[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Living in a Smart City Chattanooga TN.flv[/flv]

The only one Gigabit broadband service currently available in the United States for residential and business customers is in Chattanooga, Tennessee. Meet people who live and work in one of the smartest cities in the country: what services do they embrace today, what is their vision for the future, and what kind of culture do they think makes this all possible.  New jobs are moving into Chattanooga every day, and existing companies are learning to take advantage of the new business opportunities gigabit broadband delivers.  You may be surprised to learn America’s best Internet access comes from a publicly-owned utility that works hard every day for its customers, not investors and banks living a thousand miles away.  (6 minutes)

Verizilla

The Communications Workers of America has a new, decidedly low-budget video decrying a spectrum swap between America’s largest cable companies and Verizon Communications that will leave Verizon Wireless stores pitching cable television service from one of Verizon’s cable company competitors.

To the CWA, this is nothing less than the birth of Verizilla, a new monster of a telecommunications company that has capitulated on competing with Big Cable and will instead devour the wireless communications marketplace for itself.  The CWA interest is obvious: many of its employees are responsible for constructing and maintaining Verizon’s now-stalled FiOS fiber to the home network.

From the CWA:

The deal, struck behind the closed doors of America’s corporate boardrooms, poses a threat to consumers and workers. If it goes through, it will be the death knell for competition between cable and telecom companies. Verizon Wireless, Time Warner, Comcast, and other cable companies will become a giant, unregulated quasi-monopoly. Verizon will have no incentive to challenge cable by building FiOS into new areas — meaning less competition, consumer choice, and higher prices for consumers.

Less FiOS also means fewer jobs building, maintaining, servicing, and installing the network. This deal will create a corporate behemoth that will use exclusive quad-play market power to shrink its future workforce.

Worst of all, Verizon Wireless and the cable companies are refusing to come clean about the details of the deal. Even as the FCC and Department of Justice review it, we still don’t know what it means for consumers or workers.

The CWA has so far collected more than 135,000 signatures on its petition opposing the current form of the deal. 

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Verizilla.flv[/flv]

America, say hello to Verizilla, wreaking reduced investment havoc on Verizon service areas across the northeastern United States.  (2 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WPRI Providence What Would You Give Up for the Internet 3-22-12.mp4[/flv]

What would you give up to keep the Internet?  WPRI in Providence ponders what people would be willing to sacrifice if it meant they could keep broadband service.  A new study from a Boston consulting group proves that Americans increasingly depend on immediate, fast, and affordable access to the Internet.  Providers aren’t asking for you to stop showering, give up sex, or throw in the towel on family vacations.  Some just want you to pay more for less service at a time when a lot of people treat the Internet as their primary means of communication.  (Loud Volume Alert!)  (6 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WBGH Binghamton Verizon Workers Protest 03-22-12.mp4[/flv]

Workers for Verizon Communications continued public protests outside of Verizon facilities in upstate New York as their unions complain the company has still not reached a negotiated contract agreement covering landline employees.  Protestors in Buffalo and Binghamton told local media they fear customer service operations will be outsourced overseas, other jobs will be cut, and benefits will be slashed.  “Verizon is not a hurting company,” noted one protestor in Binghamton.  Verizon counters its landline operations must become more competitive to compete with wireless services, although the largest provider in the country is Verizon Wireless, which has almost no unionized employees.  WBGH in Binghamton reports. (Loud Volume Warning!)  (2 minutes)

Phillip "The Mayans Never Met AT&T" Dampier

AT&T has used the specter of a nationwide wireless bandwidth crisis to pressure Washington to adopt its agenda for additional mobile spectrum.  But talk of a looming “data tsunami” has done nothing to stop AT&T from heavily marketing their most data-hungry devices — smartphones and tablets to customers.

In fact, the “broadband shortage business” has become enormously profitable for the former Ma Bell.

Switch to a Smartphone

Wireless carriers like AT&T aggressively market smartphones because they drive the highest average monthly revenue earned from customers.  So far, the marketing push has been an unparalleled success.  PricewaterhouseCoopers reported smartphones accounted for 48% of all wireless phone sales in 2011, up from 30% in 2010.  More than half of customers upgrading their old phones chose smartphones to replace them — an enormous increase over just 36% of upgrades in 2010.  Because smartphones are designed for an online experience, most companies mandate customers subscribe to a data plan, often adding $30 or more per phone, per month to a wireless phone bill.

AT&T’s 4th quarter results told the story, and it was all smiles.  AT&T celebrated customer enthusiasm for smartphones and the data they consume with no worries about “data tsunamis” or “bandwidth crises”:

• In 2011, AT&T’s growth engines — wireless, wireline data and managed services — represented 76 percent of total revenues and grew 7.5 percent versus 2010, led in the fourth quarter by:
  • 10.0 percent growth in wireless revenues
  • 19.4 percent growth in wireless data revenues, up $956 million versus the year-earlier quarter
• 9.4 million smartphone sales, best-ever quarter and 50 percent more than previous quarterly record and nearly double 3Q11 sales; 82 percent of postpaid sales were smartphones
• Best-ever quarter for Android and Apple smartphones, including 7.6 million iPhone activations

Double-Digit Growth for Wireless Revenues. Total wireless revenues, which include equipment sales, were up 10.0 percent year over year to $16.7 billion. Wireless service revenues increased 4.0 percent, to $14.3 billion, in the fourth quarter.

Wireless Data Revenues Increase 19.4 Percent. Wireless data revenues — driven by Internet access, access to applications, messaging and related services — increased by $956 million, or 19.4 percent, from the year-earlier quarter to $5.9 billion. AT&T’s postpaid wireless subscribers on monthly data plans increased by 16.4 percent over the past year. The number of subscribers on tiered data plans also continues to increase. About 22 million, or 56 percent, of all smartphone subscribers are on tiered data plans, and about 70 percent have chosen the higher-tier plans.

Wireless Margins Reflect Record Sales. Fourth-quarter wireless margins reflect record-setting smartphone sales and customer upgrade levels. This was offset in part by improved operating efficiencies and further revenue gains from the company’s growing base of high-quality smartphone subscribers.

Forcing Customers to Upgrade… Or Else

AT&T's 2G Exit Strategy Started in 2009 (Courtesy: Blackberry News)

Back in 2009, AT&T decided it was inventory clearance time, released a memo entitled “2G Exit Strategy,” and slashed prices on 2G “feature” or “messaging phones” to attract customers looking for a bargain.  A few years later, the company is now sending letters to some of them strongly recommending they upgrade to a new, potentially more expensive phone.  If they don’t, AT&T writes, “your current, older-model 2G phone might not be able to make or receive calls and you may experience degradation of your wireless service in certain areas.”

AT&T hopes many customers will adopt smartphones, because the plans that accompany them are far more expensive than the 2G “messaging” plans they replace. AT&T wants to repurpose 1900MHz 2G spectrum for other services, but sometimes customers are left holding the bag if they don’t want the designated replacement phone(s) AT&T is willing to provide.

In Grand Valley, Col. last fall, AT&T created lines outside its stores as customers were compelled to upgrade phones and service plans to continue reliable AT&T service:

AT&T isn’t actually discontinuing the 2G network — it is moving 2G service to less-favorable spectrum it owns in order to make room for improved 3G coverage.  That might work fine in areas less expansive and rugged than western Colorado, but in the Grand Valley, it means many customers will find they no longer have data service at all.

The ongoing tower upgrades have also disrupted cell service generally, and when customers arrive at AT&T’s stores to complain, the employees on hand attempt to upsell them more expensive phones to “fix” the problem.

“There is significant pressure on carriers to migrate to the most efficient networks while needing to address the issue of spectrum scarcity,” explains PricewaterhouseCoopers’ Dan Hays. “We are beginning to see carriers shut off legacy networks and force customers to migrate to new technologies.”

Internet Overcharging for Profit Without Raising Company Costs

AT&T has no worries about data tsunamis and "exafloods" when app makers or consumers are willing to pay more.

With customers seeking to get the most out of expensive wireless data plans, data usage naturally goes up. But so do prices, meaning the “data tsunami” carriers warn about is not bad for their bottom line at all.

In 2011, consumer research group Validas found average data consumption was up 34.7% for all users, from 448.8MB in January to 604.8MB by December.  AT&T responded with a price increase and an allowance boost that will benefit only a tiny minority of customers.  The most popular data plans now cost $5 a month more: $30 for 3 gigabytes, up from $25 for 2GB and $50 for 5GB, up from $45 for 4GB.  But Validas found only 5% of wireless customers use more than 2GB of data per month, with only 2.7% using more than 3GB.

That translates into higher AT&T bills for the 97% of customers who don’t come close to using even 2GB a month.  Although the price hike delivers no tangible benefit to the overwhelming majority of customers, it does deliver an extra $5 a month from their bank account to AT&T’s.

The “Anyone Pays But Us” Model for “Heavy Traffic”

With online video “clogging” the wireless airwaves, companies like AT&T should be interested in offloading as much video to wired or Wi-Fi service. But late last month, the company suggested a way customers could bypass its stringent data caps by allowing content companies to pay for the wireless traffic their customers generate.

“A feature that we’re hoping to have out sometime next year is the equivalent of 800 numbers that would say, if you take this app, this app will come without any network usage,” said John Donovan, who oversees AT&T’s network and technology. “What they’re saying is, why don’t we go create new revenue streams that don’t exist today and find a way to split them … “It’d be like freight included.”

Only wasn’t the railroad already overburdened with traffic, threatened with a nationwide slowdown?  If one is willing to flash enough money, it’s remarkable how quickly the tidal wave of wireless congestion and despair can be pushed back out to sea.  Just don’t tell Washington lawmakers.  This is a crisis of epic proportions after all.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Carriers Facing Data Tsunami 3-21-12.mp4[/flv]

Derek Kerton, principal analyst at Kerton Group, talks about increased demand for data and the impact on wireless carriers. Kerton compares it to today’s gasoline prices. Demand=higher prices.  Wall Street folks like Kerton thinks more spectrum isn’t the total answer.  Smaller cell sites and more Wi-Fi might be.  Otherwise, prepare for bill shock.  (4 minutes)