A Stop the Cap! reader working for a Kansas City non-profit group dropped us a note this morning indicating she has received an invitation from Google to join the company at a special event Thursday, July 26 which will be Google Fiber’s formal launch announcement.

“There is buzz all over town about Google launching the fiber service on a limited basis in certain Kansas City neighborhoods next week,” Cathy writes us. “The local media has definitely been invited and encouraged to attend and several non-profit groups are going together in a group to also informally meet with some Google officials at the conclusion of the event regarding access and pricing issues. We have already been told this will be a formal launch event.”

Google has kept its pricing and exact service availability information tightly under wraps, but the company is inviting local residents to sign up for e-mail invitations and additional information as it is released.

The anticipated launch has not been missed by Time Warner Cable, which has taken to placing signs around the workplace offering $50 “rewards” for insider tips about Google Fiber’s launch and marketing plans. Although some in the tech press have characterized this as “fear” of Google Fiber, a Time Warner employee tells Stop the Cap! the “reward” program is not unprecedented and the cable company has occasionally offered goodies to employees who can deliver tips about competitors like Verizon FiOS and community fiber broadband networks for years.

Courtesy: Gigaom

Kansas City residents will certainly have a choice when Google Fiber launches its gigabit network. In addition to fiber broadband from the search engine giant, customers in different parts of the area can also get cable from Time Warner Cable or Charter and U-verse from AT&T.

Google will join Chattanooga’s EPB Fiber as America’s gigabit residential broadband providers. Cable operators and phone companies are expected to downplay Google’s fiber introduction — likely telling customers they do not need gigabit speeds and chastising its likely monthly cost.

Google’s competitors may have to prepare to deliver that message beyond Kansas City, however.

Dow Drukker, senior vice president of CapStone Investments, believes Google is in the mood to grow:

Initial Indications Google Fiber Is Likely Expanding Beyond Kansas City.

We saw an ad for an Inside Sales position in Mountain View, CA for selling Google Fiber to small businesses. The ad said the position would be tasked to build a team to sell a national broadband network indicating Google likely plans to build a fiber-optic network in additional cities.

This was the ad Drukker saw, which can be vaguely interpreted to indicate the company has plans to place Google Fiber in more cities (underlining ours), although we see nothing that specifically mentions a “national” broadband network:

The area: New Business Development

At Google, we set ourselves goals we know we can’t reach yet. Our New Business Development team works on game-changing ideas, from technological experiments to the expansion of existing businesses into new territories. We’re a team of technologists, entrepreneurs and leaders with an eye for what’s next, working across Google to develop products and ideas that revolutionize the way people connect with information.

The role: Sales Manager, Inside Sales, Google Fiber

Does winning new business get your adrenaline pumping? Drive growth for Google’s Online Sales Group as part of the Inside Sales Organization, the sole acquisition engine at Google. You collaborate with our Account Management teams to devise strategies to acquire specific segments of your market. Work independently, travel to trade shows, visit large prospective clients–it’s all part of this role. Be rewarded for being an overachiever while driving incremental growth in your market. You prescribe the right marketing mix based on Google’s core advertising products through acquisition of predefined mid-and up-market clients. You are product-and industry-savvy, and your energetic drive propels you toward new acquisitions and building and managing your own book of business.

If you want the opportunity to work on a state-of-the-art high-profile program, look no further than the opportunity to frame the future of broadband. The Fiber Sales Manager will build a team to evangelizes Google Fiber services to small and medium business and multi unit dwellings. Fiber Sales manager will develop a plan for our approach in the market including multi unit dwellings, small business, restaurants, and hotels. Inside Sales Representative, you reach out proactively to both small businesses, while articulating how Google Fiber Solutions can help make their work more productive. (And then, you seal the deal!) You excel at product pitching, cultivating a strong base of new clients and working with fellow technical Googlers to devise solutions and support for your clients.

One of the most potentially valuable lessons Google may teach with its new gigabit broadband network is one for Washington lawmakers. To date, cable and telephone companies have portrayed gigabit fiber broadband as unnecessary, unwanted, and too difficult and expensive to offer residential customers. Google’s performance in Kansas City could prove those arguments wrong.

Several years ago, phone companies like AT&T and Verizon discovered providing competing cable service over U-verse and FiOS meant approaching each community, asking permission to tear up the streets and yards of local residents to deliver the service. AT&T’s U-verse requires enormous 4-6 foot ugly metal cabinets in the front or side yard of a customer every few blocks. Verizon’s FiOS network necessitates the replacement of the copper wire network with fiber optic cables in its place. More than a few yards and streets were torn up installing the new cables.

Dealing with individual town boards, city councils, and other franchising authorities became a nuisance for the companies, so both decided to invest some serious lobbying money to rip control away from local authorities. Understanding they would never get away with advocating for no oversight, they settled for the next best thing — advocating for a statewide franchise law. With that, both phone companies simply needed to obtain a single license from the state to operate.

U-verse cabinets often make the evening news when they are plunked down in your front yard. With statewide video franchise laws, you and your local community leaders no longer have a say.

AT&T has been especially successful in passing such “reforms” in their service areas. Verizon has fought less successfully in the more-skeptical northeastern states unwilling to give the company carte blanche-benefit of the doubt.

Illinois is definitely AT&T territory, and the company’s successful push for statewide franchising in 2007 was tied to promises AT&T would hurry out its U-verse service across Illinois. Instead, with many Illinois customers still without access to U-verse, the phone company recently announced its upgrade-expansion was over. But AT&T remains grateful to the Illinois legislature for keeping its end of the agreement — removing certain pesky consumer protection and local oversight laws.

AT&T also craftily defined limits on how much authority the state franchise body could have to operate. In some states, franchise authorities are little more than paper pushers issuing franchise agreements at-will to operators, leaving local communities stuck with whatever quality of service the phone and cable company is willing to offer.

While phone companies spent millions lobbying for franchise reform, the cable industry has occasionally fought their efforts, maintaining AT&T and Verizon should have to follow the same rules they do. Cable operators spent years negotiating franchise agreements with every community they service. In many cases, the cable industry lost the battle but, along with AT&T and Verizon, effectively won the war.

In Carbondale, cable customers quickly learned that statewide video franchise “reform” pushed by AT&T was no help to them. Soon after the law was passed, Mediacom closed the only local customer service center in the city, in direct violation of their local 2009 franchise agreement that required Mediacom to keep its service center open for at least a decade after signing.

In court, Mediacom argued their signed contract with Carbondale was null and void because of the changes to the Illinois Public Utility Act, which transferred franchise authority to the Illinois state government and out of the hands of local officials.

Carbondale officials sued Mediacom in 2010 over the franchise violation, and the cable company opened a temporary customer service center in a local shopping center as an interim measure.

Now two courts have found in favor of Carbondale’s carefully written franchise agreement, and have ruled Mediacom cannot simply tear up their local franchise agreement, state law or not.

What made the difference for Carbondale was language in the agreement that kept close to the consumer protection provisions now found in the statewide franchise law. Courts found that because Carbondale did not stray from the state’s standards, they were within their rights to expect Mediacom to continue operating under the terms of the franchise agreement the company signed.

“The circuit court correctly concluded that the plaintiffs and Mediacom ‘mutually agreed to contracts, both valid at the time of their formation, and valid after the enactment of the customer service and privacy protection standards of (statute),” Justice James M. Wexstten wrote in the appellate ruling.

That leaves Mediacom mulling extending its lease on their single local customer service center, at least until they decide whether or not to appeal the case to the Illinois Supreme Court.

Jackson County Assistant State’s Attorney Dan Brenner and Carbondale City Attorney Mike Kimmel, who fought Carbondale’s case in court told The Southern they would not be surprised to see Mediacom pursue the case.

“As far as we’re all concerned, they’ve got to keep that service center open in Carbondale until the contract ends or they get this thing reversed,” Brenner told the newspaper.

Lovett – Paid nearly double his 2010 salary for even worse results.

The man hired specifically to improve dismal customer satisfaction ratings for Charter Communications has walked away from the company with more than $20 million in pay in 2011 after just over two years at the helm, even as the company’s ratings grew worse.

Michael Lovett assumed the CEO position at Charter after the company emerged from Chapter 11 bankruptcy in November, 2009. Lovett was charged with cleaning up the company’s lousy reputation for customer service, service quality, and pricing.

He resigned this past February leaving Charter with an even poorer customer satisfaction rating. Now a filing with the Securities & Exchange Commission discloses he walked away with $1.3 million in salary and $19.24 million in bonuses, golden parachutes, stock awards, and other resignation-related benefits — almost double the pay he received in 2010.

Charter is legendary for billing errors, disinterested customer service representatives, Internet Overcharging schemes that limit broadband consumption, poor quality repair and installation work, and inadequate infrastructure.

In July, 2011 Atlantic magazine named Charter the 5th most-hated company in America, and only received a satisfaction rating of 59/100 in the American Customer Satisfaction Index.

This year, the “don’t care bears” of cable did even worse — achieving the rank of 3rd most-hated company in America, stiffing customers with bait and switch promotions customers never received, even shoddier customer service and dodgy billing practices.

“I’d rather have AT&T, and that should tell you something,” shares Thom, a Charter customer in St. Louis. “You can’t believe how bad a cable company can be until you’ve dealt with Charter. You have a better chance of being dealt with fairly in a mob-run casino.”

“Shareholders must be among the dumbest people in America to watch this company flush more than $30 million down Lovett’s bank account for two years and accomplishing the amazing task of actually making things worse,” Thom writes. “He’s proof that throwing money at a problem does not work, no matter how many press releases Charter puts out.”

Charter is now being run by an ex-executive from Cablevision Industries, who has spent his tenure luring other Cablevision mid and high level executives to join him at Charter. President and CEO Tom Rutledge, chief operating officer John Bickham, and chief marketing officer Jonathan Hargis — former Cablevision executives now show up for work at a New York office Charter opened specifically for them.

“Nothing ever changes at Charter,” says Thom. “Instead of spending money actually improving service, they’re opening new executive suites in expensive New York just so the top brass need not slum it here in St. Louis. It’s good to know they have their priorities straight.”

The Better Business Bureau has processed more than 5,000 customer complaints against Charter in the past three years, most eventually resolved through Charter’s executive escalation office in Simpsonville, S.C.

Charter Communications reported a net loss of $94 million in the first quarter ended March 31.

Comedy Central’s Jon Stewart expressed his views about the ongoing dispute between DirecTV and Viacom into his first show back from vacation. He was not charitable to his ultimate boss Viacom, asking company executives, “What are you, China?” Viacom quietly restored streaming access to its programming earlier today. (Clip viewable only within the United States) (5 minutes)

McAdam

Verizon CEO Lowell McAdam wants you to spend more with the phone company, and if his vision of Verizon’s future comes true, you will.

The company’s newest CEO spoke on a wide-ranging number of topics for the benefit of Wall Street investors at the Guggenheim Securities Symposium. A transcript of the event delivers several newsworthy revelations on the company’s future plans.

McAdam rose through the ranks of Verizon Communications with a specialty in the company’s immensely profitable wireless business. His predecessor, Ivan Seidenberg, spent his career at Verizon Communications working with the company’s legacy wireline (landline) network. While Seidenberg envisioned a new future for Verizon’s landline business with an upgraded fiber optic network called FiOS, McAdam maintained a different vision having run Verizon Wireless as a profit-making machine since 2006. McAdam believes Verizon’s future earnings and focus should be primarily on the wireless side of the business, because that is where there is serious money to be made.

“The first thing I did when Ivan sort of named me as the Chief Operating Officer was we had a very well-defined credo in the wireless side,” McAdam said. “We created it when we first came together in ’99 because we had seven different companies and we knew we had seven different cultures and we needed to tell people what it was we were really looking for. So we created that document. We spent a lot of time on it. We do a lot of reward and recognition as a result of it and that culture really took root in wireless.”

McAdam’s leadership also aggressively challenged the long-standing telephone company philosophy of earning a stable, predictable profit as Verizon did when it was a regulated monopoly. Instead, McAdam shifted the work culture towards an obsession with shareholder value.

“We took the top 2000 leaders through what we call ‘Leading for Shareholder Value’ and that was really a cultural shift for us because, if you think about it, the wireline side of the business has come out of the defined rate of return culture and we left that competitively a while ago. I am not sure we left it culturally,” McAdam said. “So we have been far more pushing why do you make that investment, what is the return on it, what is the priority of that investment versus another investment.”

Verizon’s Plans to Abandon Rural Landline Customers – Sign Up for Our Expensive LTE 4G Wireless Broadband With a 10GB Usage Cap Instead

Some of the most revealing commentary from McAdam came in response to questions about what Verizon plans to do with its enormous landline phone network, dominant in the northeastern United States.

In comments sure to alarm rural Verizon customers from Massachusetts to Virginia, McAdam clearly signaled the company is laying the groundwork to abandon its rural phone network (and DSL broadband) as soon as regulators allow. Dave Burstein at DSL Prime estimates that could impact as many as 18 million Verizon customers across the country.

“In […] areas that are more rural and more sparsely populated, we have got [a wireless 4G] LTE built that will handle all of those services and so we are going to cut the copper off there,” McAdam said. “We are going to do it over wireless. So I am going to be really shrinking the amount of copper we have out there and then I can focus the investment on that to improve the performance of it.”

Elsewhere, in more urban and suburban areas, McAdam also wants Verizon to purge its network of copper.

“The vision that I have is we are going into the copper plant areas and every place we have FiOS, we are going to kill the copper,” McAdam said. “We are going to just take it out of service and we are going to move those services onto FiOS. We have got parallel networks in way too many places now, so that is a pot of gold in my view.”

In other words, McAdam would shift money spent maintaining and upgrading rural landline service into the company’s wireless network in rural America and its FiOS network in more urban environments, both of which will improve profits. FiOS allows Verizon to pitch television, broadband, and phone service in one profitable triple-play package, while also discontinuing standalone DSL service. Rural customers pushed to wireless LTE for broadband will face onerous usage limits and more expensive service for phone calls and broadband. Using Verizon’s LTE network for video would be prohibitively expensive.

McAdam hints the company has used its lobbyist force to make preparations to abandon rural customers first in Florida, Virginia, and Texas where state regulators approved legislation that eliminates the requirement Verizon serve as “the carrier of last resort.” That law required Verizon to deliver landline phone service to any customer in its service area on request. With that provision stricken in those three states, Verizon can abandon any landline customer it chooses after serving written notice.

McAdam said he intends to continue lobbying other states to adopt similar deregulation, and chided legislatures in both New York and New Jersey for “being backward” because they have repeatedly refused to allow Verizon to walk away from its rural customer obligations.

Burstein thinks the changes in progress at Verizon will be a disaster for affordable rural broadband.

“This makes a mockery of ‘affordable broadband,’ especially when Verizon and AT&T are boycotting the plan for discounts for poor schoolchildren,” Burstein says. “The detente between telcos and cable companies means the prices of modest Internet speeds (3-15 megabits down) are typically going up from $30-45 to $55-70.”

Burstein also notes the change spells disaster for competitors who sell DSL service over existing phone networks.

“Nationwide, alternatives to the telco/cablecos have less than 5% of the residential market but in some areas they remain important,” Burstein says. “The most interesting, Sonic.net in California, offers unlimited calls and Internet up to 20 meg for $50/month, 20-50% cheaper than AT&T.”

“High prices, unacceptable service choices and further rural depopulation are bad policy,” he adds.

Verizon still earns enormous revenue from its remaining landline customers, revenue McAdam hopes will be replaced by selling business-focused services instead.

“Cloud [service] is continuing to pick up for us. Security is I think going to be an even more important play for us as we go forward,” McAdam noted. “I think these large enterprise accounts, offering them kind of a global service with those up the stack […and…] applications on top of it drive it as well. So there is a number of pieces in the portfolio that I think will take us up and more than compensate for some of the falling off of copper-based services like DSL and voice and that sort of thing.”

Verizon’s Unionized Employees Are Wrong-Headed Defending Verizon’s Landline Network

McAdam also blamed the company’s unionized employees for remaining loyal to the company’s traditional role in the landline business.  Unions like the Communications Workers of America continue to push Verizon to expand its FiOS fiber optic network in more places, but the company has left its FiOS expansion on hold, diverting investment into its wireless business. Both McAdam and the union agree the days of copper wire networks are numbered, but McAdam hints that union concessions (and fewer unionized employees) are required before the company will again expand FiOS.

“Our employees see that it is not sustainable to keep having copper plant out there. You really can’t invest in it; it is difficult to maintain it; and they want to see us improve on FiOS,” McAdam said. “And when I am out in the field, the techs and the reps will be the first to point out kind of some of the dumb policies I call them that we have around the business. Well, a lot of those are based on rules that were negotiated with the union back in the ’60s and ’70s.”

“So we have to get the union leadership to understand that if the company is able to be more flexible in meeting customer needs then we can grow things like FiOS, which will provide good long-term jobs,” McAdam added. “Will it be the same number as what we had in the past? No.”

Verizon’s Enormous Offshore Bank Accounts: Waiting for a ‘Business-Friendly’ Administration to Let Them Bring the Money Back, Tax-Free

McAdam also signaled investors that the phone company’s profits massed in overseas bank accounts are going to remain in place until they know who wins the next election. Verizon wants to repatriate some of that offshore money, but they want to do it tax-free.

“Everybody is kind of waiting to see who controls the Senate and who controls the White House and they are waiting to make those — you have got to understand what the tax situation is going to look like, so we are all waiting to make those investments,” McAdam said.

‘Share Everything’ Lays the Foundation to Monetize Your Data Usage… Forever

McAdam is a big supporter of the company’s new Share Everything wireless plan, which charges smartphone owners $90 a month for unlimited voice calling, texting, and a small 1GB bucket of data that he is convinced customers will be prepared to spend more to enlarge.

“If I know that I have an intelligent home that I can get to any number of ways. If I know that I can do everything I want in my car that I can do in front of my TV set or my PC or on my tablet, I think it just takes away a lot of the restraints,” McAdam said. “Is it going to cost them more money? Yes, but it will probably shift their wallet spend from other things that they do individually into this sort of a bucket of gigabytes. And so I think it will be a significant [revenue] stream for us.”

FitchRatings, a credit ratings agency, agrees in a new report.

“The new pricing structure taken by the industry leader is a disciplined pricing action that could create more cash flow stability longer term within the wireless industry,” the credit ratings agency said last week.

Fitch notes data services are increasingly becoming a larger source of revenue for wireless phone companies. In the first quarter alone, data revenues at Verizon Wireless, AT&T, and T-Mobile USA — all carriers that abandoned flat rate wireless data plans, grew 19% year over to year to $14.2 billion. That represents 41 percent of the companies’ service revenues.

Despite assertions from Verizon that the new plans deliver convenience and better value for subscribers, Fitch found they actually represent a substantial price increase for many customers.

“These increases are sometimes material, depending on whether the legacy rate plans have low recurring charges for text messaging or calling minutes. As a result, prices have generally increased for new subscribers,” Fitch reports.

Fitch warns investors Verizon is likely to lose customers over its new pricing strategy, and experience a slowdown in new customer growth as well, at least until competing carriers realign their pricing and plans to be similar (or match) those Verizon introduced last month.

The Days of Your Subsidized Android/iPhone May Be Numbered

McAdam’s vision also includes a re-examination of device subsidies as customers increasingly depend on wireless devices. McAdam previously indicated the wireless device subsidy was designed to get customers to adopt and embrace new technologies, and as adoption rates have soared, the need to keep discounting technology that customers depend on diminishes.

He echoed that sentiment at the Guggenheim Securities Symposium, noting that Verizon this month abandoned subsidies on tablet devices. For McAdam, discounting wireless technology serves one purpose: to quickly establish a new business relationship with a customer that probably would not buy their first device at full price.

But McAdam recognizes changing the company’s subsidy that customers expect to receive must happen gradually. It has already started, first by eliminating early upgrade discounts, then by dropping the company’s loyalty discount “New Every Two” plan. Now, the company will only allow grandfathered unlimited data plan customers to keep those plans if they agree to forego any subsidy on their next smartphone.

“If you look at the telematics industry today [services like OnStar], the car companies subsidize a device that goes into the car. So I think that we have a tendency over the years to sort of look and say, oh, something is going to happen very quickly,” McAdam said. “Things have a tendency to evolve over a long period of time, so I think you will have some devices, like the tablet today, that [are] not subsidized and you’ll probably still have certain devices that are because you want to establish that relationship with a customer and that is the easiest way to get there.”

Verizon Wants You to Use the Cable Industry’s Growing Wi-Fi Network

McAdam’s vision also offloads as much of Verizon’s 3G and 4G traffic to other networks as possible. Ironically, one of the biggest networks he hopes customers will use instead of his are the growing number of Wi-Fi services offered by his competitors in the cable industry.

“It is interesting that a lot of people have said, well, I can’t believe you’re going to partner with [cable companies],” McAdam said. “You are not going to use their Wi-Fi are you? Well, of course, we are. I mean we want to shift as much onto FiOS or onto the fixed network where we can and then provide — use that capacity to provide those higher demand services like video.”

McAdam added he does not want customers sitting in their homes watching video over his LTE 4G network. He also wants that traffic shifted to Wi-Fi.

“So our thinking going forward as we talk about kind of the ‘One Verizon’ approach is we want to use every network asset we have and if that means jumping onto FiOS or using the cloud services for mobile as well as fixed line, using security across all of our different access technologies, we want that network to be seamless and that is what our CTO, Tony Melone, is driving hard on in the business right now,” McAdam said.

One preview of that thinking at work can be found on Verizon Wireless’ hottest new device — the Samsung Galaxy S3. Verizon’s version of the phone browbeats customers with prominent menus that encourage Wi-Fi use wherever possible. The phone’s persistent reminder has become a pest according to many of the phone’s owners, who consider both the message and the difficulty keeping Wi-Fi shut off obtrusive.

Verizon’s partnership with large cable companies including Comcast, Time Warner Cable, Cox, and Bright House Networks originally involved the acquisition of excess wireless spectrum cable companies originally intended to use to compete with the mobile phone industry. With the cable industry abandoning those plans, the proposed collaboration involving Verizon Wireless grew to include cross-marketing each other’s products and services, and now apparently includes sharing the cable companies’ growing Wi-Fi networks.

Verizon Believes The Future of Telecommunications Needs to Be In the Hands of Two Companies — Verizon and AT&T

A point of shared belief between market leaders Verizon CEO Lowell McAdam and AT&T CEO Randall Stephenson is that excessive competition just does not make sense. Both believe federal regulators have it all wrong when they push to maintain the level of competition that still exists in the telecommunications business. When the Department of Justice effectively pulled the plug on a merger between AT&T and T-Mobile, Stephenson was outraged and, in one investor conference call, launched a tirade against regulators and suggested that AT&T would throw in the towel on expanding rural broadband in a retaliatory move.

McAdam and Stephenson both believe that competition in telecommunications represents wasted investment, inefficiency, and value destruction.

“I think the fundamental problem here, and it is sort of like fighting gravity I think, is that it is so expensive to build these networks that you are not going to support seven or eight carriers,” McAdam told investors. “I don’t — frankly, I think you’ll be lucky if you can support three in a healthy environment.”

But McAdam recognizes that if it achieves a wireless duopoly with AT&T, it must be a benevolent one, or else the marketplace abuses the wireless industry has a track record engaging in will invite regulatory scrutiny.

“We have a tendency to create a great club and hand it to our detractors and say please beat me with this because we do some dumb things like fighting some of the number portability and trying to push a direct wireless directory,” McAdam said. “I mean there are things that have really upset customers and that invites regulation. So I think the industry has the responsibility to act in the best interests of the customer as part of the mix with a shareholder, but I think there is always going to be the battle with regulation.”

McAdam admits he is uncomfortable with the fact the Obama Administration has allowed the regulation pendulum to swing more towards enforced competition and checking the power of dominant carriers in the marketplace. He prefers the Bush Administration’s “hands-off” approach that allowed both Verizon and AT&T to snap up smaller competitors with scant regulatory review.

McAdam believes the Obama Administration’s FCC and Justice Department is slowing down wireless investment, innovation, and the industry’s ability to earn profits at a time when unemployment in sky high and increased investment will help drive the economy forward.