One of the frustrations communities filing for federal grant money often face are the onerous terms and conditions that arrive with the application.  In many cases the rules are so complex, an entire industry of paid consultants to advise would-be grant applicants has grown up with the bureaucracy.  Miss one qualification and your potentially worthwhile application gets an automatic rejection.  Hiring an expensive consultant (often formerly employed in a government agency as an application processor) can often work miracles for a potentially dubious application.

Although some terms and conditions are included to prevent potential waste, fraud, and abuse or are intended to close potential loopholes, many others are influenced by elected officials trying to steer funding into projects they want to “pre-qualify.”  Often the intentions are obvious to would-be applicants, who discover only one company in their midst is capable of meeting all of the requirements of a grant program.  It never hurts to have a powerful member of Congress sign a cover letter of support for an application either, especially if that member of Congress helps oversee your agency’s annual budget.

And so we come to the broadband stimulus program, which has its own bureaucratic red tape and pre-conditi0ns to be met before funding becomes available.  Big phone and cable interests have already been rigging the system through broadband mapping projects that magically show broadband service in areas where none exists.  That’s critically important, because an application can be rejected out of hand if it seems to duplicate or overlap an existing broadband provider’s service area.  Incumbent players have wasted no time filing objections to thousands of broadband grant applications, often citing broadband maps which show a would-be applicant wants federal tax dollars to compete against them.

Mount Washington Resort – Bretton Woods, New Hampshire (left), Town Office – Minneiska, Minnesota (right)

Larger players sat out most of the first round of broadband stimulus applications, which often involved “last mile” projects which would deliver real results to those stuck on dial-up.  These projects actually provide service to individual homes and businesses where none existed before.  Many of the largest telecommunications companies are seeking a better deal for themselves from so-called “middle mile” project grants which allow them to improve their broadband infrastructure without actually hooking up a single new customer.

The collateral damage of this high stakes poker match is visible in rural communities in states like Minnesota, where some found their stimulus applications rejected because they couldn’t afford a requirement for 50 percent in matching funds.  That won’t be a problem for a New Hampshire community that did win $1 million in stimulus funding.  They are lucky enough to host the Mount Washington Resort at Bretton Woods, which will have broadband available in every room, in part thanks to taxpayers.  The resort, now undergoing a $50 million dollar luxury renovation, encouraged the local phone company to apply.  A single night booked for this weekend at the Omni Mount Washington Resort starts at $259 on the economy rate.  The “Winter Wonderland Inclusive Package” will set you back at least $569 a night.  At least now you can Twitter about it with all of your followers.

In contrast, Minneiska, Minnesota (population 116) doesn’t have a hotel, or broadband access, but you can drive down the road to the Winona Days Inn and get a room this weekend with a queen-sized bed for $65 a night. If the bed has a mattress similar to that on the purple mattress review, then it’s comfortable enough.  Winona is big enough to get DSL service, so Days Inn throws in Internet access for free.  You can contemplate that over your free hot waffle breakfast.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CNN Wiring the Wrong America 3-12-10.mp4[/flv]

CNN asks the question, are we wiring the wrong America for much-needed broadband service?  Before you answer, yes we noticed CNN used the sounds of a fax line to simulate the sounds of a dial-up connection, too.  (3 minutes)

Governor Jay Nixon has announced support for 12 different proposals from across Missouri that would expand broadband Internet access in rural and underserved parts of the state for health care, business, education and consumers.

As part of the MoBroadbandNow initiative, Missouri is coordinating efforts among private companies, local governments and rural electric cooperatives to extend broadband access to 95 percent of Missouri residents over the next five years.  Much of the funding to support rural broadband expansion would come through federal stimulus money from the Recovery Act, and those backing the Missouri effort hope a coordinated approach improves the state’s chances to secure funding.

“These proposals were closely reviewed, and we identified the ones we believe are most likely to receive federal funding and most closely aligned with the vision of MoBroadbandNow,” said Governor Nixon.

Five of the applications supported by the State of Missouri are for developing middle-mile infrastructure for broadband, which would help extend existing broadband service to additional homes previously deemed too rural; six are for developing last-mile projects which directly reach customers; and one is for developing public computing centers, which will provide broadband access in public locations, often targeting a specific vulnerable population such as low-income, minority, disabled or unemployed Missourians.

Gov. Nixon

The middle-mile proposals that received letters of support from the Governor included:

• BlueBird Media, of Columbia, which plans to build a middle-mile network in northern Missouri;
• Boycom Cablevision, of Poplar Bluff, which plans to build a middle-mile network along the U.S. Highway 60 corridor in southern Missouri and into the Bootheel;
• Sho-Me Technologies, of Marshfield, which plans to build a middle-mile network in central and south central Missouri;
• SpringNet, a division of City Utilities of Springfield, which would provide broadband to customers in the metropolitan Springfield area; and
• American Fiber Systems, of Rochester, N.Y., which plans to provide connections to several Metropolitan Community College facilities in Jackson County.

The last-mile proposals that received letters of support from the Governor included:

• Big River Telephone Company, of Cape Girardeau, which would provide broadband to households and businesses in southeast Missouri;
• Cass County, which would provide broadband to households and businesses in western Missouri;
• Co-Mo Electric Cooperative, of Tipton, which would provide broadband to households and businesses in west-central Missouri;
• Finally Broadband, of Seymour, which would provide broadband to households and businesses in south central Missouri;
• Socket, of Columbia, which would provide broadband to households in central Missouri; and
• United Electric Cooperative, of Savannah, which would provide broadband to households and businesses in northwest Missouri.

The public computing center proposal supported by the governor is being submitted by YourTel America, which would create eight public computing centers at retail centers, including five in the Kansas City area, two in the St. Louis area, and one in St. Joseph. These public computing centers also will focus on bringing broadband access to vulnerable populations of Missourians.

Currently, 77 percent of Missouri residents can obtain broadband from DSL service from AT&T and smaller independent phone companies, cable modem service from providers like Charter, Mediacom, and Cable One, and mobile broadband provided by several carriers.  Most the remaining residents have little/no access to broadband service except through satellite fraudband, which promises far more than it delivers.

[flv]http://www.phillipdampier.com/video/KYTV Springfield KOLR Springfield Rural Broadband Initiative 8-12-09 3-31-10.flv[/flv]

We have two reports – the first from KYTV-TV in Springfield which comes from August 12, 2009 exploring the state of Missouri broadband and the launch of the MoBroadbandNow coordinated stimulus funding effort and the second from KOLR-TV in Springfield discussing Governor Nixon’s announcement yesterday.  (4 minutes)

Verizon Communications is indefinitely finished expanding FiOS — its fiber to the home triple-play package of broadband, phone, and TV — to new cities across its service area.  In short, if your community isn’t already engaged in franchise negotiations with the telecommunications company, there is no fiber from Verizon in your immediate future.

The company said after spending $23 billion upgrading its aging copper wire phone network, it needs to finish construction and improve its reach in existing FiOS-wired communities.  When the company ceases FiOS construction, it hopes to pass 18 million customer homes across its multi-state service area.

The decision to stop expansion of advanced fiber optics threatens to leave hundreds of communities behind, too late to the party or simply too far down Verizon’s priority list.  Among important cities Verizon will pass up include Alexandria, Virginia, Boston and Baltimore.

That concerns city officials, especially in Baltimore which already considers itself on the disadvantaged list.

“My take on it is that Baltimore is not equipped for the future,” Rev. Johnny Golden, past president of the Interdenominational Ministerial Alliance and an advocate for improved access to technology in the city told the Baltimore Sun. “We have a decent broadband system for today, but it does not have the infrastructure to take us into the future where we need to go.”

Despite the fiber bypass, the company will continue negotiations with about a dozen communities where negotiations were already underway – mostly in New York, Massachusetts, and Pennsylvania.  Despite company spin, the decision to drop the shovels and wheel away the spools of fiber does represent a dramatic change of plans, evidenced by the company’s decision to bypass the aforementioned lucrative urban communities.

For cable companies like Comcast and Time Warner Cable, Verizon’s announcement brings a sigh of relief.  Both cable operators handily beat Verizon’s DSL offerings and are swiping increasing numbers of Verizon’s phone customers who are disconnecting their landline service in favor of cell phones or “digital phone” service from the cable companies.

Both Time Warner Cable and Comcast have also kept a larger percentage of their customers than Verizon hoped.

In markets where FiOS is available, Verizon has only achieved 25% penetration for television service and 28% for Internet, far below the 40 percent penetration Verizon CEO Ivan Seidenberg hoped to achieve.  The reasons consumers didn’t switch to Verizon FiOS vary, but include:

• Pricing was not always lower than what the incumbent cable operator offered, and in many cases prices for some service were higher once the promotional rate expired;
• Cable operators in competitive areas improved service, offered more aggressively priced bundles, and increased broadband speed;
• Many cable operators locked their customers into two year “price protection agreements” which hold customers in place until agreements expire (if they don’t auto-renew);
• Installation can prove disruptive because of the elaborate rewiring required in many homes;
• Consumers didn’t see enough compelling reasons to switch.

Seidenberg

Still, Verizon has future-proofed their fiber optic service areas and are better positioned to deliver extremely high broadband speed and HD offerings than their cable counterparts.  But that has never impressed short-term focused Wall Street.  Many in the financial press have attacked Verizon for the costly fiber upgrades they believe will not work for the short-term investor seeking immediate return from their Verizon stock purchase.  With the rumor mill predicting upcoming retirement for Seidenberg, his likely successors are hardly FiOS fanboys.

John Killian, Verizon’s current chief financial officer, is a short-term results man.  Samuel Greenholtz, an analyst with the Gerson Lehrman Group, doesn’t see Killian sharing much of Seidenberg’s visionary long term thinking.  Lowell McAdam, another prospect for the top job, is currently the president of the Wireless Services division, and would likely bring a wireless “solution” for broadband customers left off the FiOS list.  Neither man seems particularly interested in restarting the push for fiber in the future.

For 2010, capital expenses are flat or down across the company except in the Wireless Services division.  Verizon already declared copper phone wiring dead, and has elected to abandon its rural and suburban customers,  systematically sold off to America’s “rural phone companies” Frontier, CenturyLink, or Windstream.  Those still with Verizon but without FiOS will find the future of their landlines increasingly perilous.  Greenholtz notes Verizon has terminated another 1,200 line technicians and the company intends to spend two percent less on its copper wire network this year over last.

Greenholtz witnessed first hand what happens when a company starts to ignore its legacy network — his residential phone line quit working:

Having worked at Verizon and its predecessors for over 25 years, I expected a fix would be swift and trouble-free.  Wrong. I was offered a two-week appointment date for repair people to come out and look at the problem. I might add here that my wife does not use the cellular device that she carries around anymore than necessary and certainly never uses it when in close proximity to the hardwired set. By resorting to measures that I certainly would never have thought of using 10 years ago, I was able to get attention brought to the problem much quicker — and the issue has been resolved satisfactorily.

It seems that Verizon’s residential repair and maintenance has sunk to a new low.  Neighbors and other people on copper cabling are often experiencing problems. If there is static on the line, subscribers are frequently told nothing can be done to correct the situation because they need to replace the cable or do cable maintenance – but there is no budget available to do the work.   So, repairmen take the brunt of the public’s unhappiness with the service they are receiving. In contrast, when I spoke with some friends regarding FiOS and its maintenance issues, I found a much better response time to any difficulties the customers were experiencing.

Shockingly for a Wall Street-focused “expert network,” Greenholtz was allowed to offer his belief the only real solution to phone companies ignoring their undesirable customers is to regulate the heck out of them.

What can be done to cure the situation with residential landline services?   Unfortunately, it is going to have to come down to regulation.  Verizon, and no doubt, AT&T, has been doing what they want for many years now.  The PUCs have given them a lot of opportunities to offer advanced services that the commissions thought would spread throughout the serving areas, but they are increasingly realizing that is not in the plans.  They are going to have to force these companies to be responsive to the needs of the entire footprint, not just the Fortune 500 territories — and the nearby residential homes.

[Update 4/1/2010: While working on another story, I was amused to discover we had written about Mr. Greenholtz before, back on April 15th, when he was telling his readers “do-gooders” forced Time Warner Cable to attempt usage caps on customers.  I wonder if we would have heard something different from him had his broadband service faced an Internet Overcharging scheme.]

Blind deregulation and legislative-friendly handouts to companies like AT&T and Verizon have never resulted in better service for consumers.  They haven’t proven to save consumers any money either.  Ultimately, the decision to provide FiOS and U-verse came with investor consent, and when the economic downturn threatened the value of the stock and dividends, no deregulation or statewide franchise agreement is going to keep the fiber party from coming to a close.

[flv]http://www.phillipdampier.com/video/WSYR Syracuse Verizon FiOS Winds Down 3-26-10.flv[/flv]

WSYR-TV in Syracuse reports on the demise of Verizon FiOS’ expansion plans, which have a significant impact on central New York where many communities will be left behind.  One saving grace for New Yorkers ticked off at Albany — they’re now off the FiOS list indefinitely.  (2 minutes)

Apple iPhone

The Wall Street Journal reports Apple is developing two new iPhones for launch this June, including one that’s designed to work with Verizon Wireless.

According to the report, the new iPhone models can run on CDMA networks, such as the one Verizon Wireless uses.  The introduction of such a phone would mark an end for the three year exclusivity agreement Apple has with AT&T in the United States.

“There has been lots of incorrect speculation on CDMA iPhones for a long time. We haven’t seen one yet and only Apple knows when that might occur,” an AT&T spokesman told the Wall Street Journal.

For AT&T, the Apple relationship has been crucial, helping to make the carrier the U.S. leader in lucrative smart-phone market share. According to comScore Inc., AT&T has over 43% of all U.S. smart-phone customers, compared with 23% for Verizon. These customers are especially attractive because they generally pay higher monthly rates for data plans.

For several quarters, AT&T’s growth has come almost single-handedly from the iPhone. In the fourth quarter of 2009, the carrier said it activated 3.1 million new iPhones. In comparison, it counted only a net total of 2.7 million new subscribers as some customers moved from other phones to iPhones.

“You’re not going to lose the iPhone [exclusivity] and make up growth somewhere else without bearing the cost,” said Sanford C. Bernstein & Co. research analyst Craig Moffett.

The impact on Verizon Wireless data network will be an important measure of whether American wireless broadband networks can sustain the demand customers have for wireless broadband service and speed.

[flv]http://www.phillipdampier.com/video/CNBC Verizon Getting iPhone 3-29-10.flv[/flv]

CNBC carried three reports about the Verizon Wireless iPhone story published in the Wall Street Journal and its potential impact on the American wireless marketplace.  (11 minutes)

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/Wall Street Journal iPhone On Verizon 03-29-10.flv[/flv]

The Wall Street Journal included this “web-extra” report on their story and what it means for consumers.  (2 minutes)

AT&T may have put the safety of its Salt Lake City customers at risk by diverting cell phone 911 calls intended for local authorities to a 911 call center in Seattle, Washington hundreds of miles away.

Starting last Thursday, AT&T customers who tried to report an emergency by dialing 911 ended up speaking with confused operators in Seattle who couldn’t understand why customers were calling them about problems several states away.  Company officials took until the following day to fix the problem, and it took calls from a local television station to alert local officials and the company that a serious problem existed with the area’s 911 system.

Although the problem has now been fixed, company officials have not released an explanation about what caused the glitch.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/KSL Salt Lake City ATT mysteriously directing Salt Lake 911 calls to Seattle 3-25-10.flv[/flv]

KSL-TV broke the story about the 911 diversion, interviewing one customer whose local Salt Lake City cell phone mysteriously reported his caller ID as in Seattle, Washington.  Part two of this report is from the following day, after service was restored. (4 minutes)