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AT&T Getting Pushback from Consumer Groups Over Dropping Landline Service in Illinois

Phillip Dampier April 20, 2017 AT&T, Consumer News, Public Policy & Gov't, Video No Comments

A telecommunications bill largely written at the behest of AT&T now working its way through the Illinois legislature would allow AT&T to discontinue landline telephone service in the state, potentially eliminating traditional phone service that more than a million Illinois residents and businesses still depend on.

“The Illinois Telecom Act is up for review in the 2017 legislative session, and AT&T is pushing two deregulation bills—Senate Bill 1381 and House Bill 2691,” says the Citizen’s Utility Board (CUB) website. “The bills would open the door for the company to end traditional home phone service in Illinois and push consumers onto less affordable and reliable alternatives.”

Consumer advocates urged Illinoisans to visit SaveOurPhoneService.com to send messages to the General Assembly against AT&T’s deregulation bills, or they can also call a special toll-free hotline, at 1-844-220-5552, to talk to their legislators.

With Illinois’ Telecommunications Act under review and set to expire July 1, AT&T’s bills would:

  • Abolish the state requirement that AT&T serve traditional landline customers. That authority would be ceded to the Federal Communications Commission (FCC), and Illinois would be stripped of any meaningful oversight to protect AT&T’s 1.2 million business and residential landline customers from inferior service.
  • Abolish low-cost calling plans. The General Assembly mandates that AT&T offer three “Consumer’s Choice” plans, which were created by CUB under a legal settlement. Illinois’ best local phone deals, which cost about $3 to $20 a month, have saved callers millions of dollars, and are under a state-mandated price freeze.

For many in Illinois still bypassed by AT&T’s U-verse fiber-to-the-neighborhood system, the measure could leave customers with just two choices for home phone service – a local cable operator or a wireless mobile provider — both potentially more expensive and less reliable than basic landline service.

“It doesn’t take someone with an economic degree that one option, one unregulated option for people, isn’t very cheap. So I’m sure cable is sitting back licking their chops,” said Citizens Utility Board director of governmental affairs Bryan McDaniel.

Some Chicago-area residents, like Michele Charous and Carol Kolen, prefer traditional landline service for its cost and reliability. A significant percentage of older residents still depend on affordable rotary dial landline phone service from AT&T — a service the phone company now wants to scrap.

AT&T claims more than 90% of Illinois customers have either replaced landline service for a cell phone or have switched to digital U-verse phone service from AT&T or a cable operator. But AT&T doesn’t mention its network upgrades have bypassed large rural sections of the state, and its U-verse phone service can cost more than a traditional landline.

Kolen and Charous claim their AT&T landline service has proven reliable for decades, while cell service has not, especially in an emergency.

Katherine Panny adds she is in her 80s, does not have a cellphone or a computer and has a rotary dial phone on her kitchen wall. She said she likes it.

“I depend on this landline with my life,” she said.

“We are not at the point we can guarantee that this is going to work all the time,” added Kolen.

AT&T’s part supplier.

“I would be just isolated because how would I be able to talk anybody if the battery died or I forgot to charge it what would I do,” Charous said.

“For a lot of people a landline is there most reliable and affordable lifeline to vital services,” said Jim Chilsen, of the Citizens Utility Board. “Our fear is that, what AT&T really wants to do is push consumers onto phone options that tend to be more expensive and tend to be less reliable.”

AT&T Illinois and Midwest president Paul La Schiazza gave some stark admissions to reporters about the state of AT&T’s wireline network in Illinois.

By the end of this year, “less than 10 percent of the households [in Illinois] will have an old style, voice-only line in their home,” La Schiazza said. AT&T is losing about 1,000 traditional landline customers a day. Maintenance on the traditional telephone system is also getting more difficult, and the phone company is turning to some unique sources for parts these days.

“Believe it or not, even AT&T at times, has to go to eBay to scrounge for parts to keep these ‘old-style’ switches running,” he said.

WMAQ in Chicago reports some Illinois consumers are worried AT&T is about to pull the plug on their landline home phone service. (2:38)

Verizon Commits to Spend $1 Billion on New Fiber Buildout for Its 5G Network

Verizon Communications announced a deal Tuesday with a leading optical fiber manufacturer to supply up to 12.4 million miles of fiber cable annually for a large buildout of Verizon’s fiber network to power its forthcoming 5G wireless service.

Verizon’s $1.05 billion agreement with Corning, Inc., of Corning N.Y., will guarantee Verizon will have an ample supply of optical fiber available from 2018-2020 at a time when the company noticed a fiber cable shortage was causing problems for its current FiOS/5G fiber buildout now underway in Boston.

“This new architecture is designed to improve Verizon’s 4G LTE coverage, speed the deployment of 5G, and deliver high-speed broadband to homes and businesses of all sizes,” Verizon said in a statement. But Verizon did not make it very clear the expansion will primarily benefit Verizon Wireless, not Verizon Communications’ FiOS fiber to the home service.

Verizon CEO Lowell McAdam, appearing exclusively on CNBC this morning, rejected the notion that the fiber buildout would represent a restart of Verizon’s long-suspended expansion of its FiOS fiber to the home service.

“When we deployed FiOS we would run a fiber cable into a neighborhood with six or eight strands in it,” McAdam said. “Now we’re going to drop off six or eight strands to every street light in every neighborhood so that allows you to deliver a gigabit of thruput into the home and allows you to do things like intelligent transportation, electric grid management, and water system management. You hear a lot about autonomous cars and things like that today that don’t work without 5G.”

Verizon’s Boston project represents the current CEO’s vision: a wireless-based network supported by an extensive fiber network. But instead of connecting fiber to homes, McAdam’s network connects fiber to tens of thousands of palm-sized “small cells” and other wireless infrastructure that will deliver services to individual neighborhoods instead of individual homes.

Critics still question whether Verizon’s 5G network will be able to sustain its speed and capacity claims outside of testing labs, especially as shared wireless network infrastructure faces future usage demands. Fiber to the home service does not require customers to share bandwidth the same way a wireless connection would and can manage much higher capacity.

Verizon CEO Lowell McAdam and Corning chairman and CEO Wendel Weeks appeared jointly on CNBC to discuss Verizon’s $1.05 billion agreement with Corning to guarantee up to 12.4 million miles of optical fiber a year from 2018-2020. (11:24)

Fox-Charter Showdown — Charter/Spectrum Customers Could Lose Fox Nets Wednesday

Phillip Dampier April 11, 2017 Charter Spectrum, Consumer News, Video 1 Comment

Every week brings the threat of yet another programming blackout because cable programmers want to be paid more and cable operators want to pay the same or less. This time, Fox Networks Group has sent a final warning to Charter Communications that their customers will lose several cable networks as soon as Wednesday if the two companies cannot reach a renewal agreement.

“Fox and Charter have an agreement to carry the Fox networks that Charter has chosen to ignore,” Fox said in a statement that was updated today. “We’re disappointed that despite our best efforts to reach a resolution, Charter Spectrum subscribers could lose access to multiple Fox sports and entertainment networks on April 12.”

The latest dispute surrounds the lucrative volume discounts that Time Warner Cable formerly negotiated for some of Fox’s non-news-related cable networks. Charter Communications acquired both Time Warner Cable and Bright House Networks to secure those kinds of volume discounts for itself. In general, the larger a cable system is, the lower the wholesale rate charged for cable programming. Charter hoped it could continue paying the lower rates Time Warner Cable managed to secure after acquiring the much larger cable system. But cable programmers are not buying Charter’s approach and in one case sued.

In March, Univision blocked Charter from carrying its Spanish-language networks Univision, Unimás, Galavisión, Univision Deportes and El Rey in a similar dispute. A temporary restraining order brought the networks back to the lineup a day later, at least temporarily. Univision sued Charter Communications in 2016 over the programming fee dispute.

A significant amount of money is at stake depending on which side ultimately wins in court.

In the case of Univision, Charter’s own contract with the Spanish language programmer expired on June 30, 2016. That would normally require Charter to negotiate a contract renewal that it knew would be more costly than what it paid under the old contract. Charter learned Time Warner Cable had negotiated a contract with Univision that delivered better volume discounts and was not set to expire until June 2022.

To allow Charter Communications to argue that Time Warner Cable’s contract should continue to apply after the merger, it structured its acquisition (on paper at least) to allow Charter to claim Time Warner Cable would continue to manage all of its cable systems. Charter’s lawyers argued that because “Time Warner Cable” is in charge, the wholesale rates Time Warner Cable negotiated should now apply to all Charter systems.

Univision, among other programmers, balked at Charter’s creative thinking.

“Everyone knows that is simply not true: the longstanding CEO and the senior executive team of Charter, as well as its pre-existing board of directors, now in fact manage and control all such cable systems, and virtually the entire TWC leadership team has departed,” Univision argued in its 2016 lawsuit.

If the programmers win, Charter will have to negotiate new carriage agreements at 2017 prices instead of continuing to pay the lower rates Time Warner Cable won for itself in the past.

A similar dispute is likely behind the current battle between Charter and Fox. Each time a cable company has to negotiate a new contract, programmers tend to ask for a considerably higher wholesale price for their channels and try to get cable systems to also carry their other networks. When a cable operator refuses to pay what it considers to be an unconscionable renewal rate or does not want to carry the programmer’s other networks, a showdown takes place that often leads to channels being temporarily removed from the lineup. Cable companies usually lose these battles after subscribers get hostile, but some smaller cable operators have walked away from programmers like Viacom for good when the renewal price stayed too high.

As is the tradition in these disputes, Fox launched a website and social media blitz to warn Charter customers they are about to lose access to 19 regional sports channels, FX, FXX, FOX Movie Channel, National Geographic TV, Fox Sports and Fox Deportes and asked customers to start calling Charter and complain. The current dispute does not involve the FOX (TV) Network, the Fox News Channel or the Fox Business Channel.

“We’re disappointed that despite our best efforts to reach a resolution, Charter Spectrum subscribers could lose access to multiple Fox sports and entertainment networks on April 12,” FOX wrote on its website. “Charter’s tactics could result in its subscribers missing our popular programming including Fox Sports’ telecasts of the St. Louis Cardinals and Blues, Kansas City Royals, Cleveland Cavaliers, Cincinnati Reds and many other MLB, NBA and NHL teams on Fox Regional Sports Networks, Fox Deportes, National Geographic, and FX’s hit dramas The Americans and Feud as well as much more award winning programming.”

“Fox is trying to gouge our customers using the increasingly common tactic of threats and removal of programming,” Charter responded in a statement. “They are attempting to extort Charter for hundreds of millions of dollars. We will continue to work towards a fair agreement.”

Fox Networks is using this ad to warn Charter Spectrum customers they could lose Fox programming. (0:30)

Texas Homeowner Appalled Over “Sissy Ass Fight” Between Two AT&T Workers in Her Backyard

Phillip Dampier March 28, 2017 AT&T, HissyFitWatch, Video 1 Comment

A San Antonio homeowner was upset when she discovered two AT&T subcontractors installing a fiber line in her backyard were instead engaged in what seemed to be a fight/wrestling match/comedy routine.

“Caught this sissy ass fight on my security camera today in my backyard,” the unidentified homeowner wrote on her Facebook page. “These idiots are supposed to be installing AT&T fiber wire not getting into a lovers’ quarrel. It’s a full on chick fight, about the sissiest fight I’ve ever seen in my life. I could have done a better job at kickin’ those boys tails.”

Only in Texas.

“‘Honestly, I couldn’t tell if they were playing around and wrestling or what,” she complained. “Then I saw some sissy hair pulling and thought, ‘Oh no way! This is for real!’ Two grown men rolling around pulling hair like a bunch of sissy pants.”

An embarrassed AT&T sent the Houston Chronicle a statement about the unfortunate incident.

This involved employees of a company that was hired by one of our contractors, and obviously didn’t meet our requirements of how they conduct themselves… The contractor has assured us they will no longer use this company when working for us.

In response to the story, a local company offered the duo free fight lessons.

“If either of these guys want to learn to fight, shoot us a message,” wrote Genesis Jiu Jitsu SA. “We offer a free month of lessons on the house.”

AT&T Subcontractor Fight Club: A San Antonio homeowner’s video security system picked up this encounter between two workers that were there to install a fiber cable. She posted the fracas on her Facebook page. (1:30)

Trump Takes Credit for Charter’s Job Commitments (Made in 2015) + Charter’s Odd CapEx Promise

President Donald Trump took credit on Friday for Charter Communications’ commitment to hire 20,000 new employees and invest $25 billion on improving cable and broadband service, despite the fact Charter promised to hire those workers more than a year before Trump won the election and its spending commitment may actually represent a reduction in spending.

“We are really in the process of announcements and you’re going to see thousands and thousands and thousands of jobs and companies and everything coming back into our country,” Trump told reporters in the Oval Office after meeting with Charter CEO Thomas Rutledge and Texas Gov. Greg Abbott. “They’re coming in far faster than even I had projected.”

Rutledge claimed the company’s promise to spend $25 billion over the next four years was because of Trump’s commitment to cut corporate taxes and further deregulate the cable industry. Rutledge added that he was excited that the time was right in the “regulatory climate and the right tax climate to make major infrastructure investments.”

Unfortunately for both the president and Charter’s CEO, public filings required by the Securities and Exchange Commission show Rutledge’s spending commitment to the president actually could represent a $4 billion reduction in spending over the next four years.

In 2015, Charter, Time Warner Cable, and Bright House collectively spent a combined $7 billion as Charter continued its speed improvements and Time Warner Cable invested in its Time Warner Cable Maxx upgrade initiative. That spending increased in 2016 to $7.1 billion (a figure that excludes merger-related expenses), an amount confirmed in last month’s 4th quarter 2016 financial results:

“Capital expenditures totaled $1.89 billion in the fourth quarter, including $187 million of transition spend,” reported Christopher Winfrey, chief financial officer of Charter Communications. “Excluding transition CapEx, fourth quarter CapEx declined by $81 million year-over-year or 4.5% with tradeoffs between all-digital in the fourth quarter of 2015 in Spectrum pricing and packaging box placement in Q4 2016. For the full-year 2016, our capital expenditures totaled $7.5 billion or $7.1 billion when excluding transition spending.”

Hal Singer, a principal at Economists, Inc., noted Rutledge’s new $25 billion spending commitment could represent a net decrease in spending. That’s because “New Charter” would have spent $28.4 billion over the next four years if it kept combined spending in line with the figures the three companies independently reported in 2015 and 2016.

Rutledge

Charter officials told Ars Technica the spending commitment announced Friday was “specific to broadband infrastructure and technology investment” and claimed it was different from the total capital expenditure figure. Charter claimed spending related to infrastructure and technology was $5.3 billion in annual spending over the last three years, but Charter declined to provide numbers for 2016. It also wouldn’t provide a breakdown adequate to determine if Rutledge’s commitment would result in a spending increase or decrease.

CFO Winfrey told investors in February that a “bigger portion of CapEx” spending in 2017 won’t be for broadband enhancements and expansion, as Mr. Rutledge seemed to tell President Trump. Instead, Charter will spend the money on set-top boxes, cable modems, and network gateways Charter will place in customer homes as a result of an ongoing digital transition, expected to last until 2020.

“When we do an install under Spectrum pricing and packaging, there’s a higher number of devices that we’re placing in the home because of our two-way set-top box strategy as well as our strategy not to charge for modem rental and to have reasonable router fees, which means that you’re going to put more capital into the home on an average transaction and we expect to have [more transactions as a result of increased sales],” Winfrey told investors last month.

Rutledge himself told investors on February’s investor conference call that predicting Charter’s CapEx spending in the future represented an “artificial target.”

“On CapEx, we are not providing CapEx guidance just because we approved a budget internally, which is what we want to operationally deploy this year,” Rutledge explained. “It could be less than that just because of what practically can be done or could be in a position to accelerate. But from our perspective, it doesn’t make sense to release such an artificial target and have the tail try to wag the dog for what’s ultimately right.”

Rutledge agreed with Winfrey’s assessment about what Charter’s spending priorities will be this year: installing more cable boxes and converting customers to all-digital television service. In all, there will be no significant boost in CapEx spending.

“If you think back to what I said, in 2017 we will be spending more on Spectrum pricing and packaging through that higher [cable equipment] placement or connect,” Rutledge said. “We will restart all-digital. We will be insourcing. But offsetting some of that increase will be the benefit of synergies. So without giving specific guidance, 2017 is probably a bit higher in terms of absolute dollars than what we were performing in 2016, but it shouldn’t be a dramatic change in terms of capital intensity or CapEx as a percentage of revenue.”

As for Trump claiming credit for Charter’s commitment to hire 20,000 additional employees, that has been part of Charter’s list of claimed “deal benefits” to win approval of its acquisition of Time Warner Cable and Bright House Networks for at least a year before the election, as Fortune reminds us:

The 20,000 jobs, at least, have been in the works for more than a year. Charter CEO Tom Rutledge said in 2015 that Charter would need to bring on 20,000 additional workers if the company’s merger with Time Warner Cable and acquisition of Bright House Networks went through. A Charter spokesman reiterated the claim in April 2016. The FCC approved the deal last May, and Charter CEO Tom Rutledge said in January that the company had plans to hire 20,000 new employees within three years.

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