A community-owned cable system that critics called “a municipal broadband failure” is proving to be anything but as it aggressively launches a broadband speed war and is narrowing its losses on the road to profitability.

MI-Connection is the community-owned cable system serving Mooresville, Davidson, and Cornelius, N.C.

Originally acquired in 2007 from bankrupt Adelphia Cable, MI-Connection has been a favorite target for municipal broadband critics who have painted the operation as an experiment gone wrong and a financial failure. But the system’s latest financial results and its forthcoming free broadband speed upgrades tell a different story.

Residents will see major boosts in their broadband speeds for no additional charge in December thanks to a broadband service upgrade. Meanwhile, competitor Time Warner Cable has announced new fees for cable modem rentals that will raise many customer bills by $4 a month. (MI-Connection does not charge customers a rental fee when they have just one cable modem on their account.)

The speed increases will provide the fastest download-upload speed combination in the area, thanks to faster upstream speeds. These upgrades launch Dec. 10:

• 8/4Mbps service upgrades to 10/5Mbps
• 12/4Mbps service upgrades to 15/5Mbps
• 16/4Mbps service upgrades to 20/5Mbps
• 20/4Mbps service upgrades to 30/10Mbps

Also on that date, MI-Connection will launch its fastest Internet tier yet, tentatively dubbed Warp Speed, offering 60/10Mbps service with a free wireless router for bundled customers, selling faster service at up to $20 less per month than what Time Warner charges:

• $99.95/month broadband service only
• $89.95/month when bundled with one other service
• $79.95/month when bundled with phone and television service

Warp Speed will be the fastest residential broadband available in Mecklenburg and Iredell counties.

MI-Connection hopes accelerating improvements in broadband will also accelerate additional earnings. MI-Connection continues to earn the bulk of its revenue from television, with broadband and phone lagging behind. But the biggest growth in revenue year over year comes from broadband service.

Last summer, MI-Connection reached another milestone — it delivered its first cash payments back to the communities that took a chance on owning and running their own telecommunications provider. Although the total amount of $277,000 was modest, and the company still has to pay down debt incurred from purchasing and upgrading the cable system, it was a symbolic victory against anti-government, anti-municipal broadband naysayers.

More elusive is tracking the amount of money saved by residents finding Time Warner Cable and area phone companies ready and willing to offer stunning rate cuts in customer retention efforts.

Stop the Cap! has tracked some of those offers over the past several years, based on reader input.

Time Warner Cable’s retention department has offered North Carolina customers with active competition in their area prices as low as $100 a month (after taxes and fees) for triple play packages that include a free year of Showtime and 30/5Mbps broadband. Customers who only want broadband and television have been able to negotiate rates averaging $70 a month, especially after pointing out MI-Connection provides a year of its own phone, broadband, and TV service for $89.99 a month, including three free months of HBO.

“Year after year, renewing these prices just takes a phone call mentioning you received a flyer from MI-Connection offering more for less,” says Stop the Cap! reader Sam, who we contacted this morning for an update on our earlier story in April. “Whether you stay with Time Warner or switch to MI-Connection, you can easily save dozens of dollars a month just mentioning one provider to the other.”

Courtesy: Davidson News

Sam remains a Time Warner Cable customer based on what he calls “a simple matter of economics and what my wife wants to spend.” But he still supports the fact MI-Connection is there, even though it has created some early headaches for Mooresville, Davidson, and Cornelius.

“The conservatives have demagogued MI-Connection to death to win seats in local government but recently have stopped attacking it as an outright failure and are now claiming they want to make it successful so they can sell it off in a few years, probably to their pals at Time Warner,” Sam reflects.

“At the rate MI-Connection is cutting their losses, it might actually be profitable then,” Sam argues. “Selling it would be stupid. But a lot of the current crowd is hellbent on selling it no matter what, mostly for ideological reasons, and after Time Warner buys it for cheap, we’ll all pay even more when they put the rates back up.”

Critics of MI-Connection have help from various astroturf groups, backed largely by telecommunications companies who oppose government involvement in broadband. Particularly notorious is the “Coalition for the New Economy,” which issues negative reports about municipal broadband while burying the fact the group is funded in part by AT&T, Time Warner Cable, and other Big Telecom lobbyists.

The “Coalition” issues various reports mostly summarizing news accounts about community broadband that highlight struggles and ignore successes, while concluding that community broadband is interfering with private providers trying to hurry upgrades into neglected areas.

“A report from some group that lies never brought better broadband access to anyone in North Carolina,” Sam said. “MI-Connection has become a thorn that must be pulled from Time Warner’s backside because MI actually does provide better service.”

AT&T will spend $14 billion on its wireless and wired broadband networks in an effort to improve service for its urban and suburban customers, while preparing to argue its case for disbanding parts of the century-old landline network.

In a major 90-minute presentation with most of AT&T’s top executives on stage, the company announced its intention to move away from traditional landline service and towards a combination of an enhanced broadband platform and 4G LTE wireless access, especially in the 22 states where it currently delivers landline service.

The investment plan — Project Velocity — is a pivotal moment for AT&T, which has seen deteriorating revenue from its aging rural landline network and has focused most of its investments in recent years on its increasingly profitable wireless network.

But AT&T also hoped to hang on to the enormous revenue it still earns providing traditional home phone service. Its early answer for landline cord cutting came in 2006 with U-verse, an IP-based network platform on which AT&T can sell video, voice, and broadband service with a minimum of regulatory oversight. U-verse succeeded attracting high-paying customers who either stayed with or returned to AT&T. But now company officials hope U-verse can help the company achieve victory in its next public policy fight: to abandon traditional landline service altogether.

That emerging battle is likely to pit urban and suburban customers enjoying enhanced U-verse service against rural AT&T customers deemed unsuitable for wired broadband. AT&T is seeking to decommission up to 25% of its rural landline network as part of the strategy announced today, shifting affected customers to its 4G LTE wireless voice and broadband service, which comes at a higher cost and includes draconian usage caps.

Critics contend such a move could leave AT&T largely unregulated with monopoly control over its networks, with few service requirements or access concessions for competitors. It would also leave rural customers relegated to a wireless Internet future, perhaps permanently.

Landline/Wired Broadband: Good News for Some, Scary News for Rural America

AT&T plans to expand and enhance its broadband network to 57 million consumers and small businesses across its 22-state operating area, reaching 75 percent of customers by the end of 2015. AT&T will operate three broadband networks going forward, while gradually decommission its existing ADSL network.

• U-verse: AT&T’s triple play package of TV, Internet, and Voice over IP phone will be expanded by more than a third to reach an additional 8.5 million customers by the end of 2015. This will make U-verse available to 33 million customers in AT&T home phone service areas. Most of the expansion will be in urban and suburban areas bypassed during the initial U-verse construction phase. To remain competitive, AT&T will also increase available broadband speeds for existing customers up to 75Mbps;
• U-verse IPDSLAM: An additional 24 million customers will be offered a combo voice-broadband package that could be called “U-verse Lite.” It will offer speeds up to 45Mbps and is primarily intended as a replacement for the company’s DSL service in exurban and semi-rural areas. Arrives by the end of 2013;
• Fiber to Multi-Tenant Business Buildings: AT&T plans to expand its fiber network to reach more commercial buildings, but also lay the foundation to use these facilities for future distributed antenna systems and small cell technology that will create mini-cell sites serving individual neighborhoods, cutting down the demand on existing cell towers.

Customers living in rural, open country in AT&T service areas in states like Texas, northern Mississippi, western Tennessee and Kentucky, central and northern California and Michigan, and the rural areas of the Carolinas may eventually find themselves using AT&T’s wireless network as the company seeks to decommission its landline infrastructure.

A number of AT&T customers living in areas shown in red may see red if and when AT&T begins trying to force rural Americans to its more profitable wireless networks.

But AT&T officials also admitted in a Wall Street Q & A session that the company planned nothing special for rural landline customers transitioned to wireless. Those customers will be sharing service with traditional mobile customers. If AT&T’s service plan resembles that of Verizon, customers will pay around $60 a month and limited to just 10GB of usage per month. If AT&T decommissions its existing landline infrastructure, no other wired provider is likely to take its place.

Most remaining regulations enforcing a level playing field for telecommunications networks remain with legacy copper-wire landline Plain Old Telephone Service. AT&T’s plan would effectively banish that network in its entirety through a series of regulatory and service-transition maneuvers:

• U-verse customers actually no longer have traditional landline service. U-verse offers barely regulated Voice over IP service, free from most state regulations and pricing oversight;
• U-verse IPDSLAM customers will also quietly forfeit their traditional landlines. This product works over an IP network, which means telephone service is Voice over IP;
• Wireless service is already barely regulated and not subject to price oversight or universal service requirements that landline providers must meet to deliver service to all Americans.

AT&T proves you have to spend money on network upgrades to make money from customers purchasing the enhanced services they offer.

4G LTE Mobile Broadband: 99% Coverage Across 22 AT&T Landline States, Up to 300 Million Americans Served by the End of 2014

The majority of AT&T’s planned investment in its network will once again go to its highly profitable wireless division. At least $8 billion will be spent on bolstering AT&T’s 4G LTE wireless coverage area, especially in rural sections across its 22 state landline service area. That investment is necessary if AT&T hopes to win approval to decommission traditional landline service for rural customers.

• 4G LTE Expansion: AT&T plans to expand its 4G LTE network to cover 300 million people in the United States by year-end 2014, up from its current plans to deploy 4G LTE to about 250 million people by year-end 2013. In AT&T’s 22-state wireline service area, the company expects its 4G LTE network will cover 99 percent of all customer locations;
• Spectrum: AT&T continues its acquisition binge with more than 40 spectrum deals so far this year. AT&T’s biggest win of the year was approval for new WCS spectrum it will occupy alongside satellite radio. AT&T will have accumulated 118MHz of spectrum nationwide.
• Small Cell Networks: AT&T has already aggressively deployed a large number of Wi-Fi hotspots to encourage customers to shift traffic off its traditional wireless network. The next priority will be deployment of small cell technology, macro cells, and distributed antenna systems that can offer neighborhood-sized cell sites to serve urban and suburban customers and high density traffic areas like shopping malls and entertainment venues.

AT&T’s wireless 4G LTE upgrades will cover 99% of the service areas where the company provides landline service. It has to offer blanket coverage if it hopes to win approval for decommissioning its current legacy landline network in rural America.

Using New Infrastructure to Drive New Business and Even Higher Revenue

AT&T would have had a hard time selling its planned investments to Wall Street without the promise of new revenue opportunities. AT&T’s new network enhancements will support a range of new services the company hopes to introduce to win greater revenue in the future:

• AT&T Digital Life: A nationwide all IP-based home security and automation service set to launch in 2013 that will let consumers manage their home from virtually any device — smartphone, tablet or PC.
• Mobile Premise Solutions: This new nationwide service, available today, is an alternative for wireline voice service and in the future will include high-speed IP Internet data services.
• Mobile Wallet: AT&T is participating in the ISIS mobile wallet joint venture. Market trials are underway in Austin, Tex. and Salt Lake City today.
• Connected Car: More than half of new vehicles are expected to be wirelessly connected by 2016. AT&T is positioned to expand from vehicle diagnostics and real time traffic updates to consumer applications that tie into retail wireless subscriber data plans. AT&T already has deals with leading manufacturers such as Ford, Nissan and BMW.

AT&T’s 2012 Investor Conference introduced major transformative changes for AT&T’s wired and wireless broadband networks.  (2 hours, 9 minutes)

Will be available to 8.5 million additional customers by the end of 2015

AT&T will spend $6 billion over the next three years to upgrade broadband speeds across its 22 state operating service area and further expand its U-verse broadband platform to reach suburban and exurban customers stuck in the DSL broadband slow lane.

AT&T today announced existing U-verse customers will be able to buy upgraded speeds as high as 75Mbps by the end of 2013, with speeds increasing to around 100Mbps further out. AT&T’s current U-verse platform is currently constrained with maximum speeds of around 24Mbps.

Customers currently bypassed by AT&T U-verse may still have a chance to get the service in their community. AT&T announced plans to expand the fiber to the neighborhood service by more than one-third, with an additional 8.5 million customers able to sign up by the end of 2015.

AT&T also announced an eventual replacement for its existing ADSL platform, which currently offers speeds ranging from 768kbps to around 12-15Mbps in certain areas. The company’s lighter version of U-verse, dubbed U-verse IPDSLAM, will be introduced to 24 million AT&T customers in smaller communities by the end of 2013. Customers will be offered phone and Internet service over the network — but not television — with broadband speeds up to 45Mbps.

About 25% of AT&T’s rural customers will not see any upgrade to their current landline service. Instead, AT&T announced it will seek to gradually decommission rural landline networks and transfer those customers to its 4G LTE wireless service for both broadband and voice service, pending regulator approval.

Short on specifics, AT&T did not say whether rural customers will face the same broadband usage caps that are familiar to other AT&T wireless customers.

AT&T plans to upgrade its broadband speeds using a combination of technologies:

• Pair bonding existing copper wiring to get additional bandwidth;
• 17MHz: Devoting six frequency bands to broadband, up from the current four;
• Vectoring: Using technology to reduce or eliminate speed-robbing crosstalk noise on existing lines;
• Additional Copper Wire Reductions: Bringing fiber further into neighborhoods to reduce the distance of copper wiring between your home and AT&T’s network;
• Using “rate-adaptive” technology to let equipment select the fastest possible speeds with a tolerable error rate.

Time Warner Cable will increase the broadband speed for its most popular Standard service to 15/1Mbps across the country over the next 60 days.

With increased competition from Verizon’s FiOS fiber to the home network and AT&T U-verse, Time Warner is boosting Internet speeds to stay competitive with aggressive promotions on offer from phone companies throughout its service area.

Rob Marcus, chief operating officer for Time Warner, today told investors U-verse was available in about a quarter of the company’s footprint, with Verizon FiOS offering service in 12% of the areas where the cable company provides service.

“Last quarter, U-verse featured fairly aggressive double play promotions, especially in Texas and the midwest, while FiOS continued to aggressively enter new buildings in New York City,” Marcus said.

Marcus

Time Warner Cable failed to meet investor expectations for broadband growth during the third quarter, and some are questioning the company’s wisdom narrowly-targeting promotions to specific segments of its customer base. Bloomerg Industries analyst Paul Sweeney suggested the company was struggling to market the correct bundles of services to its customers.

Marcus reported Time Warner has seen the largest growth in DOCSIS 3.0 enhanced broadband so far, with 73,000 new customers signing up for the company’s 30/5Mbps Extreme tier or 50/5Mbps Ultimate tier during the last quarter. Combined with Turbo customers, this represents over 22% of all Time Warner’s residential broadband customers.

But while the company celebrated its new revenue from cable modem rental fees, the new charge has alienated a number of customers, some now shopping around for a better deal from competitors.

“In essence, this is a rate increase on [broadband] service, but the key is our customers have a choice,” Marcus said. “If customers prefer to buy their own modem from a qualified list of options, we’re all for it. After all, if the modem is on the customer’s balance sheet, that is less capital expense for us and fewer truck rolls.”

Marcus’ statement conflicts with one made earlier by Joli Plucknette-Farmen, communications manager for Time Warner Cable in western New York. She told WGRZ-TV last month the new fee was not  a “rate hike dressed up as a fee”, as some critics have suggested.

The company made no announcements about increasing the speeds of its higher-speed tiers to maintain their value in light of the forthcoming speed increase for Standard service.

Suddenlink is throwing a hissyfit over Frontier’s aggressive advertising.

Now come on, you are both pretty… slow that is.

Suddenlink Communications is crawling mad that Frontier Communications has been hammering the cable company over their broadband speeds, which PC Magazine this week proclaimed were nothing to write home about. The cable operator successfully challenged some of Frontier’s ads with the National Advertising Division of the Council of Better Business Bureaus.

The group recommended Frontier cease making claims that its DSL service offers “dedicated” lines to the Internet in contrast to Suddenlink, which forces customers to share their connection with the whole neighborhood.

Frontier claims Suddenlink’s network can bog down during peak hours, while Frontier makes sure customers consistently get the speeds they pay for.

Many of the ads targeted customers in West Virginia, who regularly tell Stop the Cap! neither provider competing there offers particularly good service.

“Is Frontier kidding?,” says Shane Foster, a former Frontier customer in West Virginia. “I was supposed to be getting up to 6Mbps service and I was lucky to get 1.5Mbps at 2 am.”

Foster says he believes Frontier oversold its DSL network in his area, with speeds slowing even further during the evening and weekends when everyone got online. While Frontier may not require customers to share a line from their home to the company’s central office, congestion can occur within Frontier’s local exchange or on the connection Frontier maintains with Internet backbone providers.

“The technician sent to my house even privately admitted it,” Foster tells Stop the Cap!

Foster switched to Suddenlink, but he is not exactly a happy customer there either.

“Their usage caps suck, the service is slow, and their measurement tool is always broken,” Foster shares. “West Virginia doesn’t just get the bottom of the barrel, it gets the dirt underneath it.”

Frontier Communications says it has been making improvements in West Virginia and other states where it provides DSL broadband. Some areas can now subscribe to 25Mbps service because of network upgrades. Foster says he would dump Suddenlink and go back to Frontier, if they can deliver speeds the rest of the country gets.

“Sorry, but 1.5Mbps is not broadband and with their prices, tricky fees and contracts it is robbery,” says Foster. “They need to clean up their act and I’ll come back. I hate usage caps with a passion.”

Frontier says it will appeal the NAD’s decision. But Frontier might do better advertising its broadband service as usage cap free — something customers consistently value over those running Internet Overcharging schemes.