Phillip Dampier

Federal Communications Chairman Julius Genachowski is racking up those frequent flier miles as he travels from one telecom industry trade show to another.  In addition to less-than-thrilling appearances at industry events run by the wireless industry and broadcasters, the chairman is now scheduled to be the headline act at the cable industry trade show to be held June 15 in Chicago.

Instead of devoting time and attention to provider profiteering and the ongoing concentration of the wireless marketplace, Genachowski will be shaking hands with big cable executives, sharing the stage with former FCC chairman Michael Powell, who now runs the National Cable and Telecommunications Association.  (Powell is a classic example of Revolving Door Syndrome: Start a career in public service and finish it using your government connections to cash in with a six figure salary working for the industry you used to oversee.)

While the current FCC chairman gets to bloat his expense account, his performance on behalf of the American people leaves plenty to be desired:

1. His vision of our broadband future is all talk and little action, with National Broadband Plan goals seen as increasingly anemic when contrasted with broadband development abroad;
2. Genachowski has caved on important consumer protections for broadband consumers, most notably with a very-industry-friendly Net Neutrality policy that won him little thanks (Verizon sued anyway);
3. His “white space” broadband plan to carve up UHF broadcast spectrum for mobile broadband comes poorly conceived, infuriating broadcasters who promise to spend millions in a lobbying death match;

Julius Genachowski has plenty of time for speeches, but never enough time to protect consumers who want better broadband, more competition, and lower prices..

At the NCTA convention, Genachowski is likely to deal with the hot potato retransmission consent issue — the one that pits you in the middle of million-dollar squabbles over what pay TV provider gets to carry what networks (and how much you will pay for them).  Also on the agenda: CableCARD 2: Electric Boogaloo, also known as AllVid, the almost certainly Dead on Arrival replacement for the first generation CableCARD set top box replacement that practically nob0dy uses.

Although Google loves AllVid, the powerful entertainment and cable industry is less impressed.  The Motion Picture Association of America considers it a piracy gateway because it lacks sufficient copyright protection mechanisms, and the cable industry has always been wary of standardized set top equipment that could tie down on-demand programming, signal theft protection, and future innovations.

Genachowski is sure to get a warmer reception at the cable show than he got from broadcasters earlier this month, who were downright hostile over his proposal to carve up the UHF TV dial (channels 14-51), selling off “extra” channels for wireless broadband.

The National Association of Broadcasters is starting to get a little worried, not feeling the love the Commission has bestowed on big cable and phone companies who got their lobbying wish-lists largely granted.  Instead, a year after being dragged into an expensive digital TV conversion, the FCC is back for more from television broadcasters, taking back perhaps a dozen or more channels for “white space broadband,” a vaguely-explained plan to enhance the amount of space available for wireless data.

Unfortunately, with thousands of television stations, the FCC will have to find enough channels for everyone to share without interfering with each other.  The FCC still hasn’t released a definitive plan about how to accomplish this, and with big wireless interests suggesting TV stations should slash their transmitter power and share the same or adjacent channels, a lot of stations fear they will be crammed together like a Japanese train at rush hour.

But the wireless industry wants it, even if it drives some stations in densely populated areas off the air completely.  In many other areas, especially in the northeast and southern California, stations might have to cut their signal coverage areas to avoid interfering with stations sharing the same channel in an adjacent city.  Rural residents relying on over the air television could be out of luck, even with a rooftop antenna.

In a bidding war, who would likely win the spectrum up for sale?  AT&T, Verizon, and perhaps some large cable companies looking for enhanced wireless services to sell.  No wonder the NAB is worried.  The FCC could favor selling spectrum out from under your local stations and sell it to their biggest competitors in the pay television business.

Consumers should be concerned as well.  Should today’s biggest wireless carriers scoop up “white space” frequencies, it will do nothing to bring enhanced competition or lower prices.  It will just lock up even more spectrum for a wireless industry that threatens to become a duopoly.

Instead of flying all over the country to attend trade shows and shake hands with industry leaders, Chairman Genachowski should be spending more of his time looking for creative, effective solutions to enhance competition and protect consumers, not simply throw them under the bus for the benefit of a handful of industry players already too large for the common good.

Verizon Communications formally closed its acquisition of Alltel in January 2009, but some former customers are only now feeling the impact as they transition to… AT&T.

That’s right, AT&T.

Although Verizon acquired the bulk of Alltel’s national customer base, the federal government ordered Verizon to sell off its future Alltel customers in communities where the company would likely be the overwhelmingly dominant player.  Verizon sold off most of these orphaned customers, numbering over a million, especially in the Mountain Time Zone, to AT&T.

The transition from Alltel to AT&T would be a bumpy one because the two companies use different wireless technologies, meaning every customer would have to be provided with a new phone.  Alltel’s customers remaining with Verizon didn’t experience this, because both companies use CDMA technology.

AT&T agreed, as part of the deal, to supply every one of its new postpaid/contract Alltel customers with brand new GSM phones (although AT&T was unwilling to provide free advanced smartphones like Apple’s iPhone).  Prepaid customers were less lucky — they only received discounts off new phones.

Stop the Cap! has talked with more than a dozen affected customers in Arizona, New Mexico, Michigan, Utah, Wyoming, Iowa and Colorado about their experiences as they transition to AT&T service.  With AT&T now proposing to merge with T-Mobile, which could also mean some new phones for T-Mobile customers, we wanted to learn what customers thought about being moved from one carrier to another, what their experience was before the transition and after, and whether they intend to stay with AT&T.

Our panel included a young man from Utah who used his phone at home and outside of the state as he performed mission work for the Mormon Church in rural Florida.  We also spoke with a retired couple living in Arizona who chose Alltel because of their unlimited calling circle option to stay in touch with friends and family in Minnesota.  Also participating: a travel agent in Michigan, a realtor in New Mexico, a self-employed contractor in Colorado, a farmer in Iowa, and several others who shared their stories with us in e-mail.  By mutual agreement, we’re keeping their last names private because some have pending disputes with AT&T.

Breaking the News: Alltel Sells Out Their Customers to Verizon

When Karen, a realtor from New Mexico first heard word that Alltel was selling out to Verizon, she wasn’t sure exactly what that meant.  There was considerable confusion in her part of southern New Mexico mostly because the local media does a poor job of covering telecommunications stories.

“In New Mexico, everything in the media is centered around what is going on in Albuquerque and everything else is given little attention, except in the local newspaper,” Karen says.  “But whether you are in Las Cruces or Roswell, the quality of the story depends on the quality of the poorly paid reporter.”

Karen was not worried about the sale at first, because she was aware Verizon had a good reputation for cell phone service.  She had originally selected Alltel because they had good rates and friendly customer service.

“If I ever had a problem with my phone, Alltel would always fix it, even if it was out of warranty,” Karen explains.  “That meant a lot to me because they didn’t have to do that, but it was why I always renewed my contract.”

Heath, who runs a home-based contracting business in southern Colorado, didn’t like what he was hearing from the start.  Neither did Marion and Will, a retired couple living outside of Phoenix.

“We had our dealings with Verizon back in Minnesota when we lived there and we never liked them because they cost too much,” Will says.  “Alltel was a great choice for us because they had a calling circle plan that let you make unlimited calls to certain numbers, and we talked with our daughter back in Minnesota daily using our cell phone.”

Confusion about the deal only got worse when Alltel (and in some cases Verizon) notified our panel members they would not be Verizon customers after all — they were being sold off to another cell phone company.

Alltel -> Verizon -> AT&T -> Frustration

Micah, our reader in Utah first contacted us more than a year ago to express his confusion about why he was not only losing his Alltel account, but now he was somehow ending up as a customer of AT&T, a carrier he definitely wants nothing to do with.

“I figured I could at least live with Verizon because they are everywhere, but as I started performing my mission work for the church in rural central Florida, I learned from my parents I was actually going to end up a customer of AT&T, something I definitely never wanted,” Micah says.  “AT&T is terrible in Utah and worse here — nobody wants AT&T unless you are in Orlando or Daytona Beach.”

Alltel Markets Sold to AT&T (click to enlarge)

“At first we thought, cool, new phones for everyone,” Shanie told Stop the Cap! from her home in Muskegon, Mich. “AT&T has been promising major expansion of service here in western Michigan since they notified us they were taking over for Alltel, but then we started learning the details.”

While Shanie’s family of four would be given four new phones, their choices of new phones were limited, although AT&T called them “comparable.”  Many of AT&T’s smartphones were not covered, even if families already owned smartphones purchased from Alltel.

“We also discovered if you wanted one of these advanced phones, it meant a new two-year contract with AT&T, effectively forcing us to stay with them longer,” Shanie says.

Jed, a farmer outside of Sioux City, Iowa says AT&T did a poor job keeping him informed.  Jed stopped receiving all communication from Alltel (other than a bill) and never heard a word from AT&T.  Instead, one of his neighbors warned him that his Alltel phone was going to quit working by the middle of May.  Jed was upset because the deadline for him to choose a new free phone had passed and he never had the opportunity to make a choice, never having been notified about any of the changes.

“The newspaper might have said something about it, but we don’t get the paper here and nobody has much time to spend watching television,” Jed shared.  “We would have thought AT&T would have notified us, but they apparently forgot we were here.”

Last week, a new phone arrived from AT&T in the mail, unsolicited.

“What a way of doing business — we thought at first it was some sort of fraudulent purchase and we almost didn’t accept it from the driver,” Jed said.

AT&T has been sending out new phones all month to customers across several states, encouraging them to call and activate them on AT&T’s network.  Once customers do that, their old Alltel phones will quit working.  That was a problem for Shanie’s daughter at college in Grand Rapids.  When mom activated her phone, the primary one on the account, her daughter’s Alltel phone stopped working.

“AT&T has you call a toll-free number to activate the phone, but first they require y0u to accept the terms and conditions for doing business with AT&T, which can include contract extensions for some people,” Shanie said.  “I had no idea activating my phone would end service on all of the other Alltel phones on the account.”

Alltel customers in these states had new AT&T phones shipped to them on this schedule.  The second date refers to the service transition cutoff date:

Bailing Out for Alternatives

Jody, a soon-to-be-ex AT&T customer in New Mexico, says there was plenty of fine print to wade through when he prepared for the switch from Alltel, and he didn’t like what he saw.

“AT&T is very tricky about how they handle customers who want to depart Alltel and avoid becoming an AT&T customer,” Jody says.  “You cannot cancel your Alltel contract and avoid an early termination fee, but you can cancel AT&T within 30 days of switching and escape a hefty exit fee.”

Indeed, AT&T’s transition website says Alltel customers who want to switch providers will face an early exit penalty as long as their Alltel phones remain active.  Those who switch and activate their new AT&T phones get a 30 day window to drop AT&T and avoid an ETF:

If, after moving to AT&T service, you choose to discontinue your AT&T service, you will have a 30-day period to opt out of your AT&T contract without an ETF. After that 30-day period, standard AT&T terms apply including any applicable ETF.

Old name, New Company

Jody got his new phone and promptly canceled his AT&T service.  He switched to CellularOne, a company with a legacy name but a very local network.  It has its own cell towers only in northern Arizona and parts of New Mexico.  For everywhere else, it depends on a roaming agreement with… AT&T.

Jody’s CellularOne plan still offers completely unlimited calling, texting, and data for around $80 a month, and that includes AT&T’s nationwide network.

“CellularOne offers a much better deal than AT&T, but you can only choose from three lower end smartphones — no iPhone to be had here,” Jody says.

Heath in Colorado wants out of AT&T as well.

“They drop calls all the time and their network strength is awful in my neighborhood, and I depend on my cell phone and don’t have a landline,” Heath says.  “I don’t know why we had to be stuck with AT&T who apparently de-commissioned Alltel’s towers, which used to deliver a rock solid signal here.”

But not everyone is heading for other carriers.  Sam in Farmington, New Mexico says AT&T is bringing 3G to his community and mobile broadband speeds have been much faster than what Alltel used to deliver.

“AT&T’s data plans are overpriced, but if you can hang onto your existing Alltel plan but use it on AT&T’s network, it’s not so bad,” Sam says.  “Unfortunately, you cannot upgrade to an iPhone and keep Alltel’s plans — you have to pick one of AT&T’s.”

The Future for T-Mobile Customers

Although T-Mobile shares the same GSM network technology AT&T uses, the two companies have different frequency allocations for their respective networks.  T-Mobile customers seeking access to AT&T’s network will probably need new phones to access it. While AT&T claims T-Mobile’s own largely urban network will supplement AT&T’s own coverage, customers may need new equipment for that to be true as well, unless AT&T co-locates their own cell antennas on T-Mobile towers.

Former Alltel customers tell Stop the Cap! AT&T didn’t offer the latest and most popular phones for their swap, and some customers too far away from an AT&T store had to get a new phone without being able to try it.  AT&T allowed customers to exchange phones within 30 days, which helped some of our readers, but most felt the entire idea of being forced to switch to AT&T an inconvenience.  Most were also disturbed that one of the competitors in their area was disappearing, and considering Alltel served largely small cities and rural areas, there was already a lack of choice for most.  In total, three of our readers are staying with AT&T, two left for CellularOne, one chose to switch to a prepaid plan, and the rest went with Verizon after all.  If Alltel were still around, every customer we talked with for this piece would have stayed with them.

Sprint CEO Dan Hesse has declared war on the proposed merger of AT&T and T-Mobile, suggesting it would result in a nationwide cell phone duopoly that will stifle innovation and eliminate competition.

“If AT&T is allowed to swallow T-Mobile, competition will be stifled, growth will be stifled and wireless innovation will be jeopardized,” Hesse told attendees at the Commonwealth Club of California Friday.

Sprint’s announced opposition to the proposed merger came during a speech that was supposed to be about the company’s environmental initiatives, but Hesse opened his remarks warning of the dire implications should the nation’s second largest wireless carrier absorb the fourth — T-Mobile.

Sprint CEO Dan Hesse delivers remarks at the Commonwealth Club of California – Friday, April 15, 2011. This edited clip covers Hesse’s remarks regarding the proposed merger of AT&T and T-Mobile. (12 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Sprint has signaled it is willing to spend lobbying dollars to fight the merger in Washington, where it faces a review by the Justice Department and the FCC.  The declaration of war by Sprint did not go over well at AT&T, where the company’s top lobbyist Jim Cicconi trotted out Hesse’s prior statements to use against him in a company blog post:

As recently as last October, Mr. Hesse said the wireless industry is ‘hyper competitive‘.  The month prior, his CFO talked about how ‘tough‘ retail competition is in the wireless market, citing at least six major competitors.  In February of last year, Mr. Hesse said, “M&A is absolutely a way to get the growth in the industry, if a particular transaction makes sense for anybody.”  He went on to say, “I think consolidation will be healthy for the industry, some consolidation. It is, needless to say, very competitive.”  And in January of last year at a Citi Global Conference, Mr. Hesse said, “Well, there is no question that we have an extremely competitive wireless industry in this country and that the pricing is getting much more aggressive.”

Given that Sprint is a major competitor to AT&T in the hyper competitive wireless market Mr. Hesse describes, no one should be surprised that they would oppose this merger.  But it is self-serving for them to argue that the highly competitive wireless market they cited only months ago is now threatened by the very type of transaction they seemed prepared to defend previously.

Sprint was reportedly interested in pursuing a merger with T-Mobile before AT&T sealed their own deal with the German telecommunications company.

Hesse

Cicconi’s remarks about a “hyper-competitive” marketplace conflict with marketplace reality:

• A combined AT&T/T-Mobile enterprise would control 42 percent of the American wireless marketplace;
• Verizon Wireless would control 32 percent;
• Sprint would maintain third place with a distant 17 percent;
• Every other carrier combined (Cricket, MetroPCS, Alltel, and other regional players) would have just 9 percent.

In fact, after Sprint, other carriers AT&T routinely cites as “serious competition” individually have just three percent or less of the American market.

Hesse told his audience that besides concerns about innovation and price, also-ran carriers other than AT&T and Verizon are likely going to get stuck with less advanced handsets and face little or no access to latest generation iPhone and Android smartphones, often made available exclusively to larger carriers.

“Whoever the supplier is, you can say, ‘Hey, I’ll take all of your production,'” Hesse said. “They could restrict our access to some of the cool devices.”

Hesse predicts his company will ultimately not be the only one opposing the merger.  But smaller carriers have had little to say since the merger was announced.

Green River, Rock Springs, and other communities served by Wyoming.com

Wyoming is one of America’s most broadband-challenged, least populated states.  With just over 560,000 residents spread across its often mountainous terrain, broadband service is nothing to take for granted.  Larger communities have limited access to Qwest DSL and cable broadband, but large sections of the state rely on independent wireless providers as their only choice, or they find no broadband service at all.

In this spartan digital world, many residents are surprised Wyoming is criss-crossed by national fiber-optic lines moving traffic across the country.  It’s just that in most instances, individuals are not allowed to access it.

Wyoming.com, a privately-owned Wireless ISP, wants to expand service to Farson and South Pass City — two communities further north that have no hope of getting anything beyond dial-up or satellite fraudband service.  The commercial provider, working with the administrators of the fiber network, has access to federal grant money to expand service to unserved communities, and improve it in underserved areas like Rock Springs.  But that cannot happen if the venture is refused access to a 48-strand “middle-mile” fiber-optic line financed by public dollars and managed by the Joint Powers Telecommunications Board — a partnership between the Green River City Council and Rock Springs local government.

The notion Wyoming.com could get access to a taxpayer-financed network ruffles Tom McCullough, the city’s liaison to the Joint Powers board.  He’s opposed to allowing any government resource to benefit the public at the expense of the local cable monopoly — Sweetwater Cable TV, which doesn’t even serve most of the areas that would benefit from enhanced Internet access.  McCullough argues it violates a 2007 Wyoming law that prohibits public broadband projects when private providers provide access to similar services anywhere within the boundaries of a city or town.  The law came in response to a public broadband project undertaken in Powell that upset the state’s cable and phone companies.

If residents want access to the fiber network they paid for, they have to visit Western Wyoming Community College or the Sweetwater County Library System and use public terminals there.

McCullough so dislikes the fiber project, he has tried to disband the Joint Powers Board that manages it twice, suggesting he has enough support to sell off the entire network to anyone interested (presumably at a substantial discount.)

Shea

Local residents who remain stuck with dial-up or who live outside of Sweetwater Cable’s service area are furious.

“There are some types around here who can’t see past Rush Limbaugh — anything the government does is automatically bad and must be taken down, even if taxpayers paid to build it in the first place,” complains Stop the Cap! reader Sue who lives in Farson.  “Farson has nothing to do with Sweetwater Cable, but because a handful of politicians are looking out for the cable company, worried Wyoming.com is going to get one-up on them, that means we can’t have broadband.”

Steve Shea, chairman of the telecommunications board, is unimpressed with McCullough’s arguments as well, and accused him of allowing his personal friendship with Sweetwater Cable TV’s owner — Al Carollo — to cloud his judgment.

Shea says Wyoming’s local governments are often fiercely protective of locally-owned businesses, and told the Green River Star the Board has historically faced the attitude that “local business deserves a monopoly, no matter what.”  Sweetwater Cable TV is locally owned and operated.

In fact, Shea says original designs for the fiber network were to provide fiber-to-the-home service in the area.  Since a national fiber optic cable was already running adjacent to the community, getting a connection to it was relatively simple.  Extending service to individual homeowners was another matter.  Political opposition to “government broadband” and demagoguery about its cost and implications from private providers ultimately killed the project.

Shea documented his experience as commercial providers and their dollar-a-holler industry-connected supporters fought the fiber project:

• Opposition comes from everyone in the Telecom business;
• Opposition will be in your face constantly;
• Opposition will never run out of lies;
• Opposition is ready to strike at any time and at any place;
• Opposition will engage in back-room politics against you;
• Opposition will try to get Power Brokers and Influentials on their side;
• Opposition will spend as much money as needed to defeat you.

Local cable and wireless providers engage in a tangle in southwestern Wyoming

As Wyoming’s broadband rankings slip further and further behind much of the rest of the country, Shea hopes attitudes about the fiber network have changed, especially when residents learn Sweetwater Cable was offered access to the network as well, and they declined.

Shea shared that the long history of opposition to the project started with suggestions wireless broadband was better than fiber, or that broadband over power lines could do the same or better than fiber networks.  He even battled contentions that existing broadband networks provided “fast enough” service for Wyoming.  Today, it has extended to allowing a private company to engage in a public-private partnership.  The other providers are still opposed.

“You have to refute these arguments over, and over, and over again. Your opposition will oppose you at every corner, and will call in all of their political favors to derail your fiber project,” Shea writes.

“It’s Wyoming’s version of North Carolina,” Sue writes from her Hughes Satellite address.  “Sweetwater Cable doesn’t want access to the fiber themselves, and they want to make sure you don’t access it either, even though the family I have down there tells me their cable Internet service sucks because the cable company can’t handle the traffic.”

Sweetwater Cable gets their access from Qwest.

What bothers Sue and some other local residents about the squabble is that it is inherently political and allows an existing, underutilized fiber line to sit mostly unused when expanded broadband is desperately needed in Wyoming.  In fact, some consider it a scandal among special interests.

“They don’t care about better broadband — they only care about their political and industry friends,” Sue complains.  “When will people wake up and realize that whether it is North Carolina or Wyoming, these policies and laws don’t give anyone broadband — they keep us from getting it.”

Shea’s observation that opponents’ use of backroom politics seems to have been right on point.  On Tuesday, as the Board met to discuss Wyoming.com’s proposal, Shea was effectively forced out and announced his resignation after the owner of Sweetwater Cable TV said he contacted an attorney to look at whether Shea’s tenure on the board was legal.

Here today, Gone today. T-Mobile withdraws a prepaid plan hours after sending press releases about it. (Image: TmoNews)

Imagine if your “unlimited” phone line came with a hidden limit — after 50 calls a month, each additional call would take at least five minutes to complete.

In the data world, speed throttles for “heavy users” deliver a similar frustrating experience.  That is what makes T-Mobile’s newly-announced “unlimited” use plans so ironic.  They are not truly unlimited at all.

T-Mobile’s “Even More” plan ($79.99) announced today for their contract/postpaid customers promises unlimited calls, texts, and data sessions with a very big asterisk — after using 2GB of data in a month, the company will throttle your data speed to near-dialup until your next billing cycle starts.

Providers routinely claim this doesn’t represent false advertising because you can still use data services on your phone, as long as you are willing to wait… a… very… long… time….

T-Mobile also managed to take back an announced plan for prepaid customers literally hours after seeding press releases to as many news agencies as possible.

In our copy, “Even More Plus” was supposed to deliver the same features as “Even More,” but at a much lower price — $59.99 per month.  It too was sold as “truly unlimited” for all of five hours before company officials yanked it, perhaps realizing their prepaid plan threw their postpaid/contract customers under the bus — charging them $20 more a month for same plan prepaid customers were to get for less.

TmoNews, home to a number of employees willing to share inside information about T-Mobile’s business, shared a copy of a notification message telling employees to avoid signing people up for the cheaper prepaid plan — it has been withdrawn.  But if customers insist, T-Mobile will agree to let you have the lower price, but only if you call by the end of today.

We noted with interest T-Mobile labels what they sell as “truly unlimited data” as the “$20 (2GB) feature” add-on in their own internal sales system.

Jeff, a Stop the Cap! reader grandfathered on an earlier T-Mobile data plan says it’s classic “bait and switch” advertising.

“My data plan offers 5GB of usage before the speed throttle kicks in, and now T-Mobile is advertising a 2GB data plan that they call ‘unlimited’,” Jeff notes. “A T-Mobile rep actually tried to tell me the new plan was better than the one I have now, which is the kind of new math that will make T-Mobile’s marketing department fit in real well with AT&T if this merger is approved.”