Years ago, phone companies could not simply raise rates willy-nilly.  They had to justify rate increases before an oversight body, usually on the state level.  But after spending millions to lobby state lawmakers to deregulate the phone business, AT&T is set to recoup their investment with a dramatic 25 percent rate increase for landline phone service in the state of California.

Some residential customers have kept basic landline service as a last resort, switching to “measured service,” where customers pay a small charge for every call they make or receive a calling allowance that covers several calls a day.  Measured service can deliver substantial savings over traditional flat rate service.  But now AT&T is targeting these “budget customers” for some stunning rate hikes.

Starting March 1st, AT&T is raising rates by nearly 25% for measured service — from $12.37 to $15.37 a month — a $3 increase.  After your calling allowance is exhausted, each additional local call will cost three cents per minute.

Customers with flat rate service will also pay AT&T $1.05 more — $21 a month (before taxes, fees, and surcharges) for basic flat rate, unlimited local calling.

Best of all (for AT&T), the company does not have to explain or justify the rate increase.  That attitude was evident when reading the Los Angeles Times‘ account of the rate hike, complete with an arrogant, shoulder-shrugging AT&T spokesman:

Lane Kasselman, an AT&T spokesman, said fees for measured and flat-rate calling plans are going up because, well, because.

“Goods and services go up,” he told me. “That’s how our economy works.”

The increase is expected to hit seniors and low income consumers the hardest — they are the biggest constituency of the 10 percent of AT&T customers who choose measured-rate, budget service.  They are also the least likely to have cut the cord on their traditional landline service in favor of a cell phone or competing Voice Over IP provider.

AT&T hints that the rate increase is partly to push customers into multi-service bundles that include phone, Internet, and television service.  By hiking the price of individual services, the bundled price suddenly seems to deliver the best “savings” for customers.

Critics call that price pumping — artificially raising the price of a-la-carte services to create phantom savings for the company’s higher-revenue bundled service packages.

A San Francisco advocacy group calls it something else.

“It’s extortion, pure and simple,” said Regina Costa, telecom research director for the Utility Reform Network, or TURN, a consumer group. “There’s no proof that these price increases are justified.”

Thanks to California’s deregulation of the landline phone business, no proof is required.

A western Indiana fiber-to-the-home project first envisioned more than five years ago is finally moving forward as it wins unanimous approval at the Tippecanoe County Redevelopment Commission.

Lafayette and West Lafayette, Ind., home to prestigious Purdue University, has a broadband problem.  Broadband advocates claim current providers Comcast and Frontier Communications underserve Tippecanoe County.  The former has put western Indiana on the “long list” waiting for service upgrades, and Frontier Communications offers little more than slow speed DSL in the region.  While Purdue arranges for its own Internet connectivity, off-campus students and area residents have had to make due with what the local cable and phone company offers, which isn’t much according to the locals.

“Comcast service has recently improved, but there is a big difference between Comcast service in a city like Chicago and what they deliver this part of Indiana,” shares Stop the Cap! reader Nick Jefferson, who tipped us to the recent developments.  “Frontier is a complete waste of time, and they have alienated customers across Indiana after taking over from Verizon Communications.”

In 2005, Tippecanoe County officials met with Verizon to encourage construction of its FiOS fiber-to-the-home network in western Indiana, as it had planned for the eastern Indiana city of Fort Wayne.  But Verizon sold off its Indiana landline operations to Frontier Communications, which has since shown little interest in expanding the fiber to the home network it inherited.  Now the county is considering financing a fiber network itself, to be ultimately run and administered by Cinergy MetroNet, which already provides service in the Indiana communities of Connersville, Greencastle, Huntington, Madison, New Castle, North Manchester, North Vernon, Seymour, Vincennes, and Wabash.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/WLFI Lafayette Ultra-high-speed net may be headed here 3-21-11.flv[/flv]

WLFI-TV explained the basics of the new fiber-to-the-home network and how it will be paid for in this report from March, 2011.  (2 minutes)

The $40-50 million project would not come out of taxpayer funds directly.  Instead, a novel financing approach would cover construction costs over a 15-20 year period using a combination of MetroNet investor funds and a “tax increment financing” district, which would provide a temporary tax abatement during the period the network is being paid off.  Taxpayer dollars would not be exposed — the financial risks would be to MetroNet and its investors alone.

A fiber to the home service would provide a network capable of gigabit broadband speeds, but historically Cinergy has offered lower speeds to their other Indiana customers, albeit at highly competitive pricing, along with packages of video and phone service.

Larry Oates, head of the West Lafayette redevelopment commission for the project, says the fiber network delivers more than just the promise of better broadband service

“This project could be a great economic development tool,” Oates told The Exponent. “It is up to the businesses and residents who live here to decide what to do with it. We are just facilitating their potential.”

The County Commissioners will decide later whether to give the project a final approval.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/WLFI Lafayette Tippecanoe County moves forward with plans for Fiber to Home 1-9-12.mp4[/flv]

WLFI in Lafayette reports Tippecanoe’s fiber to the home network has gotten unanimous approval from the country redevelopment commission.  (2 minutes)

An Oak Hill, W.V. contractor has said Frontier Communications’ unwillingness to pay a $1.6 million dollar balance is behind a layoff of more than 50 employees who handled cable work and phone installations on behalf of West Virginia’s largest phone company.

S&N Communications laid off the workers indefinitely Jan. 9, telling them the phone company had not paid the contractor.

Frontier Communications issued a statement indicating the “contractual relationship between Frontier Communications and S&N Communications has ended.  Both parties consider such contractual arrangements to be confidential.”  It had no comment about S&N’s claim Frontier had an outstanding balance.

Frontier has experienced several challenges providing phone and broadband service in West Virginia.  A plague of copper thefts, poor service, and a broadband service interruption last Thursday affecting 9,000 residents have all presented problems for Frontier’s customers. On Sunday, a squirrel chewed through a fiber line that disrupted service for hundreds of customers in Brooke and Ohio counties, also knocking out service for Brooke County’s 911 center and sheriff’s office.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WVNS Ghent Telecommunications Company in Fayette County Lays Off Workers 1-11-12.mp4[/flv]

WVNS in Ghent, W.V. reports on the layoffs at S&N Communications.  (1 minute)

Citing “the many enhancements they have launched” in the past year, Rogers Cable has announced an across-the-board broadband rate increase that will cost subscribers an additional $2 a month for Internet service effective March 1, 2012.

Rogers claims the rate increases come as a result of investments in their broadband network and the introduction of SpeedBoost, which delivers a temporary speed increase during the first few seconds of file transfers.

Rogers also claims they have increased monthly usage allowances and download speeds on many of the company’s broadband packages.

The rate increase is not going over well with subscribers, however.

Stop the Cap! reader Nick in Markham, Ontario is one of them.

"No additional charge," except for the $2 rate increase Rogers suggests comes after the addition of "service enhancements" like SpeedBoost.

“Rogers introduced ‘SpeedBoost’ as a ‘free’ feature which we are now apparently/effectively going to pay more for,” Nick writes. “I am really unimpressed with Rogers’ ‘generosity,’ especially respecting bitcaps, considering they are totally arbitrary.”

Nick notes customers in Quebec and western Canada have more generous usage allowances, and often lower bills.

“Shaw customers are getting a much better deal than Rogers’ customers these days,” Nick says. “If Rogers increased prices by $2 and took the caps completely off, I’d gladly pay a little more just to end years of headaches over watching my Internet usage.”

“I am so tired of feeling like my Internet connection is being rationed, and considering my choices have been Bell or Rogers, I think I’ll sacrifice some of the higher speeds and just consider switching to TekSavvy DSL, because it costs less and doesn’t come with Rogers’ stingy caps.”

A Montreal Gazette piece on the Canadian telecommunications industry says stockholders and company executives are doing much better, enjoying major boosts in telecom industry dividends.  The industry enjoyed a 25% boost in stock price + dividend yield over other Canadian stocks over the past 12 months.  The industry also enjoys the benefits a barely-competitive marketplace that offers opportunities for unfettered rate increases:

Canada remains a heavily protected market in telecommunications, which is one reason why consumers don’t get the kind of deals available in other countries.

But in the absence of such [competitive] changes, there’s a strong case to be made that telecom and cable companies will post solid profit growth this year and next.

Canadian taxpayers gift Rogers-owned Macleans magazine $1 million annually, just because.

The Tories running the Canadian federal government are on a mission to slash government spending.  In addition to budget cuts, Ottawa is about to start pink-slipping public service workers.  But executives at Rogers Communications, Canada’s gi-normous media conglomerate can rest easy knowing their corporate welfare payments are still safe from the government axe.

At a time when North Americans are abandoning print media in droves, it’s more than a little odd that Rogers is getting a government handout for a whole mess of magazines the company still prints and sells to an increasingly disinterested public.

It turns out the Canada Periodical Fund exists to throw nearly $71 million a year in subsidies to magazines ranging from the endangered to the ubiquitous.  Among the titles getting taxpayer handouts include those even Americans recognize.  Rogers is getting $1.5 million a year in free money just for printing Maclean’s.  They get the same for Chatelaine, Canada’s version of Reader’s Digest, and Canadian Living.

In fact, more than a dozen well-known magazine titles get a cool million plus from the federal government, just for… existing.

Ironically, Canadian Heritage defends the subsidy program as an effort to ensure “Canadians have diverse Canadian print magazines, non-daily newspapers, and digital periodicals.”  Canadian publishing, much like its telecommunications marketplace, is increasingly about as non-diverse as you can get, as a handful of giant corporations consolidate their ownership of most major print publications.  Transcontinental and Rogers together account for half of the top 50 magazines in Canada.  Smaller titles are fading through a combination of increasing postal rates and decreasing interest on the part of an online-0bsessed culture.

The Ottawa Citizen thinks it has all gotten out of hand:

The central problem with this government program is that big magazines don’t need government help and the little ones aren’t worth it. A really generous observer could see public value in Atlantic Horse & Pony, Modern Dog or Hardware Merchandising, but this is Canadian culture writ extremely small.

The magazine program clearly helps prevent a Darwinian reduction in the astounding number of Canadian magazines. Thus we have Big Buck Magazine ($40,521) a quarterly periodical devoted to deer hunting. Subscribers who enjoy pictures of dead animals might also like Western Canadian Game Warden ($18,626), Ontario Monster Whitetails ($8,488) or The Canadian Trapper ($5,303).

Farm publications are soundly supported, including Canadian Ayrshire Review ($12,319), Canadian Cattlemen ($158,952) and Cowsmopolitan Dairy Magazine ($16,504). It includes no sex tips, by the way. The biggest beneficiary is The Western Producer, a weekly farm newspaper that takes in nearly $1.6 million.

Religious publications also do well, including Canadian Mennonite ($152,957), Mennonite Brethren Herald ($85,590), The United Church Observer ($191,592) and Presbyterian Record ($156,373).

Even the satirical magazine Frank collected $57,517 from the taxpayers, surely one of its best pranks.

[…] The taxpayers might not get much value from the Canada Periodical Fund, but the Conservative government is making the most of it. In the Canadian way, the magazine and weekly newspaper grants have been turned into pork. Local MPs announce these silly little grants, using standard language about how the giveaway contributes to the economy and the diversity of Canadian content.

A few thousand dollars could do wonders for most digital versions of small print publications, all without killing trees and wasting energy delivering them to a dwindling number of readers.  But giant-sized conglomerates like Rogers don’t need the handouts.  Not when the company enjoys a revenue largesse from its current holdings.  You cannot promote diversity handing out checks to companies that would like nothing better than to use the money to merge and acquire their way to an increasingly concentrated media marketplace.  Nobody has proved that better than Rogers Communications.