The nationwide outage lasted just a few minutes for some, about 20 minutes for others.

Time Warner Cable customers across the country noticed a nationwide outage of the cable company’s broadband service this morning.

Customers from New York to California to Texas first noticed the outage at around 9am EST, which appeared to first affect the company’s DNS servers, but attempts to switch to other DNS providers only worked briefly before they began to fail as well.  Inbound and outbound traffic was impacted.

The outage lasted approximately 20 minutes for customers relying on Time Warner’s DNS servers and just a few minutes for those who don’t.  Thanks to Stop the Cap! reader Tom for dropping us a note and letting us know.  We already knew — Stop the Cap! HQ is powered by Time Warner Cable broadband and it was out of service here in Rochester, N.Y. as well.

The company acknowledged the “large but brief Internet outage affecting most of our service areas” and requested customers still impacted reboot their cable modems.  That’s advice unlikely to help those who can’t access the Internet to read those instructions, however.

Because the outage lasted less than one hour, and only a few minutes for many, customers are not entitled to service credits this time.

It could be worse.  Some AT&T and Cablevision customers in parts of Connecticut are expecting to be without Internet or cable service for as long as two weeks after the snow storm that struck the area Oct. 29-30, bringing down utility poles and cable lines.

At least 50,000 people in the Nutmeg State have begun their second week without electricity as Connecticut Light and Power missed their self-imposed deadline to get the lights back on by midnight last night.  Power isn’t expected to be fully restored until Wednesday.  Cable and telephone crews cannot begin repair efforts until electrical service is up and running.

The House on Tuesday approved a five-year moratorium on new wireless taxes to keep states and localities from padding cell phone bills with new fees for wireless services.

The non-controversial measure easily won bipartisan support and passed quickly on a voice vote with just one member of Congress rising to oppose the measure.

The Wireless Tax Fairness Act, sponsored by Representative Zoe Lofgren, a California Democrat and Trent Franks, an Arizona Republican, was heavily backed by the wireless industry.  The legislation doesn’t stop local and state governments from imposing existing taxes, but would keep new taxes off cell phone bills if the measure becomes law.  AT&T and Verizon spent heavily to promote the bill, noting customers are cutting back their cell phone and data plans in response to increasing taxes which run as high as 23% in some states.

Historically, state and local governments have seen cell phones as a luxury item, and have targeted them with taxes to help sustain government budgets.  But as consumers increasingly turn to cell phones as landline replacements, the days of such technology being used mostly by the well-heeled are well past.  Lofgren sees the burden of cell phone taxes on Californians, who have dropped traditional landline services in favor of smartphones and wireless broadband.

“We need to encourage the development and adoption of wireless broadband, not tax it out of existence,” said Lofgren.

An identical Senate companion bill was introduced by Senators Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine), where it also seems to be getting bipartisan support.

Taxes on wireless services now meet or exceed those charged for alcohol and tobacco in several states.

[For flat monthly taxes and fees, average monthly consumer bill is estimated at $48.16 per month per CTIA – The Wireless Association.]

Source: Committee on State Taxation, 50-State Study and Report on Telecommunications Taxation, May 2005. Updated July 2010 by Scott Mackey, Kimbell Sherman Ellis LLP using state statutes and regulations.

The taxes levied are supposed to pay for everything from school funding to law enforcement to 911 services.  Some states impose 911 surcharges that local municipalities also charge themselves.  The free-for-all takes an even bigger bite as consumers adopt more expensive plans that include wireless data.

How much consumers would save with the passage of the legislation is unclear, because existing taxes are not impacted.  The measure also does nothing to stop the wireless industry from adding bill padding fees they conjure up themselves.

But the wireless industry still calls the House passage a “crucial step toward providing wireless subscribers with some much needed relief.”

[flv width=”520″ height=”308″]http://www.phillipdampier.com/video/Cell Phone Taxes 11-3-11.flv[/flv]

WKRG in Mobile, Ala. reports cell phone taxes are reaching an all-time high.  Nearby viewers in Pensacola, Fla. probably weren’t too happy to learn Florida is rated the 4th highest-taxed-state.  The Wireless Tax Fairness Act may prevent taxes from rising further, but it won’t stop existing fees.  Also included: Rep. Franks’ statement on the House floor introducing the bill and urging fellow members to support it.  (3 minutes)

AT&T customers are getting no bars in more places in the state of Connecticut as the wireless company deals with 150-200 cell towers that are either without power or were damaged by a weekend storm that brought more than 20 inches of snow to some parts of New England.  But some customers are questioning why AT&T has suffered damage to their cell tower network while other carriers report no significant damage at all.

“As of Wednesday afternoon, we still have no AT&T wireless service and it takes miles of driving to find a cell tower that is still working,” reports Sam, a Stop the Cap! reader outside of Hartford.  “My friends’ Verizon Wireless and Sprint phones work as if the storm never happened. In fact, I can’t find any Verizon customer who is impacted by the storm, but that’s sure not true with AT&T.”

On Sunday, Connecticut Gov. Dannel P. Malloy noted AT&T told state officials that 152 cell towers had been damaged by the storm and that cell phone service would likely be disrupted in some portions of the state for some time to come.  But Verizon Wireless reports outside of some power outages, they sustained absolutely no damage to any of their towers and backup generators are expected to provide uninterrupted service even in areas where extended power outages are occurring.  A Verizon spokesman reported at least 93 percent of its network was operating as of Tuesday, with most of the sporadic outages due to backup batteries depleting their stored energy before technicians arrive to fire up backup generators.

Sprint also reports only minor interruptions to its service in Connecticut, mostly due to power failures.

In most cases, extended power interruptions are responsible for cell tower service failure.  When power is restored, cell service generally is as well.  But this outage proved more extensive because AT&T’s backhaul network between towers and their own facilities was also damaged by falling tree limbs and power poles.

Residents tell the Hartford Courant AT&T has made some progress as the week wears on, with slowly improving service as towers are brought back online.

“We continue to make progress in restoring service to our customers in the wake of the recent snowstorm,” Kate McKinnon, AT&T spokeswoman for the northeast region told the newspaper. “We have deployed generators and crews across the storm-impacted areas and are working around the clock to address service issues. We also continue to work with local Connecticut utility companies as they restore commercial power to affected cell sites and facilities.”

Power utility companies have first priority in service restoration. Connecticut Light & Power reports 77 percent of their customers lost power during the snowstorm.  As of this afternoon, at least 544,000 are still waiting for power to be restored.

A class action lawsuit accusing AT&T of methodically over-measuring wireless customers’ usage and subjecting them to overlimit fees has been re-assigned to arbitration because AT&T wrote terms into contracts denying customers the right to pursue grievances any other way.

Plaintiff Patrick Hendricks claimed AT&T was systematically overstating customer usage by 7-14 percent with a rigged usage meter.  Hendricks claims some customers were overbilled by as much as 300 percent for phantom data usage that he claims never took place.  The measuring errors found in a two-month study cited by Hendricks were in AT&T’s favor, potentially exposing customers to surprise overlimit fees or, more recently, speed throttles.

But U.S. District Judge Charles Breyer shut down the court case, heard in a San Francisco federal courtroom.  Breyer ruled that since AT&T’s contracts bar lawsuits by customers, Hendricks must pursue his case in the venue required by AT&T — arbitration.

“[AT&T’s contract] requires the use of arbitration on an individual basis to resolve disputes, rather than jury trials or class actions, and also limits the remedies available … in the event of a suit,” Breyer ruled.

Ironically, Breyer is the same judge that dissented from an earlier case — AT&T v. Concepcion, that ultimately set the stage allowing AT&T to force consumers to pursue arbitration and practically speaking, remove their right to pursue class action relief.

“What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim?,” Breyer wrote. “The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30’.”

Brandi M. Bennett, a California attorney who specializes in intellectual property law, considers arbitration clauses to be a major threat to class action cases:

“Class actions make it possible to find recourse for individuals with damages that make traditional litigation impractical. AT&T Mobility v. Concepcion appears to leave the average consumer at risk of being defrauded by corporations for $10, $20, $50 without any practical remedy. If one million customers are damaged for $20 each, a corporation can improperly realize a $20 million gain. Class actions serve to prevent that.”

Arbitration can offer a poor substitute, because most arbitration firms are beholden to their corporate clients for repeat business.  An arbitrator perceived to be exceptionally pro-consumer stands little chance of being retained when corporate defendants pay the arbitration firm for its services.  Some arbitration policies require consumers and the company to split the costs of arbitration, but those costs often easily exceed the value of the original claim, discouraging customers from pursuing a refund settlement.

Companies understand that reality, which is why clauses requiring arbitration to settle disputes are increasingly common in service contracts.

Hendricks’ original suit sought restitution for the entire class of consumers and damages for breach of contract, unjust enrichment, unfair and fraudulent business practices, unfair competition, and violations of the federal Communications Act.  Most arbitration clauses require consumers to file individual complaints, which few may ultimately do considering arbitration proceedings may occur in another city and often requires the complainant to appear in person to provide testimony.

Phillip Dampier on USF Reform: It might have been great, it could have been a lot worse, but ultimately it turned out to be not very good.

Last week, the Federal Communications Commission unveiled their grand plan to reform the Universal Service Fund, a program originally designed to subsidize voice telephone service in rural areas deemed to be unprofitable or ridiculously expensive to serve.  Every American with a phone line pays into the fund through a surcharge found on phone bills. Urban Americans effectively subsidize their rural cousins, but the resulting access to telecommunications services have helped rural economies, important industries, and the jobs they bring in agriculture, cattle, resource extraction, and manufacturing.

The era of the voice landline is increasingly over, however, and the original goals of the USF have “evolved” to fund some not-so-rural projects including cell phone service for schools, wireless broadband in Hollywood, and a whole mess of projects critics call waste, fraud, and abuse.  For the last several years, USF critics have accused the program of straying far from its core mission, especially considering the costs passed on to ratepayers.  What originally began as a 5% USF surcharge is today higher than 15%, funding new projects even as Americans increasingly disconnect their landline service.

For at least a decade, proposals to reform the USF program to bridge the next urban-rural divide, namely broadband, have been available for consideration.  Most have been lobbied right off the table by independent rural phone companies who are at risk of failure without the security of the existing subsidy system.  Proposals that survived that challenge next faced larger phone company lobbyists seeking to protect their share of USF money, or by would-be competitors like the wireless industry or cable operators who have generally been barred from the USF Money Party.

This year, FCC Chairman Julius Genachowski finally achieved a unanimous vote to shift USF funding towards the construction and operation of rural broadband networks.  The need for broadband funding in rural areas is acute.  Most commercial providers will candidly admit they have already wired the areas deemed sufficiently profitable to earn a return on the initial investment required to provide the service.  The areas remaining without service are unlikely to get it anytime soon because they are especially rural, have expensive and difficult climate or terrain challenges to overcome, or endure a high rate of poverty among would-be customers, unable to afford the monthly cost for the service.  Some smaller independent phone companies are attempting to provide the service anyway, but too often the result is exceptionally slow speed service at a very high cost.

The new Connect America Fund will shift $4.5 billion annually towards rural broadband construction projects.  Nearly a billion dollars of that will be reserved in a “mobility fund” designated for mobile broadband networks.

The goal is to bring broadband to seven million additional households out the 18 million currently ignored by phone and cable operators.

The FCC believes AT&T will take a new interest in upgrading its rural landline networks, even as the company continues to lobby for the right to abandon them.

Unfortunately, the FCC has set the bar pretty low in its requirements for USF funding.  The FCC defines the minimum level of “broadband” they expect to result from the program — 4/1Mbps.  That’s DSL speed territory and that is no accident.  The phone companies have advocated a “less is more” strategy in broadband speed for years, arguing they can reach more rural customers if speed requirements are kept as low as possible.  DSL networks are distance sensitive.  The faster the minimum speed, the more investment phone companies need to make to reduce the length of copper wiring between their office and the customer.  Arguing 4Mbps is better than nothing has gotten them a long way in Washington, but it also foreshadows the next digital divide — urban/rural broadband speed disparity.  While large cities enjoy speeds of 50Mbps or more, rural towns will still be coping with speeds “up to” 4Mbps.

The FCC does not seem too worried, relying heavily on a mild incentive program to prod providers to upgrade their DSL service to speeds of 6/1.5Mbps.

The irony of asking AT&T to invest in an aging landline network they are lobbying to win the right to abandon is lost on Washington, and future speed upgrades for rural America from companies like Verizon are in serious doubt when they sell off their rural areas to companies like FairPoint and Frontier and leave town.

Critics of USF reform suggest the program is still stacked in favor of the phone companies, and considering the state of their copper wire networks, would-be competitors are scratching their heads.

The cable industry, in particular, is still peeved by reforms they feel leave them at a disadvantage.  Of course, Washington may simply be recognizing the fact cable companies are the least likely to wire rural America, but when they do, the service that results is often faster than what the phone company offers.  The nation’s biggest cable lobbyist — ironically also the former chairman of the FCC, Michael Powell — still feels a little abused after reading the final proposal.

“While we are disappointed in the Commission’s apparent decision to ignore its longstanding principle of competitive neutrality and provide incumbent telephone companies an unwarranted advantage for broadband support,” said National Cable & Telecommunications Association President Michael Powell, “we remain hopeful that the order otherwise reflects the pro-consumer principles of fiscal discipline and technological neutrality that will bring needed accountability and greater efficiency to the existing subsidy system.  We are particularly heartened by the Commission’s efforts to ensure that carriers are fairly compensated for completing VoIP calls.”

Wireless operators are not happy either, because the arcane requirements that come with the USF bureaucracy were written with the phone companies in mind, not them.  Small, family-owned providers find it particularly difficult to do business with the USF, if only because they don’t have the staff or time to navigate through endless documents and forms.  Phone companies do.

Your phone bill is going up.

Many consumer groups are relieved because it could have been much worse.   The FCC could have simply capitulated and adopted the phone companies’ wish-list — the ABC Plan.  Thankfully, they didn’t, but the FCC has naively left the door open to substantial rate increases for consumers by not capping the maximum annual outlay of the fund.  That follows the same recipe that invited higher phone bills and questionable subsidies awarded in an effort to justify the original USF program even after it accomplished most of its goals. Consumers may face initial rate increases of $0.50 almost immediately, and up to $2.50 a month five years from now.

The FCC, unjustifiably optimistic, suspects phone companies and other telecommunications interests won’t gouge customers with higher prices.  They predict rate increases of no more than 10-15 cents a month.  I wouldn’t take that bet and neither will consumer groups.

“We’re going to press the FCC to ensure that these are temporary increases, because history has shown that these types of costs tend to stick around and go on and on and on,” said Parul Desai, policy counsel for Consumers Union.

An even bigger question left unanswered is just how far the FCC will get into the broadband arena when it refuses to take the steps necessary to ensure it has an admission ticket.  The agency has avoided classifying broadband as a telecommunications service, an important distinction that would bolster its authority to oversee the industry.  Without it, some members of Congress, and more importantly the courts, have questioned whether the FCC has any business in the broadband business.  Just one of the many high-powered players in the discussion could test that theory in the courts, and should a judge throw the FCC’s plan out, we’ll be back at square one.

[flv]http://www.phillipdampier.com/video/C-SPAN Tom Tauke from Verizon on Changes to the Universal Service Fund 10-29-11.flv[/flv]

Verizon’s chief lobbyist Tom Tauke spent a half hour last weekend on C-SPAN taking questions about USF reform and the side issues of IP Interconnection and Net Neutrality policies. Tauke supports consolidation of small phone companies into fewer, larger companies.  He also expands on his company’s lawsuit against Net Neutrality, which fortuitously (for Verizon) will he heard by the same D.C. Court of Appeals that threw out the FCC’s fines against Comcast for throttling broadband connections.  Politico’s Kim Hart participates in the questioning, which also covered wireless spectrum issues impacting Verizon Wireless, AT&T’s stumbling merger deal with T-Mobile, and Verizon’s latest lawsuit against the FCC for data roaming notification rules.  (28 minutes)