AT&T and Comcast have successfully delayed Google Fiber’s expansion around the country long enough to finish upgrades that can nearly match the upstart’s speedy internet service.

Nearly four years after Google Fiber announced it would offer gigabit speed in Nashville, most residents still have no idea when they will be able to have the service installed. Although officially announced in January 2015, Google has only managed to connect 52 apartment buildings and a limited number of single family homes in parts of Charlotte Park, Edgehill, Sylvan Heights, Sylvan Park, East and North Nashville, and Burton Hills. In all, less than 30% of the homes originally promised service actually have it, forcing Google to seek an extension from the Tennessee Public Utilities Board, which was granted last week.

Google’s problems originate within itself and its competitors. The company’s contractors have been criticized for damaging existing wiring, tearing up streets and yards, piercing water pipes causing significant water damage, and inappropriate microtrenching, which caused some of its fiber infrastructure in Nashville to be torn out of the ground by road repair crews.

But the biggest impediment keeping Google from moving faster is its two competitors — AT&T and Comcast, successfully collaborating to stall Google, giving the phone and cable company plenty of time to improve services to better compete. Both companies have also aggressively protected their customers from being poached by offering rock bottom-priced retention plans that some claim are only available in Google Fiber-ready areas.

“It’s still complicated,” Nashville Google Fiber Manager Martha Ivester told the Tennessean newspaper. “Building this fiber optic network throughout the whole city is a long process, and we never expected it wouldn’t be a long process. Obviously, we have had our challenges here.”

WZTV Nashville reports East Nashville residents were upset over road work related to Google Fiber that lasted for months, severely restricting residential parking. (2:37)

Google Fiber Huts – Nashville, Tenn.

Google’s ability to expand has been restrained for years, despite an informal alliance with city officials, primarily over pole attachment issues. Much of middle Tennessee is challenged by a difficult-to-penetrate layer of limestone close to the surface, making underground utility service difficult and expensive. Google’s negotiations with Nashville Electric Service (NES), which owns 80% of the utility poles in Nashville and AT&T, which owns the remaining 20%, have been long and contentious at times. To bring Google Fiber to a neighborhood, existing wires on utility poles have to be moved closer together to make room for Google Fiber. In real terms, that has taken several months, as AT&T and Comcast independently move at their own pace to relocate their respective lines.

An effort to use independent contractors to move all lines in unison — known as “One Touch Make Ready,” was fiercely opposed by AT&T and Comcast, claiming it would violate contracts with existing workers and could pose safety issues, despite the fact both companies use independent contractors themselves to manage wiring. Both companies successfully challenged One Touch Make Ready in court. A federal judge ruled that only the FCC could regulate poles owned by AT&T, while another judge ruled the city had no authority to order the municipally owned electric company to comply with One Touch Make Ready.

In August, the FCC issued an order allowing One Touch Make Ready to apply to AT&T’s poles, but NES still refuses to change its policy of relocating service lines one line at a time. The electric utility did not explain its reasons. AT&T also recently eased its position on One Touch Make Ready, but with NES still stonewalling, Google Fiber’s delays are likely to continue.

AT&T Fiber is being embraced by some customers tired of waiting for Google Fiber.

In the interim, both AT&T and Comcast have upgraded their respective systems. AT&T Fiber offers a fiber-to-the-home connection available in some areas while Comcast offers near-gigabit download speeds over its existing Hybrid Fiber-Coax (HFC) network. The upgrades have taken the wind out of Google Fiber for some tired of waiting.

Google has recently tried to speed progress using underground “shallow trenching” for installation, which buries cable as little as four inches deep. The company has amassed more than 24,000 permits to lay fiber under roads and yards in Nashville, which may speed some deployment, but for some it is too little, too late.

“It has been more than a year since we expected Google Fiber to serve us and they won’t tell us when they will get here, so I gave up and signed a two-year contract for AT&T Fiber service instead,” said Drew Miller. “Google Fiber just isn’t as exciting as it was when it was announced because other providers have similar service now and I get a better deal bundling it with my AT&T cellphone service.”

Attitudes like that obviously concern Google, as have reports that customers in Google Fiber-ready neighborhoods are getting very aggressively priced retention offers if they stay with their current provider.

“Comcast cut my bill from close to $200 to around $125 if I did not switch,” said Stop the Cap! reader Olivia. “I also got double internet speed. I don’t need a gigabit, so I stayed with Comcast. If I get close to their usage limit I will switch to Google then.”

Olivia notes her mother had exactly the same services from Comcast, but Comcast would not offer her the same promotion because she lived in an area not yet wired for Google Fiber.

With upgrades and aggressive customer retentions, the longer Google takes to string fiber, the fewer customers are likely to switch for what was originally “game-changing” internet speeds and service.

WTVF Nashville shows off Google’s microtrenching, burying fiber optic cables just a few inches underground. (2:36)

Pricing Comparisons

Google Fiber

• Fiber 100: $50 a month, internet speeds up to 100 Mbps
• Fiber 1000: $70 a month, internet speeds up to 1,000 Mbps, downloads and uploads
• Fiber 100 + TV: $140 a month, internet speeds up to 100 Mbps, 155+ channels, premium channels (HBO, Showtime) available
• Fiber 1000 + TV: $160 a month, internet speeds up to 1,000 Mbps, 155+ channels, premium channels (HBO, Showtime) available

AT&T

• Internet-only: $50 a month for first 12 months, then $60 thereafter. $99 installation fee. Unlimited data costs an extra $30 a month. Early termination fee: $180 (pro-rated). Speeds range from 10 to 100 Mbps
• Direct TV + Internet: $75/mo first 12 months, then $121. Customers pay a $35 activation fee and $30 a month for unlimited data. 155 channels. Speeds vary. 24 month contract required.
• Internet 1000: $90 a month during first 12 months, then $100/mo thereafter. Bundled discount can reduce cost of package to $80-90. Up to 960 Mbps downloads. Early termination fee: $180 (pro-rated).

Comcast

• Performance Starter: $20 a month, increases to $50 after two-year promotion. Up to 25 Mbps.
• Blast!: $45 a month, increases to $80 a month after two-year promotion. 150 Mbps.
• Gigabit (DOCSIS 3.1): $70 a month, increased to $140 after two-year promotion. 940/35 Mbps.

WSMV Nashville reports Google’s microtrenching has been problematic as road crews unintentionally dig up Google’s optical fiber cables mistakenly buried just two inches underground. (2:44)

A complaint from AT&T that the city of Lincoln, Neb. charged “high fees” that have “delayed its residents the benefits of AT&T’s small cell deployments,” was false and misleading, city officials tell the Federal Communications Commission.

AT&T is one of the chief proponents of industry-friendly national pole attachment and zoning reform, urging the FCC to issue a national policy that would override state and local authorities on pole attachment fees, cell tower and antenna placement, environmental/historic/tribal impact reviews, and paperwork requirements.

In short, AT&T wants to improve its chances of getting fast and inexpensive approval to place its wireless infrastructure in localities with time limits on public input and local reviews.

But Lincoln city officials tell the FCC AT&T never even applied.

“A review of our records fails to reveal any permit applications filed by AT&T for such as deployment,” Lincoln officials wrote. “That means that AT&T either deployed without permission and unknown to the city, or AT&T provided misleading statements to the Commission. Lincoln has researched our rates, submitted them to national companies for evaluation, and as a result has signed small cell agreements with three different companies.”

Local officials around the country complain that the wireless industry is misrepresenting a handful of bad actors as indicative of rampant overcharging, and that a profitable, multi-billion dollar industry is seeking a government mandate to force preferential treatment for its infrastructure at below-market rates. Local government officials who hold a position on the FCC’s Broadband Deployment Advisory Committee issued a strong opinion that the wireless industry is getting a government-sanctioned benefit its competitors do not.

“It is unfair to prioritize one industry over all others in pricing the public rights-of-way and public infrastructure access,” the local officials advised. “Equal pricing of private access to public assets is especially a concern where there is no obligation for providers to serve all residents.”

“Devastating.”

“Too big to fix.”

“A bad, recurring dream.”

“An oligopoly.”

“A meritless merger.”

These were some of the comments from objectors to T-Mobile and Sprint’s desire to merge the two wireless carriers into one.

Consumer and industry groups filed comments largely opposed to the merger on the grounds it would be anti-competitive and lead to dramatic price increases for U.S. consumers facing a consolidated market of just three national wireless carriers.

Free Press submitted more than 6,000 signatures from a consumer petition opposed to the merger.

“This is like a bad recurring dream,” one of the comments said, reflecting on AT&T’s attempt to acquire T-Mobile in 2011.

The comments reflected consumer views that mergers in the telecom industry reduce choice and raise prices.

The American Antitrust Institute rang alarm bells over the merger proposal it said was definitively against the public interest and probably illegal under antitrust laws. It declared two competitive harms: it creates a “tight oligopoly of the Big 3 and [raises] the risk of anticompetitive coordination” and it “eliminates head-to-head competition between Sprint and T-Mobile.”

The group found the alleged merger benefits offered by the two companies unconvincing.

“The claim that two wireless companies need a merger to expand or upgrade their networks to the next generation of technology is well worn and meritless. The argument did not hold any water when AT&T-T-Mobile advanced it in 2011 and the same is true here,” the group wrote. “The FCC should reject it, particularly in light of the merger’s presumptive illegality and almost certain anticompetitive and anti-consumer effects. Both AT&T and T-Mobile expanded their networks in the wake of their abandoned merger. And T-Mobile became a vigorous challenger to its larger rivals. Sprint-T-Mobile’s investor presentation notes, for example ‘T-Mobile deployed nationwide LTE twice as fast as Verizon and three times as fast as AT&T.’”

“The Sprint-T-Mobile merger is one of those mergers that is ‘too big to fix,’” the group added. “Like the abandoned AT&T-T-Mobile proposal, it is a 4-3 merger. It combines the third and fourth significant competitors in the market, creating a national market share for Sprint-T-Mobile of about 32%. Next in the lineup is AT&T, with a share of about 32%. Verizon follows with a share of about 35%. These three carriers would make up the vast majority (almost 99%) of the national U.S. wireless market with smaller MVNOs accounting for the remaining one percent. These carriers include TracPhone, Republic Wireless, and Jolt Mobile, Boost Mobile, and Cricket Wireless, which purchase access to wireless infrastructure such as cell towers and spectrum at wholesale from the large players and resell at retail to wireless subscribers.”

A filing from the groups Common Cause, Consumers Union, New America’s Open Technology Institute, Public Knowledge and Writers Guild of America West essentially agreed with the American Antitrust Institute’s findings, noting removing two market disruptive competitors by combining them into one would hurt novel wireless plans that are unlikely to be introduced by companies going forward.

Rivals, especially AT&T and Verizon, have remained silent about the merger. That is not surprising, considering T-Mobile and Sprint have forced the two larger providers to match innovative service plans, bring back unlimited data, and reduce prices. A combined T-Mobile and Sprint would likely reduce competitive pressure and allow T-Mobile to comfortably charge nearly identical prices that AT&T and Verizon charge their customers.

Smaller competitors are concerned. Rural areas have been largely ignored by T-Mobile, and Sprint’s modestly better rural coverage has resulted in affordable roaming arrangements with independent wireless companies. Sprint has favored reciprocal roaming agreements, allowing customers of independent carriers to roam on Sprint’s network and Sprint customers to roam on rural wireless networks. T-Mobile only permits rural customers to roam on its networks, while T-Mobile customers are locked out, to keep roaming costs low. Groups like NTCA and the Rural Wireless Association shared concerns that the merger could leave rural customers at a major disadvantage.

Many Wall Street analysts that witnessed the AT&T/T-Mobile merger flop are skeptical that regulators will allow the Sprint and T-Mobile merger to proceed. The risk of further consolidating the wireless industry, particularly after seeing T-Mobile’s newly aggressive competitive stance after the AT&T merger was declared dead, seems to prove opponents’ contentions that only competition will keep prices reasonable. Removing one of the two fiercest competitors in the wireless market could be a tragic mistake that would impact prices for a decade or more.

The American Antitrust Institute reminded regulators:

In 2002, there were seven national wireless carriers in the U.S.: AT&T, Verizon, Sprint, T-Mobile, Nextel, AllTel, and Cingular. In a consolidation spree that began in 2004, Cingular acquired AT&T. This was followed by Sprint’s acquisition of Nextel in 2005—a merger that has been called one of the “worst acquisitions ever.” At the time of the merger, Sprint and Nextel operated parallel networks using different technologies and maintained separate branding after the deal was consummated. The company lost millions of subscribers and revenue in subsequent years in the wake of this costly and confused strategy.

In 2009, Verizon bought All-Tel. This was followed by AT&T’s unsuccessful attempt to buy T-Mobile in 2011 and T-Mobile’s successful acquisition of mobile virtual network operator (MVNO) Metro PCS. The DOJ and the FCC forced the abandonment of the AT&T-T-Mobile deal. Like Sprint-T-Mobile, it was also a 4-3 merger that would have eliminated T-Mobile, a smaller, efficient, and innovative player that set the industry bar high for the remaining rivals.

AT&T’s rationale that the merger with T-Mobile was essential for expanding to the then-impending 4G LTE network technology also did not pass muster. In August of 2014, two years after the abandoned attempt, Forbes magazine concluded that there would have been “no wireless wars without the blocked AT&T-T-Mobile merger.”

Spectrum customers in western New York are reporting overdraft charges and missing funds from their checking accounts that trace back to double-charging by Charter Communications for cable service.

WIVB-TV Buffalo reports Olean resident Michelle La Voie was stunned when an unauthorized debit showed up in her credit union checking account, which appeared to be a double-bill from Spectrum.

The second charge, a duplicate of the $161 payment she made manually, appeared as a “pending charge” on her electronic statement — a charge she did not authorize and a hold on her checking account funds her credit union could not release unless Charter canceled the transaction.

When La Voie called Spectrum’s billing department, she was told it was a computer glitch.

“They informed me that it was a known issue, that payments that had been made on the 19th and the 20th [of August] there was a computer glitch, and there were people being double-charged,” La Voie told WIVB News.

The “glitch” is in fact an “authorization hold” — one that we are experiencing with our August Spectrum bill payment here at Stop the Cap! 

If a customer pays using a debit or credit card, a vendor like Spectrum can place a temporary “hold” on funds. Often, this hold is the full amount of the transaction, which will temporarily make those funds unavailable for withdrawal until either the company and your bank or credit card “settles” the transaction and transfers the funds, or the hold expires, usually after 5-8 days.

In this case, Spectrum or its credit card processor failed to clear the hold after the transaction was settled, meaning affected customers have twice the amount of their cable bill unavailable in their account until the pending charge expires in about a week.

Customers can check to see if this glitch is affecting their account by logging on and looking for something like this:

Pending Charges

Aug 19 2018  TWC * TIME WARNER CABLE   $151.40

Activity Since Last Statement

Aug 28 2018  TWC * TIME WARNER CABLE  $151.40

The presence of both the “pending charge” and the “settled” charge found under current account activity is unusual, because the pending charge should have been canceled at the same time funds were transferred to pay Charter Communications (d/b/a Time Warner Cable). Instead, $151.40 was withdrawn and sent to Charter while an additional $151.40 is remains unavailable for withdrawal because of the authorization hold not being removed. By September 1st, that pending charge will likely expire. But until then, Spectrum has effectively kept $151.40 of your money hostage.

This can become a problem for customers who keep a low balance in their checking account and expect those funds to be immediately available to pay bills or make a cash withdrawal. Because of the extended hold, customers could unintentionally overdraw their checking account, leading to overdraft fees or an automatic draw from a line of credit, if one is attached to your checking account. La Voie had enough money in her account to avoid an overdraft, but she was concerned about those who don’t.

“I asked are you planning to tell customers this so that they can make sure that they are not overdrawn, or having payments declined?  They said no, we don’t have any plans to notify customers,” La Voie said.

In fact, one of her co-workers did incur overdraft fees because of this problem. Her credit union removed the overdraft fees as a courtesy, but not all banks are likely to be that understanding.

Customers can protect themselves by considering using autopay with a credit card, where authorization holds only affect your available credit line, not money in your checking account. For most credit card transactions, the temporary hold has no material impact, and few even notice the hold. But authorization holds can temporarily put a credit card into an overlimit condition if a customer keeps their card nearly “maxed out,” and exceeding your credit limit will damage your credit score and risk your good standing with the credit card issuer.

WIVB in Buffalo reports some customers in western New York are being “double-billed” for Spectrum cable service. (2:06)

AT&T has laid off more than 16,000 employees since 2011, eliminating thousands of customer service positions while transferring others to cheap offshore call centers where some employees earn less than $2 an hour.

The company is rapidly closing call centers and consolidating others in hopes of wringing “deal synergies and cost savings” out of its operations, including DirecTV, acquired by AT&T in 2015.

Altogether, AT&T has closed 44 call centers, according to the Communications Workers of America (CWA), over the last seven years. Four call centers have been closed so far this year, including one in Harrisburg, Pa., that cost 101 jobs, some employed for over a decade. Many other call centers are being radically downsized, but have not yet been closed.

Betsy LaFontaine, a 30-year veteran at an AT&T call center in Appleton, Wisc. told The Guardian her call center has been slashed from 500 employees to less than 30 today.

“They’re liquidating us,” LaFontaine said. “This is not a poor company. On the shoulders of all its employees, we’ve made the company extremely profitable.”

AT&T took over this DirecTV call center.

While workers in Pennsylvania were offered new jobs if they were willing to move… to Kentucky, other workers would have to be willing to move overseas to keep a job with AT&T. As a cost saving measure, AT&T is offshoring an increasing amount of its customer service operation to India, Mexico, and the Philippines where it pays some English-challenged workers less than $2 an hour.

The savings from layoffs and offshoring are helping AT&T buy back shares of its own stock to help investors grow their stock portfolio’s value. The company has spent $16.45 billion on buybacks since 2013, including $419 million in the second quarter of 2018, the most AT&T has spent on buybacks since 2014.

AT&T has also banked at least $20 billion in savings from the Trump Administration’s corporate tax reform program. CEO Randall Stephenson was among the country’s biggest backers of the Trump tax cut program and was a principal member of the Business Roundtable lobbying group, which heavily lobbied Republicans to pass the measure.

According to the Institute on Taxation and Economic Policy, AT&T actually paid an effective tax rate of just 8 percent between 2008 and 2015, despite recording a profit in the United States each year, by exploiting tax breaks and loopholes. But the thought of paying even less was appealing to Stephenson.

When the measure passed, AT&T’s chief financial officer John Stephens shared the good news with shareholders.

“With the passage of tax reform, we see a significant boost to our balance sheet, reducing $20 billion of liabilities and increasing shareholder equity by a like amount,” Stephens said.

Stephenson

AT&T promised if the Trump Administration passed tax cuts and reduced the corporate tax rate to around 20%, AT&T would create 7,000 new middle class jobs paying $70,000-80,000/year. The CWA argues AT&T instead laid off an estimated 7,000 workers. AT&T disputes this, claiming the company hired 8,000 new employees in the United States so far this year and 87,000 over the past three years. AT&T also claims it promised to pay $1,000 bonuses to 200,000 employees over the next year, tied to the tax cuts. In fact, AT&T’s unions negotiated the bonuses with AT&T before the Trump Administration’s tax reform was passed.

For AT&T employees, mass layoffs come without warning. Managers at the Cleveland call center repeatedly calmed employees that its call center, open for decades, was not targeted for closure. Until it was in 2011. Most employees were laid off or offered positions in Detroit, a city two hours away.

Employees feel insecure, despite recruitment campaigns that stress AT&T is a company where stability is part of the job. In reality, an out-of-state executive can decide to close call centers and other AT&T facilities without ever having to face the employees being laid off. Many of those laid off face the prospect of competing in job markets where single, younger employees are willing to accept much less and do not have the same financial obligations veteran AT&T workers have to their families.

AT&T has increased investment in network upgrades with some of its tax savings, but much of that work is farmed out to third-party contractors. AT&T’s much larger investment is in mergers and acquisitions, acquiring Time Warner (Entertainment), Inc., for $85 billion.

Critics of the tax cut plan predicted the money would be spent on almost everything but job creation and investment.

“They can either create new jobs and capex for expansion or they can create greater shareholder wealth through dividends and stock buybacks. There are some other issues to consider, but that’s the main line of reasoning why corporate tax cuts incentivize buybacks and dividends,” Fran Reed, regulatory strategist at FactSet told US News & World Report.

A typical job offer to work in an AT&T call center. Starting salary is $22,880. Maximum pay is $37,518.

History tells the rest of the story. In 2004, a one-time tax holiday to repatriate foreign earnings temporarily cut tax rates from 35% of 5.25%.

“The primary use of the repatriated funds was to increase shareholder payouts, particularly stock buybacks, rather than increase firm investments such as capital expenditures, research and development spending,” said Stephen J. Lusch, associate professor of accounting at the University of Kansas.

In 2011, the Senate Permanent Subcommittee on Investigations found the 2004 tax break did not deliver the promised benefits of increased employment and investment. In fact, the largest recipients of the tax break downsized and collectively fired more than 20,000 employees, while enriching shareholders and executives:

U.S. Jobs Lost Rather Than Gained. After repatriating over $150 billion under the 2004 American Jobs Creation Act (AJCA), the top 15 repatriating corporations reduced their overall U.S. workforce by 20,931 jobs, while broad-based studies of all 840 repatriating corporations found no evidence that repatriated funds increased overall U.S. employment.

Research and Development Expenditures Did Not Accelerate. After repatriating over $150 billion, the 15 top repatriating corporations showed slight decreases in the pace of their U.S. research and development expenditures, while broad-based studies of all 840 repatriating corporations found no evidence that repatriation funds increased overall U.S. research and development outlays.

Stock Repurchases Increased After Repatriation. Despite a prohibition on using repatriated funds for stock repurchases, the top 15 repatriating corporations accelerated their spending on stock buybacks after repatriation, increasing them 16% from 2004 to 2005, and 38% from 2005 to 2006, while a broad-based study of all 840 repatriating corporations estimated that each extra dollar of repatriated cash was associated with an increase of between 60 and 92 cents in payouts to shareholders.

Executive Compensation Increased After Repatriation. Despite a prohibition on using repatriated funds for executive compensation, after repatriating over $150 billion, annual compensation for the top five executives at the top 15 repatriating corporations jumped 27% from 2004 to 2005, and another 30%, from 2005 to 2006, with ten of the corporations issuing restricted stock awards of $1 million or more to senior executives.