The French Revolution in wireless could be spreading across the United States if Paris-based Iliad is successful in its surprise $15 billion bid to acquire T-Mobile USA (right out from under Sprint and Japan-based Softbank). Wall Street hopes it isn’t true.

If you named one wireless carrier in the world guaranteed to provoke groans, sweat, and Excedrin headaches from powerful wireless industry executives living high on 40%+ annual margins, Iliad and its notorious Free Mobile would be the chief provocateur. Initially dismissed as an irrelevant upstart (much like T-Mobile itself) when it announced service on a less-robust network in 2012, as soon as Free Mobile announced its groundbreaking prices, panic was rife in the boardrooms and executive suites of competitors Orange, SFR and Bouygues Telecom, who couldn’t slash their own prices fast enough.

As one wireless executive in Paris put it, when Free Mobile launched, “the tsunami hit.”

In short order, Free Mobile has taken nearly five million of their competitors’ very profitable customers in France, mostly from its vicious price-cutting that results in rates half that of any other competitor.

Orange and other carriers promptly announced slashed shareholder dividend payouts and implemented cost-saving measures after being forced to cut pricing.

American wireless executives visiting Europe were aghast at the prices charged by the French upstart, suggesting they were reckless and would eliminate necessary investment in upgrades. Although France has been behind the United States in launching 4G service upgrades, French customer satisfaction with their wireless service is higher than in the U.S., and Free Mobile has the lowest customer loss (churn) rate of any carrier in France.

Iliad’s reputation as a nasty competitor is fine with self-made billionaire CEO Xavier Niel, who has become extremely wealthy selling cutting edge, yet affordable, telecommunications products without losing touch of his more modest roots. But he is reviled by most of his competitors for disrupting the comfortable wireless service business models his competitors have maintained for years. Niel has thrown marketing bombs into every sector of the French telecom market, ruthlessly cutting prices for customers while relying on in-house innovations to keep costs low.

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Euronews reported on the turmoil Iliad caused incumbent wireless carriers when it forced them to respond with major price-cuts to stay competitive. (0:44)

Free’s customer care center is run on Ubuntu-based, inexpensive notebook and desktop computers. Free’s wired broadband, television, and phone service is powered by set-top boxes and network devices custom-developed inside Iliad to keep costs down. Its creative spirit has been compared to Google, much to the chagrin of its “business by the book” competitors.

“It’s not done like this,” is a common refrain heard when Free Mobile announces more price cuts, an easing of usage caps, or completely free add-ons.

Today, a typical Free Mobile customer pays $26.75US a month for wireless service which includes:

• Unlimited calls to France and 100 other destinations, including the U.S., Canada, China, and all French overseas departments (eg. Guadeloupe, Tahiti, Mayotte, etc.);
• Unlimited SMS/text messages;
• Unlimited MMS messages to French numbers;
• 20GB of 4G access before the speed throttle kicks in;
• Unlimited free Wi-Fi on Free’s extensive Wi-Fi network.

A Free Mobile customer that also subscribes to Free’s wired broadband or television service gets an even bigger discount. Their monthly wireless bill for the same features? $21.40US a month.

Niel said the reason he has not brought the Free Mobile brand to the United States is because the wireless industry here is highly anti-competitive. The fact T-Mobile USA is now up for sale represents ‘the opportunity of a lifetime,’ a “one-time opportunity to enter the world’s-largest telecoms market,” a person familiar with the matter said prior to the announcement.

“The competitive landscape in the U.S. is a lot less aggressive than what we are used to in France,” added Niel. “There is enormous potential. It is almost too good to be true.”

A number of Wall Street analysts who prefer the current business model of high cost/high profits are keeping their fingers crossed the Iliad offer is just a pipe dream. Some, including analysts on Bloomberg TV, dismissed Niel as a former pornographer and suggested “for the guppies, it is whale season,” a reference to Iliad’s small size relative to T-Mobile USA.

“To say this is surprising is something of an understatement; it is one of the most bizarre bits of potential M&A we have ever witnessed in the sector,” said analysts from Espirito Santo in a note to investors.

[flv]http://www.phillipdampier.com/video/Bloomberg Who Is T-Mobiles New French Suitor 8-1-14.flv[/flv]

Some on Wall Street are mocking the deal as a guppy hoping to swallow a whale. T-Mobile is considerably larger than Iliad, says CNBC. “It’s preposterous. Who put them up to it?” (6:18)

“Iliad is about a third of the size of T-Mobile US, and we don’t think there would be synergies from the deal,” said Jonathan Chaplin, an analyst at New Street Research, in a note. “It would be tough to finance without Xavier Neil relinquishing control. Sprint and anyone else with synergies should be able to outbid them.”

Should Free Mobile enter the United States, its cutthroat pricing would make CEO John Legere’s “bad wireless boy” campaign to make T-Mobile the “uncarrier” quaint in comparison. Every wireless carrier in the U.S. could be forced to cut rates by one-third or more to stay competitive should Niel adopt a similar business model for Free Mobile in the U.S. market.

Some worry that Softbank’s bid to merge Sprint and T-Mobile together has just become even less likely with the possibility of a new player in the U.S. market, competing against three other carriers, not two as the Softbank deal proposes.

[flv]http://www.phillipdampier.com/video/CNBC Sprint Deal with T-Mobile Has Little Chance 8-1-14.flv[/flv]

CNBC spoke with Nik Stanojevic, equity analyst at Brewin Dolphin, who was surprised Iliad threw in a bid for T-Mobile, but believes Softbank/Sprint’s deal to acquire T-Mobile has very little chance getting by regulators. (2:40)

AT&T couldn’t have gotten a better deal for itself if it tried.

Mississippi state officials that awarded AT&T a 10-year State Master Contract, compelling the majority of state government offices to do business only with AT&T, have just given the phone company an early two-year extension without allowing for any public discussion or competitive bidding.

In 2005, when the contract with AT&T was first signed, it was unlikely most government offices, schools, and libraries would be able to find any bidder other than AT&T. The state contract spells out a series of requirements that critics contend were tailor-written with the full knowledge only AT&T could offer the full menu of required services. Nearly 10 years later, and more than a year before the contract was up for renewal, the state suddenly granted AT&T a two-year contract extension, potentially exposing taxpayers to overpriced, taxpayer-funded broadband services.

Interested members of the public who want to examine the state contract for telecommunications with AT&T have run headlong into a roadblock erected by a Hinds County judge who ruled it was off-limits for public inspection and has since been sealed under court order. To this day, only government customers of Mississippi’s Department of Information Technology Services, the agency in charge of the state government’s broadband, are allowed to see the document.

The state contract comes at a significant cost to taxpayers if Marvin Adams’ figures are correct. Adams, who works for the Columbia School District, suspects a lot of money has been frittered away because of the lack of competitive bidding. Only the state’s schools and libraries have the option of either securing a contract with AT&T or requesting bids from competitors like Ridgeland-based C-Spire, which supplies fiber and wireless connectivity.

Adams says AT&T’s contract with the state costs taxpayers $5 per Mbps. But AT&T also charges a “transport circuit charge” of between $10-45 per Mbps. Adams said his colleagues have seen competitive bids averaging $6 per Mbps and the transport circuit charge is included in that price.

The Mississippi Watchdog delivered the understatement of the year when it called AT&T’s contract with Mississippi “lucrative.” Attempts to modify the contract have met with fierce opposition in Jackson, the state capital. Senate Bill 2741, a modest measure that would have compelled school districts to seek competitive bids before signing a multi-year contract with a provider, died in committee earlier this year.

AT&T has close political ties in several southern states. The company co-authored an article with Gov. Phil Bryant and donated at least $42,500 to his various campaigns for political office. In 2012, Bryant signed a bill into law removing most of Mississippi’s remaining regulatory authority over AT&T.

Next door in Louisiana, Gov. Bobby Jindal also maintains close ties with AT&T. The company has funneled more than $250,000 to his wife’s charitable foundation – the Supriya Jindal Foundation for Louisiana’s Children, which also takes substantial contributions from oil and chemical companies, the insurance industry and defense contractors. The New York Times reported back in 2011 that telecom companies like AT&T were increasingly contributing to politically connected charities they could use in campaigns to influence legislation and regulation. Companies can write off their unlimited charitable giving while politicians take credit for the work done by the non-profit groups while also quietly understanding exactly where the money is coming from.

Verizon Wireless’ ongoing campaign to get rid of its grandfathered unlimited data customers continues this week with news the carrier will begin throttling speeds of off-contract customers still hanging on to their uncapped data plans starting Oct 1.

Verizon doesn’t call the enforcement of speed reductions a “throttle,” but rather “Network Optimization”:

Verizon Wireless strives to provide its customers with the best wireless experience when using our network. In 2011, Verizon Wireless launched Network Optimization, which slows the data speeds of its unlimited data subscribers with 3G devices who are in the top 5% of data users when they connect to a cell site experiencing high demand.

Effective October 1, Verizon Wireless will expand its existing Network Optimization policy to include its unlimited data subscribers using 4G LTE devices who have fulfilled their minimum contract term. Based on your plan and recent data usage, one or more lines on your account may experience a reduction in data speeds when connected to a cell site experiencing high demand. Customers on MORE Everything or other usage-based data plans are not subject to Network Optimization. For more information about our Network Optimization, please refer to www.verizonwireless.com/networkoptimization.

Verizon Wireless customers on the company’s 3G network have been subject to speed throttling for several years if Verizon deems them a “heavy user,” but the company’s 4G LTE network avoided the speed noose until now. Customers who find themselves subjected to Verizon’s speed limiter report it is a very unpleasant experience.

“My phone has been throttled and is now essentially unusable for the very things it is marketed for,” reports one customer sentenced by Verizon’s “Network Optimization.”  “I can send texts, emails, and view basic websites but any sort of streaming is now out of the question for the remainder of the billing cycle and possibly the next cycle as well.”

The throttle effectively limits speeds to well under 300kbps, and in most urban areas where cell tower usage is higher, punished customers have to live with speeds of around 50kbps — the same as dial-up.

Verizon’s logic and consistency about its “Network Optimization” faced customer scrutiny as well.

“This is not about equal opportunity bandwidth, it’s about Verizon realizing they can increase their revenue stream, otherwise, wouldn’t those tiered folks be getting throttled as well if they ‘abused’ and used ‘inordinate’ amounts of data?  Oh no, of course not, Verizon just bills them more.  This scenario is as ridiculous as charging $20/month for text messaging, which, by the way, is also data.”

What makes you speed-throttling-worthy? According to Droid Life, which broke the story, anyone using more than 4.7GB of data per month on a busy cell tower is likely to end up on a speed diet.

Verizon claims its “Network Optimization” is designed to protect the usage experience among all of its customers, and suggests the speed reductions will only occur when a heavy user is connected to a “high demand” cell site.

“Once you leave that site and attach to a new cell site without high demand, your speeds return to normal,” claims Verizon. “Other carriers often throttle you no matter what throughout the end of a billing cycle.”

But Verizon’s gesture isn’t as generous as it first suggests.

Once a customer is suspected of being a data hog and forced to endure Verizon’s speed throttle, they can stay in Verizon’s speed prison for up to 60 days after being sentenced. The result is dramatically reduced data speeds when a customer happens to travel through a busy cell site area, regardless of whether they are using a lot of data at the time or not.

Network congestion problems may be a result of too many customers connected to a single cell site at any one time, several customers concurrently engaged in high bandwidth traffic exchanges through a cell site, or Verizon’s inadequate capacity to meet even the reasonable needs of its wireless customers.

But regardless of the cause, only one group will be punished for their usage-excess: unlimited data plan customers who are now mostly off-contract (Verizon requires most customers signing a contract renewal that includes equipment discounts to migrate off their unlimited plan, which stopped being sold to new customers in June, 2012.)

Customers can get out of speed jail permanently simply by agreeing to give up their unlimited data plan. Then they can use (and abuse) Verizon’s limited wireless bandwidth, whether it slows every other customer down or not.

“Hey look, is that the Verizon FiOS truck?”

New York City comptroller Scott Stringer is lukewarm at best about the idea of Comcast taking over for Time Warner Cable. In a letter to the New York Public Service Commission released today, Stringer says the deal needs major changes before it comes close to serving the public interest.

“As New York City residents know all too well, our city is stuck in an Internet stone age, at least when compared to other municipalities across the country and around the world,” Stringer wrote. “According to a study by the Open Technology Institute at the New America Foundation, New Yorkers not only endure slower Internet service than similar cities in other parts of the world, but they also pay higher prices for that substandard service. Tokyo residents enjoy speeds that are eight times faster than New York City’s, for a lower price. And Hong Kong residents enjoy speeds that are 20 times faster, for the equivalent price.”

Stringer should visit upstate New York some time. While the Big Apple is moving to a Verizon FiOS and Time Warner Cable Maxx or Cablevision/Optimum future, upstate New York is, in comparison, Raquel Welch-prehistoric, especially if your only choice is Verizon “No, We Won’t Expand DSL to Your House,” or Frontier “3.1Mbps is Plenty” Communications. If New York City’s speeds are slow, upstate New York speeds are glacial.

“The latest data from the FCC shows that, as of June 30, 2013, over 40 percent of connections in New York State are below 3Mbps,” Springer added.

Come for the Finger Lakes, but don’t stay for the broadband.

Should the merger be approved, Comcast would be obligated to comply with the existing franchise agreement between Time Warner Cable and the City of New York. However, in order for the proposed merger to truly be in the public interest, Comcast must have a more detailed plan to address these ongoing challenges and to further close the digital divide that leaves so many low-income New Yorkers cut off from the information superhighway. To date, Comcast’s efforts to close the digital divide have focused on its “Internet Essentials” program, which was launched in 2012.iii The program offers a 5 megabit/second connection for $9.95/month (plus tax) to families matching all of the following criteria:

• Located within an area where Comcast offers Internet service
• Have at least one child eligible to participate in the National School Lunch Program
• Have not subscribed to Comcast Internet service within the last 90 days
• Does not have an overdue Comcast bill or unreturned equipment

While the aim of the program is laudatory, its slow speed, limited eligibility, and inadequate outreach have kept high-quality connectivity beyond the reach of millions of low-income Americans. Not only are the eligibility rules for Internet Essentials far too narrow, but the company has done a poor job of signing up those who do meet the criteria. In fact, only 300,000 (12 percent) of eligible households nationwide have actually signed up since the program was launched in 2011.

It is critical that the PSC not only press Comcast to significantly expand the reach of Internet Essentials, but also that it engage in appropriate oversight to ensure that the company is meeting its commitments to low-income residents of the Empire State.

Phillip “Comcast isn’t the answer, it’s the problem” Dampier

In fact, the best way New York can protect its low-income residents is to keep Comcast out of the state. Time Warner Cable offers everyday $14.99 Internet access to anyone who wants it as long as they want it. No complicated pre-qualification conditions, annoying forms, or gotcha terms and conditions.

When a representative from the PSC asked a Comcast representative if the company would keep Time Warner’s discount Internet offer, a non-answer answer was the response. That usually means the answer is no.

“We have seen how telecommunications companies will promise to expand access as a condition of a merger, only to shirk their commitments once the merger has been approved,” Springer complained. “For instance, as part of its 2006 purchase of BellSouth, AT&T told Congress that it would work to provide customers ‘greater access and more choices for broadband, no matter where they live or work.’ However, later reports found that the FCC relied on the companies themselves to report their own merger compliance and did not conduct independent audits to verify their claims.”

Big Telecom promises are like getting commitments from a cheating spouse. Never trust… do verify or throw them out. Comcast still has not met all the conditions it promised to meet after its recent merger with NBCUniversal, according to Sen. Al Franken (D-Minn.).

Stringer also blasted Comcast for its Net Neutrality roughhousing:

While the FCC has not declared internet providers to be “common carriers”, state law has effectively done so within the Empire State. Under 16 NYCRR Part 605, a common carrier is defined as “a corporation that holds itself out to provide service to the public for hire to provide conduit services including voice, data, or video by electrical, electronic, electromagnetic or photonic means.”

Importantly, the law requires these carriers to “provide publicly offered conduit services on demand to any similarly situated user on substantially similar terms, subject to the availability of facilities and capacity.”

In recent months, Comcast has shown that it is willing to sacrifice net neutrality in order to squeeze additional payment out of content providers, such as Netflix. As shown in the chart below, Netflix download speeds on the Comcast network deteriorated rapidly prior to an agreement whereby Netflix now pays Comcast for preferential access.

Consumers have a legitimate fear that if access to fiber-optic networks is eventually for sale to the highest bidder, then not only will it stifle the entrepreneurial energy unleashed by the democratizing forces of the Internet, but will also potentially lead to higher prices for consumers in accessing content. Under that scenario, consumers are hit twice—first by paying for Internet access to their home and second by paying for certain content providers’ preferred access.

Internet neutrality has been a core principle of the web since its founding and the PSC must examine whether Comcast’s recent deal with Netflix is a sign that the company is eroding this principle in a manner that conflicts with the public interest.

Stringer may not realize Comcast also has an end run around Net Neutrality in the form of usage caps that will deter customers from accessing competitors’ content if it could put them over their monthly usage allowance and subject to penalty rates. Comcast could voluntarily agree to Net Neutrality and still win by slapping usage limits on all of their broadband customers. Either causes great harm for competitors like Netflix.

“I urge the Commission to hold Comcast to that burden and to ensure that the merger is in the best interest of the approximately 2.6 million Time Warner Cable subscribers in New York State and many more for whom quality, affordable Internet access remains unavailable,” Stringer writes. “And I urge Comcast to view this as an opportunity to do the right thing by introducing itself to the New York market as a company that values equitable access and understands that its product—the fourth utility of the modern age—must be available to all New Yorkers.”

If Comcast’s existing enormous customer base has already voted them the Worst Company in America, it is unlikely Comcast will turn on a dime for the benefit of New York.

The best way to ensure quality, affordable Internet access in New York is to keep Comcast out of New York.

No cable company has ever resolved the rural broadband problem. Their for-profit business model depends on a Return on Investment formula that prohibits expanding service into unprofitable service areas.

These rural service problems remain pervasive in Comcast areas as well, and always have since the company took over for AT&T Cable in the early 2000s. Little has changed over the last dozen years and little will change in the next dozen if we depend entirely on companies like Comcast to handle the rural broadband problem.

A more thoughtful solution is encouraging the development of community co-ops and similar broadband enterprises that need not answer to shareholders and strict ROI formulas.

In the meantime, for the good of all New York, let’s keep Comcast south (and north) of the border, thank you very much.

Plan on downgrading your Rogers cable, phone or Internet service? Be ready for messages injected into your web browsing sessions by the cable company trying to win back your business.

Daryl Fritz from Toronto decided to cancel his Rogers’ home phone and television service and downgrade his Internet service. Fritz soon found this banner intruding on every web page he tried to visit:

Your decision to leave Rogers is not something we take lightly. We value your business and care about how happy you are with your Rogers experience, so we would like to extend a special offer* in the hope that you will reconsider your decision. Please call 1-855-410-7589 (M-F 9am-9pm/Sat 10am-6pm ET) before your service disconnects to let us know why you are thinking of leaving Rogers. We appreciate your time and consideration. Please click on the “X” in the top right hand corner to acknowledge that you have received this message.

*-Offer available for a limited time for the account indicated (non-transferable) and subject to change without notice.

The banner usually disappears after the customer acknowledges receiving it. Stop the Cap! has learned the number directs callers to Rogers’ customer retention department where customers are pitched special discounts to change their mind. The prices are comparable, if not better, than new customer promotions found on Rogers’ website. Rogers is far less annoying than Comcast is when it faces losing a customer. If a customer rejects the offer (or never calls in to hear one), they are not bothered any longer and the representative thanks them for their time.

Rogers retention offers are often extremely aggressively priced, especially if mentioning you are leaving for a competitor (especially Bell). Rogers reps can slash prices, put you on a high usage broadband plan at prices lower than what regular customers pay for slower speeds, waive usage caps for a few dollars more, lock in rates for up to eight years, and offer heavy discounts off almost everything.

One current example for cable television:

• 30% off basic cable ($28/mo instead of $40)
• TFC ($15/mo)
• NextBox 2.0 set-top (free) NextBox 3.0 ($2.50/mo)
• Digital Services Fee (eliminated)
• CRTC LPIF (it’s the government — $0.50/mo)

This can knock your Rogers cable bill down to $46/month before GST and other taxes.

Broadband customers can grab a 50% discount off plans like Hybrid Fibre 150 (GTA), normally $86 a month, but $43 on a retention plan. Customers get 150Mbps and 350GB of usage. If you don’t want a cap, demand a deal to remove it (it regularly costs $25/month extra for unlimited). The modem rental is included.

If you still want Rogers Home Phone, you are paying too much if it costs over $20 a month. Home Phone Favourites, including Call Display and one other calling feature of your choice is $15/month on retention. Add 500 long distance minutes for $5/month extra.

All three services combined should cost no more than about $104 a month before GST, which adds $13.52 in Ontario. Provincial taxes vary.

New Rogers customers can also get very aggressively priced deals. This week Rogers is selling 30/5Mbps Internet service (includes 270GB allowance and free modem) for $54.95. Regularly, it’s $61.99 with only a 70GB monthly usage allowance. That is still outrageously high by American standards, but isn’t bad for Rogers. New customers should call 1-800-605-6678 to ask about current offers.