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Cheapest Thing Verizon Wireless Employee Ever Sold: Your Private Customer Records

vzw-for-saleA Verizon Wireless employee is facing up to five years in prison for peddling customer phone records and location data to private investigators for as little at $50 a month.

The employee, Daniel Eugene Traeger, worked as a network technician for Verizon and agreed to supply a private investigator with private customer information for a pittance, making it perhaps the cheapest service ever offered with the Verizon Wireless name attached.

Traeger’s lawyer worked out a plea agreement with prosecutors that could substantially shorten his possible sentence for pleading guilty to a felony count prohibiting unauthorized access to a protected computer. The Consumerist obtained a copy of the plea agreement.

Traeger quickly adopted the Verizon Wireless way of doing business, substantially raising his snooping rate to as much as $750 a month by 2013.

In all, prosecutors claim he earned more than $10,000 selling customer data using network tools readily available to Verizon’s network technicians.

Comcast Getting Into the Wireless Mobile Business; Relies on Wi-Fi, Verizon Wireless

(Image courtesy: FCC.com)

(Image courtesy: FCC.com)

Comcast is getting into the wireless mobile business.

Comcast CEO Brian Roberts made the surprise announcement at this morning’s Goldman Sachs Communacopia investor conference, telling attendees Comcast will offer service beginning in mid-2017.

Roberts added the service will depend heavily on Comcast’s installed base of 15 million Wi-Fi hotspots, mostly from cable modem/gateways already installed in customer homes. When away from a hotspot, Comcast’s cellular service will depend on Verizon Wireless.

The deal with Verizon Wireless was expected, because Comcast has maintained an agreement with Verizon since 2011 that allows both companies to sell each other’s services to consumers. The agreement allows Comcast to obtain service from Verizon Wireless at fixed wholesale prices.

That means Comcast can introduce its wireless service without having to build wireless infrastructure like cell towers.

“We believe there will be a big payback with reduced churn, more [customer] stickiness and better satisfaction,” Roberts said.

Comcast will continue the cable industry’s tradition of not directly competing with other cable operators and will not accept customers outside of an existing Comcast service area. Comcast will likely offer the service in a bundle with other services. This will result in a quad-play package for Comcast, bundling cable TV, internet, phone, and cellular service.

Roberts did not talk about pricing.

Verizon Wireless Bill Shock is Back; Customers Complaining About Sudden Usage Increases

bill shockSome Verizon Wireless customers are reporting data usage numbers spiked on their bills to unprecedented levels this summer, giving the cellular company’s bean counters a heaping helping of overlimit fees, charged when customers exceed their data allowance.

The phantom usage problem has become noticeable enough to win attention from the consumer reporter at Cleveland’s The Plain Dealer, who found her own family of four suddenly blowing past their shared 15GB a month, resulting in a $30 overlimit fee.

“My family’s data usage has mysteriously increased significantly every month since February, except for one month,” wrote Teresa Dixon Murray. “My family of four pays for 15GB a month. We’re grandfathered in the old More Everything family share plan. We typically were using no more than 10GB a month. But for the last six months, that has increased steadily — and inexplicably. 8.2. Then 9.7. Then 10.6. Then 12.7. Two months ago, we got alerts that we were nearing our allotment and managed to take care to avoid going over. Last month, despite our efforts, we went over by 1.057GB, and were charged an extra $30.”

Murray questioned why her family’s phones were burning through their data allowance in the middle of the night, while connected to the family’s home Wi-Fi.

A Verizon representative explained phones may be connecting to Verizon’s network because of a new feature installed on some phones, including the Apple iPhone, called “Wi-Fi Assist.” This feature, which could also be called “Verizon Profit Assist” automatically ignores the fact you are connected to Wi-Fi and switches back to the Verizon Wireless network if the phone determines your Wi-Fi connection is “poor.”

“So what’s the definition of poor? I guess Verizon and our iPhones decide that,” Murray questioned.

This feature can be switched off from your phone settings.

They are coming.

They are coming.

But that hasn’t always stopped the overlimit fees. Some customers report they still incur overlimit fees even after switching cellular data off when they reach a warning from Verizon they are about to exhaust their allowance. Verizon charges $10 in overlimit fees, even in instances where the offending extra usage amounts to .0001GB.

Verizon claims its usage meter only provides an estimate of usage, and there are instances where the warning comes too late for a customer to stop using data before they’ve already exceeded their plan allowance. Verizon’s solution is to sell a $5/month “family coverage” add-on that allows parents to monitor data usage before it gets out of hand. But Verizon doesn’t guarantee it will stop overlimit fees based on the measurements of usage it provides.

That add-on plan may or may not have helped Valarie Gerbus, who is now facing a $9,100 Verizon cell phone bill she is adamantly refusing to pay.

The suburban Tampa customer regularly paid $118/month for her cell phone plan, which included 4GB of data usage — an amount she never exceeded, at least until July. Gerbus was shocked to open her bill and discover her normal monthly bill now also included $8,535 in overlimit fees for using 569GB of data in a single month:

(Image: The Plain Dealer)

(Image: The Plain Dealer)

On July 21, Verizon sent her a text, notifying her that she had used nearly all of her 4 gigabytes of data. The text said she could get 4 more gigabytes for $20. Realizing that she had two weeks before the end of the month, Gerbus bought the additional data.

Within an hour of the purchase, she received another text that told her she only had 10 percent left on the data that she had just purchased. The next text message she received said she could change her plan to 8 gigabytes for an additional $20 a month. She said she bought that upgrade to ensure she didn’t have any data overages.

In a span of several hours, she estimates that she received 40 to 50 texts saying that she needed to purchase more data. She turned the notification off, believing that there had been a glitch in Verizon’s system.

Gerbus said she realizes now that she should have contacted the company at that point, but she didn’t, as she feared being placed on hold by a customer service representative.

She later went to work and planned on paying the bill online. When she found her online statement, it said she owed $6,480 for using 490 gigabytes of data. She was shocked.

“I told them that I won’t pay the bill,” Gerbus told the newspaper. “I can either wait until they take it to a collection agency or when they take it to court. Either way, my credit history will be ruined. I can go bankrupt here.”

Verizon said they are not aware of any widespread problem, but is looking into phantom phone usage at night and some of the more extreme examples of bill shock, where bills extend into the thousands of dollars.

Affected customers report the high bills are, in some cases, tearing families apart.

“It got to the point that we were battling in our family,” reported Lockport, N.Y. resident Tom Walker, who told the newspaper their data usage soared for no apparent reason. “We were really asking each other, ‘Have you been on Facebook too much? What have you been doing?’ We were trying to figure out who was using all this data.”

Gerbus is almost thankful to pay Verizon Wireless a nearly $600 fee to exit her contract early as she switches to T-Mobile. Verizon’s engineers have no explanation for Gerbus’ bill, other than noting her phone contacted Amazon.com at least 400 times over a few days.

Providers with usage caps and usage-based pricing often consider their usage meters more reliable than their own customers, and when customers complain, many representatives trust the meter and insist on payment. When a customer like Gerbus complains about usage that is considerably above average usage, customer service representative are not always receptive.

“I told them that there was no way that I could have gone from 490 to 560 in a day,” Gerbus said. “The [Verizon] person said, ‘Yes there is.'”

Wireless Providers Create Challenges for Smartphone Upgrade Marketplace

samsung s7Smartphone manufacturers are dealing with sluggish sales for the newest and greatest phone models because American consumers are increasingly resistant to paying for top of the line devices.

Apple, Samsung, and others are facing some of their biggest challenges ever delivering upgrade features deemed useful enough to encourage consumers to spend the more than $600 that many high-end phones now command in the marketplace. As blasé new features fail to deliver a “must-have” message to consumers, many are hanging onto their existing phones and refusing to upgrade.

The decision by wireless providers to stop subsidizing devices backed by two-year contracts have delivered sticker shock to consumers looking for the latest and greatest. The Apple iPhone 7, expected to be announced this month, will likely carry a price of $650 — a serious amount of money, even if your wireless provider or Apple agrees to finance its purchase interest-free for 24 months. Despite the fact wireless providers charged artificially higher service plan rates to recoup the cost of the device subsidy over the length of the contract, consumer perception made it easier to justify paying $200 for a subsidized phone versus paying full retail price and getting cheaper service.

As a result, consumers are strategically holding on to their cell phones longer than ever and avoiding upgrade fever just to score a lower cell phone bill. The Wall Street Journal reports that since T-Mobile started the trend away from device subsidies in 2013, Citigroup estimates the smartphone replacement cycle has now lengthened to 29.6 months, considerably longer than in 2011 when upgrades were likely even before the two-year phone contract expired.

The average combined revenue earned per subscriber from service and equipment installment plan fees is still rising, despite the alleged "price war."

The average combined monthly revenue (in $) earned per subscriber from service and equipment installment plan fees is still rising, despite the alleged “price war.” (Image: Trefis)

Wireless providers don’t mind the change since they endured fronting the subsidy cost to phone manufacturers and slowly recouped it over the next two years. Not dealing with a subsidy would make the accounting easier. But AT&T and Verizon Wireless both understood the average consumer doesn’t have a spare $650 sitting around for a new device, much less the nearly $2,500 it would cost to outfit a family of four with a new top of the line smartphone every two years. So they entered the financing business, breaking the cost of the device into as many as 24 equal installment payments. Instead of paying $672 for a Samsung Galaxy S7, Verizon Wireless offers 24 equal installments of $28. That would be a distinction without much difference from the old subsidy system except for the fact some carriers are trying to sell their equipment financing obligations to a third-party, allowing them to move that debt off their books as well.

In fact, wireless providers are doing so well under the “no-contract/pay full price or installments” system, Wall Street analyst firm Trefis has started to ask whether the so-called wireless carrier “price war” is just a mirage. The firm notes (reg. req’d.) all the four major carriers are doing well and collecting an increasing amount of money from their customers than ever before. Much of that added revenue comes from customers bulking up data plans and being forced to pay for unlimited voice and texting features they may not need. But Trefis also points to reined in marketing spending at the carriers, who no longer have to entice customers into device upgrades as part of a contract renewal.

Things are looking worse for phone manufacturers that have relied on revenue based on the two-year device upgrade cycle in the United States. Apple is under growing pressure as its iPhone faces declining demand. In the U.S. alone, analysts predict iPhone sales will drop 7.1% this year. UBS predicts an even less optimistic 9% drop, followed by a 5% drop next year, even after iPhone 7 is introduced. AT&T has already reported some of the lowest upgrade rates ever during the first three months of 2016.

Another clue consumers are planning to hold on to their smartphones longer than ever — sales of rugged cases and screen protectors are up, as are smartphone protection/loss insurance plan sales, according to AT&T senior VP Steven Hodges. Parents even expect their children to give their phones better care.

Customers “realized it was a $500 to $700 device,” Hodges said at an industry conference held in June. “As such, they started taking care of them differently. You tell a kid this is only $49, the kid is going to use his phone as a baseball at times.”

Other customers are looking forward to benefiting from a dramatically lower bill after paying off their device in 24 months.

Kristin Maclearie has an iPhone 6 and she wants to keep it for the long term, if only to see her Verizon bill drop once she finishes her monthly payments. She told the Wall Street Journal as long as it keeps working, “I’ll just hang onto the one I have,” she said. “Unless something really cool comes out…but they’re always similar.”

Verizon Wireless Switches On LTE-Advanced to Improve 4G Performance

verizon wirelessVerizon Wireless today launched LTE Advanced technology to bring up to 50% faster peak wireless data speeds to almost its entire national 4G LTE service area.

LTE-A allows Verizon to better balance its data traffic by combining disparate mobile data channels on different frequency bands to increase bandwidth and speed for mobile data traffic. The technology, known as carrier aggregation, helps mobile providers more efficiently deliver data over multiple frequency bands at the same time. Verizon controls space in the 700 MHz, AWS and PCS spectrum bands giving the company the possibility of combining two or three bandwidth channels together into a single channel, boosting speeds.

There is a catch. Only customers with the latest devices supporting LTE-A will experience dramatic speed boosts. Verizon currently supports 39 LTE Advanced-capable phones and tablets on its network, including the latest Samsung Galaxy and Apple iPhone models. If you own one of these devices, the speed improvements are automatic and no plan change is required.

infographic-welcome-to-the-next-gen-network-2-HR

Verizon’s original LTE network was shown to deliver more than 100Mbps in peak speeds when it was in the lab or during early beta tests. But once actual customers got on the network, speeds began to slow. Most customers today get LTE speeds of 5-12Mbps from Verizon Wireless. Verizon’s press release touts “peak download speeds of up to 225Mbps” using two channel aggregation and over 300Mbps when testing three channel aggregation. But customers may find speeds considerably slower than that as the number of LTE-A capable devices grows in the months and years ahead.

Verizon Wireless is not shy about its boasts for better wireless speed.

“Our customers just received a major network enhancement for no additional cost,” said Tami Erwin, head of operations for Verizon’s wireless unit. “Verizon LTE Advanced works like a turbocharger on an engine. Speed boosts kick in when you need it most, with big data use. That’s when you get the big peak boost of Verizon LTE Advanced.”

“Verizon LTE Advanced means your data session moves more quickly over the best network,” said Nicki Palmer, Verizon’s chief wireless network engineer. “Imagine a road with multiple lanes in which, once you pick a lane, that’s the lane you drive in. That describes our award-winning 4G LTE network. Continuing the metaphor, Verizon LTE Advanced allows cars to change lanes efficiently and flawlessly, balancing the flow of traffic and getting drivers to their destinations more efficiently. That means blindingly fast data transmissions when you need it most.”

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.

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