Netflix stock lost over 11% of its value late today after the company reported second quarter results that underwhelmed Wall Street, including a surprising loss of 130,000 U.S. customers that left the streaming service during the last three months.

Netflix added 2.7 million customers in the second quarter, a much smaller number than the 6 million it added during the same period last year. As of the end of June, Netflix now has 151.6 million customers worldwide. Wall Street expected between 153-156 million by that time. The $2/month U.S. rate increase during the first quarter for Netflix’s popular two-concurrent stream plan (was $10.99, now $12.99 in the U.S.) helped keep company revenue up 26%, to $4.92 billion for the quarter. But analysts expected $4.93 billion. Profits also declined to $270 million, compared with $384 million a year ago during the same quarter.

The company blamed the lackluster results on the lack of compelling content during the second quarter. In a letter to shareholders, Netflix claimed the recent price increase slowed growth, but the real problem was overheated growth during the first quarter and not a lot of blockbuster movies and shows to watch.

“We think [the second quarter’s] content slate drove less growth in paid net adds than we anticipated,” Netflix executives said.

The company also noted it is raising prices in several European countries including the United Kingdom, Spain, Ireland, France and Germany.

Netflix does not believe competition with other streaming services had a material impact on its subscriber numbers during the quarter, but analysts suggest Netflix should be concerned about forthcoming streaming competition from AT&T/WarnerMedia (HBO Max) and Walt Disney (Disney+). As more services become available, consumers are likely to take a hard look at the streaming services they are watching and ditch those they are not.

Netflix also declared it will not introduce a cheaper, ad-supported version, despite increasing speculation it would.

“We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction.” Netflix told shareholders.

The Wall Street Journal reviews the many challenges to Netflix from forthcoming contenders in the streaming wars. (4:36)

Frontier Communications has publicly admitted its residential telephone service in rural and “high-cost” service areas is “unsustainable,” resulting in an increasing number of lengthy service outages and unreliable service.

Javier Mendoza, vice president of Frontier Communications, made the admission in response to a growing chorus of complaints about rapidly deteriorating landline service in the state of West Virginia. Service has gotten so bad it prompted the senior senator from West Virginia to complain directly to Frontier CEO Dan McCarthy.

“In times of crisis, no one should ever have to think twice about whether he or she will be able to call for help,” Sen. Joe Manchin (D-W.V.) wrote in a letter directed to McCarthy. “Unfortunately, I have been alerted of several instances where my constituents who utilize Frontier’s landline service have not been able to complete calls due to service outages.”

The West Virginia Public Service Commission is currently auditing Frontier’s operations in the state after seeing “a large increase” in complaints about Frontier’s service. Frontier has been the state’s largest telecom company since 2010, when it acquired Verizon’s wireline network in West Virginia.

According to some customers, service has been going downhill ever since.

“I don’t always depend on it to work because I know it is probably not going to do that,” Frontier customer Lawrence Gray told WSAZ-TV. “So it used to be a real shock when you picked it up and it didn’t work. The other day when I picked it up and you couldn’t get a dial tone, I was like well here we are again. It is the way it is.”

Frontier is the dominant phone company in West Virginia.

Lawrence’s wife Patrecia notes they are both in their 70s and are anxious about being able to reach 911 in an emergency. Frontier has experienced several 911 outages in West Virginia as well.

“If we ever want to call 911 and it is not working, what do you do because we have no call phone service here,” Patrecia said.

The Gray family reports that it typically takes Frontier five to seven days to restore their phone service after an outage. That is unacceptable to Sen. Manchin.

“The safety of my constituents is my highest priority and the fact that so many of them are unable to do something as basic as calling 911 for assistance is unacceptable,” Manchin wrote Frontier. “Access to phone service is not a luxury; it is a critical lifeline that could mean the difference between life and death and I implore you to resolve this problem within your company immediately.”

Frontier’s response, through Mendoza, is to blame the situation on the unprofitability of Frontier’s landline network in rural West Virginia, after choosing to buy it nine years ago.

“Frontier serves only about ten percent of the state voice lines in its service area—and falling—but has 100 percent of the universal service obligation to serve the most rural and high-cost areas,” Mendoza said in a statement. “Our customer base continues to decline, while the cost of service per line has increased dramatically. This has resulted in an unsustainable model for providing service in rural and high-cost areas, manifesting in increased numbers of service complaints. We plan to reach out to the state’s leaders to collaboratively find solutions to this difficult challenge.”

Those challenges may be more difficult than imagined, considering the frequent complaints received by the Public Service Commission about the ongoing service problems experienced by customers.

Doug and Patricia Stowers represent a case in point. The Stowers family lives in Griffithsville, an unincorporated community in eastern Lincoln County. The nearest cell phone coverage in this part of West Virginia is a 14-mile drive into the town of West Hamlin. A landline is essential in Griffithsville and many other parts of West Virginia where cell service is spotty at best. The only choice of provider is often Frontier Communications.

This branch was left hanging on Frontier’s phone line… after a service call reporting branches on Frontier’s cable was finished. (Image courtesy of the Stowers family)

The Stowers family installed their landline in 2012. A single Frontier technician laid nearly one-quarter of a mile of phone cable, sections of which were laid on the ground next to the roadway.

“Since 2012, coverage has been sporadic. It took us a few service interruptions before we noticed a connection of when the county mowed [along the roadway] and the phone going out,” wrote Patricia Stowers. “When we found a long section of main line had been laid along the edge of the road, we walked the road, and made sure the line was thrown over edge out of the reach of the mowers.”

That is where Frontier’s phone cable stayed, for years. In areas where the phone cable was hung above ground, tree limbs and brush often cover the line, even after Frontier dispatches repair crews to address the latest service outage. At one point, the family discovered parts of their phone cable were now exposed to the core. A Frontier technician temporarily “patched” the cable and then placed it back on the ground, this time at the bottom of a dry creek bed.

When the family reports service outages to Frontier, having patience is a virtue.

“When we call for repairs, we are scheduled three to seven days out. To me this is unacceptable,” writes Patricia. “If we had a choice, trust me, we would not have phone service from Frontier, however, we are at their mercy.”

An attorney for Frontier Communications in Charleston disputed parts of the Stowers family complaint, noting that each time the family reported an outage, the company dispatched a technician to repair the trouble and the family was given credit on their bill.

The attorney also noted that the service address in question was a “weekend/vacation residence.” The cable lying in the creek bed was “not in service” and was “scheduled to be removed.” Further, despite the Stowers’ claims that branches were left laying on their phone line, the attorney claimed Frontier found only “a small branch lying on the 2-pair cable servicing the weekend/vacation residence” and it would be removed “with a pole saw.”

Frontier routinely responds to service complaints filed with the PSC with this declaration:

Pending final resolution and dismissal of this matter, Frontier respectfully reserves all defenses and objections, including without limitation the right to demand strict proof of each and every allegation of the Complaint not expressly admitted in this Answer.

WSAZ-TV in Huntington, W.V. reports Frontier’s landline service in the state is deteriorating, and Frontier admits its rural phone service is “unsustainable.“ (2:41)

Starry, Inc., a fixed wireless internet provider, this week announced it has won 104 licenses in the FCC’s recent spectrum auction, allowing the company to launch service to over 40 million people in 25 states, potentially covering more than 25% of all U.S. households.

“We are excited to take this important next step, augmenting our shared spectrum strategy with exclusively licensed spectrum,” said Starry CEO and co-founder Chet Kanojia. “This gives us the ability to provide access to unlimited, affordable, high quality internet access. We built our technology to be agile and operate across a range of frequencies, so that we could take advantage of opportunities like this to expand and grow our network.”

Starry’s internet service advertises 200/200 Mbps speed without data caps for a flat $50 a month, equipment included. The service will now also use licensed frequencies in the 24 GHz band and reach customers over a point-to-multipoint network that serves multi-dwelling residential units primarily in dense urban areas, but can affordably service other areas with a significant population density.

Starry claims to offer a simple, no bundles, no-long-term contract, no-data caps, no-hidden fees plan of $50 per month, and is up and running in parts of Boston, Los Angeles, Washington, D.C., New York City, and Denver. Customers give Starry a rating of 4.9 out of 5.0 stars in over 100 Google reviews.

Customers like Raphael Peña are fans.

“It’s awesome so far, 300 Mbps down and about the same up,” Pena writes. “The price is right and I can play Battlefield V or any other game with no lag. I just wish you could get this for homes but I’m loving it in my apartment.”

So far, Starry is focused on serving multi-dwelling units like apartments and condos in downtown areas that are increasingly attractive to younger residents. The technology can be extended to serve other customers at an average cost of around $20 per residence. Most of their customers are young cord-cutters or cable-nevers, and Starry only sells internet service, skipping video and phone service. Starry works closely with real estate developers, which may be similar to those canary wharf estate agents, and owners to deploy Starry internet service, sometimes as an amenity to attract new renters and keep current ones happy.

With the latest spectrum acquisition, Starry plans to expand service in phases, starting with Chicago, San Francisco, Houston, Dallas, Seattle, Detroit, Atlanta, Indianapolis, Philadelphia, Miami, Memphis, Phoenix, Minneapolis, Manchester, N.H., Portland, Ore., and Sioux Falls, S.D. But the company also plans to reach cities in the 25 states where it now holds licensed spectrum. How fast it reaches these cities will depend on available funding and subscriber interest:

Starry’s Spectrum Licenses Cover These Communities

Light Reading’s Mike Dano discussed how to build an affordable fixed 5G internet service with Alex Moulle-Berteaux, chief operating officer for Starry, at the Big 5G Event in Denver on May 8, 2019. (16:41)

Dish Network Corporation is in the final stages of talks to acquire assets that include valuable wireless spectrum and Sprint’s Boost Mobile brand for an estimated $6 billion, according to a report quoting anonymous sources published by Bloomberg News, clearing the way for the Department of Justice to approve the merger of T-Mobile and Sprint.

Dish could announce a deal as soon as this week, but sources caution the talks are still ongoing and a deal might still fall apart. A spinoff of Boost is reportedly essential for the Antitrust Division at the DoJ to approve the merger, because the regulator reportedly wants to preserve four national wireless carriers to protect wireless competition in the United States.

Dish has already warehoused extensive wireless spectrum, much of it potentially valuable for the future deployment of 5G wireless networks, but Dish has historically held its spectrum without launching any significant wireless operations. If Dish does acquire Boost, the deal will come with a pre-existing contract allowing the prepaid Mobile Virtual Network Operator (MVNO) to continue to use Sprint’s network to service its customers. Dish would also receive a portion of spectrum held by T-Mobile and/or Sprint with which it could build its own wireless network, but that would require billions in new investments from a satellite TV provider already under financial stress from the impact of cord-cutting.

At worst, the transaction could allow Dish to increase its spectrum holdings while running Boost’s existing prepaid wireless operation as-is, dependent entirely on Sprint for connectivity. If the merger is successful, T-Mobile plans to mothball a significant portion of Sprint’s CDMA wireless network, which could eventually force Boost to find a new host for its wireless services.

Wall Street analyst MoffettNathanson remains skeptical about the T-Mobile/Sprint merger and is even more puzzled by Dish’s reported involvement. The analyst firm released a research note to its clients warning the future of Boost may be bleak:

We’re not sure why that deal is sensible for anyone involved. Dish, remember, already has more spectrum than they know what to do with; what they lack is money and ground facilities, and the deal described on Friday wouldn’t deliver either one. Instead, it would make both problems worse. And while Boost would help provide a baseline revenue stream in return for an upfront purchase price, the fit between Boost and Dish is, at best, superficial. Yes Boost serves a budget conscious consumer, as does Dish Network’s satellite business, but Boost is a mostly urban brand and Dish’s satellite business is an increasingly rural one.

And, more urgently, Boost’s distribution poses a huge problem. Historically, Boost was heavily dependent on Walmart for retail gross additions, but they’ve since lost that distribution channel. They would also, presumably, lose distribution through Sprint-branded stores (and even if, as a condition of the deal, they didn’t, does anyone think that Sprint/T-Mobile store employees would direct any volume to a spun off Boost brand?) That would leave Dish with the brand that has a churn rate as high as 5% per month to be spun off with an inadequate distribution front end, and with no realistic path to replace that front end before the subscriber base was, well, gone.

BTIG’s Walter Piecyk appeared on CNBC Monday to warn investors they are being too optimistic about the T-Mobile/Sprint merger’s chances of being approved. He puts those chances at “less than 50-50.” (5:38)

In contrast, Dade Hayes, contributing editor at Deadline, believes the deal will ultimately win approval from the Department of Justice. He talks to Cheddar about what T-Mobile and Sprint are doing to win over regulators. (8:14)

Third party contractors hired to install fiber optic infrastructure that will deliver Google Fiber internet service in parts of North Carolina are getting an increasing number of complaints from frustrated residents upset with the pace of the work, the mess it creates, and disruptions caused when crews accidentally damage existing utilities.

In Cary, construction crews are testing the patience of residents on Kilarney Drive, who have endured multiple power outages caused by Google’s contractors digging up the streets in the area.

In one neighborhood, crews removed a section of a sidewalk and installed a utility cabinet in its path. In others, cabinets were installed on the wrong side of the street. In some areas, Google’s contractors are still experimenting with shallow dug fiber installations. Some residents reported they unearthed their underground Google Fiber connection after raking their lawns. Others claimed their home’s water service line was cut by construction crews. Last winter brought multiple outages when snowplows dragged up fiber lines buried just an inch or two into the pavement and held in place with foam.

This summer’s service disruptions are coming at inopportune times, Cary residents complain. Recently, crews mistakenly cut through cables providing power, phone, and cable service, knocking out power for four hours and cutting off air conditioning on a 92 degree day.

Watching the crews slowly move through the neighborhood also has some residents concerned.

“It took them a week or two to do a couple hundred yards,” Cary resident Ed Fillback told WRAL-TV. “How long is it going to take to do the town?”

Google Fiber officials shared a response to the disruptive work in a prepared statement.

“Building a brand new fiber network is a big and complex project, and we’re sensitive to the impact construction has on a community. We want to be good neighbors, and do everything we can to minimize disruption, respond to residents, and resolve issues quickly.”

WRAL in Raleigh reports neighborhood frustration with Google Fiber’s buildout in North Carolina is growing. (2:56)