association.

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Verizon’s N.J. Astroturfing Revisited: More ‘Phoney’ Pro-Verizon E-Mails Revealed

astroturf200New Jersey’s Board of Public Utilities received more than 460 identical e-mails urging the regulator to approve Verizon’s proposed settlement permitting it to renege on broadband expansion commitments that would have brought high-speed Internet to every citizen in the state that wanted it.

More than a few of those e-mails were submitted with fake e-mail addresses or without the knowledge of the alleged senders. An Ars Technica piece this week confirmed Stop the Cap!’s own findings of the astroturf effort and found more customers denying they ever submitted comments to the BPU about the settlement.

“I am a customer only to Verizon and I was not contacted by them to submit anything,” one person told Ars. “If they did, I would’ve slammed them. They are gougers. If AT&T was where I lived, I would switch in a heart beat.”

When this customer was shown the e-mail he allegedly sent to state officials, he said, “That would mean someone did it on my behalf. I can assure you that I did not send that response.”

In other cases, Ars discovered some of Verizon’s vendors were misrepresenting the nature of the settlement and asking people they worked with or knew to sign the petition as part of a contest.

Verizon-logo“I hope you are doing well. I have a favor to ask,” one e-mail read. “I’m working on a project for our client, Verizon, and they need some signatures to an online petition. Verizon wants to expand its offerings in New Jersey, but needs approval from the state. Higher-speed Internet, more FiOS, etc.”

“All you need to do is enter your e-mail and zip code,” the message continued. “I appreciate it. We’re in a contest with another vendor to see how many people we can get to sign it. Just let me know yea or nay, so I can get the credit for it.”

Of course signing the petition would result in the exact opposite of more FiOS deployment and higher speed Internet access.

That online petition turned out to be hosted on the website of the astroturf group 60+ Association, which is funded by various corporations and works with D.C. lobbying firms who help corporate clients launch “social media” campaigns that appear to be spontaneous grassroots movements. The group only supports Republican candidates for office and is normally preoccupied with attacking health care reform with the major financial contributions it receives from the pharmaceutical industry. With Obamacare more or less settled, the group now also advocates for telecom companies without bothering to disclose any financial arrangement.

60plus

One of the lobbying firms associated with 60+ Association — Bonner & Associates, was implicated in a 2009 scandal when they were caught sending forged letters to members of Congress claiming to be from local minority and senior citizen groups. The lobbying firm quietly changed its name to Advocacy to Win (A2W), where it is still accepting clients that want to launch astroturfing campaigns.

One banking trade association gave glowing reviews for their work:

“You ran a well-honed operation recruiting, educating, and mobilizing grasstops/community leaders,” said the president of a ‘leading financial services trade association.’ The grasstops supporters you mobilized were well educated on the issue, advocated convincing arguments for our side, and most importantly were strongly vocal with stories of the local impact this issue would have on their customers/members of their organization.”

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