Still keeping their fingers on the pulse of West Virginia’s broadband.

The state of West Virginia has a money problem.

In 2009, the state applied for and won a $126 million federal Broadband Technologies Opportunity Program (BTOP) grant to expand broadband service in a state plagued with some of the worst Internet access around. That grant will expire Jan. 31, without all of the money spent and equipment in place.

Whatever money is left unspent will be returned to the federal treasury and lost for good. That represents the absolute worst-case nightmare scenario for government officials loathe to leave money on the table. As a result, the state continues to hurry depleting the remaining grant funds before the clock runs out, even if it results in controversial spending decisions.

Last week, the chairman of the West Virginia Broadband Deployment Council openly admitted the state does not have a unified, coherent broadband deployment plan and has been running the broadband expansion effort on an ad hoc basis. That’s a big mistake in the eyes of Dan O’Hanlon, a retired Cabell County circuit judge who leads the Council.

It should not be this difficult. Ask virtually any consumer in rural West Virginia about what needs to be done and the answer is always the same: expand access in unserved areas and raise speeds for those who already have the service.

Unfortunately, $126 million of consumers’ tax dollars will be spent without really doing either.

The Obama Administration’s efforts to expand rural broadband came with lofty rhetoric, but far too often failed to directly address the problem. Consumers and small businesses want Internet access, and the local phone company simply won’t deliver it. Forget about cable broadband — most rural areas without Internet access are not served by any cable operator.

Phillip “Verizon and Frontier have built West Virginia’s taxpayer-funded broadband network in their own image” Dampier

That leaves the federal government in the position of trying to fund rural Internet connections in ways that don’t appear as blatant corporate welfare — paying off phone companies to provide service where they have simply refused for revenue and cost reasons. Competitors are also outraged at the precedent of directly subsidizing certain players but not others, and a lot of taxpayers might question why their tax dollars are going to the phone company.

As a result, the government has discovered a politically palatable alternative: throwing money at non-controversial “institutional” networks built to serve local governments, hospitals, public safety agencies, libraries, and schools. They also have political cover funding obscure “middle mile” networks that interconnect telecommunications company offices, but don’t directly serve any homes or businesses.

Since most people don’t understand the differences between these types of networks and the services they actually provide, broadband expansion projects offer politicians headache-free ribbon cutting ceremonies, applause, and positive publicity from local media reports that mistake institutional and middle mile networks with broadband finally coming to rural towns and villages. Long after the cartoon-sized ribbon-cutting scissors are put away, rural residents still find themselves stuck with dial-up or satellite fraudband.

Last week, the Joint Committee on Technology overseeing the BTOP grant learned the state lacks a plan to get the most broadband bang for the buck, despite hiring some big dollar Verizon subcontractor-consultants that are supposed to be experts at this kind of thing.

As Stop the Cap! reported in May, the state decided to spend $24 million of taxpayer money to buy 1,064 overpowered Cisco routers built (and priced) for big city university use. Imagine the surprise of rural schools and libraries when routers valued at $22,000 each arrived to serve a handful of concurrent users that would have been just as well-served with equipment you can find at Best Buy. Those routers were coincidentally supplied by a familiar vendor: Verizon Network Integration.

Two years later, more than 300 of those routers were in storage, unused. As of this week, 175 are still there.

This $22,000 router, paid for at taxpayer expense…

Two rural librarians in May told Stop the Cap! they were in a quandary over the equipment installed in their tiny libraries because they had no idea how to switch them on, much less maintain them over the long term. Even worse, both told us, they cannot begin to afford the ongoing monthly service fees that are required to participate in the new broadband network.

“We are getting a Hummer network on a Kia operating budget,” one librarian told Stop the Cap! last spring. “The network sounds great, but in our case we have to find the money to pay the bill to run it every month, and that money is hard to find in a library with five outdated public terminals.”

Seven months later and not a lot has changed.

“We have complained to our local leaders this has created more problems for us than it solved,” that same librarian, who could not use his name because of local politics, told Stop the Cap! “If you have worked in government or community service as long as I have, you cringe whenever you have one of these grants because you have to follow the federal government’s rules and you end up spending the money where it least needs to be spent.”

…will provide service for this rural library’s four public terminals. (Image: West Virginia Gazette)

Committee members echoed that sentiment, observing facilities are ending up with equipment they don’t know how to use or cannot afford because monthly service charges for upgraded broadband from Frontier Communications, the state’s largest phone company, are unaffordable.

One proposed solution to cut further taxpayer expense would be to sell the excess network capacity, deemed significant in many communities, to third party Internet Service Providers to directly resell to individual homes and businesses. After all, taxpayers are footing the bill for the $126 million grant that largely paid for the network and independent ISPs would help solve the problem of extending broadband to the unserved.

No deal. Frontier claims it is selling the project broadband access far below normal commercial rates, offering high capacity speeds at an unspecified “entry-level” price. Allowing third party companies to resell that service would put independent ISPs in direct competition with Frontier.

Unfortunately, well-intentioned members the West Virginia Broadband Deployment Council, the Joint Committee on Technology, and other government officials are in over their heads and increasingly appear captive to the design, recommendations, and implementation of a network plan heavily influenced by high-paid Verizon consultants and implemented on a broadband network owned and operated by Frontier Communications.

That left Gale Given, the state’s chief technology officer claiming critics of earlier spending decisions were engaged in “second guessing.” With the expensive routers mostly already in place, Given offered it was better for schools and other institutions to have more capacity than they need now so they won’t be hamstrung if they ever want to expand.

“Only one problem: Ms. Given assumes we can afford to turn the key on the network they are building us now,” said one librarian this week. “Only we can’t. Worrying about what we can do tomorrow is pointless when we can’t even afford to do it today.”

AT&T has once again received the dubious distinction of being America’s worst cell phone company, according to ratings (sub. required) from Consumer Reports.

AT&T’s bottom-of-the-barrel status has become something of an annual tradition in the consumer magazine’s ratings, as the company remains in last place year after year for dreadful performance, poor value, and downright lousy customer service. Its one bright spot: the company’s new 4G LTE service, which gets top marks for speed, although that rating comes before the majority of its customers are on the new network.

Verizon Wireless also took a tumble in the ratings published in the January 2013 issue. Verizon got downgraded for its new Share Everything plan, rated as only a fair value. Verizon’s vaunted customer service also declined significantly.

The highest ratings went to companies many never heard of:

• Consumer Cellular: This company resells AT&T service. The disparity between this top-rated, no contract provider and AT&T demonstrates that a bad customer experience with AT&T’s high prices and poor customer service can topple your ratings across the board. Consumer Cellular will face the same growing pains AT&T’s customers do in congested cities, but their customers seem to tolerate them better;
• U.S. Cellular: Top rated last year, this regional carrier provides service in the Pacific Northwest, Midwest, parts of the East and New England. The carrier, like the southern U.S. provider C-Spire, would probably have been acquired by one of the top-four carriers if the Justice Department seemed willing to accept further market consolidation. Its customers benefit from the company’s independence.
• Credo Mobile: Resells the Sprint network, but delivers superior customer service, which boosts its overall ratings. Formerly known as Working Assets, this progressive organization also enjoys loyalty because customers approve of the political and social causes with which it affiliates.

Overall, the magazine increasingly recommends consumers investigate no-contract or prepaid service plans before signing an expensive 2-year contract with the major four carriers. Pricing changes in 2012 have caused many subscribers to see bills rise, even as perks and benefits continue to erode. Device activation fees, upgrade fees, limits on early upgrades, restricted data plans, and all-or-nothing offerings that deliver (and charge) for features many consumers don’t use much have all reduced the value of contract service.

What keeps most customers coming back to another two-year contract is the chance to grab the hottest new smartphone at a discount. But consumers ultimately pay back whatever they have saved in higher fees over the life of the contract, which may make buying your own device at full price a better value with a no-contract plan.

Time Warner’s Wi-Fi hotspots in Kansas City (click to enlarge)

Sorry Kansas City — Time Warner Cable is not bringing faster broadband to compete with Google Fiber. Instead, the company today unveiled a new network of local Wi-Fi hotspots, along with an invitation to area businesses to help expand Wi-Fi access.

The new Wi-Fi initiative begins with 14 hot spots in downtown Kansas City, the Crossroads Arts District, the River Market, Brookside, Waldo, Westport, the 18th and Vine District, Loose Park, plus the downtowns of Parkville, Leavenworth and other sites.

Time Warner Cable Inc. launched 14 Wi-Fi hot spots in Downtown, the Crossroads Arts District, the River Market, Brookside, Waldo, Westport, the 18th and Vine District, Loose Park, plus the downtowns of Parkville, Leavenworth and other sites, reports the Kansas City Business Journal.

Time Warner said any of its commercial customers with Business Class broadband can share their connection by hosting a Wi-Fi hot spot themselves, with the cable company supplying the necessary equipment.

Company spokesman Mike Pedelty said the service will complement businesses’ existing Wi-Fi offerings, particularly in restaurants and other high traffic public venues.

But not everyone will have access. Time Warner Cable is restricting the Wi-Fi network to its own customers with Standard broadband service or above. Customers can access the new network with their Time Warner-supplied e-mail address and password.

Additionally, Time Warner has added Kansas City to the roster of communities where it sells disadvantaged families access to a discounted broadband package called Starter Internet. The package will match Google’s entry level 5Mbps service plan (with 1Mbps upload speed) and will run $10 a month. Google offers anyone in its service area 5Mbps service for a one-time fee of $200, payable in $20 installments.

For the time being, Time Warner Cable is leaving broadband speeds unchanged for its customers in Kansas City, although that may change in the future as Google’s fiber network continues to expand across the city.

FCC Chairman Julius Genachowski’s cowardly lion act. The rhetoric rarely matched the results.

Washington insiders are predicting Federal Communications Commission chairman Julius Genachowski will leave his position early in President Obama’s second term.

It cannot come soon enough, as far as we’re concerned.

One of the biggest disappointments of the Obama Administration has been the poor performance of a chairman that originally promised a departure from the rubber stamp-mentality that allowed Big Telecom providers to win near-instant approval of just about anything asked from the Republican-dominated FCC of the Bush Administration. If only to underline that point, former FCC Chairman Michael Powell joined Republican ex-commissioner Meredith Atwell-Baker on a trip through the D.C. revolving door, taking lucrative jobs with the same cable industry both used to oversee.

We had high hopes for Mr. Genachowski when he took the helm at the FCC — particularly over Net Neutrality, media consolidation, and predatory abuse of consumers at the hands of the comfortable cable-telco duopoly. Genachowski promised strong Net Neutrality protections, better broadband — especially in rural areas, an end to rubber stamping competition killing mergers and acquisitions, and more aggressive oversight of the broadband industry generally.

What we got was the reincarnation of the Cowardly Lion.

The Washington Post reviews Genachowski’s tenure during the first term of the Obama Administration and reports he has few unabashed supporters left. Telecom companies loathe Genachowski’s more cautious approach and consumer groups hate his penchant for caving in when lobbyists come calling. In short, another Democrat that talks tough and caves in at the first sign of trouble.

“His tenure has been nothing but a huge disappointment because he’s squandered an opportunity to give consumers the competitive communications market they deserve,” Derek Turner, head of policy analysis at public interest group Free Press told the Post. “If someone like him upholds compromise, it quickly leads to capitulation, which is what he’s done. He folds…to the pressure of big companies.”

Genachowski’s Record:

• Heavily promoted rural broadband and oversaw a review program measuring actual broadband speeds against those claimed by providers. But much of the money available for improving rural broadband has been separately awarded to “middle mile” and “institutional networks” that are not accessible to most consumers or businesses. Genachowki has heaped automatic praise on many of the phone companies winning broadband funding, despite the fact many of them are satisfied giving consumers no better than 4Mbps service;
• Reformed the outdated Universal Service Fund, which long outlived much of its usefulness, into a broadband expansion fund. But some unintended consequences have led to some rural providers suspending network upgrades because of funding uncertainties still unresolved;
• Approved a blockbuster merger deal between Comcast and NBC-Universal that included temporary “hard-won” concessions Comcast later admitted they were going to offer anyway – merger or not. The result is a new high bar for tolerating super-sized media consolidation with no serious consideration of the impact on consumers. The latest evidence: support for Rupert “Phone Hacker” Murdoch’s latest efforts to buy more newspapers in the United States;
• Rejected an AT&T/T-Mobile merger deal, but only after the Justice Dept. took the lead dismissing it as an anti-consumer, anti-competition nightmare. Within hours, Genachowski’s office issued a “me, too” press release condemning the deal he said little about earlier;
• Demanded a strong Net Neutrality framework to protect the open Internet, but utterly caved under pressure from politicians receiving hefty corporate contributions from AT&T and others. The resulting loophole-ridden “protections” do not apply to wireless, and the industry-approved compromise is now the subject of a lawsuit filed by some of the same companies that earlier applauded Genachowski’s flexibility;
• Genachowski handed out his direct phone numbers to the CEO’s of the top Big Telecom companies, and has been directly lobbied by those “super-citizens,” while ordinary consumers are stuck filing comments with the FCC’s arcane Electronic Comment Filing System. Genachowski also directed closed-door meetings be held on the subject of Net Neutrality with large telecom companies. These meetings were closed to the public with no consumer representatives on hand;
• Genachowski refused to reclassify broadband as a “telecommunications service,” which would give the agency clear-cut authority to oversee the service. Instead, he has stuck with former FCC Chairman Michael Powell’s odd interpretation of broadband as “an information service,” not subject to much review by the agency;
• Appropriately nixed Philip Falcone’s LightSquared venture, the biggest threat to GPS navigation around. But Genachowski’s controversial early boosting of the venture, including support for expedited special permission to launch the network without the usual scrutiny, resulted in an embarrassing about-face after long-standing critics’ fears of navigation interference were vindicated;
• In 2012, Genachowski’s cozy relationship with the industry reached whole new levels with unabashed support for Internet Overcharging schemes like usage caps and consumption billing, despite no evidence justifying them. The FCC has continued to ignore repeated requests for a review of these pricing schemes.

Time Warner Cable is expected to announce “three major initiatives” at a press event scheduled in Kansas City tomorrow morning, presumably in response to competition from Google Fiber.

Time Warner Cable representatives, Kansas City, Mo. Mayor Sly James, Kansas City, Kan. Mayor Joe Reardon, Kansas City, Kan. Superintendent of Schools Dr. Cynthia Lane and representatives from other participating school districts will speak at the event, which will officially unveil Time Warner Cable’s new low-cost Internet offering and significant additions for residential and Business Class customers.

Based on the attendance list and the nature of the Kansas City market, Stop the Cap! predicts the company will introduce discounted broadband service for low income families with school-age children and significant speed improvements for both residential and business customers, the latter likely limited to Kansas City for the time being.

Time Warner Cable currently charges $99 for 50/5Mbps service. Google charges $70 for 1,000/1,000Mbps service.