Promises, promises.  The one thing you can always count on with mergers and acquisitions: the promise what they’ll bring you tomorrow is better than what you have today, but only if you approve the deal.  The concept of forward momentum from change is very compelling when it comes to technology.  The lesson people have to learn is that not all change is good, and not all promises are always kept.  For New Englanders drawn into the transfer of their telephone service from Verizon to FairPoint Communications, the allure of faster broadband certainly sounded good, with promises made in July 2008 that 75% of Vermont would have access to FairPoint DSL service by the end of that year.

[flv width=”320″ height=”240″]http://www.phillipdampier.com/video/WPTZ Fairpoint Announces Huge Expansion 9-30-08.flv[/flv]

This report, aired on September 30, 2008 on WPTZ Plattsburgh (viewable in Vermont) also displayed a company-made sign promising that 100% of Vermont would have broadband service available from FairPoint by 2010.  But the numbers were already in dispute when another station serving Vermont, WCAX in Burlington, reported that same day that just 80% of customers would have access by that time:

[flv width=”368″ height=”208″]http://www.phillipdampier.com/video/WCAX Burlington FairPoint Promises Internet Expansions 9-30-08.flv[/flv]

Why the discrepancy?  After all, the visual material on display at the town hall meeting covered by both stations clearly showed a map claiming 100% coverage.

With the benefit of time, the answer turns out to be that promises made by one company official were not always repeated by others.  Indeed, FairPoint has a history of tempering enthusiasm.  Enthusiasm that sometimes originated from the company itself.

Watch in amazement as the numbers drop and the excuses mount.  As the Bennington Banner quoted a FairPoint spokesman in 2008, the numbers and scope of the actual rollout was considerably smaller than the sweeping improvements being promised:

“By 2010, we hope to have at least 80 percent of households in the state with DSL access,” Fastiggi said. “We hope to have every customer in half of our exchanges to have access by 2010 as well.” According to Fastiggi, though, the expansion does not mean that every house in these towns will receive access to the service. “We’re doing certain areas in each town — nothing we’re doing encompasses the entire town,” Fastiggi said. “I don’t want to say we’re expanding bit by bit, but we are moving neighborhood by neighborhood.“

New Englanders, at the time of these announcements, were hopeful, but skeptical whether or not the company would meet its goals.  They were right to be.

As for those wireless connections promised to the most rural areas of the state, the company did sign a contract with Nortel Networks and Airspan Networks to construct a network based on the aging fixed wireless 802.16d standard. Known as “fixed WiMAX,” the technology is largely being abandoned by many providers in favor of the newer mobile WiMAX standard IEEE 802.16e, which has a lot more bells and whistles.  But the technology FairPoint wants to deploy will function for a basic wireless fixed “broadband” service, albeit a comparatively slow one, operating at 1-3Mbps.

So how is the company doing with its DSL “improvements?”  Not so good.  Since these announcements, the company has fallen behind schedule on virtually everything, and was one of the few providers to actually lose broadband DSL customers during the second half of 2008 as many switched to another provider or simply gave up.  They are set to lose MANY more in 2009, for reasons that will become obvious soon enough.

In yesterday’s story, FairPoint Communications learned that the state utility commissions in Vermont, New Hampshire, and Maine, were underwhelmed by their proposal to take control of telephone service formerly provided by Verizon.  The regulatory authorities in all three states felt state residents would bear most of the risk, and too few rewards in return for approving the deal.  New Hampshire was among the most skeptical.

[flv width=”320″ height=”240″]http://www.phillipdampier.com/video/WMUR Manchester FairPoint and Verizon Plan to Refile Proposal 12-21-07.flv[/flv]

Vermont wasn’t overwhelmed with what it saw either:

[flv width=”320″ height=”240″]http://www.phillipdampier.com/video/WCAX Burlington FairPoint’s New Plan.flv[/flv]

But FairPoint returned to the negotiating table to make additional promises and concessions.  But would they ultimately keep them?

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'If you give us exactly what we want, we might wire your town with fiber optics. If not, there is always Wisconsin.'

The Trojan Horse of the 2000’s apparently comes in the form of spools of fiber optic cable.  Verizon assumes the attractive notion of FiOS, fiber to the home for broadband, telephone, and video programming, is worth sacrificing local oversight.  The company has made it known it does not enjoy what they consider a cumbersome franchising application procedure in Massachusetts.  In a public relations push, Verizon has suggested that giving them quicker approval will guarantee state residents the golden promise of fiber optics.  If the company doesn’t get what it wants, maybe Wisconsin or another state where Verizon is deploying FiOS will:

Ellen M. Cummings, a spokeswoman for Verizon, said that with the struggling economy, the company has to choose where to commit its financial resources. Therefore, it is looking for the quickest return on its investment.

“Here in Massachusetts, it puts us in a predicament. If the company is trying to decide how to deploy money, and Massachusetts is vying against other states, like Wisconsin, where the wait is as little as five days, it definitely puts Massachusetts at a disadvantage,” she said.

Every wired provider is subject to local community licensing, in the form of a franchise, which permits companies to string wires through towns and cities, on poles as well as underground, in return for oversight and a small piece of the action.  Local governments justify franchising to regulate companies tearing up local streets and neighborhoods to maintain their networks, as well as making sure that all citizens within a community are served equitably and that the community benefits from the service.

The cable industry has lived under the franchise system since its inception.

Verizon decided it can’t be bothered dealing with individual municipalities in Massachusetts, and last year tried,  but failed, to replace the local franchising system with a single statewide franchise.  This year they’ve returned with a Verizon-friendly bill that would dramatically tip the scales in their favor, limiting local oversight and reducing their public service commitments.

The companion bills, (S. 1531) by Sen. Steven Panagiotakos of Lowell in the Senate, and House bill (H. 3765) by Rep. Michael Rodrigues of Westport, would mandate that each municipality limit consideration of Verizon’s franchise applications to no more than 90 days, and opens up a number of loopholes that Verizon could use to do an end run around a community and run the clock out, assuring quick approval without making concessions.

At worst, a provision in the bill setting a strict 90 day window for consideration of a franchise application, even if incomplete, ties the hands of municipalities.  Language that restricts the right of municipalities to deny applications gives the upper hand to Verizon, and the back of the hand to consumers.

One of the most common promises local communities extract from any wired provider is a guarantee they will establish wiring policies to equitably reach people throughout the franchise area, not simply the wealthiest neighborhoods, or easiest to wire.  While it has never been practical to insist on 100% wiring coverage, particularly in more isolated, rural communities, most franchise agreements insist on a uniform policy that says if there are a certain number of homes within an area, it must be wired.  Without that assurance, prior experience has shown operators would often “redline” communities, wiring prosperous streets while ignoring others.  Municipalities in Massachusetts want to guarantee that Verizon doesn’t engage in that kind of behavior, particularly after witnessing the company jettisoning “undesirable” customers in three nearby states — Vermont, New Hampshire, and Maine, which were sold off to FairPoint Communications.  No FiOS for them.

In general, more competition is good news, especially when Verizon comes to town with FiOS, which is sure to give the incumbent cable operator a real headache.  But Verizon’s complaints ring a little hollow when considering the company has managed to already obtain franchises in 93 communities across the state, and is literally obtaining new agreements faster than wiring crews can get into communities and start the upgrades.  While there may be a few towns that drag their feet for a variety of reasons, customer demand for FiOS is sure to light fires under elected officials to get a move on.  Doing it fast is not necessarily the same as doing it right.  As our readers are coming to learn, promises made by telecom providers that at first glance sound consumer-friendly turn out to be anything but.

One more reason to believe that:  the state’s incumbent cable operators are also opposing the bills, claiming they extend special benefits to Verizon that they, themselves, have never received. Cable companies on the same side as municipalities on questions of competition?  Of course most of the state’s cable operators are already past the franchising process, and merely return every decade or so for perfunctory rubber-stamp renewals, so green-lighting Verizon’s proposed bills would only expose them to FiOS competition sooner.

Paul R. Cianelli, the president of the New England Cable and Telecommunications Association, which represents the cable companies Comcast, Charter Communications, Time Warner and Cox, but not Verizon, said, “We oppose this legislation.”

“It’s another attempt by Verizon to get a special deal. They are pushing for legislation that would give them an advantage over existing cable providers. And they are attempting to chip away at the authority and powers of the municipalities to grant franchises,” he said.

In the end, we believe Ellen Cummings at Verizon who said it best: “[Verizon] is looking for the quickest return on its investment.”  Unfortunately, that’s not always compatible with the best interests of consumers.

Yesterday, Stop the Cap! examined the rationale for Verizon to spin away hundreds of thousands of customers to a small independent telephone company, FairPoint Communications.  In today’s report, the utility commissions that protect ratepayers in three New England states ponder the proposal.  WMUR-TV in Manchester offers a nice summary of the issues involved, and the Josiah Bartlett they reference isn’t the one from NBC’s The West Wing, but rather the sixth governor of New Hampshire!

1. Would the merger improve the chances for New England’s smaller communities to enjoy better service, particularly with high speed broadband that Verizon never rolled out;
2. Was FairPoint financed sufficiently to handle the dramatic increase in its customer base?

Vermont decided the FairPoint takeover in their state was likely to be unsustainable, with insufficient guarantees that the company would have the money to get the job done.  WPTZ-TV, which serves Vermont, covered the announcement on December 21, 2007:

Unfortunately, as Stop the Cap! readers have come to learn again and again, one defeat doesn’t mean the end of the war. FairPoint had the opportunity to digest the input from state regulatory bodies and return with a new proposal. The question is, would that proposal simply put out small fires started by state authorities concerned about a few isolated factors, or would it be a complete overhaul to provide better guarantees that a FairPoint taking over phone service in three states in 2008 would still be in business in 2009.

Tomorrow, FairPoint has a new plan.

This is the first in a series of articles documenting the trials and tribulations of residents in New Hampshire, Vermont, and Maine when their incumbent telephone company Verizon abandoned them, leaving them at the mercy of an inexperienced, financially shaky, and downright lousy replacement — FairPoint Communications.  This are many lessons to be learned, and we’ll be following what was promised, what went wrong, and why it creates a nightmare for rural and small town America.  Some may wonder why focusing on this story is relevant to our issues.  The reasons:

• Broadband service in rural America is either unavailable, expensive, slow, and/or capped.  Smaller players in the broadband market often lack the financial resources to provide high quality, fast, and flexible broadband service to residents and businesses.
• The hope for competition from Verizon’s advanced fiber to the home FiOS network is dashed when the company abandons the smaller communities it once served to concentrate on more urban service areas.  Those communities will be stuck with second-rate copper or wireless “broadband” options for years to come.  In many of these communities, there is no cable service available.
  
• Some of the astroturfing political groups on the right decry public taxpayer funding of broadband, and accuse municipal networks of being subsidized by taxpayer dollars.  But as you’ll learn, private companies are receiving favorable tax breaks, and FairPoint in particular is being permitted to access $50 million dollars in funding that was originally intended by New Hampshire to be used for improvements in service.  Now that money will go to repay debts incurred by FairPoint at the same time the company paid enormous bonuses to company executives.  Strangely, these astroturf groups are silent about diverted funds finding their way into the private sector.

The sordid story of FairPoint in New England is a timely one, coming just a few weeks after Frontier Communications announced it would be taking on Verizon customers in several states, in numbers that dwarf the existing customer base of Frontier.  Shouldn’t public utility regulators carefully consider the implications for these customers before it gets approval?  What guarantees for broadband will be included, and at what speeds?  Will Frontier’s “acceptable use policy” provision of 5GB of usage per month, currently unenforced, come back to haunt customers later?

We’ll be covering the story in chronological order with lots of video over the coming days.  Pay special attention to the promises made, the realities that would come later, and the current nightmares that have cut off communities from 911 service, forced some businesses to relocate out of state just to obtain telephone service, six week delays for installations, Internet accounts that lost e-mail, and the tale of one woman who literally lives next to the telephone company, but cannot get a service call completed because FairPoint claims they cannot find her address!

When it’s all over, isn’t it well past the time Americans should be asking more from the telecommunications providers that deliver service?  For millions of Americans, when the phone company is your only choice, is this the best we can do?

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