A summary of recent quarterly earnings reports from America’s wireless companies:

Verizon Wireless: Verizon has been uncompetitive in the prepaid market for the last several years, as it focused on its postpaid/contract customers.  No more.  Recent price cutting and the introduction of new contract-free plans that offer unlimited calling or packages of features comparable to contract plans are starting to win Verizon a bigger share of the prepaid market.  But Verizon also successfully picked up 1.2 million new contract customers as well, many switching from AT&T or smaller providers.  That’s the second best result the company has had in the last two years.  Verizon has a whopping 87.4 million people on two-year contracts and 21.3 million prepaid customers — 108.7 million total.  Verizon’s iPhone remains popular with 4.3 million activations last quarter.

AT&T: Growth at AT&T achieved its best results in the last quarter of the year, but the company continues to trail Verizon Wireless.  AT&T added 717,000 contract customers last quarter, and has been behind Verizon adding new customers for more than a year.  The company’s reputation for lousy service and policies that antagonize their customers have driven people to look elsewhere — mostly to Verizon.  But iPhone devotees are remaining loyal to AT&T, with one of every five new iPhone activations happening on AT&T’s network.  The company picked up 7.6 million new iPhone activations last quarter.

Sprint: The iPhone is killing Sprint’s balance sheet, but is bringing the company new contract customers.  Historically, Sprint’s most predictable growth has come from its resale agreements with third party providers and its various prepaid service divisions (Boost/Virgin Mobile).  But with the introduction of the Sprint iPhone (1.8 million new activations last quarter), customers looking for unlimited data or a cheaper plan are finding both at Sprint.  Unfortunately for the company, the wholesale cost of the iPhone is eating heavily into the company’s cash on hand.

Leap Wireless/Cricket and MetroPCS: Both companies are facing increasing challenges sustaining their prepaid service business models because of growing competition from larger providers.  Just about everyone who wants a two year contract-cell phone plan already has one, limiting new growth opportunities.  That is forcing AT&T, Verizon, Sprint and T-Mobile to turn their attention to the still-growing prepaid market, which is attractive for the credit-challenged, occasional users, travelers, and those with lower incomes.  Both Cricket and MetroPCS have traditionally targeted urban markets, where their networks are focused, to sell customers inexpensive service plans with convenient payment options.  But their networks don’t extend outside of suburban and urban areas, so roaming expenses can be higher for customers on the go.  Customers of both companies are increasingly looking to larger providers with more robust network coverage and increasingly aggressive pricing.

That has left Cricket with anemic, but acceptable growth, picking up 179,000 new customers in the fourth quarter.  MetroPCS, however, failed to meet expectations with just 197,410 new customers in the fourth quarter.  Existing MetroPCS subscribers are also leaving at a higher rate.

Verizon Buying Portion of Plateau Wireless’ New Mexico Operations

Plateau Wireless serves eastern New Mexico and portions of western Texas.

The consolidation of America’s wireless market continues with this week’s announcement Verizon Wireless intends to acquire a portion of Plateau Wireless’ network operations in southwest New Mexico.

Verizon will take over Plateau’s 259,000 mostly rural customers in portions of Roswell, Carlsbad, Artesia, Hobbs, and Ruidoso, N.M.

The acquisition covers a service territory of 26,100 square miles.

Plateau says the decision came down to money.  The wireless company needs the infusion of cash a Verizon purchase would bring to help finance high speed wireless upgrades.

The FCC will have to review the transaction before it can be approved.

Not a problem

Who knew America’s largest cable and phone companies were in the broadband shortage business?

Broadband evangelist Craig Settles has been as outraged about this year’s crop of anti-broadband legislation as we have here at Stop the Cap!

He wrote about the implications of allowing state laws to be changed in favor of the big cable and phone companies in a piece published by GigaOM that details where these anti-community Internet bills are coming from:

This push is brought to you by the American Legislative Exchange Council (ALEC), a group of corporate lobbyists who ghostwrite state bills behind closed doors that their pocket legislators then push on the floor. This “model” of anti-muni broadband legislation contains wording that is replicated in these latest bills and newspaper op-eds that attack community broadband.

Many of the nation’s largest phone and cable companies funnel funds into ALEC, and even sponsor wine-and-dine trips for state legislators and their families as part of a comprehensive effort to get their foot (and later proposed legislation) in the door.

Download this archive of ALEC-written and sponsored state legislation/policies affecting telecommunications and IT.  (16mb .zip file)

Few state legislators fully realize the implications of some of these measures, which can hamstring their state’s broadband networks into “good enough for you” broadband, as determined by Comcast, AT&T, Time Warner Cable, Verizon, and others.

ALEC’s dog-and-pony show opens with its corporate backers enhancing their campaign contributions to legislators likely to support their agenda.  ALEC’s lobbyists can then provide “boilerplate” templates for legislation that can be slightly modified and introduced at the state level for consideration.

With a significant increase in campaign contributions targeting friendly legislators, community broadband suddenly becomes a hot topic at the statehouse.

Legislators do not work alone to pass these measures.  As we’ve seen in other states, industry-backed lobbying firms deliver a comprehensive set of support services for the campaign to stop community broadband competition:

1. Talking points for legislators and others opposed to municipal Internet;
2. Professionally produced mailers that can be distributed to every home in a community bashing community networks;
3. Sample letters to the editor intended for local newspapers and easy-to-send letters to legislators asking them to support anti-broadband legislation;
4. Help from seemingly “independent” outside groups that criticize such networks, without disclosing their funding comes, in part or whole, from the cable or phone company.

Settles

Being hoodwinked by the companies that want these kinds of bills passed leave your community’s broadband needs entirely in the hands of providers that have performed so poorly in some cities, local governments have decided they have to provide the service themselves.  Settles illustrates the obvious:

This isn’t about unfair competition by local government. When Wilson’s 12-person IT department can plan, build and manage a network that can deliver speeds (up to a gig) 20 times faster than the best Time Warner Cable offers, that’s competing with superior technology. When Comcast customers switch to Chattanooga’s gig network because of their public utility’s better customer service, that’s competent competition. When tiny Reedsburg, Wis. refuses to compete against the large cable company on price, but beats competitors by offering greater value such as a better selection of Internet services, they compete based on local credibility.

So U.S. communities have to ask themselves, are they going to stay stuck on the train or will they be zipping along at warp speed?

Providers and their industry friends will always argue that you don’t need gigabit broadband speed — what you get from your cable or phone company today is “fast enough.”  Some go as far as to argue current providers are equipped to deliver whatever service customers need, but the demand “just is not there.”

Big Problem.

But as we argued on GigaOM ourselves, the nation’s largest telecom companies have already proven they apparently cannot meet the demand that exists today.  That is because an increasing number of them have started to slap arbitrary usage caps and other limits on their customers’ broadband usage.  Customers don’t want these Internet Overcharging schemes, yet they persist because of what providers effectively admit is a broadband shortage on their networks.

So for a city like Chattanooga, Tenn., which of the following providers should be punished (and potentially even banned) for being in the broadband business:

1. AT&T, which delivers around 6-7Mbps DSL in suburban Chattanooga or up to 24Mbps on its U-verse platform with 150GB/250GB usage limits respectively;
2. Comcast, which delivers up to 50Mbps over cable broadband with a 250GB usage cap;
3. EPB Fiber, which delivers up to 1,000Mbps over fiber optics with no usage cap.

If you are AT&T or Comcast, clearly the provider that must be stopped is #3 — EPB Fiber.  After all, you can’t be in the broadband shortage business when the competitor next door offers a broadband free-for-all made possible from an investment in a superior network that exists to serve customers, not shareholders and investment banks.

Skeptical Science produced this infographic of the Heartland Institute’s funding sources and where the money goes.

The Heartland Institute, a corporate-backed astroturf operation that has steadfastly supported cable and phone companies against the interests of consumers, has threatened legal action against activists, bloggers, and other journalists who published stories about recently-acquired documents connecting the group with major corporate donors.

Among telecommunications companies, both AT&T and Time Warner Cable show up in the alleged donor documents, which Heartland officials claim were obtained under false pretenses and, in some cases, were altered or forged.

Jim Lakely, communications director for the group, was unhappy:

We respectfully ask all activists, bloggers, and other journalists to immediately remove all of these documents and any quotations taken from them, especially the fake “climate strategy” memo and any quotations from the same, from their blogs, Web sites, and publications, and to publish retractions.

The individuals who have commented so far on these documents did not wait for Heartland to confirm or deny the authenticity of the documents. We believe their actions constitute civil and possibly criminal offenses for which we plan to pursue charges and collect payment for damages, including damages to our reputation. We ask them in particular to immediately remove these documents and all statements about them from the blogs, Web sites, and publications, and to publish retractions.

The fact the group implies it will take legal action against those who published stories not to the group’s liking will only draw added attention to the scandal.  Stop the Cap! has tangled with this group several times over the years whenever AT&T and Time Warner Cable’s corporate agendas are being challenged.

The group has steadfastly refused to release their donor lists, at one point telling us, “by not disclosing our donors, we keep the focus on the issue.”

Not really.  That’s because the first rule of politics is to “follow the money.”  Most of these groups do not sing their songs for free, and knowing who paid the songwriter can be very revealing.

The Associated Press found no evidence Heartland’s budget or fundraising documents leaked to the media were faked or altered:

Because Heartland was not specific about what was fake and what was real, The Associated Press attempted to verify independently key parts of separate budget and fundraising documents that were leaked. The federal consultant working on the classroom curriculum, the former TV weatherman, a Chicago elected official who campaigns against hidden local debt and two corporate donors all confirmed to the AP that the sections in the document that pertained to them were accurate. No one the AP contacted said the budget or fundraising documents mentioning them were incorrect.

Heartland can best salvage its reputation and put this behind them by releasing the names of their largest donors, letting consumers decide whether this organization truly represents their interests, or those of the corporations writing the big checks.  In addition to corporate contributions, Heartland’s operations rely on a single person identified only as “Anonymous Donor.” In the past six years, the man has given $14.26 million to the institute, nearly half its $33.9 million in revenue, according to the AP.

Grassroots this is not.

Game over. In the championship of cell phone competition, Verizon Wireless and AT&T have won, and it is now too late for Sprint-Nextel or T-Mobile USA to catch up.

That is the conclusion of Moody’s Investors Service, who has determined competition in waning in the U.S. wireless marketplace.

“AT&T Mobility and Verizon Wireless have better network coverage, wider capabilities and wider profit margins which gives them a competitive advantage that smaller rivals just can’t match,” said Mark Stodden, a Moody’s analyst and author of the report. “It is too late for competitors to invest and catch up; Sprint has the willingness but not the ability, while T-Mobile’s parent Deutsche Telekom, is the opposite.”

Sprint’s ambitious plans for a new 4G LTE network have been suppressed by a lack of enthusiasm by Wall Street investors and bankers, who seem to prefer the much-larger AT&T and Verizon who can sustain increased pricing and are better credit risks.  T-Mobile USA has practically been abandoned by its parent owner Deutsche Telekom, which wants to focus its investments in larger markets in Europe.

Moody’s estimates AT&T and Verizon will account for 81 percent of industry earnings in 2011.  Wall Street has pressured Sprint and T-Mobile to seek consolidation to better withstand their larger competitors.  Before AT&T bid for T-Mobile, rumors of an acquisition of the German-owned company by Sprint-Nextel were common, although the two companies operate with different network technology.  Moody’s predicts troubled waters for Sprint if it should actually seek to acquire T-Mobile, because the FCC seems comfortable with a minimum of four national carriers.

Instead, Moody’s predicts Sprint will seek to acquire smaller regional carriers and prepaid providers like Leap Wireless’ Cricket and MetroPCS.  Neither acquisition would significantly improve Sprint’s service footprint, however, as both prepaid providers operate only in larger markets where they already co-exist with Sprint.