Phillip Dampier

It is no secret that there is an urban-rural broadband divide.

The market-driven, private enterprise broadband landscape delivers the best speeds and service to urban-suburban areas, particularly those in and around large cities, short-changing rural communities.

This is true regardless of the technology: the fastest fiber optic services are delivered in large population centers, and wireless speeds are fastest there as well. But as the National Telecommunications and Information Administration has discovered, the further away you get from these urban sectors, the poorer the service you are likely to get.

The NTIA’s findings present a significant challenge to phone company claims that rural customers would be better served with wireless broadband instead of spending money to support and upgrade landline infrastructure, which supports DSL and is upgradable to fiber optics.

The NTIA finds these rural wireless networks to be severely lacking:

Not only are far fewer rural residents than urban residents able to access 4G wireless services (i.e., at least 6Mbps downstream), but a further divide also exists within rural communities. For wireless download services greater than 6Mbps, Very Rural communities have approximately half the availability rate of Small Towns, and Small Towns have about half the availability rate of Exurbs (10, 18, and 36 percent, respectively).

This represents nothing new. AT&T and Verizon have shortchanged their rural customers with catastrophically slow DSL service (or none at all) for years:

For wireline download service, Very Rural communities also have the least availability of all five areas. Though a rural/urban split continues to be useful in providing generalized information about availability, a five-way classification uncovers a more refined picture of the divide in broadband availability across the nation. For example, at wireline download speeds of 50Mbps, broadband availability varies from 14 percent (Very Rural), 32 percent (Exurban), 35 percent (Small Town), 62 percent (Central City), to 67 percent (Suburban), even though the overall broadband availability was 63 percent in urban areas compared to 23 percent in rural areas. In addition, wireline and wireless broadband availability, particularly at faster speeds, tends to be higher within Central Cities and the Suburbs compared to everywhere else.

Why the disparity? It is a simple case of economics. Wealthy suburbs can afford the ultimate triple play packages, so providers prioritize the best service for these areas, even above less costly to serve urban centers. Rural residents either get no service at all or only basic slow speed DSL. The Return on Investment to improve broadband is inadequate for these companies in rural areas.

Source: NTIA

The same is true with wireless 4G service. Rural areas struggle for access or endure poor reception because fewer towers provide service away from major highways or town centers.

The NTIA observed wireless download speeds of 6Mbps or more were available to 90% of urban residents, but only 18% of small town residents. Wireless upload speeds of 3Mbps or greater were found in only 14% of small towns.

Dee Davis, president, Center for Rural Strategies, based in Whitesburg, Va. said the implications were clear.

“The market’s always going to go to the well-heeled communities,” Davis observed. “It’s going to go to the densest population.”

Folks in rural communities end up paying more for a lower level of service, Davis said.

“That also means that they don’t get the same chance to participate in the economy,” Davis added. “They don’t get to bring their goods and services to market in the same way. They don’t always get to participate.”

The economics of cutting off rural landlines delivers most of the benefits to providers, and assures decades of inferior service to consumers.

Economic market tests, including Return on Investment, that impact rural broadband availability will not disappear if AT&T and Verizon abandon their rural landline networks. While cost savings will be realized once rural wired infrastructure is decommissioned, there is no free market formula that would encourage either provider to pour investment funds into rural service areas. For the same reasons rural customers are broadband-challenged today, their comparatively smaller numbers and economic abilities will continue to fail investment metrics for innovative new services tomorrow.

The primary reason broadband speeds are lower in rural areas is inferior network infrastructure. Providers argue it does not make economic sense to invest in network upgrades to boost speeds for such a small number of customers. While wireless technology can be cheaper to deploy than the upkeep of a deteriorating landline network, it is not cheap or robust enough to deliver comparable broadband speeds now available in urban areas, especially as broadband usage continues to grow.

Verizon’s chief financial officer Fran Shammo admitted as much during remarks at the at JPMorgan Global Technology, Media and Telecom Conference in May:

If you recall, way back I guess about two years ago we did a trial with DirecTV in Erie, Pa., where we did broadband on the side of a house and offered a triple-play, if you will, which consisted of broadband, voice, and linear TV provided by DirecTV.

What we found was people were adoptive to the broadband; but because of the consumption of broadband through that LTE network, it was really detrimental to the spectrum and to the network performance. Because they used so much data, it soaked up so much of the spectrum.

So what we felt was LTE for broadband works in certain rural areas, but you can’t compete LTE broadband in those dense populated areas because you can’t — first of all, you can’t match the speed with a 50-megabit or a 100-megabit delivery between cable and FiOS and U-verse. And you literally don’t have enough spectrum to be able to use that much consumption.

So what we felt was by partnering with the cable companies, and delivering our LTE network with voice and data, and having that hardwired connection into the home was a better financial way to do it than trying to go LTE broadband. Because we just didn’t see where the spectrum could hold up to the volume that would be demanded.

Without rural cable companies to partner with, Verizon’s decision to move rural broadband to wireless guarantees rural Americans will not benefit from ongoing speed and capacity upgrades that are necessary to support the evolving Internet.

Optimum Wi-Fi is available from thousands of “hotspots” across New York, New Jersey and Connecticut. You can find them by starting your Wi-Fi device and viewing the available networks in range. The network name will be ‘optimumwifi’.

Cablevision broadband subscribers may soon get free Optimum Wi-Fi service on New Jersey commuter trains and inside railway stations, if the NJ Transit board approves an agreement with the cable company.

On Wednesday, the board will vote on a 20-year contract with Cablevision to build and maintain a wireless network entirely at the cable company’s expense and offer NJ Transit free use of its facilities to assist in its operations.

With more than two-thirds of all rail commuters using Internet service during their travels, the network will vastly improve Wi-Fi access and offload data traffic from nearby cellular towers.

Providing Wi-Fi on trains has proved more difficult than Cablevision and the transit group originally thought.

The NJ Transit system first issued a “request for proposals” from interested Wi-Fi vendors back in 2010. Three years later, the transportation agency finally chose Cablevision over Illinois-based RAILband Group.

Cablevision has also been dragging its feet installing Wi-Fi on the Long Island Railroad and Metro North, despite agreeing to offer service by 2011.

“Wi-Fi on the trains is complicated,” explained Tad Smith, Cablevision president of local media.

On a March 2013 conference call with Wall Street analysts, he admitted the service is still not up and running, but should be sometime in the future.

“We are in active, productive, very positive conversations with the trains,” said Smith. “I am optimistic for the future.”

The project in New Jersey is not anticipated to be complete until 2016. Wi-Fi will first be made available in railway stations. Individual railway cars will then gradually get the service.

Cablevision now provides its Optimum Wi-Fi service as a benefit exclusively for subscribers. Non-subscribers are limited to three 10-minute sessions per 30-day period, with a further limit of one 10-minute session per day.

The MTA required Cablevision to provide “reasonable” access to non-Cablevision subscribers, which may include daily, weekly, or monthly access passes at an additional cost. But no pricing or further details are now available.

NJ Transit is the nation’s largest statewide public transportation system providing more than 895,000 weekday trips on 240 bus routes, three light rail lines and 12 commuter rail lines. It is the third largest transit system in the country with 165 rail stations, 60 light rail stations and more than 18,000 bus stops linking major points in New Jersey, New York and Philadelphia.

An older Comcast Wireless Gateway (Model 2)

Comcast customers may soon find themselves providing free Internet access to other Comcast customers under a new initiative announced today that will turn millions of homes into Wi-Fi hotspots.

The “xfinitywifi” project will activate a second 15-25Mbps Wi-Fi signal from Comcast’s XB2 and XB3 wireless gateways that any Comcast broadband customer can reach as long as they stay within 250-300 feet of the gateway.

“We’ve been able to add certain feature functionality to the firmware of our devices,” Tom Nagel, senior vice president of business development, told CED. “The way its architected is we sort of logically split the modem in two. On the private side, you still get the same things. You can do your own security, you can manage, you can do port forwarding and all the things that no one really understands but are available to you. On the public side what happens is it’s logically a separate network. We actually provision a separate service flow to that cable modem for the public side. If that public side uses up what we’ve given them, there is no getting from someone else.”

In simplified terms, Comcast is opening up a second dedicated Internet connection for its public Wi-Fi service that will not share your existing broadband service. The two networks will co-exist from the wireless gateway, and although the available bandwidth cannot be combined to increase connection speed, customers do have the option of connecting various wireless devices to either the home Wi-Fi or public Wi-Fi connection. The public Wi-Fi service is exempt from usage measurement, caps, and/or consumption-based billing at this time. (Comcast last year suspended usage caps in all of its service areas except Nashville and Tucson.)

In beta tests, Comcast claims customers did not object to sharing their Wi-Fi wireless gateways as long as it did not affect their speed and protected their privacy.

Nagel says the service was designed to address both concerns, noting a 50Mbps Blast customer will still have full access to 50Mbps service, regardless of how many wireless visitors are connected to the customer’s gateway.

“There’s also no leakage of the public and private security functions as well,” Nagel said. “We do two totally different security regimes in the box and there’s really no way to get in between the two. We do provide people the ability to opt out of the service but there have been very few people that have done that, like sub fractions of 1 percent.”

Comcast enables the new service with a firmware upgrade automatically sent to customers when an area is ready for a Wi-Fi launch. Customers in Washington, D.C.; Philadelphia; Boston; Northern Virginia, Chicago, Atlanta; Delaware; and California will likely be among the first to receive the new service.

Some customers do have a problem with Comcast charging them for equipment Comcast is appropriating for its own benefit.

“This is a fine deal for Comcast, which can keep charging customers $7 a month for their gateway and benefit from millions of new hotspots they did not have to build themselves,” said Comcast customer David Tate. “If customers get wise and buy their own [gateway/cable modem], Comcast’s new Wi-Fi service will begin losing hotspots as customers return the equipment to avoid the fee. They should be charging a lot less or nothing at all for equipment if they want us to host their hotspots.”

Tate also believes Comcast will ruin its own service if they attempt to bring usage caps back.

“If Comcast brings back the cap, I wouldn’t want anyone else sharing my connection and I would avoid using Comcast’s Wi-Fi if they counted that usage against my allowance,” Tate explained. “If they exempt the wireless service from caps, customers can just connect to that network to avoid the cap so they would have a big loophole.”

AT&T has once again followed Verizon Wireless’ lead by ending early upgrades for contract customers, making it impossible to upgrade a handset with a full device subsidy until 24 months have passed.

The changes took effect last Sunday. Customers that bought their current device after March 1, 2012 must now wait four more months before they can get a discounted upgrade. AT&T also will only allow upgrades within the same “device category,” meaning a customer with an expiring smartphone contract cannot use their upgrade discount on a tablet device.

Previously, both Verizon and AT&T offered customers loyalty discounts and early upgrades for customers not minding a two-year contract extension. Device subsidies — discounts extended to customers to cut prices on new smartphones or tablets, are anathema to many Wall Street analysts because they can drag down provider earnings. Cell companies quietly win back the subsidy discount within two years by charging artificially higher rates on service plans. But Wall Street does not like waiting for a two-year payback.

Verizon Wireless and AT&T both charge nearly the same rates and have almost identical policies and discounts. When one carrier raises prices, the other quickly follows. In the past three years, both companies have ended a number of discounts and plan features — notably loyalty upgrade credits and flat rate data plans — in moves to cut costs and increase profitability.

Both Verizon and AT&T have spoken positively about the idea of doing away with phone upgrade subsidies altogether, but neither would say current rates would be lowered in tandem with such a move. Wall Street wants carriers to consider maintaining current pricing and ending phone subsidies, which would dramatically stimulate company earnings. A device subsidy on a top of the line smartphone is worth $150 a year — money that would come from the customer’s pocket, not AT&T or Verizon.

Customers who don’t want to pay AT&T’s contract prices will not find a better deal from its prepaid division. AT&T has also announced it is discontinuing several  affordable data plan options effective June 20.

The most-affected plan is AT&T GoPhone’s $25 monthly plan, which includes unlimited texting and 250 minutes of calling. That plan allowed customers to choose between three data packages:

• 50MB for $5/month;
• 200MB for $15/month;
• 1GB for $25/month.

Effective June 20, the only available data add-on for this plan will be the 50MB option. Customers exceeding this will have to re-subscribe for an extra $5 for each renewal.

AT&T’s $50 monthly plan includes unlimited texting and calling. But customers will no longer be able to add data service. Instead, they will have to upgrade to AT&T’s premiere $65 plan, which includes the same features as the $50 plan but adds up to 1GB of data.

AT&T says it will have new options for consumers in the coming weeks, but until then, data customers will often pay an average of at least $15 more per month as the changes take effect.

Canadian telecom regulators have announced new rules that will limit “gotcha” fees for mobile customers caught exceeding their data allowance, push for an end to the ubiquitous three-year service contract, and force carriers to unlock cell phones after 90 days.

The Canadian Radio-television and Telecommunications Commission (CRTC) this week unveiled a new consumer’s Wireless Code governing wireless service. The new rules were introduced in response to more than 5,000 consumer comments received by the regulator over service pricing, opaque wireless contract language, and policies that kept customers locked into long service contracts with expensive exit penalties.

On the surface, the new rules seem to aggressively rein in Bell, Rogers, and Telus — Canada’s three dominant carriers. Among the new provisions taking effect Dec. 2:

• cancel your contract at no cost after a maximum of two years;
• cancel your contract and return your phone at no cost, within 15 days and specific usage limits, if you are unhappy with your service;
• have your phone unlocked after 90 days, or immediately if you paid in full for your phone;
• have your service suspended at no cost if your phone is lost or stolen;
• receive a Critical Information Summary, which explains your contract in under two pages;
• receive a notification when you are roaming in a different country, telling you what the rates are for voice services, text messages, and data usage;
• limit your data overage charges to $50 a month and your data roaming charges to $100 a month;
• pay no extra charges for a service described as “unlimited”;
• you can refuse a change to the key terms and conditions of your contract, including the services in your contract, the price for those services, and the duration of your contract; and
• all cell contracts must use plain language and clearly describe the services customers receive and include information on when and why customers may be charged extra.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/CBC New CRTC wireless rules ban contract break fees after 2 years 6-3-13.flv[/flv]

CBC Television’s “The National” explains the CRTC’s new Wireless Code and how it will impact Canadian cell phone customers. Many are skeptical the CRTC will outwit the wireless industry.  (4 minutes)

“Every day, Canadians rely on wireless devices while in their homes, at their jobs, at school or traveling abroad,” said Jean-Pierre Blais, chairman of the CRTC. “The wireless code will contribute to a more dynamic marketplace by making it possible for Canadians to discuss their needs with service providers at least every two years.  The code is a tool that will empower consumers and help them make informed choices about the service options that best meet their needs. To make the most of this tool, consumers also have a responsibility to educate themselves.”

Canadians pay among the world’s highest wireless charges and most are offered contracts lasting three years. In the United States, two-year contracts are standard. But in both countries, once the contract is fulfilled customers do not receive a discount on services going forward.

“The biggest scam of all is still allowed under the new rules: wireless companies don’t lower your bill if you buy your own phone or fulfill your contract, so you are still paying their subsidy-recovery phone rates either way,” complains Thomas Harcourt in Toronto. “Once again, the wireless companies got the ears of the commissioners and despite thousands of angry Canadians, they watered down our ‘Bill of Rights’ into more bait and switch. You can almost see where the wireless lobbyists had their way with the language.”

Most Canadian wireless carriers welcomed the new rules and the industry participated in hearings contemplating their creation. The new federal rules will supersede conflicting, sometimes stronger provincial regulations, which some observers suggest is a decision in the carriers’ favor.

A closer review of the new regulations exposes several that were tempered, perhaps after industry objections.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/BNN Wireless Code of Conduct CWTA 2-11-13.flv[/flv]

Back in February, BNN talked with Bernard Lord, a representative of the Canadian Wireless Telecommunications Association about what policies they hoped to see in a national wireless “code of conduct.” The industry got most of what it wanted in the final Wireless Code. (8 minutes)

The CRTC did not ban 3-year contracts outright. Instead, they tied contract termination policies and fees to the device subsidy phone companies give customers to cheapen the upfront cost of equipment.

Blais

In Canada, a new smartphone selling for $699 might be discounted to $99 with a three-year contract. For the next 36 months, customers gradually pay back that discount, called a device subsidy, in the form of an artificially inflated rate plan. Most companies amortize that payback rate over the life of the contract. Under the new CRTC rules, companies must recoup their device subsidy within 24 months.

“We didn’t focus on the length of the contract, we focused on the economic relation,” CRTC chairman Blais said. “So, in effect, it’s equivalent to those asking for a ban of a three-year contract without us actually banning three-year contracts, because what we’re saying is the contract’s amortization period can only be for a maximum period of 24 months.”

Carriers can still charge early termination fees during the first two years and can also recoup any remaining unpaid subsidy during the third year as the regulations begin to cover more customers already under three year contracts. Customers who bring or buy their own device can also be charged an early termination fee up to $50 during the first two years of the contract.

Since the rules will apply only to new cellular contracts signed after Dec. 2, 2013, current customers will have to wait before the new Wireless Code fully applies to them. That means wireless carriers can lock you to the old rules if you buy a new phone before December until your contract ends or is amended.

“I think a lot of consumers, if they were thinking of going to the mall and picking up a new phone and signing a contract, they should think twice about doing so,” Michael Geist, the Canada Research Chair in Internet and e-commerce law at the University of Ottawa, told CTV News.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CBC 3-year contracts to end 6-3-13.flv[/flv]

The CBC tells you when you can rip up your three-year contract. But be careful. The new rules don’t take effect until December. Many complain cell phone service is far too expensive in Canada. (4 minutes)

Wireless carriers claim consumers may eventually pay the price for the rules changes, with some hinting they will increase the upfront price for devices or raise rates to cover the shortened window of time they can recoup a device subsidy.

“This requirement does limit consumer choice in the marketplace, and could make a customer’s up-front purchase price of a smartphone more expensive than current offerings,” said Bernard Lord, head of the Canadian Wireless Telecommunications Association (CWTA).

The CWTA also hinted rates may also increase to cover the “major technology development and costs associated with implementing and complying with the new code.”

Ken Engelhart, senior vice president for regulatory affairs at Rogers told BNN a new smartphone under the old three-year contract was typically priced at around $100. Under a two-year contract, that smartphone might cost $300 upfront.

The CRTC’s language banning overage charges for “unlimited” service does not offer consumers any relief from speed throttling. The CRTC says speed limits are acceptable as long as they are “clearly explained” in what the regulator calls a “fair use” policy.

Language that covers contract changes also leaves some wiggle room for carriers to make changes and in certain cases, even increase customer rates while the contract is in effect. The new rules specify customers must make “informed and express consent” to approve a contract change. But the rules might allow a carrier to consider those changes as accepted if a customer does not expressly complain and/or continues to use the phone after a specified deadline. Carriers can also make changes without consumer consent if they involve reducing the rate for a single service or increasing the customer’s usage allowance for a single service.

The limit of data overage charges ($50) and international data roaming charges ($100) are welcomed by most Canadians to avoid bill shock. But most wireless carriers will likely impose usage “toll booths” to avoid uncollectable customer overages. When a customer reaches their limit, they will be given a choice of having their service cut off, opting to cover the overlimit fees, or upgrade their plan.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/BNN Wireless Code of Conduct PIAC 2-11-13.flv[/flv]

BNN talked with John Lawford, executive director of the Public Interest Advocacy Centre about the things Canadians hate most about their wireless phone companies.  (February 11, 2013) (4 minutes)