Frontier Communications stock took a beating this afternoon after Citi analyst Michael Rollins downgraded the company’s stock from Neutral to Sell after announcing he didn’t believe Frontier’s rosy promises of synergy savings from its acquisition of Verizon’s wired networks in Florida, Texas, and California.

Rollins believes Frontier’s legacy copper networks, long overdue for significant upgrades, will continue to pose a greater-than-expected drag on Frontier’s financial performance, substantially reducing any benefits of its latest acquisition deal with Verizon. Frontier executives previously admitted they have less than a 25% market share in many of their service areas, evidence customers are dumping Frontier landlines and DSL broadband and never looking back.

Frontier was depending on the Verizon acquisition, scheduled to close March 31, to help stabilize its revenues and OIBDA numbers. That isn’t likely, according to Rollins, because Frontier customer revenue is down in all-copper service areas. Frontier’s revenues from its legacy service areas dropped more than 4 percent in 2015.

The news is slightly better in areas where Verizon has acquired fiber to the neighborhood (Connecticut) and fiber to the home (Pacific Northwest, Indiana) networks from AT&T and Verizon. Frontier FiOS has helped keep the company’s revenue stable to modestly down, but there are no clear signs Frontier plans to build its own fiber networks in its legacy service areas, outside of an experimental network in North Carolina.

As a result, Rollins is convinced the “synergy realization” numbers need to be run again. He predicts they will turn out much lower than anticipated. Experience with Frontier’s earlier acquisitions from AT&T and Verizon demonstrated lower than anticipated synergies.

Phillip Dampier: One customer calls FairPoint’s deregulation logic “moosepoop.”

In 2007, Verizon Communications announced it was selling its landline telephone network in Northern New England to FairPoint Communications, a North Carolina-based independent telephone company. Now, nearly a decade (and one bankruptcy) later, FairPoint wants to back out of its commitments.

In 2015, FairPoint stepped up its push for deregulation, writing its own draft legislative bills that would gradually end its obligation to serve as a “carrier of last resort,” which guarantees phone service to any customer that wants it.

The company’s lobbyists produced the self-written LD 1302, introduced last year in Maine with the ironic name: “An Act To Increase Competition and Ensure a Robust Information and Telecommunications Market.” The bill is a gift to FairPoint, allowing it to abdicate responsibilities telephone companies have adhered to for over 100 years:

• The bill removes the requirement that FairPoint maintain uninterrupted voice service during a power failure, either through battery backup or electric current;
• Guarantees FairPoint not be required to offer provider of last resort service without its express consent, eliminating Universal Service requirements;
• Eliminates a requirement FairPoint offer service in any area where another provider also claims coverage of at least 94% of households;
• Eventually forbids the Public Utilities Commission from requiring contributions to the state Universal Service Fund and forbids the PUC from spending that money to subsidize rural telephone rates.

Such legislation strips consumers of any assumption they can get affordable, high quality landline service and would allow FairPoint to mothball significant segments of its network (and the customers that depend on it), telling the disconnected to use a cell phone provider instead.

FairPoint claims this is necessary to establish a more level playing ground to compete with other telecom service providers that do not have legacy obligations to fulfill. But that attitude represents “race to the bottom” thinking from a company that fully understood the implications of buying Verizon’s landline networks in a region where some customers were already dropping basic service in favor of their cell phones.

FairPoint apparently still saw value spending $2.4 billion on a network it now seems ready to partly abandon or dismantle. We suspect the “value” FairPoint saw was a comfortable duopoly in urban areas, a monopoly in most rural ones. When it botched the conversion from Verizon to itself, customers fled to the competition, dimming its prospects. The company soon declared bankruptcy reorganization, emerged from it, and is now seeking a legislative/regulatory bailout too. Regulators should say no.

Last week, even FairPoint’s CEO Paul Sunu appeared to undercut his company’s own arguments for the need of such legislation, just as the company renewed its efforts in Portland to get a new 2016 version of the deregulation bill through the Maine legislature.

“We’ve operated in and we have experience operating basically in duopolies for a long time,” Sunu told investors in last week’s quarterly results conference call. “Cable is a formidable competitor. Look, they offer a nice package and a bundle and they – in certain areas, they certainly have a speed advantage. So we recognize that and so our marketing team does a really good job of making sure that our packages are competitive and we can counter punch on a both aggregate and deconstructive pricing.”

“Our aim is not to be a low cost, per se,” Sununu added. “What we want to do is to make sure that people stay with us because we can provide a better service and a better experience and that’s really what we aim to do. And as a result, we think that we will be able to change the perception that people have of Fairpoint and our brand and be able to keep our customers with us longer.”

Paul H. Sunu

Of course customers may not have the option to stay if FairPoint gets its deregulation agenda through and are later left unilaterally disconnected. In fact, while Sunu argues FairPoint’s biggest marketing plus is that it can provide better service, its agenda seems to represent the opposite. AARP representatives argued seniors want and need reliable and affordable landline service. FairPoint’s proposal would eliminate assurances that such phone lines will still be there and work even when the power goes out.

At least this year, customers know if they are being targeted. FairPoint is proposing to immediately remove from “provider of last resort service” coverage in Maine from Bangor, Lewiston, Portland, South Portland, Auburn, Biddeford, Sanford, Brunswick, Scarborough, Saco, Augusta, Westbrook, Windham, Gorham, Waterville, Kennebunk, Standish, Kittery, Brewer, Cape Elizabeth, Old Orchard Beach, Yarmouth, Bath, Freeport and Belfast.

At least 10,000 customers could be affected almost immediately if the bill passes. Customers in those areas would not lose service under the plan, but prices would no longer be set by state regulators and the company could deny new connection requests.

FairPoint argues that customers disappointed by the effects of deregulation can simply switch providers.

“The market determines the service quality criteria of importance to customers and the service quality levels they find acceptable,” Sarah Davis, the company’s senior director of government affairs, wrote. “To the extent service quality is deficient from the perspective of consumers, the competitive marketplace imposes its own serious penalties.”

Except FairPoint’s own CEO recognizes that marketplace is usually a duopoly, limiting customer options and the penalties to FairPoint.

Those customers still allowed to stay customers may or may not get good service from FairPoint. Another company proposal would make it hard to measure reliability by limiting the authority of state regulators to track and oversee service complaints.

Company critic and customer Mike Kiernan calls FairPoint’s legislative push “moosepoop.”

“FairPoint has been, from the outset, well aware of the issues here in New England, since they had to demonstrate that they were capable of coping with the conditions – market and otherwise – in their takeover bid from Verizon,” Kiernan writes. “Yet now we see where they are crying poverty (a poverty that they brought on themselves) by taking on the state concession that they are trying desperately to get out from under, and as soon as possible.”

Vermont Public Radio reports FairPoint wants to get rid of service quality obligations it has consistently failed to meet as part of a broad push for deregulation. (2:23)

You must remain on this page to hear the clip, or you can download the clip and listen later.

Kiernan argues FairPoint should be replaced with a solution New Englanders have been familiar with for over 200 years – a public co-op. He points to Eastern Maine Electrical Co-Op as an example of a publicly owned utility that works for its customers, not as a “corporate cheerleader.”

Despite lobbying efforts that suggest FairPoint is unnecessarily burdened by the requirements it inherited when it bought Verizon’s operations, FairPoint reported a net profit of $90 million dollars in fiscal 2015.

Finding affordable wireless Internet access that isn’t speed throttled or usage capped is becoming rare, but Stop the Cap! has been exploring a provider that offers both.

Unlimitedville is the latest authorized reseller of Sprint that has managed to get permission to market an unlimited LTE 4G wireless data plan that comes without speed throttles. The service is priced at $42.99 a month (not including certain minor fees and surcharges) and includes a 30-day free trial to test the service. A $50 setup fee includes a mobile hotspot device (typically a Netgear Zing or Pocket Wifi) that is yours to keep once you commit to the required 2-year contract (after the free trial).

Customers we have communicated with give the service a universal thumbs-up for not limiting or throttling usage. Customers in suburban and semi-rural areas near highways and interstates report the best speeds from relatively uncongested Sprint cell towers. Those in very rural areas may have a lot of trouble finding Sprint service available, so potential customers should review Sprint’s coverage map carefully for data service coverage before considering Unlimitedville.

There are some peculiarities about doing business with this reseller, however.

First, Unlimitedville acts as a front line sales agent, but accounts are apparently provisioned by an another company named Impact Wireless, a “master agent” for Sprint. After service is established, all future communications, support and billing take place directly with Sprint.

Getting service established is the first minor hurdle. Because the contract plan is intended for business use, customers will need to list a company name on the enrollment form. It is acceptable to consider yourself a consultant or use your current profession if you intend to use the service at anytime/for any reason for work or while travelling for work. No formal business registration is required. Some customers sign up using their last name, as in “Smith Consulting.” You do have to give them your Social Security number or business Taxpayer ID Number to run the usual required credit check. Most applicants are easily approved within 72 hours and Sprint will then call to help arrange for service. If you are not approved, you can agree to pay an upfront deposit and after 12 on-time monthly payments, the deposit will be returned to your account.

Second, some customers have recently reported they’ve been surprised to discover their account activation came with membership in a free loyalty program for a certain home improvement retail chain. With the recent demise of Karma’s Neverstop plan, disconnecting customers are banging at the doors of Unlimitedville to get in. Evidently this overflow is also affecting Impact Wireless, which evidently has some limitations on how many new customers it can enroll itself over a certain period of time. As a result, they may be looking for other entry points available to them to get customers activated as quickly as possible. Customers should be ready to be flexible. Getting unlimited wireless data from anyone these days increasingly requires creativity.

As Unlimitedville gains more visibility, there are also questions about how long it will last given carriers’ dislike of resellers that attract a lot of heavy users. The service has been around at least as long as Karma and is still welcoming new clients, so it is hard to say. It will probably last longer if customers respect the wireless network that powers it was not built to sustain customers running up a terabyte of usage a month. Being a responsible user of a limited resource is likely to help keep these kinds of unlimited services viable, an important consideration for customers who do not have the luxury of going to another provider if Unlimitedville folds.

Despite claims satellite broadband has improved, our readers respectfully disagree:

“Most people don’t know what data caps really are until they’ve had satellite based Internet service where the bandwidth is shared,” Scott S. reminds Stop the Cap! He’s a subscriber of Exede, a satellite broadband provider powered by the ViaSat satellite platform serving about 687,000 residential customers nationwide.

Online life can be a lot worse when you are stuck with satellite-based Internet access:

• “I am only allowed to have 10GB per month total for everything and have a 12/3Mbps service. Anything over that and they either cap your flow or give you substantially lower bandwidth speed.
• “You can’t go online with more than three devices (including your phones).
• “You can forget Netflix or watching any shows online.
• “You can forget playing ANY video games online.
• “You can forget taking any college courses online without service interruptions (which I am).”

“And they still charge you as much as other ISPs do (at least $60/month) that provide no data caps and a MUCH faster speed,” Scott writes.

Exede offers most customers plans with 10, 18, or 30GB of usage per month. About one-third of the country, typically the most rural regions in the western U.S., can now choose faster plans at speeds nearing 25Mbps because those spot beams are underutilized. But most subscribers get considerably poorer service because about two-thirds of ViaSat’s residential satellite access beams are full. Despite that, Viasat still managed to find capacity to power in-flight Wi-Fi on JetBlue, Virgin America and some United Airlines aircraft.

Customers who have never had DSL or cable broadband tolerate the slow speeds and low caps better than those that move from an area served by a wired provider. Many of those customers call satellite broadband speed marketing claims “fraudulent” and complain low usage caps make it difficult to impossible to use the Internet to use multimedia content.

TRAI Chairman R.S. Sharma

A plan by Facebook to deliver free limited Internet access to India’s poor and rural communities was delivered a blow this morning after the Telecom Regulatory Authority of India (TRAI) declared the plan would violate Net Neutrality and banned it.

TRAI’s ruling focused on the fact the proposed plan would only allow customers to access Facebook and other partnered websites the social network elected to let users access over its free service. The regulator declared no service provider in India will be allowed to offer or charge discriminatory rates for data services based on content.

The regulator relied heavily on the ISP License Agreement in its ruling, which requires subscribers to have “unrestricted access to all the content available on Internet except for such content which is restricted by the Licensor/designated authority under Law.” TRAI went further in its Net Neutrality declaration than regulators in the U.S. and parts of Europe, proclaiming price-based differentiation “would make certain content more attractive to consumers resulting in altering online behavior.” Under those terms, India has effectively banned the practice of “zero rating,” which exempts certain so-called “preferred content” from metering charges or counting against a customer’s usage allowance.

“This is a big win for Indian consumers and Net Neutrality,” said Independent MP Rajeev Chandrasekhar. “This is a very powerful and positive first step taken by TRAI. The days of telcos controlling regulations and regulatory policy is over and it is consumers to the fore.”

Facebook’s Internet.org and its companion free mobile web service, now dubbed Free Basics, offers stripped-down web services without airtime or usage charges, targeting basic so-called “feature phones” that were common in the U.S. before smartphones. Facebook has targeted the free service on about three dozen developing countries including the Philippines, Malawi, Bangladesh, Thailand and Mongolia. India would have been Facebook’s largest market for Free Basics, until the telecom regulator effectively banned it.

In India, Facebook CEO Mark Zuckerberg’s frequent entries into the debate, including a passive-aggressive OpEd widely panned in India, was seen by many as arrogant and counter-productive. Facebook’s ongoing campaign to enlist users’ active support of the project for the benefit of India’s telecom regulator created a row with the Office of the Prime Minister, that dismissed Facebook’s public relations defense of Free Basics “a crudely majoritarian and orchestrated opinion poll.“

A misleading astroturf campaign only infuriated the government more after Facebook users (including some in the U.S.) were greeted with an invitation in their timelines to support “digital equality,” sponsored by Facebook. Regulators were flooded with form letters, only later to be informed many were misled to believe it indicated their support for Net Neutrality.

Facebook users across India (and some in the U.S.) were invited by Facebook to defend “digital equality,” which critics define as “opposing Net Neutrality.”

“Facebook went overboard with its propaganda [and] convinced ‘the powers that be’ that it cannot be trusted with mature stewardship of our information society,” said Sunil Abraham, of the Center for Internet and Society in Bangalore.

Initially, Internet.org included Facebook and a handpicked assortment of content partners, including the BBC, that were allowed on the free service. Net Neutrality proponents accused Facebook of creating a walled garden for itself and its preferred partners, disadvantaging startups and other companies not allowed on the service.

Unlike in the United States where Net Neutrality was a cause largely fought by netizens, websites, and consumer groups, major media organizations in India helped coordinate the push for Net Neutrality. The Times of India and its language websites like Navbharat Times, Maharashtra Times, Ei Samay and Nav Gujarat Samay appealed to other broadcasters and publishers to remove themselves from Internet.org. NDTV, a major multi-lingual broadcaster running multiple 24-hour news channels, often promoted Net Neutrality on the air and encouraged Indians to support it.

Like in the United States, Indians faced a telecom regulator more accustomed to dealing with government officials and telecom companies. TRAI was quickly swamped with over one million comments in support of Net Neutrality, so many that invitations for future comments were moved to another government website that made it harder for consumers to address regulators. The unexpected level of support for Net Neutrality also led Facebook to change its Internet.org service and relaunch Free Basics as “an open platform.”

But websites included in the service still cannot contain data intensive product experiences, such as streaming video, high-resolution images and GIFs, videos, client or browser side caching or file and audio transfer services.

“Facebook defines the technical guidelines for Free Basics, and reserves the right to change them,” adds the SavetheInternet.in coalition. “They reserve the right to reject applicants, who are forced to comply with Facebook’s terms. In contrast they support ‘permissionless innovation’ in the US.”

In India, the argument has boiled down to whether the country would prefer a usage-limited open Internet platform for the poor or an unlimited experience for a handful of websites. TRAI prefers enforcing rules guaranteeing users can visit any website they want, even if the free service used comes with a usage cap.

It’s a major blow for Facebook and the telecom operators that were some of the service’s biggest defenders.

[flv]http://www.phillipdampier.com/video/NDTV Net Neutrality India 2-8-16.mp4[/flv]

Net Neutrality is now law in India, where the telecom regulator exceeded the United States by completely banning zero rated services, which allow users to avoid usage charges for certain applications or websites. (2:03)

Activists of Indian Youth Congress and National Students Union of India shout anti-government slogans during a protest in support of Net Neutrality in New Delhi on April 16, 2015. (Image: MONEY SHARMA/AFP/Getty Images)

”COAI had approached the regulator with the reasons to allow price differentiation as the move would have taken us closer to connecting the one billion unconnected citizens of India,” said Rajan Mathews, director general of the Cellular Operators Association of India (COAI). “By opting to turn away from this opportunity, TRAI has ignored all the benefits of price differentiation that we had submitted as a part of the industry’s response to its consulting paper, including improving economic efficiency, increase in broadband penetration, reduction in customer costs and provision of essential services among other things.”

In a statement, a Facebook spokesperson said: “Our goal with Free Basics is to bring more people online with an open, non-exclusive and free platform. While disappointed with the outcome, we will continue our efforts to eliminate barriers and give the unconnected an easier path to the Internet and the opportunities it brings.”

TRAI rejected industry claims that differential pricing will enable operators to bring innovative packages to the market.

India has 300 million mobile users but there are still nearly one billion Indians without Internet access. India is an important market for Facebook, with 130 million active Facebook users — second to only the United States.

Allowing Facebook to gain a foothold in rural India using zero rating was compared with British colonialism by Vijay Shekhar Sharma, the founder of PayTM — an Indian mobile payment system. He called Free Basics a trojan horse — “poor Internet for poor people” and referred to it as the colonial-era East India Company of the 21st century.

“India, Do u buy into this baby Internet?” Mr Sharma tweeted in December. “The East India company came with similar ‘charity’ to Indians a few years back!”

“Given that a majority of the [Indian] population are yet to be connected to the Internet, allowing service providers to define the nature of access would be equivalent of letting [operators] shape the users’ Internet experience,” TRAI said in its release.

Telecom operators should be able to adapt to a market that bans zero rating, analysts believe.

“Telecom service providers may not be happy with this notification,” Amresh Nanden, research director at Gartner, told NDTV News. “However, they still have the ability and freedom to create different kind of Internet access packages; as long as content is not a parameter to provide or bar access to anyone. Such practices have already started elsewhere with products such as bandwidth on demand, bandwidth calendaring etc. to create premium products.”

[flv]http://www.phillipdampier.com/video/AIB Save The Internet 1 4-2015.mp4[/flv]

All India Bakchod produced several humorous mostly English language videos teaching Indians about Net Neutrality and why it’s important. It’s a familiar case for North Americans dealing with our own telecom operators. (9:07)

An update from All India Backchod last summer alerted India to an astroturf campaign underway at Facebook and telecom operators to mislead Net Neutrality supporters. (8:02)