Connecticut’s telecommunications regulator has effectively banned public broadband in the state, ruling that municipalities cannot use their reserved space on utility poles if it means competing with the state’s dominant telecom companies — Comcast, Altice, and Frontier Communications.

The ruling by Connecticut’s Public Utilities Regulatory Authority (PURA) is a death-blow for municipalities seeking to build gigabit fiber networks to offer residents the broadband speeds and services that incumbent phone and cable companies either refuse to provide or offer at unaffordable prices.

Among the petitioners appealing to PURA to protect them from competition is Frontier Communications, which owns a large number of utility poles across the state acquired from AT&T. The company was unhappy that municipalities were planning to use reserved space on state utility poles to construct fiber to the home networks that are generally superior to what Frontier offers consumers and businesses in the state. Other providers, like Frontier, said little about the early 1900s Connecticut statute that guarantees municipalities “right of use space” on poles until it became clear some communities were planning to threaten their monopoly/duopoly profits.

The law was originally written to deal with the dynamic telecommunications marketplace that was common in the U.S. during the late 1800s and early 1900s. Utility pole owners were confronted with a myriad of companies selling telegraph and telephone service — all seeking a place on increasingly crowded poles. Local governments could have been crowded out, were it not for the “Act Concerning the Use of Telegraph and Telephone Poles,” approved on July 19, 1905. It was one sentence long:

Every town, city, or borough shall have the right to occupy and use for municipal purposes, without payment therefor, the top gain of every pole now or hereafter erected by any telephone or telegraph company within the limits of any such town, city, or borough.

The law stood as written until 2013, when the legislature clarified exactly who could benefit from the use of “municipal gain.” Where the original law effectively protected reserved pole space for “municipal” use, the language was broadened in 2013 to read “for any purpose.”

Observers said the law was modified because of ongoing disputes with pole owners relating to planned municipal broadband projects. Frontier, in particular, has sought restrictive pole attachment agreements with communities trying to build out their broadband networks. In addition to accusations of foot-dragging over issues like “make ready” — when existing pole users move wiring closer together to make room for new providers, Frontier has tried to impose restrictive language on communities that would permanently restrict their ability to offer service. The most common restriction is to compel towns to agree to use their pole space exclusively “for government use,” which would restrict third-party providers hired to manage a community’s municipal broadband service.

PURA’s decision surprised many, because it completely ignored the 2013 language changes and relied instead on its perception of a conflict between state and federal laws. PURA ruled “municipal gain” establishes “preferential access” for towns and communities, and could be in conflict with the federal Communications Act, which mandates “non-discriminatory access” to utility poles, and prohibits local governments from blocking companies from providing telecommunications services.

“Providing municipal entities free access to the communications gain for the purpose of offering competitive telecommunications services … appears to be inconsistent with these principals and other aspects of federal law,” the decision reads.

In the early 20th century, vibrant competition meant a lot of utility poles were crowded with wires.

Except communities are not seeking to block providers looking to offer broadband service. These communities are seeking to become a provider. Pole attachment controversies typically relate to unreasonable limits on access to poles and allegations of price gouging pole attachment fees, not “preferential access.”

The end effect of PURA’s ruling: communities can use their pole space for government or institutional purposes only, such as building closed fiber networks available only in public buildings like libraries, schools, town halls, and police and fire departments. It also means any community seeking to build a fiber broadband network serving homes and businesses will either have to pay market rates for pole space, give up on the project, or place all the project’s wiring exclusively underground — a potentially costly alternative to aerial cable and one likely to cost taxpayers millions.

“We are very disappointed in the decision,” Consumer Counsel Elin Katz told Hartford Business. Katz is a strong supporter of municipal broadband. “It ignores the plain language of the statute, and by deciding that [municipal gain] cannot be used by our cities and towns to provide broadband to those affected by the digital divide, denies our municipalities a tool provided by the legislature for just that purpose.”

Frontier and the state’s cable and wireless companies, however, are delighted PURA has come to their rescue, calling its decision “fully consistent with the law.”

“Frontier Communications continues to support efforts to expand broadband access in Connecticut,” said spokesman Andy Malinowski. “PURA reached the correct result. This decision helps ensure the continuation of robust broadband competition in our state.”

The New England Cable & Telecommunications Association (NECTA), the cable industry’s regional lobbying group in the region, was also happy to see an end to unchecked municipal broadband growth and the competition it will bring.

“Our members, who pay millions of dollars annually to rent space on utility poles, offer competitive broadband services with speeds ranging up to 1 gigabit-per-second for residential Connecticut customers, in addition to offering speeds up to 10 gigabits for business customers,” noted NECTA CEO Paul Cianelli.

Other supporters of PURA’s decision include the wireless industry lobbying group CTIA and the Communications Workers of America — unionized employees at Frontier Communications who fear their jobs may be at risk if a municipal provider gives Connecticut customers an additional option for broadband service.

PURA’s decision leaves little room for municipal broadband expansion efforts that have been underway in the state for a decade. Most projects that cannot afford to pay for space on utility poles or the cost to switch to underground cable burial will probably not survive unless a court overturns the regulator’s decision or the state legislature clarifies state law in a way that makes PURA’s current interpretation untenable.

A number of groups are considering suing PURA to overturn its decision, noting the regulator completely ignored the very clear and understandable 2013 language that allows municipalities to use their allotted space on utility poles “for any purpose.” That purpose includes giving the state’s telecom duopoly some competition.

Bell today announced it will spend $100 million dollars to expand its all-fiber network to 60,000 homes and businesses in Oshawa, Ont.

The Bell Fibe upgrade will bring gigabit upload and download speed to the community, located east of Toronto. It is part of Bell’s larger plan to upgrade 1.3 million homes and businesses across the GTA/905 region around Toronto to fuel southern Ontario’s digital economy.

Earlier this month, Bell launched its all-fiber network in the city of Toronto, which reaches more than one million residents around Canada’s largest city.

“We welcome Bell’s investment in Oshawa to provide our residents, businesses and visitors with access to truly world-class Internet connectivity,” said Oshawa Mayor John Henry. “High-speed networks are a primary driver of growth and innovation, supporting Oshawa’s status as a Smart City and our 5 key areas of economic growth – advanced manufacturing, energy generation, health and biosciences, multimodal transportation and logistics, and information technologies.”

Bell’s network is currently capable of delivering up to 40 Gbps broadband speed, and is infinitely upgradable to even faster speeds in the future. Residents will be able to subscribe to the new service beginning this fall. New customers will pay $79.95 a month for gigabit speeds for the first year, $149.95 a month after that. A $59.95 installation fee also applies.

Bell’s fiber network now extends across more than 240,000 kilometers and is Canada’s largest fiber network. Bell provides fiber broadband in four Atlantic provinces, Québec, Ontario and Manitoba, serving 9.2 million customers over its older fiber-to-the-neighborhood network (similar to AT&T U-verse) and over 3.7 million fiber to the home subscribers — a number expected to exceed 4.5 million by the end of this year.

Oshawa will join several other “all-fiber” cities across Canada, which include St. John’s, Gander, Summerside, Charlottetown, Halifax, Sydney, Moncton and Fredericton — all in Atlantic Canada, Québec City, Trois-Rivières, Saint-Jérôme and Gatineau in Québec, Cornwall, Kingston, Toronto, North Bay and Sudbury in Ontario, and Steinbach and The Pas in Manitoba. Bell unveiled its major Montréal all-fiber project in 2017 and other major new centers getting Bell Fibe to the home will be announced later this year.

Charter Communications’ takeover of Time Warner Cable and Bright House Networks has not proved popular, according to a new survey from Temkin Group.

The cable operator received rock bottom scores among customers frustrated about how Charter handles its acquired customers, especially those facing a transition to Spectrum plans and pricing. Customers have filled the company’s own forums with complaints about rate increases for newly required equipment or cable television plan changes that force customers to upgrade to win back channels deleted from their long-standing Time Warner Cable or Bright House lineups.

Customer dissatisfaction about the changes was picked up in Temkin Group’s 2018 Temkin Experience Ratings, U.S., published in March.

Just 35% of Charter/Spectrum customers were emotionally satisfied after interacting with Spectrum, the third worst performing company among the 318 surveyed across 20 different industries. Spectrum saw a ratings drop of 8.2% from 2017-2018, the worst performance decline among all TV and internet service providers,  according to Temkin’s survey.

Spectrum also scored just 57% on the “effort” metric, which measures how difficult it was to interact with the company to resolve a problem. Only 51% reported satisfaction with the ability of Spectrum to resolve their concern or problem, putting Spectrum on Temkin’s “Bottom 50 Organizations” — 312th best performer out of 318 companies. (Comcast, Cox, and Altice-Optimum actually performed slightly worse.)

Temken explains the root cause for perennially poor ratings of cable and phone companies: they often have a monopoly.

“There are some industries that have habitually poor customer experience,” Temken explains. “In many of the cases, these problem stems from some form of monopolistic power. TV service providers and internet service providers have carved out regions and have limited competition.”

This marks the eighth year Temkin has published its Temkin Experience Ratings, generated from compiling the results of a survey of 10,000 U.S. consumers about their recent interactions with 318 significant U.S. companies. Temkin measures three dimensions of a customer’s experience:

• Success: To what degree were customers able to accomplish what they wanted to do after a recent interaction with a company.
• Effort: How easy was it to interact with the company.
• Emotion: How did the customer feel about those interactions.

The TV/internet service category has stood out in recent years for consistently delivering rock bottom ratings — the worst of Temkin’s surveyed industries. Only health insurance companies come close to the dismal ratings phone and cable companies deliver year after year.

Much of the decline in Spectrum’s rating is attributed to an increase in the negative emotions customers experienced after interacting with the company. In the last year, the company has adopted a much firmer position on pricing and packages that customers criticize as “take it or leave it pricing.” Spectrum also recently scaled up digital television conversion in many legacy Time Warner Cable markets, with many customers paying for new set-top boxes to continue receiving cable television service on all televisions in the home. The company has also frustrated early and enthusiastic adopters of broadband speed upgrades with compulsory upgrade fees as high as $199.

Based on Temkin’s four customer experience core competencies, it seems like Charter is mired at the first stage of what Temkin calls ‘Customer Experience Maturity’:

Stage One — Ignore: Organization does not focus on customer experience management and does not view customer experience as a core part of its value proposition.

The best performers in Temken’s annual study were supermarkets, which took five of the top 11 spots. The top-rated company in the 2018 study was Wegmans, a privately held supermarket chain operating in the northeastern U.S. Other top scorers included H-E-B, Publix, Aldi, Wawa, Citizens Bank, USAA, Subway, and Ace Hardware.

Golisano

Rochester billionaire and philanthropist Thomas Golisano is seeking expedited regulatory approval from New York’s Public Service Commission to acquire Rochester-based Greenlight Networks, LLC, a fiber to the home network provider for an undisclosed sum.

Greenlight Networks has been slowly overbuilding Charter/Spectrum and Frontier Communications’ service areas in eastern Monroe County since 2012, offering subscribers gigabit internet access. But time may be running short for Greenlight’s competitive broadband speed advantage. Charter Communications is reportedly planning to introduce gigabit service as early as April 25th throughout upstate New York, except for Buffalo.

The urgency of the transaction’s approval is clear in the companies’ filing with state officials requesting an expedited review and approval of the transaction.

“Greenlight’s […] need for working capital and the optimization of capital structure required for long-term success in the competitive telecommunications industry are matters for urgent consideration,” the application states. “Greenlight seeks Commission approval in order to avoid unnecessary delays in the completion of its network expansion projects and in order to secure valuable, committed, outside investors who share Greenlight’s vision and believe in its ability to execute on its plan.”

Greenlight’s success is likely dependent on its ability to rapidly expand its fiber optic network before its biggest competitor, Charter’s Spectrum, capitalizes on its forthcoming ability to match Greenlight’s download speeds. Greenlight receives praise from subscribers lucky enough to live in a neighborhood reached by its network. But residents also report frustration over the slow pace of the company’s fiber network expansion, particularly in suburbs west of the Genesee River that bisects the city of Rochester.

Golisano’s Grand Oaks LLC of Pittsford, N.Y. promises customers the acquisition will not result in any changes in Greenlight’s rates or its terms and conditions.

The petition claims the acquisition is in the public interest because it will offer Greenlight much-needed additional capital to accelerate deployment of its fiber network inside Rochester and beyond. Greenlight’s website suggests the company is considering expansion into the New York State cities of Albany, Binghamton, Buffalo, Ithaca, Syracuse, and the Finger Lakes Region. In Connecticut, the company is considering serving Bridgeport, Danbury, Hartford, New Haven, and Stamford (the corporate home of Frontier Communications). Grand Oak also promises to grow jobs at Greenlight and increase operational efficiency at the company.

Golisano is well-known in Rochester as an entrepreneur, philanthropist, and civic leader. Golisano founded Paychex, a leading national payroll service provider in 1971. After his retirement in 2004, Golisano has been actively involved in local civic causes and advocates for policies promoting improvement in the economy of western New York State.

The application is likely to be approved, but not soon enough to combat Charter Communications’ accelerated broadband upgrades across New York State. By early summer, Spectrum customers across New York State will receive 200 Mbps Standard service, 400 Mbps Ultra service, or 940 Mbps (nearly gigabit) Gigabit service from the cable operator at prices ranging from $65-125 a month. In contrast, Greenlight currently offers customers 100 Mbps for $50, 500 Mbps for $75, or 1,000 Mbps for $100 a month.

CenturyLink is ready to capitulate in its competitive war with the cable industry, conceding its residential broadband business is a money loser that will no longer get broad-based upgrades and investment under the management of incoming CEO Jeff Storey, who will refocus CenturyLink on its larger business/enterprise customers.

The independent phone company has sent strong signals it is going to focus only on residential customers that are cheapest and easiest to reach, promising to fund broadband urban and suburban upgrades only where costs are low and the chances of a significant return is high. In rural areas, CenturyLink will depend heavily on capital made available by the FCC’s Connect America Fund when choosing areas worthy of upgrades.

“We’ll focus more on return on investment, which includes rural capital from the CAF II program,” said Sunit Patel, CFO of CenturyLink.

Patel, along with CenturyLink’s incoming CEO, originally worked for Level 3 Communications, a business and enterprise internet company acquired by CenturyLink in 2016. Now top Level 3 executives, at the behest of Wall Street and shareholders, are gradually taking over the top management positions of CenturyLink, pushing out current CEO Glen Post III with an early retirement this spring. With Post leaving, there is clear evidence CenturyLink is embarking on a transformation away from low return residential phone and broadband service and towards the kind of high profit business and enterprise connectivity Level 3 has provided for years.

Wall Street increasingly sees CenturyLink’s residential business as costing the company a lot of money for network upgrades that simply don’t deliver shareholder expectations of return on that investment, especially as the cable industry continues to aggressively deploy faster speed service to its customers.

In the fourth quarter of 2017, CenturyLink lost another 105,000 broadband subscribers, bringing internet subscriber numbers down to around 5.7 million nationwide. That represents a 4.8% reduction year over year, despite repeated promises of upgrades to stem those customer losses.

Last November, Post blamed those losses on customers served by CenturyLink’s legacy copper/DSL service areas where speeds and performance are lowest.

Soon to be CenturyLink Ex-CEO and President Glen F. Post

“We saw a much higher than expected loss of customers at the 20 Mbps and below speeds in a lot of the markets where we have that,” Post said during a late fall earnings call, according to a Seeking Alpha earnings transcript. “We had a much higher loss there. I think a couple of reasons, first of all, you see cable rolling out more with more aggressive offers, higher speeds and just the demand for bandwidth in those markets.”

Last fall, Post emphasized his broad-based residential and commercial broadband upgrade transformation plan to stop those losses. Post committed CenturyLink would provide 90% of homes with at least 40 Mbps, 70% of homes and businesses with 100 Mbps and over 20% with 1 Gbps or higher no later than 2020.

That was before activist shareholders and Wall Street joined forces to successfully push CenturyLink’s board to replace Post with business-oriented Level 3 CEO Jeff Storey. CenturyLink stock had been down by about one-third of its value over the last nine months, which only aggravated investors to push harder for dramatic management changes at the phone company. Activists argued CenturyLink shouldn’t be devoting much attention to its legacy businesses. In their eyes, only “strategic/success” businesses are worthy of investment, and those include commercial and enterprise broadband, metro ethernet, and cloud/backup services. The revenue eating “legacy” businesses, namely residential landline and DSL service, represent a drain on profits and threaten the company’s shareholder dividend. About two-thirds of CenturyLink customers are commercial enterprises.

(Blue) CenturyLink (Orange) Level 3

On March 6, 2018 the company announced Post’s retirement effective the day of its annual shareholder meeting in May. Post had originally planned to leave at the end of 2018, but some shareholders were unwilling to wait that long.

Strategic changes in CenturyLink’s future were previewed at the Morgan Stanley Technology, Media & Telecom conference earlier this month, where Patel outlined the company’s new vision.

“On the consumer side, the focus will be on enabling higher broadband speeds,” Patel said, but added a caution. “We won’t be spending capital on 5-20 Mbps connections, but rather on 100 Mbps and higher speeds. In urban areas we want to make sure we’re spending the capital where the returns make sense so focusing on multi-dwelling units make more sense in urban areas.”

Since the company is now going to target upgrades only in areas that “make more sense,” Post’s goal of better broadband for all by 2020 seem doomed

Another key piece of evidence is the retirement of CenturyLink executive Duane Ring, who announced he is leaving after 34 years despite a recent promotion. Ring, who led CenturyLink’s 12-state midwest region, was also behind much of CenturyLink’s residential broadband enhancement effort, including the 2005 launch of Prism TV — CenturyLink’s cable-TV alternative, as well as deploying gigabit speed services in several midwestern states. In 2016, he oversaw the deployment of 500 Mbps service for multi-dwelling units in 44 Platteville, Wisc. buildings that included nearly 800 apartments.

Broadband industry analyst Dave Burstein already sees the writing on the wall.

“Their fiber and G.fast plans, modest already, have been cut,” he noted. “They simply aren’t competitive with cable, which by 2020 will have a gigabit to 90% [of customers]. I look at the network and say if they don’t cut the dividend, trouble is near. Depreciation was $3 billion more than capex the last three years. Dividends were higher than income.”

As cable broadband speeds increase and customers defect from CenturyLink, few may choose to come back, making investments in broadband upgrades even more questionable.

“The rumor is they will virtually abandon much of the wireline network,” Burstein noted. “They will temporarily draw cash out to upgrade where they have better prospects,” referring to areas Patel identified as worthy targets for upgrades.