Phillip “Free Trade in Bad Broadband” Dampier

Sure we’ve had our cultural skirmishes in the past,  but on one thing we can all mostly agree: our largest cable, phone, and broadband providers generally suck.

Outside of hockey season, Canada’s national pastime is hating Bell, Rogers, Vidéotron, Telus, and Shaw. The chorus of complaints is unending on overbilling, bundling of dozens of channels almost nobody watches but everybody pays for, outrageous long-term contracts, and bloodsucking Internet overlimit fees. In fact, dissatisfaction is so pervasive, the Conservative government of Stephen Harper spent this past summer waving shiny keys of distraction promising Canadians telecom relief while hoping voters didn’t notice their tax dollars were being spent by the country’s national security apparatus to spy on Brazil for big energy companies.

The Montreal Gazette is now collecting horror stories about dreadful service, mysterious price hikes, and promised credits gone missing on behalf of readers fed up with Bell and Vidéotron.

Rogers Cable, always thoughtful and pleasant, punished a Ottawa man coping with multiple sclerosis and cancer with a $1,288 bill, quickly turned over to a collection agency after his home burned to the ground. It took headlines spread across Ontario newspapers to get the cable company to relent.

Things are no better in the United States where the American Customer Satisfaction Index rates telecom companies worse than the post office, health insurers airlines, and the bird flu. National Public Radio opened the floodgates when it asked listeners to rate their personal satisfaction with their Internet Service Provider — almost always the local cable or telephone company.

The phone company Canadians love to hate.

Many responded their Internet access is horribly slow, often goes out, and is hugely overpriced. In response, the cable industry’s hack-in-chief did little more than shrug his shoulders — knowing full well American broadband exists in a cozy monopoly or duopoly in most American cities.

Breann Neal of Hudson, Ill., told NPR she has one choice — DSL, which is much slower than advertised. Hudson is Frontier Communications country, and it is a comfortable area to serve because local cable competition from Mediacom, America’s worst cable company, is miles away from Neal’s home.

“There’s no incentive for them to make it better for us because we’re still paying them every month … and there’s no competition,” Neal says.

Samantha Laws, who gets her Internet through her cable provider, says she also only has one option.

“It goes out at least once a day, and it’s been getting worse the last few months,” Laws says. She works with a pet-sitting company that handles all of its scheduling through email and the company website. At times she can’t do her job because of the unreliable connection.

Chicago is in Comcast’s territory and the company is quite comfortable cashing your check while AT&T takes its sweet time launching U-verse in the Windy City. AT&T isn’t about to throw money at improving DSL while local residents wait for U-verse and Comcast doesn’t need to spend a lot in Chicago when the alternative is AT&T.

Where there is no disruptive new player in town to shake things up, there is little incentive to speed broadband service up. But there is plenty of room to keep increasing prices for a service that is becoming as important as a working telephone. Companies are using broadband profits to cover increasing losses from pay television service, investing in stock buybacks, paying dividends to shareholders, or just putting the money in a bank, often offshore.

NPR’s All Things Considered:

“[For] at least 77 percent of the country, your only choice for a high-capacity, high-speed Internet connection is your local cable monopoly,” says Susan Crawford, a visiting professor at Harvard Law School. She is also the author of Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.

Crawford says that today’s high-speed Internet infrastructure is equivalent to when the railroad lines were controlled by a very few moguls who divided up the country between themselves and gouged everybody on prices.

She says the U.S. has fallen behind other countries in providing broadband. At best, Crawford says, the U.S. is at the middle of the pack and is far below many countries when it comes to fiber optic penetration. Given that the Internet was developed in the U.S., she says the gap is a result of failures in policy.

“These major infrastructure businesses aren’t like other market businesses,” Crawford says. “It is very expensive to install them in the first place, and then they build up enormous barriers of entry around them. It really doesn’t make sense to try to compete with a player like Comcast or Time Warner Cable.”

So Crawford is calling for is a major public works projects to install fiber optic infrastructure — a public grid that private companies could then use to deliver Internet service.

Powell

That’s an idea met with hand-wringing and concern-trolling Revolving Door Olympian Michael Powell, who made his way from former chairman of the Federal Communications Commission during the first term of George W. Bush’s administration straight into the arms of Big Cable as president of their national trade association, the NCTA.

Powell, well compensated in his new role representing the cable industry, wants Americans to consider wireless 3G and 4G broadband (with usage caps as low as a few hundred megabytes per month) equivalent competitors to the local cable and phone company.

“I think to exclude [wireless] as a substitutable, competitive alternative is an error that leads you to believe the market is substantially more concentrated that it actually is,” Powell says.

Of course, Powell’s new career includes a paycheck large enough to afford the wireless data bills that would shock the rest of us. All that money also apparently blinds him to the reality the two largest wireless providers in America are AT&T and Verizon — the same two companies that are part of the duopoly in wired broadband. It’s even worse in Canada, where Rogers, Bell, and Telus dominate wired and wireless broadband.

Although America isn’t even close to having the fastest broadband speeds, Powell wants you to know the speeds you do get are good enough.

“I think taking a snapshot and declaring us as somehow dangerously falling behind is just not substantiated by the data,” he says. He says it is like taking a snapshot of speed skaters, where there might be a few seconds separating the leaders, but no one is “meaningfully out of the race.”

That is why we still celebrate and honor Svetlana Radkevich from Belarus who competed in the speed skating competition at the Vancouver 2010 Winter Olympics. She made it to the finish line and ranked 33rd. Ironically, South Korea ranked fastest overall that year, taking home three gold and two silver medals. In Powell’s world, that’s a distinction without much difference. You don’t need South Korean speed and gold medals when Belarus is enough. That argument always plays well in the United States, where Americans can choose between Amtrak or an airline for a long distance trip. Who needs a non-stop flight when a leisurely train ride will get you there… eventually.

There are a handful of providers uncomfortable with the mediocre broadband slow lane. Google is among them. So are community broadband providers installing fiber broadband and delivering gigabit Internet speeds. EPB in Chattanooga is among them, and it has already made a difference for that city’s digital economy neither AT&T or Comcast could deliver.

Unsurprisingly, Powell thinks community broadband is a really bad idea because private companies are already delivering broadband service — while laughing all the way to the bank.

If a community really wants gold medal broadband, Powell says, they should be able to have it. But Powell conveniently forgets to mention NCTA’s largest members, including Comcast and Time Warner Cable, spend millions lobbying federal and state governments to make publicly owned broadband illegal. After all, cable companies know what is best.

All Things Considered recently asked its fans on Facebook, “How satisfied are you with your Internet service provider?” Many responded that they didn’t like their Internet service, that it often goes out and that their connection was often “painfully slow.” Listen to the full report first aired Jan. 11, 2014. (11:30)
You must remain on this page to hear the clip, or you can download the clip and listen later.

After years of inaction, northern Canada will finally see improved telecommunications services that the rest of us have taken for granted for at least a decade.

Under a plan developed by the Canadian Radio-Television and Telecommunications Commission (CRTC), NorthwesTel (a Bell Canada subsidiary) will spend $233 million by 2017 to improve Internet service and bring other telecommunications services into the 21st century.

At present, many communities still lack phone features like caller ID, call waiting, and three-way calling. Dial up access remains common and landline based broadband from DSL remains spotty. Larger communities like Whitehorse can obtain broadband at speeds up to 100Mbps, however.

The eastern Arctic regions, including Nunavut, rely primarily on satellite broadband while those in the western Arctic can access a mix of DSL and Wireless ISP services in more populated areas and settlements. Cell phone service is available in some areas, but reception doesn’t hold up once customers roam outside of town. Mobile broadband upgrades are anticipated to make 4G home broadband a possibility, although it is likely to be expensive and usage-capped.

NorthwesTel’s operating area

Telecom analyst Iain Grant told the Canadian Press NorthwesTel’s plans to upgrade it services are long overdue. Grant is a proponent of fiber broadband access over satellite and reminded the CRTC a Canadian company called Arctic Fibre is working on a fiber optic route across the Canadian Arctic that will connect China to Europe.

The CRTC has been unimpressed with the Bell Canada subsidiary’s performance, noting the quality of service is well behind the rest of Canada. The Commission has placed a four-year price cap on services and has broken up NorthwesTel’s near-monopoly on service by ordering it sell landline, Internet, and other voice services separately, which opens the door for new competitors to emerge. New entrants could either develop their own networks or resell service purchased wholesale from the phone company.

The CRTC heard numerous complaints from northern residents during hearings held in the region earlier this year. Common complaints included inadequate access to broadband, expensive and outdated telephone service, and no competition in parts of the region. Residents also complained about poor cell service.

One competitor that has specialized in cellular service in northern Canada, Ice Wireless, announced it is spending more than $12 million to upgrade its network in Yukon, the Northwest Territories and Nunavut, introducing mobile data service for the first time.

NorthwesTel serves the Yukon, Northwest Territories, Nunavut and northern parts of British Columbia and Alberta.

[flv]http://www.phillipdampier.com/video/CBC North CRTC issues decision on Northwestel plan 12-18-13.flv[/flv]

CBC North reports northern Canada is well overdue for telecom service upgrades, and Canadian regulators are no longer waiting around for competitors to show up. (1:45)

AT&T is offering T-Mobile customers — and only T-Mobile customers — up to $450 to switch their wireless service to AT&T, but is the switch actually worth it? A close inspection of AT&T’s fine print suggests some customers might want to think twice.

According to AT&T, beginning Jan. 3, under the limited-time offer, T-Mobile customers who switch to AT&T can trade-in their current smartphone for a promotion card of up to $250, which can be used toward AT&T products and services.  Trade-in values will vary based on make, model and age of the smartphone, but many of the latest and most popular smartphones will qualify for a value of $250.  T-Mobile customers can receive an extra $200 credit per line when they transfer their wireless service to AT&T and choose an AT&T Next plan, buy a device at full retail price or activate a device they currently own. The “Next” plan offers customers a chance to upgrade to a new device every year under an installment plan that divides the retail price of the phone over 20 months.

[flv]http://www.phillipdampier.com/video/CNN The Most Dangeous Man in Wireless 1-8-14.flv[/flv]

The Wall Street Journal’s ‘Digits’ explores the open marketing warfare between AT&T and T-Mobile. (3:34)

Although $450 sounds like an outstanding deal, some Wall Street analysts that usually panic when a company seems to be giving away the store, are still sleeping well at night.

“It’s not as great an offer as it appears on the surface,” Michael Hodel, equity analyst at Morningstar tells MarketWatch. “The fine print is critical.”

1. Not every smartphone will qualify for the $250 “promotional card.” Only the latest model smartphones showing no signs of wear and tear are going to earn full value. Customers with older feature or basic phones will not qualify for anything at all. Customers may be able to get just as much selling their old phone themselves.
2. AT&T is not offering a cash rebate. The value of the “promotional card” and the $200 ‘switch from T-Mobile’ bonus can only be spent on AT&T products and services. The promotional card will help defray the cost of buying a new smartphone from AT&T (which may not have the best price) and the $200 bonus will appear as a credit on a future AT&T bill.
3. By accepting the $200 bonus, customers give up any device subsidies, an important distinction if you want an Apple iPhone. AT&T’s device subsidy on this phone is higher than $200.
4. AT&T has tighter credit standards than T-Mobile. Customers with spotty credit may be asked to put down a deposit with AT&T before the company will take your business.

Legere

AT&T argues its offer will benefit T-Mobile customers by giving them access to the larger coverage area of AT&T’s wireless network and more widespread 4G service. But AT&T customers pay higher prices for access to that network. A T-Mobile customer is more likely to be sensitive to the price of the service — one of the strongest marketing points T-Mobile has in its favor. Most customers unhappy with T-Mobile’s less robust coverage tend to cancel service at the end of their contract (or earlier) and switch to either AT&T and Verizon Wireless.

According to an October report from MoffettNathanson Research, a typical T-Mobile family with 3-5 lines on a single account usually save around $50 a month off AT&T’s prices. That represents $600 a year in savings.

T-Mobile’s scrappy and aggressive marketing has had an impact, particularly on AT&T. Just a few years earlier AT&T tried to buyout T-Mobile in a consolidation move rejected by the Justice Department’s Antitrust Division. After the merger collapsed, incoming T-Mobile CEO John Legere has long forgotten whatever niceties existed between the two companies when they were trying to join forces. Legere has been on the attack against both AT&T and Verizon Wireless all year, and the effort is clearly beginning to pay off as T-Mobile adds customers.

Last year at the Consumer Electronics Show (CES) Legere called AT&T’s network “crap” on stage. So when Legere crashed AT&T’s party at this year’s CES convention, still sporting his pink T-Mobile t-shirt, AT&T’s security guards threw him out.

[flv]http://www.phillipdampier.com/video/CNN The Most Dangeous Man in Wireless 1-8-14.flv[/flv]

CNN calls T-Mobile’s John Legere the most dangerous man in wireless, for exposing “disgusting” AT&T and Verizon’s over 90% gross margin on their wireless services and their consumer unfriendly business practices. (2:41)

AT&T today announced it has agreed to buy 49 Advanced Wireless Services (AWS) spectrum licenses from a venture that has done nothing with the frequencies since acquiring them at auctions dating back as early as 2004.

Aloha Partners II, L.P. has no intention to use the frequencies it controls, so it has sold part of its spectrum portfolio to AT&T. The acquired licenses cover almost 50 million people in 14 states, including California, Colorado, Connecticut, Idaho, Illinois, Indiana, Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, Ohio, Pennsylvania and Texas.

Aloha Partners II is selling a considerable amount of its AWS portfolio to AT&T for an undisclosed sum. The venture never used the frequencies, although it controlled some of them as early as a decade ago.

The acquisition will complement AWS frequencies AT&T already controls in the band, which ranges from 1710 – 1755 and 2110 – 2155MHz.

Financial terms were not disclosed.

Carriers have complained regularly about spectrum shortages but some consumer groups charge carriers and spectrum squatters are not putting the airwaves they already control to use. Spectrum has become such a valuable asset, some investors have pooled resources to buy licenses only to resell at a profit later.

Before today’s announcement, Aloha Partners II was the 8th largest owner of wireless spectrum in the U.S. The venture owns AWS spectrum concentrated in 12 of the top 50 markets including many of the leading high-tech areas like San Francisco, San Jose, Denver, Austin and San Antonio.

Klobuchar

After months of fruitless discussions with cell phone carriers, the U.S. Senate is moving closer towards legislation that would stop phone companies from blocking “kill switch” technology that could disable lost or stolen phones, discouraging would-be thieves.

Sen. Amy Klobuchar (D-Minn.) sent letters this week to Verizon Wireless, AT&T, Sprint and T-Mobile asking the carriers to do more to protect customers from phone theft.

Klobuchar is concerned wireless companies may be blocking cell phone manufacturers from enabling anti-theft technology customers could activate to disable missing phones and prevent unauthorized access or reactivation without the customer’s consent.

“Mobile devices aren’t just telephones anymore – increasingly people’s livelihoods depend on them,” Klobuchar said. “That’s why we need to do more to crack down on criminals who are stealing and reselling these devices, costing consumers billions every year. The wireless industry needs to step up to the plate and address these thefts, and make sure consumers have the most advanced security technology at their fingertips.”

The technology is already widely available internationally and has dramatically reduced smartphone theft by eliminating most of the resale value of the expensive devices, which are rendered useless once the phone is disabled.

Apple has contractual control over its products unlike most cell phone manufacturers.

But American carriers have so far refused permission to allow manufacturers like Samsung to introduce the feature in North America. Apple has successfully introduced a “kill switch” on many of its latest devices thanks to favorable contractual language that limits outside interference with the software Apple develops for its wireless devices. Other manufacturers are generally required to bow to carrier demands.

“I think that this is motivated by profit,” San Francisco district attorney George Gascon told CNN. Gascon reported he had seen e-mails from carriers that rebuffed Samsung’s efforts to introduce the technology in the American market.

Companies like AT&T claim that a “kill switch” feature could be exploited by hackers and make restoring service extremely difficult. But manufacturers and proponents of kill switch technology dismiss that argument, claiming the process is easily reversible once a customer enters a correct name and password. Critics believe carriers are motivated by the potential loss of millions from the sale of insurance plans, replacement phones, and the increased revenue earned from the reactivation of stolen phones.

With more than 1.6 million smartphones stolen or lost annually, carriers sell more than $800 million of replacement phones worth at least $500 each. Wireless phone companies also profit selling insurance plans priced at $7 or more monthly that offer free or discounted, typically refurbished cell phone replacements. Most customers never use the insurance plans, earning providers an extra $84 a year in revenue per customer.

Without kill switch technology and other theft prevention measures, the incentive to steal valuable smartphones continues to increase. As the price of sophisticated smartphones continues to increase, they are a prime target in street crime incidents. In San Francisco, 67% of robberies are related to mobile devices, according to the police department. Ten percent of phone owners have had a phone stolen, according to a Harris poll.

For now, the industry has only agreed to develop a voluntary database of phones reported lost or stolen. But participating carriers are largely American, allowing crooks to bypass the list by exporting phones overseas where they are quickly reactivated.

Klobuchar wants carriers to go on the record about kill switch technology, and her letter requested a formal response to three questions:

• Whether companies received offers from handset manufacturers to install “kill switch” technology;
• Have companies introduced the technology and, if not, why not;
• How companies will introduce such technology in the future.

[flv]http://www.phillipdampier.com/video/CNN Kill Switch Smartphones 11-20-13.flv[/flv]

CNN reports American cell phone companies aren’t interested in allowing customers to remotely disable their lost or stolen cell phones. (0:43)