Byron L. Harris heads the Consumer Advocate Division of the West Virginia Public Service Commission

Strong opposition to the proposed spinoff of Verizon service in West Virginia to Frontier Communications erupted Monday as the state Public Service Commission (PUC) published a flurry of written testimony filed with the state agency.

Some of the strongest criticism of the deal came from the state’s Consumer Advocate (CAD), an independent division of the PSC that represents residential utility customers.  Division director Byron Harris testified the deal carried “too many risks” for the state, and suggested Frontier failed to do its homework before considering the implications of the deal for nearly the entire state’s telephone system.  Harris added residents faced higher phone bills, early termination fees, little improvement in service, and was highly skeptical of Frontier’s promises to expand broadband service in the state, suggesting the company will not be in a financial position to offer acceptable “plain old telephone service,” much less broadband.

Harris testimony called on the Commission to reject the deal:

The proposed transaction poses too many risks for retail telephone customers in West Virginia from both a financial and an operational standpoint. The proposed transaction also poses too many risks for Verizon-WV’s wholesale customers and, ultimately, the tens of thousands of West Virginians served by these entities.

In his testimony on behalf of the CAD, Mr. Roycroft [one of two expert consultants hired to analyze the proposed sale] explains the operational difficulties that Frontier will face in assimilating the Spinco properties and operating systems. As Mr. Roycroft makes clear, the operational difficulties associated with a transaction as large as the one proposed are exacerbated by the fact that the proposed transaction – from an operational standpoint – actually involves two mergers in one:

1. The acquisition of the legacy Bell Atlantic network and OSS in West Virginia, and
2. The acquisition of the old GTE network and systems in 13 other states.

Mr. Roycroft details the multitude of risks that the proposed transaction presents for retail and wholesale telephone customers in West Virginia. Not only do customers face service and service quality risks, but they also face the risk of higher rates and/or other adverse terms and conditions of service such as early termination fees.

Mr. Hill points out, in his testimony, the many unrealistically optimistic financial projections Frontier makes in support of the proposed transaction. As Mr. Hill points out, Frontier’s projections rely too much on financial information that has been provided by the seller, Verizon, without independently verifying Verizon’s numbers. Frontier’s projections similarly rely on a number of assumptions about reducing access line loss, cutting operating expenses and capital expenditures, and realizing merger savings that would require Frontier to substantially reverse recent trends.

The fallout from the proposed merger not going well obviously affects retail and wholesale customers currently served by Verizon-WV and Frontier-WV as well. As discussed below, and in Mr. Roycroft’s testimony, Verizon-WV’s customers already have experienced sharp declines in their service quality, which is the predictable result of years of falling investment in the company’s telephone plant and workforce in West Virginia, as Verizon has focused its attention on other markets in other states and other service offerings, such as wireless service and video/Internet/telephone service provided via its FiOS offering (which is not offered in West Virginia).

The financial and operational risks associated with the proposed transaction jeopardize the combined company’s ability to maintain even current service quality in Verizon-WV’s service territory, let alone follow through on Verizon-WV’s obligation to improve that service quality going forward under the Plan.

Although the CAD obviously is (and has for some time been) concerned with the poor service quality currently provided to customers by Verizon-WV, the CAD believes that service is likely to get even worse under Frontier’s ownership. The proposed transaction will result in a post-closing Frontier that will not have the financial resources to be able to improve service quality for “plain old telephone service” – as voice-grade traditional telephone service is often called – in Verizon-WV’s service territory, much less to deploy broadband to the extent suggested in Frontier’s direct testimony.

Harris likened the deal to Frontier buying a used car from Verizon without knowing what’s under the hood.

“Frontier has essentially agreed to purchase a used car without first having the car examined by a mechanic. Without a thorough investigation of Verizon-WV’s plant, Frontier has no way of knowing whether its buying a pre-owned car that has had regular oil changes and proper tune-ups, or whether it is buying a clunker with a new paint job and a blown transmission. If Verizon-WV’s network has not been properly maintained (as the evidence seems to suggest), just like a car that hasn’t been properly maintained, getting it back to serviceable condition will be a very expensive proposition,” Harris testified.

Harris gave five specific reasons why the deal was bad for West Virginia:

First, Frontier has not done any in-depth analysis of the quality of the Spinco facilities that it is acquiring. This lack of analysis is disturbing on its face, as it would seem to be a fundamental area of inquiry for any prospective buyer. But the importance of this lack of meaningful review is magnified in West Virginia by the fact that Frontier knows, or reasonably should know, that Verizon-WV’s outside plant facilities in West Virginia are not in good shape. The Commission is well aware of the significant decline in service that Verizon- WV’s customers have experienced over the last several years. This decline is documented in the public record (in both the informal complaint records maintained by the Commission’s Staff, and in the record in proceedings related to Verizon-WV’s service quality docketed in the last few years). That record should have triggered a much more searching analysis by Frontier. This lack of analysis also impacts the overly optimistic assumptions that Frontier has used in its financial analysis of the transaction.

Second, Frontier’s overly optimistic financial projections increase the risk that the post-merger company will not be able to remedy Verizon-WV’s current poor service quality or to provide its promised broadband deployment. Verizon is obviously a larger and more financially sound company than Frontier. For a company such as Frontier which historically pays out greater dividends than its net income, the risk that the optimistic financial projections will not transpire is magnified.

Third, as of October 14, 2009, Frontier still had not determined how it will handle the additional call center volumes that will occur when the company acquires access lines in West Virginia.  Obviously, the proposed transaction would adversely affect the public if it is approved without a concrete plan to handle service calls from current Verizon-WV customers.

Fourth, similarly, no concrete plan has been put forth by Verizon for serving customers in West Virginia who are currently served out of central offices in Maryland. Again, the proposed transaction would adversely affect the public if it is approved without a concrete plan to serve Verizon-WV customers who are currently served from central offices in Maryland.

Fifth, current Verizon-WV retail customers face the prospect of increased rates and/or early termination fees as a result of having their current package or bundle service migrated to a similar package or bundle offered by Frontier. In discovery, Frontier has to date refused to identify the packages that will be offered to replace current Verizon-WV packages or to state at what price the packages will be offered to such customers. Verizon- WV customers with bundles that include Verizon broadband service also appear to likely face significant early termination fees of at least $120 if they elect not to transition or migrate to Frontier’s service after closing. This likelihood appears even greater when the companies’ obtuse response on this subject is considered. When the CAD asked whether Verizon-WV customers who elected not to remain with Frontier post-closing, would be charged any early termination fees, the companies merely stated that they will “honor the terms of their contracts with customers.” Obviously, “honoring” the terms of a contract that includes an early termination fee could very well mean enforcing that provision of the service agreement.

Hundreds of New York state residents were unfairly charged early termination fees that eventually brought Frontier to the attention of the New York Attorney General’s office, which obtained relief in the form of full refunds for affected New York residents.

Ironically, even though Verizon may seek to exit West Virginia’s landline telephone business, the company will continue to exist as a competitive player in the state — through Verizon Wireless, its mobile telephone division.  Verizon Wireless sent letters to customers urging them to terminate their home phone lines.  That will spell additional competition for Frontier Communications, as Stephen Hill testified, on behalf of the Consumer Advocate Division:

“Simplify your life and your budget by cutting the cord on your home phone today.”  It is reasonable to believe that such a letter coming from the company that had been a customer’s land-line phone service provider urging them to end that type of service and return to their former provider’s wireless service, would have an impact on Frontier’s ability to maintain that customer. The presentations to Frontier’s board of directors regarding the merger do not discuss potential competition from Verizon.

Perhaps the more troubling aspect of Verizon as a formidable competitor, however, is that, under the current post-merger plan, Verizon will continue to operate the billing and back-office functions of most of the local exchange operations sold to Frontier. Under such circumstances, Verizon becomes both a business partner and a competitor of Frontier-a situation that would put Verizon in an even greater competitive position than it would be otherwise (Le., if it weren’t also leasing operating systems to Frontier). Therefore, it is quite possible that, due to competition-in which Verizon is likely to play an important role-the reduction in the rate of revenue decline forecast for the future may not be realized. Instead, the rate of access line loss may accelerate from historical conditions, making the fbture financial picture for a combined Frontier/Spinco more tenuous than now forecast.

Strong opposition also came from other providers, some of whom who may be affected by the sale through wholesale agreements currently in place with Verizon, as well as from the Communications Workers of America (CWA).

Susan Baldwin, who served as Director of Telecommunications for the Massachusetts Dept. of Public Utilities, submitted testimony on behalf of CWA.  In her testimony she stated, “If the transaction goes awry, consumers will bear the consequences….Even if the transaction does not go awry, it will adversely affect consumers because Frontier’s financial constraints will prevent it from investing in the WV telecommunications infrastructure.” Baldwin strongly urged rejection of the proposed deal.

David Armentrout, on behalf of FiberNet stated, “Frontier lacks the requisite resources, experience, and incentive to comply with wholesale obligations it will take on …in West Virginia.”

Some companies waived their right to file direct testimony but asserted their right, along with the parties who did file today, to file rebuttal testimony in December.

Coming up… The truth about Frontier’s DSL products, network capacity, and why their 5GB Acceptable Use Limit is part of official testimony calling on the Public Service Commission of West Virginia to just say no to Frontier Communications.

Regulating mobile broadband data usage on a constrained network has posed a challenge for mobile broadband providers that can’t always easily expand their networks to accommodate growing demand.  As mobile broadband providers work with the frequency allocations they have either been assigned or won through airwave auctions, simply adding more capacity by using additional frequencies isn’t always possible.  So most providers have increasingly turned to usage allowances to artificially control demand on their existing networks.

Who wins the next round of spectrum auctions sets us up for the mobile broadband chicken and egg scenario.  Providers cannot bid the enormous dollar amounts these auctions routinely command without revenue from customers craving access.  Customers aren’t about to commit paying even more for mobile broadband service that, in the United States, is almost universally limited to five gigabytes of consumption per month.  Finding ways to attract new customers who have been resistant to the current pricing of mobile broadband service could provide a source for additional revenue.

But as far as consumers are concerned, the current model of “usage allowances” combined with punishing overlimit penalties is extremely unpopular, and will keep many potential customers away.

Camiant, which helps create and manage traffic management solutions for broadband networks, today announced the findings of its latest study, “Rethinking Mobile Broadband Data Rate Plans.”  Although some of the study was no doubt designed to help sell the case for Camiant’s product line devoted to “intelligent” network management and quota systems, it provides important insight into the European mobile broadband market.

The conclusion: Europeans don’t like Internet Overcharging schemes either.

In fact, when the 263 survey respondents using plug-in mobile broadband modems in the UK, France, Germany, Italy, Spain and Sweden were asked about their preferences for various rate plans, the key finding was consumers don’t like ‘Cap + Overage’ style rate plans.  Among their concerns:

• 62% didn’t know what their usage cap was;
• 76% didn’t know how much data they actually used;
• 39% didn’t know what happened if they went over the usage cap;
• 45% were very/moderately concerned about exceeding the cap.

When presented with four alternative rate plan structures and asked their preference — “Cap + Overage” was least preferred by consumers.  ‘None of the above’ was not an option, so those surveyed chose the plan most acceptable under the parameters of the study.  The result showed almost half wanted unlimited service, and just over one-third wanted to pay less for a plan with an allowance, but one that wouldn’t empty their wallets if they happened to exceed the limit:

Many users were willing to pay additional fees beyond the base subscription for potential “extras”:

• 43% of all respondents would pay €5 in addition to base plan for unlimited usage of one specific application. Of those that were interested, 90% said it was important that they select the application.
• 45% of respondents interested in a service that might provide lower speed at some point said they would be willing to pay between €1 and €3 for on-demand higher speed “for a short duration (e.g. 1 hour).”

“It’s becoming very clear that network operators need to offer a wider range of package options to users of mobile data users,” said Graham Finnie, Chief Analyst at Heavy Reading. “This study provides strong evidence that end users are willing to consider a range of alternatives to conventional usage management schemes.”

Some similar studies and focus groups being conducted in the United States testing additional rate plan options, most of which carrying a lower usage cap and lower pricing.  Many of the private studies are including the dreaded ‘I wouldn’t buy any of these plans because they are all too expensive for what you get’ option to determine if consumers are simply going to continue turning their noses up at overpriced data plans.

Mobile broadband growth at the $60 for five gigabytes price level has been accepted by the on-the-go traveler or business person dreading hotel Internet connection fees, but have been difficult to sell to occasional users, residential customers, or those who consider the price out of line for the amount of access it includes.  Most of these types of customers rely on free or reduced price wi-fi instead.

With 49% of survey respondents looking for unlimited plan options at reasonable prices, and most of the rest looking for a lower price with some limitations, today’s American mobile broadband pricing platform charging high prices for highly limited service is the worst of both worlds for consumers.

PCL Cable's logo and website appear behind the times

Knology, the company that competes with other cable and phone companies by overbuilding their service areas, has purchased the assets of Private Cable Co. LLC, which serves Athens and Decatur, Alabama for $7.5 million, creating new competitive headaches for bankrupt Charter Cable, which serves both communities.  The company said it expects to close the deal by the end of 2009.

Acquiring PCL Cable, which serves areas adjacent to existing Knology service areas, would seem a natural fit.

Decatur City Councilman Gary Hammon said he expects the acquisition to benefit Decatur residents, especially because PCL Cable appears to have frozen operations in place and not expanded their reach.

“PCL hasn’t put any money into Decatur in the last five years,” Decatur City Councilman Gary Hammon told The Decatur Daily. “There are a lot of places in the city where you have Charter cable or no cable. I think competition sharpens the sword.”

PCL Cable’s website appears outdated, outlining a service package that offers fewer channels than many larger cable systems, and a broadband service promoting unlimited access for 5Mbps and 10Mbps tiers of service.  The “full package” includes about 100 channels with no need for a set top box for $93 a month (or $73 if bundled with telephone and/or broadband service).  The last status updates were published in August 2008.

The incumbent cable operator in PCL Cable’s service area is Charter Cable, which also competes with Knology in several southeastern cities.  The buyout, and eventual conversion of PCL Cable into Knology’s family of services, means additional competition for Charter Cable in the two Georgia cities.

Knology Vice President of Communications Tony Palermo talked with The News about the purchase:

Decatur, Alabama

Palermo said it was premature to predict whether the company would expand PCL’s limited footprint in Decatur.

“It’s pretty early on,” Palermo said. “Coming out of the chute, we’re looking at bringing the (existing) PCL footprint into our fold.”

He said Knology already has optical fiber running to PCL, which provides data services.

“Within a relatively short period of time, we’ll be able to bring up products and services to the level of what we’re offering in Huntsville,” Palermo said, to businesses and residents already within PCL’s footprint.

He said the acquisition gives Knology the ability to increase its revenue with investments already made in Huntsville.

“The first step for us is to get the deal done,” Palermo said. “The second step is to transition over to our network and our method and our ways of doing business. That will include checking on the integrity of the distribution network.”

Only after that, Palermo said, will Knology look at expansion in Decatur.

“We will not go in immediately and do any kind of construction work,” he said.

AT&T provides telephone service in Decatur and is on the list for U-verse service at some point in the future, but like Knology, has no immediate plans to roll out service.  AT&T received a video franchise from the city of Decatur to provide service.

Even with immediate service expansion still out of reach in many parts of the community, Palermo is still excited about the prospects for the future.

“Anytime there is good strong competition,” Palermo said, “that always results in goodness for the consumer.”

[Correction: Article adjusted to reflect Decatur and Athens are in Alabama.]

America's Broadband Emergency Plan Allows Up to Three Cat-Chasing-Laser-Pointer videos per day

The mainstream media loves a scare story.  Suggestions that a national H1N1 pandemic could bring the Internet as we know it to its knees is a surefire way to get plenty of attention.

The Chicago Tribune, among others, reports that a nationwide outbreak of virus forcing 40% of American workers to remain housebound could result in too many people sitting at home watching Hulu, bringing the entire Internet to a screeching halt.

The answer? Shut down video streaming sites and throttle users during national emergencies.

Of course, even more interesting is what never turns up in these kinds of stories — the news behind the sensationalist headlines.

The report on which this story is based comes courtesy of the General Accounting Office.  The GAO doesn’t simply issue reports willy-nilly.  A member or members of Congress specifically request the government office to research and report back on the issues that concern them.  In this instance, the report comes at the request of:

• Rep. Henry Waxman
• Rep. John D. Dingell
• Rep. Joe Barton
• Rep. Barney Frank
• Rep. Bennie G. Thompson
• Rep. Rick Boucher
• Rep. Cliff Stearns
• Rep. Edward J. Markey

The congressmen weren’t worrying exclusively about your broadband interests.  The GAO notes the study came from concern that such a pandemic could impact the financial services sector (the people that brought you the near-Depression of 2008-09).  The Wall Street crowd could be left without broadband while recovering from flu, and that simply wouldn’t do.

“Concerns exist that a more severe pandemic outbreak than 2009’s could cause large numbers of people staying home to increase their Internet use and overwhelm Internet providers’ network capacities. Such network congestion could prevent staff from broker-dealers and other securities market participants from teleworking during a pandemic. The Department of Homeland Security (DHS) is responsible for ensuring that critical telecommunications infrastructure is protected. GAO was asked to examine a pandemic’s impact on Internet congestion and what actions can be and are being taken to address it, the adequacy of securities market organizations’ pandemic plans, and the Securities and Exchange Commission’s (SEC) oversight of these efforts,” the report states.

Putting aside my personal desire that a little less broadband for deal-making, bailout-demanding “kings of the world” might not be a bad idea, the GAO’s report concludes what we already know — the business model of residential broadband is based on sharing connections and when too many people stay home and use them, it’s slow and doesn’t work well.

Providers do not build networks to handle 100 percent of the total traffic that could be generated because users are neither active on the network all at the same time, nor are they sending maximum traffic at all times. Instead, providers use statistical models based upon past users’ patterns and projected growth to estimate the likely peak load of traffic that could occur and then design and build networks based on the results of the statistical model to accommodate at least this level. According to one provider, this engineering method serves to optimize available capacity for all users. For example, under a cable architecture, 200 to 500 individual cable modems may be connected to a provider’s CMTS, depending on average usage in an area. Although each of these individual modems may be capable of receiving up to 7 or 8 megabits per second (Mbps) of incoming information, the CMTS can transmit a maximum of only about 38 Mbps. Providers’ staff told us that building the residential parts of networks to be capable of handling 100 percent of the traffic that all users could potentially generate would be prohibitively expensive.

In other words, guess your customer demand correctly and 200-500 homes can all share one 38Mbps connection.  Guess incorrectly, or put off expanding that network to meet the anticipated demands because your company wants to collect “cost savings” from reduced investment, and everyone’s connection slows down, especially at peak times.

One way to dramatically boost capacity for cable operators is to bond multiple channels of broadband service together, using the latest DOCSIS 3 standard.  It provides cable operators with increased flexibility to meet growing demands on their network without spending top dollar on wholesale infrastructure upgrades.  Many operators are already reaping the rewards this upgrade provides, by charging customers higher prices for higher speed service.  But it also makes network management easier without inconveniencing existing customers with slowdowns during peak usage.

The GAO didn’t need 77 pages to produce a report that concludes broadband usage skyrockets when people are at home.  Just watching holiday shopping traffic online spike during deal days like “Cyber Monday,” after Thanksgiving would illustrate that.  Should 40 percent of Americans stay home from work, instead of browsing the Internet from their work machines, they’ll be doing it from home.  That moves the bottleneck from commercial broadband accounts to residential broadband networks.

The GAO says such congestion could create all sorts of problems for the financial services sector, slowing down their broadband access.

Providers’ options for addressing expected pandemic-related Internet congestion include providing extra capacity, using network management controls, installing direct lines to organizations, temporarily reducing the maximum transmission rate, and shutting down some Internet sites. Each of these methods is limited either by technical difficulties or questions of authority. In the normal course of business, providers attempt to address congestion in particular neighborhoods by building out additional infrastructure—for example, by adding new or expanding lines and cables. Internet provider staff told us that providers determine how much to invest in expanding network infrastructure based on business expectations. If they determine that a demand for increased capacity exists that can profitably be met, they may choose to invest to increase network capacity in large increments using a variety of methods such as replacing old equipment and increasing the number of devices serving particular neighborhoods. Providers will not attempt to increase network capacity to meet the increased demand resulting from a pandemic, as no one knows when a pandemic outbreak is likely to occur or which neighborhoods would experience congestion. Staff at Internet providers whom we interviewed said they monitor capacity usage constantly and try to run their networks between 40 and 80 percent capacity at peak hours. They added that in the normal course of business, their companies begin the process to expand capacity when a certain utilization threshold is reached, generally 70 to 80 percent of full capacity over a sustained period of time at peak hours.

However, during a pandemic, providers are not likely to be able to address congestion by physically expanding capacity in residential neighborhoods for several reasons. First, building out infrastructure can be very costly and takes time to complete. For example, one provider we spoke with said that it had spent billions of dollars building out infrastructure across the nation over time, and adding capacity to large areas quickly is likely not possible. Second, another provider told us that increasing network capacity requires the physical presence of technicians and advance planning, including preordering the necessary equipment from suppliers or manufacturers. The process can take anywhere from 6 to 8 weeks from the time the order is placed to actual installation. According to this provider, a major constraint to increasing capacity is the number of technicians the firm has available to install the equipment. In addition to the cost and time associated with expanding capacity, during a pandemic outbreak providers may also experience high absenteeism due to staff illnesses, and thus might not have enough staff to upgrade network capacities. Providers said they would, out of necessity, refrain from provisioning new residential services if their staff were reduced significantly during a pandemic. Instead, they would focus on ensuring services for the federal government priority communication programs and performing network management techniques to re-route traffic around congested areas in regional networks or the national backbone. However, these activities would likely not relieve congestion in the residential Internet access networks.

It’s clear some broadband providers are not willing to change their business models to redefine congestion from measurements taken during peak usage when speeds slow, to those that anticipate and tolerate traffic spikes.  That means making due with what broadband providers are delivering today and developing technical and legal means to ration, traffic shape, or simply cut access to high bandwidth traffic during ‘appropriate emergencies.’  Right on cue, the high bandwidth barrage of self-serving provider talking points are on display in the report:

Providers identified one technically feasible alternative that has the potential to reduce Internet congestion during a pandemic, but raised concerns that it could violate customer service agreements and thus would require a directive from the government to implement. Although providers cannot identify users at the computer level to manage traffic from that point, two providers stated that if the residential Internet access network in a particular neighborhood was experiencing congestion, a provider could attempt to reduce congestion by reducing the amount of traffic that each user could send to and receive from his or her network. Such a reduction would require adjusting the configuration file within each customer’s modem to temporarily reduce the maximum transmission speed that that modem was capable of performing—for example, by reducing its incoming capability from 7 Mbps to 1 Mbps. However, according to providers we spoke with, such reductions could violate the agreed-upon levels of services for which customers have paid. Therefore, under current agreements, two providers indicated they would need a directive from the government to take such actions.

Shutting down specific Internet sites would also reduce congestion, although many we spoke with expressed concerns about the feasibility of such an approach. Overall Internet congestion could be reduced if Web sites that accounted for significant amounts of traffic—such as those with video streaming—were shut down during a pandemic. According to one recently issued study, the number of adults who watch videos on video-sharing sites has nearly doubled since 2006, far outpacing the growth of many other Internet activities. However, most providers’ staff told us that blocking users from accessing such sites, while technically possible, would be very difficult and, in their view, would not address the congestion problem and would require a directive from the government.

Enjoy up to one Hogan's Heroes episode per day during the H1N1 flu pandemic

You have to love some of the players in the broadband industry who trot out their most-favored “network management” talking points to handle a national emergency.  It’s interesting to note providers told the GAO they were concerned with violating customer agreements regarding speed guarantees, when most providers never guarantee residential service speeds.  Their first solution is the Net Neutrality-busting traffic throttle, to slow everyone down to ration the “good enough for you” network in your neighborhood.  Shutting down too-popular, high bandwidth websites like Hulu (no worries – you can watch your favorite shows on our cable TV package) is apparently someone’s good idea, but considering providers admit it wouldn’t actually solve the congestion problem, one’s imagination can ponder what other problems such a shutdown might solve.

One provider indicated that such blocking would be difficult because determining which sites should be blocked would be a very subjective process. Additionally, this provider noted that technologically savvy site operators could change their Internet protocol addresses, allowing users to access the site regardless. Another provider told us that some of these large bandwidth sites stream critical news information. Furthermore, some state, local, and federal government offices and agencies, including DHS, currently use or have plans to increase their use of social media Web sites and to use video streaming as a means to communicate with the public. Shutting down such sites without affecting pertinent information would be a challenge for providers and could create more Internet congestion as users would repeatedly try to access these sites. According to one provider, two added complications are the potential liability resulting from lawsuits filed by businesses that lose revenue when their sites are shutdown or restricted and potential claims of anticompetitive practices, denial of free speech, or both. Some providers said that the operators of specific Internet sites could shut down their respective sites with less disruption and more effectively than Internet providers, and suggested that a better course of action would be for the government to work directly with the site operators.

A very subjective process indeed, but one many providers have sought to keep within their “network management” control as they battle Net Neutrality.  One would think “potential claims of anti-competitive practices” would represent an understatement, particularly if cable industry-operated TV Everywhere theoretically kept right on running even while Hulu could not.  As long time net users already know, outright censorship or content blockades almost always meet resistance from enterprising net users who make it their personal mission to get around such limits.

Expanding broadband networks to provide a better safety cushion during periods of peak usage is looking better and better.

Providers could help reduce the potential for a pandemic to cause Internet congestion by ongoing expansions of their networks’ capacities. Some providers are upgrading their networks by moving to higher capacity modems or fiber-to-the-home systems. For example, some cable providers are introducing a network specification that will increase the download capacity of residential networks from the 38 Mbps to about 152 to 155 Mbps. In addition to cable network upgrades, at least one telecommunications provider is offering fiber-to-the home, which is a broadband service operating over a fiber-optic communications network. Specifically, fiber-to-the-home Internet service is designed to provide Internet access with connection speeds ranging from 10 Mbps to 50 Mbps.

Hello.

Sounds like a plan to me, and not just for the benefit of the Wall Street crowd sick at home with the flu.  Such network upgrades can be economical and profitable when leveraged to upsell the broadband enthusiast to higher speed service tiers.  During periods of peak usage, such networks will withstand considerably more demand and provide a better answer to that nagging congestion problem.

The alternative is Comcast or Time Warner Cable, in association with the Department of Homeland Security, having to appear on Wolf Blitzer’s Situation Room telling Americans they have a broadband rationing plan that will give you six options of usage per day.  Choose any one:

• Up to three videos of cats chasing laser pointers on YouTube
• One episode of Hogan’s Heroes
• Up to six videos of your friends playing Guitar Hero on Dailymotion
• Unlimited access to Drugstore.com to browse remedies
• Five MySpace videos of your favorite bands
• Up to 500 “tweets” boring your followers with every possible detail of your stuck-at-home-sick routine

When utilities want to “charge you for what you use,” it would be nice to trust the meter is accurately measuring your usage, California consumer advocates say.

In a growing controversy, Pacific Gas & Electric (PG&E) is now being accused of installing so-called “smart meters” that were smart for PG&E profits, but financially devastating for California consumers who face higher bills and growing questions about just how accurate those “smart meters” really are.

Customers across California who have had new meters installed, which are supposed to help consumers save energy by charging lower prices at off-peak usage times of day, report enormously higher bills from PG&E after installation.

State Sen. Dean Florez, D-Shafter (Kern County), reports he has seen bills from customers that don’t begin to make sense.

California Senator Dean Florez (D-Shafter/Kern County)

“One farmer was charged $11,857 for running a piece of equipment that was never turned on. A local attorney at the hearing clutched a $500 bill from July, a month in which she was visiting family out of state and almost every appliance in her house was shut off,” he reports.

Florez quotes the woman — “My smart meter keeps reading these spikes in usage at noon. But no one was in the house,” she said. “It’s obvious to me that this technology is not ready for prime time.”

Customers across the state with smart meters have reported similar stories, and are angry with PG&E’s response to their concerns, which can be boiled down to, “the meter is right, you are wrong, now pay us.”

PG&E claims that during its own internal reviews, it found nobody being overcharged. Spokesman Jeff Smith says “in all 1700 of those cases we have not found an instance thus far of the smart meter transmitting inaccurate information or incorrect usage information.”

The California Public Utilities Commission doesn’t think that’s enough and has begun ordering an independent review of the “smart meter” program and accuracy of meter readings.

Liz Keogh spent 14 years collecting and analyzing data at the Institute for Social Research in Ann Arbor, Michigan, and now lives in Bakersfield, California.  She has been pulling out her old PG&E bills and records showing her utility use all the way back to 1983.  What she found since the “smart meter” was installed on her home was disturbing.

Her analysis was printed in the San Francisco Chronicle:

My July, August and September 2009 bills showed the highest usage and cost in 26-plus years, even though I rarely go over “baseline usage.” The dollar difference from 2008 to 2009 was $20 to $30 each month. Billing costs are a product of usage multiplied by kilowatt-hour rates, which, like the federal income tax structure, is “tiered,” so that the more you use, the more you pay – and at higher and higher rates. Analysis of usage is the first step toward understanding fluctuations in cost.According to the smart meter installed on Sept. 12, 2007, the increase in my 2008-09 usage over 2007 was:

	2008	2009
May	+5.6%	+28.6%
June	+7.5%	+32.6%
July	+10%	+50.2%
Aug.	+3.1%	+41.1%
Sept.	-4.8%	+67.9%
Oct.	+4.9%	NA

PG&E’s own data show there was not a significant difference in temperatures for each comparable month. Why, then, did my “usage” increase range from 30 percent to 70 percent in 2009, while the 2008 increases were no more than 10 percent?

Simple answer: Meter malfunctioning, whether accidental and idiosyncratic, or, as some claim, intentional.

The suspicion that funny business is going on might be justified when considering Bakersfield residents have been through this all before.

“[Several years ago] Bakersfield is where PG&E first realized it had made a $500 million mistake, installing tens of thousands of inferior meters that would never live up to the promise. So the utility purchased a new generation of meters from Silver Spring Networks Inc. of Redwood City. PG&E insists that these new meters are glitch-free, though it concedes that it has tested only 50 out of 250,000 meters in Kern County,” Florez said.

At a time when some broadband providers want to install their own meters to overcharge customers for their Internet service, the PG&E experience is telling.  Independent oversight of any meter comes down to the enforcement mechanism available to guarantee accuracy.  But broadband service in the United States is unregulated, and no such enforcement mechanism exists.

And just when you thought you could believe the rhetoric that utility customers who conserve their usage will save more money, another electric and gas utility in San Diego filed a rate increase request that will charge customers who have managed to cut their usage even higher prices than those who have not.

[flv width=”640″ height=”480″]http://www.phillipdampier.com/video/KGET Bakersfield Senator Florez Questions SmartMeters 9-23-09.flv[/flv]

KGET-TV Bakersfield talked with Senator Florez on September 23 about the SmartMeter controversy (4 minutes)

More video coverage below the jump.

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