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Christmas in August: Calif. Allows AT&T to Fine Itself and Keep the Money

att400California’s Public Utilities Commission (CPUC) couldn’t get cozier with AT&T if they moved regulators into the phone company’s plush executive suites.

In a 3-2 decision, the CPUC has given California phone companies that cannot manage to keep their wireline networks in good order an early Christmas, allowing the companies to effectively fine themselves for bad performance and keep the money.

Although the CPUC adopted a series of “automatic fines” for companies with chronic service problems (AT&T is by far the largest offender), it completely negated any sting by allowing companies to skip the fine by demonstrating they’ve invested at least twice the amount of the penalty in their networks. That is an expense AT&T’s bookkeepers can manage to document in minutes just by highlighting AT&T’s investments in other parts of the state. AT&T can argue investments in gigabit fiber in southern California or wiring fiber to business parks and cell sites improves service reliability for at least some customers.

CPUC president Michael Picker isn’t in any hurry either, helpfully offering AT&T and other phone companies two years to complete the investments that will cancel their fines:

In support of a request to suspend the fine, carriers may propose, in their annual fine filing, to invest no less than twice the amount of their annual fine in a project (s) which improves service quality in a measurable way within 2 years. The proposal must demonstrate that 1) twice the amount of the fine is being spent, 2) the project (s) is an incremental expenditure with supporting financials (e.g. expenditure is in excess of the existing construction budget and/or staffing base), 3) the project (s) is designed to address a service quality deficiency and, 4) upon the project (s) completion, the carrier shall demonstrate the results for the purpose proposed. Carriers are encouraged to review their service quality results to find appropriate target projects to invest funds.

Consumer advocates have accused AT&T of underinvesting in their wireline facilities for years. Because the CPUC does not require the investment be specifically targeted to correcting problems that prompted the fine, phone companies can continue to allow high cost/low profit rural infrastructure to deteriorate while targeting service-improving investments in more profitable or competitive service areas.

Steve Blum from Tellus Venture Associates, who has closely tracked telecom public policy matters in California for years, called it the most cynical decision he’s ever seen from the CPUC:

Fines, it seems, are just another cost of doing business for telecoms companies and don’t matter anyway. So why not let them keep the money?

Boiled down, that’s CPUC president Michael Picker’s rationale for establishing new telephone voice service level requirements backed up by a swinging schedule of penalties and then saying but we’ll let you keep the money if you invest it in infrastructure or pay staff. Or something. Anything.

Picker

Picker

Commissioner Mike Florio called the Picker’s proposal “unenforceable.”

The CPUC’s own staff has documented the troubling condition of landline service in the state. A staff report published in September 2014 showed the largest phone companies in the state — AT&T and Verizon (later sold to Frontier Communications) — that control 88% of landlines in California never met the CPUC’s minimum standard of repairing 90% of “out of service” trouble tickets within 24 hours during 2010-2013.

In 2010 and 2011, AT&T and Verizon needed an average of 110 hours to repair 90% of outages. That is 4.5 days. In 2012 and 2013, repair time marginally improved to an average of 72 hours (3 days). That is three days without any phone service or the ability to call 911, something the CPUC staff said compromised public safety.

AT&T and Verizon have papered the CPUC’s walls with “corrective action reports” over the years explaining why they failed to meet CPUC standards and what actions they planned to take to improve compliance. The staff report found those reports never resulted in improved compliance.

Commissioner Catherine Sandoval submitted an alternative plan of simple fines and a reporting system that gives equal weight to outages occurring in areas served by independent phone companies like Citizens Telecommunications Company of California (d/b/a Frontier) and SureWest Telephone (d/b/a Consolidated Telephone). Picker didn’t bother to hold a vote on Sandoval’s proposal, instead bringing his own proposal to the commission that approved it on a 3-2 voice vote. Florio and Sandoval voted no.

Despite the easy out, the state’s phone companies are still complaining the fine system was unnecessary because the free market was best equipped to manage service outages. If customers don’t like their provider, they can switch, assuming there is another provider available in the large rural and mountainous parts of the state.

Verizon Ponders Installing Partners’ Bloatware on Your Android Phone for $1-2/App

Uninvited apps that cannot be removed infest smartphones.

Uninvited apps that cannot be removed infest smartphones.

Verizon Wireless keeps looking for those end runs around Net Neutrality, this time offering its preferred partners a chance to force-install their apps on your new Android phone without your permission.

Most consumers call these unwanted apps “bloatware,” but the geniuses from Verizon’s marketing department prefer to call it “brandware.” Whatever it’s called, each app successfully installed on your next Android phone will net the wireless giant $1-2, according to Ad Age.

Verizon has pitched the program to ad agencies and their major retail and financial clients rich enough to not worry about spending $1-2 million on app installations. Verizon’s app program is more dynamic than traditional pre-loaded bloatware that customers cannot uninstall. Through the use of Google’s remote install feature, a client could pay Verizon to trigger an automatic download and installation of a banking or shopping app the moment a customer turned on their new phone. The customer would likely assume such apps came with the phone, just like traditional pre-installed bloatware. But unlike the myriad of uninvited game trials, shopping and media apps that customers can’t get rid of, Verizon’s program would let customers uninstall the apps they never wanted installed on their phone to begin with.

Apple iPhone users have nothing to fear from Verizon’s “brandware” because the Apple ecosystem is more tightly controlled by Apple.

Ad Age notes the app program would only send apps to new smartphones being activated for the first time. That isn’t a small market. Verizon activates about 10 million new phones each quarter out of 75 million postpaid customers.

The program raised eyebrows among advertisers and consumer activists worried about Net Neutrality. A deep pocketed app maker would have an instant advantage pre-installing a new game or social networking app on millions of phones while smaller competitors would have to attempt to build scale through word-of-mouth, reviews, or other marketing efforts. Verizon would effectively be giving its preferred partners an unfair advantage over other app makers.

Advertisers are also reportedly wary about blowback from consumers that don’t appreciate uninvited apps chewing through their usage allowance installing themselves.

Consumers generally dislike all the excess apps stuffing up their phones, Azher Ahmed, director of digital at DDB Chicago told Ad Age. “If the app doesn’t offer valuable content and experiences, you’re going to deal with a lot of frustrated users calling out your bloatware.”

Editorial: N.Y. Governor’s Broadband Initiative Saddles Us With a Slower Internet

Thanks, Gov. Cuomo

Thanks, Gov. Cuomo

In Gov. Andrew Cuomo’s zeal to take credit for broadband enhancements across New York State, he also took partial-credit for convincing Charter Communications to speed its plan to deliver internet speeds of 100Mbps across upstate New York by early 2017, calling it “sweeping progress toward achieving its nation-leading goal of broadband for all.”

Unfortunately for New Yorkers, the governor forgot to mention his plan, coupled with the state government’s approval of Charter’s merger with Time Warner Cable, will actually result in slower and more expensive broadband for all of upstate New York.

“Access to high-speed internet is critical to keeping pace with the rising demands of the modern economy,” said Gov. Andrew Cuomo. “The New NY Broadband Program is advancing our vision for inclusive, interconnected communities that empower individuals, support small businesses, and advance innovation. These actions are a major step forward in creating the most robust broadband infrastructure network in the nation, and ensuring that reliable, high-speed internet is available to all New Yorkers.”

While the governor’s goals for rural broadband expansion in New York are laudable and have actually produced significant results, his belief in Charter’s broadband enhancement plan is misplaced and will actually leave cities in upstate New York at a serious broadband speed disadvantage that could remain an indefinite problem.

It is difficult to admit that New York was better off leaving Time Warner Cable as the dominant cable operator in New York State. As we warned last fall in our testimony to the N.Y. Public Service Commission, Charter’s merger proposal included promises of broadband enhancements considerably less robust than what Time Warner Cable had already undertaken on its own initiative. Time Warner Cable Maxx would have brought upstate New York free speed upgrades ranging from 50/5Mbps for Standard internet customers (up from 15/1Mbps) to 300/20Mbps (up from 50/5Mbps) for customers subscribed to Time Warner’s Ultimate tier.

Charter only advertises its 60Mbps tier. You have to dig to discover they also sell 100Mbps, for $100 a month and a $200 installation fee.

Charter only advertises its 60Mbps tier. You have to dig through their website to discover they also sell 100Mbps, for $100 a month and usually a $200 installation fee.

Charter this week made it clear those Maxx upgrades are dead, except in areas where they have already been introduced. Instead, upstate New York (and likely other Maxx-less areas around the country) will get two internet speed tiers instead: 60 and 100Mbps.

Getting 100Mbps is better than 50Mbps, at least until you check the price. Customers should be sitting down for this. Charter’s 100Mbps tier costs $100 a month after a one-year promotional rate and often includes a one-time $200 installation fee. In contrast, Time Warner Cable charges about $65 a month for 300/20Mbps internet-only service, which incrementally rises after one year if you don’t threaten to cancel service. There is usually no installation or upgrade fee.

This is the “benefit” Gov. Cuomo is touting?

In fact, with Charter Communications to be the overwhelmingly dominant cable operator throughout upstate New York, this leaves cities like Buffalo, Rochester, Syracuse, Albany, and Binghamton in a relative broadband swamp. While cities of similar sizes in other states are qualifying for Google Fiber, AT&T’s gigabit fiber upgrade, or fiber to the home service from community-owned broadband providers, Charter’s competition includes a barely trying Frontier Communications which still offers little more than slow speed DSL, Verizon Communications which stopped expanding FiOS in New York (except Fire Island) in 2010, and a handful of small independent phone companies and fiber overbuilders serving very limited service areas.

Charter is still required to offer 300Mbps service… by 2019 in New York as part of a commitment to regulators we fought for and won. That represents a speed equal to Time Warner Cable Maxx, but Charter has three years to offer what many New Yorkers either already had or were slated to get by next year from Time Warner Cable for much less money.

It takes chutzpah to proclaim broadband victory from this kind of avoidable defeat. Gov. Cuomo’s plan for better broadband allows Charter to cheat millions of New Yorkers out of Time Warner’s much better upgrade that was scheduled to be finished this summer in Central New York and ready to commence in Rochester this fall and Buffalo early next year. The governor should be on the phone with Charter management today insisting that all of New York get the 300Mbps internet service Time Warner Cable was planning for this state. Anything less leaves New York worse off, not better.

Consider again this cold, hard reality: Time Warner Cable was the better option — that is how bad things are in New York.

Upstate cities considering their economic future must not rely on the state or federal government to solve their broadband problems. Considering what Charter and Gov. Cuomo are proposing, waiting for the cable company to make life better isn’t a solution either. The only alternative is for local community leaders to start taking control of their own broadband destiny and launch community-owned, gigabit-capable, fiber to the home service. Charter won’t do it, Frontier can’t, and Verizon is too busy making piles of money from its wireless network to worry if your city will ever have 21st century internet access it needs to compete in the digital economy.

N.Y. Governor Announces “Sweeping Progress” Towards Broadband-for-All-NY’ers Goal

broadband nyGovernor Andrew M. Cuomo yesterday announced that the “New NY Broadband Program” is well on its way to achieving “sweeping progress toward achieving its nation-leading goal of broadband for all” New Yorkers.

The governor claimed that 97% of New York residents will have access to high-speed internet access by 2017, with a vague goal of serving 100% of New Yorkers by the end of 2018.

To do this, Gov. Cuomo relies heavily on the state’s new and overwhelmingly dominant cable operator – Charter Communications, which closed on its acquisition of Time Warner Cable earlier this summer. A press release promoting the governor’s efforts quotes Charter’s executive vice president of government affairs Catherine Bohigia as being excited to work with the governor and his administration to expand service to about 145,000 households currently not served by Time Warner Cable or Charter in New York.

Charter officials are working with the Public Service Commission to identify the households to be served, and highly redacted documents suggest Charter is identifying new housing developments and areas immediately next to existing Charter/Time Warner Cable service areas for this expansion.

A second separate plan to subsidize private cable and phone companies to help cover the costs of reaching another 34,000 homes that won’t be served by Charter is only expected to reach 50% of the remaining unserved homes and businesses in the state. A further round of funding will target the the remainder of unserved areas, including certain rural landline areas where Verizon has shown no interest in offering customers internet access of any kind.

Charter Communications

Charter Communications has effectively canceled the Time Warner Cable Maxx upgrades that were either underway, in progress, or in the planning stage in upstate New York. Instead, Charter plans to speed up the roll-out its own originally proposed upgrade, which includes two tiers: 60 and 100Mbps, for more than two million upstate homes and businesses by early 2017 in Buffalo, Rochester, Syracuse, Binghamton and Albany.

Customers in Central New York are likely to be left in limbo, some already getting Maxx upgraded 300Mbps internet access while others were scheduled to get the speed upgrade the same week Charter froze further Maxx upgrades. Those customers are now likely to receive a maximum of 100Mbps service sometime next year under Charter’s new plan.

Charter is also negotiating with state officials about where it will deploy broadband to 145,000 currently unserved homes in upstate New York over the next four years.

State-funded Rural Broadband Awards – Round I

New York State will help subsidize broadband rollouts to approximately 34,000 homes and businesses currently not served (or not served adequately) in rural areas. All but two of these projects will rely on fiber to the home service and each will offer service to a few thousand people:

Applicant Namesort descending Technology REDC Region Census Blocks Housing Units Total Units State Grant Total Private Match Total Project Cost
Armstrong Telecommunications, Inc. FTTH Finger Lakes, Southern Tier, Western NY 176 1,135 1,162 $3,930,189 $982,549 $4,912,738
Armstrong Telephone Company FTTH Southern Tier, Western NY 74 466 504 $1,778,256 $444,564 $2,222,820
Citizens Telephone Company of Hammond, N.Y., Inc. FTTH North Country 146 1,789 1,860 $3,316,810 $829,202 $4,146,012
Empire Access FTTH Southern Tier 124 719 724 $1,797,894 $449,474 $2,247,368
Empire Access FTTH Southern Tier 117 1,202 1,268 $1,598,480 $399,620 $1,998,100
Frontier Communications FTTH Southern Tier 1 62 65 $67,592 $16,899 $84,491
Frontier Communications FTTH North Country 3 188 216 $129,634 $32,409 $162,043
Frontier Communications FTTH Southern Tier 12 129 142 $197,104 $49,276 $246,380
Frontier Communications FTTH Capital Region 23 391 394 $318,304 $79,576 $397,880
Frontier Communications FTTH Mohawk Valley 30 402 405 $924,663 $231,166 $1,155,829
Frontier Communications FTTH North Country 105 1,928 2,096 $1,702,246 $425,562 $2,127,808
Germantown Telephone Company FTTH Capital Region 208 2,195 2,334 $2,512,562 $628,140 $3,140,702
Haefele TV Inc. FTTH Southern Tier 413 3,029 3,238 $271,568 $67,892 $339,460
Hancock Telephone Company FTTH Southern Tier 136 1,505 1,675 $4,915,920 $1,228,981 $6,144,901
Heart of the Catskills Communications Hybrid-Fiber Coax Southern Tier 216 2,836 3,177 $1,224,946 $524,977 $1,749,923
Margaretville Telephone Company FTTH Mid-Hudson, Southern Tier 209 1,882 2,002 $4,791,505 $2,053,503 $6,845,008
Mid-Hudson Data Corp Fixed Wireless Capital Region 60 647 663 $950,184 $237,546 $1,187,730
Mid-Hudson Data Corp FTTH Capital Region 6 354 362 $59,155 $14,789 $73,944
State Telephone Company, Inc. FTTH Capital Region 231 3,801 4,134 $5,805,600 $1,451,400 $7,257,000
State Telephone Company, Inc. FTTH Capital Region 101 516 595 $2,914,960 $728,740 $3,643,700
TDS Telecom FTTH Southern Tier 156 2,369 2,423 $1,895,390 $1,895,390 $3,790,780
TDS Telecom FTTH North Country 74 506 543 $1,084,000 $1,084,000 $2,168,000
TDS Telecom FTTH Central NY, Finger Lakes 106 996 1,038 $1,424,793 $1,424,793 $2,849,586
TDS Telecom FTTH Southern Tier 395 3,528 3,551 $4,989,570 $4,989,570 $9,979,140
The Middleburgh Telephone Company FTTH Capital Region, Mohawk Valley 250 1,596 1,651 $5,562,548 $1,390,637 $6,953,185
Federally Funded Rural Broadband Awards – Round II

After Verizon abdicated any interest in participating in rural broadband expansion funding through the FCC’s Connect America Fund, New York’s Broadband Program Office (BPO) and the Public Service Commission urged the FCC to keep the original funding intended for rural New York intact and open to other applicants seeking to build rural broadband projects. The FCC has not fully committed to do this, but it is an agenda item. Assuming this funding becomes available, it will be used to help pay for independent broadband providers or rural cable operators to begin delivering broadband service into still unserved parts of New York not included in the Charter expansion or Round I projects noted above. Many Verizon territories are expected to be included.

Applicants will have to provide at least 100Mbps service in most places or a minimum of 25Mbps in the most remote corners of New York. The application form discourages applicants from delivering broadband over DSL or wireless and clearly favors fiber to the home or cable broadband technology. Price controls will be in place for the first few years to assure affordability and those winning funding are strictly prohibited from introducing usage caps or usage-billing.

A vaguely defined “third phase” is scheduled to launch early next year to offer internet access to all remaining unaddressed service areas. Nobody mentions where the money is coming from to cover the last 1-3% of unserved areas, which are likely to be notoriously expensive to reach.

Gov. Cuomo explains progress on his New York Broadband for All program. (26:31)

Verizon 5G: Finally a “Fiber” Broadband Service Verizon Executives Like

verizon 5gIt wasn’t difficult to understand Verizon’s sudden reticence about continuing its fiber to the home expansion program begun under the leadership of its former chairman and CEO Ivan Seidenberg. Starting his career with Verizon predecessor New York Telephone as a cable splicer, he worked his way to the top. Seidenberg understood Verizon’s wireline future as a landline phone provider was limited at best. With his approval, Verizon began retiring decades-old copper wiring and replaced it with fiber optics, primarily in the company’s biggest service areas and most affluent suburbs along the east coast. The service was dubbed FiOS, and it has consistently won high marks from customers and consumer groups.

Seidenberg

Seidenberg

Seidenberg hoped by offering customers television, phone, and internet access, they would have a reason to stay with the phone company. Verizon’s choice of installing fiber right up the side of customer homes proved highly controversial on Wall Street. Seidenberg argued that reduced maintenance expenses and the ability to outperform their cable competitors made fiber the right choice, but many Wall Street analysts complained Verizon was spending too much on upgrades with no evidence it would cause a rush of returning customers. By early 2010, Verizon’s overall weak financial performance coupled with Wall Street’s chorus of criticism that Verizon was overspending to acquire new customers, forced Seidenberg to put further FiOS expansion on hold. Verizon committed to complete its existing commitments to expand FiOS, but with the exception of a handful of special cases, stopped further expansion into new areas until this past spring, when the company suddenly announced it would expand FiOS into the city of Boston.

Seidenberg stepped down as CEO in July 2011 and was replaced by Lowell McAdam. McAdam spent five years as CEO and chief operating officer of Verizon Wireless and had been involved in the wireless industry for many years prior to that. It has not surprised anyone that McAdam’s focus has remained on Verizon’s wireless business.

McAdam has never been a booster of FiOS as a copper wireline replacement. Verizon’s investments under McAdam have primarily benefited its wireless operations, which enjoy high average revenue per customer and a healthy profit margin. Over the last six years of FiOS expansion stagnation, Verizon’s legacy copper wireline business has continued to experience massive customer losses. Revenue from FiOS has been much stronger, yet Verizon’s management remained reticent about spending billions to restart fiber expansion. In fact, Verizon’s wireline network (including FiOS) continues to shrink as Verizon sells off parts of its service area to independent phone companies, predominately Frontier Communications. Many analysts expect this trend to continue, and some suspect Verizon could eventually abandon the wireline business altogether and become a wireless-only company.

With little interest in maintaining or upgrading its wired networks, customers stuck in FiOS-less communities complain Verizon’s service has been deteriorating. As long as McAdam remains at the head of Verizon, it seemed likely customers stuck with one option – Verizon DSL – would be trapped with slow speed internet access indefinitely.

Verizon's FiOS expansion is still dead.

Verizon’s FiOS expansion rises from the dead?

But McAdam has finally shown some excitement for a high-speed internet service he does seem willing to back. Verizon’s ongoing trials of 5G wireless service, if successful, could spark a major expansion of Verizon Wireless into the fixed wireless broadband business. Unlike earlier wireless data technologies, 5G is likely to be an extremely short-range wireless standard that will depend on a massive deployment of “small cells” that can deliver gigabit plus broadband speeds across a range of around 1,500 feet in the most ideal conditions. That’s better than Wi-Fi but a lot less than the range of traditional cell towers offering 4G service.

What particularly interests McAdam is the fact the cost of deploying 5G networks could be dramatically less than digging up neighborhoods to install fiber. Verizon’s marketing mavens have already taken to calling 5G “wireless fiber.”

“I think of 5G initially as wireless technology that can provide an enhanced broadband experience that could only previously be delivered with physical fiber to the customer,” said McAdam during Verizon’s second-quarter earnings call. “With wireless fiber the so-called last mile can be a virtual connection, dramatically changing our cost structure.”

McAdam

McAdam

Verizon’s engineers claim they can build 5G networking into existing 4G “small cells” that are already being deployed today as part of Verizon’s efforts to increase the density of its cellular network and share the increasing data demands being placed on its network. In fact, McAdam admitted Verizon’s near-future would not depend on acquiring a lot of new wireless spectrum. Instead, it will expand its network of cell towers and small cells to cut the number of customers trying to share the same wireless bandwidth.

McAdam’s 5G plan depends on using extremely high frequency millimeter wave spectrum, which can only travel line-of-sight. Buildings block the signal and thick foliage on trees can dramatically cut its effective range. That means a new housing development of 200 homes with few trees to get in the way could probably be served with small cells, if mounted high enough above the ground to avoid obstructions. But an older neighborhood with decades-old trees with a significant canopy could make reception much more difficult and require more small cells. Another potential downside: just like Wi-Fi in a busy mall or restaurant, 5G service will be shared among all subscribers within range of the signal. That could involve an entire neighborhood, potentially reducing speed and performance during peak usage times.

Verizon won’t know how well the service will perform in the real world until it can launch service trials, likely to come in 2017. But Verizon has also made it clear it wants to be a major, if not dominant player in the 5G marketplace, so plenty of money to construct 5G networks will likely be available if tests go well.

Ironically, to make 5G service possible, Verizon will need to replace a lot of its existing copper network it has consistently refused to upgrade with the same fiber optic cables that make FiOS possible. It needs the fiber infrastructure to connect the large number of small cells that would have to be installed throughout cities and suburbs. That may be the driving force behind Verizon’s sudden resumed interest in restarting FiOS expansion this year, beginning in Boston.

“We will create a single fiber optic network platform capable of supporting wireless and wireline technologies and multiple products,” McAdam told investors. “In particular, we believe the fiber deployment will create economic growth for Boston. And we are talking to other cities about similar partnerships. No longer are discussions solely about local franchise rights, but how to make forward-looking cities more productive and effective.”

If McAdam can convince investors fiber expansion is right for them, the company can also bring traditional FiOS to neighborhoods where demand warrants or wait until 5G becomes a commercially available product and offer that instead. Or both.

There are a lot of unanswered questions about how Verizon will ultimately market 5G. The company could adopt its wireless philosophy of not offering customers unlimited use service, and charge premium prices for fast speeds tied to a 5G data plan. Or it could market the service exactly the same as it sells essentially unlimited FiOS. Customer reaction will likely depend on usage caps, pricing, and performance. As a shared technology, if speeds lag on Verizon’s 5G network as a result of customer demand, it will prove a poor substitute to FiOS.

Verizon Sues New York Over Tax Refund Regulators Want Spent on Network Improvements

Phillip Dampier July 27, 2016 Consumer News, Public Policy & Gov't, Verizon No Comments

verizon repairVerizon Communications is taking the New York Public Service Commission to court over the regulator’s ruling that $8 million in property tax refunds rebated to the phone company through a tax certiorari proceeding should be spent on improving Verizon’s service quality in the state.

Verizon wants to pocket the refunds of $1 million from New York City, $2 million from Oyster Bay, and $5 million from Hempstead for the benefit of the company and its investors, but regulators are insisting Verizon use the money to boost “capital expenditures to address purported service quality and network reliability concerns about its New York network.”

The PSC has been monitoring Verizon’s landline performance in the state since at least 2010 under its Verizon Service Quality Improvement Plan proceeding. Local officials and customers have filed complaints with the PSC about extremely long repair times, service outages, unreliable service, and sub-par line quality for several years, especially in downstate areas around New York City that have not yet been upgraded to Verizon’s FiOS fiber to the home service.

Regulators want those issues resolved, particularly after Verizon made it clear it has suspended its FiOS expansion outside of New York City. Customers with long-standing service issues are often offered a controversial wireless landline replacement called Voice Link, that has earned mixed reviews, instead of a permanent repair of their existing service.

ny pscVerizon calls the regulator’s demands arbitrary and unwarranted confiscation of its property.

“The commission did something it had never done before — it allowed Verizon to retain the refunds as it had in the past but this time also imposed a spending mandate which required Verizon to use the funds for a particular purpose,” the company claimed.

Verizon used the company’s long and successful track record convincing New York regulators that Verizon’s wireline networks have faced hard times as it bled landline customers, so it deserved regulatory and rate relief. Because the PSC recognized Verizon’s marketplace challenges when it “found that a lightened regulatory approach for traditional incumbent telephone carriers was warranted and necessary in order to level the playing field and enable them to remain viable providers in the future,” it is unwarranted to suddenly now demand the company spend its tax refund on network improvements, Verizon argued in its lawsuit.

In the past, Verizon added, the PSC allowed the phone company to keep its tax refund money for itself, even as it reduced spending on its infrastructure. The company claimed that to be “a proper regulatory response to the financial stress Verizon claims it is and will be under as it continues its transition to an increasingly competitive market.”

Earlier this year, the commission began to take a more formal look at the mounting service complaints it was receiving from Verizon customers and found troubling evidence Verizon might not be taking its copper landline network as seriously as it once did, especially in areas where FiOS upgrades have not been scheduled.

“…[T]here may be an unwillingness on the part of Verizon to compete to retain and adequately serve its regulated wireline customer base, and warrants further investigation into Verizon’s service quality processes and programs,” minutes from a March commission meeting state.

Charter: We Won’t Screw Up Southern California Like Frontier Did With Verizon

Phillip Dampier July 13, 2016 Broadband Speed, Charter, Consumer News, Frontier 3 Comments

frontier frankCharter Communications is promising its Southern California customers it won’t bungle the transition from Time Warner Cable to Charter Communications like Frontier Communications did with former Verizon customers.

“We purchased all of Time Warner Cable and Bright House Networks. With this transaction we acquired everything,” company spokesman Justin Venech said. “We’re able to take more time in the integration process and not rush to make changes.”

Charter will take up to 18 months to make its presence fully known in areas formerly served by Time Warner Cable, and then primarily under its brand name known as Spectrum.

Time Warner Cable customers will be able to keep their current service and packages even after the transition, at least for a while.

charter twcBut not all customers are happy about Charter’s slow transition plans. Customers waiting for Time Warner Cable Maxx upgrades, some already in progress, may be out of luck. Charter’s new management team put an indefinite hold on Time Warner’s more aggressive upgrade plans in favor of Charter’s much more modest commitment to offer customers two broadband speed tiers – 60 and 100Mbps over the next 18 months. Customers in the northeast and midwest have been told there are no longer any definitive dates for the introduction of Maxx, which offers free speed upgrades up to 300Mbps.

Almost all of Time Warner Cable’s executive management has been escorted out of the company’s Manhattan headquarters, severance pay and benefits in hand. In fact, Charter plans to abandon Time Warner Cable’s Manhattan headquarters altogether and shift top management to its plush Connecticut office. Most workers will be reassigned to other locations yet to be announced, some possibly upstate.

Charter has already begun repricing service and packages that will resemble Spectrum offerings, at least for new customers across Time Warner Cable and Bright House territories. The packages will not carry the Spectrum brand just yet, however.

 

 

Is Your Landlord Taking Kickbacks to Keep Better Internet Out of Your Building?

xfinity communitiesIs your cable television service included in your rent or condo “services” fee? Have you ever called another provider and told service was not available at your address even through others outside of your condo neighborhood or apartment complex can sign up for service today? Chances are your landlord or property management company is receiving a kickback to keep competition off the property, while you may be stuck paying for substandard services you neither want or need. Worst of all, chances are it’s all legal and everyone is getting a piece of the action… except you.

Welcome to the world of Multiple Dwelling Unit (MDU) Bulk Service Agreements, the seedy underbelly of the anti-competitive cable and telco-TV world. When cable TV first got going, most people wanted access. In the early days, cable franchises were typically exclusive and cable companies maintained the upper hand in negotiations with apartment owners and property owners. Since the service was in demand, many property owners were told to sign whatever “Right Of Entry” Agreement (ROE) was put in front of them. Most contained clauses that guaranteed that cable company would get exclusive access to the property for as long as it was given a franchise to operate within that community. In other words, basically forever.

This turned out very handy when competitors started showing up. First on the scene were satellite television providers, which had a rough time dealing with landlords who loathed tenants installing satellite dishes that “ruined the aesthetics” of the property. Many rental agreements still restrict satellite television dishes in ways that make their use untenable. But things got much more serious when Verizon and AT&T got into the cable business. Initially, both companies found extending FiOS and U-verse to some rental and gated communities was blocked by the exclusive agreements held by cable operators. By 2007, the FCC finally acted to forbid exclusive service contracts, but the cable industry and property developers have played cat and mouse games with the FCC’s loopholes ever since.

Property Developers, Management Companies, Landlords, and Homeowner Associations With Their Hands Out

att connectedWith the FCC’s 2007 declaration that exclusive contracts between cable companies and property owners were “null and void,” the power of the cable industry to negotiate on their terms was markedly diminished. Although many property owners applauded their new-found freedom to tell the local cable company to take a hike if they did not offer better service to their tenants, many others saw dollar signs in their eyes. With leverage now in the hands of the property owner, if the local cable company wanted to stay, in many cases it had to pay. Only the most brazen property owners kicked uncooperative cable companies off their properties, putting tenants at a serious inconvenience. Instead, many found life more peaceful and lucrative to stick with the existing cable company, signing a new contract for “bulk billing” tenants. On the surface, it seemed like a good deal. Property owners advertised that cable TV was included in the rent (and they paid a deeply discounted price per tenant) and the cable operator had a guaranteed number of customers, whether they wanted the service or not.

Bulk billing also proved a very effective deterrent for would-be competitors, who had to overcome the challenge of marketing their service while the tenant was already paying for another as part of their rent. As a result, telco TV competitors often stayed away from properties with bulk billing arrangements.

As broadband has become more prominent and threatens to become more important than the cable TV package, the cable industry has refined its weapons of non-competition. While they cannot force competitors off properties, they can make life very expensive for them. The latest generation of ROE agreements often grant access rights to the building’s telecommunications conduit, cabling, and equipment exclusively to the cable operator.

fiosIf Google Fiber, AT&T U-verse or Verizon FiOS sought to offer service on one of these properties, they would have to overcome the investment insanity of wiring each building with its own infrastructure, including duplicate cables, in separate conduits and spaces not already designated for the exclusive use of the cable company. Verizon in New York City has faced numerous obstacles wiring some buildings, including gaining access to the building itself. Intransigent on site employees, bureaucratic and unresponsive property management companies, and developers have all made life difficult for Verizon’s fiber upgrade.

AT&T often takes the approach “if you can’t beat ’em, join ’em” and offers its own bulk billing incentives, along with occasional commitments for fiber upgrades. Google Fiber can afford to skip places where it isn’t wanted, although with recent revelations that landlords can raise the rent by up to 11% with the arrival of Google Fiber alone, it may hurt to alienate that fiber to the home provider.

Kickbacks for New Developments = Windfall

Kickbacks for existing properties are lucrative, but nothing compared to the lucrative windfall new property developments can achieve with the right deal.

In 2013, one property developer in Maryland went all out for an exclusive deal with a provider that was going to get de facto exclusivity by using a convoluted series of entities and agreements designed to insulate the company from competition and a challenge from the FCC. A court later ruled the provider used an “elaborate game of regulatory subterfuge” using various corporate entities to escape potential competition.

Some lawyers devote a substantial amount of their practice to the issue of bulk contracts and ROE agreements. Carl Kandutsch serves clients nationwide, many trying to extricate themselves from bad deals of the past. In many cases, an attorney may be needed to find a way out of contracts that don’t meet FCC rules. Other communities sometimes have to buy out an existing contract. Many have to sit and suffer the consequences for years. One residential community found itself trapped with a service provider that was quietly protected by an “airtight contract” negotiated not with the property management company or the homeowner association, but the development’s original builder. The provider delivered lousy service and the community spent six years trying to get rid of the offending firm with no result until they hired an attorney. Although happy to be rid of the bad provider, the homeowner association ended up illustrating how pervasive this problem is after it signed a similar contract with another provider also handing out kickbacks.

Comcast pays up to 10% of a renter's cable bill to the landlord.

Comcast pays up to 10% of a renter’s cable bill to the landlord. (Image: Susan Crawford)

Comcast is more creative than most. It calls its handouts: “Marketing Support Compensation.” The property owner gets an increasing reward for every tenant signed up for Comcast service. Once around two-thirds of tenants are subscribed, the owner gets up to a 10% take of each bill, plus a one time payment of up to $130 per tenant.

Because Comcast’s reputation often precedes it, customers reluctant to sign up without considering other providers will find that tougher to do because Comcast bans other providers from marketing their services to tenants with the support or cooperation of the landlord. In other words, no door hangers, free coffee, brochures in the lobby, or any other on-site promotions. In case a property owner forgets, Comcast sends reminders in the mail:

Comcast likes to remind landlords it has an exclusive. (Image: Susan Crawford)

Comcast likes to remind landlords it has an exclusive. (Image: Susan Crawford)

Susan Crawford calls it “astounding, enormous, decentralized payola” and claims it affects millions of renters.

Crawford

Crawford

“These shenanigans will only stop when cities and national leaders require that every building have neutral fiber/wireless facilities that make it easy for residents to switch services when they want to,” Crawford wrote. “We’ve got to take landlords out of the equation — all they’re doing is looking for payments and deals (understandably: they’re addicted to the revenue stream they’ve been getting), and the giant telecom providers in our country are more than happy to pay up. The market is stuck. Residents have little idea these deals are happening. The current way of doing business is great for landlords and ISPs but destructive in every other way.”

One real world example of how this deters competition comes from Webpass (recently acquired by Google), which offers gigabit Ethernet speeds in select MDUs in San Francisco, San Diego, Miami, Chicago, and Boston. The service comes with a low price, but that doesn’t get the company in the door, according to its president, Charles Barr.

Barr has been refused entry by multiple building owners who have agreements with Comcast, AT&T, or others.

“Tenants want us, but we can’t get in,” Barr said.

Crawford argues the FCC has once again been outmaneuvered by ISPs and their attorneys.

“Sure, a landlord can’t enter into an exclusive agreement granting just one ISP the right to provide Internet access service to an MDU, but a landlord can refuse to sign agreements with anyone other than Big Company X, in exchange for payments labeled in any one of a zillion ways,” added Crawford. “Exclusivity by any other name still feels just as abusive.”

This isn’t a new problem. Stop the Cap! first reported on these kinds of bulk buying arrangements back in 2010, all made possible by the FCC’s regulatory loopholes. Six years later, the problem appears to be getting worse.

AT&T’s King of Lobbyists Endorses Hillary Clinton for President

Cicconi

Cicconi

The Telecommunications Act of 1996 was the first major overhaul of telecommunications law in almost 62 years, and the deregulation measure supported with ecstasy by many in the telecom industry was signed into law by none other than President Bill Clinton, opening the door to a massive wave of industry deregulation and multi-billion dollar media consolidation.

It therefore comes as no surprise — to some at least — that AT&T’s top lobbyist Jim Cicconi, perhaps rivaled only by Comcast’s David Cohen in power and influence, has endorsed Hillary Clinton for president. The Wall Street Journal reported Cicconi has joined several other Republican corporate executives signing up for Team Hillary this election cycle.

Cicconi is voting Democratic this year, despite supporting every Republican presidential candidate since President Gerald Ford’s run against Jimmy Carter in 1976. This year is different, he claims.

hillary 2016“I think it’s vital to put our country’s well being ahead of party,” he said in a statement provided by the Clinton campaign. “Hillary Clinton is experienced, qualified, and will make a fine president. The alternative, I fear, would set our nation on a very dark path.”

Comcast’s David Cohen is also well-known for leaning to the left, and has been considered a friend of the Obamas since they took office in 2009. Cohen hosted 120 people in his home for a dinner in 2011 on behalf of Obama’s 2012 re-election campaign. It was an expensive dinner — each guest contributed at least $10,000.

The alternative, Donald Trump, represents what corporate America and Wall Street hates above all else – unpredictability and uncertainty.

Telecom issues have not made a big splash this year in either campaign, and regardless of who wins, their appointments to regulatory agencies like the FCC can have a major impact on consumer broadband initiatives and public policy. A Clinton administration could result in appointments of “centrist” Democrats that Bill favored during his two terms in office. Many of those former regulators are now lobbyists for the telecom industry. Or Hillary could move closer to Obama’s surprisingly tough pro-consumer policies on broadband issues and keep Thomas Wheeler at the helm of the FCC for a few more years.

attverizonCicconi would be pleased to see someone like former Tennessee congressman Harold Ford, Jr., take a seat at the FCC under a future Clinton Administration instead. Ford has served as an honorary co-chairman of Broadband for America, an industry-sponsored astroturf operation, for most of Obama’s two terms in office. He remains a close friend of both Bill and Hillary and is never far from the public eye, turning up regularly on MSNBC.

Broadband for America supports deregulation, opposes Net Neutrality, and essentially shills for its corporate sponsors. Rep. Ford would likely oppose Net Neutrality and continue support for near-total deregulation.

Verizon has also shown itself to be a Friend of Hillary. Three Verizon vice presidents each donated $2,700 to Hillary for America. They were joined by a senior vice president and another vice president, who gave an additional $1,000, according to Salon. A former Hillary Clinton operative who now lobbies for Verizon donated $2,700 as well, along with another Verizon lobbyist who pitched in $1,000.

While Bernie Sanders joined striking Verizon workers on the picket line, the Clinton campaign was cashing checks worth tens of thousands of dollars from Verizon executives and lobbyists. In May 2013, the telecom company paid Hillary a $225,000 honorarium in return for a speech (the text has not been disclosed) to Verizon executives.

The Clinton Foundation also benefited from Verizon contributions ranging from $100,000-250,000.

America’s 5G Revolution Comes By Giving Wireless Industry Whatever It Wants

Wheeler

Wheeler

FCC chairman Thomas Wheeler today told an audience at the National Press Club that 5G — the next generation of wireless networks — “is a national priority, and why, this Thursday, I am circulating to my colleagues proposed new rules that will identify and open up vast amounts of spectrum for 5G applications.”

Wheeler’s proposal, dubbed “Spectrum Frontiers,” is supposed to deliver wireless connectivity as fast as fiber optic broadband, and in Wheeler’s view, will deliver competitive high-speed access for consumers.

“If the Commission approves my proposal next month, the United States will be the first country in the world to open up high-band spectrum for 5G networks and applications,” said Wheeler. “And that’s damn important because it means U.S. companies will be first out of the gate.”

Central to Wheeler’s 5G proposal is opening up very high frequency millimeter wave spectrum — for unlicensed and licensed data communications. Wheeler named two in his speech: a “massive” 14GHz unlicensed band and a 28GHz “shared band” that will allow mobile and satellite operators to co-exist.

“Consider that – 14,000 megahertz of unlicensed spectrum, with the same flexible-use rules that has allowed unlicensed to become a breeding ground for innovation,” Wheeler said.

5g“Sharing is essential for the future of spectrum utilization. Many of the high-frequency bands we will make available for 5G currently have some satellite users, and some federal users, or at least the possibility of future satellite and federal users,” Wheeler noted. “This means sharing will be required between satellite and terrestrial wireless; an issue that is especially relevant in the 28GHz band. It is also a consideration in the additional bands we will identify for future exploration. We will strike a balance that offers flexibility for satellite users to expand, while providing terrestrial licensees with predictability about the areas in which satellite will locate.”

The CTIA – The Wireless Association, America’s largest mobile carrier lobbying and trade association, is all for opening up new spectrum for the use of their members — AT&T, Verizon Wireless, Sprint, T-Mobile, among others. They just don’t want to share it. Ironically, they are calling on the FCC to regulate who gets access to what frequencies and what services can use them. They’d also appreciate federal rules restricting or preempting local officials responsible for approving where new cell towers can be located, and some form of price regulation for backhaul services would also be nice:

First, we need the right rules for high-band spectrum based on a time-tested regulatory framework. It must strike a reasonable balance for licensed and unlicensed use while promoting investment with clear service and licensing rules. We should avoid experimenting with novel spectrum sharing regimes or new technology mandates.

Second, we need the right rules to help build our 5G infrastructure. Traditional spectrum travels many miles, depending on large cell towers to transmit signals. In contrast, high-band spectrum – capable of carrying greater amounts of data –travels meters, not miles and will require the deployment of thousands of new small cells the size of smoke alarms. This network evolution requires a new infrastructure approach, and Congress, the FCC and states must streamline and simplify local siting and rights of way rules.

Wheeler recognizes that 5G services will work very differently from the 3G and 4G networks we’ve used in the past.

ctia

CTIA is the wireless industry’s biggest lobbyist and trade association.

“5G will use much higher-frequency bands than previously thought viable for mobile broadband and other applications,” Wheeler said. “Such millimeter wave signals have physical properties that are both a limitation and a strength: they tend to travel best in narrow and straight lines, and do not go through physical obstacles very well. This means that very narrow signals in an urban environment tend to bounce around buildings and other obstacles making it difficult to connect to a moving point. But it also means that the spectrum can be reused over and over again.”

In other words, think about 5G as an initially limited range wireless network that may turn out to be best suited for fixed wireless service or limited range hotspots, especially before network densification helps make 5G service more ubiquitous. The wireless industry doesn’t think Wheeler’s vision will be enough to resolve capacity issues in the short term, and is calling on the FCC to release even more low and mid-band spectrum in the 600MHz range that can travel inside buildings and offer a wider coverage area.

Wheeler’s recognition that 5G’s shorter range signals will likely require a massive overlay of new infrastructure has also opened the door for the CTIA to call on the FCC to revisit local zoning and antenna placement rules and policies, with the likely goal of preempting or watering down local authority to accept or reject where cell phone companies want to place their next small cell or cell tower. Wireless companies are also expected to push for easy access to utility poles, time limits to approve new cell tower construction applications, and pricing regulation for fiber lines needed to connect 5G infrastructure to backhaul networks.

Cell tower camouflage failure.

Cell tower camouflage failure.

On the issue of backhaul — the connection between a cell tower and the wireless carrier’s network, the FCC is planning a pro-regulatory “anchor pricing” approach to benefit wireless companies. Consumers can also relate to being overcharged for slow speed Internet access with little or no competition, but the FCC is only acting for the benefit of the wireless companies for now — the same companies that would undoubtedly complain loudly if anchor pricing was ever applied to them.

“Lack of competition doesn’t just hurt the deployment of wireless networks today, it threatens as well to delay the buildout of 5G networks with its demand for many, many more backhaul connections to many, many more antennae,” complained Wheeler. “Before the end of this year the Commission will take up a reform proposal – supported by the nation’s leading wireless carriers, save one – that will encourage innovation and investment in Business Data Services while ensuring that lack of competition in some places cannot be used to hold 5G hostage.”

While Wheeler’s goals are laudable, there are stunning examples of hypocrisy and self-interest from the wireless industry. Yet again, the industry is seeking regulatory protection from having to share spectrum with unlicensed users, existing licensees, or competitors.  No letting the “free market” decide here. Second, there are absolutely no assurances the wireless industry will deliver substantial home broadband competition. Verizon and AT&T will be effectively competing with themselves in areas where they already offer wired broadband. Is there a willingness from AT&T and Verizon to sell unlimited broadband over 5G networks or will customers be expected to pay “usage pack”-prices as high as $10 per gigabyte, which doesn’t include the monthly cost of the service itself. Offering customers unlimited 5G could cannibalize the massive profits earned selling data plans to wireless customers.

Cactus or cell tower

Cactus or cell tower

Upgrading to 5G service will be expensive and take years to reach many neighborhoods. Verizon’s chief financial officer believes 5G wireless will be more cost-effective to deploy than its FiOS fiber to the home network, but considering Verizon largely ended its deployment of FiOS several years ago and has allowed its DSL customers to languish just as long, 5G will need to be far more profitable to stimulate Verizon’s interest in spending tens of billions on 5G infrastructure. It does not seem likely the result will be $25/month unlimited, fiber-like fast, Internet plans.

Although the mobile industry will argue its investment dollars should be reason enough to further deregulate and dis-empower local officials that oversee the placement of cellular infrastructure, it would be a tremendous mistake to allow wireless carriers to erect cell towers and small cells wherever they see fit. Most small cells aren’t much larger than a toaster and will probably fit easily on utility poles. But it will likely spark another wave of pole access controversies. The aesthetics of traditional cell tower placement, especially in historical districts, parks, and suburbs, almost always create controversy. The FCC should not tip the balance of authority for tower placement away from those that have to live with the results.

The mobile industry doesn’t make investments for free, and before we reward them for investing in their networks, let’s recall the United States pays some of the highest mobile service prices in the world. The industry argues what you get in return for that $100+ wireless bill is better than ever, an argument similarly used by the cable industry to justify charging $80 a month for hundreds of channels you don’t watch or want. Therefore, incentives offered to the wireless industry should be tied to permanent pro-consumer commitments, such as unlimited 5G broadband, better rural coverage, and the power to unbundle current wireless packages and ditch services like unlimited texting many customers don’t need. Otherwise, it’s just another one-sided corporate welfare plan we can’t afford.

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