AT&T workers launched a two-day strike impacting operations in Connecticut, Nevada, and California.

Around 20,000 AT&T workers in Connecticut, Nevada and California are striking this afternoon in a two-day action to protest what union officials call the company’s lack of good faith during contract negotiations talks.

“Contract negotiations are never easy,” said CWA District 9 vice president Jim Weitkamp. “But when AT&T violates the law repeatedly, the process really can’t work. Given AT&T’s record profits, tax breaks and jaw-dropping executive compensation, there is no reason for them to insist on lowering the standard of living of a single worker.”

While 17,000 workers in the west and 3,000 employees in Connecticut walk picket lines, fellow AT&T employees in the southeast are still on the job after the company reached tentative deals with unions representing those workers.

AT&T says the new three-year deals with the Communications Workers of America and the International Brotherhood of Electrical Workers in Alabama, Georgia, Louisiana, Mississippi, Tennessee and North and South Carolina  bring wage and “modest pension increases,” according to the company.

Connecticut workers say AT&T’s proposed package in the northeast is not sufficient to address the high cost of living in the state.

But AT&T says declining numbers of landlines means cuts are inevitable. AT&T said in a statement Tuesday’s walkout was not in anyone’s best interest.

Connecticut picketers have been blocking the entrances of several AT&T facilities including in New Haven, where replacement workers appear to be honoring the picket lines after talking with striking workers. Unions are requesting customers not do business with AT&T during the strike.

Late reports indicate several cars with New Jersey license plates have hit three persons on one picket line. The union claims the vehicles were being driven by replacement workers, but no independent confirmation was available.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/New Haven Register ATT UNION ON STRIKE 8-7-12.mp4[/flv]

The New Haven Register talked with Tim Smith, a union worker on a picket line outside of an AT&T facility. The video shows picketers encouraging replacement workers to honor the picket line and not report for work.  (3 minutes) 

Four of the nation’s largest phone companies — two former Baby Bells, two independents — have very different ideas about solving the rural broadband problem in the country. Which company serves your area could make all the difference between having basic DSL service or nothing at all.

Some blame Wall Street for the problem, others criticize the leadership at companies that only see dollars, not solutions. Some attack the federal government for interfering in the natural order of the private market, and some even hold rural residents at fault for expecting too much while choosing to live out in the country.

This four-part series will examine the attitudes of the four largest phone companies you may be doing business with in your small town.

Today: CenturyLink — Our Commercial Customers Deliver 60% of Our Revenue; Our Attention Follows Accordingly

“Business customers now drive about 60% of our total operating revenues,” CenturyLink CEO Glenn F. Post III told investors in March. “Our focus on delivering advanced solutions and data hosting services to businesses are key factors in improving our top line revenue trend.”

With residential customers departing traditional landlines at an average rate of 5-10 percent a year, keeping customers has become an important priority for a number of phone companies, especially those who have plowed millions into mergers and acquisitions to build their businesses. For the past several years, CenturyLink has been acquiring small, regional independent phone companies, a former Baby Bell, and a competing landline provider Sprint used to think would be an important part of its business.

Century Telephone’s original customers were mostly cobbled together from acquisitions from other phone companies, including names like GTE, Central Telephone Company of Ohio (part of Centel), Pacific Telecom, Mebtel and GulfTel. But the biggest expansion of the company would come from acquisitions of Sprint-spinoff Embarq and former Baby Bell Qwest.

Today CenturyLink operates one of the nation’s largest independent phone companies, and serves markets large (primarily on the west coast) and small (rural communities primarily in the southeast, Missouri, Ohio, Indiana and Wisconsin).

CenturyLink’s revenues have often been uneven, mostly because of its acquisitions, landline losses, and the effects from competition in its larger markets. While CenturyLink’s acquisitions grew the company, they also saddled it with landline networks that have proved inadequate to meet the growing needs of customers. With a disconnect rate running between 6.4% this quarter and 7.6% in the same quarter a year ago, residential customers are leaving their voice lines behind in favor of cell phones and broadband customers are departing for faster speeds available from cable operators.

These “legacy services” lost the company $124 million in revenue — an 8.1% decrease over the past quarter. As customers depart, so do CenturyLink employees that used to handle the old landline network.

To make up the lost revenue, CenturyLink has gotten more aggressive in other areas of its business:

• Increasing focus on business/commercial and governmental services, including managed hosting, cloud computing and other commercially-targeted broadband initiatives;
• Deployment of fiber to cell towers as a growing revenue source;
• Limited, but ongoing rural broadband expansion;
• Development of Prism TV — a fiber to the neighborhood service targeting residential customers.

CenturyLink calls these their four key initiatives towards revenue stability, stable cash flow, and growth.

In the business services segment, CenturyLink sees enormous revenue potential selling businesses access to data centers, co-location services, and ethernet-speed broadband. Last year, CenturyLink acquired Savvis, an important enterprise-level service provider and owner of 50 data centers. Phone companies like CenturyLink are also in a race with large cable operators to be the first to offer cell phone companies access to “fiber-to-the-tower” service to support exploding data growth on 4G wireless networks.

Faster DSL, Fiber to the Neighborhood-Broadband Key to Keeping Residential Customers Happy

CenturyLink’s network map showing both its own service areas, and infrastructure obtained from the acquisition of Qwest.

For consumers, CenturyLink has been moderately aggressive in some areas boosting speeds of its DSL services. The company claims 70% of their DSL-capable landline network provides speeds of at least 6Mbps. At least 55% supports 10Mbps or higher; over 25% can manage 20Mbps or faster.

The company’s Prism TV service, a fiber to the neighborhood upgrade comparable to AT&T U-verse, is now available to nearly 6.3 million homes and apartments in eight cities. By year end, CenturyLink says it will increase that to 7.1 million homes.

Prism represents a significant portion of CenturyLink’s investment in its residential business. So far, the results have not proven a major threat to the competition. CenturyLink added 15,000 Prism subscribers in the first quarter, but the company only has 8% of the market. Cable and satellite providers continue to dominate. But the company says Prism is helping to keep the customers they already have.

CenturyLink says it now taking Prism TV west into former Qwest territory, starting in and around Colorado Springs, Col.

Customers will likely be offered 130 channels starting at $59.99 a month with a free set top box (new customers typically receive a $20 monthly discount for the first six months of service).

The phone company will compete with Comcast, which sells 80 channels for $56 a month (new customers get a $26/mo discount for the first six months).

With CenturyLink providing a better deal, at least for television service, Colorado City officials hope the competition will bring down rates, at least for new customers. That may be exactly what happens, predicts Mark Ewell, a senior account executive with Windstream Communications.

“We could see some pressure on Comcast’s rates. I would like to see Comcast adopt a price model that doesn’t go up after a promotional period,” Ewell told The Gazette.

“CenturyLink is likely to be more of a threat to the satellite providers like DirecTV and Dish because they have a much higher market share in Colorado Springs than they do in most other markets because so many customers left Adelphia [acquired in bankruptcy by Comcast] when it had its financial problems. Those customers have already shown a willingness to leave the cable television provider and try another service.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CenturyLink Prism TV.flv[/flv]

CenturyLink shows off its new Prism TV offering in this company-produced video.  (2 minutes)

CenturyTel acquires Embarq and changes its name to CenturyLink to reduce the emphasis on its traditional landline business.

CenturyLink’s arrival in the triple-play business of phone, Internet, and television service could be the first serious competition Comcast has gotten outside of satellite providers. WideOpenWest had a franchise to provide service in 2000 but never did. Falcon Broadband won a franchise in 2006, but only provides service to around 1,500 customers in the Banning Lewis Ranch, Black Forest, and Falcon areas. Porchlight Communications received a franchise in 2007, installed service for 500 customers but ultimately never charged them. Porchlight’s IPTV service never worked properly with its chosen set top boxes. That fatal flaw put the company out of the cable business, and the company turned the porch light off for good, abandoning its franchise.

Rural Broadband: Unless the Government Delivers More Subsidies, Rural Customers Will Continue Waiting

In late July, CenturyLink announced it would accept $35 million from the Federal Communications Commission’s new Connect America Program (CAP) to deploy broadband to homes and businesses in rural, broadband-deprived parts of its service area.

CenturyLink has the capability to extend broadband to 100 percent of its customers, but not the willingness to invest the money to make that happen, critics contend. CenturyLink freely admits it applies a financial test when considering when and where to expand its DSL broadband service into its most rural service areas.

In short, the company must recoup its costs of deploying broadband within a certain time frame, and be confident that a certain percentage of customers are going to sign up for broadband service, before it will agree to make the investment. Virtually all of CenturyLink’s current service areas have already met or failed that test, which leaves an indefinite group of broadband “have’s” and “have-nots.”

To shake up the status quo, the FCC proposed to shift Universal Service Fund money, collected from all phone customers, away from landline service towards rural broadband deployment. This invites CenturyLink, and other phone companies, to run those financial tests again. With urban customers footing part of the bill, theoretically more homes should squeak past the return on investment test.

In fact, more homes will finally get CenturyLink broadband — around 45,000 in semi-rural and suburban areas where the costs to provide the service are not as great as in truly rural areas.  The FCC is offering to cover just short of $800 per household to cut the costs of deploying rural Internet access.

But CenturyLink complains the money is not nearly enough to solve the really-rural broadband problem.

“In very rural areas where we really have the greatest need for support, this amount, on a per-location basis, will not be enough to allow us to really do an economic build-out,” Post told investors this spring. “So we’re still in the process really of evaluating our opportunities….”

That will leave CenturyLink likely spending considerably more upgrading its urban landline network to support Prism TV instead of supplying rural broadband service.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CenturyLink History.flv[/flv]

Jeff Oberschelp, vice president and general manager of CenturyLink of Nevada discusses the past history of CenturyLink and where phone companies are going in the future in this company-friendly interview.  (6 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WPRI Providence Call for Action Hotel guests not satisfied 8-5-12.mp4[/flv]

WPRI in Providence reports consumer satisfaction with many hotel chains is dropping as they follow the airline industry’s practice of charging extra for services usually included in the price of a ticket, or in this case, room. An increasing number of hotels are introducing new surcharges and fees for using their Wi-Fi networks.  (2 minutes)

Wireless Internet Service Providers (WISPs) are incensed about efforts by CenturyLink to win waivers from the Federal Communications Commission’s Connect America rural broadband funding program that could leave WISPs facing new competition from CenturyLink made possible by surcharges paid by phone customers nationwide.

At issue is a filing from CenturyLink before the FCC that would allow the phone company to “change the rules,” according to critics. One of CenturyLink’s most prominent arguments is that WISPs have data caps that inconvenience customers. But CenturyLink buries the fact it has usage caps of its own in a footnote.

“The waiver application we filed … would allow CenturyLink to spend tens of millions of dollars to bring more broadband services to more rural and high-cost customers who do not have reasonable access to broadband service today,” CenturyLink said in a media release. “These funds would be provided by the FCC’s Connect America Fund, as well as additional investment dollars would be provided by CenturyLink. If the waiver application is approved, CenturyLink will build needed broadband services to thousands of homes in Arizona, Colorado, Washington, Oregon and several other states.”

CenturyLink claims WISPs charge considerably more for service, suffer from line-of-sight restrictions which could leave many rural customers without service, have limited spectrum which keeps broadband speeds to a bare minimum and often forces customers to endure stringent data usage caps.

The waiver request would allow CenturyLink to receive and use federal Connect America funds to deploy its DSL service to rural customers already served by WISPs if two conditions are met:

• The state where CenturyLink would spend the money has not independently verified the coverage area of the wireless ISP and objective data opens the door to an argument that a WISP cannot adequately service areas where they claim coverage;
• The WISP imposes unusually high prices ($720/yr or more) or severe usage caps (25GB per month or less).

Chuck Siefert, CEO of the Montana Internet Corporation (MIC), a WISP, argues CenturyLink has no case, and is attempting to modify the rules to accomplish its own objectives rather than adhering to the original goals of the program — to deliver broadband to the rural unserved:

CenturyLink is simply raising an old protest in a new venue. Having been designated as eligible for almost ninety million dollars of the Connect America Program (CAP), it wishes to have the opportunity to use more than a third of that as it chooses, rather than as the Commission designated after input and analysis from all parties. The Rubicon has been crossed with respect to this issue: unserved areas are those that are not served by fixed wireless providers.  Regardless of CenturyLink’s opinion of the quality of service provided, these areas have been deemed served by the Commission and CAP incremental support may not be used to build out broadband in these areas. CenturyLink is certainly capable of using other funding to build out in these areas; the Commission has not precluded that.

CenturyLink’s complaints that WISPs often come with data usage caps is ironic because CenturyLink is now imposing usage caps on its own broadband service. CenturyLink argues data caps expose the limitations inherent in wireless broadband in their filing with the FCC:

Satellite broadband also often comes encumbered with restrictive data caps. The same is true of many of the WISPs subject to this waiver request. They impose on their users highly restrictive data caps of less than 25 GB per month. Indeed, two of the WISPs impose a cap of just 5 GB per month.

It is no surprise that these WISPs would impose such unusually low caps; like satellite providers, they must ration out their highly constrained capacity among the various end users who compete for it. WISP broadband capacity—unlike the customer-specific links in DSL-based broadband—is shared by all customers within a given wireless cell or sector.

This means that the more customers a WISP persuades to sign up, the worse the average service quality gets for all customers unless the WISP sharply limits how much customers may consume.

That imperative may be an unavoidable consequence of the WISPs’ technology, but it further underscores the need to give the affected consumers a robust broadband alternative.

Siefert claims CenturyLink’s assertions about the quality of its DSL service, pricing, and performance simply fall short of the truth, and MIC does better by its customers.

Pricing

CenturyLink charges a $134.89 non-recurring charge plus $29.99/mo for “up to 1.5Mbps” DSL service, plus “up to” $99.95 for professional installation. CenturyLink’s DSL modem costs $99 and has a one-year warranty.

Siefert claims MIC charges $30/mo for “bursting speeds up to 10Mbps” and $250 for technician installation, but the company offers regular installation promotions that cost $99. MIC warrants its equipment for the life of the service and charges no fee for service calls as long as the customer is current on their bill.

But Stop the Cap! found speeds and pricing less advantageous than Siefert might have the FCC believe. For instance, MIC’s $30 tier only guarantees 384kbps with speed “bursts” up to 10Mbps. Getting committed 2Mbps service runs $55 a month with the same “bursting” speed of 10Mbps. We also found CenturyLink willing to negotiate installation charges, and the company frequently discounts or even waives them if a customer signs up for a multi-service package.

Data Caps

CenturyLink now imposes a 150GB usage cap on customers with 1.5Mbps service or slower, 250GB for customers at higher speeds.

MIC claims it does not even monitor individual customer usage. Siefert says data use limitations are found in the terms and conditions of its service and are imposed only when a customer creates a problem for other users on the network.

“Rather than strictly applying data caps, MIC’s policy is to contact its customers and explain the impact their usage has on other customers,” Siefert explains. “As a small provider in a local community, MIC is able to do this in a way that a carrier like CenturyLink cannot. CenturyLink’s representations regarding transfer caps imply that WISPs arbitrarily and automatically shut a customer down once the cap is reached. This assertion is not based on evidence and is not an accurate statement of MIC’s approach to the caps. CenturyLink’s argument that WISPs operate like satellite and therefore WISPs service areas should be categorized as unserved areas based on how transfer caps are used fails.”

Stop the Cap! found different information on MIC’s website, however, including a 20GB monthly data cap and a $15/GB overage charge. Siefert’s submission to the FCC may suggest the published cap is a guideline more than a rule.

Performance

CenturyLink still uses T1-level circuits (1.5Mbps) to connect at least some of their remote D-SLAMs, according to Siefert, which helps the phone company extend DSL service to homes and businesses far away from the company’s central office. The net result is that customers fight for the bandwidth on an insufficient backhaul, which dramatically reduces speeds during peak usage times. In Helena, Montana CenturyLink “daisy-chains” D-SLAMs to support customers over a single T3 line, creating latency problems, packet loss, and further reductions in speed and performance.

MIC is capable of providing a total of 252Mbps per distribution site. The incoming next generation of wireless technology will increase that to 1.4Gbps. Additional distribution sites can divide the traffic load similar to how new cell towers can reduce demand on other nearby towers.

Speeds

CenturyLink sells speeds “up to” a certain level without guaranteeing customers will actually get the speed they are paying to receive. Siefert says CenturyLink customers in Montana currently can manage up to 7Mbps in some areas.

MIC says it can commit to its customers they can receive 10-40Mbps (and 80Mbps by the end of 2012) over its wireless network.

Independent Netindex.com suggests MIC does offers faster service on average than CenturyLink provides in Montana:

• Montana (statewide average): MIC 5.04Mbps vs. CenturyLink 3.8Mbps
• Helena: MIC 5.08Mbps vs. CenturyLink 2.73Mbps

The Wireless Internet Service Provider Association says their members are not eligible for federal Connect America subsidies, and most wireless providers are privately financed operations built with the support of their rural customers.

Said Richard Harnish, WISPA’s executive director, “We find it hard to believe that a company like CenturyLink that gets millions of dollars in federal support now wants more free money to overbuild unsubsidized rural broadband networks that WISPs already successfully operate. To do this, CenturyLink has attempted to discredit the taxpayer-funded National Broadband Map and invent its own standards in an effort to show that they should receive more than $30 million in additional subsidies.  Our strong opposition reflects WISPA’s view that CenturyLink’s arguments are factually and technically flawed.  We thank the other associations, state agencies and WISPs that support our views.”

Time Warner Cable executives told investors on a morning conference call the cable company has embarked on a gradual transition to an all-IP-based distribution platform which could eventually mean the end of today’s set top boxes and radically increase the amount of bandwidth available for its broadband and video networks.

“Whatever the merits of that from an engineering sense, all things IP are the standards that the world is building devices to,” said Time Warner Cable CEO Glenn Britt. “So that’s the standard we’re going to end up migrating to until something better comes along.”

The transition will help Time Warner Cable support additional customer-owned equipment, including video game consoles, streaming online video boxes, and televisions with built-in support for cable-delivered channels.

“If you look at the cable in 1980s, there weren’t a lot of set-tops, and I think we’re going back to that over time,” Britt said.

Britt has repeatedly criticized set top box equipment as cumbersome, expensive, outdated, and disliked from the perspective of customers. He noted the only reason Time Warner uses the boxes is to support traditional televisions that cannot handle all of the services the cable company offers today, including video-on-demand and encrypted premium channels. Moving to a different technology platform can result in significant savings if cable operators adopt open standard devices and technology.

Later this year, Time Warner will also be launching a nationwide channel realignment, affecting virtually every subscriber around the country. The cable company is adopting a unified, genre-based, national channel lineup, putting popular cable networks on identical channel numbers in every city.

Time Warner’s reported results found the company losing an additional 169,000 video subscribers during the quarter, a new record loss for the cable operator. Despite that, the company still booked an 8% increase in profits, thanks to higher prices for service and increases in the number of broadband customers. Time Warner blamed the video subscriber drop on seasonal losses from departing college students and those heading to vacation properties, as well as the downturned economy.

But the nation’s second biggest cable operator reports it has several initiatives under way for subscribers which they feel will boost earnings and subscriber numbers:

• Over the last 60 days, Time Warner deployed a new set-top box guide throughout the eastern region. After the Olympics conclude, the company will introduce the new guide across the western half of the country. The new guide features a new color scheme and better graphics, and is supposed to make navigation and search easier to use;

• The company will introduce IP-based set top boxes and home gateway devices by next year. The newest gateway is a combination DVR, DOCSIS 3.0 cable modem, and a video transcoder that can convert QAM-based video to IP for devices including game consoles and new IP set top boxes. Time Warner’s newest DVR will include the capability of recording five shows at the same time while watching another and 1TB of storage.

Install it yourself.

• Time Warner Cable’s TV Everywhere service will expand to include video on demand and the possibility of watching certain networks while outside of the home. The current service only works when you watch over your home Wi-Fi network.

• The cable operator’s Internet Essentials offer, which includes a 5GB monthly usage cap, will move beyond Texas and reach everywhere the cable operator serves by the second half of next year. When a usage meter shows up on your My Services page on Time Warner Cable’s website, you will know this new, optional plan is on the way.

• Time Warner is revamping their website to let customers shop, order, and buy more services online.

• Self-install kits will become increasingly common for customers comfortable installing their own services. The Easy Connect packages are available in stores or by mail, and are free of charge with no installation fee.

• Service call windows will continue to be refined. In most cities, two hour windows are currently offered, but the company is now moving to one-hour windows in many markets. In some cities, 15-minute windows for the first appointment of each shift are now available to customers who don’t want to sit at home and wait all day for the cable guy. The company is now also including an estimate of how long it typically takes to complete the type of service call requested.

• Customers continue to gravitate towards faster broadband service plans. The company’s Turbo, Extreme and Ultimate tiers together garnered 157,000 new adds in the second quarter and now comprise over 21% of high-speed data customers, up from 17% a year ago and 9% three years ago.

Britt also took questions about the impact Google Fiber will have on Time Warner Cable’s operations in Kansas City.

“There’s a lot of effort going on around the country to see what we could do as a society with more bandwidth in kind of a laboratory sense,” Britt said. “I view the Google effort as that. […] And I think that’s good for our business. We have a wonderful infrastructure, we have bandwidth, we have a way to go much faster with DOCSIS 3.0 by adding [higher speeds] to the offering. And the more the people figure out how to use broadband, the better off we’re going to be. So I think this is a good thing, not a bad thing, that people are trying to figure out how to use this technology.”