Spending less, charging more in 2019.

Despite repeated claims from some in Washington that eliminating net neutrality would stimulate U.S. telecommunications companies to invest more in their networks, Charter Communications has announced a dramatic $1.9 billion cut in capital expenditures (CapEx) spending on its Spectrum cable systems for 2019.

Charter posted 2018 revenue of $43.6 billion (up 4.9 percent over 2017), with especially healthy returns for its internet service, which grew 7.1%. Charter earned $11.2 billion in revenue, up 5.9% in the fourth quarter of 2018 alone, partly from rate increases, reduced costs, and additional broadband customers.

Republican FCC commissioners have repeatedly argued that deregulating the internet by sweeping away net neutrality would stimulate companies to invest more in their networks. But it now appears the reverse is true. In 2017, Charter spent $8.7 billion on network investments; in 2018 the company spent $9.1 billion. But this year, with net neutrality no longer the law of the land, the cable company is planning to dramatically cut investments in 2019 to just $7 billion. The combined company, which now includes Time Warner Cable (TWC) and Bright House Networks (BH), has never spent this little on capital expenditures. The 2016 merger between Charter and TWC and BH forced a 189.4% spike in spending after the deal was completed, as Charter began a cable system overhaul and upgrade.

Charter is expecting it can distribute more of its revenue to shareholders, share buybacks, and debt payments as a result of the completion of its all-digital conversion project, which eliminated analog television signals from cable systems to make more room for revenue-enhancing internet service. The company also gets to lease more set-top boxes to customers seeking to view digital television signals on older analog TV sets.

Charter also reports it has successfully completed its DOCSIS 3.1 internet upgrade to more than 99% of its cable systems, allowing the introduction of premium-priced gigabit internet speed.

Charter executives signaled investors earlier this month Charter expects to post greater revenue and profits as a result of the spending reductions, but these new-found gains will have no effect on the company’s ongoing plans to continue mildly aggressive rate increases in 2019.

Charter has not disclosed how much it plans to spend on its new mobile business in 2019. The company is marketing its mobile phone service more aggressively this year as it prepares to accept customers bringing existing phones to its cellular service, powered by Charter’s in-home and in-business Wi-Fi and Verizon Wireless’ 4G LTE network.

Frontier Communications is taking its lemon-of-a-legacy-copper-network and attempting to squeeze some lemonade with a new national radio advertising campaign promoting the company’s legacy DSL internet service with a $100 gift card and “free” Amazon Echo Dot.

Get Frontier Copper is Frontier’s latest promotion for customers who do not live in its fiber-to-the-home service areas. Much of Frontier’s legacy network that predates its acquisitions of former Verizon FiOS and AT&T U-verse customers in Indiana, the Pacific Northwest, California, Texas, Florida, and Connecticut is still dependent on copper wiring that may have been on utility poles since the Johnson Administration.

The new promotion is among the first created under the leadership of Robert Curtis, Frontier’s latest senior vice president and chief marketing officer. Curtis is abandoning Frontier’s old marketing policies that eliminated a lot of fine print, sneaky fees/surcharges, and term contracts. The two-year contract with $120 early cancellation fee is the hallmark of Curtis’ commitment to reduce Frontier’s substantial customer churn, as customers abandon Frontier for competitors. A $120 sting in a customer’s wallet may convince many not to switch providers.

Frontier’s latest surcharges are also designed to extract more revenue from customers. A $10 per month compulsory equipment rental fee and recently increased “Internet Infrastructure Surcharge” will be applied to all customers in the future. Frontier previously allowed some customers to avoid the $10 monthly equipment rental fee by buying equipment outright from Frontier for $200. That option may be going away as Frontier gets serious about collecting $14 a month in surcharges from their internet customers.

Most legacy copper customers will be pitched up to three speed tiers ranging from 1, 6, and 12 Mbps, but not all customers will qualify for 6 or 12 Mbps plans if wiring in the neighborhood cannot support those speeds. There are Frontier service areas in metro areas that cannot achieve better than 3 Mbps, and plenty more in rural areas that top out at 1-3 Mbps. Those slower speed customers may not qualify for some promotions now available.

If you try to order faster internet speed not available in your neighborhood, you will likely see this error message.

Current promotions claim to offer up to 12 Mbps internet service for $12 a month for two years when bundled with voice service and/or a choice of packages that bundle internet and DISH satellite TV for $88 a month or a triple play of internet, voice, and satellite TV for $102 a month. Customers ordering online can get a $100 prepaid Visa card. But there are plenty of price-changing fees found in the terms and conditions, including an extra $14 a month in fees for that $12 a month internet offer. Customers that cancel any service in a promotional package automatically forfeit all promotional pricing and will be a charged an early termination fee up to $120.

Frontier charges a number of hidden fees on internet service, which increases the advertised price by at least $14 a month:

• Broadband router fee ($10/mo.) (Frontier used to allow customers to waive this fee by buying Frontier’s $200 equipment package up front.)
• Internet Infrastructure Surcharge ($3.99/mo.) (the fee was $1.99 a month)
• A $9.99 equipment delivery/handling fee.
• A $9.99 broadband processing fee upon disconnection of service.
• A $75 installation fee applies to broadband-only service, waived if a customer chooses to bundle another service with internet.

Frontier claims it offers the speeds “you need” on a “reliable” network.

But there is plenty more fine print to consider, the most important we’ve underlined below:

Visa Gift Card: Limit one VISA Reward Card per household. Customer must submit (2) paid bill statements and follow the redemption instructions to receive VISA Reward Card, subject to Frontier verification. Customer agrees to share billing information with Frontier’s fulfillment partners. Limited-time offer for new Internet residential customers. Must subscribe to a qualifying package of new High-Speed Internet. Visit internet.Frontier.com/terms.html for details. VISA Reward Card offer is provided by Internet.frontier.com and is not sponsored by Frontier.

“Free” Amazon Echo Dot: Requires a two-year agreement with $120 maximum early termination fee on new internet and qualifying voice services. Maximum $120 Frontier early termination fee associated with Amazon Echo Dot offer is in addition to DISH early termination fee described below. The Amazon Echo Dot is given away by Frontier Communications. Amazon is not a sponsor of this promotion.

$12 Internet offer: New residential Internet customers only. Must subscribe to a two-year agreement on new High-Speed Internet with maximum speed range of 6.1 Mbps to 12 Mbps download and qualifying Voice service. After 24-month promotional period, promotional discount will end and the then-current everyday monthly price will apply to Internet and voice services and equipment.

$88 Internet and DISH TV offer: Limited-time offer for new residential Internet and new TV customers. Must subscribe to a two-year agreement on new High-Speed Internet with maximum speed range of 6.1 Mbps to 12 Mbps download and new DISH® AT120 service. After 24-month promotional period, promotional discount will end and the then-current everyday monthly price will apply to Internet service and equipment. A $34.99 Frontier video setup fee applies.

Frontier’s new marketing chief is returning the company to gotcha fees, surcharges, and contracts.

$102 Internet, DISH TV and Voice offer: Limited-time offer for new TV, new Internet and new Voice customers. Must subscribe to a two-year agreement on new High-Speed Internet with maximum speed range of 6.1 Mbps to 12 Mbps download, new qualifying Voice service and new DISH® AT120 service. After 24-month promotional period, promotional discount will end and the then-current everyday monthly price will apply to Internet and voice services and equipment. A $34.99 Frontier video setup fee applies. Unlimited calling is based on normal residential, personal, noncommercial use. Calls to 411 incur an additional charge.

Important DISH Terms and Conditions. Qualification: Advertised price requires credit qualification and 24-month commitment. Upfront activation and/or receiver upgrade fees may apply based on credit qualification. Offer ends 7/10/19. Early termination fee of $20/mo. remaining applies if you cancel early. America’s Top 120 programming package, local channels, HD service fees, and Hopper Duo Smart DVR for 1 TV. Programming package upgrades ($79.99 for AT120+, $89.99 for AT200, $99.99 for AT250), monthly fees for upgraded or additional receivers ($5-$7 per additional TV, receivers with additional functionality may be $10-$15). Taxes & surcharges, add-on programming (including premium channels), DISH Protect, and transactional fees. 3 Mos. Free: After 3 mos., you will be billed $20/mo. for Showtime and DISH Movie Pack unless you call or go online to cancel. All packages, programming, features, and functionality and all prices and fees not included in price lock are subject to change without notice. After 6 mos., if selected, you will be billed $9.99/mo. for DISH Protect Silver unless you call to cancel. After 2 years, then-current everyday prices for all services apply.

All Offers: Offer not valid in select areas of CT, NC, SC, MN, IL, OH, NY. Check promotion availability for your address. Maximum service speed is not available to all locations and the maximum speed for service at your location may be lower than the maximum speed in this range. Service speed is not guaranteed and will depend on many factors. Your ability to stream may be limited by speeds available in your area. Cannot be combined with other promotional offers on the same services. Equipment, taxes, governmental surcharges, and fees including broadband router fee ($10/mo.), Internet Infrastructure Surcharge ($3.99/mo.), and other applicable charges extra, and subject to change during and after the promotional period. A $9.99 equipment delivery/handling fee applies. A $9.99 broadband processing fee upon disconnection of service applies. Service and promotion subject to availability. $75 Installation fee waived on new Frontier Double and Triple plays. Standard charges apply for jack installation, wiring and other additional services. Frontier reserves the right to withdraw this offer at any time. Other restrictions apply. Subject to Frontier’s fair use policy and terms of service.

Solving America’s rural broadband crisis will take a lot more than demonstration projects, token grants, and press releases.

Since 2008, Stop the Cap! has witnessed media coverage that breathlessly promises rural broadband is right around the corner, evidenced by a new state or federal grant to build what later turns out to be a middle mile or institutional fiber optic network that is strictly off-limits to homes and businesses. Politicians who participate in these press events tend to favor publicity over performance, often misleading reporters and constituents about just how significant a particular project will be towards resolving a community’s broadband challenges. Much of the time, these projects turn out to serve a very limited number of people or only fund part of a broadband initiative.

Officials last week said they are hoping to make North Carolina “the first ‘giga-state,’ with broadband access for all its residents.” But to realistically achieve that goal, nothing short of an expenditure of hundreds of millions of dollars will be required to realistically achieve that goal statewide.

A decade ago, rural broadband progressed in North Carolina, as communities transitioned away from traditional tobacco and textile businesses to the information and technology economy. To assure a foundation for that economic shift, several communities identified their local substandard (or lacking) broadband as a major problem. The state’s phone and cable companies at the time — notably Time Warner Cable, AT&T, and CenturyLink, often proved to be obstacles by refusing to upgrade networks in the state’s smaller communities. Some cities decided to stop relying on what the broadband companies were willing to offer and chose to construct their own modern, publicly owned broadband network alternatives, open to residents and businesses. A handful of cities in North Carolina went a different direction and acquired a dilapidated and bankrupt cable system and invested in upgrades, hoping cable broadband improvements would help protect their communities’ competitiveness to attract digital economy jobs.

That progress largely stalled after Republicans took control of the state legislature in 2011 and passed a draconian municipal broadband law that effectively banned public broadband expansion. Most of those backing the measure took lucrative campaign contributions from the state’s dominant phone and cable companies. One, Sen. Marilyn Avila, worked so closely with Time Warner Cable’s lobbyists, the resulting bill was effectively drafted by the state’s largest cable company. For that effort, she was later wined and dined by cable lobbyists at a celebration dinner in Asheville.

To be fair, some North Carolina cities are experiencing a broadband renaissance. Charlotte, Raleigh, Greensboro, Cary, Durham, Winston-Salem, and Chapel Hill will have a choice of providers for gigabit service. Google has installed fiber in some of these cities while AT&T and Charter lay down more fiber optics and introduce upgrades to support gigabit speeds.

Things are considerably worse outside of large cities.

In North Carolina, 585,000 people live in areas where their wired connections cannot reach the FCC’s speed definition of broadband — 25 Mbps, and another 145,000 live without any notion of broadband at all.

Bringing all of North Carolina up to at least the nation’s minimum standard for broadband will not be cheap, and politicians and public policy groups must be realistic about the real cost to once and for all resolve North Carolina’s rural broadband challenges. Where the money comes from is a question that will be left to state and local officials and their constituents. Some advocate only tax credit-inspired private funding, others support a public-private partnership to share costs, while still others believe public money should be only spent on publicly owned, locally developed broadband networks. Regardless of which model is proposed, without a specific and realistic budget proposal to move forward, the public will likely be disappointed with the results.

The Facts of Broadband Life

There is a reason rural areas are underserved or unserved. America’s broadband providers are primarily for-profit, investor-owned companies. They are not public servants and they respond first to the interests of their shareholders. Customers might come in second. When a publicly owned utility or co-op is created, in most cases it is the result of years of frustration trying to get a commercial provider to serve a rural or high cost area. Public projects are usually designed to serve almost everyone, even though it will likely take years for construction costs to be recovered. Investor-owned companies are not nearly as patient, and usually demand a Return On Investment formula that offers a much shorter window to recover costs. For broadband, adequately populated areas that can be reached affordably and attract enough new customers to recover the initial investment will get service, while those areas that cannot are left behind. The two populations most likely to fail the ROI test are the urban poor that may not be able to afford to subscribe and rural residents a company claims it cannot afford to serve. Many early cable TV franchise agreements insisted on ROI formulas that allowed companies only to skip areas with inadequate population density, not inadequate income, which explains why cable service is available in even the poorest city neighborhoods, while a wealthy resident in a rural area goes unserved.

Today, most cable and phone companies install fiber optic infrastructure most commonly in new housing developments or previously unwired business parks, while allowing existing copper wire infrastructure already in place elsewhere to remain in service. Some companies, including AT&T and Verizon, have made an effort in some areas to replace copper infrastructure with fiber optics, but in most cases, their rural service areas remain served by copper wiring installed decades ago. As a result, most rural residents end up with DSL internet from the phone company, often at speeds of 5 Mbps or less, or no internet service at all. Neither of these phone companies, much less independent telcos like CenturyLink and Frontier, have shown much interest in scrapping copper wiring for fiber optics in rural service areas. There is simply no economic case that shareholders will accept for costly upgrades that will deliver little, if any, short-term benefits to a company’s bottom line. That reality has led some communities to try incentivizing commercial providers to make an investment anyway, usually with a package of tax breaks and cost sharing. But many communities have achieved better results even faster by launching their own fiber broadband services that the public can access.

Some states with large rural areas have recognized that solving the rural broadband problem will be costly — almost always more costly than first thought. Such projects often take longer than one hoped, and will require some form of taxpayer matching funds, municipal bonds, public buy-in, or a miraculous sudden investment from a generous cable or phone company. In states with municipal broadband bans, like North Carolina, politicians who support such restrictions believe the cable and phone companies will spontaneously solve the rural internet problem on their own. Such beliefs have stalled rural broadband improvements in many of the states ensnared by such laws, usually tailored to protect a duopoly of the same phone and cable companies that have historically refused to offer adequate broadband service to their rural customers.

Challenges for North Carolina

(Courtesy: North Carolina League of Municipalities – Click image for more information)

North Carolina is a growing state, so a small part of the rural broadband problem may work itself out as population densities increase to a level that crosses that critical ROI threshold. But most rural communities will be waiting years for that to happen. Intransigent phone and cable companies are unlikely to respond positively to local officials seeking better service if it requires a substantial investment. As industry lobbyists will tell you, it is not the job of government to dictate the services of privately owned companies. The Republican majority in North Carolina’s legislature underlines that principle regularly in the form of legislation that reduces regulation and oversight. Many, but not all of those Republicans have also taken a strong strand against the idea of municipalities stepping up to resolve their local broadband challenges by working around problematic cable and phone companies. The ideology that government should never be in the business of competing against private businesses usually takes precedence.

Almost a decade ago, the cable and phone companies of North Carolina made three failed attempts to enshrine this principle in a new statewide law that would limit municipal broadband encroachment to such an extent it made future projects unviable. They succeeded in passing a law on their fourth attempt in 2011, the same year Republicans took control in the state legislature.

Today, Republicans still control the legislature with a Democratic governor providing some checks and balances. Why is this important? Because for North Carolina to achieve its goal, it will realistically need a combination of bipartisan support for rural broadband funding and an end to the municipal broadband ban.

Where is the money?

Although North Carolina wants to be America’s first “gigabit” state, New York is the first to at least claim full broadband coverage across the entire state. That did not and could not happen without a multi-year spending program. Recently, North Carolina’s Department of Information Technology launched a $10 million GREAT Grant program to provide last-mile connectivity to the most economically distressed counties in the state. While a noble effort, and one no doubt limited by the availability of funds to spend on broadband expansion, it is a drop in a bucket of water thrown into a barely filled pool.

To put this problem in better context, New York’s goal of full broadband coverage (which in our view remains incomplete) required not only $500 million acquired from settlement proceeds won by the state after suing Wall Street banks for causing the Great Recession, but another $170 million in federal broadband expansion funds that were expected to be forfeited because Verizon — the state’s largest phone company — was not interested in the money or upgrading their DSL service upstate.

Big Money: New York’s rural broadband funding initiative spent hundreds of millions to attack the rural broadband problem. Gov. Andrew Cuomo outlines funding for just one of several rounds of broadband funding.

Last year, Gov. Andrew Cuomo detailed success for his Broadband for All program by pointing out the state spent $670 million to upgrade or introduce broadband service to 2.42 million locations in rural New York, giving the state 99.9% coverage. That amounts to an average grant of $277 per household or business. In turn, award recipients — largely incumbent phone and cable companies, had to commit to matching private investments. For that state money, the provider had to typically offer at least 100 Mbps service, except in the most rural parts of the state, where a lower speed was acceptable.

North Carolina has 585,000 underserved or unserved locations. Just by using New York’s average $277 grant, North Carolina will have to spend approximately $202 million with similar matching funds from private companies to reach those locations. In fact, it is assuredly more than that because North Carolina’s goal is gigabit speed, not 100 Mbps. Also, New York declared ‘mission accomplished’ while stranding tens of thousands of expensive or difficult to reach residents with subsidized satellite internet access. That offers nothing close to gigabit speed. A more realistic figure for North Carolina in 2019 could be as high as $250-300 million in taxpayer dollars — combined with similar private matching funds to convince AT&T, Charter, CenturyLink and others that the time is right to expand into more rural areas. But as New York discovered, there will be areas in the state no company will bid to serve because the money provided is inadequate.

If the thought of handing over tax dollars to big phone and cable companies bothers you, the alternative is helping communities start and run their own networks in the public interest. Except private providers routinely retaliate with well-funded campaigns of fear, uncertainty and doubt over those projects, and they become political footballs to everyone except their customers, who generally appreciate the service and local accountability.

If North Carolina’s state government relies on a series of $10 million appropriations for grants, it will likely take at least 20 years to wire the state. Stop the Cap! agrees with the goals North Carolina has set to deliver ubiquitous, gigabit-fast broadband. But those goals will be difficult to reach in the present political climate. Republicans in the state legislature approved reductions in the corporate income tax rate to 2.5 percent, down from 3 percent last year, and the personal income tax rate drops to 5.25 percent from 5.499 percent. North Carolina’s latest budget sets aside $13.8 billion for education, $3.8 billion for Medicaid, $3 billion in new debt for road maintenance, and $31 million in grants to attract the film industry to shoot their projects in the state.

It is likely any appropriation significant enough to actually deliver on the commitment to provide total broadband coverage will have to be spread out over several years, unless another funding mechanism can be identified. That assumes the Republicans in the state legislature will be receptive to the idea, which remains an open question.

Americans for Tax Reform’s leader Grover Norquist is continuing a campaign against municipally owned public broadband projects, labeling them “really stupid ideas” that are best left in the hands of private companies like Comcast, AT&T, Verizon and Charter.

Norquist’s group is one of many Koch Brothers’ funded groups butting into the local public discussion about Traverse City Light & Power’s new fiber-to-the-premises project, which would deliver a gigabit fiber optic alternative to the area’s dominant phone and cable companies. TCL&P already provides electric service in Traverse City, and is considering introducing fiber broadband for 2,300 downtown customers. As the local utility works towards developing a business plan, local officials are suddenly receiving opposition mailers and phone calls from a variety of national groups with a coordinated message against “government-owned networks.”

None of the groups contacting city officials will reveal their funding sources, but there are strong suspicions the coordinated effort is designed to protect the city’s existing duopoly, run by Charter Spectrum and AT&T.

The Record-Eagle notes city officials and residents are receiving professionally printed postcards and other mailers some consider “propaganda.” Not every letter of opposition generated by these campaigns appears to be genuine. Traverse City Commissioner Amy Shamroe told the newspaper the city studies incoming opposition emails and calls, and found many are questionable form letters, including a few that claim to be from “Firstnametest Lastnametest.”

Shamroe

“I encourage dissenting opinions, but I like them to come from real people,” she said.

Although some genuine Traverse City residents are telling local officials they oppose government competition with private businesses, Shamroe says a much larger number of people support the project and are frustrated with its slow pace.

Norquist argues public broadband believers are being snookered into supporting “really stupid ideas” that will ultimately require taxpayer bailouts or come with hidden fees and taxes. Norquist claims he is not aware of any successful municipal broadband project, despite the fact there are dozens of successful projects that have received strong support in their communities, especially when providers offer services that cable and phone companies will not deliver. In Michigan, Holland BPW (a municipal utility), Sebewing, and Midwest Connections Electric Co-Op, are all successfully providing fiber broadband services to their customers.

Much of the opposition to community broadband is designed to muddy the waters about such projects, using opposition mass-mailings and paid staffers to argue such broadband projects are risky at best, failures at worst. Their opposition is backed up with articles and studies that claim to prove government-run broadband has been a national fiasco, although most of their sources and studies have undisclosed direct or indirect ties to the same cable and phone companies that would face direct competition from a community run provider.

In the past, local officials have often been unprepared to deal with professionally-coordinated opposition efforts, but Traverse City officials are ready to deal with the opposition’s talking points, and have shared a detailed FAQ about the project.

One local resident brought many of those talking points up at an association meeting, and Shamroe was prepared to answer them point by point. The resident recognized he was “blindsided” by the opposition’s distorted representations about the project, and thanked Shamroe for addressing his concerns.

Ironically, Norquist told the newspaper he was particularly opposed to local utilities and governments using excess revenue earned from overcharging utility customers to fund fiber optic competition, arguing that if a provider is overcharging you for a service and making excess profits from it, “they should give you the money back.”

That is an argument Norquist has never brought to the attention of AT&T, Charter, Comcast, and Verizon.

Tens of thousands of rural New York families were hopeful after Gov. Andrew Cuomo announced in 2015 his intention to bring true broadband to every corner of the state by the year 2018. At the time, it was the largest and most ambitious broadband investment of any state in the country, putting $670 million in lawsuit settlement money and rural broadband funds from the FCC on the table to build out rural broadband service other states only talk about.

But for many rural New Yorkers, Gov. Cuomo’s program was a failure that could lock in substandard internet service (or no service at all) for years. What began as a 100% broadband commitment later evolved into 99.9% (then 98% in another estimate) after state officials learned $670 million was not enough to convince providers to share the cost of extending their networks to the most rural of the rural as well as those unlucky enough to live just a little too far down the road to make extending cable broadband worthwhile. But the governor proclaimed mission accomplished, and as far as the Cuomo Administration is concerned, the rural broadband issue has been resolved.

“There were a lot of tax dollars that were flipped and the governor has said, ‘Internet for everybody. Everybody will have internet.’ Well, that’s not the case. We’re not seeing that and those were his promises, not mine, but I voted for that money. A lot of other members did too,” Sen. Rob Ortt (R-North Tonawanda) told WBFO radio last year.

Ortt wants to know where the money is going and who exactly is getting it, and proposed legislation requiring annual reports from the Empire State Development Corporation detailing expenditures and disclosing the formula used to determine who gets true broadband service, and who does not.

For those not getting high-speed wireless or wired connections, the state has either offered nothing or dreaded satellite internet service, paying HughesNet $14,888,249 to supply discounted satellite equipment Hughes itself routinely discounts as a marketing promotion on their own dime.

For rural residents learning HughesNet was their designated future provider, many experienced with satellite internet over the last decade and hating nearly every minute of it, it was “thanks for nothing.”

“The governor pulled the rug right out from under us,” Ann told Stop the Cap! from her home near Middle Granville in Washington County, just minutes away from the Vermont border. “I have kids that require internet access to finish research and send in homework assignments. Internet service is not an option, and my kids’ grades are suffering because they have to complete homework assignments in the car or in a fast food restaurant or coffee shop that has Wi-Fi.”

Ann used HughesNet before, and canceled it because service went out whenever snow arrived in town.

“I thought the governor promised 100 Mbps service and HughesNet can’t even provide 25 Mbps,” she claims. “If you get 5 Mbps on a clear summer’s day, you are doing okay. In winter, reading email is the only thing that won’t frustrate you. It’s slow, slow, slow.”

Gov. Andrew Cuomo announcing rural broadband initiatives in New York.

Nick D’Agostino brought his family to a new home an hour northeast of Syracuse when he got a new job. He was counting on the governor’s commitment to bring wired internet access to a home that used to have Verizon DSL, but no longer does after Verizon’s wired infrastructure deteriorated to the point where the company stopped offering the service to new customers like him arriving in the neighborhood. D’Agostino had to spend hours researching the state’s Broadband Program Office website to find out which provider was going to be supplying his census block (neighborhood) with 100 Mbps internet. He found HughesNet instead.

“It’s a kick in the pants because we have a lot of experience with HughesNet and Exede and neither came close to meeting their advertising claims,” he told Stop the Cap! “Exede was often unusable and a horrible company to deal with. HughesNet has a new ‘Gen 5’ service that is capable of DSL speeds, but comes with a low data cap and speed throttling.”

D’Agostino warns that New York made a terrible choice relying on satellite internet, even though HughesNet’s latest fleet of satellites has offered improvement over HughesNet a decade ago.

“The problem is HughesNet customers in a geographic area all share the same spot beam — a regionally targeted satellite signal that serves a specific state or region,” D’Agostino said. “When we lived in North Carolina, the population growth in rural areas meant a lot more satellite customers were sharing the same spot beam, and speeds plummeted, especially after Netflix, Hulu, and cord cutting took off. Nothing eats bandwidth like streaming video, which is why you can subscribe to their 50 GB allowance package and be over that limit after a single week.”

D’Agostino fears that tens of thousands of additional satellite users will dramatically slow down HughesNet across upstate New York unless the company finds a way to get more shared bandwidth to serve the state’s rural broadband leftovers.

“That usually means, ‘wait until the next generation of satellites are launched,’ something nobody should have to wait for,” D’Agostino said.

The obvious solution for D’Agostino is to convince Charter Spectrum, the nearest cable provider, to extend its lines down his street. The cable company agreed, if he paid an $88,000 engineering, pole, and installation fee.

“That is not going to happen, even if we got the dozen or so neighbors in our position to split the cost,” he said. “This is why Cuomo’s program is a flop. It turns out close to $700 million is not enough, and they probably always knew there would be people they could never economically serve because they are miles and miles from the nearest DSL or cable connection. But if the electric and phone companies are compelled to offer service, the same should be true for internet access.”

D’Agostino believes rural New Yorkers left behind need to organize and make their voices heard.

“They keep saying we are .1% of New York, but I’ve seen plenty of rural town supervisors and other local officials across upstate New York complain they have all been left behind, and that decision will cost their towns good education, jobs, competitive agribusiness, and services online that everyone assumes people can easily access,” he said. “Clearly the state is not telling the truth about how many are being internet-orphaned. There have been three rounds of broadband funding in New York. It is time for a fourth round, finding either tax breaks or funding to get existing providers to reach more areas like mine that are less than a mile from a Spectrum customer.”

Ann shares that sentiment, and adds that Vermont is looking for ways to get internet to its rural residents as well.

“We’re at the point where companies or co-ops already offering service are probably the quickest and easiest option to solve the rural internet crisis, but they are not going to pay to do it if they are not required to,” she said. “We have taxes and surcharges on our phone bill now that are supposed to pay for internet expansion, but the amounts are too small to get the job done I guess. Perhaps it is time to revisit this, because 99.995% is better than 99.9% and satellite internet should be the last resort for people living in a cottage miles from anyone else, not for people who can be in town in less than a five-minute drive.”

A familiar story for any rural resident trying to get internet access to their rural home. But there is a small silver lining. HughesNet’s newest generation of satellites has provided a modest improvement that is often better than rural DSL. (10:19)