Carbon Hill, Ala.

AT&T is seeking permission to disconnect traditional landline service in Alabama and Florida as it plans to abandon its copper wire network and move towards Voice Over IP in urban areas and force customers to use wireless in suburbs and rural communities.

AT&T’s BellSouth holding company has asked the Federal Communications Commission to approve what it calls “an experiment,” beginning in the communities of West Delray Beach, Fla., and Carbon Hill, Ala.

The first phase of the plan would start by asking residents to voluntarily disconnect existing landline service in favor of either U-verse VoIP service or a wireless landline replacement that works with AT&T’s cellular network. In the next phase of the experiment, traditional copper-based landline service would be dropped altogether as AT&T and the FCC study the impact.

“We have proposed conducting the trials in Carbon Hill, Ala., and in West Delray Beach, Fla.,” AT&T writes on the company’s blog. “We chose these locations in an effort to gain insights into some of the more difficult issues that likely will be presented as we transition from legacy networks. For example, the rural and sparsely populated wire center of Carbon Hill poses particularly challenging economic and geographic characteristics.  While Kings Point’s suburban location and large population of older Americans poses different but significant challenges as well.  The lessons we learn from these trials will play a critical role as we begin this transition in our approximately 4700 wire centers across the country to meet our goal of completing the IP transition by the end of 2020.”

The transition may prove more controversial than AT&T is willing to admit. A similar effort to move landline customers to wireless service was met with strong resistance when Verizon announced it would not repair wired infrastructure on Fire Island, N.Y., damaged by Hurricane Sandy. Hundreds of complaints were registered with the New York Public Service Commission over the poor quality of service residents received with Verizon’s wireless landline replacement. The company eventually abandoned the wireless-only transition and announced it would also offer FiOS fiber optic service to customers seeking a better alternative.

“Be ready, beware,” Jim Rosenthal, a seasonal Fire Island resident, told Bloomberg News when asked what communities need to know about the changes. “Get your ducks in order. Make the alliances. Speak loudly, make sure you’re not roadkill.”

Customers that have already dropped landline service in favor of wireless and do not depend on AT&T for broadband will not notice any changes. Neither will customers  subscribed to U-verse phone and broadband service. But those who rely on AT&T DSL are likely to lose their wired broadband service and asked to switch to a very expensive wireless broadband alternative sold by AT&T. That alternative may be their only broadband option if the neighborhood is not serviced by a cable competitor.

The biggest impact will be in rural Carbon Hill, where 55% of AT&T customers will only be able to get wireless phone and broadband service, according to AT&T documents. At least 4% of local residents will get no service at all from AT&T, because they are outside of AT&T’s wireless coverage area. The phone company has no plans to expand its U-verse deployment in the rural community northwest of Birmingham. In contrast, every customer in West Delray Beach will be offered U-verse service. That means AT&T’s DSL customers will eventually be forced to switch to either U-verse for broadband or a wireless broadband plan that costs $50 a month, limited to 5GB of usage.

AT&T promises the transition will be an upgrade for customers, but that isn’t always true.

AT&T’s wireless home phone replacement is not compatible with fax machines, home or medical monitoring services, credit card machines, IP/PBX phone systems, dial-up Internet, and other data services. AT&T also disclaims any responsibility for mishandled 911 emergency calls that lack accurate location information about a customer in distress. The company also does not guarantee uninterrupted service or coverage.

AT&T chose Carbon Hill, which was originally a coal mining town, because it represents the classic poor, rural community common across AT&T’s service area. At least 21 percent of customers live below the poverty line. Many cannot afford cable service (if available). AT&T selected Alabama and Florida because both states have been friendly to its political agenda, adopting AT&T-sponsored deregulation measures statewide. AT&T was not required to seek permission from either state to begin its transition, and it is unlikely there will be any strong oversight on the state level.

“We looked for places where state law wasn’t going to be an issue, where the regulatory and legal environment in the state was conducive to the transition,” admitted Christopher Heimann, an AT&T attorney, at a briefing announcing the experiment.

Verizon faced a very different regulatory environment in New York, where unhappy Fire Island customers dissatisfied with Verizon’s wireless landline replacement Voice Link found sympathy from Attorney General Eric Schneiderman, who appealed to the state PSC to block the service. Sources told Stop the Cap! the oversight agency was planning to declare the service inadequate, just as Verizon announced it would offer its fiber optic service FiOS as an alternative option on the island.

Voice Link sparked complaints over dropped calls, poor sound quality, inadequate reception, and inadequacy for use with data services of all kinds. Customers were also upset Verizon’s service would not work as well in the event of a power interruption and the company disclaimed responsibility for assured access to 911.

Carbon Hill, Ala.

Although millions of Americans have disconnected landline telephone service in favor of wireless alternatives, traditional landlines are still commonly used in businesses and by poor and elderly customers. Many medical and security monitoring services also require landlines.

The loss of AT&T’s wired network could also mean no affordable broadband future for rural residents — wireless broadband is typically much more expensive. AT&T admits it will not guarantee DSL customers they will be able to keep wired broadband after the transition.

AT&T will “do our very best” to provide Internet-based services in trial areas, Bob Quinn, senior vice president for federal regulatory matters, said in a 2012 blog post proposing the trials.

“For those few we cannot reach with a broadband service, whether wireline or wireless, they will still be able to keep voice service,” Quinn said. “We are very cognizant that no one should be left behind in this transition.”

AT&T is likely to be the biggest winner if it successfully scraps its copper network. The company wants to drop landline service completely by 2020, saving the company millions while ending government oversight and eliminating service obligations.

“It’s a big darn deal,” said AT&T CEO Randall Stephenson. “The amount of cost that it removes from our legacy businesses is dramatic and it’s significant.”

[flv]http://www.phillipdampier.com/video/ATT The Next Generation IP Network 2-21-14.mp4[/flv]

An AT&T-produced video showing a sunny future with IP-based phone service. But the future may not be so great for AT&T’s rural DSL customers. (1:31)

Time Warner Cable truck?
(Image: WHAM-TV)

A Time Warner Cable contractor threatened to cut off cable service for a Brighton, N.Y. woman after arriving at her doorstep demanding a credit card payment. Suspicious, she called police.

While snapping photos of a blue truck with a Time Warner Cable logo on its side, the woman, identified only as “Michelle,” contacted Time Warner Cable customer service and was told the man was not a Time Warner employee and she should call the cops.

The customer had every right to be suspicious,” said Brighton Police Chief Mark Henderson.

Brighton police quickly tracked down the truck after the incident and discovered the driver was, in fact, a Time Warner Cable subcontractor. He was unable to show any work order for the address and Michelle claimed her account was current, leaving no reason to demand payment on the spot at her front door under threat of service suspension.

A Time Warner Cable spokesperson said that customers should ask for proper identification if they receive an unexpected visit from the cable company. In the meantime, Time Warner is reviewing the case, especially because contract workers are not authorized to process credit card payments.

[flv]http://www.phillipdampier.com/video/WHAM Rochester Police track down Time Warner subcontractor 12-13.flv[/flv]

WHAM-TV in Rochester reports Brighton Police tracked down the suspicious Time Warner worker and discovered he was a sub-contractor not authorized to accept credit card payments. (1:37)

Windstream delivers turtle slow Internet speeds to customers paying for fast connections.

Windstream broadband customers in Georgia were not imagining their turtle-slow DSL Internet speeds after all. After a year-long investigation, the Governor’s Office of Consumer Protection (GOCP) this week announced a $600,000 settlement with the rural telephone company over claims it was ripping off customers by falsely advertising broadband speeds it was in no position to deliver.

“This is essentially a truth in advertising case,” says John Sours, administrator of the Governor’s Office of Consumer Protection.  “What consumers thought they were getting from a major company was significantly different from what they allegedly received. People need to be able to make informed choices about buying the services they need to communicate and do business. We are confident that this settlement will ensure that will now occur here.”

A GOCP investigation found substantial evidence Windstream routinely advertised and sold certain Internet speeds to customers it should have known it could not provide and/or guarantee, especially over its deteriorating copper landline network. Customers complained they should have been sold cheaper broadband packages with Internet speeds Windstream could actually deliver.

Customers who called to complain about the poor performance of their connection received empty promises from Windstream representatives that misrepresented the time frame within which broadband speeds would improve. In some cases, customers were not told their speed issues would likely never be resolved. In rural Georgia communities, DSL broadband is often the only available option.

The GOCP also found that some of Windstream’s “Lifetime Price Guarantee bundle” advertisements falsely implied that the advertised offer included high-speed Internet packages with speeds of “up to 12 Mbps”.

Windstream was also criticized for advertising a free 6-month “Hulu Plus” subscription but did not clearly disclose that consumers who failed to cancel the subscription at or before the 6-month period would be charged membership fees every month afterwards, until the membership was cancelled.

To resolve these allegations, Windstream will pay a total of $600,000, which includes a $175,000 civil penalty, $175,000 in administrative fees and expenses, and $250,000 in cy pres restitution to be used to buy new computer equipment for the Technical College System of Georgia. Customers will receive no compensation from the settlement, but Stop the Cap! strongly recommends that affected customers insist on compensation by appealing directly to Windstream for service credits and/or a penalty-free exit from any service commitments.

“Windstream … has cooperated fully throughout the inquiry by the Governor’s Office of Consumer Protection,” wrote a company spokesperson in a statement. “Windstream is pleased to resolve this inquiry by entering an assurance of voluntary compliance with all applicable advertising laws. That agreement includes no finding or admission of violation by the company.”

Windstream has represented to the Governor’s Office of Consumer Protection that it is in the process of investing about $14 million to upgrade its fiber-supported areas in Georgia.  The company says that 90% or more of these upgrades were completed by the end of 2013, with the remaining upgrades slated for completion by mid-2014. The company expects the upgrades to address systemic download speed issues in the areas undergoing the upgrades. It is also seeking federal funding as well as exploring other options for upgrading the Internet service for consumers who are served by network equipment supported by copper-fed wires.

[flv]http://www.phillipdampier.com/video/WGCL Atlanta Windstream Settles False Advertising Suit 2-25-14.mp4[/flv]

WGCL in Atlanta reports Windstream has agreed to settle charges they falsely advertised broadband speeds customers could never receive. The state gets $600,000, customers get nothing. (1:56)

Franken

Sen. Al Franken (D-Minn.) has turned over much of his campaign website to expressing concern about the merger of Time Warner Cable and Comcast.

Franken has maintained a comparatively low profile since arriving in the U.S. Senate and rarely grants interviews to reporters outside of Minnesota, but after the announced $45 billion merger deal between the two largest cable companies in the country, he started making exceptions.

Franken has repeatedly tangled with Comcast, the dominant cable operator in his home state, since being elected. He favors Net Neutrality/Open Internet policies, strongly opposed Comcast’s purchase of NBCUniversal, and believes cable rates are too high and service quality is too low.

Although the senator claims he remains undecided about the merger, his public comments suggest he is likely going to oppose the deal.

“We need more competition, not less,” said Franken, who mocked Comcast’s claim that the two cable companies never compete with each other. “This is going exactly in the wrong direction. Consumers, I am very concerned, are going to pay higher bills and get even worse service and less choice.”

Although the merger will leave the combined company serving nearly one in three households, Comcast says it plans to keep its total nationwide broadband market share under 30%. But Franken points out Comcast isn’t just a cable company. It also owns a major television network and has ownership interests in nearly three dozen cable networks and television stations around the country — many in America’s largest cities.

Franken mass e-mailed his campaign supporters to express concern about the current state of the cable and broadband business and asked consumers what they thought about their cable company. More than 60,000 have shared their mostly negative views so far.

Minnesota Public Radio takes a closer look at why Sen. Al Franken is interested in the merger of Time Warner Cable and Comcast. Feb. 24, 2014 (4:32)
You must remain on this page to hear the clip, or you can download the clip and listen later.

That may prove to be smart politics for Franken, seen as a polarizing figure in the left-right divide. The near-universal loathing among consumers for both Comcast and Time Warner Cable threaten to rise above traditional partisan politics. Republican lawmakers have kept largely quiet about the merger deal, and some are even openly questioning it. Franken may tapped into a re-election issue that voters across Minnesota are likely to support — especially older Republican-leaning independents.

Franken claims his survey is trying to level the playing field by getting consumers involved in the issue. For Washington regulators accustomed to only hearing from company lobbyists and various third party groups often financially tied to merger advocates, it could be a game-changer.

Comcast’s connections in Washington are legendary. Former Republican FCC commissioner Meredith Attwell Baker wasted no time taking a job as a senior Comcast lobbyist shortly after voting in favor of Comcast’s buyout of NBCUniversal. Former Republican FCC chairman Michael Powell today heads the National Cable and Telecommunications Association (NCTA), the cable industry’s largest lobbying group and supporter of the merger.

The merger deal’s regulatory review will be conducted by current FCC chairman Thomas Wheeler, a past president of the NCTA and former cable and wireless industry lobbyist. Bill Baer is in charge of the Antitrust Division that will examine the merger at the U.S. Department of Justice. His last job was leading the law firm that represented NBC in support of the Comcast-NBCUniversal merger.

[flv]http://www.phillipdampier.com/video/CNN Al Franken Talks With CNN About TWC-Comcast Merger 2-13-14.flv[/flv]

Sen. Al Franken spoke to CNN’s Jake Tapper earlier this month about the Time Warner Cable-Comcast merger. Tapper admitted he dropped Comcast because he was dissatisfied with their service. (7:45)

Netflix has agreed to compensate Comcast in return for assurances that the cable company’s subscribers would no longer be caught in the middle of a dispute between Comcast and one of Netflix’s content distributors.

The multi-year agreement between the two companies will bring Netflix direct access to Comcast’s broadband network with a Service Level Agreement that will guarantee streaming stability for customers who have loudly complained about Netflix’s deteriorating performance.

The controversial arrangement has probably established a precedent for other large Internet Service Providers likely to seek compensation to handle Netflix traffic. As of this evening, both AT&T and Verizon have already acknowledged they are negotiating with Netflix for similar arrangements.

Caught in the middle of the dispute are Comcast customers paying for a reliable Internet connection and getting slowing connections and re-buffering problems while attempting to watch Netflix content during peak usage times.

One side accuses Comcast of violating Net Neutrality while the other blames Netflix for dumping enormous Internet traffic on Internet Service Providers without compensation for network upgrades. Also in the crossfire is Cogent, a third-party company delivering Netflix content to Comcast’s front door.

How Netflix Distributes Its Streaming Movies and TV Shows

Netflix has traditionally avoided owning the “pipes” that distribute movies and TV shows to paying customers. Instead, it usually contracts with “transit providers” to send content from Netflix headquarters on to “content distribution networks (CDN)” that manage video streaming. A Netflix video may pass through a number of connections on a variety of independently owned networks before it arrives at the front door of your Internet Service Provider. Companies like Comcast handle “the last mile” of the journey that began at Netflix and ends at your computer or television set.

Netflix does not rely on just one transit provider to handle its traffic. Level 3, Cogent, and XO Communications all reportedly serve in that capacity, depending on where traffic is headed. The same is true for the CDN’s Netflix contracts with to regionally stream content to each subscriber.

Netflix determines how to handle your streaming movie request behind the scenes, selecting a CDN that is close to you and capable of delivering the most stable streaming experience at that moment. If you are a Comcast or Verizon customer, Netflix often selects Cogent to handle its content. Cogent is also well known for its relatively low cost.

If you are served by Cablevision, Frontier, or certain other providers like Google Fiber, Netflix will instead direct your streaming request to a CDN located within your provider’s own network. These “Open Connect” boxes store Netflix content in a type of cache and can stream it to customers directly without sending video packets across multiple third-party networks. Theoretically, Open Connect offers an efficient and stable way of distributing Netflix content to customers. It also saves Netflix money and in return, it costs the ISP nothing — Netflix pays for the equipment and service.

Cogent vs. Big Telecom

Netflix and YouTube together are now estimated to cover 50 percent of all video traffic on the Internet, and that traffic is growing. Cogent dutifully passes that video content along to Internet Service Providers like Verizon and Comcast that have customers waiting to watch. But it is a two-way street. Any outbound traffic from customers could also be forwarded to Cogent to send on. Traditionally, both sides have managed the traffic by gradually increasing the bandwidth and speed of their connections to one-another. But as Netflix traffic grows and grows, companies like Comcast and Verizon believe they are being saddled with the costs to upgrade their networks in ways that are out of proportion to the traffic they send in the other direction. ISPs often grumble about the cost but keep on upgrading to keep paying customers happy. Verizon and Comcast are suspected of dragging their feet on those upgrades in an effort to win compensation.

Verizon and Comcast argue they should be paid by content producers responsible for generating tons of Internet traffic to help cover the cost of upgrades. Instead, Netflix offered its Open Connect boxes, which keep Netflix traffic within an ISPs own network, reducing the necessity of constantly upgrading connections with other transit providers. Verizon and Comcast don’t want Netflix’s solution — they want cold hard cash.

Conflict of Interest

Some network engineers cannot understand all the controversy about Comcast’s arrangement with Netflix. Some believe Netflix is simply shifting traffic away from third-party Cogent to Comcast directly, presumably at a cost savings. They suggest customers will be happy that streaming quality is restored and Netflix also wins a guaranteed level of performance they never had with Cogent.

But that argument does not explain why Netflix was compelled to make a financial arrangement with Comcast. The two companies have been in negotiations on the subject of traffic compensation for months. Many industry observers believe those talks went nowhere until Netflix customers began complaining about the increasing network slowdowns. Some even dropped their Netflix subscriptions over the issue.

Netflix CEO Reed Hastings admitted he made a deal with Comcast to restore customer confidence in Netflix and end subscriber frustration. It was also increasingly clear Comcast was in no hurry to improve things on its own, despite the fact its own customers were the ones most directly affected.

So why wouldn’t Comcast (or Verizon or Time Warner Cable) take Netflix up on its offer of free Open Connect boxes that would reasonably solve streaming problems without forcing anyone to spend a fortune on upgrades? Simply put, all three companies are direct competitors of Netflix. Helping Netflix offer a top quality streaming experience is not in the best interests of Comcast (or others) that are facing potential cord-cutting customer losses in their subscription video businesses. Verizon has partnered with Redbox to deliver streamed video, Comcast operates Streampix, its own online streaming service, and Time Warner Cable offers a variety of on-demand and streamed video content for its cable TV subscribers. None of these services have suffered from traffic congestion issues.

ISP Payday

What About Net Neutrality? What About Paying Customers?

With Net Neutrality tossed out by the courts, there is little any regulator can do to resolve disputes until Net Neutrality can be properly enforced under a stronger regulatory framework. Some argue the congestion issues creating the problems with Netflix are not a true violation of Net Neutrality in any event because providers are not artificially prioritizing traffic.

They are simply not keeping up with upgrades that just so happen to directly impact a competitor while leaving their own services unscathed.

Providers also seem characteristically unconcerned about complaining customers, passing blame for the problem on to Netflix. Besides, they remind you, paying for an Internet connection alone does not entitle you to any guarantee of performance.

The Dam Breaks

With this week’s agreement between Comcast and Netflix, both AT&T and Verizon wasted no time admitting they are both seeking compensation from Netflix as well. Other providers are likely to follow.

Netflix warned investors that paid agreements with ISPs could adversely affect its earnings due to increased costs. Although stopping short of suggesting price increases for Netflix customers could come as a result, Wall Street wasted no time worrying about the financial impact of deals like the one between Netflix and Comcast.

The Wall Street Journal reported the momentum appears to be shifting in favor of large Internet providers like Comcast and AT&T and away from content producers.

Janney Capital analyst Tony Wible suggested Comcast’s toll booth could create a barrier for other content producers if the cable company asks for significant compensation.

“Although there is no prioritization benefit [from the deal], we suspect that the exchange of money for resolution/performance could (if large) effectively limit competition,” said Wible. “In essence, Netflix could be trading [profit] margins for subscribers. Few others can match Netflix’s [spending budget to acquire content] without incurring massive losses. The competition may now have to cope with additional fees that sway their willingness to compete if they do not already have a large subscriber base.”

In other words, a new Internet startup could face hard questions from investors about how it intends to cover ISP demands for compensation in return for a suitable connection to reach customers. A large venture like Netflix has enough resources to handle those costs and negotiate for a better deal while a smaller startup may not.

[flv]http://www.phillipdampier.com/video/WSJ Netflix Comcast Agreement 2-24-14.flv[/flv]

Netflix has signed a deal with Comcast to ensure smooth streaming, in what is being called a landmark agreement. Wall Street Journal reporter Shalini Ramachandran explains the agreement. (3:39)