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.

AT&T’s real priorities are to satisfy Wall Street demands for regular revenue growth. Rural wired broadband just cannot compete with the margins the company earns on its enormously profitable wireless and ARPU-raising U-verse services. (Graphic adapted from original work of Mark Fiore)

Today: AT&T — More Rural Broadband? Don’t Call Us, We’ll Call You

AT&T CEO Randall Stephenson earlier this year declared expansion of its U-verse fiber to the neighborhood service “largely complete,” despite the fact almost half of AT&T’s customers only have access to much slower DSL service, or cannot receive any broadband service at all.

For those living in AT&T’s service areas, which include a large portion of the midwest, southern states east of the Mississippi, Connecticut, and parts of California and Texas, Stephenson has not inspired confidence the company is rethinking what is possible in rural broadband.

“We have been apprehensive on moving, doing anything on rural access lines because the issue here is, do you have a broadband product for rural America?,” Stephenson told investors earlier this year. “And we’ve all been trying to find a broadband solution that was economically viable to get out to rural America and we’re not finding one to be quite candid.”

AT&T’s lack of confidence this year is in contrast with their bombastic rural broadband lobbying campaign of 2011, launched as part of an effort to win approval for its aborted merger with T-Mobile USA. The company sent slick talking points promoting the deal to community groups it supported with contributions, politicians it bought with contributions, and astroturf efforts it bankrolled with contributions.

The result was declarations like this from former Rep. Rick Boucher (D-Va.), who swept through Washington’s revolving door and came out on the other side working for AT&T-backed lobbyist-law firm Sidley Austin and serving as an “honorary chairman” of the industry-backed Internet Innovation Alliance:

Thousands of the smallest communities outside of urban areas either lack broadband service or have just one option that can be pricey for a relatively low connection speed, inadequate for modern business demands. The joining of AT&T’s and T-Mobile’s wireless spectrum will largely fill the gap and bring robust Internet connectivity to rural localities where wired infrastructure is cost prohibitive.

With the merger now nothing more than a bad memory, Stephenson’s interest in the innovation of Internet access quickly faded.

Last week, AT&T customers learned the company isn’t even interested in taking free money from the federal government and ratepayers to do better. Offered access to $115 million in broadband subsidies from the reform of the Universal Service Fund (USF), AT&T officials shrugged their shoulders and indicated they were not interested because they are not yet “ready” to participate.

Quinn

“AT&T is in the midst of evaluating its options for further rural broadband deployment,” said Robert Quinn, AT&T’s senior vice president of regulatory affairs wrote in a letter to the commission. “As our chairman stated last month, we are optimistic about AT&T’s ability to get more broadband into rural areas, particularly as the technology continues to advance. However, until AT&T finalizes that strategy, it cannot commit to participating in the incremental support program. ”

For communities like Orangeburg, S.C., that answer is not good enough. The community received an $18.65 million federal grant of broadband stimulus funds to develop high-speed broadband in an area where only 20-40 percent of residents have Internet service today. AT&T is the dominant phone company and offered the same non-committal response to Orangeburg’s pleas for better service that the  company gives to customers elsewhere.

While AT&T reports it is not yet ready to do better in rural South Carolina, it is very motivated to make sure nobody else does either, funding a massive lobbying effort in coordination with its friends at the American Legislative Exchange Council (ALEC) to pass a virtual ban on community broadband development across South Carolina.

Christopher Mitchell at Community Broadband Networks calls it “monetizing scarcity.” Orangeburg officials call it a big headache and are working around AT&T, frustrated with the phone company’s disinterest while it also helps build barriers to impede the community’s efforts to build its own network.

“If some of these other providers had a desire to serve these rural areas, they would have already been doing it,” said county administrator Bill Clark. “We are entering the broadband business because third-party providers are reluctant to provide the service.”

AT&T’s reluctance to accept USF money may have a lot to do with the company’s focus on its wireless network which is seen as a much more lucrative investment. Profit margins for barely-competitive wireless service remain sky high, and are growing higher as AT&T raises prices and the industry works to cut costs.

Even the company’s urban-focused U-verse network delivers opportunities for greater revenues from AT&T customers likely to buy additional services. Investing in DSL just does not pull in the same level of profits, and companies like AT&T will remain reluctant to expand rural broadband unless the government delivers a much larger government subsidy, according to Benjamin Lennett, a policy director at the New America Foundation.

“It underscores how flawed it is to rely on private companies to serve these rural areas where their margins are not going to be that high,” Lennett said.

Unfortunately for communities trying to work around AT&T’s roadblock, the company has made sure towns and villages building their own networks soon discover that road remains closed in more than dozen states thanks to  AT&T with the help from corporate groups like ALEC, who feed willing legislators bills often drafted by the corporations they are designed to protect.

Verizon Wireless has settled a complaint brought by consumer group Free Press that accused the wireless carrier of violating federal rules allowing customers to use their phones as mobile hotspots or for tethering with the apps of their choosing.

The Federal Communications Commission announced Verizon had agreed to pay $1.25 million to the U.S. Treasury for violating the conditions of its 700MHz “C”-Block licenses, which carry the provision that Verizon not “deny, limit, or restrict” customers from using the applications or devices of their choosing.

Instead of abiding by those rules, Verizon Wireless reportedly pressured Google to disable and restrict tethering applications in the Google Play Store, forcing most customers to purchase Verizon’s Mobile Hotspot/Tethering service which, at the time, was priced at an additional $30 a month. Verizon Wireless’ recent plan changes now include tethering and mobile hotspot service for no additional monthly fee, although customers are subject to usage caps and overlimit fees.

“The FCC sent a strong signal to the market that companies cannot ignore their pro-consumer obligations,” said Free Press policy director Matt Wood. “Unfortunately, the fact that Verizon worked to block these apps in the first place is a clear indication that wireless providers have a strong incentive to discriminate against certain content and applications, an incentive that continues to threaten online freedom and innovation.”

Free Press notes consumers of other carriers lack the same protection Verizon’s customers have under the law. Verizon agreed to the more consumer-friendly language as part of its purchase of the frequencies where the company operates its 4G network.

The Canadian Broadcasting Corporation today shut down more than 600 analog television transmitters primarily serving rural viewers, forcing most to either go without television to sign up for commercial satellite or cable television service.

Because of Canada’s great expanse, the country’s public broadcaster has relied on hundreds of terrestrial low-power television transmitters to cover smaller communities and rural areas outside of the reach of CBC stations in larger cities. These transmitters provide relays of 27 regional English and French stations and have allowed rural residents to enjoy free over-the-air television.

While larger communities are now able to watch digital television signals in place of older analog service, the CBC has decided not to replace existing analog repeater transmitters with digital ones, effectively ending service for many rural Canadians who will now receive no over the air signals at all. Budget challenges and a decision from the CRTC that declared the CBC has no obligation to broadcast its programming has been met with resistance across rural Canada, particularly because taxpayers in cities large and small finance the CBC’s operations.

As of today, the CBC will rely entirely on the 27 digital television stations it will continue to operate over the public airwaves nationwide. Critics say that is contrary to the CBC’s mandate in the Broadcasting Act, which declares the CBC is Canada’s “national public broadcaster.”

 “The TV transmitter infrastructure is worth millions and was paid for by Canadian taxpayers,” says Catherine Edwards of the Canadian Association of Community Television Users and Stations. “More than 2000 Canadians protested the shutdown in letters to the CRTC last month. They asked that the infrastructure be offered to communities to maintain for themselves. The federal government seems to be doing everything it can to cripple the national broadcaster and turn it into a pay specialty service, available to well-heeled Canadians in big cities.”

“The CBC-TV and Radio-Canada analog transmitter shutdown is a sad chapter in Canada’s digital transition,” says Karen Wirsig of the Canadian Media Guild. “We understand that CBC is in a financial bind with $155 million in cuts required by 2015. Something had to give. Evidently infrastructure outside of major cities is not a priority for the federal government, despite rhetoric about the digital economy.”

The CBC says the change will impact only 2 percent of Canadians that do not already receive digital television service or have signed up with a pay television provider. But the concept of “free TV” has changed forever for rural viewers.

For some cable viewers, the CBC’s digital solution is also presenting problems, especially in the Maritimes. In rural Newfoundland and Labrador, EastLink viewers may lose their closest local CBC station and be forced to watch programming from a CBC station is Halifax, Nova Scotia instead, at least until Shaw begins carrying additional CBC stations on satellite.

The Canadian Broadcasting Corporation today shut down more than 600 relay transmitters providing rural Canada with over-the-air access to the public broadcaster with a mandate to serve all of Canada. Now, viewers in rural Newfoundland and Labrador are going to be stuck watching “local” news and weather intended for Halifax, Nova Scotia. CBC Radio in Newfoundland and Labrador talks with the CBC about the reason for the disruption. (July 30, 2012) (8 minutes)
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Shaw’s “Local Television Satellite Solution”

In 2010, Shaw Communications, which owns Shaw Cable and Shaw Direct — a major satellite TV provider, announced its intention to buy Global TV — a major Canadian television network. For Americans, this would be the equivalent of Comcast owning your local cable company, NBC, and DirecTV. The Canadian Radio-television and Telecommunications Commission (CRTC), Canada’s telecommunications regulator, agreed to a deal offered by Shaw to acquire Global in return for offering Canadians who have not had satellite or cable service in the last 90 days a temporary free satellite solution for receiving “local stations.”

This customer ran out of luck when he needed Shaw to install just over 250 feet of cable from the nearest clear spot for the satellite to his home. Shaw limits installers to 250 feet, no more. The installer packed up and left shortly after learning an exception would have to be made. (Photo: PGM/Dude, ‘Where’s My TV?’ blog)

Shaw’s Local Television Satellite Solution (LTSS) offers qualified Canadians free satellite service with a handful of over-the-air stations, assuming they apply by November 2012.

Assuming your postal code is within a “qualified reception zone,” and you somehow know about the barely promoted service, Shaw will provide a satellite dish, receiver, and reasonable installation at no charge.

Unfortunately, many Canadians have no idea Shaw is offering the service, and are opting to purchase a regular Shaw Direct package, signing up with another satellite provider, or subscribing to cable where available. Very little about the service is found on Shaw Direct’s website, and those interested are required to call the company for further information. Even those made aware of Shaw’s offer have found challenges signing up.

Steven James May, who runs the “Dude, Where is My TV?” blog reports his parents, who live in rural Denbigh, Ontario were first made aware of Shaw’s LTSS when he told them about it. Several initial attempts to sign up for the service were dashed when Shaw responded Denbigh residents were not qualified for LTSS based on the postal code provided. When May’s parents eventually did qualify, they were sent a well-used and scuffed Star Choice satellite receiver retired from the days Shaw Direct was known as Star Choice.

After installation, the Ontario residents ended up with a dozen primarily over-the-air channels from across Canada:

• 2 Shaw Direct’s home channel
• 9 Knowledge Network
• 23 CTV 2 Alberta
• 37 CBC Toronto
• 39 Global Toronto
• 40 CityTV Toronto
• 41 CHCH Hamilton
• 42 OMNI
• 44 CTV Toronto
• 50 MCTV Sudbury (CTV)
• 52 Global Thunder Bay
• 55 TVOntario (Educational)

While enticing, Denbigh residents have effectively lost “local service” because the community is forced to watch local news for Toronto, Hamilton, Sudbury, Thunder Bay, and Calgary — all much further away than the nearest large city for them — Ottawa. Residents that used to watch CJOH (CTV Ottawa) and CBOT (CBC Ottawa) over-the-air now must get accustomed to news and weather for Toronto, a considerable distance to the west.

“This is a major public policy failure,” adds Edwards. “Everyone has known that the digital transition was coming for two decades. It’s supposed to increase our communications services, yet no one would step up to the plate and take leadership to make sure that neither rural Canada nor our national public broadcaster would be crippled: not Heritage, not the CRTC, not the CBC, and certainly not the federal government.”

Large telecom and oil companies want to pay less property taxes and don’t mind Montana homeowners and small businesses paying the difference.

Telecommunications companies and the oil industry are lobbying the Montana Legislature to lower their assessed property taxes, shifting tax collections away from themselves and towards homeowners and small businesses.

Members of the Montana Legislature’s Revenue and Transportation Interim Committee are reviewing how the state values property — an important prerequisite to setting property taxes. The state legislature intends to collect a certain amount of tax revenue from owned property in the state. What percentage is paid by large national and multinational corporations, small businesses, and homeowners is open to debate, and industry lobbyists are fighting to lower the taxes of some of Montana’s largest businesses. Critics contend that will shift a greater proportion of property taxes on those who don’t have the resources to pay lobbyists — independent small businesses and residential property owners.

The Missoulian reports that the interim committee is currently divided on the proposition — Republicans favoring the views of large corporations and Democrats in favor of small businesses and homeowners.

Outgoing Democratic Gov. Brian Schweitzer warns that Montanans are facing a corporate lobbying snowjob that will stick them with a higher tax bill.

“What they’re proposing is a great tax shift in favor of out-of-state and multinational corporations in Montana – a shift from those paying the taxes to small businesses and homeowners in Montana,” Schweitzer told the newspaper. “They’ve decided that they can hire lobbyists on both the Democratic and Republican side and pull the wool over legislators. This is the same cast of characters that brought us utility deregulation. What could go wrong?”

The Montana Budget and Policy Center agrees, suggesting a large shift in property taxes towards homeowners, small businesses, farmers and ranchers could prove shocking when tax bills start arriving in mailboxes.

Leading to change the property tax laws are cable television, telecommunications companies, and oil refineries, with the assistance of the Chamber of Commerce and the Montana Taxpayers Association, which does not disclose its funding sources.

Prior to the introduction of the “tax reform” study, large telecom companies including AT&T, Verizon Wireless, and Cablevision routinely appealed their property tax bills to the tune of $61.3 million out of $108.2 million owed in property taxes assessed from 2005-2011.

State Revenue Director Dan Bucks defends the current valuation system, which he says has used the same practices since the 1930s. Bucks warns if the tax burdens are shifted away from the telecommunications and oil industries, the difference will have to be paid by homeowners and small businesses.

The newspaper reports if Republicans control the 2013 Legislature, telecom and oil industry supporters in the state legislature are confident they can pass a bill to change property tax assessments, and Sen. Bruce Tutvedt, (R-Kalispell) acknowledged there would be a noticeable tax shift.

“We’ve got to take the political hit of the tax shift,” Tutvedt said. “If you’re going to be fair, then you shouldn’t get hit.”

Rep. Dick Barrett (D-Missoula) warned the Republican-backed measure could deliver tax bills packing a major wallop on unsuspecting property owners.

“They could be pretty severe, depending on what it looks like,” he said.

Believe it or not, Google Fiber has not always been headline news in Kansas City. Outside of a few stories in early spring about zoning and installation matters, local media (particularly television) has mostly given back page treatment to Google’s new fiber network since the city was first chosen in March, 2011.

That all changed last Thursday when television, radio, and newspaper reporters flooded a converted yoga studio in midtown Kansas City to attend Google Fiber’s unveiling. Many stations aired live reports on-site and devoted time during their afternoon and evening newscasts to explain what the service is all about, starting with what it will cost — $70 a month for 1Gbps service (or paying a flat $300 for 5/1Mbps service for the next seven years). Adding television brings the final price to $120 a month. Google considers landline phone service a dead-end business, and won’t bundle a telephone option, but customers can use Google Voice to make and receive most calls for free.

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KMBC reports on the introduction of Google Fiber, what it will cost Kansas City residents, what it means for the city as whole, and when and how service will be installed.  (3 minutes)

Kansas City, Mo., Mayor Sly James said Google Fiber was more of an opportunity than a gift for Kansas City.

“We now have an opportunity to take a giant step and if we don’t it’s all on us,” James said.

KCUR Radio in Kansas City explores some of the public policy and institutional changes Google Fiber can bring the area with the advent of gigabit broadband. Mike Burke, Missouri co-chair, and Dr. Ray Daniels, Kansas co-chair of the Mayors’ Bistate Innovation Team talks about what changes Google Fiber could bring to health care, education, government, and more.  The Mayors’ Bistate Innovation Team recently released a report titled “Playing to Win in America’s Digital Crossroads,” a playbook for capitalizing on ultra-high-speed fiber in Kansas City, Kansas and Kansas City, Missouri. (Some of the specific details discussed in the program turned out to be outdated after last Thursday’s announcement introducing the service.)  (June 6, 2012) (52 minutes)
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Some in the media seemed disappointed Google spent a considerable amount of time selling the entertainment-oriented element of its service — namely the television lineup and the equipment that comes with it, and less on the educational and transformational nature of gigabit broadband. But many in the audience didn’t need an explanation of what 1,000/1,000Mbps service will mean for them.

Reviewing the coverage shows a predictable response:

• Those under 30 want it today and won’t think twice about paying $70 to get it;
• Those running businesses that depend on the web also want it, and are slightly perturbed Google will only sell to residential customers at first;
• Families with young children want the service because they feel it will be a game-changer for their children’s education and future career;
• Income-challenged residents are concerned about the cost, but are happy to discover Google has an affordable option for them to participate in the wired world;
• Older residents seem preoccupied with the price and consider the television lineup even more important than broadband speed;
• Schools, libraries, health care, and non-profit groups are thrilled with the prospect of getting free or deeply discounted service;
• Incumbent providers are putting on a brave face, relying on what they feel is excellent customer service, local ties to the communities they service, and a current customer base that may be reluctant to switch.

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Google Fiber has arrived in Kansas City, and neighborhoods will compete to see who gets the gigabit broadband service first. KCTV in Kansas City reports. (3 minutes)

Google Fiber’s free 5/1Mbps service is another embarrassment to big cable companies like Comcast which offer less service for more money.

The Kansas City Star needlessly fretted about the remaining digital divide of Internet “have’s” and “have-not’s,” as Google launched a competition between neighborhoods to determine where to install the service first.

So far, many poorer urban core neighborhoods are expressing interest in Google fiber at a slower rate than middle- and higher-income neighborhoods.

It’s important now for efforts to reach out to help the lower-income neighborhoods rally so the access doesn’t become a new dividing line.

The newspaper is concerned by Google’s fiber map showing many minority, inner-city neighborhoods have yet to receive a single commitment from a resident willing to pre-register for the service. But Google is not running a competition to exclude anyone. It is surveying interest to ensure it has a working business model to sustain its fiber broadband operation. Overshadowed by the gigabit broadband announcement is the fact Google is also including a real solution for the income-challenged — an entry-level 5/1Mbps broadband option that will cost just $300 (payable in $25 installments) that guarantees service with no additional payment for seven years.

That is a broadband solution far superior to the afterthought programs on offer from Comcast and a handful of phone companies that only deliver a fraction of the speed, at a higher price, to those who meet a byzantine set of requirements. It is yet another embarrassment for Kabletown, which would not have even offered the service had the government not made it a condition for approving the mega-merger of NBC-Universal and Comcast.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KCTV Kansas City Neighborhoods Compete for Fiber 7-26-12.flv[/flv]

KCTV visits some of the neighborhoods competing to be the first to get Google Fiber. Reaction from residents varies from those willing to canvas neighborhoods to get people to pre-register to others who will consider switching providers only if the price is right.  (4 minutes)

One Star columnist likened Google Fiber to a public works project that threatened to go bad pitting neighborhoods against one-another, rich against poor:

The more educated, middle- to upper-income neighborhoods in southwest KC and in midtown were signing up for first crack at the service.

Meanwhile, the neighborhoods without as many computers and without the income to afford the $70 or $120 proposed monthly charges for Google Fiber were signing up at far slower rates.

None of that means Google Fiber won’t be a big success.

But let’s not pretend there won’t be winners and losers with this advance in technology.

If Google Fiber narrows that digital gap – and makes more information available more quickly to more people to help boost the economy of KC – that’s all for the good.

However, being able to hook up eight computers in a house so people can be more entertained doesn’t set my world on fire.

Let’s remember Google Fiber is intended to be a for-profit business run by a for-profit corporation. Star columnist Yael T. Abouhalkah might have been more comfortable had he advocated for a community-owned broadband solution committed to serving every neighborhood, everywhere. Google Fiber is not that, at least not now. The alternatives from AT&T and Time Warner Cable have not solved the digital divide either. Giving away effectively-free 5/1Mbps broadband for seven years might.

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Google’s Fiberhoods are likely to win fiber service for the more high-tech areas of Kansas City, among the first to pre-register. Google’s Kevin Lo explains those areas most committed to getting the service will also win free fiber connections for their neighborhood’s schools, health care facilities, and public safety buildings.  KCTV reports. (3 minutes)

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KCTV explores what Google Fiber could mean for local schools who can utilize the faster connections for distance and remote learning.  (3 minutes)

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WDAF in Kansas City covers Google Fiber’s weekend “Open House,” inviting residents to experience what gigabit broadband is really like, and letting them see and sample the company’s broadband and television service.  (2 minutes)

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KSHB in Kansas City covers the reaction of local business owners elated and frustrated by the arrival of Google Fiber, which will open the door to new online innovation once Google begins selling to commercial customers (and if you are lucky enough to work in a Google Fiberhood.)  (2 minutes)