America’s established cable and telephone companies are pulling out every stop to impede the Obama Administration’s broadband stimulus program.

Comcast alone, the nation’s largest cable company, has filed thousands of objections to proposed broadband projects in communities large and small, claiming those projects have the potential of introducing competition in their service areas, whether or not actual broadband service is being provided to residents in those communities.

Most large providers like Time Warner Cable, Comcast, and many national phone companies have steered clear of applying for broadband stimulus money.  They don’t like requirements that could force them to adhere to Net Neutrality provisions, sharing equal access to their networks.  But they don’t want anyone else on their turf getting funding either, and they’re spending enormous amounts of time and money objecting to anything and everything that seeks funding in their respective service areas.

It’s nothing short of a Broadband Blockade, and it is dramatically slowing the government’s ability to pour over thousands of applications.

Settles

Dan Hays, from consulting firm PRTM, told USA Today as a result of the delays, there’s significant doubt as to whether the monies can be awarded before the end of September when the funding authorization expires.

Could that be part of the plan all along?

“They aren’t leading, they aren’t following, and they won’t get out of the way,” said Craig Settles, a municipal broadband expert. “They’re not going to put proposals on the table because they don’t like the rules. Yet they’re not going to cooperate with the entities that are going after the money.”

“There are 11,000 public comments (about the funding applications), and I’m willing to bet that 9,000, at least, were a challenge or protest of one sort or another,” says Settles.

“We’re at a point where it’s the general public’s interest vs. the entrenched incumbents,” Settles added.

When giant telecommunications providers are threatened, they run to lawmakers for special protection, and they’re getting it.

National Public Radio ran this report about the problems awarding broadband stimulus grants. (5 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Coming next…

FairPoint – Bankrupt And Soaking in Failure – But Still Has Enough for Lobbyists, Attorneys to Fight Broadband Projects On Its Turf

Your Bill from MTN - Internet Overcharging Gift Wrapped

South Africans using the wireless services of MTN may be in for quite a shock in the coming weeks as the company attempts to collect for customer data usage charges it forgot to bill last fall.  Some customers have discovered the company automatically debited their checking accounts for thousands of dollars of “back usage” customers deny using.  Once again, when choosing whether to believe a faulty usage meter and billing system or the customer, Internet Overchargers believe the meter that fills their pockets with customer cash.

Benzi Kornizer is one customer impacted by the data discrepancy.  Despite using MTN’s data service for several months without incident, the company is trying to withdraw R10000 ($1,321 US Dollars) from Benzi’s checking account.  Kornizer pays R600 ($79) per month for 3GB of wireless data usage.  MTN’s usage meter, after the installation of a new billing system, claims he used more – more than $1,000 more.

“I received a letter from MTN, with no reference number, no date, no details of the problem and now I am having trouble getting my problem resolved,” Kornizer told ITWeb.

MTN believes in their usage meter, which it is using as justification to back-bill customers, despite admissions of ongoing billing problems.  Affected customers are receiving letters signed by customer relations executive Eddie Moyce admitting prior under-billing.

“MTN is in the process of re-processing the used data and customer call data records and will debit the affected customers’ accounts accordingly,” the letter states.

MTN’s billing practices, now a story in the South African media, resulted in a statement released by the company.

“We are extremely sensitive to the fact that billing errors have had an impact on the pockets of our subscribers. We will not suspend any voice or data contracts as a result of this error, and MTN will credit the accounts where double-billing errors occurred. MTN subscribers will also retain their loyalty points accrued over this period. MTN will investigate and evaluate every query on a case-by-case basis,” says Moyce.

He explains that the trouble stems from an upgrade of the billing system the company is using. “We have invested millions in a new billing system, which went live at the end of 2009 and is proving to be successful. However, we are still working hard to rectify the fallout from the previous system.”

The company admits the complete transition to the new billing system may take years to complete.  That leaves customers like Kornizer playing broadband usage roulette, never certain what the company’s meter will finally read, even months after the billing cycle ends.  Although MTN claims their meter is “proving to be successful,” customer complaints are pouring into consumer protection agencies and websites.

Kornizer is threatening to sue MTN in court.

Eddie Moyce, customer relations executive, spoke with MoneyWeb about the billing problems experienced by MTN. (5 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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A sampling of the complaints from just the last 48 hours about MTN’s Usage Meter on consumer site HelloPeter, which has logged more than 9,000 customer complaints thus far against MTN:

“My December bill for my MTN Data Contract suddenly hits R3000 despite an normal usage of +-R320. I call the Autopage Accounts only to be told that there is a billing problem. However, any reply from MTN that this is a backbilling issue can be refuted. On my itemised billing, it shows that on Christmas day I used 1.2GB of data in 2 sessions a few minutes apart! Now, my modem is a 1.8Mbps but downloading 600MB in seconds is absolutely incredible!”

“Last month I received a data usage bill for R1901 which I thought was insane as it has always been R249 per month.  I queried it and a itemised bill was sent though, which showed the ‘usage’, so I could not argue, then on the 23rd I received an SMS saying MTN incorrectly billed customers for that period and we would get a full credit for the incorrect amount. Then I check my account and another R2693 was debited from my account.”

“My average monthly MTN bill for internet access via a modem is R271.27 which was boosted by a November bill for R521.20. I paid this amount even though it looked very high. I was astounded by my December bill for R 5395.48! I spoke to [customer service] who tells me that I must wait 25 working days for my query to be assessed! In the meantime I must pay the R5394.48 or else my [service] will be suspended! MTN insists I must pay before they audit my account.”

“I migrated my internet from a 500 meg to a 3 gig package, completed the paperwork and was assured that everything is in place and will be faxed through for the migration. After receiving an account for over R11000,  I was informed that the migration was never made. I do not have the forms, but the personnel remembered the transaction and called the accounts department. Answer, ‘Sorry, we made a mistake and did not do the migration for you, but you did use the data so you must pay the account’.”

“Since October 2009 I’ve been billed R 16000 mostly for data use. My account was suspended three times without notice….  [The company won’t send me] proof of the amount used.”

“My bill from MTN ranges between R1200 and R1400 a month – In October, November and December 2009, I received bills between R11 000 and R14 000 a month! When I queried these bills the answer was always the same: These are amounts that were not billed ‘forgot’ to bill me this amount and ‘there was an error’ on their system and this usage was not billed for. When asked for proof of some kind – seeing as I have not been using the account in December 2009, they told us they could not provide this. Nor would the call centre agent put me through to a Manager to discuss or sort it out. The last time we spoke to someone, they told us to ‘just pay it’ or make a payment plan to pay it off. I have no intention on paying any amounts due to their system faults and without proof of how I could use between R11 000 to R14 000 a month. Inconsistent billing, no service, no response to messages left, no responses to emails and faxes. I had no choice but to change service providers.”

“I am presently on the 500MB package for internet service, cost; R239/Mth. Yet my bill arrives stating just over R1400. I know I have not exceeded my allowance as I check it before and after each session and I only use it to Skype family back home, plus some VERY minor surfing on the odd occasion. This has been raised twice now with MTN, both times I have been greeted by a ‘it happens often’ mentality, told they can not find a reason why the bill is so high and the billing dept will get back to me in 21 days. This is going to be AFTER the money is taken out of my account. Evidence on this website indicates that grossly overcharging their clients is hardly an isolated occurrence here and there, but a standard procedure. This they seem to find an acceptable way to treat their customers. I wonder how they would feel if their clients all decided to settle bills in 21 days or at their leisure, through no fault of their own. To the present time this problem remains unresolved and not taken seriously by MTN.  TOTALLY UNACCEPTABLE.”

LUS Fiber - Lafayette, Louisiana's public utility municipal broadband provider, offers fast speeds with great rates

Frustrated communities across America, take note.

If your town or city government starts making serious noises about constructing your own, municipally-owned broadband network (especially one built with fiber optics to the home), existing providers who have repeatedly said “no” to requests for faster service at more reasonable prices have a track record of quickly turning around and saying, “yes — why didn’t you ask us before?”

Big existing telecommunications players loathe the thought of facing a new competitor in their midst.  They are accustomed to the usual arrangement of one cable operator and one phone company.  Cable companies provide cable modem service, phone companies mostly provide DSL.  In smaller cities, and where a competitor is missing (or provides a lower quality service), there is almost no drive to upgrade.  Cable will set speeds just above what the phone company is offering, and both will co-exist happily ever after.

For communities being bypassed by the fiber revolution now underway by Verizon, and to a lesser degree AT&T, requests from civic leaders, businesses, and consumers for upgraded service fall on deaf ears.  ‘What you have now is good enough for this market, so be quiet and be lucky we give you what you’ve got now.  Oh, and we’re raising rates, too.’

In Rochester, the one upstate New York city not on the “to-do” list of Verizon (which is merrily wiring urban and suburban communities across their service areas with fiber optic cable FiOS), Time Warner Cable sees little incentive to raise speeds or upgrade to DOCSIS 3 with a phone company competitor that has no apparent plans to move beyond traditional old school DSL service.  Where FiOS does threaten, Time Warner Cable is in a hurry to provide “wideband” broadband as quickly as possible.

In Wilson, North Carolina, years of pleading from local officials to provide something beyond anemic broadband in their community was met with yawns from Time Warner Cable and Embarq, the local phone company.  Wilson decided to build their own municipal fiber network, offering faster speeds at better pricing.  Time Warner and Embarq did what most existing competitors do — they moved through the Four Stages of Telecommunications Competition Grief:

1) Behind the Scenes Threats and Anger: Companies work the phones with local officials trying to browbeat them into dropping the plans to construct municipal broadband, try to gin up partisan opposition, issue overinflated cost estimates, issue warnings about the trouble they’ll cause local politicians who support such initiatives, and snow a blizzard of documents illustrating how wonderful and reasonable their existing service is;

2) Stall Tactics Through Negotiation: Once home office is notified, a series of negotiations to attempt to forestall the project begins, such as throwing crumbs for incrementally better service, offers to build showcase mini-projects that represent a “win” for local politicians, or “looks good on paper” concessions that end up amounting to far less.  Most of these discussions are designed simply to stall to allow the company to prepare for stage three.

3) PR and Legal Blitzkrieg: Assuming local officials haven’t been discouraged away from their idea, or dropped it after starring in a company-sponsored press event – ribbon cutting a small wi-fi or school connectivity project, the next stage is a multi-front battle involving company legal teams filing lawsuits to delay or kill projects, public relations and astroturf lobbying efforts to distort issues and build public opposition, legislative maneuverings to make such projects untenable through industry-friendly laws, and often vague promises about impending upgrades making the entire project unnecessary.

4) Acceptance, Competition, and Better Service: The final stage is the realization consumers don’t always get suckered by astroturf groups and company scare tactics.  They accept the project is moving forward, and send out the press release saying they welcome the competition and are announcing their own significant service upgrade because “customers asked for it.”  Price increases slow, speeds increase, and service improves, all because of the reality that an aggressive competitor is in their future.

Wilson city officials tried negotiations for better service, got nowhere, and had to fight back against a blizzard of nonsense from the telecommunications industry trying to legislate such projects out of existence with changes to state law.  Americans for Prosperity, an astroturf group, even hassled residents in other nearby communities with robocalls to try and stop similar projects.

The arrival of Wilson’s Greenlight service, which offers speeds far faster than Time Warner and Embarq ever did, at lower prices, was a shock to Time Warner’s call centers.  As customers canceled, representatives taking those calls were in denial residents were actually achieving the speeds Time Warner failed to deliver.

[flv]http://www.phillipdampier.com/video/Chattanooga Builds Fiber Network.flv[/flv]

Chattanooga’s public power utility fought back against telecommunication company propaganda to construct fiber to the home service across the city, which launched this year. (5 minutes)

In Monticello, Minnesota, local telephone company TDS had spent years refusing requests to improve service in the city.  Speed and access issues plagued the community, northwest of Minneapolis.  Local officials had enough and voted to construct their own fiber to the home municipal network.

Enter the four stages.  TDS started by telling city officials the company’s network was state of the art for Monticello, and couldn’t be immediately improved because there was insufficient return on investment.  Companies want to be assured they are paid back for investments they make, and because Monticello is a relatively small city, there were questions whether the costs for a fiber network would be paid back quickly enough through revenues.

When that didn’t work, the company sued the city as a stalling tactic.  Despite the fact Monticello won case after case, TDS kept filing.  A full assault by large telecommunications interests also began, trying to gin up public opposition.  While the project was approved by voters, and Monticello was tied up in court, TDS quickly moved to stage four and started rapidly building their own fiber network in Monticello, actually putting down fiber the city was prohibited to wire themselves as the lawsuits dragged through the courts.

The company told Ars Technica that despite its earlier refusals to provide fiber service, TDS didn’t act earlier because it didn’t actually know that people really, really wanted fiber; once the referendum was a success, the company moved quickly to give people what it now knew they wanted.

Then, in June, the company said with the advent of its own fiber network, the city of Monticello should back away from constructing theirs, because its economic viability report was partly premised on the fact TDS refused to provide that service.

To underline that, TDS’ new fiber network doubled customer speeds to 50Mbps, trying to keep customers from taking their business to  FiberNet Monticello.

[flv]http://www.phillipdampier.com/video/Vote Yes on Fiber.mp4[/flv]

Lafayette staged a multi-year battle with Cox and other providers to bring municipal fiber broadband to it’s corner of Louisiana.  This 30 second ad promoted a “yes” vote on the project.

In Louisiana, Cox Cable is facing accusations it’s engaged in predatory pricing to kill Lafayette Utility System’s fiber to the home network and EATel’s fiber network in Ascension Parish.  Cox Cable froze rates and moved in with DOCSIS 3 upgrades, delivering up to 50Mbps service.  Cox chose to upgrade Lafayette before any other Cox-served community.

The Lafayette Pro-Fiber Blog found this EATel billboard taunting Cox

EATel, an independent phone company that wired fiber across Ascension Parish, also faced down Cox.  When the cable company began promoting cut-rate pricing in Ascension, EATel took out advertising promoting Cox’s special prices — in other cities, much to Cox’s consternation.  EATel’s ads, much like those run by Novus against Shaw in British Columbia, tell Cox’s customers to call the company and ask for the lower price they are advertising elsewhere.

“Cox came in with an incredibly aggressive promotion for TV service with every bell and whistle you could imagine. We couldn’t figure out how they could even make money on it. So we took out an ad in the Lafayette newspaper that basically said, ‘Hey Lafayette, look at the great prices you are going to get from Cox.’ Cox was not amused,” Trae Russell, communications manager for EATel told Telephony Online.

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p style=”text-align: center;”>Joey Durel, Jr., president of Lafayette parish, testifies before the House Committee on Energy and Commerce on Lafayette’s municipal fiber network on February 27, 2008. (7 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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Lesson learned — just threatening to bring in a municipal competitor is often all it takes to turn a persistent “no” from the local cable and phone companies into “yes, Yes, YES!”

Of course, not every project is successful.  Some, such as Burlington Telecom Stop the Cap! reported on yesterday face political and cost challenges.  Others are killed through stage managed opposition and astroturf campaigns paid for by the telecommunications industry before they even get started.

In North St. Paul this year,  “PolarNet,” a planned fiber optic broadband network to stimulate the local economy was killed by an astroturf propaganda campaign undertaken by Qwest, Comcast, and other telecommunications companies that would have to deal with PolarNet as a competitor.  The telecommunications companies claimed it would result in higher local taxes and “more government” where it wasn’t needed.  Citizens defeated the proposal 67-33%.

Windom, Minnesota faced similar challenges and their fiber project was shot down in 1999, but with lessons learned, proponents brought it back up and won in 2000.  To this day, the community of 4500 in western Minnesota face considerable envy from adjacent communities — they want service from the fiber-to-the-home system as well.

Almost universally, opponents to municipal broadband systems claim they are financial failures and saddle communities with debt.  In reality, most have forced those opponents to provide improved service in their competitive communities, or those companies will become the financial failure.

[flv width=”427″ height=”240″]http://www.phillipdampier.com/video/Terry Huval of Lafayette Utility System April 2009.flv[/flv]

Terry Huval of Lafayette Utility System talks with the Fiber Revolution blog about the challenges Lafayette experienced building their own municipal fiber network.  Huval offers excellent advice for other municipalities exploring similar projects.  (April, 2009 – 10 minutes)

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p style=”text-align: left;”>Thanks to Stop the Cap! readers Tim and Matt who suggested this story idea.

Barely 18 months after taking control of telephone and broadband service from Verizon Communications, FairPoint Communications collapsed under the weight of enormous debt and an economic downturn, announcing they would declare Chapter 11 bankruptcy this morning.

As Stop the Cap! reported Friday afternoon, sources told us the company had quietly notified key employees of the impending filing, which was expected as early as this weekend.  On Monday morning, the announcement of the filing was made to the media and to an unsurprised customer base of several million dissatisfied customers in Maine, New Hampshire, and Vermont who lived through a never-ending nightmare of bad service and broken promises from a company many believe “bit off more than they can chew.”

Today’s announcement may bring additional scrutiny to the next telecommunications deal Verizon has planned for customers in 13 states.  Frontier Communications, much like FairPoint, wants to take on the operations of a departing Verizon, who wants to disengage from smaller communities to focus on providing fiber optic telecommunications service in larger cities.  Today’s bankruptcy announcement marks three out of three failures for companies assuming control of Verizon’s discarded operations.  Hawaii Telcom declared bankruptcy last December, three years after being sold to The Carlyle Group, a politically well-connected private equity investment firm.  Idearc Media, a Verizon spinoff of the phone company’s print and online yellow pages business declared bankruptcy on March 31st, and FairPoint Communications, which took over Verizon’s northern New England phone operations made its bankruptcy known this morning.

FairPoint executives admit the downturn in the economy and much larger than anticipated conversion problems contributed to the declaration.  FairPoint has accumulated more than $2.7 billion in debt, mostly from the Verizon transaction, and faced difficulty making payments on that debt as credit markets froze and customers fled the terrible service problems that developed when the company tried to integrate 600 Verizon computer systems and software to 60 FairPoint systems on January 30th.

“Those two things contributed to FairPoint having too much debt, at the end of the day,” said David Hauser, chairman and CEO of FairPoint.

Creditors now effectively control FairPoint Communications, and they’ve agreed to forgive $1.7 billion dollars in debt and reduce the company’s interest payments to keep service operational.  Company officials are also looking for savings from cost-cutting measures.  Union officials are extremely concerned that could mean significant job losses for a company already stressed to provide service.  Although company officials characterized today’s announcement as a “non event” for FairPoint customers, many are not so sure.

“There have been a lot of promises made by FairPoint,” one customer told a Maine television station.  “Services that were promised are not being delivered,” said another.

Skepticism was rampant that today’s bankruptcy announcement would be the start of a new beginning for a restructured FairPoint.

“On the news they said that the services would go on as usual, which means crappy,” said one Maine customer in Portland.

Perhaps to underline that sentiment, FairPoint spokeswoman Jill Wurm reported FairPoint broadband’s e-mail service is out of order this evening.  Wurm said anyone with a fairpoint.net e-mail address has been without service since 6pm.  The company was unable to project an estimated time when service will be restored. It was also not known how many customers were affected.

Union leaders said they take no pleasure in the fact their predictions were all-too-accurate about the ultimate outcome of the FairPoint-Verizon deal.

“What good does it do us? We can say it, but we’re left here to deal with it,” Pete McLaughlin of the International Brotherhood of Electrical Workers, which represents FairPoint employees, told the Associated Press.

State regulators across all three New England states plan to keep a watchful eye on reorganization proceedings.  Special consultants and attorneys have been hired to give the states input and guidance as the restructuring commences.  For some consumers, that doesn’t provide much comfort because many of these same regulatory agencies approved the deal in the first place.

Stop the Cap! has extensive coverage of today’s developments from across all three states’ local newscasts.  We’ve also been notified representatives of utility boards now considering a similar spinoff with Frontier have also arrived here to gain our perspective on the sales deal now before them.  For that reason, we will continue covering FairPoint’s final months before today’s announcement to complete the record on FairPoint and its impact on customers, state regulators, and public safety officials.

Our coverage begins with today’s announcement, starting in Maine, where it was a lead story across the state.

[flv]http://www.phillipdampier.com/video/WGME Portland FairPoint Mess 10-26-09.flv[/flv]

WGME-TV in Portland leads their 6pm newscast this evening with the news of FairPoint’s bankruptcy and what it means for customers, some of whom remain skeptical. (5 minutes)

More video to view below ….

… Continue Reading

This newspaper ad is running across West Virginia opposing the sale of the state's phone business to Frontier Communications

Opposition to the sale of Verizon’s landline business to Frontier Communications in 13 states continues to increase, particularly in Ohio and West Virginia, where several employee unions have argued the deal represents a win for Wall Street and company executives, but a raw deal for millions of consumers.

The Communications Workers of America and the International Brotherhood of Electrical Workers, who also warned state regulators in New England about the consequences of approving the sale of Verizon’s operations in Maine, New Hampshire, and Vermont to FairPoint Communications, continue to warn consumers and state officials that a similar deal between Verizon and Frontier Communications could spell major problems for telephone customers.  They call on state officials to reject the deal and force Verizon to invest some of their substantial profits earned in these communities into providing better service instead of dumping customers overboard.

The CWA says the sale would put $3.3 billion dollars into Verizon’s coffers — tax free — and leave Frontier buried in debt, which could impact both new and existing Frontier Communications customers, including hundreds of thousands of those in Rochester, New York, Frontier’s biggest service area.

“Verizon Communications has been divesting assets to smaller, less stable corporations in order to reap large, tax-free, profits,” CWA International Representative Elaine Harris said. “Verizon proposes to repeat that formula, and its disastrous effects, with the sale of all of its wireline operations here in West Virginia to Frontier.”

The CWA considers the transaction based primarily on corporate greed, not the best interests of phone customers.

“The only winner in all of these deals has been Verizon Communications and especially Verizon’s corporate executives,” Harris said. Verizon CEO Ivan Seidenberg is the highest paid executive in the telecom industry, with $24.31 million dollars in annual compensation from Verizon.

“His salary could have funded the entire network of senior services in West Virginia last year and he still would have had $8 million in his pocket,” Harris said.

The deal will leave Frontier Corporation with a total of $8 billion dollars in debt. “The West Virginia consumers will experience the effects of converting more than 617,000 aging access lines to a smaller, debt-ridden company,” Harris said. “The public will be forced to pick up the pieces if Frontier follows Verizon’s other buyers and files for bankruptcy.”

“We’ve closely watched the failures of the companies that purchased Verizon’s assets and we don’t need a crystal ball to figure out what will happen if Verizon tries the same scheme in West Virginia. There’s absolutely no reason to gamble West Virginia’s telecommunication’s future just to increase Verizon’s bottom line,” Harris added.

The CWA is running radio ads across the state of West Virginia opposing the deal.

Audio Clip: Communications Workers of America Radio Ad (1 minute)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Verizon spokesman Harry Mitchell said Verizon wants to sell its access lines so the company can focus on its wireless and broadband business. Mitchell told The Charleston Gazette the union has opposed the deal from day one.

“They’re spending their members’ dues on advertising in an effort to cloud the issue,” he said.

Frontier Communications has protested accusations that their purchase of Verizon assets will result in the same kinds of colossal failures impacting other Verizon sell-offs.  Company officials claim Frontier already has a successful customer support operation in DeLand, Florida, and billing and operating systems in place.

In West Virginia, those existing operations serve 144,000 Frontier customers.  If the deal is approved, Frontier will take on the responsibility of serving 1.3 million landlines across the southeastern U.S. alone.

The International Brotherhood of Electrical Workers, integrally involved in fighting the FairPoint transaction in New England, says the Frontier deal is reminiscent of what happened with FairPoint:

Regulators in the 14 states where Verizon now proposes to sell its landlines to Frontier face an almost identical situation as New England regulators did last year. Frontier Communications is proposing to buy Verizon’s entire wire line operation in West Virginia – as well as Verizon’s scattered landlines across 13 other states – in a similarly structured deal.

In both cases, Verizon chose a much smaller company in order to take advantage of an obscure tax loophole. With the Frontier sale, Verizon will avoid paying any taxes on the $3.3 billion it will receive from Frontier. Frontier will have to cope with three times more employees, three times more access lines and a 75 percent increase in its debt from $4.5 to $8 billion.

Verizon has a very poor track record in these sales. Verizon sold its Hawaii operations to Hawaiian Telcom in 2005 and it filed for bankruptcy. Customers, service and employees have suffered as a result.

Frontier – just like FairPoint – is a making promises that it may not be able to meet. Like FairPoint, state regulators are being asked to approve a deal where a small company will attempt to simultaneously run a much larger operation, pay off billions of dollars more in debt, integrate Verizon’s computer systems and spend more money to expand broadband.

In the end Verizon will profit but consumers, workers and communities are put at real risk.

Expanding broadband access is an especially critical factor for all rural areas. But Frontier has failed to make any specific commitments, set any timeline or offer a plan for its broadband buildout.

Union leaders believe that states shouldn’t risk their telecommunications’ future just so Verizon can fatten its bottom line. Regulators shouldn’t approve this sale because the risks are too great. Instead, our legislators, regulators and the Governor should require Verizon to meet its service responsibilities. Verizon shouldn’t be allowed to walk away with $3.3 billion tax free, and leave the fate of its customers in the hands of a company with a lot less resources. If Frontier should falter, customers and the public would be required to pick up the pieces – not Verizon!

The track record for Verizon spinoffs has hardly been one of success.

FairPoint Communications, the company to which Verizon sold its Maine, New Hampshire and Vermont operations in 2008, is foundering as it tries to integrate operations and is choking on the debt it incurred to finance the transaction Since the deal was announced, FairPoint’s stock price has declined by about 95%, and the company has been forced to suspend dividend payments.

Hawaiian Telecom, the company to which Verizon sold its Hawaii operations in 2005, filed for bankruptcy. Verizon sold its 715,000 access lines in Hawaii. Since then, Hawaiian Telcom has experienced significant transition issues that resulted in major financial and customer service problems. In three years, the company lost 21% of its customers. In December 2008, Hawaiian Telcom filed for bankruptcy.

The yellow pages company that Verizon spun off also filed for bankruptcy. In November 2006, Verizon spun off its yellow pages directory business to Verizon shareholders, loading the new company, Idearc, with about $9.5 billion in debt and extracting a cool $9 billion in cash and debt reduction. Last year, interest payments alone on Idearc’s debt accounted for almost one-quarter of its total revenues! Representing something of a Verizon failing company “hat trick,” Idearc filed for bankruptcy in March 2009.

[flv]http://www.phillipdampier.com/video/WSAZ Huntington Frontier CWA Fight 10-14-09.flv[/flv]

WSAZ-TV Huntington, West Virginia reported on the growing opposition to the Frontier sale by employee groups on October 14th. (3 minutes)

In Washington State, IBEW Local 89, outside Seattle, says the sale could cripple one of America’s most tech-savvy regions.

“We’ve always been a leader in communications in this part of the country,” said Ray Egelhoff, business manager of IBEW Local 89. “If this happens, we’re afraid businesses won’t move in, and some may even move out.”

Egelhoff, along with more than 1,500 Verizon workers who may become Frontier employees, deluged officials with letters and e-mails expressing their concerns. More than 500 have gone out so far to senators, house members, governors and business leaders. The workers worry Frontier —at about the a third the size of Verizon—won’t be able to absorb the huge Verizon assets, won’t be able to keep customers happy and, eventually, will have to shed staff.

Robert Erickson, International Representative in the IBEW’s Telecommunications Department said, “The deal poses risks to consumers and employees. Frontier is making all kinds of promises about synergy and how they’ll expand broadband. FairPoint Communications made the same grand claims and now they can’t meet their commitments and fulfill the promises they made. It’s clear that Frontier will be in a similar situation and not have the resources to fulfill the commitments they are making.”

Consumer groups are also raising objections to the sale.

The National Association of State Utility Consumer Advocates urged the Federal Communications Commission, which is reviewing the proposed transaction, to reject the deal.

“The merger proposed by Frontier and Verizon is not in the public interest,” said David Springe, president of the consumer advocate group. “The failure of the companies to offer adequate consumer benefits or protections puts customers at risk of being served by a company without enough financial strength to make necessary improvements to local telephone facilities and widen the deployment of broadband access.”

Free Press, a nonpartisan group that works to reform the media, also raised concerns about the sale in a filing with the FCC. Free Press cited Verizon’s sale of lines in New Hampshire, Maine, and Vermont to FairPoint, which subsequently acquired substantial debt, was unable to accommodate the increased service area, and is now on the edge of bankruptcy.

“This trend has the potential to leave rural areas with ill-equipped companies offering inadequate service at high prices,” says the Free Press report. “This is in direct contrast to the stated intent of Congress and the Obama Administration to foster universal broadband to all Americans.”

[flv]http://www.phillipdampier.com/video/WCHS Charleston Verizon Sale Fight 10-14-09.flv[/flv]

WCHS-TV in Charleston, WV talked with the CWA and company officials about the sale of Verizon operations to Frontier Communications. (1 minute)