Failure, Squared

LightSquared, Inc. filed for bankruptcy this afternoon after its plan to deliver high-speed wireless broadband nationwide was blocked by federal regulators over interference issues.

LightSquared was a pet project of billionaire hedge fund manager Phil Falcone, who earned his money pitching George Foreman grills and betting against sub-prime mortgages. Falcone invested billions in the satellite Internet venture, despite knowing the wireless technology had run into controversy with nearby satellite spectrum users who claimed it interfered with GPS reception.

Starting in 2010, Falcone convinced the FCC to approve his purchase of SkyTerra Communications, on the condition he construct a nationwide wireless broadband platform that could serve up to 260 million Americans. His hedge fund, Harbinger Capital Partners, spent $3 billion to gain control of 74 percent of the fledgling LightSquared project, despite Falcone’s knowledge the technology would potentially interfere with adjacent spectrum users. But Falcone dismissed those concerns, believing the interference problem was actually the fault of GPS technology that encroached on his spectrum or receivers that were not properly constructed to reject adjacent channel interference.

Falcone

Falcone’s steadfast belief in LightSquared, and the enormous financial backing he gave it, flew in the face of network engineers who reviewed the technology startup.

DirecTV was one company interested in the potential of LightSquared’s wireless satellite broadband back in 2004, but quickly backed away when even tentative tests flashed red lights of caution for DirecTV executives.

“A young engineer we had went and tested it and said, ‘It conflicts with GPS, it will never work.’ So we backed away immediately,” CEO Michael White told Business Week.

Falcone assumed any problems could be smoothed over with the federal government, White added.

With sufficient lobbying money and inside D.C. influence, he might have even overcome the alliance of GPS users that formed to fight the venture.  But in the public debate that followed, the GPS community eventually proved their case and the FCC put the project’s approval on hold. Now some parties involved in the LightSquared debacle are wondering if things might have gone better had the company been more sensitive to those GPS users and had found a way to overcome the interference problems.

Ultimately, the FCC delivered the death blow issuing an eventual revocation of the company’s license to operate its broadband system as presently designed.

Most of the group’s working partners have fled the LightSquared project, Harbinger has seen the biggest drop in assets in industry history — losing $23 billion from direct losses and client withdrawals, and billionaire Falcone is even accused of allegedly stiffing the contractor working on his Long Island home at least $1.2 million, according to a lien filed in Suffolk County.

Fabio Savoldelli, a finance professor at Columbia University, talks about Harbinger Capital Partners’ Phil Falcone and his investment in wireless broadband startup LightSquared Inc. It has been rough sailing for Falcone ever since he turned the project into a major priority for himself and his investors. Savoldelli shares how it all went wrong with Bloomberg News.  (8 minutes)

Verizon Communications will stop selling DSL broadband-only service to its customers May 6th in what the company is calling an effort to control costs “enabling us to continue providing competitively priced services to existing and new customers.”

Broadband Reports readers first reported receiving written notice of Verizon’s plans to discard “naked DSL” service, although existing customers who don’t move or make any changes to their account will be able to keep the broadband-only service for now.

Verizon provides the details:

Beginning May 6, 2012, we will no longer offer High Speed Internet without local voice service on the same account.

What does this mean for you?

• If you currently have High Speed Internet without local voice service on the same account, there is no action required on your part to continue enjoying your internet service. You will not experience any disruption of service.
• Prior to May 6, 2012, you can still make speed upgrades or downgrades to your existing service.
• Prior to May 6, 2012, you can receive bundle discounts by adding DIRECTV service or Verizon Wireless service to your current internet service.

What this means if you change or disconnect your High Speed Internet Service as of May 6, 2012 or after:

• You can make changes to and retain your Verizon High Speed Internet Service on or after the above date, by adding Verizon’s local voice service to the same account.
• If you are moving your service from one location to another on or after the above date, you may subscribe to internet service at your new location if you also subscribe to Verizon’s local voice service on the same account.
• If you choose to subscribe to additional Verizon services you could be eligible for a bundled discount when you also subscribe to Verizon’s local voice service on the same account.

There is speculation Verizon is eliminating its DSL-only service in an effort to boost revenue and push subscribers in FiOS-enabled areas to Verizon’s fiber optic network.  A decade earlier, many phone companies fought to avoid selling “broadband-only” DSL service without a voice landline because of revenue losses.  Landline customers continue to drop voice service from traditional phone companies at an alarming rate — choosing competing cable or Voice over IP service or a cell phone.  By requiring voice service, Verizon can boost average revenue from each customer, whether those customers want the service or not.

Customers who currently subscribe to broadband-only DSL service from Verizon are advised that virtually any account change of significance can disqualify them from continuing with the service.  That includes address changes and speed adjustments.  Stop the Cap! recommends customers make any changes prior to May 6th.

Large sections of Verizon’s service area are not FiOS-eligible,  so current DSL customers with no other broadband choices may find themselves stuck with adding voice service. Verizon sells Basic Home Telephone Service with no local calling allowance at prices ranging from $7 in some communities to $16 or higher in others, excluding the FCC-mandated line fee, which runs an extra $6.50 a month.

One thing Verizon’s higher bills will accomplish is making Verizon Wireless’ new 4G LTE Home Fusion wireless broadband service look slightly more price competitive.  If a Verizon landline customer has to pay for both voice and data service, paying $60 a month for 10GB of wireless broadband may not seem that expensive in comparison.

The cable company best known for serving suburban New York City.

Cablevision Industries has cried “uncle” in light of relentlessly aggressive competition from Verizon Communications, which offers its fiber to the home FiOS service in much of the cable operator’s service area.

Cablevision’s 4th quarter and year-end financial results, reported earlier today, are underwhelming investors.  Cablevision executives warned the company will have lower cash flow in 2012 due to increased investments in set-top boxes, network upgrades, and more importantly — no planned subscriber rate increases this year.

Some highlights:

Video – Losing Customers Like Everyone Else: Cablevision lost 14,000 video customers in the last quarter, many to Verizon FiOS and ongoing cord-cutting.  Analysts expected just 9,000 defections.  Cablevision will soon launch both HBO and Max Go online video for their customers nationwide.  Additional on-demand video options, online and off, are also anticipated.

Broadband – Cablevision finally admitted its own network was responsible for last year’s faltering broadband speeds that delivered poor marks in ongoing FCC speed tests.  The company originally denied the speed test results were accurate.  Today CEO James Dolan told investors the company invested in its broadband network to improve speeds and service.  Cablevision feels strongly it must compete effectively with Verizon to survive.  The company added 20,000 high-speed data customers and 31,000 phone subscribers in the quarter.  The company is doing well allowing customers easy access to broadband speed upgrades.

Wi-Fi – Cablevision sees strong value in its wireless broadband network as customers increasingly take their content mobile and need connectivity to the web.

Upgrades – CEO Jim Dolan said 2012 will be “a year of investment” in Cablevision upgrades and improvements.  The company is even accelerating projects originally envisioned for 2013.  Cablevision will continue to expand its “next day” installation offer across the eastern United States by the end of the first quarter.

Promotions – The escalating war of promotions between Verizon and Cablevision are likely to cease as Cablevision yanks their most aggressive new customer offers.  Earlier this year, Verizon was pitching a two year triple play offer that included an incredible $500 prepaid card rebate as part of the promotion.  “I don’t think you’ll see those [low introductory rates from Cablevision] again ever,” said Dolan.

“The main theme that people should take away from the call today is that we continue to be focused on moving the business in a direction where we both retain existing subscribers and have attractive, economically sensible offers for new subscribers,” said Cablevision chief financial officer Gregg Seibert.

CNN's Scare Stories on Wireless

As part of our ongoing coverage of the telecommunications industry, I talk with a variety of reporters in both Canada and the United States.  We have educated local newspapers, national wire services, local TV news, and even big national consumer magazines about the problems consumers have with the North American telecommunications industry.  Whether you are a wireless customer facing eroding usage caps and increasing prices, or a wired broadband customer now being slapped with Internet Overcharging schemes that monetize your usage, the truth about why your bill has gone up isn’t too hard to find, if you bother to look.

Unfortunately, CNN-Money just published a “week-long” series on the wireless mobile phone market that might as well have been written by the CTIA, the nation’s cell phone lobby.

“The Spectrum Crunch” was supposed to be a sober and objective report about the state of congestion on America’s cell phone networks. Instead, the reporter decided industry press releases and lobbyist talking points were good enough to form the premise that America is deep in a cell phone crisis.

Sorry America, Your Airwaves Are Full

Part one of CNN’s special report is a laundry list of disaster predictions, explaining away rate increases and usage caps, and an industry-skewed view that the answer to the “crisis” is to give wireless carriers all the frequencies they want.

The spectrum crunch is not an inherently American problem, but its effects are magnified here, since the United States has an enormous population of connected users. This country serves more than twice as many customers per megahertz of spectrum as the next nearest spectrum-constrained nations, Japan and Mexico.

When spectrum runs short, service degrades sharply: calls get dropped and data speeds slow down.

That’s a nightmare scenario for the wireless carriers. To stave it off, they’re turning over rocks and searching the couch cushions for excess spectrum.

They have tried to limit customers’ data usage by putting caps in place, throttling speeds and raising prices. Carriers such as Verizon, AT&T, Sprint, T-Mobile, MetroPCS and Leap have been spending billions to make more efficient use of the spectrum they do hold and billions more to get their hands on new spectrum. And they have tried to merge with one another to consolidate resources.

The FCC has also been working to free up more spectrum for wireless operators. Congress reached a tentative deal last week, approving voluntary auctions that would let TV broadcasters’ spectrum licenses be repurposed for wireless broadband use.

[...] The bad news is that none of the fixes are quick, and all are expensive. For the situation to improve, carriers — and, therefore, their customers — will have to pay more.

The United States also covers more ground, with lots of wide open spaces where frequencies can be used and re-used without interference problems.  As AT&T keeps illustrating, how you run your business has a lot to do with the quality of your service, spectrum crisis or not.  AT&T customers in heavily-populated urban markets cope with dropped calls and slow data not because the company has run out of frequencies, but because AT&T has failed to appropriately invest in its own network.  AT&T’s problems are generally not shared by customers of other carriers.  Even T-Mobile, which has the least spectrum of all major carriers, does not share AT&T’s capacity issues.

CNN reporter David Goldman suggests mergers and consolidation have been a solution for ‘wireless shortages’ of the past.  But are mergers about consolidating resources or leveraging profits?

The spectrum war’s winners and losers

AT&T’s failed $39 billion bid for T-Mobile was largely aimed at getting its rival’s spectrum. The Department of Justice and the Federal Communications Commission killed the deal, saying it would be too damaging to wireless competition.

That put the entire industry on notice: The carriers will have to solve their problems without any blockbuster takeovers.

The regulators’ main concern was that the deal would take the ranks of national carriers down from four to three. That’s why experts now expect the big players to focus instead on acquiring smaller, low-cost carriers like MetroPCS and Leap Wireless. Their spectrum could relieve capacity issues in large metro areas, which are the places most crippled by the crunch.

Industry analysts also think that Sprint and T-Mobile could gain approval to merge, though that’s a bit like two drowning victims clinging together. Sprint is losing piles of money every quarter, while T-Mobile is hemorrhaging customers with contracts.

Another possibility is that several carriers could partner in a spectrum-sharing joint venture.

But the most likely scenario is that the carriers continue fighting each other to snap up the last remaining large swaths of high-quality spectrum.

Stephenson

The claim that AT&T sought the purchase of T-Mobile USA for spectrum acquisition falls apart when you examine the record.  For instance, during AT&T CEO Randall Stephenson’s presentation at the merger announcement, shareholders were told the buyout would deliver cost synergies and savings, would stabilize earnings from a more predictable mobile market (with T-Mobile’s ‘market disruptive’ pricing out of the way), and would allow the company to secure additional frequencies.  However, as Stop the Cap! reported back in August, documents released by the FCC showed AT&T unprepared to specify what T-Mobile spectrum it expected to acquire, much less how the company intended to use it.

The “problem” AT&T sought to solve, in the eyes of both the Justice Department and the FCC, was pesky competition from T-Mobile and the reduced profits AT&T endured as T-Mobile forced competitors to deliver better service at lower prices.

Even Goldman admits T-Mobile had the smallest inventory of wireless spectrum among the major carriers — scant reason for AT&T to court a merger for spectrum purposes.

The spectrum winners continue to be AT&T and Verizon, who have the largest inventory of favorable frequencies, and both continue to warehouse spectrum they are not using for anything.

Your Cell Phone Bill is Going Up

Has your mobile phone bill jumped this past year?

Get used to it.

Demand for wireless data services is soaring, forcing carriers to invest massively to keep up. They have two main options: Upgrade their network technology or acquire more wireless spectrum to give them more bandwidth.

“Massively” is in the eye of the beholder.  Verizon outspent AT&T on network upgrades and continues to enjoy enormous returns on that investment.  Most major cell companies spend billions on network improvements, but also earn tens of billions from their customers.  Yet in the midst of the “spectrum crisis,” AT&T CEO Randall Stephenson told investors revenue was up — way up:

“We’ll expand wireless and consolidated margins. We’ll achieve mid-single-digit EPS growth or better. Cash generation continues to look very strong again next year. And given the operational momentum we have in the business, all of this appears very achievable and probably at the conservative end of our expectations.”

AT&T’s chief financial officer John J. Stephens put a spotlight on it:

In 2011, 76% of our revenues came from wireless and wireline data and managed services. That’s up from 68% or more than $10 billion from just 2 years ago. And revenues from these areas grew about $7 billion last year or more than 7% for 2011. We’re confident this mix shift will continue. In fact, in 2012 we expect consolidated revenues to continue to grow, thanks to strength in these growth drivers with little expected lift from the economy.

[...] We also continue to bring more subscribers onto our network with tiered data plans, more than 22 million at the end of the quarter, with most choosing the higher-priced plan. As more of our base moves to tiered plans and as data use increases, we expect our compelling [average revenue per subscriber] growth story to continue.

That’s a story AT&T has avoided sharing with customers, because more than a few might take exception that the past year’s rate increases have more to do with the company’s “compelling growth story” than a spectrum shortage.

CNN could have reported this themselves, had they bothered to look beyond the press releases and talking points from the wireless industry. The reporter even conflated recent increases in early termination fees as part of the “spectrum shortage.”

Readers have to glean the real story by reading between the lines.  Here is an example:

As Suraj Shetty, Cisco’s marketing chief, puts it: “Data caps are curbing the top 1% of users, but not the top 20%.”

For carriers, finding the sweet spot is a delicate balancing act. Heavy data consumption is costly for them. On the flip side, smartphone users, who are typically required to buy pricey monthly data plans, are their most lucrative customers.

The ideal customer is someone with a smartphone they use sparingly.

That reality could eventually be reflected in your monthly bill. All four of the major carriers declined to comment about their future pricing strategies, but analysts expect them to start experimenting with new “pay for what you consume” approaches.

The real agenda is finding customers who buy the most service and use it the least.  Usage caps and throttles don’t even work, if one believes Mr. Shetty.  Curbing one percent of your heaviest users does little to curtail congestion when the top 20% remain within plan limits and create an even greater strain on the network.

It’s another hallmark of Internet Overcharging — monetizing broadband usage while using “congestion” as an excuse.  If a customer uses 10GB on an unlimited usage plan or 10GB on a limited use plan, the impact on the network is precisely the same.  Only the profit-taking is different.

There Are Solutions

Only in the last part of the series does CNN’s reporter discover there are some practical solutions to the spectrum crunch.  They include:

• Splitting cell phone traffic to reduce tower load.  Adding additional towers is one solution, but not all have to be huge, unsightly monstrosities.  In parts of Canada and Europe, new “micro-cells” on top of traditional power poles or buildings can reduce tower load, especially in urban areas.  These units, which can fit in the palm of your hand, are especially good at serving fixed location users, such as those sitting at home, work, or in a shopping center.  They don’t create eyesores, are relatively inexpensive, and are effective.
• Allocation of spectrum.  The FCC is working on making additional wireless spectrum available.  Some carriers are cooperating to alleviate capacity issues, share towers, and collaborate on new tower planning.
• Consider Wi-Fi.  AT&T found offloading traffic to Wi-Fi and even home-based “femtocells” — mini in-home cell towers have effectively reduced demand on their wireless 3G/4G networks.  There is still room to expand.

Alcatel-Lucent has a solution to the capacity crunch — a microcell cube that can be attached to a building or phone pole.  (3 minutes)

A billionaire who invested enormous sums to purchase airwaves for a new national wireless broadband network learned Tuesday ruled he cannot use them to launch LightSquared.

The Federal Communications Commission said yesterday Philip Falcone’s vision for competitive wireless service cannot go forward on the frequencies he acquired because tests show they create significant interference to other nearby spectrum users, especially GPS.

Falcone’s hedge fund poured nearly $3 billion into LightSquared, which the company still claims would not create significant problems for GPS users including aircraft, cars, and ships.

Falcone

But when tests were conducted in early 2011, significant interference problems were reported, some that could jeopardize the safety of American air travel.  The FCC decided it preferred to be safe instead of sorry.

The announcement by the FCC calls into question the future of the company and the value of its airwave assets, which are now likely worth a fraction of the price paid.

The company’s agreements with at least 30 wholesale customers are also at risk, and one of its largest partners, Sprint-Nextel, has spent the last few months distancing itself from the project, anticipating the decision the FCC announced yesterday.

The rejection has upset the FCC’s plans to increase wireless competition for AT&T and Verizon, which dominate American wireless.  The agency hoped the spectrum LightSquared obtained would open the doors to a new national player, but that appears unlikely for now.

LightSquared executives said in October they would sue the FCC in court if the agency blocked their network from operating.

The only new player on the horizon may be Dish Network, which earlier acquired wireless spectrum from two bankrupt companies, and now seeks to use them as mobile phone spectrum.  Separately, Clearwire is working with Sprint to construct a new national 4G network, while still operating Clear’s existing WiMAX 4G service.

CNBC discusses LightSquared’s new troubles and where the company can go from here.  (3 minutes)

Getting Internet service in rural America can involve a whole lot more than calling the local phone company to check if DSL service is available.  When it is not, satellite broadband is often the only realistic choice to access the Internet.  Unfortunately, navigating through the options, terms and conditions, and restrictions requires the help of a lawyer or rocket scientist.

Kevin Hanssen, a dairy farmer in rural Wisconsin is just one of a dozen Stop the Cap! readers who access us over a satellite Internet connection.  He, along with others, have been writing requesting assistance navigating an increasingly confusing amount of detail about recent upgrades taking place at the parent company of his provider — WildBlue, a service of ViaSat.

As Stop the Cap! recently reported, ViaSat is placing a new satellite into service that will bring improved service for certain customers.  Long time customers like Hanssen have waited more than two years for company-promised upgrades that would bring better speeds and more generous usage policies. Currently, Hanssen faces a tiny usage allowance and “broadband” speeds of well under 1Mbps, especially in the evening.

“As a long term customer, I have lived under a plan that gives me 7.5GB in downloads and 2.3GB in uploads, but my experience with WildBlue may be very different than other customers, because the company has so many legacy and special plans that apply to different customers, so it is very hard to say ‘this is WildBlue’s policy’ because it can vary so much,” Hanssen tells us.

Indeed, over WildBlue’s history, ViaSat has changed its access policies several times, sometimes raising, but often lowering usage allowances accompanied by rate adjustments.  Since 2005, WildBlue customers who originally faced a simple 30-day consumption limit that reset after each billing cycle now face a combination of a usage allowance under the company’s “Fair Access/Data Allowance Policy (FAP),” and an even more confusing rolling speed throttle called the “Quota Management Threshold (QMT).”  Exceeding a monthly usage allowance guarantees broadband speeds of dial-up or less.  Speeds are also curtailed temporarily for customers who run browsing sessions that consume as little as 30MB over a 30 minute period.

WildBlue's Quota Management Threshold starts reducing your speeds after a heavy browsing session.

With the help of Cisco, which created the throttled bandwidth technology, WildBlue’s combined FAP and QMT systems make it impossible for a customer punished just once by speed throttles to completely clear their record as a ‘known bandwidth abuser’ unless they avoid using any bandwidth for a month.  For most customers unequipped to fully grasp the highly technical explanations of both policies, customer service representatives boil it down to something easier to understand: the less service you use, the better the chance you will not face a speed throttle rendering your connection practically unusable.

WildBlue's confusing throttle.

With strict limits in place, WildBlue not surprisingly scores among the lowest of all Internet Service Providers for customer satisfaction, and its nearest competitor Hughes does no better.

“As you have written before, satellite really is ‘take it or leave it broadband’ — heavily rationed, confusing, and very expensive,” Hanssen says.

For Hanssen and other Stop the Cap! readers who rely on satellite Internet, the promise of new capacity and faster speeds were supposed to turn “satellite as a last resort” into something more comparable to 4G wireless in America’s most rural areas.  But as our readers share, there is a big chasm between marketing hype and reality for customers on the ground.

Confusing Brands & Pricing

ViaSat has not been content to offer customers a single brand of satellite broadband service.  In addition to WildBlue itself, ViaSat markets plans under the American Recovery Act (the broadband stimulus program), co-branded service from DirecTV, DISH, AT&T and the National Rural Telecommunications Cooperative (NRTC), and forthcoming service on its newest satellite, ViaSat 1, which the company is marketing as “Exede” Internet. Customers west of the Mississippi who qualify for the American Recovery Act program get free installation and more generous usage allowances of up to 60GB per month.

“For two years, WildBlue has told us better usage allowances and faster service was coming with the new upgraded satellite, which we assumed would service all existing WildBlue customers,” Hanssen shares. “Now it turns out they are leaving existing WildBlue customers behind on the old satellite and creating a brand new service to sell new customers on the new satellite.”

Indeed, for marketing purposes, WildBlue and Exede are two different entities, and WildBlue customers looking for faster speeds from Exede will need to pony up at least $150 for new equipment, sign a new contract, and switch to a new Fair Access Policy that actually delivers many customers a lower usage allowance than their existing service from WildBlue offers.

“It’s total bait and switch, promising us faster service and then reducing the usage allowance that goes with it and adding around an $8/GB over-usage fee on Exede,” Hanssen says.

For customers served by the new ViaSat 1 satellite, Exede sells service based on usage, not speed.  The advertised speed (not independently verified) is 12/3Mbps, which will cost $49.99 for up to 7.5GB per month, $79.99 for 15GB per month, or $129.99 for 25GB per month.

“Highway robbery I call it, because some of those caps are lower than on WildBlue so you are paying for better speed you won’t be able to use unless you agree to pay a lot more for a bigger allowance,” Hanssen says.

New Customers Get Priority Over Old Ones?

Customers eager to switch to the new, faster satellite broadband service report they are encountering roadblocks from ViaSat and their large independent dealer network responsible for sales and service of the satellite reception equipment.  An often-heard accusation is that current customers are taking a back seat to new customers already invited to sign up.

That is a charge ViaSat, through its support forum, has strongly denied.

“We’re not giving preferential treatment to new vs. existing customers,” says WildBlue Forum Administrator Steve. “The dates we’ve quoted to existing customers who call in are approximately April/May, but yes, it could be sooner. It all depends on the number and availability of certified installer technicians in a given area. If someone absolutely wanted it now, we’ll try our best to accommodate that along with the big flood of new orders we’re receiving.”

Steve explains the delays to upgrade existing customers are occurring because new customer installations are currently “through the roof.”

An independent dealer offers new customers a better deal.

But Stop the Cap! has also learned from an independent WildBlue dealer that ViaSat is offering a bonus for dealers who sign new customers, an incentive not paid to upgrade existing ones.  Some new customer promotions also offer free installation and deep discounts until the end of 2012 for 15GB ($49.99) and 25GB ($79.99) service on the new ViaSat 1.  Existing customers do not get the discount pricing and have to pay a $150 installation fee for new equipment required for the new satellite.  Customers within a 2-year initial contract term pay even more: $250.

Customers Revolt

The government-sponsored Broadband Initiative program required WildBlue to provide a more generous usage allowance in return for broadband stimulus money.

Customers learning about the new pricing are unhappy.

Bill Cameron feels let down as a loyal customer by ViaSat’s pricing:

This new Excede 12 plan is an absolute joke. 12Mbps is awesome but the top plan limits you to a up/down total of 25GB and its $129.99 +$9.99 lease fee. So what good is 12Mbps if you really cant use it? Forget Netflix, Hulu or any Video on Demand. I have DirecTV and was hoping to be able to do some streaming but there is no way. If I want to stay at the same $80/mo price point I will loose 7GB of monthly cap since the mid tier plan is 15GB combined up and down. I don’t know what WildBlue is thinking here. Come on, $140/mo in the middle of a recession? Plus there is a $149 setup fee and even customers who have been with them for 7 years, like me, has to pay it. My loyalty is not rewarded one bit. A brand new customer pays the same amount.

A Broadband Reports reader sums up his views about WildBlue’s broken promises:

[...] We have been living with low caps on Wildblue for years, then for several years they -promise- an upgrade that will change everything. Then they up the speed to something most people don’t need, and REDUCE the amount of data available by a LARGE amount, increasing the price as well significantly. It was not what we were lead to believe. This was supposed to be an upgrade, but the speed is useless without quantity, that point has been made over and over.

And it doesn’t take someone sitting all day to go over the caps. It can take a little over an hour every day for one person to go over on the current 512Kbps plan, imagine with more speed how easy the person can go over with about 23% less data available.

Bottom line, it was not an upgrade, period, for many of us. Every neighbor I know is thinking the same thing, some currently drive 30 miles one way to get to a free hotspot to have enough bandwidth for online classes. The offered new plans are not enough for what they do either. Is anyone that understands the limits of satellite asking for anything unreasonable, NO. We were expecting an increase of some sort, any kind, not further insane restrictions after years of being restricted. A downgrade and overcharging is not an upgrade no matter how they try to spin it to us. If so few use what’s available as they say anyway, what would have been the harm of doubling the current caps. PERFECTLY REASONABLE EXPECTATIONS.

Kevin Hanssen wishes he had better options:

At this point, just about anything would be better than WildBlue.  Since AT&T shows no interest in bringing me DSL service, it’s probably going to be wireless broadband or nothing.  We have spotty cell coverage in this part of Wisconsin, but should a provider do something about that, we would still be facing tiny usage allowances in the 2-10GB range.

This is why universal service policies should extend to broadband service, to make certain rural America has reasonable access at reasonable prices.

There is nothing reasonable about satellite or wireless Internet at these speeds, allowances, and prices.  WildBlue wants new customers at all costs, even if they walk over their loyal customers to sign them up. But why shouldn’t they? Their only effective competition is Hughes, and they are actually worse!

Broadband everywhere, except where it isn't.

Comcast is willing to install cable service for a neighborhood in Ashburnham, if six families agree to split the estimated $94,000 installation fee.

Paying more than $10,000 each just to get cable television from the nation’s largest cable operator is not a top priority for those living on Old Pierce Road and Rindge State Road, but getting reliable Internet access is.  Comcast officials have refused all requests to extend cable service to the families, because there are simply too few of them in the company’s eyes to justify the expense.

Families were surprised to find neither Comcast or Verizon interested in serving the neighborhood, because state broadband maps show coverage in Ashburnham from both the dominant cable and phone company.  Comcast suggested the families sign up for satellite Internet service or use a wireless provider instead.  But families complain paying Verizon Wireless or AT&T for mobile broadband is expensive and has resulted in rationed Internet use because of very low data caps.  Even worse, when the weather turns bad, the wireless Internet service effectively turns off.

The affected families want better answers.

“I’m not afraid to spend $400 to get out of a [wireless] contract if I can have Internet when it’s cloudy out,” James LeBlanc of Rindge State Road told the Sentinel & Enterprise. “But I don’t have $10,000 just sitting in my pocket.”

Wireless broadband for rural Massachusetts is simply not a serious solution for most because of the low usage allowances that accompany the service.

“It’s difficult when it’s raining out, and we can’t get online, and I have to tell my kids, sorry, you can’t do your homework tonight,” his wife, Wendy LeBlanc told the newspaper. “My oldest goes to Overlook (Middle School) and I’m going to have to send in notes for any assignments that require Internet research to be done at school.”

“It’s a hardship for our family,” said Brian Belliveau, of Old Pierce Road. “We don’t have enough Internet service. We get into situations where we use all of our data within the first two weeks of the month and have to go without it the rest of the month. Our kids are in school with kids who have service all the time, and they don’t understand why we don’t. It’s hard to explain.”

Comcast’s attitude so far has been ‘tough luck — it’s a money thing.’  Company officials simply won’t front the construction and installation costs because it would take too long to recoup that investment.  That leaves the families with few alternatives.

Although Ashburnham, a community of 6,000 in north-central Massachusetts, is considered “rural,” it is not nearly rural enough to qualify for federal broadband funding.  Besides, according to broadband mapping data supplied by area cable and phone companies, Ashburnham is already “well-served” with broadband.  But don’t tell that to families without Internet access.

Local officials were stunned the multi-billion dollar company wouldn’t assume upfront expenses in return for goodwill and devoted, long-term paying customers.

“I may be sort of old-fashioned, but a company sometimes has to do what is in the best interest of its customers to gain their loyalty,” Selectman Gregory Fagan said. “I’m offended when you say the company can’t afford it. Our schools are giving our children Internet assignments. There’s been discussion of giving tablets to all kindergartners. It’s not like in the ’80s when these things were a luxury. They are must-haves now.”

http://www.phillipdampier.com/video/BBC News Will 4G be faster than home broadband 1-9-12.flv

The BBC produced this mini-documentary about 4G LTE wireless broadband’s impact in Europe and the United States.  Providers in the UK and northern Europe see wireless 4G as the solution to rural broadband scarcity, but consumers in urban and rural settings won’t put up with stingy usage caps and ridiculously high prices.  Sweden pioneered 4G wireless, running the oldest and most robust 4G network in the world.  In Sweden, TeliaSonera delivers wireless broadband at speeds of up to 84Mbps — many times faster than what Verizon Wireless offers.  But even with those speeds, just 9,000 Swedes have signed up — rejecting the company’s “very high priced” service — $50US a month for 10GB.  (Verizon Wireless charges $80 a month for the same amount of data usage, a testimony to the price sensitivity of a much-more regulated and competitive European wireless marketplace.)

A TeliaSonera speed test shows their 4G LTE network can deliver nearly 84Mbps.

While Europe enjoys faster speeds at lower prices, providers in the United States are treating 4G as a luxury item.  With that in mind, plans by some U.S. carriers to create a home broadband replacement service for rural America that relies on 4G wireless networks will likely face strong consumer resistance because of the extremely high prices and low usage caps.  (The abrupt end of the video is intentional.) (10 minutes)

Static isn't just for the UHF dial, it's for powerhouse lobbying groups, too.

While surface reporting on “white space” broadband and “super Wi-Fi” seem to suggest the United States is on the cusp of opening up much of the UHF television dial to wireless broadband, behind the scenes broadband advocates are fretting about being outmaneuvered by the powerful broadcast lobby.  The theory behind “white space” broadband seems simple enough.  Anyone who has flipped channels up and down the UHF dial sees a lot of unused real estate.  While most cities receive 5-10 UHF TV channels, there are dozens of apparently empty channels filled with what seems to be nothing at all. Can’t we make more efficient use of the UHF dial and open the excess to other uses?

The FCC has been studying just that, with the proposition that broadcasters could be relocated closer together or agree to sell their broadcast license and sign off the air for good.  Theoretically, the UHF dial would be reduced to channels 14-30.  Stations on channels 31-51 would have to relocate down the dial to make way for broadband.

That was the plan anyway

Naturally, the National Association of Broadcasters (NAB), the broadcast industry lobbying group, was not happy to learn of this plan, which is still heavily promoted by wireless telecommunications companies.  They quickly argued there were not enough UHF channels left to accommodate every TV station on the air today, and some cities bordering Canada faced losing major stations if the plan was adopted.

In the clash of the lobbying titans, it appears broadcasters have at least temporarily won the upper hand.  Legislation authored by the powerful House Communications Subcommittee Chairman Greg Walden (R-Ore.), would grant the FCC authority to conduct spectrum horse-trading and auctions, but only if the sales take ”all reasonable efforts to preserve” the coverage area of impacted broadcast stations.

In the minds of several wireless broadband advocates, “reasonable efforts” kills it. That key passage is open to wide interpretation, which in Beltway language means a full employment program for Washington law firms who will end up letting a judge decide what “reasonable” really means.

Blair Levin

Blair Levin, an attorney who served as chief of staff to FCC Chairman Reed Hundt from 1993 to 1997, where he oversaw the implementation of the disastrous 1996 Telecom Act, is all sour grapes about the latest developments in Congress.  That is to be expected — he was once considered the Obama Administration’s chief “broadband czar.”

“The legislation ties the FCC’s hands in a variety of ways,” Levin tells TVNewsCheck. “It opens it up to litigation risk, which then, in conjunction with the other handcuffs, makes it difficult to pull off a successful auction. The nature of the bill dramatically increases the probability that there will be less spectrum recovered and less money for the [U.S.] Treasury.”

Broadcasters have been legitimately worried about where they might fit within the new, slimmed-down UHF dial.  The more broadcasters packed closer together, the greater the chance of interference and reduced signal coverage for those who happen to live between two cities sharing the same channel number.  The NAB has consistently opposed forcing station-owners’ hands and wants stations compensated for their costs and inconvenience.

Before the first “white space” broadband signal takes to the airwaves, the government will have to set aside at least $3 billion to defray expenses incurred by television stations moving down the dial.  With language that guarantees broadcasters won’t have to suffer from an interference nightmare, FCC engineers will have a much harder time finding enough channels for the number of stations that need to move.  That could mean fewer channel positions up for auction.

Blair believes stations can extract even more by playing the litigation threat card.

“Nobody wants to go to an auction when there is the threat of a judge anywhere having the ability of holding it up,” Blair said. “I believe a good lawyer could find a way to get the question of  whether the FCC took all reasonable efforts in front of a judge. If you are designing the auction and a big law firm shows up and says, ‘If you don’t take care of my single broadcaster, we are going to find a way to get to court.’ That’s a real threat.’’

The Lady Gaga problem

Lady Gaga's wireless microphone malfunction.

Assuming Washington can fling enough cash to soothe the nerves of worried broadcasters, impediments to white space broadband don’t stop with the local Fox station.  The next complication is the wireless microphone issue.  When you see Lady Gaga in her latest outrageous outfit, you probably are not noticing her wireless microphone.  Performers of all kinds use these low power devices that often work over unused UHF spectrum.  Only it may not be unused for long.

Spectrum Bridge, a “white space” database administrator charged with coordinating who is using what frequency for what purpose, understands the challenges of trying to keep track of TV reporters, bands on tour, and other wireless microphone users, who all expect an interference-free experience.  Electric companies and municipalities also plan to utilize white space spectrum to manage smart city and smart grid communications.  A year later, Super Wi-Fi applications that deliver longer distance Wi-Fi service are expected to arrive.

It’s becoming a crowded neighborhood.

Congress’ NAB-friendly, Republican-sponsored bill may be modified substantially in a Democratic-controlled Senate, and there is still plenty of time for lobbyists to work their magic.  But it’s safe to say that those who have waited at least seven years for white space broadband to become a reality will have to wait a little longer.