Windstream CEO Jeff Gardner told a cable news audience Tuesday that the rural phone company already supplies broadband to 100 percent of its service areas where the service is “economically feasible” to provide.  Any additional expansion will only come with the assistance of the federal government’s broadband stimulus program.

“We’re in 23 states — mostly rural markets, so broadband reach is incredibly important to us,” Gardner said on CNBC’s Fast Money program.  “We’re getting to 90 percent of our customers today; in fact, we’ve built out to every customer that’s economically feasible, so the broadband plan that has been announced by the administration is critical to us getting to that last 10 percent.”

In 2006, when Windstream was created from the spun-off landlines Alltel used to own, broadband and business customers represented 35 percent of Windstream’s revenue.  Today that number has jumped to 53 percent.

That’s not surprising to many telecom analysts who suggest broadband will be key to the survival of rural landline phone companies, especially those adjacent to larger communities where cell phone providers extend coverage.

Windstream has applied for $238 million in broadband stimulus money and claims it is in the best position to spend that money to extend broadband to its most rural customers.  It also has a captive customer base in many areas, where no cable competition exists and wireless service is spotty.

Gardner promotes the results of their de facto monopoly, noting that while Verizon and AT&T lose up to 11 percent of their landline customers each year in certain areas, Windstream has lost just three percent.

Still, many think landline phone companies are ultimately a dying business and a real bad investment.  Except Gardner admits the most important reason why people buy stock in his company is the huge dividend payout.

“Most importantly, what people buy our stock for is our dividend,” he said. “We pay $1 dividend — an 8.5 percent yield, so our cash flow is something our investors are always tuned into.”

One of the show hosts acknowledged the huge dividend, but suggested that may be troublesome down the road.

“The dividend is interesting, but it’s getting to the point of where it might be a little too interesting, if you know what I mean,” said Guy Adami.

Adami may be referring to the practice of paying out a larger dividend than a company earns in revenue, something that can rapidly spiral a company into bankruptcy.

[flv]http://www.phillipdampier.com/video/CNBC Windstream CEO Jeff Gardner 7-27-10.flv[/flv]

Windstream CEO Jeff Gardner appeared on CNBC’s Fast Money program to talk up Windstream’s prospects for broadband, especially if the government delivers on the company’s request for $238 million in stimulus funds to extend service to its most rural customers.  (4 minutes)

“The World Company is complimented that a number of companies have expressed interest in its Sunflower division over the years. This continues today. There is no definitive agreement concerning Sunflower with any company at this time.” — Dolph C. Simons Jr., Chairman, The World Company

Those words were reported Wednesday in a brief story published by the Lawrence Journal-World is response to an article published by cable trade magazine Multichannel News that Sunflower Broadband was close to a sale to Knology.

The denial of a definitive agreement does not mean the company isn’t close to reaching one, which was the original claim in the article written by Mike Farrell.

The non-denial denial didn’t dampen excitement by several Sunflower Broadband customers who were delighted to learn of the potential ownership change for the usage-capping broadband provider.

Some have stayed with AT&T’s DSL service just to escape Sunflower’s pricing, which one reader called “insane.”

Another claims AT&T’s upgrades have helped improve broadband service: “AT&T service has improved greatly…not to mention the price blows Sunflower away. Though AT&T will not tell you that you don’t have to have their modems. Go to Best Buy and get a third party modem.”

However, the broader implications of a sale of the cable company are worrying some Lawrence residents pondering the future of the hometown newspaper, the aforementioned Journal-World.  Sunflower Broadband and the LJW share a common owner — The World Company.  While the cable industry remains very profitable, many newspapers are not.

Phil Cauthon added his views to the Lawrence Broadband Observer on the topic:

I can’t see how this is anything but ominous for the Journal-World. Sunflower has a been a boon to the otherwise sinking newspaper ship. Unless some of the money from this sale is set aside as a foundation to support the newspaper over the long term, I don’t see how the Journal-World survives post-Knology sale. That Dolph Simons is still alive during a sale bodes well for that kind of prospect. Otherwise, I hope the Kansas City Star sees fit to serve Lawrence as a primary market—maybe even purchasing the LJW—with more than just a page or two of “metro” coverage.

What a great way to introduce U-verse to Chattanooga — headline news that an AT&T technician pepper-sprayed three dogs owned by a Chattanooga woman with a repellent known to be stronger than police pepper spray.

The nightmare for Janelle Lawrence began last week when an AT&T technician came on her property unannounced and began working in her fenced-in yard.

Janelle greeted the technician and asked him if her dogs, who were sharing her yard with the AT&T employee bothered him.

“He said not anymore.  I pepper sprayed them,” Janelle told WRCB, a Chattanooga television station.

She also noticed her dogs reeling in pain.

“My pug had pepper spray all over her body and was having trouble breathing and it got all over my arms and I started burning,” Lawrence says.

Lawrence says the technician was rude to her and refused to show her I.D. or a work order.

She recorded his truck number off the back of his work truck and called the main office demanding to know why he was there when she doesn’t subscribe to any of the company’s services.

AT&T told WRCB they didn’t need Janelle’s permission to enter her property or spray her pets.

AT&T issued a statement to the station:

“An AT&T technician has been working on this street all week for this week’s U-verse launch in Chattanooga. This AT&T technician needed access to the easement area on this fenced-in property, which is in a public right of way.”

Janelle remains deeply upset at AT&T and the employee, who appears not to be suffering any ill-effects to his job from the incident.

“You can do something to me and I’ll take it all day, but if you touch my little angels,” Lawrence says that’s where she draws the line.

The pepper spray incident took a considerable amount of shine off AT&T’s U-verse launch event, particularly for potential customers who are also pet owners like Stop the Cap! reader Sam who pointed this incident out to us.

“The same quick-drawing AT&T technician that attacked this poor woman’s pets could be aiming for yours or mine next,” he writes. “As long as this guy is still employed by AT&T, I wouldn’t have U-verse in my house even if they gave it to me for free.”

As far as Sam as concerned, AT&T pepper sprays their customers with high bills and bad service on a daily basis anyway.

“These guys have no shame buying their way into Tennessee with another one of those statewide deregulation bills that brought lots of campaign cash for supporters and very little for consumers,” Sam writes. “I signed up for EPB Fiber service, which is owned by the city, costs me less than either the cable or phone company, and delivers real fiber optic service right to my house.”

Sam also notes the guy who installed it loved his two dogs and cat.

[flv]http://www.phillipdampier.com/video/WRCB Chattanooga Chatt woman ATT pepper sprayed my dogs 7-27-10.flv[/flv]

WRCB-TV was the only station in Chattanooga to spend more than a few seconds on U-verse’s introduction in the city this week, but it wasn’t the kind of PR AT&T was exactly hoping for.  [Warning-Content may upset sensitive viewers.]  (2 minutes)

All this during an underwhelming launch week for AT&T’s U-verse in the River City, which garnered almost no attention in the local broadcast media, except for the pepper spraying incident.  The local newspaper put the story in its Business section.

Chattanooga residents now enjoy a fifth choice for several traditional services offered by cable or satellite:

• Comcast — incumbent cable operator
• EPB — municipally owned power utility and fiber-to-the-home provider
• AT&T — U-verse brings better speeds and service than traditional DSL from the phone company
• DirecTV — Satellite TV
• DISH — Satellite TV

The biggest savings residents will find from Comcast and AT&T comes when bouncing back and forth between new customer promotions.  Or you can just stick with EPB, which seems to offer the same prices for new and old customers.  For broadband customers, EPB delivers (by far) the fastest Internet speeds — up to 100Mbps upstream and downstream.  Comcast comes in at second place, and AT&T U-verse tops out at around 24Mbps if you are lucky.

Once promotional pricing from Comcast and AT&T expire, savings are highly elusive.  Price comparisons are extremely difficult because of channel line-ups, bundled equipment, and different Internet speed tiers and phone calling plans.  Making the best choice means sitting down and exploring channel lineups, HD channel tiers, how much broadband speed you require, and what kind of phone service you want, if any.

Most of the triple-play bundled promotions including standard cable, Internet and phone service will run between $119-139 a month before taxes, fees, and equipment costs.  If you sign a contract, Comcast will throw in a free iPod Touch.  Providers will keep your package price-increase-free for the length of any contract you sign.  That could be important, because AT&T and Comcast have been increasing their rates at least annually.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ATT U-verse Launch Event Chattanooga.flv[/flv]

Raw video from the Chattanooga Times Free Press captured the launch party for AT&T U-verse in the city.  (34 seconds)

McCormick - An AT&T Friend for Life

While AT&T was patting itself on the back for its wonderfulness, AT&T took special care to extend personal credit to Rep. Gerald McCormick (R-Hamilton County) for shepherding the Competitive Cable and Video Services Act of 2008 through the Tennessee General Assembly.  It helped deregulate the telecommunications industry in Tennessee and de-fang oversight agencies tasked with protecting consumer interests.  The result has been a myriad of customer service nightmares for Tennessee residents, particularly for those who are with AT&T and have faced repeatedly inaccurate bills and terrible customer service.

McCormick was right there in the press release to help celebrate the achievement:

“As Tennessee policymakers, our goal was to increase investment throughout the state and give consumers more choices and innovative new services, and I’m honored to help AT&T celebrate this launch,” Rep. McCormick said.

AT&T invested $180,000 in Tennessee lawmakers like McCormick to do the right thing by AT&T and pass the bill.  The Chattanooga Times Free Press delivered a breakdown in April 2009 summing up the spending as AT&T pushed forward its bill:

State Election Registry records show AT&T’s PAC gave almost $180,000 to candidates, usually incumbents, as well as PACs operated by legislative leaders and caucuses and parties in the two-year 2008 campaign cycle.

The PAC, funded by top executives, gave $2,000 to Lt. Gov. Ron Ramsey, R-Blountville, the Senate speaker, records show. The PAC gave another $8,000 to Mr. Ramsey’s leadership PAC, known as RAAMPAC, according to records.

The AT&T PAC contributed $5,000 to then-House Speaker Jimmy Naifeh, D-Covington, and another $4,000 went to Mr. Naifeh’s leadership PAC, the Speaker’s Fund, records show.

Rep. Gerald McCormick, R-Chattanooga, who is sponsoring the AT&T-backed deregulation bill, reported receiving $1,250 from AT&T’s PAC in 2007, records show.

“I don’t know how much money I’ve gotten from them,” Rep. McCormick said Tuesday. It is “up to each individual legislator whether they let that kind of thing influence them. I would hope that nobody would. I certainly don’t. I don’t need the campaign money that bad, to be honest with you.”

Janelle Lawrence and her beloved pets enjoyed none of this AT&T largesse — just the literal sting of the results.

Dingell

Rep. John Dingell has told FCC Chairman Julius Genachowski to drop broadband reform because the Michigan Democrat has not received a detailed reply to his letter about the matter sent back in May.  The Hill reports Dingell doesn’t like to be kept waiting for responses to his “Dingell-grams.”

“I find it wholly frustrating that Chairman Genachowski, after nearly two months, still has not responded to my questions about the classification of broadband Internet access services,” Dingell said in his letter.

Dingell added that he has “serious concerns about the FCC’s proposed course of action” and that Congress has “intense interest” in Genachowski’s plans.

In his May letter, Dingell had said he doubts Genachowski’s plan despite his support for network neutrality rules, which the FCC hopes to enact under the authority it would gain through its administrative maneuver.

“I feel Chairman Genachowski’s responses to my questions would be invaluable in informing the debate on the matter,” Dingell wrote this week.

He said the FCC should not proceed with Genachowski’s proposal to boost its power over Internet service providers through a regulatory maneuver known as “reclassification.” In his original letter, Dingell expressed “grave concern” that Genachowski’s plan risks reversal by the courts, putting “at risk significant past and future investments, perhaps to the detriment of the Nation’s economic recovery and continued technological leadership,” he wrote at the time.

Dingell’s days of putting his constituents first are well past.  He is the longest currently-serving Congressman and the third longest serving Congressman in the history of the country.  These days, having Washington officials bow before him is a much higher priority.  In a petulant letter sent to the chairman on July 20th, Dingell puts a deadline, in bold, for Genachowski’s reply.

Genachowski is probably wasting paper and time responding, considering Dingell already made public his opposition for broadband reform back in May when he wrote, “I have strong reservations about the course the commission is presently taking.”  Dingell said he’s worried that Genachowski’s proposal would be struck down in court, puts at risk “significant” past and future investments and could even “paralyze” other regulatory initiatives.

The reasons for his opposition amount to little more than concern trolling.  The telecommunications industry already challenges virtually every controversial policy enacted by government in the courts, threatens to slash investment in providing broadband service to those they’ve shown little interest in serving before, and do not deserve credit for “technological leadership” as the United States falls further behind others in broadband rankings.  The only threat to the national economic recovery from some cable and phone companies is another rate increase eating away at already tight budgets for most Americans.

Dingell’s latest noise opposing broadband reform brought praise from the U.S. Telecom Association, a group run by and for major broadband providers.  That should not be a surprise either, considering the USTA is Dingell’s 14th largest campaign contributor, donating $9,000 so far this congressional term.

Telecommunications interests who oppose pro-consumer broadband reform are among Dingell’s biggest contributors (in order of ranking):

Open Secrets reminds us this is a big money, high stakes fight with special interests pouring tens of millions into an all-out effort to stop meaningful broadband reform:

Since the start of the 2008 election cycle, telephone utility companies have given $12.7 million to federal candidates and party committees and spent $118.7 million on lobbying. Current lawmakers have collected $37.9 million from the industry, with Republicans collecting 51 percent of that.

The computers and Internet industry has spent even more money politicking and has leaned a little more heavily toward Democrats, giving current members of that party 60 percent of their nearly $50 million in total contributions. The industry has also spent $331.4 million on lobbying since 2007.

As the top all-time donor to federal politics, AT&T may have an especially strong standing on Capitol Hill. The company’s employees and political action committee have given $22.6 million since 1989 to current lawmakers through their candidate committees and leadership PACs, with 52 percent of that going to Republicans.

Verizon, too, is considered a “Heavy Hitter” for its extensive contributions over the years to federal political candidates. Current lawmakers have collected $9.2 million from Verizon’s employees and political action committee since 1989, with Democrats receiving 51 percent of that.

[…]

Here are the current lawmakers to bring in the most through their leadership PACs and candidate committees from telephone utility companies since 1989:

Opposing broadband reform that ultimately helps your constituents in return for campaign contributions and praise from groups like the USTA is business as usual in Washington.  Dingell’s outburst shows he’s forgotten exactly who he is supposed to be representing in this debate — his Michigan constituents, facing ever-increasing broadband bills.