March ended with yet another public hearing on the seemingly endless series of problems customers in New Hampshire were experiencing from FairPoint.  The Public Utilities Commission sent FairPoint a letter in April laying out benchmarks it expected the company to comply with to address the problems once and for all.

Meanwhile, a FairPoint spokesperson pushed the goal post even further away, now claiming the company’s “plan all along” was to resolve problems by June 30, 2009.  WMUR summed up the problems, and what New Hampshire regulators hoped would finally be the solution.

[flv width=”320″ height=”240″]http://www.phillipdampier.com/video/WMUR Manchester FairPoint Says It’s Working To Improve Performance 04-10-09.flv[/flv]

By May of this year, FairPoint finally started putting a dent in the number of customer complaints filed with Public Utilities regulators in Maine, Vermont, and New Hampshire.  Billing problems were now the biggest challenge for the company.  Customers receiving incorrect bills (or not receiving them at all) started refusing to pay until an accurate bill could be sent.  Many others found they were still being billed for lines disconnected weeks or even months earlier.

Wall Street, and credit rating agencies were following the chaos in New England, and didn’t like what they saw.  Customers were fleeing to the competition in high numbers.  The company cannot pay its debt without paying  customers.  The stock price had been declining as well.  Considering all of those factors, along with FairPoint’s quarterly earnings report, a range of rating services downgraded FairPoint’s credit rating, with one openly speculating FairPoint could face bankruptcy.

WCSH in Portland, Maine picks up the story on May 8th:

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We are still tracking down some nuisance bugs, and have had a report of at least one browser crash when trying to visit our site.

The bug we are currently aware of, particularly for those running Mac OS 10.5 and Safari 4 is:

Error #2044: Unhandled IOErrorEvent:. text=Error #2124: Loaded file is an unknown type.

We *think* that is related to one of the video players (the one that shows a blank screen before starting a video).

If you are experiencing that error, let me know if you can clear it and still access video, or if it completely disrupts your visits here.

Any other error reports should include:

• Your operating system (XP, Vista, OS10, etc.)
• Your browser & version
• If the error occurs only in one browser, some, or all browsers.
• If you are disabling Macromedia Flash (if you know)
• The exact error message you see, if you see one.
• If there is a specific action you take which routinely causes the error problem.

Because some errors might impact your ability to use our contact form, you can e-mail me directly at:  bugswat (-at-) phillipdampier.com or reply as a comment here.

You should replace the (-at-) with @ like you would with any e-mail address ([email protected]).   I use this format to keep those spam e-mail address harvesters from picking up my e-mail address and blitzing me.

When we are confident the bug(s) are gone, this message will disappear.

Thanks for your help.

For those who tried to watch the live stream from this past Monday’s Internet Town Hall from Toronto, it was a process that demonstrated the limitations of broadband service in Canada.  Evidently the hotel broadband connection was inadequate for the task, and the stream suffered ongoing video and audio problems for the duration.

An audio podcast version has now become available and is included below.  Because the event runs nearly two hours, you may wish to download the audio and listen on the go.  If you want to listen here, remember that the audio player will only work as long as you remain on this page.

Internet Town Hall On Canadian Broadband/Net Neutrality Issues – Toronto, June 8, 2009 (1 Hour 50 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Comcast apparently doesn’t like Verizon invading its home turf.  The Philadelphia-based cable company and the New York-based telephone company are engaged in an all-out ad war in southeastern Pennsylvania, and Verizon is calling “foul.”

Comcast replies turnabout is fair play, telling the Philadelphia Business Journal:

“Verizon’s been running a negative campaign against Comcast for years and its response to our campaign shows that they can dish it out but they can’t take it. As might be expected, the better the advertising and the more traction that it gains with consumers, the louder the competitor will object,” said Jennifer Khoury, Comcast spokeswoman.

So what ad put Verizon over the edge? Apparently it wasn’t the Verizon sales-stalker who invades people’s cars, front lawns, and demands credit card numbers of women at their doorstep.  No, it was the fact that Comcast depicted a typical Verizon FiOS installation as resembling a chaotic home lawn invasion, complete with heavy ‘yard wrecking’ equipment, life-threatening recklessness, and a monthly bill so prolific in pages, it requires a forklift to deliver.

That did it.

“These ads have people ripping up property, putting lives in danger and suggesting that this is typical of FiOS installations,” Eric Rabe, Verizon’s senior vice president for media relations, said. “That is an outrageous characterization and it has to stop.”

Rabe wasn’t sure if Verizon would sue if Comcast doesn’t knock it off.  The two companies are “having conversations,” according to Rabe.

While they talk, let’s explore the offending ad, plus several others from both sides.  It must be nice to live in a heavily competitive market.  Too many of us do not.  Comcast limits monthly usage to 250GB.  Verizon FiOS has no limit.

[flv width=”640″ height=”360″]http://www.phillipdampier.com/video/Comcast FiOS Bashing Ad 1.flv[/flv]

More video follows below…

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Robert Cyran, writing for BreakingViews, is concerned about the profit capacity of telephone and cable companies in the coming years.

Noting that wired, high speed services often account for more than half the revenue of providers, anything that challenges those margins could provoke hostile reaction from Wall Street, dissatisfied with diminishing returns.

Cyran specifically calls out Frontier Communications, FairPoint Communications, and Qwest for not having wireless (mobile phone) divisions and for their high level of debt.

He’s also been absorbing Sanford Bernstein’s views on the telecommunications industry, which typically guarantees Verizon fiber-to-the-home cost bashing.  And yes, it’s in there:

True, in urban areas where Verizon and AT&T are laying optical fibre, their fixed-line businesses are doing relatively well. Customers like super-fast internet connections, and the companies can pump bundles of services such as voice and television through it. But in rural areas, fibre is prohibitively expensive to lay, and customers without high-speed service options have more reason to rely solely on a mobile phone.

Verizon and AT&T won’t escape unharmed. Verizon is spending about $4,000 per customer to lay fibre.

Verizon is spending money on fiber service that customers like and are generating healthy revenues, but the fiber optics “harms” Verizon.  At least the bashing is consistent.

Cyran claims cable’s biggest problem is that margins for their broadband divisions have been slowly dropping.  Should customers defect en masse to competitors, things could get bad fast:

And when businesses like these with high fixed costs see customers defect, margins can contract quickly and even go negative.

One way to guarantee mass defections is to try to gouge consumers with Internet Overcharging schemes.  In markets where equivalent levels of service are available, customers have the option of leaving the Overcharger behind for a more customer-friendly option.  Unfortunately, not every market has equivalent competitors.

Cyran’s predictions for the future?  Big troubles for Frontier, FairPoint, and Qwest who he predicts will see ongoing declines in their cash flow and increasing difficulty in paying back their debts.  The companies will also struggle with the limitations of aging copper infrastructure to provide advanced class services (high speed broadband, video, and telephone) customers increasingly expect.  In larger communities, many customers will leave for competitors who can provide those services (in these cases that means the cable company).  In rural communities, customers will increasingly rely on cell phones as their only telephone line.

Fairpoint’s stock has fallen about 70% over the last 12 months and Hawaiian Telecom, which Carlyle bought in 2005, filed for bankruptcy at the end of last year. Yet Quest and Frontier’s stocks both still trade at more than 10 times estimated 2010 earnings. Since there’s little chance customer defections from wired telecom businesses such as theirs will stop, their stocks could have much further to fall.