Google formally announced its new fiber to the home service to residents of Kansas City today with game-changing pricing for broadband and television service.

For $70 a month, Google will deliver consumers unlimited 1Gbps broadband service. For an additional $50 a month, customers can also receive a robust television package consisting of hundreds of digital HD channels, and throw in a free tablet (they call it ‘the remote control’), free router, free DVR with  hundreds of hours of storage, and access to Google’s cloud backup servers.

Google has also found a solution to affordable Internet for poorer residents. The company is promising free 5/1Mbps service for up to seven years if customers will pay a $300 installation charge, payable in $25 installments.

Customers who agree to sign up for multiple services and a service contract can waive the $300 installation charge.

Google’s new service will roll out to different areas of Kansas City. Google has split neighborhoods into “fiberhoods” that consist of around 800 homes. In a masterful public relations and public policy demonstration, Google intends to show up the cable and phone companies who have repeatedly declared customers have no interest in fiber-fast broadband speeds by asking would-be customers to pre-register for Google Fiber, which will cost $10. Those “fiberhoods” with the largest number of pre-registrations will be the first to get Google’s new fiber service. At least 80 families (around 10%) of each “fiberhood” will have to be willing to sign up for Google to activate the service in each neighborhood.

Google hopes consumers will evangelize the possibilities of fiber broadband with friends and neighbors nearby and get them on board. If the telecom industry’s predictions of lukewarm interest are true, then Google won’t collect many $10 registrations and will not be able to publicize the number of customers who want nothing more to do with incumbent cable and phone companies. If Google is correct, they will have successfully proven America’s phone and cable companies have been dramatically overcharging Americans for service and large numbers are clamoring for a better choice.

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

Google’s formal introduction of Google Fiber in Kansas City this morning. Presentation begins at around the five minute mark.  (1 hour, 6 minutes)

Google has the goods to entice technology fanatics. Those signing up for television service will find Google has moved way beyond the traditional cable set top box that still won’t reliably record your favorite shows. Google will supply customers with:

• a free Nexus 7 tablet that will come pre-programmed to function as a remote control (but can be used for other things);
• a Bluetooth-based traditional remote;
• a combination set top box and DVR system that can record up to 500 hours of programming;
• a Wi-Fi enabled Gigabit router;
• an iOS (Android coming, of course) app that will let viewers manage everything over their tablet or mobile phone;
• a 2TB storage locker;
• a free terabyte of Google Cloud storage

But Google’s current television lineup does omit many popular cable networks, either in an effort to control programming costs or because the company has not completed negotiations with every programmer they want on the lineup. Among the missing:

• ESPN and regional sports networks
• Disney networks
• Turner networks like TNT, TBS and Turner Classic Movies
• Rainbow Networks’ AMC
• Time Warner-owned channels like HBO, CNN and TruTV
• Fox-owned networks like Fox News Channel and Fox Business News

Time Warner Cable’s response to Google’s network seems to indicate, publicly at least, they are not that worried.

“Kansas City has been a highly competitive market for a long time and we take all competitors seriously,” said spokesman Justin Venech. “We have a robust and adaptable network, advanced products and services available today, and experienced local employees delivering local service. We are confident in our ability to compete.”

Time Warner Cable customers in Kansas City are ground zero for the cable operator’s retransmission consent battles with over-the-air stations that leave cable viewers without a full lineup of local channels.

Just hours after Time Warner customers got back two local stations owned by Hearst Corporation, Meredith Corporation’s KCTV and KSMO are preparing to pull the plug at midnight tonight.

“Please know that we have tried very hard to reach an agreement with Time Warner Cable, so that our viewers would not have to miss any of our stations’ around-the-clock reporting of news, politics, traffic, weather emergencies, public service announcements, and favorite local and national programming,” reads a statement from the two stations. “We are disappointed in the outcome of our negotiations especially since we have successfully reached agreements with every major cable and satellite company that recognizes our fair market value. The fact is that we are only asking Time Warner Cable for pennies a day from your cable bill for our programming.”

They did not elaborate on exactly how many pennies more a day they were asking to receive. Time Warner Cable suggested they wanted a 200% rate hike.

Should negotiations fail, viewers in Kansas City will lose their local CBS and CW affiliates. Time Warner Cable’s recent response to these disputes is to replace missing local stations with out-of-area stations, in this case most likely Nexstar’s WROC-TV in Rochester, N.Y., a CBS affiliate. Time Warner has not bothered to find a fill-in CW station to date.

But Nexstar last week sued Time Warner Cable in U.S. District Court in the northern district of Texas alleging copyright infringement and breach of contract for importing its TV stations without permission. Nexstar wants a temporary restraining order and damages. If the judge hearing the case issues the restraining order, Kansas City will have to do without a CBS station on Time Warner’s lineup until the dispute is settled.

So far this year, there have 69 instances of local stations withholding their signals from either a cable, phone, or satellite operator in disputes over retransmission rights fees.

In a hearing held yesterday in Washington, several senators attacked the disputes that deprive paying subscribers of broadcast stations.

Sen. Jim DeMint (R-S.C.) wants to repeal the 1992 law that allows broadcasters to require pay television operators to get permission and, in an increasing number of cases, payment to carry local broadcast stations.

DeMint argues the law has outlived its usefulness.

But Sen. John Kerry (D-Mass.) and others note the law also enacted several consumer protections and pro-competition policies that stopped programmers from withholding programming from competing pay television providers.

Kerry called demands to repeal the law altogether “radical” and suggested such moves could destroy local broadcasting. Cable operators want the power to negotiate contracts with out-of-area stations to leverage lower retransmission consent fees from broadcasters and provide customers with replacement stations when the two sides can’t or won’t agree to terms.

Broadcasters have suggested that could leave cable viewers with stations from distant cities, depriving viewers of important local news and emergency information.

For now, no action in Washington is anticipated. Broadcasters have leveraged their popularity to demand increasing payments for permission to carry their signals, and cable and other pay television operators, despite protests, usually agree to slightly lower fee increases and pass them right along to paying subscribers in the form of a rate increase.

Yesterday’s hearing, chaired by Sen. Jay Rockefeller (D-WV), discussed changes in television technologies over the past two decades. It focused on examining the effectiveness of the Must-Carry law, a 1992 law currently in place for the cable industry. The Must-Carry law requires a variety of local broadcast stations to be viewed on pay-TV platforms. Today’s Must-Carry rights were enacted by Congress in the 1992 Cable Act, which the Supreme court upheld in 1997. Congress then found that cable systems have an “economic incentive” to alter their local broadcast signals and that, without Must-Carry rules, broadcasters’ viability is jeopardized.

Although Chairman Rockefeller sought to not have the hearing derailed by retransmission consent disputes, a significant portion of the hearing dealt with that specific issue.

Top cable and broadcasting executives, as well as law experts testify. Witnesses include Melinda Witmer from Time Warner Cable; Martin Franks of CBS; the National Association of Broadcasters’ Gordon Smith; Colleen Abdoulah from Wide Open West!; Gordon Smith from the American Cable Association; law professor and former Disney Washington executive Preston Padden; along with Mark Cooper from the Consumer Federation of America. Courtesy: C-SPAN (1 Hour, 41 Minutes)

A Short History of Wireless Cable

Spectrum offered Chicago competition to larger ON-TV, selling commercial-free movies and sports on scrambled UHF channel 66 (today WGBO-TV).

Long before many Americans had access to cable television, watching premium commercial-free entertainment in the 1970s was only possible in a handful of large cities, where television stations gave up a significant chunk of their broadcast day to services like ON-TV, Spectrum, SelecTV, Prism, Starcase, Preview, VEU, and SuperTV. For around $20 a month, subscribers received a decoder box to watch the encrypted UHF broadcast programming, which consisted of sports, popular movies and adult entertainment. The channels were relatively expensive to receive, suffered from the same reception problems other UHF stations often had in large metropolitan areas, and were frequently pirated by non-paying customers with modified decoder boxes.

With the spread of cable television into large cities, the single channel over-the-air services were doomed, and between 1983-1985,virtually all of their operations closed down, converting to all-free-viewing, usually as an independent or ethnic language television outlet.

But the desire for competition for cable television persisted, and in the mid-1980s the Federal Communications Commission allocated two blocks of frequencies for entertainment video delivery. The FCC earlier allocated part of this channel space to Instructional Television Fixed Services (ITFS) for programming from schools, hospitals, and religious groups, which could use the capacity to transmit programming to different buildings and potentially to viewers at home with the necessary equipment.

Home Box Office got its start broadcasting on microwave frequencies before moving to satellite.

In practice, ITFS channels allocated during the 1970s were underutilized, because running such an operation was often beyond the budgets and technical expertise of many educational institutions. Premium movie entertainment once again drove the technology forward. After signing off at the end of the school day, Home Box Office, Showtime, and The Movie Channel signed on, using microwave technology to distribute their services to area cable systems and some subscribers. As those premium services migrated to satellite distribution beginning in 1975, reallocation for a new kind of “wireless cable TV” became a reality.

Wireless cable (technically known as “multichannel multipoint distribution service”) began in earnest in the late 1980s and early 1990s, with a package of around 32 channels — typically over the air stations, popular cable networks, and one or two premium movie channels. Some operations in smaller cities sought to beam just a channel or two of premium movies or adult entertainment to paying subscribers, the latter at a substantial price premium. Installation costs paid by providers were more affordable than traditional cable television — around $350 for wireless vs. $1,000 for cable television. That made wireless attractive in rural areas where installation costs for cable television could run even higher.

However, it was not too long before wireless cable operators ran into problems with their business models. Obtaining affordable programming was always difficult. Some cable networks, then-owned by large cable systems, either refused to do business with their wireless competitors or charged discriminatory rates to carry their networks. By the time legislative relief arrived, the wireless industry realized they now had a capacity problem. As cable television systems were being upgraded in the 1990s, the number of channels cable customers received quickly grew to 60 or more (with many more to come with the advent of “digital cable”). Wireless cable was stuck with just 32 channels and a then-analog platform. Satellite television was also becoming a larger competitive threat in rural areas, with DirecTV and Dish delivering hundreds of channels.

American Telecasting gave up its wireless cable ventures, under such names as People’s Wireless TV and SuperView in 1997, selling out to companies including Sprint and BellSouth (today AT&T). BellSouth pulled the plug on the services in February, 2001.

Wireless providers simply could not compete with their smaller packages, and most closed down or sold their operations, often to phone companies. The few remaining systems, mostly in rural areas, have typically combined their wireless frequencies with satellite provider partners to deliver television, slow broadband, and IP-based telephone service.

Rebooting Wireless Cable for the 21st Century

By the early-2000’s the Federal Communications Commission proposed a new allocation for a “Multichannel Video and Data Distribution Service” (MVDDS). Designed to share the 12.2-12.7GHz band with Direct Broadcast Satellite (DBS) services DirecTV and Dish, MVDDS was partly envisioned as a potential way to deliver local stations to satellite subscribers over ground-based transmitters. But things have evolved well beyond that concept, especially after both satellite providers began using “spot beams” to deliver local stations to different regions from their existing fleet of orbiting satellites.

MVDDS was ultimately opened up to be either a competing cable television-like service or for wireless broadband, or both. Michael Powell, then-chairman of the FCC during the first term of George W. Bush, said the technology was free to develop as providers saw fit:

What is MVDDS? The short answer is that we do not know.  Its name, Multichannel Video Distribution and Data Service, seems to suggest everything is possible – and perhaps it is.

But the service rules the Commission has adopted do not require MVDDS to provide any particular kind of service – it could be a multichannel video, or data, or digital radio service, or any other permutation on spectrum use.

The Commission was once in the business of requiring spectrum holders to provide a certain type of service.  That approach failed because government is a very bad predictor of technology and markets – both of which move a lot faster than government.  Over the past decade or so, the Commission has adopted more flexible service rules that bound a service based largely on interference limitations and its allocation (fixed or mobile, terrestrial or satellite).  In this Order, we follow that flexible model for MVDDS.

In 2004 and 2005, licenses to operate MVDDS services were opened up for auction, and a handful of companies won the bulk of them: MDS America, which built a 700-channel wireless cable system in the United Arab Emirates, DTV Norwich, an affiliate of cable operator Cablevision, and South.com, which is really satellite provider Dish Network. Another significant winner was Mr. Bruce E. Fox, who wants to partner with other providers to finance and operate MVDDS services.

Cablevision and Fox are the two most active license recipients at the moment.

A Look at Today’s MVDDS Wireless Players

Fox launched Go Long Wireless in Baltimore as a demonstration project. Go Long transmits its signal from the roof of the World Trade Center at the Baltimore Inner Harbor to the Emerging Technology Center, a business incubator site a few miles away. Fox believes the technology is especially suited to multi-dwelling units like apartment complexes and condos. He plans to work with other service providers who will market and bill the service under their own brand names. Fox does not seem to be interested in challenging the marketplace status quo. He does not believe in using MVDDS to provide television service, for example. In Fox’s view, the real money is in broadband and Voice over IP telephone service.

Cablevision’s involvement is more direct-to-consumer. Its Clearband service– now operating under the new brand ‘OMGFAST’ — is now selling up to 50/3Mbps wireless broadband service in the Deerfield Beach, Fla. area. The company has had nothing to say about whether this service is slated to expand, and if it does, Cablevision will not be permitted to operate it in areas where they already provide cable service, due to the FCC’s cross-ownership rules.

OMGFAST originally bundled voice service in its broadband packages, which it sold at different price points: 12Mbps for $39.95 a month, 25Mbps for $59.95 a month, and 50Mbps at $79.95. The company also tested a 50Mbps promotion priced at $29.95 a month for three months, $59.95 ongoing. Today it offers a better deal: $29.95 a month for 50Mbps service as an ongoing rate. (Expect to pay $10 a month more for mandatory equipment rental, and $14.95 a month if you also want voice service.)

[flv width=”640″ height=”450″]http://www.phillipdampier.com/video/Clearband FAST 50 Mbps Internet.flv[/flv]

Here is a promotional video explaining how Clearband (now OMGFAST) wireless broadband works. (3 minutes)

MVDDS currently delivers broadband with similar constraints cable systems operate under — namely, download speeds are much faster than upload speeds. That is because upstream bandwidth relies on another transmission technology, often WiMAX, in the 3.65 GHz or 5 GHz bands.

The wireless technology is also very “line of sight,” meaning the tower must be within six miles of the subscriber and not blocked by any obstructions. Hills, buildings, even heavy foliage can all block MVDDS signals the same way satellite signals can be blocked (they share the same frequencies).

Most customers end up with an antenna that very much resembles a traditional satellite dish from DirecTV or Dish, mounted on a roof. To maximize available bandwidth, MVDDS uses a configuration similar to cellular systems, with up to 900Mbps of total bandwidth available to each 90-degree narrow beam sector.

Cablevision has MVDDS licenses to serve most large cities in the United States.

The question is, how will license holders ultimately use the technology. Although originally proposed as a competitor to traditional cable or satellite TV, deregulation has left the fate of MVDDS in the hands of the operators.

Some are considering not selling the service to consumers at all, but rather making a market out of providing backhaul connectivity for cell towers. Dish may be interested in using its licenses to offer customers a triple play package of broadband and phone service with its satellite TV package. Nobody seems particularly interested in providing television service over MVDDS, primarily because programmers’ demands for higher carriage payments would cut into revenue.

Even Cablevision isn’t completely sure what it wants to do. Although it currently is trialing broadband and phone service in Florida, the company earlier petitioned the FCC for increased power to establish a more suitable wireless backhaul service it can sell to mobile phone companies.

For the moment, reviews seem relatively positive for the Florida market test. Of course, as more customers pile on a wireless service, the less speed becomes available to each customer. OMGFAST does not appear to be currently concerned, noting it has no usage caps on its service.

Want to know which provider may be coming to your area? See below the jump for a list of the top-three bid winners and the cities they are now licensed to serve, in order of market size.

… Continue Reading

AT&T lost 649,000 DSL customers in three months.

AT&T’s broadband customers are taking their business elsewhere as second quarter results show the phone company lost 649,000 DSL customers in the last three months, while only picking up 553,000 new U-verse Internet users to replace those leaving. The result was a net loss of nearly 100,000 broadband customers in a single quarter. The company also only managed to attract 155,000 new U-verse television customers away from satellite or cable operators during the quarter.

AT&T blames the losses on “seasonality” — code language for part-time residents, college students, and other fluctuations that occur as customers come and go. Total broadband connections dropped 0.2% for AT&T, with 16.43 million remaining customers.

Landline customers also continue to depart AT&T in droves. More than one million home phone customers pulled the plug on AT&T this quarter. AT&T has lost nearly 11 percent of their landline customers over the past year.

For those remaining, a combination of rate increases, cost cutting and fierce marketing of bundled packages of services are keeping revenue growing on both the residential and business side.

AT&T is getting closer to announcing a “rural landline solution,” which some analysts predict will be the company’s exit from the rural landline business.

Executives continue to hint the company is reviewing its future in the rural landline business. AT&T lobbyists have shepherded new laws in several states that would allow them to abandon rural landline customers where the company is no longer required to be “the carrier of last resort.”

AT&T U-verse is turning out to be not much of a threat to cable and satellite operators, only achieving a 17.3% penetration rate in areas where the service is available.

The real money for AT&T is being made in the wireless sector, where increasing prices, changes to service packages, and data usage-based billing are all paying off  — revenue for wireless data alone is up 18.8% to $1 billion during the second quarter. AT&T earned $14.3 billion from its wireless business in just the second quarter alone.

At the same time, the company is slashing investments in parts of its network and cutting employees.

Capital expenditures in the second quarter amounted to $4.48 billion, down 15% from the $5.27 billion AT&T spent a year ago. AT&T also cut its workforce by 6.4% since June 2011, with a reported 242,380 total remaining employees.

Despite the company’s talking points, AT&T’s upgrade fee is designed to slow down customers considering upgrading their smartphones.

In other highlights:

• Wall Street analysts are praising AT&T’s stricter upgrade policies and device upgrade fees. In fact, at least one analyst wants to see AT&T raise the fee to $50 for every phone upgrade. The fees discourage customers from upgrading their phones, which dramatically reduces AT&T’s costs. AT&T subsidizes phones for customers. The longer customers hold off from upgrading, the more revenue AT&T keeps for themselves and shareholders. AT&T has made it clear it will continue to “introduce discipline”  in the handset market to enforce “rational pricing,” which means customers will continue to see further reductions in device subsidies and face higher prices when upgrading phones.
• Much of AT&T’s investment will be in its LTE 4G network. AT&T’s spending on wireline services including U-verse is on the decline.
• AT&T admitted its policy of monetizing data usage for profit is well underway: “[We are getting] ourselves set up for revenues that are going to be tied to usage, which will then be tied to our capital requirements and a really profitable situation.”
• AT&T is aggressively pushing customers to upgrade to smartphones so they can earn additional revenue. “Smartphone subscribers now number 43 million and make [up] 62% of our total postpaid base. But smartphones accounted for 77% of postpaid sales during the quarter, showing continuing opportunity for growth. And when you look at our total smartphone base, we’ve added 9 million high-value smartphone customers in just the last 12 months.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ATT 2Q2012 Results.flv[/flv]

AT&T spins its 2nd Quarter results for shareholders in the best possible light. Although revenues are up, the number of customers leaving AT&T for other providers may challenge future growth and earnings. (4 minutes)

Nearly 100 Frontier employees may be visiting Idaho’s unemployment offices by September.

On the second anniversary of Frontier Communications assuming control of landline operations in Idaho formerly owned by Verizon Communications, Frontier has announced plans to close its Coeur d’Alene call center this summer, putting nearly half of Frontier’s workers in Idaho out of work.

“There’s nothing wrong with the employees or the work they’re doing. It’s more about efficiencies,” Frontier’s senior vice president Steve Crosby told CDA Press. “What we’re trying to do is work through efficiencies, consolidations, really moving people around, having work groups working closer together.”

Those hoping to remain with Frontier will need to move to another state and accept a large pay cut if they want to keep their jobs. Other Frontier call centers around the country will assume the responsibilities of the 100 Idaho-based employees who face termination by Sept. 18, including one opening near Myrtle Beach, S.C., that will pay substantially lower salaries.

The closure will reduce Frontier’s workforce in Idaho almost in half. Crosby said Frontier had roughly 260 employees in the state as of last week.

Two years ago, Frontier was telling Idaho a very different story about its takeover of Verizon landlines.

“I think we’ll have better service for customers,” David Haggerty, then a Verizon manager staying with Frontier, told the Bonner County Daily Bee. “Frontier brings with it a small-town mentality. It used to be you were able to pay bills in town and make human contact. That was taken away by Verizon.”

In 2010, Haggerty promised the transition would have no impact on former Verizon workers now heading to work at Frontier.

“We focus on putting the customer first,” said Frontier’s regional manager Vickie Bullard said. “That’s one of the 11 value statements we have at Frontier.”

Some of Frontier’s customers in Idaho wonder if Frontier’s “value statements” are also being downsized.

“I just switched from Frontier to Time Warner Cable for my Internet,” says Scott Mead. “Frontier started out great in the beginning, but shortly after went downhill as issue after issue started.”

Mead reports his calls to Frontier’s national 800 customer support number, which promises 100 percent of the company’s workers are American-based, often left him flummoxed dealing with foreign-accented employees with poor English language skills.

The last one out can turn off the lights.

Another Coeur d’Alene customer endured bad service from Frontier before finally leaving, with the phone company’s collection agency chasing him not far behind:

“As far as I’m concerned Frontier can take a long walk off a short pier. When they first took over from Verizon, from whom we had good service, they sent out a service guy to get us back online. He installed the wrong equipment so another serviceman came out and replaced the wrong one with a bigger, better, and faster wrong one. Over the next 6 weeks we were down all but 12 days and we heard one excuse after another with nothing getting resolved.

So a month later, after switching companies, not only did we get a bill from Frontier for the entire 6 weeks but they charged us for several wrong pieces of equipment. When we tried to resolve the issues they simply sent us to collection and refused to talk. Se we ended up paying for over 4 weeks of service they did not provide and for 4 Internet boxes that the servicemen could not get to work.

I can only hope that Frontier has an office at the bottom of a honey bucket at a chili feed. Flippin crooks.”

One former Verizon/Frontier employee suggests the “efficiencies” Crosby is concerned with is paying call center workers less, and offering fewer benefits:

“Frontier closed a center in Elk Grove, Calif. back in June leaving 50+ people unemployed there,” he writes. “When Verizon sold their landlines and DSL to Frontier back in 2009 they only guaranteed the acquired employees jobs for two years. July 1, 2012 was the second anniversary of that acquisition. This does not surprise me at all. The leadership of both Verizon and Frontier is like any other large corporation. Bottom line is the new call center in South Carolina is cheaper to operate. Why pay people over 50K (this is including 401k, stock & medical benefits) when you can pay half that in a center that has no union.”

Another Idaho employee is bitter about the extra work Frontier employees managed for the company during its great billing and systems transition away from Verizon.

“We will be out of a job, after working massive amounts of overtime to transition this company to get them through the largest conversion in telecommunications history,” the worker shared. “They needed us to get them through it and now they don’t.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WMBF Myrtle Beach New Frontier Call Center 5-11-12.mp4[/flv]

Race to the bottom. Frontier Communications closes an “unneeded” 100-worker call center in Idaho that reportedly paid workers over $50,000 a year in salary and benefits while announcing a new, “much-needed” call center with 110 workers near Myrtle Beach, S.C. that will pay workers only $30,000 a year. WMBF in Myrtle Beach calls the new South Carolina call center a “success” for Horry County’s efforts to recruit new business to the area. Frontier applauded South Carolina’s “excellent business environment.” But that success comes at a cost to other workers in other states.  (2 minutes)