Illinois politics is business as usual — if you’re a high-powered business like AT&T, that is.  They’ve just proven how easy it is to sucker the fifth largest state’s legislature and several newspaper editorial boards with a dog and pony show of promises that it will have few regrets (and no consequences) for breaking later on.

Once again, AT&T is upset about the terms it agreed to in efforts to rebuild its nationwide reach through frenzied mergers and acquisitions.  This time it’s the 1999 merger with Ameritech.  AT&T claims the promises its partner SBC made to state regulators to green-light the deal are now too hard to honor. If only you and I could lobby legislators to walk away from our own personal responsibilities.  “I can’t pay my town taxes because the neighborhood has changed since I first moved here, so it would be unfair of you to ask.”

The argument apparently worked in the Illinois General Assembly which passed AT&T’s Get Off the Regulatory Hook Bill (Senate Bill 107) unanimously earlier this month.  The bill has now been sitting on Governor Quinn’s desk for more than two weeks, and AT&T is getting nervous.  Letters to the editor and AT&T-friendly editorials have started appearing in the Illinois press in a coordinated effort to beat the drum loud enough to get the governor’s attention to sign the bill unchanged.

Ameritech used to provide phone service to most of Illinois before being purchased by SBC Communications (later AT&T) in 1999.

Memories are short.  The Illinois Commerce Commission established ground rules for AT&T precisely because its predecessor provided abysmal service in the state.  As part of a hard-fought campaign to secure Ameritech, AT&T promised Illinois it would:

• provide reliable landline service in rural Illinois at a fair price;
• provide DSL broadband to at least 90 percent of Illinois customers;
• recognize that landline service remains an essential utility for millions of residents, many of whom don’t have the option of switching to another provider.

That was then, this is now.

These days, those requirements are apparently too tough on AT&T.  The company complains Illinois residents can switch to Comcast phone service (from the Worst Company in America 2010) or sign up for cell phone service from AT&T or a few other providers, assuming one has reception.  With all of this “competition,” AT&T argues there is no reason to continue regulating the company’s landline services, especially in rural areas AT&T could probably do without anyway.

Illinois is just the latest stop on AT&T’s big budget deregulation traveling circus, starring high-paid lobbyists and astroturf friends, all coordinating to unshackle their benefactor from pesky regulations.

The state’s legislature is evidently a million miles away from its fellow midwestern states who have been chauffeured down AT&T’s Promise Avenue before, only to discover it quickly became a one-way toll road for consumers.  Ask Wisconsin.

AT&T’s Message — Less is more.

AT&T routinely promises less regulation will magically open the door for its much-coveted U-verse platform.  Every elected official would love to claim he or she brought much-needed cable competition to their district, so promises of telco-TV are quite an incentive for legislators.  The formula is simple — you deregulate us and we’ll bring more U-verse deployment to your state.

Illinois State Senator Michael Bond (D-31st District)

Politicians trip over one another running to the nearest microphone over promises like that.

“This legislation is the key to opening up investment in the telecommunications industry in Illinois,” said state Sen. Michael Bond. “By modernizing our system, we are showing providers that we are worthy of their investment.”

But hasn’t AT&T already made a trip to that well before?  Last June, AT&T issued a press release crediting deregulation undertaken in 2007 for making U-verse expansion possible in Illinois:

AT&T U-verse is being expanded in Illinois thanks to legislation passed in 2007 and supported by State Senators Larry Bomke and Bill Brady and State Representatives Raymond Poe, Rich Brauer, Robert Flider and Bill Mitchell. The Cable and Video Competition Law provides an environment that encourages new video providers, such as AT&T Illinois, to invest in Illinois to compete against incumbent cable providers.

What will AT&T want next to finish U-verse deployment in Illinois – tax-free status?

That U-verse was designed to save AT&T’s landline business from a torrent of disconnect requests always gets missed by elected officials.  Basic landline service over copper wire is a dying business.  If AT&T doesn’t deploy U-verse, its ultimate destiny as a landline provider will be the horse and buggy industry of the 21st century.  Regulators need not throw away valuable consumer protections to protect a multi-billion dollar company already well-aware of what it needs to accomplish to stay profitable.

What consumers end up with — Less service for more money.

Despite the flowery rhetoric that competition is breaking out all over Illinois, 78 percent of state residents continue to rely on landline telephone service. That numbers 6.5 million consumers. Among the well-represented holdouts are fixed income seniors, and for most of them, a $200 monthly deluxe triple-play package of services is out of the question.

For customers that cannot afford higher rates, the Illinois Citizens Utility Board fought for and won a three year rate freeze and reprieve for AT&T’s budget-minded Consumer’s Choice telephone packages that were slated to be discontinued.  These packages don’t bundle unneeded calling features or extra services, instead providing affordable basic telephone service.  But after three years, AT&T can cancel these packages and raise prices at will, particularly in rural areas where competition is minimal to non-existent.  State oversight of AT&T is also history, leaving little recourse for consumers who suffer through poor service or AT&T’s legendary billing nightmares.

Supporters also promoted the deregulation legislation as a “jobs bill” — a ludicrous contention for legislation that contains no section pertaining to jobs.  Perhaps they meant more jobs for AT&T’s lobbying crew.  In fact, landline phone companies like AT&T are slashing jobs by the tens of thousands and will likely continue to do so.

Illinois Senate Bill 107 allows AT&T to set the stage to follow Verizon’s example — exiting rural areas, leaving the bulk of their investments and potential profits in large cities like Chicago.

The State Journal-Register wrote a shortsighted editorial supporting the proposed deregulation bill

Newspaper editorials like this one in the State Journal-Register in Springfield mean well but are breathtakingly short-sighted.  The editorial staff gushes about the benefits U-verse will bring Springfield, without any evidence U-verse will actually be universally available in the community anytime soon:

On a less philosophical level, we believe the new telecom law will be beneficial to most Illinois consumers because it should promote competition for household cable TV, Internet and phone service. In markets like Springfield, it could allow AT&T and Comcast to go head-to-head throughout the city, not just in the few areas where AT&T’s U-verse service is now available. That’s what cable customers have been demanding for decades.

AT&T customers have learned not to hold their breath waiting.  Any regular visitor to the company’s own support forums will quickly discover customers frustrated by lack of availability, hit or miss service, and no coverage map.  One customer summed it up:

I have NEVER in my life had to fight so hard to spend money on something.
Not even my wife makes it this hard on me to get something.
I have NEVER in my life (aside from when I got my AT&T POTS service) had a company work so slowly to accomplish something to try and attract a perspective customer or keep a current customer.

But there’s more.  Had the Journal-Register picked up the phone and checked with their neighboring states, they would have learned U-verse is not the competitive nirvana it’s routinely promised to be.  In Wisconsin, rates for cable, broadband, and phone service continue to increase, not decrease.  Most of the savings built into introductory packages for new customers expire after one year, and some providers limit the discounts to once per household.  That means once your new customer discount package expires, you may never get it again.  Then it’s a lifetime of ever-increasing pricing.

AT&T-backed bills also never require the company to completely wire every community for its U-verse service.  The company can bypass neighborhoods, towns and villages, or buildings it feels are not cost-effective to serve.  There are states that deregulated AT&T to their specifications and years later, communities are still waiting for service to reach their areas.  Illinois will be no different, and if AT&T determines U-verse isn’t worth the investment in large swaths of southern Illinois, so be it.

The Citizens Utility Board is correct when it predicts most of the investment will end up in Chicago, even at the expense of other parts of the state.  AT&T always follows the money.

AT&T’s Astroturf Friends Join the Parade

You have to look closely to see the connection. Who really is behind ITP?

AT&T’s friends are also writing letters to the editor demanding action, without disclosing they are bought and paid for sock puppets.

Take the Illinois Technology Partnership, which claims to represent a grand union of consumer and private interests for the betterment of Illinois’ high tech future.  In reality, it’s yet another AT&T astroturf group that works against consumers.

Their claim:

The Illinois Technology Partnership is the Illinois-based project of Midwest Consumers for Choice and Competition, a non-profit organization of individual consumers interested in technology, broadband, and telecommunication issues with state projects throughout the Midwest region.  ITP brings together industry experts, thought leaders, and Illinois consumers to foster an environment that will encourage emerging technologies, jobs, and investment, and spur economic growth on the state and local level.

Reality Check:

Both ITP and the ironically-named “Midwest Consumers for Choice and Competition” are both creatures of AT&T.  Thad Nation, behind all of these groups, invents AT&T-supported astroturf campaigns in various states where the company delivers service.  Over the past few years, Nation has cooked up TV4Us, Wired Wisconsin and Technology for Ohio’s Tomorrow, among others.  But his real day job is the founder and senior partner at Nation Consulting, a politically-connected lobbying firm:

At Nation Consulting, Nation focuses on assisting corporate clients with strategic planning in government and public relations, and managing crisis communications.

Our team has worked on the “inside” of the offices of Governors, Congressional members, and state agencies. We’ve worked at every level of government, and we have the relationships necessary to help you navigate state and federal bureaucracies to accomplish your goals. We know how government works – and we know what government can do for you.

Getting government officials or bodies to do what you want isn’t easy. Government is inherently a slow, bureaucratic entity. When you want elected or appointed officials to change policy, you need a comprehensive plan – and the resources, relationships and quick-thinking to implement that plan.

We come to you with decades of experience in advocacy, moving legislators and engaging state agency leaders to action. Let us help you build and drive an aggressive advocacy agenda.

Regardless of your industry, the internet has a role to play in achieving your public relations goals – and we have the experience and the expertise to implement a plan suited to your needs. Whether you need to effectively use social networking sites, manage a blog, conduct email campaigns or use Web 2.0 tools, Nation Consulting can help you maximize your online presence in a way that is both cost-effective and beneficial to your business or organization.

Ordinary consumers can’t afford Nation Consulting’s services so he doesn’t work for them.

As usual, AT&T’s connections don’t end there.  Many of the “partners” listed on ITP’s website are themselves also backed by AT&T — the Illinois State Black Chamber of Commerce and Illinois Hispanic Chamber of Commerce just two examples.  Several of ITP’s partners follow Nation’s efforts wherever he goes, also ending up affiliated with his other astroturf projects.

A letter to the editor appearing in The Daily Herald signed by Lindsay Mosher, executive director of ITP, applauds the state legislature for passing AT&T’s custom-crafted deregulation bill:

This legislation will spur significant private investment, increase broadband access and create jobs for Illinois residents at no cost to taxpayers.

The legislature deserves our thanks for taking this step.

Now it’s up to Governor Quinn to finish the job and sign the bill without changes, as some have suggested.

As is too often the case, readers are done a disservice when a newspaper prints a self-interested letter to the editor or guest editorial without fully disclosing who is behind it.  Mosher could have signed her letter “AT&T lobbyist” and been more honest.  In fact, in addition to her position at ITP, she’s also employed by another Chicago lobbying firm — Resolute Consulting.  It specializes in issue advocacy as well, and doesn’t work for free.

AT&T spends an enormous amount of money carefully crafting its issues advocacy campaigns designed to convince consumers they are representing your best interests.  Wouldn’t using all this money to lower your phone bill and provide better broadband service be a better allocation of resources if, as AT&T claims, this is all to benefit consumers?

Here’s another question — if an individual consumer in western New York can expose all of these incestuous ties between supposedly grassroots consumer groups and the telecom companies and interests that fund them, why can’t the news media in Illinois?  If they only followed the money, the real story about Senate Bill 107 could have been told before it sailed through the legislature unopposed.

Now, the only chance Illinois consumers have is if Governor Quinn loses the bill.

Thursday’s Winston-Salem Journal featured an editorial calling on the North Carolina legislature to get out of the way as municipalities across the state take control of their broadband destinies.

The piece, Broadband Battle, echoes what Stop the Cap! has been writing for more than a year now:

• More than decade after the Internet became a household word, too many households in the state still don’t have broadband access to it;
• “High-speed,” as defined by many of the state’s providers, doesn’t meet today’s definition of multimedia-ready broadband that can support today’s high bandwidth applications;
• When private providers cannot or will not meet a community’s needs, they shouldn’t have to wait indefinitely for that to change.  If municipalities want to establish high-speed service at the behest of their residents, let them!

The Journal sees through a transparent effort by Senator David Hoyle and others to ensure protectionism for a marketplace duopoly.

Fifteen years after Internet use became common, the telecoms still do not provide high-speed service to much of North Carolina. They can’t expect people to wait any longer.

The telecommunications industry wants the legislature to make it more difficult for local governments to offer high-speed Internet service. The giant companies say they can’t compete with local governments in towns of a couple thousand people.

If the telecoms don’t want local governments to establish these Internet services, they should rush into these areas and establish service now.

The newspaper points out the yoga-like stretching Hoyle and his allies are doing to justify their obstacle course for municipal broadband, noting they are demanding a higher standard for financing municipal broadband than exists for most other government borrowing. And legislators would look hypocritical in passing such legislation because they’ve been borrowing without bond referenda for many years.

The newspaper takes a common sense attitude about such projects — if providers really want to stop them, they should rush into the areas where they are proposed and deliver the world-class 21st century broadband service consumers want and prices they can afford.  Instead, they divert subscriber’s monthly bill payments to high-priced lobbying efforts to kill potential competition.

The editorial’s advice to the General Assembly?  Ignore the telecoms on this issue.  Unfortunately, for some legislators, that means ignoring campaign contributions.  The best way to strengthen their resolve is to let them know they won’t get any more of those checks if they aren’t re-elected.

One of the lesser-known implications of broadband reform includes major changes to the Universal Service Fund (USF), a program that collects a few dollars a month from every phone customer to help subsidize the costs of delivering service to rural America.  As traditional phone lines become ever less important, a proposal to begin applying USF charges to broadband service has gotten increasing attention from conservatives who oppose the program, calling it a new “tax on broadband.”

The need for USF subsidies on rural telephone service continues to decline along with the number of landline customers.  Over the history of the program, repeated abuses have been documented which have diverted funding into cell phones for school administrators, telecommunications services in decidedly non-poor or rural areas, and steering vendor contracts to providers that kick money, trips, or other gifts back to decision makers.  With the FCC increasing the USF subsidy rate to 15.3 percent for the second quarter of 2010, an enormous amount of money is at stake, available for qualified programs.

So much money is available, some companies are building USF funding into their business plans.  Independent rural telephone companies can make a killing on USF subsidies, which are targeted precisely at their service areas.  But now cell phone companies have begun riding the USF gravy train, and are now marketing products and services that would be impossible to provide without USF funding.

One of the most controversial programs is free cellphones for income-challenged Americans, a program that first appeared during the Bush Administration, made possible by the Universal Service Fund.

To qualify, subscribers must either have an income that is at or below 135% of the federal Poverty Guidelines, or participate in one of the following assistance programs:

• Medicaid,
• Food Stamps,
• Supplemental Security Income (SSI),
• Federal Public Housing Assistance (Section 8),
• Low-Income Home Energy Assistance Program (LIHEAP),
• Temporary Assistance to Needy Families (TANF), or
• The National School Lunch Program’s Free Lunch Program

An extension of Lifeline and Link-Up, the free cell phone program has been extended to more than a dozen states by providers like TracFone’s SafeLink Wireless or Sprint’s Assurance Wireless.

Safelink provides qualified customers with free ($50 value) Motorola cell phones and free calling with no contract requirement.  They also receive free texting, national/international calling, voicemail, caller ID, and call waiting.

“A telephone service, just in general, is not a privilege, it’s a right, and we feel it’s a corporate responsibility to provide it,” says José Fuentes, TracFone’s director of government relations. “Everyone should be in contact, should have the opportunity to get a phone call, especially if it’s an employer.”

Fuentes may be right, but TracFone’s altruism is made considerably easier when the federal government is picking up the majority of the tab every month.  USF funding contributes $10 of the estimated $13.50 the service actually costs to provide.

Traditional Lifeline landline service has been a part of American life for decades, but the prospect of welfare recipients getting free cell phones is ready-made for demagoguery in the media.  A common meme is that the program represents more “Obama socialism,” despite the fact the program began under the previous administration, and there may be nothing inherently wrong with extending Lifeline service to an increasingly wireless world.

What this really represents is the opportunity to consider different approaches to funding subsidy programs.  For example, would such programs like cell phone subsidies be better served if they were funded by the carriers themselves as part of spectrum auction proceeds?  Is the FCC trying to substantiate the need for continued USF spending by expanding the number of projects and programs qualified to receive funding?  Is 15.3 percent a fair amount to charge telephone ratepayers?

Under the FCC’s proposed Broadband Plan for America, USF fees would be collected from and largely diverted to broadband service.  Rural America would get broadband service at a price comparable to what big city residents pay, and providers could substantiate the return on investment to begin constructing such projects partly subsidized by USF funding.

But that means the price of your broadband service will increase and some consumers don’t like it.

[flv]http://www.phillipdampier.com/video/WLOS Asheville Broadband Tax 4-28-10.flv[/flv]

WLOS-TV in Asheville, North Carolina reports on concerns about a forthcoming proposed broadband tax.  (2 minutes)

[flv width=”451″ height=”260″]http://www.phillipdampier.com/video/WGRZ Buffalo Free Cell Phones On Your Dime 4-8-10.flv[/flv]

WGRZ-TV in Buffalo covers the free cell phone angle as residents see ads from companies like Assurance Wireless that offer free cell phones to income-challenged Americans. (2 minutes)

Customers of Vistabeam in Nebraska and Wyoming who subscribe to the company’s rural Wireless Internet Service are about to discover their online activities are about to be capped… for real this time.

Matthew Larsen, who runs the Wireless Cowboys blog, includes some illustrative examples of Internet Overcharging schemes in action and what they’re all about.  He writes about his experiences at Vistabeam, which serves rural Nebraska and Wyoming with wireless broadband service.  The company started operations with an admittedly-unenforced 3GB usage limit, backed up with a stinging $25/GB penalty overlimit fee to underscore the point.  Today that cap is described by Larsen as “a joke” — too low to be taken seriously.  [Note to Frontier: Are you reading this?]

But the company was determined to monitor and measure its customers’ online activities and developed an in-house tool that is providing daily insights into customer usage, and gives Vistabeam the ability to begin penalizing customers who exceed the limits established by the provider.

Wireless providers, known as WISPs, often provide the only Internet access in rural areas that are too sparsely populated to deliver DSL service and where cable television is a financial impracticality.  For Nebraska and Wyoming residents bypassed by cable and underserved by DSL (if at all), it’s often a choice between dial-up, satellite fraudband service barely capable of 1Mbps service with a punitive “fair access policy,” or an independent WISP.  A number of customers have chosen the latter.

Vistabeam offers service plans for its 2000 customers ranging from 384kbps for $29.95 a month to 4Mbps service for $99.95 a month, with a discount for paying in six month increments.  That’s not cheap by any means.  But rural Americans routinely face higher broadband bills because of the inability of providers to achieve economy of scale.  Fewer customers have to share the expenses to construct, operate and maintain the service.

But those bills could soon grow even higher if customers exceed the new harder-line Vistabeam will take on usage cap offenses.

Larsen’s measurements identified what their customers were doing with their broadband connections and identified Vistabeam’s biggest users:

Out of 2000+ customers, 80 used more than 10 gigs for the month.

One customer – a 1 meg subscriber at the far eastern edge of our network, behind seven wireless hops and on an 802.11b AP – downloaded 140gig.

Another one, on the far western side of our network, downloaded 110gig.   We called them and found out that they were watching a ton of online video.

We discovered a county government connection that was around 100gig – mostly because someone in the sheriff’s department was pounding for BitTorrent files from 1am to 7am in the morning, and sometimes crashing their firewall machine because of the traffic.

One wonders what the sheriff’s department was grabbing off BitTorrent, but the question itself opens the door as to whether or not your provider (and by extension, you and I) should know what they are doing with their broadband connection in the first place.

Larsen says the other subscribers on his list were watching lots of online video, had a virus, or had “mistakenly” left their file sharing programs running.

Larsen’s solution is usage caps and overlimit penalties for his subscribers.

A home equipped with a WISP antenna on the roof

Package                                                               Monthly Download Cap

384k                                                                       10 gigabytes

640k                                                                       10 gigabytes

1 meg                                                                    20 gigabytes

2 meg                                                                    40 gigabytes

3 meg                                                                    50 gigabytes

4 meg                                                                    60 gigabytes

8 meg                                                                    80 gigabytes

Additional capacity over cap                        $1 per gigabyte over the cap

Although Larsen claims the cap and the overlimit fee isn’t “a profit center,” it would be disingenuous to suggest it isn’t about the money (underline emphasis ours):

I feel that these caps are more than generous, and should have a minimal effect on the majority of our customers.   With our backbone consumption per customer increasing, implementing caps of some kind became a necessity.    I am not looking at the caps as a new “profit center” – they are a deterrent as much as anything.    It will provide an incentive for customers to upgrade to a faster plan with a higher cap, or take their download habits to a competitor and chew up someone else’s bandwidth.

Customers upgrading to a faster plan have to pay a correspondingly higher price for that service and taking their “download habits to a competitor” reduces the cost for the provider no longer encumbered with serving the higher-usage-than-average customer now heading for the door.  Among his 2,000 customers, the end effect will be what Larsen himself hopes is a deterrent for customers using increasingly common higher bandwidth applications like online video, file backup, and uploading and downloading files.  Larsen himself admits that one of his customers was a little bit upset to be told he was using too much.

Rural providers do face higher costs to provide service than their urban counterparts.  But before they enjoy any benefits from Universal Service Fund reform or other government-provided stimulus, customer-unfriendly Internet Overcharging schemes should not be part of the deal.

West Virginia residents are assured of an indefinite future with 1-3Mbps usage-capped “broadband” as Frontier won conditional approval of its plan to assume control of the majority of the state’s landlines.

Frontier Communications, the phone company with the 5 gigabyte monthly acceptable usage allowance, won approval from West Virginia’s Public Service Commission after nearly a year of opposition from several unions and consumer advocacy groups.  The opposition, led by the Communications Workers of America, charged that Frontier’s balance sheet made it impossible for the company to fulfill promises to deliver quality phone and broadband service to the majority of the state’s residents.  Consumer groups, including Stop the Cap!, argued Frontier’s DSL broadband service is inadequate for the state’s needs, because it typically only provides 1-3Mbps speed and is usage-limited for residential customers.

Verizon’s history of bad service in the state helped drive some to believe Frontier can do better

Verizon’s West Virginia division has frequently achieved a poor rating among many West Virginians upset with the company’s service record and broadband deployment.  Last Monday, the PSC announced that Verizon’s service in the state was so poor, it ordered the company to place $72.4 million in an irrevocable escrow account to be used to improve the quality of service.  The PSC found Verizon’s disinterest in delivering service in West Virginia had resulted in the deterioration of Verizon’s essential infrastructure.

The PSC-ordered escrow account will be used to maintain and improve everything from restoring copper wiring to vegetation control and pole replacement.

With a history of complaints like that, it comes as no surprise West Virginians are ready to wave goodbye to Verizon, hoping for better times with Frontier Communications.

Bray Cary

Bray Cary, a TV station owner in West Virginia, has hosted editorials on his network of local stations across the state promoting the transaction, believing it will bring a better future for the state’s telecommunications needs.  Just two weeks ago, he demanded the PSC make a decision on the proposed merger, claiming the state needs a “modern, cutting edge communication system that will bring high-speed Internet to every corner of this state.”  Unfortunately for Cary, there is nothing from Frontier that comes close to “cutting edge,” with the exception of the company’s brazen Internet Overcharging scheme now being tested in Minnesota that threatens to bring $250 monthly broadband bills to some residents.

[flv]http://www.phillipdampier.com/video/WOWK Charleston State Must Act on Verizon-Frontier Deal 5-4-10.flv[/flv]

WOWK-TV’s Bray Cary criticized the West Virginia Public Service Commission for stalling on a decision to move forward the Verizon-Frontier landline transfer in the state.  Just about ten days later, the PSC conditionally approved the deal.  [Video problems were a part of the original clip] (Aired: May 4, 2010 — 1 minute)

Frontier specializes in delivering slow-speed DSL service to most of its rural service areas, usually less than 3Mbps in speed.  Even in its largest service area, Rochester, N.Y., the company’s broadband options are an also-ran against the far faster and more reliable cable modem service from Time Warner Cable, which also beats Frontier’s out-the-door price.

Unfortunately, West Virginian media has never given important details to residents about the specific services Frontier is willing and able to offer residential customers.  It also never informed customers about the important limitations the company attaches to its “high speed Internet” Cary hopes to see available in every corner of the state.

Sometimes change for change’s sake is not an improvement.

The PSC attaches conditions to its approval

The Commission did not grant blanket approval to the transaction.  The PSC is requiring that Frontier:

• Honors all existing obligations of Verizon following the close of the sale, including the currently effective Retail Quality Service Plan approved by the Commission to continue through at least July 2, 2011.
• Makes capital investments in Verizon of $30 million during the second half of 2010, $75 million in 2011 (including $12 million targeted at service quality), $63 million in 2012 and $63 million in 2013.
• Makes additional capital investments of at least $48 million to increase broadband deployment and subscription in the Verizon service territory.
• Expands broadband availability in Verizon service areas so that by no later than the end of the fourth year following the close of the sale, access to broadband service will be available to no less than 85 percent of the households within Verizon service areas.
• Locates its Southeast regional headquarters in Charleston, WV, after closing the sale. Charleston will be Frontier’s Southeastern regional headquarters, and will be a major employment center for Frontier in the region. It will be the hub for engineering, technical, operation and executive personnel for Frontier’s operations in West Virginia, Tennessee, North Carolina, South Carolina, Mississippi, Alabama, Georgia and Florida.
• Adopts all of Verizon’s tariffs, price lists and contracts, including long distance, under the same terms and conditions at closing.
• Caps all regulated rates subject to jurisdiction of the Commission for one year after close of the transaction.
• Provides E-911 functionality provided by Verizon prior to close.
• Waives early termination fees for current Verizon customers participating in a Verizon bundled service package for the first 90 days after closing.

Reactions from all over

“We’re pleased the commission has approved the transaction. The record developed in this case provides comprehensive evidence and assurances that the transaction with Frontier Communications is in the public interest and will provide many benefits to West Virginia residents, including increased investment and broadband availability in the state, while protecting jobs and promoting employment.”

— Verizon-West Virginia President B. Keith Fulton

“We’re in the process of evaluating the order. After full review we’ll look at what we can do that will best serve West Virginia consumers and CWA members. Of course, we’re disappointed but we’re heartened by the fact that at least one person on the three-member commission agreed with us and more than 80 legislators, several county commissions and a broad coalition of consumer, union and first responder organizations that this deal is too risky and not in the public’s interest. The split decision shows our arguments about the deal had validity.”

— Communications Workers of America, District 2 Vice President Ron Collins

Byron L. Harris heads the Consumer Advocate Division of the West Virginia Public Service Commission

“There are many areas of West Virginia that will always be dependent on landlines, absent some sea of change in technology. Those are the people I’m most concerned about. They’re the truly captive customers of now Verizon and, in the future, Frontier.”

— West Virginia Public Service Commission’s consumer advocate Byron Harris

“We’ve seen how Wall Street’s investments can backfire. Like Frontier today, Wall Street once put its confidence in Global Crossing and that led to a disastrous bankruptcy. We’re concerned that the Rochester-area and other existing Frontier properties may be starved to fund this expansion.”

— John Pusloskie, President of CWA Local 1170 in Rochester, N.Y.

“Today’s approval is a welcome and important step. Our goal is to gain the approval of the FCC so that we can close the transaction and begin bringing its benefits to consumers and businesses.”

— Maggie Wilderotter, Chairman and Chief Executive Officer of Frontier

West Virginian media covers the conditional approval

A handful of television stations covered the conditional approval, most without much depth.  West Virginian newspapers covered the fight between Verizon and Frontier and the unions and consumer groups, but no paper really provided in-depth coverage into the challenges of West Virginia broadband and what precisely Frontier is capable of providing to solve it.  Consumers will discover soon enough that West Virginia has yet again gotten the short end of the online stick.  Only this time, they better not wave it around too much — it might exceed your monthly stick-waving allowance.

[flv width=”500″ height=”395″]http://www.phillipdampier.com/video/WOWK Charleston Union – Verizon-Frontier Deal Bad for W.Va., Verizon Responds 5-14-10.flv[/flv]

WOWK-TV in Charleston delivered the most substantial report on the sale, including this brief interview with PSC spokeswoman Sarah Robertson.  (2 minutes)

[flv]http://www.phillipdampier.com/video/WTAP Parkersburg Verizon-Frontier Deal Approved 5-14-10.flv[/flv]

WTAP-TV in Parkersburg ran this brief in-studio report about the Verizon-Frontier approval.  (1 minute)

[flv]http://www.phillipdampier.com/video/WDTV Bridgeport Verizon Sells Land Lines to Frontier 5-14-10.mp4[/flv]

WDTV-TV in Bridgeport explained the requirements of the conditional approval.  This was the only report on the approval that included the opposition’s perspective.  (1 minute)