Windstream Communications is under investigation by the Governor’s Office of Consumer Protection because of allegations the company is advertising broadband speeds and performance the company simply cannot deliver its customers in Georgia.

A Windstream employee in a company retail office in Dawsonville told an undercover CBS Atlanta photographer that the company can offer Internet speeds up to 24Mbps. He guaranteed service no slower than 6 to 12Mbps. But Mark Creekmore, who lives in Dawsonville, reports his speeds sometimes barely reach 1Mbps during the afternoons.

Duane Hartness, a Windstream customer, says Windstream has oversubscribed their service by continuing to sell broadband on a network that is overcrowded as-is, which slows speeds for every customer.

“Every customer they add to their oversubscribed DSLAM increases their revenue while further degrading your bandwidth,” Hartness said. “Lacking competition, they can ignore any and all complaints.”

Creekmore wants every Windstream customer in Georgia that is dissatisfied with their broadband service to file complaints with the state agency.

“The more complaints, the more likely the Office of Consumer Protection is to take action,” Creekmore said. “Please make sure to include that you are not getting what you are paying for and any other personal detail that would help them understand what you have gone through. If you have had multiple communications with Windstream, please include those details as well. In short, the more detail the better.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WGCL Atlanta Windstream Exposed for Not Providing Speeds Promised 3-7-13.mp4[/flv]

WGCL — CBS Atlanta reports there are new developments in Georgia regarding Windstream: It is under investigation by the governor’s office for misleading subscribers with broadband speeds the company cannot actually deliver.  (3 minutes)

The FCC finds Windstream is the worst of the worst among DSL providers, only giving customers advertised speeds 81 percent of the time. AT&T, Georgia’s largest phone company, doesn’t do much better.

Windstream is the worst-performing DSL provider in the country according to the Federal Communications Commission, with just 81 percent of customers getting the broadband speeds marketed.

After complaints about the company helped derail H.B. 282 — a bill Windstream heavily lobbied for that would have eliminated possible competition from community-owned providers — Windstream representatives quickly began promising upgrades.

“We’re asking our customers to be patient with us because we’re on it. We understand that they have issues and we’re working to upgrade their network,” Bettye Willis, a regional vice president at Windstream, told the CBS station in Atlanta.

Willis added Windstream was committed to solving its Internet speed problems, but not for everyone.

The company released this map showing planned service upgrades for “two-thirds of the communities it serves” in Georgia. But the company warned not everyone would receive improved service. For the remaining one-third, “take it or leave it” broadband service will continue.

Stop the Cap! has developed a sample e-mail message Georgia residents can use to petition the state legislature to vote NO on H.B. 282, the latest Big Telecom corporate welfare bill to kill competition from publicly-owned broadband networks. With thanks to Mark Creekmore, one of many rural Georgians suffering with DSL “service” from Windstream Communications, we have jointly created this letter to illustrate the folly of this bad bill. We may need to send this to members of the state Senate as well.

We realize many of you are served by AT&T, Comcast, or other rural providers, so this letter should be tailored to include the horror stories that you have experienced with your own provider. Make sure you change the relevant sections, including references to your local town’s provider (things that should be changed in your letter are highlighted in blue below) before sending your e-mail to House members today:

Dear Rep. -or- Sen.  [insert name]

I am writing to tell you that I do not support H.B. 282 — the Broadband Municipalities Act, and neither should you.

This proposed legislation is a solution in search of a problem. No community I know of gets interested in entering the broadband business on a whim. But when you live in a rural area served by a single provider that delivers poor service, as I do, it becomes understandable why some communities seek a public broadband solution as a last resort.

At its core, this is a bill designed to protect the broadband status quo at the cost of Georgia’s economic development and its citizens’ need for quality broadband service.

[Share several sentences here detailing the problems you have with your provider.]

Georgia has a long way to go to meet the broadband speeds available in cities like Chattanooga, Tenn. That city’s municipal power company offers 1,000Mbps service to residents that cannot buy those speeds from any other provider. That has attracted companies in this state to move to get the kind of service they just cannot get from our providers. Comcast and AT&T are hardly going out of business in Chattanooga and actually claim to welcome the competition. But things are much worse here in rural Georgia, where just getting 12Mbps service is a real challenge. That is because the local phone company has oversold its network and is too crowded, slowing speeds to a crawl. I’d welcome competition even more, but there just isn’t any.

Consider this: While Dawsonville suffers with Windstream’s oversubscribed DSL service as our only practical option, Thomasville residents can get 22Mbps of service over a fiber to the home network owned by the local community. Rose.net is hardly a financial failure either. It has been so successful, the city eliminated the local property tax. If you pass H.B. 282, Dawsonville will never have a chance, because no other provider is interested in serving us and the local community will never be able to because Windstream arguably already does.

If you believe H.B. 282 will stimulate rural broadband investment, you need to read Windstream CEO Jeff Gardner’s own statements during a February 2013 conference call to investors. He noted Windstream plans to cut capital expenses and investments this year and even more the next, including those made right here in Georgia. Gardner noted that Windstream’s rural customers are largely captive with no competitive alternatives, making extra investment unnecessary. That means we have to live with the service we are lucky enough to get at the high prices we are forced to pay. In effect, we are told to live with what we have or go without. This is an embarrassment to our state which boasts of its high-tech communications capability and is home to several major data centers.

The bill’s logic is also lacking. Private telecom companies enjoy the benefits of state taxpayer dollars in several ways, ranging from access to public rights of way to receiving federal stimulus dollars to incentivize rural broadband expansion. To date, Windstream’s only help for Georgia seems to be wiring 250 homes in Blue Ridge. If local communities decide they need a better broadband solution, allowing out-of-state corporations like Windstream to tie their hands and dictate terms is an outrage. We have been here before in the last century when giant electric utilities refused to provide adequate service in rural Georgia, so those communities managed it themselves with municipal utilities.

It is clear to me, despite a few inadequate revisions to the bill since its introduction, H.B. 282 is a disaster for Georgia’s telecommunications future. It is little more than protectionism for incumbent providers who will continue to treat rural Georgians like second class citizens, delivering service that falls far below what was advertised, yet costing the same as big city folks pay. If my community decides it is essential for our future to do better than what Windstream is willing to offer, making the town work through an expensive qualification process analyzing census blocks is nothing more than a deterrent to keep them from even trying.

With all the problems we face in Georgia today, spending time protecting Windstream from competition is not on my list and it certainly should not be on yours.

I respectfully ask you reject H.B. 282 in full, regardless of current or future revisions. The next time a telecommunications company comes by your office to lobby you on bills like this, let them know the best way they can protect themselves from municipal broadband is to deliver the good service Georgians deserve at a fair price. If they manage that, there would be no demand to build these alternative networks in the first place.

I look forward to hearing your views on this critical matter to me.

Respectfully,

// signature

Shammo

Verizon’s vision of broadband economics depends on the technology used to provide the service, according to some insights shared by the company’s chief financial officer at yesterday’s Deutsche Bank Access Media, Internet & Telecom Conference.

Fran Shammo outlined two strategies the company is using to profit from its broadband services. For wireless, Verizon has “flipped the model” from the traditional voice plan that starts with a bucket of voice minutes towards monetizing broadband usage instead. Today, customers buy plans that focus on anticipated data usage with unlimited voice and texting thrown in. But marketing broadband on Verizon’s fiber optic FiOS network is markedly different because the company is focused on speed over consumption.

“We are now shifting into concentrating on the broadband piece of that product, and the speed that the fiber to the home can give you we believe can’t be matched with anyone,” Shammo told an audience primarily made up of Wall Street analysts and investors. “We have a superior product.”

Shammo explained Verizon intends to “monetize speeds” that fiber broadband is capable of providing. That is important because Verizon FiOS now represents 70 percent of Verizon’s wired business, as traditional landline revenue continues to decline.

That is welcome news to broadband advocates that prefer current pricing models based on broadband speeds, not usage. Verizon FiOS intends to capitalize on its superior speed to differentiate itself from the cable competition, especially when some of those competitors are slapping usage limits on their customers.

Another important new revenue source for Verizon comes from switching legacy DSL users to FiOS technology.

In 2012, Verizon commenced its copper-to-fiber migration in FiOS areas. At least 200,000 homes formerly served by copper-based DSL were transitioned to fiber. In 2013, Verizon plans to migrate another 300,000 customers. When customers are switched to the fiber network, their former DSL speeds remain the same, but now Verizon’s marketing department has an opportunity to target upgrade offers for faster speeds.

“We give them the choice to start upgrading that speed [to] 15, 25, or 50Mbps,” Shammo reports. “What we are seeing is people are willing to pay for that additional speed, so we can monetize that fiber network more.”

However, Shammo reiterated that beyond what Verizon has already committed to in FiOS agreements with local municipalities, Verizon plans no additional expansion of FiOS in 2013.

The foundation for future profits come from data usage.

Unintended Consequences of Share Everything: Customers do an end run around Verizon’s “device fee.”

The conference also provided new insights into Verizon’s Share Everything wireless plans and the company’s other strategies.

Shammo admitted customers have done an end run around the “device fee” for multiple add-on devices.

Verizon expected mobile wireless-enabled tablet sales would increase as the cost to add a tablet to a Verizon Wireless account no longer required a separate data plan. But Verizon’s “device fee,” charged for each device connected to a Share Everything plan, has backfired. Customers are instead adopting Verizon’s “Mi-Fi” wireless hotspot device or other tethering solutions. Customers can then connect up to five Wi-Fi enabled devices through the hotspot and bypass paying multiple device fees that range from $5-20 per device.

Living Off the Revenue from a 3G Network Verizon Has Stopped Expanding, Improving

Shammo also noted Verizon has stopped further investments in its 3G wireless network.

“We are not investing any more capital in that network other than to keep it up and running, so no more coverage [expansion] capital, no more capacity [expansion] capital,” Shammo said. “If I can keep that network up and running that just generates more [revenue] for us.”

Verizon plans to keep a moratorium on further expansion of its fiber to the home service except in areas where it has existing agreements to deliver service.

Verizon’s Plans to Reduce Device Subsidies, Discounts

Customers have grown to expect a free or low-cost upgrade to a new smartphone every two years. But wireless companies find the costs of fronting device subsidies troubling because it affects the short-term bottom line. As wireless providers trim discounts, tighten upgrade policies, raise prices, and introduce new upgrade and activation fees, the $200-400 device subsidy recouped over the life of a two-year service contract remains a fat target for pruning.

But Verizon and other cell phone companies do not want to cut plan prices that are now inflated by $10-15 a month to cover paying back phone subsidies. The best of both worlds: eliminating device upgrade discounts –and– keeping prices the same for wireless service, banking the extra revenue as profit.

Verizon’s current solution is a middle-ground approach that gradually reduces device subsidies while hoping increased competition among device manufacturers will lower retail prices. For the consumer, that means prices will remain generally the same. But for Verizon, it means higher revenue from paying out lower subsidies while being able to maintain current pricing.

“I am a believer that over the next two to three years subsidies will start to decrease just because of the ecosystem,” said Shammo.

Verizon’s conversion to LTE means the day of a pure LTE-only smartphone is not far off. It will not include added-cost chips to support legacy technology, particularly older data networks and CDMA.

Wall Street Pressures Verizon to Talk Customers into Less-Costly (Anything but an iPhone) Smartphones

Brett Feldman, an analyst at Deutsche Bank who moderated the question and answer session with Shammo pointedly noted the Apple iPhone is the most-costly phone to subsidize.

“Are there things you can do with your sales force where you would proactively incentivize them to maybe sell different devices,” asked Feldman.

“It is critical that we don’t do that,” Shammo explained. “What is more important for us is a customer walks out with a phone that they will be happy with and not return under our 30-day guarantee. Because the worst thing that can happen for us is for me to incent a salesperson to get you into a phone thinking you are going to like and in three days you come back because you don’t. Now I’ve just subsidized two smartphones because that phone you used I can’t resell as a new phone.”

While Windstream continues to heavily lobby the Georgia legislature for a bill that would ban competition from publicly owned broadband providers, the company is doing little to address the growing concerns of its own broadband customers getting poor service.

Mark Wyatt, a Windstream customer fed up with not getting the broadband speeds he pays for, launched a Facebook group in January to collect evidence and attempt to leverage the company to fix its problems. Wyatt, like many other customers in rural Georgia, has only one option for broadband service — Windstream.

Now the growing Facebook group has gotten attention from an Atlanta reporter who wants customers to record videos detailing their broadband problems with Windstream for an upcoming news report.

Jeff Chirico at WGCL-TV, the Atlanta CBS affiliate, has a call out for videos due by March 6:

I’m a reporter for CBS Atlanta News. I want to hear from Windstream customers in Georgia about their experiences with the company’s Internet service. Please shoot a video (30 seconds or less) explaining the speed of Windstream’s service and how it impacts you, your family or your business. Please include your name and city and download it to our dropbox account. http://dropbox.yousendit.com/JamesEstes539379

Also, feel free to follow me on Twitter @CBSATLChirico or find me on Facebook http://www.facebook.com/JeffChiricoCbsAtlanta

The horror stories are already clear all over Windstream’s service areas:

Don Jackson, who lives outside Milledgeville pays Windstream for 6/1Mbps service. On a good day, he gets 750kbps after 4pm every day, and speeds do not improve until the early morning hours.

“I talked with a local manager and he said that there is no solution anytime soon,” Jackson reported. “I have screen shots of speed tests from different sites for months to demonstrate that this is not a fluke but a fact. I have complaints on file with the FCC and BBB of Arkansas, [which handles complaints regarding Windstream].”

Adam Ridley qualified and pays for 3Mbps broadband service from Windstream, but that is not the speed he actually receives.

“It’s 9:40pm and I’m rocking my 210kbps connection — 7% of the speed I pay for,” he reported last night.

Rodney Gray pays Windstream a premium for 12Mbps service, but the phone company does not come close to delivering those speeds. His service actually ranges from 580kbps-1.4Mbps.

“My upload speed is faster than my download,” Gray complains.

A representative answering Windstream’s Complaint Line threatens a customer in Odum,. Ga. with legal action for “harassment” in June, 2012 after he complaints about Windstream’s mailers advertising DSL Internet service that is actually “not available to him this year.” (2 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Kimberly Brown’s broadband problems with Windstream are so pervasive, even the company admits there is a problem, and they have given her service credits.

“Our primary problem is dropped connections — constantly,” Brown says. “They sent a technician out because surely it must be in our lines. He told us that there is something going on in one of the main hubs or whatever, and that it should be months (if ever) that it’s fixed. Then, customer service was suddenly able to look into our account and see that we had hundreds of dropped connections in just a few days. Hundreds. To their credit, they did give us a smallish break on our monthly bill because of the aggravation.”

A typical day for the Brown family is to wake up, reset the modem, send an e-mail or two, reset the modem, try to go to a web page, reset the modem.

“It’s crazy and extremely frustrating,” says Brown. “I work from home and rely heavily on the Internet to get my job done, so this problem affects us in many ways, not just casual web surfing.”

Things are worse for Mark B. Watson, who lost his service entirely for two days.

“The bad thing is that mine and my wife’s business is located in our house,” says Watson. “Being without Internet means we are not making an income for two days. It is getting old.”

While Windstream’s broadband service is suffering, company executives are celebrating a planned major reduction in extra investment in its broadband service, telling Wall Street its broadband expansion and fiber-for-cell-tower projects are nearing completion. That could leave rural Georgia broadband customers without improved service indefinitely.

At the same time, Windstream is reportedly the primary proponent of legislation that would make sure rural Georgians have no alternatives to choose from. The company’s support for HB 282, now working through the Georgia legislature, would prohibit communities from launching their own broadband services to improve connectivity and speeds.

Both Time Warner Cable and Verizon don’t think you want or need gigabit fiber broadband — the kind of service now available in Kansas City from Google Fiber.

Time Warner Cable’s chief financial officer Irene Esteves says the cable company is content delivering most of the country no more than 50/5Mbps broadband (for at least $10 more than Google charges for 1,000/1,000Mbps service).

“We’re in the business of delivering what consumers want, and to stay a little ahead of what we think they will want,” she told an audience of Wall Street investors at the Morgan Stanley Technology Conference. “We just don’t see the need of delivering [gigabit speeds] to consumers.”

Esteves says she is not opposed to supplying gigabit speeds to business customers.

“We’re already delivering 1-10Gbps service to our business customers, so we certainly have the capability of doing it,” she said.

Despite regular quarterly conference calls where Time Warner executives trumpet the growing interest in higher broadband speeds, Esteves downplayed the importance of Time Warner’s top-tier: 50/5Mbps, claiming only a very small fraction of Time Warner customers opt to receive speeds that high.

Fran Shammo, chief financial officer at Verizon agreed with Esteves during the conference, also arguing nobody needs gigabit speeds today.

“FiOS brings a very different perspective to the household with fiber to the home,” Shammo said. “We actually tested a 1Gbps circuit in New York three years ago, so our FiOS product can deliver that but we just don’t see the need yet from a household to have that much of a pipe into their home.”

Time Warner’s “low interest” 50Mbps premium tier is Verizon FiOS’ mainstream sweet spot. Verizon now heavily markets 50/25Mbps Quantum service as their best value option, charging $10 more per month to upgrade from basic 15/5Mbps service.