Take the money and run

The Federal Communications Commission’s approval of Frontier’s takeover of 4.8 million Verizon landline customers in 14 states comes a year after the company announced the deal.  Frontier joins three other independent phone companies — FairPoint Communications, Windstream Communications, and CenturyLink zealously trying to grow their companies with additional mergers and acquisitions to avoid being swallowed up themselves.

What is common among all four companies is they rely heavily on dividend payouts to keep their stock price as high as possible.  That was a formula for disaster for FairPoint, the first of the four to end up in bankruptcy after a similar deal with Verizon in northern New England caused the company to falter.  Service and billing deteriorated, customers fled, and promises for better broadband were broken.  Now Frontier is following in FairPoint’s footsteps with more than 4.8 million new customers Frontier hopes they can swallow.

The FCC’s statement approving the merger reads like a press release for all involved, and delighted FCC Chairman Genachowski, who called these meager requirements “robust”:

Coming one week after the final state approval for the transaction, the FCC’s Order holds the applicants, Verizon and Frontier, to enforceable voluntary commitments, including:

• Extend faster broadband to more Americans: Frontier will significantly increase broadband deployment for the lines involved in this transaction, only 62 percent of which are broadband-capable today. Specifically, Frontier will deploy broadband with actual speeds of at least 3 Mbps downstream to at least 85 percent of transferred lines by the end of 2013, and actual speeds of at least 4 Mbps downstream to at least 85 percent of the transferred lines by the end of 2015, with all new broadband deployment offering actual speeds of at least 1 Mbps upstream.

Frontier's Fast One: 3 Mbps DSL Service with a 5GB Monthly Usage Allowance

Frontier’s broadband commitment gives the company a full five years to meet the bare minimum speed considered to constitute broadband in the National Broadband Plan.  One hopes Frontier doesn’t break into a sweat offering a piddly 3 Mbps service to homes using yesterday’s DSL service until then.  While Verizon’s rural castoffs get stuck eventually with 4 Mbps DSL, many of the company’s remaining customers are enjoying 50Mbps service over an all fiber network.  The FCC is accepting an urban-rural divide for broadband which will benefit the phone companies while leaving rural customers in the dirt.

Deploy fiber to libraries, hospitals, and other anchor institutions: Frontier will launch an anchor institution initiative to deploy fiber to libraries, hospitals, and government buildings, particularly in unserved and underserved communities.

Fiber for these locations sure, but no fiber for you or I.  Frontier, like most other telecom companies, loves to promote the benefits of fiber without actually deploying it to homes.

Promote competition: Frontier and Verizon have made a series of commitments to protect wholesale customers, including honoring all obligations under Verizon’s current wholesale arrangements that are in effect at closing.

Since wholesale customers often depend on the same network other customers do, if a company doesn’t deliver robust broadband into a state like West Virginia, there isn’t a robust service to sell to those wholesalers.

Improve data quality and collection: Frontier will make available to the Commission data on its broadband deployment progress at an unprecedented level of detail to enable effective monitoring of Frontier’s compliance with its commitments.

The Commission concluded that the commitments that applicants have offered, coupled with monitoring and enforcement by the Commission, will minimize the risks of harm and ensure that this transaction is in the public interest.

Phillip "Living on the Frontier" Dampier

Considering how weakly the FCC is committing itself to protecting rural customers from being dumped into the broadband backwater Frontier has on offer (complete with the 5GB monthly usage allowance), does collecting statistics help when things go sour?  Regulators collected statistics in New England when FairPoint failed, but that didn’t get service levels back until Maine, New Hampshire, and Vermont threatened to toss FairPoint out.  Now the company is in bankruptcy and regulators are negotiating which of the promises FairPoint made can be let go ‘for the sake of the company.’

That’s why it’s so ironic to read editorials that proclaim the FCC is on some sort of power grab when they seek to restore what meager authority they exercised over broadband before a DC Court effectively excluded broadband oversight from their portfolio.

It will be a good day when federal agencies like the FCC start worrying first and foremost about consumers instead of how to make a parade of overpriced mergers and acquisitions succeed for the companies involved.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WANE Ft Wayne Verizon hanging up on local landlines 5-24-10.flv[/flv]

WANE-TV in Fort Wayne warns viewers their landline company is about to change asVerizon vacates the area by July 1st.  (1 minute)

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/CWA Verizon Dont Take the Money and Run in WV.flv[/flv]

Too late.  The Communications Workers of America ran this ad spot asking the West Virginia governor to intervene and stop the sale.  (1 minute)

A classic phone hundreds of thousands of Americans are still paying a monthly equipment fee to lease

Do you or someone you love still have an old looking rotary dial or traditional bell ringer phone mounted to the wall or installed in the bedroom?  Are you sure they still aren’t paying a rental or leasing charge for that phone?  Many customers, particularly the elderly, have no idea they need not continue to pay fees up to $90 a year for a phone manufactured at a time when color television was a novel concept.

A legacy of the old Ma Bell phone monopoly, telephone companies used to own every piece of equipment attached to their lines.  Individual customers would pay a monthly fee to lease telephone equipment that was approved by the phone company to work with their service.  By the early 1980s, nearly every American home had a kitchen wall phone and one or more extensions, usually installed in the living room or bedroom.  Manufactured by companies like ITT, Stromberg-Carlson, AT&T or Comdial, these phones were built to last… and pay for themselves many times over by unaware consumers who don’t realize the days of renting phones are long gone.

After the breakup of AT&T, most phone companies began telemarketing campaigns trying to convince consumers to buy their formerly leased phones.  Those who did now own these classics outright.  Many who didn’t returned them and bought their own new phones.  But more than a million consumers did neither, and continue to pay phone equipment rental fees to this day.  Even as phone companies abandoned the phone rental business, not everyone got the message.

Most phone companies sold off their remaining leased customers to third party companies long ago, including QLT Consumer Lease Services in Miami and Ft. Worth.  QLT has several hundred thousand customers paying quarterly lease fees for telephones often years old.  The company itself admits the majority of its customers are retired, elderly consumers.

QLT markets refurbished bell ringer phones at some surprisingly high prices:

• A traditional desk or wall retro-rotary dial telephone, which many under 30 have never seen before, costs $4.45 per month to rent.
• The glitzy-for-its-day lighted dial Princess phone costs $6.95 a month.
• Big button touchtone phones run $8.85 a month.

Those quarterly fees add up

QLT informs customers they cannot buy the phones at any price — they must lease them.

QLT claims its customers appreciate the familiar phones from an earlier era, and the bell ringers are louder, too.  Customers can exchange a broken phone within a day after the company is notified, if they can figure out how to install the replacement.

But it’s an extraordinarily high price to pay for classic phones, especially when replacements can be purchased outright for less than $20.  But many QLT customers don’t realize they have that option.  While the company also pitches decidedly non-phone-related services like roadside assistance plans and health care discount cards, it doesn’t spend any time or effort informing customers they can buy their own phones.

So next time you visit your older relatives and see a classic phone, perhaps it would not a bad idea to ask if they’re still paying for it.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WBAL Baltimore MD Many Older Residents Still Renting Phones 5-25-10.flv[/flv]

WBAL-TV in Baltimore found one woman still paying $90 a year for a phone that had been attached to her kitchen wall around the time Ronald Reagan was inaugurated president of the United States.  (4 minutes)

Rep. Dan Maffei (D-NY)

Rep. Dan Maffei (D-New York) has begun to worry broadband consumers in his western and central New York district.

In April 2009, when Time Warner Cable’s announced Internet Overcharging experiment was upsetting customers in Rochester, Maffei claimed he was concerned about limiting broadband usage for customers in the area.  But when former Rep. Eric Massa introduced legislation to ban unjustified usage caps and consumption billing, Maffei told his constituents he wasn’t interested in Massa’s approach:

Thank you for contacting me regarding H.R. 2902, the Broadband Internet Fairness Act. I appreciate hearing from you and welcome the opportunity to respond. The Broadband Internet Fairness Act was introduced by Representative Eric Massa (NY-29) on June 16, 2009, and was referred to the Committee on Energy and Commerce. The bill would authorize the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) to review volume usage service plans of major broadband internet service providers to ensure that such plans are fairly based on cost.

When Time Warner Cable announced in April that Rochester would be used as a test market for charging Internet users based upon consumption usage, I, along with Representative Massa, opposed this policy. We helped persuade Time Warner to abandon the plan in the area. At that time, Representative Massa also introduced the Broadband Internet Fairness Act.

Other utilities, like water or electricity, charge customers based on usage, but Internet users have traditionally been charged a flat fee for unlimited access to the web. The Broadband Internet Fairness Act would require Internet Service Providers that want to implement usage-based pricing plans to go through several traditional regulatory hurdles. While I share many of the goals of Representative Massa’s legislation, I do not believe passing this stand-alone bill is the right approach at this time.

Of course broadband is nothing like water or electric utilities.  In fact, Maffei’s inclusion of that reference is a classic talking point of the telecom industry.  Notice they, and Maffei, didn’t mention telephone service — the one utility that provides flat rate calling for most Americans.  It also happens to be the utility most comparable to broadband service!

New York's 25th Congressional District

But Maffei made a bad situation worse when he joined 72 other House Democrats co-signing a letter from Rep. Gene Green (D-AT&T), urging FCC Chairman Julius Genachowski not to fight a court decision overturning the agency’s ability to conduct broadband oversight.

The letter represented one giant talking point — the false premise that enforcing a fair, free, and open Internet with Net Neutrality would somehow stifle investment in broadband expansion.  Yet AT&T was required to honor the very same principles when it merged with SBC, and managed to remain a multi-billion dollar powerhouse well positioned to expand broadband service to additional customers in its ever-growing service areas.

The fact the broadband industry is a duopoly for most Americans — one that can threaten to pull back on service if it doesn’t get its way in Washington — is just one more reason the industry requires more oversight, not less.

Yet Rep. Maffei stood alone as the only member of the western New York Congressional delegation to sign his name to the agenda of big cable and phone companies.

Perhaps the congressman has forgotten these facts which trouble broadband consumers across western and central New York:

• Rochester, NY was the only city in the northeast where Time Warner sought to conduct an Internet Overcharging experiment, made possible because of limited competition in the Rochester market;
• Rochester’s other broadband provider, Frontier Communications, insists on a monthly usage allowance of just 5GB per month in its Acceptable Use Policy;
• Verizon FiOS has suspended expansion indefinitely and the service will never be available in most of the 585 area code where Frontier operates, and it will take years for most of the rest of his Syracuse district to see the service reach those areas;
• Time Warner Cable increased its broadband rates in 2010, as did Verizon;

Green’s letter dances around the real issue — telecommunications companies are spending millions to oppose pro-consumer reforms and stop a return of oversight authority the FCC lost after a recent court decision.  Without this authority, the FCC cannot implement the National Broadband Plan’s insistence that American providers not block or impede network traffic.  These Net Neutral policies preserve net freedom.  The FCC cannot even require that providers tell the truth about broadband speeds and include the company’s terms of service in plain English.

Western New York is a hotbed of consumer activism on broadband issues, particularly because we are actual victims of provider abuse.  No one knows more than we how critical 21st century broadband is to the transformation of this region’s perennially challenged economy.

Rep. Maffei needs a reminder this is a hot button issue for consumers from Irondequoit to Manlius.  Perhaps he just doesn’t fully understand what’s at stake here.  You need to remind him.

We’ve included a suggested letter you can use to help write your own.  For maximum effectiveness, include some of your own personal stories, challenges, and frustrations with your local broadband provider.  Feel free to share yours in the Comments section.

Dear Rep. Maffei:

I was extremely disappointed to discover you signed your name on a letter written by Rep. Gene Green urging FCC Chairman Julius Genachowski not to restore oversight authority over broadband.  While Rep. Green’s letter illustrates he’s mostly concerned about the well being of AT&T, Verizon, Time Warner Cable and Comcast, as a consumer I am more concerned about the broadband duopoly that exists in Rochester & Syracuse.

If the FCC does not regain its ability to oversee broadband by reclassifying it under Title II — as a telecommunications service (which it very clearly is), the FCC can effectively do nothing to stop broadband provider abuses, such as Comcast’s notorious speed throttle on customers using certain Internet websites and services. It took an FCC investigation to finally get the cable company to admit the truth — it was interfering with customers’ broadband speeds.  The oversight power the agency had was just what was needed to convince Comcast to stop.

Unfortunately, a DC Circuit Court recently disagreed it had that authority and effectively stripped it away.  Chairman Genachowski is simply seeking a return to the status quo before that court decision was handed down.  He’s not asking to regulate broadband anything like telephone service.  In fact, he’s insisted on a “light touch.”  That’s better than today’s court-imposed total-hands-off reality.

By signing Rep. Green’s letter, you effectively tell us you don’t support Net Neutrality protections that guarantee providers cannot censor or impede web traffic.  You also do nothing to protect consumers from other provider abuses.  Considering what residents of Rochester went through last year fighting a Time Warner Cable scheme that would have tripled broadband prices for the same level of service, I’m shocked you of all people would be a supporter of big telecom’s agenda.

Telecom companies are claiming that if regulations enforcing Net Neutrality are enacted, investment will suffer and broadband expansion will be slowed.  Yet AT&T was required, as part of its merger with SBC, to respect Net Neutrality for several years.  The company flourished, broadband was offered to more customers than ever, and investors liked what they saw.

The record in western New York is clear — Time Warner Cable was willing to limit its customers access to broadband service, Frontier already does in its terms and conditions, and Verizon FiOS deployment has been suspended indefinitely.  For too many of us, there are too few choices.  In fact, the only thing we can be assured of is higher pricing and a strengthened duopoly.

I strongly urge you to remove your signature from Rep. Green’s letter and get on board with consumers like myself in your district who believe deregulation and oversight failures have given us nothing but nightmares — from Wall Street to BP’s oil spill.  Let’s not make another mistake in handing cable and phone companies unfettered permission to abuse their customers.

Please get back in touch with me as soon as possible on this important matter.

Rep. Dan Maffei told constituents he was concerned about Time Warner Cable’s Internet Overcharging scheme proposed in April 2009.  At a town hall meeting in Irondequoit, New York, he admitted Time Warner Cable held near-monopoly power over consumers in Rochester.  What changed his tune when he signed on to Rep. Gene Green’s anti-consumer letter to the FCC? (April 9, 2009 — 2 minutes)

Rep. Dan Maffei’s Contact Information

Washington, D.C. Office
1630 Longworth HOB
Washington, DC 20515
Phone: (202) 225-3701
Fax: (202) 225-4042

Syracuse Office
P.O. Box 7306,
1340 Federal Building
Syracuse, NY 13261
Phone: (315) 423-5657
Fax: (315) 423-5669

Irondequoit/Rochester Office
1280 Titus Avenue
Rochester, NY 14617
Phone: (585) 336-7291
Fax: (585) 336-7274

[Update: 11:30pm EDT: Free Press reports Rep. Maffei accepted $29,000 in contributions from telecom companies, including Verizon, Comcast, and AT&T.]

Pot?  Meet Kettle!

In one of the biggest ironies thus far this year, a British broadband provider trying to one-up the competition has started running ads with Dr. Seuss-like characters that represent marketing exaggerations, traps, and bad customer service, all while forgetting to disclose it engages in some tricks of its own.

O2’s Niggles & Narks campaign features animated creatures that represent where broadband has gone all-wrong:

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/O2 Niggles and Narks Ad 5-2010.flv[/flv]

Once upon a time, when broadband was made, we browsed and surfed and chatted — everybody played.

But for some, the magic faded.  Some things started to go wrong.

Without any warning, the niggles and nobs came along.

With the No Support-a-Saurus — spouting twaddle was his game.  His impossible instructions would slowly knot your brain.

The Crafty-Cost Nark took pleasure in his work, delivering line rental bills that drove us all berserk.

And with the Mystery-Speed Mook, you never really know. You thought you’d get mega-fast but got stuck with dead slow.

But this is where we draw the line and try to right what’s wrong.  Wouldn’t broadband be a better place, with narks and niggles gone?

But accusing the others of broadband narks and niggles -you- see, without confessing your own is little more than hypocrisy.

In a land of broadband O2 promises is not a dream, it brings to the table its own Internet Overcharging scheme.

No nobble or niggle could ever believe, selling unlimited broadband -that wasn’t- was something they could achieve.

But O2 managed — somehow, we don’t know, to define “unlimited” as 10GB per month — exceeding it brings woe.

Maybe it's a typo that should have read, "download as much as WE like."

O2 sells its broadband packages across the United Kingdom, either bundled under a BTWholesale-based package or unbundled direct from O2 or BeBroadband.  Only the BTWholesale accounts, common in rural areas where O2 doesn’t have its own equipment installed in the exchange offices, are impacted by the limit on unlimited.  BT apparently charges them some form of consumption billing, and they aren’t willing to eat the costs.

Starting in March, many customers started receiving letters stating they were using the service too much, and if they didn’t back off, they’d be disconnected.  One customer received a disconnect warning after using 40.1GB, primarily from watching BBC’s iPlayer, which delivers on demand television programming.

What represented “too much” for an “unlimited service?”

“Most O2 customers use less than 10GB a month. Aim for that and you’ll be okay,” says one of O2’s support pages on the topic.

Outraged consumers arguing that “unlimited” should mean “unlimited” and didn’t comply were promptly disconnected.

With the introduction of O2’s new high-priced Niggles & Narks advertising campaign, the hilarity ensued as customers began calling out O2’s hypocrisy, leading to clarifications from O2 that were anything but:

As some of you have been discussing, we’ve started to disconnect some of the very highest usage customers whose download patterns have detrimentally affected other customers’ experience, even after we have requested them to reduce their usage and explained the effect it’s having. We will continue this in order to improve the experience for the majority of the customers on the service.

We are also making the service run more efficiently by updating the hardware and software that runs the Access service. This will improve the prioritization of the real-time activity, such as streaming, over less time-sensitive activities such as P2P. — O2 Statement from March 26th 2010

O2's "Unlimited Broadband" Price Chart

Then there is this fine print on the question of “unlimited service” that only a credit card company or bank could love (the underlining is ours):

How much should I cut my broadband use?

Most O2 customers use less than 10GB a month. Aim for that and you’ll be okay.

Your product is unlimited, so why are you telling me to use less?

There aren’t any usage limits on any of our O2 Home Broadband packages. That means you can download and upload as much as you like each month, within reason.

Our network’s been designed to cope with people downloading large files (like music or films) and watching video online. But if you’re using the service excessively – like continually downloading large files at peak times – then we do reserve the right to warn you to lower your usage. In exceptional circumstances, we can even terminate your account.

This is because excessive use by a few people can reduce the speed that other customers in the same area can get. We just want to provide everyone with an excellent level of service.

Then company officials unofficially increased the limit to 40GB per month, as this note on an official company forum disclosed:

We’re contacting less than 10% of our heaviest users at the moment and you fell into this top tier. The majority use less than 10GB and at present if you use less than 40GB, you wouldn’t hear from us.”

This isn’t the first time O2 has confused its customers.  ThinkBroadband reminds us of 2007’s mess over the same issue:

O2 have never been good at defining the term ‘unlimited’ as can be seen in 2007 when they had three different definitions for the word. Back then they did recognize that customers were confused by the term and the marketing director Sally Cowdry was quoted as saying “customer feedback has been that if we say unlimited, it should be unlimited.” We wonder why two and half years on, O2 still have not ‘nobbled this broadband niggle.’

Unfortunately for O2 customers, the company has not righted any broadband wrongs.  They’ve added to them.  O2 has an chronic problem with their own Niggles and Narks.  Perhaps British regulators can do a better job exterminating them.

Fayette County, Pennsylvania

Brazen copper thieves have taken to ripping phone cable right off the poles in an effort to cash in on resurgent copper pricing, usually to feed expensive drug habits like the ones discussed when you visit this web-site.

In southwestern Pennsylvania, repeated thefts have gotten so bad Verizon announced a $50,000 reward for information leading to the prosecution of those involved.

The epidemic of copper theft in Fayette County has reached an all-time-high as Verizon finds large sections of working cable stripped right from telephone poles.  When the cables come down, phone and broadband service goes out.

“These thefts are incomprehensible because they put people’s lives in danger and can cost thousands of dollars to repair,” said Michael Wagner, director of construction for Verizon Pennsylvania.  “We will not tolerate these deliberate and malicious acts against our telephone network and our customers.”

As a result of these crimes, hundreds of Verizon local phone customers have unnecessarily experienced telephone service delays – up to several days in some cases – and endured risks to their personal safety.

“They’re putting people who rely on phone service out of service,” Verizon spokesman Richard Young explained. “They’re putting customers who need service in danger in the event of an emergency to call an ambulance, to call the fire department. This person is putting the lives of people at risk.”

Verizon has suffered nine losses across the county in just a month:

• April 22 in Uniontown – A 360-foot section of copper cable was cut and stolen.
• April 25 in Farmington – A 600-foot section of copper cable was cut and stolen.
• April 26 in White House – Nearly 400 feet of copper cable and a fiber-optic cable were cut and stolen.
• May 5 in White House – A 290-foot section of a copper cable and a fiber-optic cable were cut and stolen.
• May 11 in Shoaf – A 300-foot section of cable was cut and stolen.
• May 11 in Smithfield – A 230-foot section of cable was cut and stolen.
• May 12 in Haydentown – More than 1,200 feet of copper cable and a fiber-optic cable were cut and stolen.
• May 14 in McClellandtown – Two sections of copper cable totaling 500 feet were cut and stolen.
• May 17 in Gates – A 350-foot section of copper cable was cut and stolen.

Southwestern Pennsylvania is by no means alone in confronting copper theft.  Across the country, thieves are stealing copper wiring from every utility.  Thieves also steal copper pipes from homes, and in a new trend, are stripping copper coils from air conditioning units.

The reason for the interest in copper is its ever-increasing value.  Copper prices exploded a few years ago, and have trended upwards ever since.

Copper price trends

In January 2009, copper was bringing “just over a dollar a pound,” according to Lee Swann, a security contractor who works with Georgia Transmission Corporation. Today — “depending on what type of copper it is” — the metal is bringing $2.80-$3.10 per pound — an all-time high for many recyclers, even as prices have recently declined on the spot market.

At those prices, the incentives are there for theft.  Recovering and recycling copper has been a growth business for years, and many companies aggressively advertise “top dollar paid for recovered metals” promotions in newspapers and circulars.

Some recycling facilities are vigilant for suspicious truckloads of “recovered” copper while others are less so.  But as law enforcement confronts the growing trend in copper theft and utility companies begin offering rewards to stop it, many facilities are now regularly cooperating with local police.

Most of the proceeds from stolen copper likely go towards illegal drugs, particularly methamphetamine, believes the Coalition Against Cable Theft, a Washington-based advocacy group funded by home builders, contractors, and utility companies who are usually the victims of copper theft.  The Coalition wants strengthened laws to deter recyclers from accepting and paying for questionable sources of recovered copper.

Perhaps copper theft would be just one more reason why providers should dump copper wire for fiber optic networks, but many of the thieves are stupid — indiscriminately cutting and tearing down cables of all kinds, only later to find they were stuck with fiber optic cable, which most immediately discard at the base of poles, deemed worthless.

Anyone with information about the Pennsylvania copper capers can contact Verizon Security at 412-633-4902 or the Pennsylvania State Police at 724-439-7111.  In other areas, if you discover suspicious activity, call 911.

The money and utility service you save may be your own.

[flv]http://www.phillipdampier.com/video/KDKA Pittsburgh WALA Mobile Copper Thieves 5-10.flv[/flv]

KDKA-TV in Pittsburgh covered an earlier copper theft of Verizon wiring and WALA in Mobile ran a very similar story about copper thieves plaguing AT&T.  (4 minutes)