The 'Prince of Wales,' one of Inter-Island Ferry Authority's boats that connect the island to the mainland (Courtesy: Inter-Island Ferry Authority)

Providing broadband to 6,000 residents of Prince Wales Island, located along the western strip of Alaska that borders on British Columbia, Canada is the ultimate challenge.  Parts of the island don’t even have access to traditional landline phone service, relying instead on fixed wireless service.

Residents have complained loudly about the poor quality of phone service on the island for years, particularly when it is provided to the 1,000 residents of Klawock, Craig, and several adjacent communities served by Alaska Communications Systems (ACS).  Ten percent of ACS customers are stuck with fixed wireless, which guarantees no Internet access, and sub-standard phone service.  What perturbs many of them is the fact another phone company’s landlines are within the sight of their homes and communities, but they can’t get service from that company.  Those lines are owned by ACS competitor Alaska Power & Telephone (AP&T), an employee owned utility that serves many areas ACS doesn’t.

Friends and neighbors served by AP&T are happy with their telephone service.  Residents served by ACS are not.

The Alaska Dispatch tells the story:

Every three months Ron Fitch drives five miles down a state highway so he can use a friend’s telephone to monitor his pacemaker.

Fitch, who lives on Price of Wales Island, has a phone at home, but he gets his service via fixed wireless, which is similar to a cell phone signal but is routed through a box mounted in the house. Since you can’t recalibrate a pacemaker over a wireless signal, Fitch makes the drive four times a year.

“Times have changed, and it doesn’t seem right that we can’t get Internet or a fax or anything over our phones,” said Eric Packer, a builder who lives outside Klawock. “It’s like living in the dark ages.”

ACS customers on the island have been complaining about their phone service for years, and for some the frustration is sharpened by the view of lines — owned by ACS competitor Alaska Power and Telephone — running near their homes. Two years ago the Regulatory Commission of Alaska opened an investigation into ACS service on the island, citing numerous customer complaints and a request from Sen. Lisa Murkowski.

With all of the negative press focused on ACS, the company relented, telling the Regulatory Commission it will offer to connect those fixed wireless customers to landline service, but will only pay for up to 1,000 feet of wiring between the nearest ACS junction box and the customer’s home.  ACS will bill customers the balance of costs beyond 1,000 feet if a customer insists on landline service.

ACS is a major recipient of universal service funds which subsidizes phone service in rural areas to keep it affordable.  ACS receives about $4 million a year.  ACS fixed wireless customers on the island pay about $26 a month.

ACS customers perennially without broadband have complained to the Regulatory Commission, according to the Dispatch, suggesting it hurts the island’s economic development.  Some customers have managed to switch to cell phone service and dropped landline/fixed wireless service, and a select few are trying to rely on satellite Internet service, which customers characterize as expensive and slow.

Pricing for landline DSL service from either ACS or AP&T is itself slow and expensive, and AP&T service is usage limited:

ACS promotes the fact their service is unlimited.  Includes local and long distance telephone service.  One year contract term required.  Pricing may be higher in rural areas not specified on the ACS website.

The 1Mbps service tier is currently available in select areas dependent upon local infrastructure.  Each additional gigabyte of usage is pro-rated at $5.00/GB.  AP&T provides wireless broadband in selected rural areas.

Milton, Vermont

Jesse and his nearby neighbors on the west side of Milton are frustrated.  They live just 20 minutes away from Burlington, the largest city in the state of Vermont.  Despite the proximity to a city with nearly 40,000 residents, there is no cell phone coverage in western Milton, no cable television service, and no DSL service from FairPoint Communications.  For this part of Milton, it’s living living in 1990, where dial-up service was one’s gateway to the Internet.

Jesse and his immediate neighbors haven’t given up searching for broadband service options, but they face a united front of intransigent operators who refuse to make the investment to extend service down his well-populated street.

“After many calls to Comcast, they eventually sent us an estimate for over $17,000 to bring service to us, despite being less than a mile from their nearest station,” Jesse tells Vermont Public Radio.  “They also made it very clear that there was no plan at any point in the future, 2010 or beyond, to come here unless we paid them the money.”

Jesse and his neighbors want to give Comcast money, but not $17,000.

For at least 15 percent of Vermonters, Jesse’s story is their story.  Broadband simply remains elusive and out of reach.

Three years ago, Vermont’s Republican governor Jim Douglas announced the state would achieve 100 percent broadband coverage by 2010, making Vermont the nation’s first “e-State.”

Vermont Public Radio reviewed the progress Vermont is making towards becoming America’s first e-State. (January 20, 2010) (30 minutes)
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Gov. Douglas

In June 2007 the state passed Act 79, legislation that established the Vermont Telecommunications Authority to facilitate the establishment and delivery of mobile phone and Internet access infrastructure and services for residents and businesses throughout Vermont.

The VTA, under the early leadership of Bill Shuttleworth, a former Verizon Communications senior manager, launched a modest broadband grant program to incrementally expand broadband access, often through existing service providers who agreed to use the money to extend service to unserved neighborhoods.

The Authority also acts as a clearinghouse for coordinating information about broadband projects across the state, although it doesn’t have any authority over those projects.  Lately, the VTA has been backing Google’s “Think Big With a Gig” Initiative, except it promotes the state as a great choice for fiber, not just one or two communities within Vermont.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/Google Fiber Vermont 3-22-10.mp4[/flv]

Vermont used this video to promote their bid to become a Google Fiber state.  (2 minutes)

Some of the most dramatic expansion plans come from the East Central Vermont Community Fiber Network.  ECFiber, a group of 22 local municipalities, in partnership with ValleyNet, a Vermont non-profit organization, is planning to implement a high-capacity fiber-optic network capable of serving 100% of homes and businesses in participating towns with Internet, telephone and cable television service.  In 2008, the group coalesced around a proposal to construct a major fiber-to-the-home project to extend broadband across areas that often don’t even have slower speed DSL.

The ECFiber project brought communities together to provide the kind of broadband service private companies refused to provide. Vermont Public Radio explores the project and the enthusiasm of residents hopeful they will finally be able to get broadband service. (March 8, 2008) (24 minutes)
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ECFiber's Partner Communities

The Vermont towns, which together number roughly 55,000 residents, decided to build their own network after FairPoint Communications and local cable companies refused to extend the reach of their services.  Providers claim expanding service is not financially viable.  For residents like sheep farmer Marian White, interviewed by The Wall Street Journal, that means another year of paying $60 a month for satellite fraudband, the speed and consumption-limited satellite Internet service.

White calls the satellite service unreliable, especially in winter when snow accumulates on the dish.  Unlike many broadband users who vegetate for hours browsing the web, White actually gets an exercise routine while trying to get her satellite service to work.

“I open a window and I take a pan of water and, a cup at a time, I launch warm water at the satellite dish until I have melted all the snow off the dish,” Ms. White says. “It works.”

Other residents treat accessing the Internet the same way rural Americans plan a trip into town to buy supplies.

Kathi Terami from Tunbridge makes a list of things to do online and then, once a week, travels into town to visit the local public library which has a high speed connection.  Terami downloads Sesame Street podcasts for her children, watches YouTube links sent by her sister, and tries to download whatever she thinks she might want to see or use over the coming week.

A fiber to the home network like ECFiber would change everything for small town Vermonters.  The implications are enormous according to project manager Tim Nulty.

“People are truly afraid their communities are going to die if they aren’t on the communications medium that drives the country culturally and economically,” he says. “It’s one of the most intensely felt political issues in Vermont after health care.”

Despite the plan’s good intentions, one obstacle after another has prevented ECFiber from making much headway:

• The VTA rejected the proposal in 2008, calling it unfeasible;
• Plans over the summer and fall of 2008 to approach big national investment banks ran head-on into the sub-prime mortgage collapse, which caused banks to stop lending;
• An alternative plan to build the network with public debt financing, using smaller investors, collapsed along with Lehman Brothers on September 14, 2008;
• An attempt by Senator Pat Leahy (D-Vermont) to insert federal loan guarantees into the stimulus bill in February 2009 was thwarted by partisan wrangling;
• Attempts to secure federal broadband grant stimulus funding has been rejected by the Commerce Department;
• Opposition to the plan and objections over its funding come from incumbent providers like FairPoint, who claim the project is unnecessary because they will provide service in those areas… eventually.

For the indefinite future, it appears Ms. White will continue to throw warm cups of water out the window on cold winter mornings.

Vermont Edition takes a comprehensive look at where the state stands in broadband and wireless deployment. (April 8, 2009) (46 minutes)
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For every Tunbridge resident with a story about life without broadband, there are many more across Vermont living with hit or miss Internet access.

Take Marie from Middlesex.

Most residents in more rural areas of Vermont get service where they can from FairPoint Communications

“I am in Middlesex, about a half-mile off Route 2, and five minutes from the Capitol Building. Yet up until just recently, we had no sign of high-speed Internet. I understand that my neighbors just received DSL a few weeks ago, but when I call FairPoint, they tell me it’s still not available at my house, which is a few hundred yards up the hill. Hopefully, they’re wrong and I’ll see DSL soon,” she says.

Marie is pining for yesterday’s broadband technology — FairPoint’s 1.5Mbps basic DSL service, now considered below the proposed minimum speeds to qualify for “broadband” in the National Broadband Plan.  For Marie, it’s better than nothing.

Geryll in Goshen also lacks DSL and probably wouldn’t want it from FairPoint anyway.

“We have barely reliable landline service. A tech is at my house at least three times per year. I was told the lines are so old they are decaying. Using dial-up is impossible. I use satellite which is very expensive and is in my opinion only one step up from dial-up. I am limited to downloads and penalized if I reach my daily limit,” he says.

Many Vermonters acknowledge Douglas’ planned 100-percent-broadband-coverage-by-2010 won’t come close to achievement and many are highly skeptical they will ever see the day where every resident who wants broadband service can get it.

Chip in Cabot is among them, jaded after six years of arguments with FairPoint Communications and its predecessor Verizon about obtaining access to DSL.  It took a cooperative FairPoint engineer outside of the business office to finally get Chip service.  His neighbors were not so lucky, most emphatically rejected for DSL service from an intransigent FairPoint:

“I laughed when Governor Douglas announced his e-State goal “by 2010” three years ago. Now I’m thinking I should have made some bets on this claim. It took years of legal battles and a zoning variance to obtain partial cell coverage here in Cabot. Large parts of the town still do not have any cell coverage. Governor Douglas can perhaps be forgiven – he has no technical knowledge, and as a politician would be expected to be wildly optimistic about such “e-State” claims. The Vermont Telecommunications Authority and the Department of Public Service should know better however. We’re talking about rural areas where there is no financial incentive to provide either DSL or cell service. It will take a huge amount of money to provide service to those remaining parts of the state. I’m not optimistic.”

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/Wall Street Journal Vermont Broadband Problems 03-02-09.flv[/flv]

The Wall Street Journal chronicled the challenges Vermonters face when broadband is unavailable to them.  ECFiber may solve these problems.  Some of the stories in our article are reflected in this well-done video.  (3/2/2009 — 4 Minutes)

A lobbying campaign to add language to a Senate bill that would retroactively apply a federal ban on a tax loophole could derail plans by Verizon to sell off landlines in 14 states to Frontier Communications.

Verizon has relied on provisions of the “Reverse Morris Trust” (RMT) — which lets companies spin-off subsidiaries that merge into smaller companies do so tax free — to dump landlines across the United States, leading to crushing debt and bankruptcy for the buyers.

The House Small Business and Infrastructure Jobs Tax Act of 2010 includes provisions killing off the tax loophole, and the measure passed the House at the end of March by a vote of 246 to 178.  But the House measure only applies to new deals, not to those already on the table.

Union officials and several public interest groups are asking consumers to contact their senators and request insertion of language in the Senate companion bill that would apply the ban retroactively to the latest Verizon deal with Frontier Communications.

Such a ban would prevent Verizon and Frontier from walking away from a $600 million dollar tax obligation.

Ironically, one of the House leaders strongly supporting the loophole-closing legislation is Rep. Louise Slaughter (D-NY), whose district covers Frontier’s largest service area — Rochester, New York.

“This tax avoidance loophole does nothing to help people in rural communities who rely on traditional landlines for their phone service,” Slaughter said. “If these transactions are allowed to go forward, Verizon may drop landlines in 14 different states, a development that would mean a loss of jobs for workers and poor quality phone service for millions of Americans.”

For Rep. Peter Welch (D-VT), passage of the ban represents some late justice for the disastrous tax-free deal between Verizon and FairPoint Communications, which took over phone service in his state and other parts of northern New England.  FairPoint staggered under the debt load from the deal before collapsing in bankruptcy.

Slaughter

“The RMT was used by Verizon to avoid federal taxes when it sold its northern New England landline operations to FairPoint Communications in 2008,” Welch’s office noted.

“This loophole is bad for taxpayers, bad for consumers and bad for workers. By closing it and investing the savings in job creation, hardworking Americans – not corporations – will benefit,” Welch said.

The ban has special importance for West Virginia, which faces the prospect of turning over most of the state’s phone business to Frontier.

“The House has recognized the Reverse Morris Trust as a greedy grab by corporations to avoid paying their fare share of taxes,” said Elaine Harris, spokeswoman for the Communications Workers of America. “We pay our taxes. Why shouldn’t Verizon have to pay one cent on an $8 billion deal?”

“The Reverse Morris Trust was designed by Wall Street for Wall Street, not West Virginians,” said Ron Collins, a union vice president. “We’re happy Congress shares our view that the Reverse Morris Trust is a tax break for corporations, not a job-creating tool. Without this tax loophole, I don’t believe Verizon would be so eager to sell to Frontier.”

The Charleston Gazette attempted to get the views of Verizon and Frontier over the bill’s passage in the House.  Verizon spokeswoman Christy Reap declined comment. A Frontier spokesman couldn’t be reached for comment.

AT&T had to pay considerably more in taxes last year than Verizon did

One of the most common talking points among pro-business tax cutting advocates is the claim that companies in the United States face the highest corporate tax rate in the world.  But that assumes corporations actually pay taxes at that rate, which few do.  In fact, this week Forbes discovered that many of the country’s biggest, most profitable corporations enjoy a far lower tax rate than you do–that is, if they pay taxes at all.

While the biggest tax savings were grabbed by the bailed-out banks, the nation’s two largest telecommunications companies — AT&T and Verizon didn’t do too badly for themselves.

Of the two, AT&T had the higher tax bill, paying an effective tax rate of 32.4 percent.  But AT&T is still prone to  avoid paying corporate taxes wherever it can.  In Connecticut, AT&T’s maneuvers are fueling a campaign for state tax reform to close the loopholes.

This morning, the Hartford Courant slammed AT&T:

AT&T Corp. has emerged as the poster child for these shenanigans.

A state Department of Public Utility Control audit found AT&T to be engaging in a tax-avoidance scheme sometimes called the Las Vegas Loophole. Over a period of 2.5 years, AT&T shifted about $145 million in Connecticut earnings to a subsidiary in Nevada, ostensibly paying licensing fees for the right to use the company’s own name and logo. Nevada has no corporate income tax, so the shifted earnings went untaxed and Connecticut lost out. If it sounds fishy, that’s because it is. AT&T is not alone. Many large corporations use sham transactions designed to move profits generated in Connecticut to a different state where they won’t be taxed.

AT&T’s executives benefit from creative tax accounting themselves, earning a stipend of up to $14,000 a year to hire high-priced accountants that specialize in finding ways to reduce their own personal tax bite.  But no matter — AT&T covers the taxes CEO Randall Stephenson has to pay on some of his benefits anyway.

While the rest of the country plods through a jobless recovery, Stephenson decided the time was right to get a base salary increase and resume taking a bonus — a big one, too.  His effective compensation package rose by a third in 2009.

Among Stephenson’s compensation and perks:

• $1.45 million in base salary, up two percent over 2008;
• $12.1 million in options and performance-based stock incentives;
• $216,000 in rebates to cover his club membership dues;
• $200,000 to cover his life insurance premiums;
• $140,576 to cover any taxes he is forced to pay on his benefits package.

Verizon gets to use partner Vodafone's British address to help reduce exposure to U.S. corporate taxes. It reports much of its income through its British partner, which helps reduce its American tax liability.

Meanwhile, over at the nation’s 12th largest company, Verizon has managed to cut its tax rate to just 10.5 percents.  That’s because on paper, Verizon’s British partner Vodafone gets much of the income, while the U.S. side gets lots of expenses.  That dramatically reduces the corporate taxes incurred by the company in the United States.  That tax rate is even lower than Steve Forbes’ much-promoted 15 percent flat tax.

Verizon’s compensation to Uncle Sam calls out the myth of America’s corporate tax rate.  With creative accounting work, companies can slash their tax obligations.

That gives Verizon more money to spread around to top executives at the company, all while Verizon lays off thousands of workers and leaves retirees wondering how long the company will stand behind its pension and health coverage benefits.

Some shareholders are rankled by news CEO Ivan Seidenberg is on track to receive an $11 million stock grant if the company makes it as low as 25th among 34 similar Dow Jones-ranked companies, and a doubling to $22 million, if the company ranks among the top four.  That’s hardly a high hurdle to achieve an $11 million bonus.

That kind of compensation raises the ire of former employees of Verizon, who launched the Association of BellTel Retirees to protect the pension and health care benefits of retirees.

“Large payouts for below-median performance does not adequately align pay with performance,” said Bill Jones, the retiree group’s president, a former managing director at NYNEX, now a part of Verizon.

The group is well known for its high profile pressure on Verizon to stop providing a largess of benefits for top management for merely doing their jobs.

This year, the Association will demand a vote on a resolution to better tie stock awards to stock performance and limit executive compensation.  It also wants to stop expensive windfall golden parachute packages, such as Seidenberg’s $33.1 million dollar bon voyage, which he receives if he’s fired or retires.

While a handful of Verizon executives fight to preserve their generous compensation packages, Verizon retirees are fighting to get their doctor bills paid.  Jones’ group is strongly advocating new legislation to stop companies from walking away from their agreements with retired employees.

Bill Jones appeared on WOCA-AM Ocala, Florida in February to discuss the threat retirees face when companies walk away from their pension and health care plans for former employees. (28 minutes)
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H.R. 1322, the Emergency Retiree Health Benefits Protection Act, was introduced into the 111th Congress by Rep. John Tierney and would:

• Prohibit group health plans from making post-retirement reductions in retiree benefits;
• Require plans to adopt provisions barring post-retirement cuts in retiree health benefits;
• Require employers to restore benefits reduced after retirement;
• Provide an exemption for employers who are unable to restore benefits because they would experience substantial business hardship to be determined by the Secretary of Labor; and,
• Create a loan guarantee program to assist employers in restoring retiree health benefits.

[flv width=”560″ height=”336″]http://www.phillipdampier.com/video/The Association of BellTel Retirees Inc.mp4[/flv]

Bill Jones discusses his organization’s battles to protect pensions and health care benefits for Verizon retirees.  (5 minutes)

Time Warner Cable may be robocalling you any day now with news that your set top box is getting what the cable company is calling an upgrade.

Time Warner Cable is making this robocall to customers with set top boxes announcing an upcoming upgrade. (1 minute)
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Calls are being made to customers with set top boxes in Buffalo and Rochester notifying them an upgrade to the new Mystro platform begins as early as April 13th, depending on the box being used.  Syracuse and southern tier residents can expect their upgrade to commence in May.  The company maintains a website that will let you find the exact schedule for the Mystro upgrade in your area.

Time Warner Cable’s Navigator software displays the electronic program guide, helps you program and control your DVR, and also includes the setup menu for the box.

The upgrade will result in a dramatic change in the look and feel of the box’s on-screen graphics, change how you navigate through the program guide, and provide more options for hooking up today’s HDTV sets. If you have a DVR box from Time Warner Cable, the upgrade sets the stage for an upcoming feature that will let you remotely program your DVR while away from home.

Not everyone is thrilled with the upgrade, however.  In fact, a Google search for “Time Warner Navigator upgrade” reveals a large selection of websites and forums filled with complaints.  Regularly reported problems include:

• Sluggish performance, especially on older set top boxes;
• Poor responsiveness on fast forward/rewind functions for DVRs, making it difficult to land precisely where you want to be;
• The loss of “virtual HD” channels which some boxes passed through to even standard analog-only TV’s (albeit not in HD of course);
• DVR bugs that made recording reliability inconsistent;
• A DVR menu that makes it difficult to record only new episodes of series that repeat regularly on the channel lineup;
• Box crashes, lost program guide data, and issues with the box retaining settings, especially for more complex HDTV setups;

Time Warner Cable began testing Mystro at least two years ago in selected markets, and the company believes it has worked out a number of the bugs noted above along the way. Time Warner plans to systematically upgrade their customers to the new platform nationwide now that testing has been completed.

This customer was so bemused with the Time Warner Navigator upgrade, he made a video illustrating the absurd journey he took to find a science-fiction movie to watch.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/Navigator Demo.flv[/flv]

Time Warner Cable’s own promotional videos show off the new Time Warner Cable Navigator system in a better light. (5 minutes)