What is one of the most effective ways to stop competition in its tracks before it can even get off the ground? Reward a state legislator with generous campaign contributions who introduces a bill banning your would-be competitor and get back to business as usual.

Delegate Kathy Byron (R-Campbell County) has broadband, but many of the people who live and work in central and western Virginia near her district don’t. Located in south-central Virginia, the county of 55,000 endures similar broadband availability and quality problems other communities in the western half of the state experience. Located near the Blue Ridge Mountains, the county seat of Rustburg has areas served by DSL, and many other areas that are not. For telecom companies serving mountainous and rural communities in this part of the state, broadband is often not economically viable enough to meet Return On Investment formulas. In fact, the problems are so significant, the southwestern Virginia community of Claudville was selected as the nation’s first testing ground for “white space” wireless broadband, designed to serve sparsely populated rural areas.

Byron’s district in Campbell County is neither wealthy or rich in internet options. Like other communities in the region, the decline of manufacturing and the transition away from tobacco production has created enormous economic challenges. Campbell County is continuing to rely heavily on agriculture while other communities in Virginia and the Carolinas are reinventing themselves to participate in the 21st century knowledge economy. That requires 21st century broadband service, which Campbell County lacks.

Last fall, Campbell County Public Schools assistant superintendent Robert Arnold provided a frank assessment of the area’s broadband problems, telling The News & Advance schoolchildren in his district suffer from a “homework gap,” unable to complete assignments requiring the internet at home because those homes lacked access. A recent trial of “white space” broadband in the area proved unsatisfactory because, in Arnold’s view, it was unreliable.

Her bill, according to The Roanoke Times, is the height of hypocrisy for a Republican claiming to be pro-business development:

Byron’s bill would make it difficult for existing municipal broadband authorities to expand and new ones to get started. Curiously, for a bill sponsored by a Republican, it would create more regulation, by requiring that the state authorize any creation or expansion of a broadband authority (plus lays on other regulations, as well.) For a bill that purports to protect the free market, it actually distrusts the free market: If telecommunications companies were already providing the service the rest of the business community wanted, the business community wouldn’t be clamoring for local governments to step in.

The newspaper shouldn’t be surprised. Politicians willing to introduce these lovingly hand-crafted turf protection bills ask themselves only one question: are the generous corporate campaign contributions that usually accompany these “model bills” still worth it if the voters find out? Even if they do, a well-funded propaganda campaign sponsored by Big Telecom companies slamming municipal broadband as a government internet takeover or a guaranteed economic failure can help give politicians enough cover to avoid being exposed for selling constituents down the river.

It will therefore come as no surprise to regular Stop the Cap! readers that Virginia’s largest telecom companies have spent lavishly on Ms. Byron over the years. Her second largest contributor (next to the Republican Party of Virginia) is Verizon, which spent considerably more on her campaign than other well-heeled companies including Anthem and the Virginia banking lobby. Another major contributor is the Virginia Cable Telecommunications Association (more on that organization later). Others bringing checks include: AT&T, Sprint, CenturyLink, Comcast and the Virginia Telecommunications Association.

The pattern is all too familiar. Politicians take a sudden interest in telecommunications public policy and almost by magic produce a very detailed (and suspiciously similar) piece of legislation designed to make life impossible for public and community broadband projects, while claiming their bill will improve broadband.

In many cases, the politicians introducing these broadband ban bills are surprisingly unprepared to answer detailed questions about their own legislation, counting on local media to not scrutinize their logic too closely. But every so often, the blank stares and subject-changing that occurs when challenges are put to the alleged authors make us question if they actually read their own bill.

We have.

Also of concern, Ms. Byron and her bill expose several conflicts of interest she has elected to ignore and hope nobody notices, like her membership on the American Legislative Exchange Council’s Communications and Technology Task Force, notorious for promulgating state bills restricting or banning public broadband. ALEC funding comes, in part, from some of the nation’s largest telecom companies.

We noticed.

The backlash Ms. Byron is now receiving from unhappy rural Virginia communities and local media that have read her bill has apparently surprised her, and in subsequent newspaper letters to the editor, she has taken to playing the victim card. But that has not stopped her from maligning municipal broadband projects, hoping that shaking those shiny keys will distract enough people from focusing on what is actually in her bill.

We put her keys away.

Stop the Cap! has reviewed her bill, also known as House Bill 2108, and what we found astonished us more than usual, and we’ve seen just about every kind of shilling imaginable:

§ 56-484.28. Provision of broadband expansion services.

Notwithstanding any provision of the Virginia Wireless Service Authorities Act (§ 15.2-5431.1 et seq.) or any other provision of law, a locality or any affiliate may own and operate a broadband or Internet communications system, including ownership or lease of fiber optic or other communications lines and facilities, to provide broadband expansion services only if the following conditions are met:

1. The locality or its affiliate has obtained a comprehensive broadband assessment by report or study, by the Center for Innovative Technology, or an independent consulting firm knowledgeable and experienced in analyzing broadband deployment, which report or study is made available to the public and specifically identifies any unserved areas.  The locality or its affiliate shall be responsible for all fees charged by the Center for Innovative Technology or an independent consulting firm for the preparation of such comprehensive broadband assessment report or study.

2. Based upon the comprehensive broadband assessment, the locality or its affiliate formally adopts and publishes specific broadband goals regarding capacity, geography and documented demand for Internet services in the specific unserved areas which the locality or its affiliate desires to address.

3. The locality or its affiliate has issued a request or solicitation for proposals, consistent with the specific broadband goals of the locality previously identified, requesting the capital cost which an existing for-profit local Internet service provider offering communications services with broadband speeds would incur to meet the locality’s specific broadband goals by extending or upgrading such services with broadband speeds to any specific unserved areas of the locality identified in the comprehensive broadband assessment.  Copies of such request or solicitation shall be sent to any franchised cable operator and other known Internet service providers with local facilities offering communications services in the locality at least 180 days in advance of the deadline for the response to the request or solicitation for proposals. The governing body of the locality or its affiliate shall analyze any responses it receives to determine if capital grants or subsidies by the locality to pay for such extension by an existing provider would be more cost effective than construction and operation of a new distribution system by the locality or its affiliate.

4. If no incumbent broadband provider advises the governing body of the locality within six months after the release of the request or solicitation for proposal that it is willing or able to meet the local goals, either without a capital grant or subsidy, or with the capital grant or subsidy or portion thereof proposed by the locality, then the governing body of the locality or its affiliate, after a public hearing, may vote to authorize one or more projects, consistent with the specific broadband goals of the locality previously identified,  to provide broadband expansion services to unserved areas within the locality identified by the comprehensive broadband assessment report or study described above, which report or study shall not be more than one year old at the time of the public hearing.  The chief executive officer of the locality or its affiliate shall certify that the comprehensive broadband assessment report or study identification of unserved areas is still correct based upon information presented at the hearing.

5. Any locality or affiliate project to provide broadband expansion services shall be designed and built or otherwise implemented so that at the time of authorization, the project (i) does not duplicate existing broadband facilities offering broadband speeds to customers, within 90 percent of the geographic area of the project, and (ii) does not duplicate service to customers who already are in a position to connect to an Internet service offering broadband speeds, for 90 percent of the projected residential and commercial customers who will be served by the project or otherwise are within the service area of the project.

6. Any locality or its affiliates seeking to offer or offering broadband expansion services shall, at least 120 days prior to commencement of construction of any project, file with the Virginia Broadband Advisory Council, (i) copies of its report or study from the Center for Innovative Technology, including any updates or supplements thereto, (ii) copies of the minutes of the meeting at which it voted to authorize the offering of broadband expansion services, (iii) a map or description of each project and projected area in which it plans to offer broadband expansion services, (iv) an annual certification by July 1 of each year that any expansion to or changes in its projects or system since the preceding July 1 still qualify as broadband expansion services, and (v) an annual certification that its provision of services meets or in the case of a prospective or an incomplete project shall meet, the requirements of subdivisions 1 through 6 of § 56-484.30.  Any person who believes that any part of such filings is incomplete, incorrect or false and who is in the business of providing Internet services within the locality shall have standing to bring an action in the circuit court for the locality to seek to require the locality to either comply with the substantive and procedural content of the filings required by this section, or cease to provide services, and no bond shall be required for injunctive relief against the locality.

In condensed form, this section claims to help facilitate municipal broadband service in “unserved areas,” but then hamstrings local communities to an extent that makes offering such a service next to impossible. The irony of a Republican legislator advocating detailed and burdensome regulations for a publicly owned provider while concurrently supporting “hands-off” policies for her campaign contributor-provider pals should not be lost on her constituents.

The bill could have been called the “Virginia Duopoly Protection Act,” because it only really allows public broadband development in unserved areas, and only after a community pays for a “broadband assessment” that the bill also mandates be sent to its potential competitors — private cable and telephone companies. Imagine if AT&T was required to send copies of their business plans to Comcast and Charter.

Even worse, phone and cable companies are guaranteed a “heads-up” when a community provider is thinking about providing service, exactly where that service will go, and how much it will cost the community to offer it. Companies on the wrong side of the law used to hire spies to get that information from competitors. Byron’s bill makes Virginia communities pay for the postage required to mail those plans to telecom companies serving their area.

Being given access to what even cable and phone companies would consider highly confidential information isn’t enough. Ms. Byron’s bill allows them to take their time reading it. In fact, her bill gives incumbent providers up to six months to stall, sabotage, or undercut the community effort. They are given the right to underbid the community’s proposal and ironically deliver service in places they have previously refused to serve.

“While it’s good to be specific about what a community plans to do, incumbent providers don’t have to adhere to the same level of transparency,” noted Lisa Gonzalez at the Institute for Local Self-Reliance. “As a result, publicly owned networks are at a disadvantage under such requirements when an incumbent knows where, what, when, and how much a municipality intends to invest to bring service to its community. When incumbents build or upgrade, they are not subject to the same level of exposure. Potential private partners who may consider leasing infrastructure or working with a community in some other capacity could also be put off by drastic transparency rules.”

Any of Virginia’s phone and cable companies could end the demand for municipal broadband tomorrow by simply providing the level of service communities need to participate in the digital economy. That requires connected education and high quality broadband for entrepreneurs and established businesses. Instead of providing that, companies write large campaign contribution checks to state politicians like Ms. Byron to slow down or sabotage any emerging competition. While stalling germinating broadband projects, providers will spend millions to demagogue them in the local media, throw every obstacle in their path, and then point to the delays and cost overruns as evidence municipal broadband is a failure.

In Tennessee, EPB had to face down a deep-pocketed cable industry lawsuit before it could begin offering gigabit internet broadband and television service. EPB eventually won the lawsuit and the service now attracts a substantial market share in Chattanooga, but critics carp it was only successful because it got a federal grant. They ignore the fact it has paid substantial dividends in job growth and enhanced the lives of local citizens, who vote for the service with their wallets.

The fact critical cable and phone companies risk charges of hypocrisy doesn’t seem to move them, even though they are not averse to accepting tax breaks and other government goodies as well. That is why providers instead use well-funded third-party astroturf groups and legislators to do their dirty work. Byron’s bill is more obvious than most, with obstructive sections mandating very short windows for public hearings, blatant protectionism, and a thicket of bureaucratic regulations designed to give ample opportunities for industry mischief with the filing of frivolous motions to run out the clock and run up costs.

§ 56-484.29. Provision of overbuild broadband services.

Any locality or its affiliate that is providing overbuild broadband services as of July 1, 2017, may continue to serve customers within the geographic service area within which it is actually providing such services as of that date; however, except as hereafter provided such locality or its affiliate shall not subsequently expand the geographic scope of its services or expand the nature of the service being offered.  Any locality or its affiliate that is not actually providing overbuild broadband services as of July 1, 2017, or if providing such services, subsequently seeks to expand the geographic territory or nature of services being offered, shall submit a proposal to the Virginia Broadband Advisory Council with a full explanation of the proposed overbuild broadband services, and if recommended by the Virginia Broadband Advisory Council, shall then require the express approval of the General Assembly through legislation approving the offering or expansion of such services by the locality or its affiliate.

Since 2008, Stop the Cap! has reviewed industry-sponsored municipal broadband ban bills, and none to date have illustrated the level of conflict of interest we see here. We call on Virginian officials to carefully investigate the ties Ms. Byron has to cable and phone companies and the ethical concerns raised from her involvement in key state bodies that can make or break rural broadband in Virginia. Byron increasingly exposes an agenda favoring incumbent phone and cable companies that just happen to contribute to her campaign — companies she seems willing to protect at any cost.

In our investigation, we uncovered several disturbing details that suggest questionable behavior from Ms. Byron, primarily from her failure to disclose materially important facts about her bill to fellow elected officials and, more importantly, the public. So far, her only defense to questions raised by the media about her bill is to play the “misunderstood victim” card:

This may be yet another example of media arrogance manifesting itself as a lack of common courtesy. But, I believe the real culprit to be something far more dangerous: the editorial’s author was not going to risk being confused by the facts.

[…] Had someone contacted me, I would have told them about my years of experience serving on Virginia’s Broadband Advisory Council, which I currently serve as chairman. The purpose of the Council is “to advise the Governor on policy and funding priorities to expedite deployment and reduce the cost of broadband access in the Commonwealth.” The Virginia Broadband Deployment Act advances that goal. That’s why legislators serving on the Council support House Bill 2108. And, we’re in good company: The Virginia Chamber of Commerce, the Virginia Association of Realtors and the Northern Virginia Technology Council have all indicated their support for House Bill 2108.

In fact, we understand Ms. Byron, her telecom industry benefactors, and the special interests she mentions as supporters only too well. We invite Ms. Byron to refute some of our facts:

While broadband in major Virginia cities is no better or worse than other large cities in the region, there are vast areas in central and western Virginia where inadequate broadband service persists, and private providers have been reluctant or unwilling to change that. As a result, some municipalities are considering offering an alternative. Ms. Byron’s bill doesn’t just deter communities from entering the broadband arena in these areas, it carpet-bombs the entrance out of existence.

The section of her bill detailing requirements for community providers seeking to expand requires them to ask permission from an entity known as the Virginia Broadband Advisory Council, which Byron disturbingly chairs. If the goal of this Council is to pave the road to improved broadband, Byron’s bill is an enormous pothole. Restricting competition won’t help the Council’s goal of winning lower prices for consumers and businesses either, and last time we checked, broadband bills in Virginia are going up, not down.

Ms. Byron’s clear conflict of interest between her bill and the Council’s goals should be grounds for her immediate resignation. It is hard to justify continuing to serve on a Council promoting better broadband while introducing bills that do the opposite. Taking political campaign contributions from the same companies that are directly responsible for the state of Virginia’s broadband today also makes it impossible for the Council to have any credibility as long as she continues to chair it.

Another concern: Ms. Byron fails to disclose the Council she uses for her defense includes “citizen members” that are, in reality, some of the most important telecom industry lobbyists in the state. Ms. Byron’s bill would require communities to seek approval for broadband expansion from the same Council that counts among its members Ray LaMura, president of the Virginia Cable Telecommunications Association, the state’s largest cable industry lobbying group, and Duront Walton, executive director of the Virginia Telecommunications Industry Association, which represents the interests of several telephone companies in the state.

Does anyone believe the Virginia Broadband Advisory Council is likely to approve any broadband expansion plan that leads to direct competition with an established cable or phone company, particularly when members like Mr. LaMura write municipal broadband hit pieces prominently linked on his LinkedIn page? Does anyone expect a fair shake from Ms. Byron, who wrote (inaccurately) “the vast majority of municipal broadband systems across the country that have tried to compete with the private sector have failed.”

By all appearances, the fix is in.

While we’re discussing full disclosure, Ms. Byron also failed to mention the Virginia Chamber of Commerce is hardly a dispassionate arbiter of the merits of community broadband — it is a private business lobbying organization. The Virginia Realtors Association is also a political lobbying organization that openly endorsed Ms. Byron’s election campaign, contributed a substantial donation to it, and runs an active Political Action Committee. The Northern Virginia Technology Council is a trade and lobbying organization that counts among its members AT&T, Cox, Comcast, CenturyLink, and Verizon, to name a few. To quote NVTC’s own website: “NVTC members are business leaders focused on the broad business climate of our state and communities.”

We believe Ms. Byron when she said she was in good company. Missing from the cozy gathering are consumers looking for internet access, local governments feeling pressure from their constituents to do something about the problem, and any belief Ms. Byron’s bill will do anything except keep things as they are.

But wait, there is more:

§ 56-484.30. Operating requirements.

The following provisions shall apply to any locality or its affiliate which offers broadband expansion services or overbuild broadband services, after July 1, 2017:

1. A locality or its affiliate shall apply, without discrimination as to itself and any affiliate, including any charges or fees for permits, access or occupancy, the locality’s ordinances, rules, and policies, including those relating to (i) obligation to serve; (ii) access to public rights of way and municipal utility poles and conduits; (iii) permitting; (iv) performance bonding; (v) reporting; and (vi) quality of service.

2. In calculating the rates charged by a locality for any communications service:

 a. The locality or its affiliate shall include within its rates an amount equal to all taxes, fees, and other assessments that would be applicable to a similarly situated private provider of the same communications services, including federal, state, and local taxes; franchise fees; permit fees; pole attachment fees; and any similar fees; and

b. The locality or its affiliate shall not price any of its communications services at a level that is less than the sum of: (i) the actual direct costs of providing the service; (ii) the actual indirect costs of providing the service; and (iii) the amount determined under subdivision 2a.

3. A locality or its affiliate shall keep accurate books and records of any provision of communications services.  A locality or its affiliate shall conduct an annual audit of its books and records associated with any provision of communications services, with such audit to be performed by an independent auditor approved by the Auditor of Public Accounts. Such audit shall include such criteria as the Auditor of Public Accounts deems appropriate and be filed with him, and with copies to be submitted to the Virginia Broadband Advisory Council.  If, after review of such audit, the Auditor of Public Accounts determines that there are violations of this chapter, he shall provide public notice of same, and the locality or its affiliate shall take appropriate corrective action to cure past violations and prevent future violations. […]

§ 56-484.31. Sale or disposal.

Any locality or its affiliate that seeks to sell or dispose of all or any material part of the infrastructure of an internal government services, broadband expansion services, or overbuild broadband services system, or any material portion of any subscriber or service contracts in connection therewith, shall do so by a public sale or auction process after advertisement.

By now, most readers get the point. This bill is a “plan for failure” for municipal broadband.

The ideological pretzel-bending required of Ms. Byron to do the telecom industry’s bidding is a sight to behold. Byron — a Republican — is openly advocating government price regulation, demands municipal providers turn over their books to be reviewed by her Virginia Broadband Advisory Council, which includes cable and telephone company lobbyists, and requires communities that want to abandon networks that fail under this legislative gulag to sell them to the lowest bidder, likely a cable or phone company that helped write the rules.

If this anti-consumer nightmare of a bill becomes law in Virginia, Christmas for Big Telecom will come early this year, and you’re paying… again.

Although existing Time Warner Cable Maxx customers will be able to keep their broadband speed upgrades up to 300Mbps, new customers and those switching to a Charter Spectrum plan will find Spectrum’s advertised broadband options reduced to just one: 100Mbps in TWC Maxx cities like New York and 60Mbps in territories never upgraded to Maxx service.

Charter Spectrum has soft launched their new plans in the New York City market and will begin heavily promoting them later this month. But customers will find their choices dramatically limited, except for television service.

Spectrum is marketing just three triple play plans on its revamped website in the NYC area, varying only with respect to the number of channels included in the TV package:

When we selected internet-only service, we were presented with only one option in New York City: 100Mbps

At least the modem rental is included in the promotional price, which incidentally rises in the second and third year until it reaches $60 for 60Mbps service, and $100 for 100Mbps service, assuming your promotion has expired.

The promotional prices are not too bad if you are a devotee of cable television, and the broadband price is affordable as well, at least for the first year. After the first 12 months, prices rise and company officials have already warned they will be far more stingy about offering customers repeat retention pricing than Time Warner Cable was.

Charter has announced it will continue to roll out Spectrum packages across the Time Warner Cable and Bright House service areas until the conversion is complete early next year. New York City and Florida are the next targeted markets, but it is clear Charter has already begun offering Spectrum plans instead of continuing to market Time Warner Cable plans that customers can still buy upstate.

Customers will be able to keep their existing Time Warner Cable plans, but any promotional pricing deals will not likely be renewed when they expire, causing your Time Warner Cable bill to spike dramatically in some cases.

We are unsure if existing TWC Maxx customers will be forced to give up their 300Mbps TWC Maxx plan if they switch to a Spectrum plan. There may be several non-publicized plans for these customers. Time will tell.

Editor’s Note: These prices/packages were obtained from timewarnercable.com using a residential street address on W 72nd St, New York, NY, 10023

At least 54,000 Time Warner Cable customers downgraded or canceled their cable TV service in the last three months as Charter Communications continues to take a harder line on offering or renewing customer retention discounts for customers unhappy with their bill.

Time Warner Cable customers are “mispriced” with discounts and deals that lower the cost of service but face bill shock when the promotion ends, according to Charter CEO Thomas Rutledge.

“Third quarter customer results were more inconsistent with good performance at Legacy Charter and Bright House, but higher churn and downgrades in the Time Warner Cable markets, as we expected, given the way Time Warner Cable had marketed promotional pricing,” said Rutledge. “Until our Spectrum pricing and packaging is launched across the newly acquired service areas, we continue to expect higher levels of churn and downgrades where Time Warner Cable was the operator.”

“Over the next few quarters, our operating results will reflect reversing certain product and packaging strategies, in particular at TWC, in which in our view are not sustainable, given high promotional roll-offs and annual rate increases, high customer equipment fees, including modem fees, all coupled with complex and stacked offers,” added Charter’s chief financial officer Christopher Winfrey.

Traditionally, Time Warner Cable has dealt with price sensitive customers rolling off special pricing promotions by gradually resetting rates higher or, when necessary, by renewing the promotion for another year in an effort not to lose the customer. That will stop under Charter’s ownership, according to Mr. Rutledge. As a result, Charter Communications is seeing significant customer losses at Time Warner Cable when customer service representatives won’t budge on pricing.

Rutledge is seeking more discipline in product pricing so Charter does not have to extend cut-rate retention promotions to customers. As part of the Charter Spectrum rebrand, the cable company introduces new cable, broadband, and phone plans while allowing Time Warner Cable’s legacy plans to stay in effect until a customer elects to switch. While Texas and California Time Warner Cable customers have already been introduced to Spectrum plans, much of the rest of the country is still being offered plans only from Time Warner Cable or Bright House.

Customers are most likely to cancel service as their promotion expires. The resulting price hike can be a considerable shock as rates quickly reset to Bright House or Time Warner’s “regular price.”

Charter wants an incentive to get customers to forfeit their Time Warner or Bright House plan and switch to a new Spectrum plan as they are introduced. By making the grandfathered plans as unattractive as possible, the alternative Spectrum plans appear to be a better deal. Unfortunately, until Spectrum-branded plans arrive nationwide, many customers are stuck in limbo rolling off a promotion, are unable to renew it, and forced to wait for new Spectrum plans to be introduced.

Rutledge announced last week that the next markets to be introduced to Spectrum this month are in New York City and Florida, the latter former Bright House territory. Rutledge predicted half of Time Warner Cable customers will be offered Spectrum plans by the end of this year. But some Time Warner Cable customers may have to wait until next spring before Spectrum rebranding is complete.

Time Warner Cable Maxx is Still Dead, Earning Charter $36 Million in Reduced CapEx

Charter also reported significant financial benefits from prematurely terminating the Time Warner Cable Maxx upgrade effort. Time Warner’s upgrades would have given customers free speed upgrades up to 300Mbps. But Charter pulled the plug on the upgrade project just after completing its acquisition, and has no plans to restart it.

“Cost to service customers declined by about 2% despite overall customer growth of 5.1%, which reflects lower service transactions at Legacy Charter, the lack of all-digital activity at TWC this quarter versus last year’s third quarter, and some benefit from less physical disconnects in all-digital markets,” reported Winfrey. “Capital expenditures totaled $1.75 billion, including $109 million of transition spend. Excluding transition CapEx, our third quarter CapEx was down by $36 million year-over-year, about 2%, driven by all-digital spending at TWC, primarily on [equipment], which did not recur in the third quarter of this year.”

Charter expects to increase CapEx next spring, as the company continues its less ambitious transition to all-digital cable service, which includes broadband speeds topping out at 100Mbps, three times less than what Time Warner Cable was implementing.

Charter is Less Enthusiastic About Digital Phone Service

Time Warner Cable maintained a healthy market share for its digital phone service by bundling it at a promotional price of $10 a month, a rate that remained relatively stable for customers sticking with a triple play package bundle. Time Warner Cable also enhanced its phone service by adding the European Union nations, Mexico, and several popular Asian calling destinations as part of the local calling area, making those calls free of charge.

Charter’s own plan is less feature-rich and customers have to buy an add-on plan to cover international long distance, making the product considerably less attractive to customers. Some customers also find the cost of the phone service has increased under Spectrum, a problem acknowledged by Winfrey, who noted Time Warner Cable’s low-price voice offer in prior year quarters had been discontinued, resulting in higher voice downgrades and relationship churn.

Charter’s Plans for Legacy Charter Customers and Newly-Adopted Time Warner Cable and Bright House Customers

Rutledge made clear that despite any product changes or rebranding, the long term goal of Charter Communications is to see revenue grow. Whether that will come from gradual repricing of cable products and services to a higher rate or from improved products and services that attract new upgrade business is not yet certain. But Rutledge outlined key areas Charter expects to focus on in the next few years:

• Charter will complete the all-digital transition at Time Warner Cable and Bright House over the next two years, but it will resemble the kind of service legacy Charter customers get today, not TWC Maxx;
• Over the next five years or so, with relatively small infrastructure investments, Charter plans to implement DOCSIS 3.1 which will be able to deliver symmetrical multi-gigabit speeds to all 50 million homes and businesses in their service area;
• Charter plans to aggressively market and grow its services for commercial customers, targeting businesses large and small, at prices that more closely resemble residential service pricing, instead of the price premium Time Warner Cable has traditionally charged its commercial customers;
• Charter is activating its MVNO agreement with Verizon, which will allow Charter to create and market its own wireless/cellular service using Verizon’s nationwide network. The company is also exploring using millimeter-wave (5G) service to offer better broadband coverage in large commercial spaces like malls and rural properties currently not wired for cable service. Expect the company to create its own wireless/cellular bundle first, because it will rely entirely on Verizon’s network, keeping Charter’s costs low.

Frontier Communications has lost more than 150,000 customers in the last six months as company executives blamed bad marketing and the on-shoring of call centers that formerly supported Verizon customers in Texas, California, and Florida.

Some 99,000 customers dropped Frontier service in the last three months, and another 77,000 departed during the three months before that. In addition to losing customers, Frontier saw a net loss of $80 million in its third quarter, up from a the $14 million the company lost during the same quarter a year ago.

A clearly distraught Dan McCarthy, Frontier’s CEO, knew he was in for a pummeling from Wall Street analysts on a conference call with investors on Tuesday.

“I wanted to assure you, that I’m focused on addressing and resolving the issues hindering our performance,” McCarthy said. “I’m fully aware that the third quarter results underscore the urgent need for our expanded business to perform at the higher level, where I know it can and should. And you have my personal commitment that we will do so.”

Frontier lost $52 million in revenue in the last three months in part because of its disastrous transition of former Verizon customers in California, Texas, and Florida and because a growing number of broadband users have realized Frontier’s endless promises of better service have rarely come to fruition and those customers chose other providers.

“This decline is unacceptable and reflects a level of performance, [and] I’m committed to change it,” McCarthy promised.

Unfortunately for customers and investors, that “change” is primarily rearranging the deck chairs with a haphazard, and likely soon-to-be-an-afterthought “reorganization,” and the usual treatment prescribed when executives fail to deliver Wall Street the results they expect: big layoffs of employees that had nothing to do with Frontier’s problems and have in fact been warning the company about some of their more boneheaded moves. The idea for quick layoffs may have come from Frontier’s newest chief financial officer R. Perley McBride, a pick McCarthy said will be “laser focused” on cost management. That’s code for cost-cutting, not exactly the best idea for a company that has shown a near-constant aversion to investing adequately in its network and on necessary broadband upgrades.

Analysts didn’t seem to be terribly interested in Mr. McCarthy’s grand reorganization plan either, detailed in this veritable word salad:

Let me also highlight that today, we announced a new customer-focused organizational structure, and the creation of commercial and consumer business units. This change is designed to improve our execution and operational effectiveness, increases spans of control in the organization and makes us more nimble, while at the same time eliminating duplicative costs associated with our former structure. In the first month of operating our new properties, it became apparent that this change was necessary.

Some investors pondered if these operational problems were all so readily identifiable and apparent, why didn’t Mr. McCarthy carry out changes after assuming leadership of the company more than a year ago.

McCarthy’s realization that big changes were needed is not what he was telling investors in May, when he was downplaying the impact of the Verizon customer cutover as affecting less than 1% of customers and wasn’t material. That level of happy talk puts McCarthy dangerously close to Wells Fargo territory, where a few million fake bank accounts weren’t material either.

McCarthy loves to use catchphrases to minimize the problems experienced at Frontier, as well as countering any negative developments with aspirational talk about the future.

For example, Frontier’s decision not to carefully scrutinize customer data provided by Verizon before cutting over customers to Frontier’s systems, leaving many without service for days to weeks was the result of “imperfect data extracts and network complexities” according to McCarthy. That cost Frontier plenty as the company issued bill credits to potentially tens of thousands of customers left without service because of ‘imperfections.’ Many just decided to leave and never looked back.

In May, McCarthy told investors “After a month of operating these properties, we are very pleased with the progress we have made, and we want to thank customers for their patience during the transition period. The entire Frontier team remains focused on cultivating growth by retaining and attracting new customers. We will continue to drive Frontier’s performance to maintain free cash flow that provides an attractive and sustainable dividend payout ratio.”

Not so much anymore. This week, McCarthy hit the red alert button and suddenly declared an urgent need for a major reorganization, oddly pegging Frontier’s problems partly on organizational inefficiencies:

“Historically, Frontier was organized around a regional structure, each one of the regions had its own resources that included marketing, finance, engineering, human resources. And in doing that, we – when we were a much smaller entity, it really did serve us well at that point in time. The more we looked at it today, the less differences there are in a lot of the markets and the way we’re going to market whether it’s around a Vantage product or it’s around FiOS or it’s around next-generation broadband products. So, when we looked at it, we did a really a trade-off on it, so we’ve essentially eliminated all of that redundancy in the organization.”

So what is the “redundancy” Frontier claims it has essentially eliminated? The forthcoming layoffs of 1,000 employees nationwide which Frontier management believes will make things much better for customers, at least according to McCarthy:

The impact is approximately 1,000 individuals that will be leaving the organization, and that translates directly into cost savings. And the nice part about it too is that the enhanced focus on commercial as well as consumer and Frontier has historically been a very consumer-focused organization. We’ve done well on the commercial side, but I really believe we can do much better with more focus, more attention and really putting the resources on those opportunities and making it, that’s what they do every day when they get up and they come to work, all they’re trying to do is grow the commercial revenue base.

So that’s really what we’ve done. It does change the focus on the field operations to really be engaged with the community as well as providing excellent service to customers and being that bridge, but really sales for both consumer and commercial are more centralized in a way that we can apply better resources and do it in a more efficient manner.

So Frontier plans to become more engaged with the community and deliver better service locally by… getting rid of 1,000 local employees and centralizing its resources somewhere else, probably in another state. The cherry on top? Frontier also implemented a rate hike for customers to enjoy.

McCarthy claimed Frontier has been a “very consumer-focused organization,” which seems hard to believe considering how many customers are saying goodbye to Frontier for good. He also implied customer sales are down because Frontier hasn’t effectively used their call center employees to sell service and Frontier alienated customers by moving those call centers from overseas back to the United States. Really?

The executive team at Frontier shrugs off further evidence of deepening customer dissatisfaction by ignoring customer losses in their “legacy” service areas — Frontier territories served by copper yesterday, today, and probably tomorrow. But ignoring problems is nothing new at Frontier:

• It’s not a problem that customers cannot order Frontier products and services on its website because of managerial ineptitude.
• It’s not a problem that customers are still stuck with 1-6Mbps copper-based DSL from Frontier while their cable competitor offers 200Mbps or more.
• It’s not a problem that several years after assuming control over almost all landlines in West Virginia, Frontier has only accomplished broadband speed upgrades for 23% of customers stuck in Frontier’s broadband molasses, and only after the company settled with the West Virginia Attorney’s General office in December 2015. For the record, that amounts to 6,320 customers. Don’t break a sweat there. Frontier’s performance in West Virginia has been so abysmal, the settlement between the state and the company represents the largest, independently negotiated consumer protection settlement in West Virginia history, which extends back to June 20, 1863.
• It’s not a problem that customers in Connecticut are still plagued by aftershocks from the tumultuous transfer from AT&T to Frontier in October 2014. On Oct. 19, 2016 countless DSL customers were reminded of that transition when they suffered another multi-hour outage and to add insult to injury, Frontier decided the time was also right to raise rates $4 a month for its Vantage TV service, which caused another round of customer cancellations.

McCarthy called the operational reorganization a “bridge” between field operations and providing excellent service to customers. We call it just another bridge to nowhere.

We’ve written for years that Frontier’s real problem isn’t cost management, organizational structure, or where it places employees and call centers. The real elephant in the room is that Frontier’s broadband service is terrible, especially where Frontier built the network all by itself or acquired it from another phone company decades earlier.

We are convinced Frontier’s management understands this, and so do many investors, but they just don’t care. One summed up the Frontier story this way:

So Frontier buys the whole wireline shooting match in one geographic area after another (labor force, wires, customers, DSL, even FIOS) paid for with billions in junk bond proceeds. Looking at an asset base that is disappearing before their eyes, the game is to squeeze as much out of it as possible before it crumbles completely. Minimum possible maintenance, minimum possible [investment], minimum possible headcount, and less every year.

From an investor’s standpoint, the key question is to figure out when the final collapse is going to take place.

When Rochester Telephone rebranded itself Frontier Communications in the 1990s, it did so looking forward to the future. The Frontier Communications experience of today is like immersing oneself in the History Channel. Nearly everything about Frontier these days is about the past and a promised future that never seems to arrive. Everything surrounds a legacy network still almost entirely dependent on last-century DSL for residential customers and various acquired networks from Verizon and AT&T mismanaged at conversion, forcing customers to clean up after Frontier’s repeated mistakes.

In legacy service areas where little has changed over the last decade, the four words that come to mind are “too little, too late” as customers make one last call to permanently drop service despite promises faster speeds are coming soon.

Too little investment in suitable broadband: Frontier dwells on its dividend payout to shareholders while customers languish with internet speeds that do not come close to the FCC’s definition of broadband. Instead of spending billions acquiring Verizon’s throwaway service areas, invest that money in your network and offer truly competitive 21st century broadband service.

Too late to matter: Frontier’s commitments to broadband upgrades happen too slowly and for too few customers. Much of Frontier’s state-of-the-art networks were built by other companies and simply acquired by Frontier, which now provides sleepy caretaker service. When people think Frontier Communications, they sure don’t think of words like “modern” and “innovative” and “excellence.” They think “yesterday,” “out of service,” and “slow.” There is a good reason why cable operators eat Frontier’s market share. People don’t love the cable company more than Frontier, but at least they are no longer stuck with broadband speeds that were common during the latter half of the Clinton Administration.

You’re a communications company, not the Geek Squad: While Frontier fritters away their customer base, those remaining are literally assaulted with promotions for dubious value services like tech support, virus protection, and cloud storage backup. There is a reason other phone and cable companies have not followed Frontier’s lead on emphasizing these services. They don’t matter to most customers and many of those who do have them are surprised when they find them on their phone bill because they don’t remember signing up. Sell reliable and fast phone, broadband, and video service, not gimmicks.

It is unfortunate another 1,000 Frontier employees are about to pay for the mistakes made at the top. Until that changes, customers would do well to consider their options and act accordingly. If reporting by The Hour is any indication, customers shouldn’t hold their breath. Frontier is still looking out for their most important asset: their shareholders.

If Frontier’s customer relations remain a work in progress, so does McCarthy’s job convincing investors to see the promise of his plan and that of his CEO predecessor Maggie Wilderotter to create a national broadband company from territories AT&T and Verizon have been willing to cast aside. Since closing at $6.54 on Oct. 31, 2014, on the eve of the switch [in Connecticut], two years later Frontier shares have hovered for the most part just above the $4 threshold.

With a new chief financial officer in place in former Frontier executive Perley McBride, McCarthy promised to get Frontier on track from an investor perspective, even as the company works to get its customer relations on an even keel.

Google has quietly announced an indefinite suspension of further fiber expansion as it prepares to downsize fiber division employees and re-evaluate its fiber business model.

In a blog post tonight from Craig Barratt, senior vice president of Alphabet and CEO of Google’s Access division, it becomes clear Google is rethinking its entire fiber strategy and is likely moving towards fixed wireless technology going forward:

Now, just as any competitive business must, we have to continue not only to grow, but also stay ahead of the curve — pushing the boundaries of technology, business, and policy — to remain a leader in delivering superfast Internet. We have refined our plan going forward to achieve these objectives. It entails us making changes to focus our business and product strategy. Importantly, the plan enhances our focus on new technology and deployment methods to make superfast Internet more abundant than it is today.

Barratt outlines the immediate implications of Google’s dramatic shift:

• In the cities where we’ve launched or are under construction, our work will continue;
• For most of our “potential Fiber cities” — those where we’ve been in exploratory discussions — we’re going to pause our operations and offices while we refine our approaches. In this handful of cities that are still in an exploratory stage, and in certain related areas of our supporting operations, we’ll be reducing our employee base.

Barratt himself is jumping ship (or was pushed). He announced in his blog entry he is “stepping away” from his CEO role, but will remain as an “adviser.”

Observing Google’s recent fiber efforts and acquisitions, it seems clear Google no longer thinks fiber-to-the-home service is an economically viable solution in light of competitors like AT&T rolling out increasing amounts of fiber and the cable industry is on the cusp of launching DOCSIS 3.1, which will dramatically boost internet speeds without a substantial capital investment.

Google’s investors have been lukewarm about the company’s economic commitments relating to its fiber broadband networks. Often built from the ground up, Google’s fiber construction complexities also include trying to navigate costly roadblocks established by their competitors (notably Comcast and AT&T), dealing with bureaucracies and red tape even in states where near-total-deregulation was supposed to make competition easy. Google Fiber has also not proved to be a runaway economic success, and now faces more challenges in light of upgrades from their competitors. Cable companies have slashed prices for customers threatening to cancel and have added free services or upgrades to persuade customers to stay, and Google’s proposition of selling consumers $70 gigabit access has proved tougher than expected.

It is highly likely the future of Google’s Access business will be deploying wireless broadband solutions powered by Webpass, a company Google acquired earlier this year. Webpass uses a high-speed point to point wireless transmission system the company claims can deliver gigabit broadband access to customers in multi-dwelling buildings and other urban areas. Webpass sells access for $60 a month (discounted to $550/yr if paid in advance) for 100Mbps-1,000Mbps speed depending on network density and capacity in the customer’s building. So far, Webpass has not been able to guarantee speed levels, and some customers report significant variability depending on their location and network demand.

Webpass’ wireless infrastructure costs a fraction of what Google has coped with building fiber to the home networks, and the installation of point-to-point wireless antennas on participating buildings has been less of a regulatory nightmare than digging up streets and yards to lay optical fiber.

But despite Webpass’ claim its performance is comparable to fiber, its inability to guarantee customers a certain speed level and its tremendous performance variability from 100 to 1,000Mbps exposes one of the weaknesses of fixed wireless networks. At a time when capacity is king, only fiber optic networks have shown a consistent ability to deliver synchronous broadband speeds that do not suffer the variability of shared networks, poor antenna placement/signal levels, or harmful interference.

There is room for wireless technology to grow and develop, as evidenced by the wireless industry’s excitement surrounding future 5G networks and their ability to offer a home broadband replacement. The emergence of 5G competition is almost certainly also a factor in Google’s decision. But even AT&T and Verizon acknowledge a robust 5G network will require a robust fiber backhaul network to support both speed and user demand. The more users sharing a network, the slower the speed for all users. No doubt Webpass has made the same assumption that cable operators did in the early days of DOCSIS 1 — current internet applications won’t tax a network enough to create a traffic logjam that would be noticed by most customers. The phone companies also learned a similar lesson trying to serve too many DSL customers from inadequate middle mile networks or traffic concentration points. (Some phone companies are still learning.)

Whether it was yesterday’s peer-to-peer file sharing or today’s online video, capacity matters. That is why fiber broadband remains the gold standard of broadband technology. Fiber is infinitely upgradable, reliable, and robust. Wireless is not, at least not yet. But technology arguments rarely matter at publicly-traded corporations that answer to Wall Street and investors, and it appears Google’s backers have had enough of Google Fiber.

Stop the Cap!’s View

At Stop the Cap!, we believe these developments further the argument broadband is an essential utility best administered for the public good and not solely as a profit-motivated venture. The path to fiber to the home service in rural, suburban, and urban communities has and will continue to come from a mix of private and public utilities, just as local public and private gas and electric companies have served this country for the last century. Where there is a business model for fiber to the home service that investors support, there is a for-profit fiber provider. Where there isn’t, now there is often no service at all. So far, the FCC in conjunction with Congress has seen fit to solve broadband availability problems by bribing private providers into offering service (usually low-speed DSL that does not even meet the FCC’s definition of broadband) with cash subsidies, tax write-offs, or occasional tax abatement schemes. Imagine if we followed that model with the nation’s public roads and highways. We would today be paying tolls or a subscription to travel down roads built and owned by a private company often financed by tax dollars.

Not every product or service needs to earn Wall Street-sized profits. Nobody needs to get rich selling water, gas, and electricity… or broadband. Public broadband networks can and should be established wherever they are needed, and they should be priced to recover their costs as well as expenses that come from support, billing, and ongoing upgrades. Naysayers like to claim municipal broadband is socialism run wild or an instant economic failure, yet the same model has provided Americans with reliable and affordable gas, electricity, and clean water for over 100 years.

In New York, publicly owned/municipal utilities often charge a fraction of the price charged by investor-owned utilities. In Rochester, where Stop the Cap! is headquartered, one need only ask a utility customer if they would prefer to pay the prices charged by for-profit Rochester Gas & Electric or live in a suburb where a municipal provider like Fairport Electric or Spencerport Electric offers service. RG&E has charged customers well over 10¢ a kilowatt-hour when demand peaks (along with a minimum connection charge of over $21/mo and a “bill issuance charge” of 72¢/mo). Spencerport Electric charges 2.9¢ a kilowatt-hour and a connection charge of $2.66 a month, and they issue their bills for free. There is a reason real estate listings entice potential buyers by promoting the availability of municipal utility service. The same has proven true with fiber-to-the-home broadband service.

The economic arguments predicting doom and gloom are far more wrong than right. Municipal utilities are often best positioned to offer broadband because they already have experience providing reliable service and billing and answer to the needs of their local communities. Incompetence is not an option when providing reliable clean water or electricity to millions of homes and customers have rated their public utilities far superior to private phone or cable companies.

Google’s wireless future may prove a success, but probably only in densely populated urban areas where a point-to-point wireless network can run efficiently and profitably. It offers no solution to suburban, exurban, or rural Americans still waiting for passable internet access. Clearly, Google is not the “free market” solution to America’s pervasive rural broadband problem. It’s time to redouble our efforts for public broadband solutions that don’t need a seal of approval from J.P. Morgan or Goldman Sachs.