America’s established cable and telephone companies are pulling out every stop to impede the Obama Administration’s broadband stimulus program.
Comcast alone, the nation’s largest cable company, has filed thousands of objections to proposed broadband projects in communities large and small, claiming those projects have the potential of introducing competition in their service areas, whether or not actual broadband service is being provided to residents in those communities.
Most large providers like Time Warner Cable, Comcast, and many national phone companies have steered clear of applying for broadband stimulus money. They don’t like requirements that could force them to adhere to Net Neutrality provisions, sharing equal access to their networks. But they don’t want anyone else on their turf getting funding either, and they’re spending enormous amounts of time and money objecting to anything and everything that seeks funding in their respective service areas.
It’s nothing short of a Broadband Blockade, and it is dramatically slowing the government’s ability to pour over thousands of applications.
Settles
Dan Hays, from consulting firm PRTM, told USA Today as a result of the delays, there’s significant doubt as to whether the monies can be awarded before the end of September when the funding authorization expires.
Could that be part of the plan all along?
“They aren’t leading, they aren’t following, and they won’t get out of the way,” said Craig Settles, a municipal broadband expert. “They’re not going to put proposals on the table because they don’t like the rules. Yet they’re not going to cooperate with the entities that are going after the money.”
“There are 11,000 public comments (about the funding applications), and I’m willing to bet that 9,000, at least, were a challenge or protest of one sort or another,” says Settles.
“We’re at a point where it’s the general public’s interest vs. the entrenched incumbents,” Settles added.
When giant telecommunications providers are threatened, they run to lawmakers for special protection, and they’re getting it.
National Public Radio ran this report about the problems awarding broadband stimulus grants. (5 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.
Coming next…
FairPoint – Bankrupt And Soaking in Failure – But Still Has Enough for Lobbyists, Attorneys to Fight Broadband Projects On Its Turf
Verizon employees affiliated with the Communications Workers of America turned out in force Sunday to protest the proposed sale of Verizon’s West Virginia operations to Frontier Communications of Connecticut.
Hundreds of workers and union members rallied at the West Virginia Culture Center in Charleston, the state capital, to protest the deal.
The CWA is concerned the transaction will enrich a handful of corporate executives and Wall Street bankers while saddling the state with sub-standard phone and Internet service for years to come. Frontier Communications will assume enormous debt to make the deal happen with Verizon, and set itself down the same path that ended in bankruptcy for two similar deals in the recent past involving FairPoint Communications and Hawaiian Telcom.
Union members are, of course, concerned about their future employment prospects at a Frontier-owned operation, but insist they are also concerned with the citizens of West Virginia.
“I work in the community and live in the community. I want to be able to go out to the stores with nobody yelling at me for not being able to provide service for them,” said Jim Radcliff, a Verizon employee.
(from left to right) CWA Pres. Larry Cohen, Local 2003 Pres. Anekia Greiner, and CWA District 2 VP Ron Collins
West Virginia’s governor Joe Manchin made an appearance at the rally, saying he has concerns about the proposed sale, and joined labor and community leaders to say he would do everything in his power to make the proposed deal work for working families in the state, not just Wall Street bankers.
Other rally speakers included Sen. Jack Yost, Del. Mike Caputo, state AFL-CIO President Kenny Perdue, and representatives from the firefighters, nurses and senior citizens.
Firefighters and other public safety officials are concerned about potential disruptions of 911 service, which were an ongoing problem after FairPoint Communications took control of Verizon lines in northern New England.
[flv]http://www.phillipdampier.com/video/CWA 911 Service At Risk Ad.flv[/flv]
The Communications Workers of America is concerned the sale of Verizon’s phone lines to Frontier Communications could cause disruptions in 911 service, as happened with FairPoint Communications in northern New England. The CWA is running this ad in West Virginia.
“We need to bring high speed broadband to West Virginia and communities across the country, to foster economic growth,” CWA President Larry Cohen said. “Instead, Verizon is using an obscure tax loophole to do a tax free deal that will leave West Virginia without a platform for achieving the speeds that are necessary for economic development. This deal is only good for Wall Street, not Main Street.”
Cohen was speaking about Verizon’s use of the Reverse Morris Trust provision in corporate tax law, which Stop the Cap!explored last fall in detail. This transaction could cost taxpayers as much as $600 million in lost tax revenue.
Audio Clip: Communications Workers of America Frontier-Verizon Radio Ad (30 seconds)
You must remain on this page to hear the clip, or you can download the clip and listen later.
[flv]http://www.phillipdampier.com/video/WCHS Charleston Union Opposes Sale of Verizon Landlines 1-10-10.flv[/flv]
WCHS-TV in Charleston covered the weekend rally by CWA opposing the sale of Verizon’s landlines to Frontier Communications. (2 minutes)
Here are some excerpts from Sunday’s rally including speakers protesting the proposed sale and praising union involvement in consumer protection. (courtesy: LairdWilliam) (10 minutes)
This newspaper ad is running across West Virginia opposing the sale of the state's phone business to Frontier Communications
Opposition to the sale of Verizon’s landline business to Frontier Communications in 13 states continues to increase, particularly in Ohio and West Virginia, where several employee unions have argued the deal represents a win for Wall Street and company executives, but a raw deal for millions of consumers.
The Communications Workers of America and the International Brotherhood of Electrical Workers, who also warned state regulators in New England about the consequences of approving the sale of Verizon’s operations in Maine, New Hampshire, and Vermont to FairPoint Communications, continue to warn consumers and state officials that a similar deal between Verizon and Frontier Communications could spell major problems for telephone customers. They call on state officials to reject the deal and force Verizon to invest some of their substantial profits earned in these communities into providing better service instead of dumping customers overboard.
The CWA says the sale would put $3.3 billion dollars into Verizon’s coffers — tax free — and leave Frontier buried in debt, which could impact both new and existing Frontier Communications customers, including hundreds of thousands of those in Rochester, New York, Frontier’s biggest service area.
“Verizon Communications has been divesting assets to smaller, less stable corporations in order to reap large, tax-free, profits,” CWA International Representative Elaine Harris said. “Verizon proposes to repeat that formula, and its disastrous effects, with the sale of all of its wireline operations here in West Virginia to Frontier.”
The CWA considers the transaction based primarily on corporate greed, not the best interests of phone customers.
“The only winner in all of these deals has been Verizon Communications and especially Verizon’s corporate executives,” Harris said. Verizon CEO Ivan Seidenberg is the highest paid executive in the telecom industry, with $24.31 million dollars in annual compensation from Verizon.
“His salary could have funded the entire network of senior services in West Virginia last year and he still would have had $8 million in his pocket,” Harris said.
The deal will leave Frontier Corporation with a total of $8 billion dollars in debt. “The West Virginia consumers will experience the effects of converting more than 617,000 aging access lines to a smaller, debt-ridden company,” Harris said. “The public will be forced to pick up the pieces if Frontier follows Verizon’s other buyers and files for bankruptcy.”
“We’ve closely watched the failures of the companies that purchased Verizon’s assets and we don’t need a crystal ball to figure out what will happen if Verizon tries the same scheme in West Virginia. There’s absolutely no reason to gamble West Virginia’s telecommunication’s future just to increase Verizon’s bottom line,” Harris added.
The CWA is running radio ads across the state of West Virginia opposing the deal.
Audio Clip: Communications Workers of America Radio Ad (1 minute)
You must remain on this page to hear the clip, or you can download the clip and listen later.
Verizon spokesman Harry Mitchell said Verizon wants to sell its access lines so the company can focus on its wireless and broadband business. Mitchell told The Charleston Gazette the union has opposed the deal from day one.
“They’re spending their members’ dues on advertising in an effort to cloud the issue,” he said.
Frontier Communications has protested accusations that their purchase of Verizon assets will result in the same kinds of colossal failures impacting other Verizon sell-offs. Company officials claim Frontier already has a successful customer support operation in DeLand, Florida, and billing and operating systems in place.
In West Virginia, those existing operations serve 144,000 Frontier customers. If the deal is approved, Frontier will take on the responsibility of serving 1.3 million landlines across the southeastern U.S. alone.
Regulators in the 14 states where Verizon now proposes to sell its landlines to Frontier face an almost identical situation as New England regulators did last year. Frontier Communications is proposing to buy Verizon’s entire wire line operation in West Virginia – as well as Verizon’s scattered landlines across 13 other states – in a similarly structured deal.
In both cases, Verizon chose a much smaller company in order to take advantage of an obscure tax loophole. With the Frontier sale, Verizon will avoid paying any taxes on the $3.3 billion it will receive from Frontier. Frontier will have to cope with three times more employees, three times more access lines and a 75 percent increase in its debt from $4.5 to $8 billion.
Verizon has a very poor track record in these sales. Verizon sold its Hawaii operations to Hawaiian Telcom in 2005 and it filed for bankruptcy. Customers, service and employees have suffered as a result.
Frontier – just like FairPoint – is a making promises that it may not be able to meet. Like FairPoint, state regulators are being asked to approve a deal where a small company will attempt to simultaneously run a much larger operation, pay off billions of dollars more in debt, integrate Verizon’s computer systems and spend more money to expand broadband.
In the end Verizon will profit but consumers, workers and communities are put at real risk.
Expanding broadband access is an especially critical factor for all rural areas. But Frontier has failed to make any specific commitments, set any timeline or offer a plan for its broadband buildout.
Union leaders believe that states shouldn’t risk their telecommunications’ future just so Verizon can fatten its bottom line. Regulators shouldn’t approve this sale because the risks are too great. Instead, our legislators, regulators and the Governor should require Verizon to meet its service responsibilities. Verizon shouldn’t be allowed to walk away with $3.3 billion tax free, and leave the fate of its customers in the hands of a company with a lot less resources. If Frontier should falter, customers and the public would be required to pick up the pieces – not Verizon!
The track record for Verizon spinoffs has hardly been one of success.
FairPoint Communications, the company to which Verizon sold its Maine, New Hampshire and Vermont operations in 2008, is foundering as it tries to integrate operations and is choking on the debt it incurred to finance the transaction Since the deal was announced, FairPoint’s stock price has declined by about 95%, and the company has been forced to suspend dividend payments.
Hawaiian Telecom, the company to which Verizon sold its Hawaii operations in 2005, filed for bankruptcy. Verizon sold its 715,000 access lines in Hawaii. Since then, Hawaiian Telcom has experienced significant transition issues that resulted in major financial and customer service problems. In three years, the company lost 21% of its customers. In December 2008, Hawaiian Telcom filed for bankruptcy.
The yellow pages company that Verizon spun off also filed for bankruptcy. In November 2006, Verizon spun off its yellow pages directory business to Verizon shareholders, loading the new company, Idearc, with about $9.5 billion in debt and extracting a cool $9 billion in cash and debt reduction. Last year, interest payments alone on Idearc’s debt accounted for almost one-quarter of its total revenues! Representing something of a Verizon failing company “hat trick,” Idearc filed for bankruptcy in March 2009.
WSAZ-TV Huntington, West Virginia reported on the growing opposition to the Frontier sale by employee groups on October 14th. (3 minutes)
In Washington State, IBEW Local 89, outside Seattle, says the sale could cripple one of America’s most tech-savvy regions.
“We’ve always been a leader in communications in this part of the country,” said Ray Egelhoff, business manager of IBEW Local 89. “If this happens, we’re afraid businesses won’t move in, and some may even move out.”
Egelhoff, along with more than 1,500 Verizon workers who may become Frontier employees, deluged officials with letters and e-mails expressing their concerns. More than 500 have gone out so far to senators, house members, governors and business leaders. The workers worry Frontier —at about the a third the size of Verizon—won’t be able to absorb the huge Verizon assets, won’t be able to keep customers happy and, eventually, will have to shed staff.
Robert Erickson, International Representative in the IBEW’s Telecommunications Department said, “The deal poses risks to consumers and employees. Frontier is making all kinds of promises about synergy and how they’ll expand broadband. FairPoint Communications made the same grand claims and now they can’t meet their commitments and fulfill the promises they made. It’s clear that Frontier will be in a similar situation and not have the resources to fulfill the commitments they are making.”
Consumer groups are also raising objections to the sale.
The National Association of State Utility Consumer Advocates urged the Federal Communications Commission, which is reviewing the proposed transaction, to reject the deal.
“The merger proposed by Frontier and Verizon is not in the public interest,” said David Springe, president of the consumer advocate group. “The failure of the companies to offer adequate consumer benefits or protections puts customers at risk of being served by a company without enough financial strength to make necessary improvements to local telephone facilities and widen the deployment of broadband access.”
Free Press, a nonpartisan group that works to reform the media, also raised concerns about the sale in a filing with the FCC. Free Press cited Verizon’s sale of lines in New Hampshire, Maine, and Vermont to FairPoint, which subsequently acquired substantial debt, was unable to accommodate the increased service area, and is now on the edge of bankruptcy.
“This trend has the potential to leave rural areas with ill-equipped companies offering inadequate service at high prices,” says the Free Press report. “This is in direct contrast to the stated intent of Congress and the Obama Administration to foster universal broadband to all Americans.”
[flv]http://www.phillipdampier.com/video/WCHS Charleston Verizon Sale Fight 10-14-09.flv[/flv]
WCHS-TV in Charleston, WV talked with the CWA and company officials about the sale of Verizon operations to Frontier Communications. (1 minute)
The advancement of Net Neutrality by the Federal Communications Commission was the topic of this week’s Mixed Media, a feature from WXXI-AM, a public radio station in Rochester, New York. Scott Fybush, who has been known to drop by Stop the Cap! from time to time, talked with WXXI’s Rachel Ward about Net Neutrality and the Stop the Cap! movement, and why Rochester is such an activist community when it comes to preserving reasonable and fair pricing for Internet access.
A Federal Communications Commissioner comes out strong for net neutrality. WXXI’s Rachel Ward and media and technology reporter Scott Fybush have more. (5 minutes) You must remain on this page to hear the clip, or you can download the clip and listen later.
If you have any interest in radio or television, Scott’s Northeast Radio Watch is a must-read every week. WXXI’s Mixed Media does a good job of explaining technology stories and their impact on us in a way everyone can understand.
Phillip DampierSeptember 24, 2009Audio, Canada, Rural BroadbandComments Off on Life With Dial-Up: Rural BC Residents Make Due With the Slow Lane
Thirsk
Marla Thirsk is still on dial-up, and wishes she had broadband. The Ucluelet, BC artist has lived in the Spanish Banks area for nearly 30 years. While her friends and neighbors have broadband service, her subdivision does not. The Canadian Broadcasting Corporation’s Spark program, dedicated to discussing technology and culture, recently covered Thirsk’s predicament. Host Nora Young explores what online life means for Marla and her nearby neighbors.
Phone interview with Marla Thirsk, as part of September 20, 2009 CBC Radio One’s Spark program. (6 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.
Be Sure to Read Part One: Astroturf Overload — Broadband for America = One Giant Industry Front Group for an important introduction to what this super-sized industry front group is all about. Members of Broadband for America Red: A company or group actively engaging in anti-consumer lobbying, opposes Net Neutrality, supports Internet Overcharging, belongs to […]
Astroturf: One of the underhanded tactics increasingly being used by telecom companies is “Astroturf lobbying” – creating front groups that try to mimic true grassroots, but that are all about corporate money, not citizen power. Astroturf lobbying is hardly a new approach. Senator Lloyd Bentsen is credited with coining the term in the 1980s to […]
Hong Kong remains bullish on broadband. Despite the economic downturn, City Telecom continues to invest millions in constructing one of Hong Kong’s largest fiber optic broadband networks, providing fiber to the home connections to residents. City Telecom’s HK Broadband service relies on an all-fiber optic network, and has been dubbed “the Verizon FiOS of Hong […]
BendBroadband, a small provider serving central Oregon, breathlessly announced the imminent launch of new higher speed broadband service for its customers after completing an upgrade to DOCSIS 3. Along with the launch announcement came a new logo of a sprinting dog the company attaches its new tagline to: “We’re the local dog. We better be […]
Stop the Cap! reader Rick has been educating me about some of the new-found aggression by Shaw Communications, one of western Canada’s largest telecommunications companies, in expanding its business reach across Canada. Woe to those who get in the way. Novus Entertainment is already familiar with this story. As Stop the Cap! reported previously, Shaw […]
The Canadian Radio-television Telecommunications Commission, the Canadian equivalent of the Federal Communications Commission in Washington, may be forced to consider American broadband policy before defining Net Neutrality and its role in Canadian broadband, according to an article published today in The Globe & Mail. [FCC Chairman Julius Genachowski’s] proposal – to codify and enforce some […]
In March 2000, two cable magnates sat down for the cable industry equivalent of My Dinner With Andre. Fine wine, beautiful table linens, an exquisite meal, and a Monopoly board with pieces swapped back and forth representing hundreds of thousands of Canadian consumers. Ted Rogers and Jim Shaw drew a line on the western Ontario […]
Just like FairPoint Communications, the Towering Inferno of phone companies haunting New England, Frontier Communications is making a whole lot of promises to state regulators and consumers, if they’ll only support the deal to transfer ownership of phone service from Verizon to them. This time, Frontier is issuing a self-serving press release touting their investment […]
I see it took all of five minutes for George Ou and his friends at Digital Society to be swayed by the tunnel vision myopia of last week’s latest effort to justify Internet Overcharging schemes. Until recently, I’ve always rationalized my distain for smaller usage caps by ignoring the fact that I’m being subsidized by […]
In 2007, we took our first major trip away from western New York in 20 years and spent two weeks an hour away from Calgary, Alberta. After two weeks in Kananaskis Country, Banff, Calgary, and other spots all over southern Alberta, we came away with the Good, the Bad, and the Ugly: The Good Alberta […]
A federal appeals court in Washington has struck down, for a second time, a rulemaking by the Federal Communications Commission to limit the size of the nation’s largest cable operators to 30% of the nation’s pay television marketplace, calling the rule “arbitrary and capricious.” The 30% rule, designed to keep no single company from controlling […]
Less than half of Americans surveyed by PC Magazine report they are very satisfied with the broadband speed delivered by their Internet service provider. PC Magazine released a comprehensive study this month on speed, provider satisfaction, and consumer opinions about the state of broadband in their community. The publisher sampled more than 17,000 participants, checking […]
Subscribe
America’s established cable and telephone companies are pulling out every stop to impede the Obama Administration’s broadband stimulus program.
