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Finding The Truth About West Virginia’s Bad Broadband; Here’s How You Can Help

Phillip Dampier November 2, 2017 Broadband Speed, Consumer News, Frontier, Public Policy & Gov't, Rural Broadband Comments Off on Finding The Truth About West Virginia’s Bad Broadband; Here’s How You Can Help

If advertised claims of lightning fast DSL internet don’t match reality, it never hurts to bring evidence to the table if you want to prove your state’s biggest telecom company is lying through its teeth.

West Virginia’s Broadband Council wants to understand just how awful broadband is in the state, despite glowing rhetoric from cable and phone companies that promise fast connections that rarely deliver to beleaguered broadband users. The Council has created its own Speed Test Portal for the state’s broadband users to test their internet speed. The results will also provide data about real world broadband performance to generate a new statewide broadband map that will clearly identify where broadband performs, where it doesn’t, and where it doesn’t exist.

“The speed test is really important,” Commerce Secretary Woody Thrasher said. “This is one of those things where before you know where you’re going to go, you have to know where you are. So we’re trying to identify what type of broadband service we have. That’s what the speed tests do for us. We want people to take the speed test, send it in and from there, we will create a map of where we are in the state of West Virginia and identify where our priorities should be. From that, we can identify where we are strong and where we are weak. We can identify where to prioritize areas to put funding and resources to generate broadband connectivity.”

The Council wants residents to test early, test often, and test on every computer they can find to make the data as meaningful as possible.

“With this information, the Broadband Council will work with local governments to help bring affordable broadband service to underserved and unserved areas of the state,” Council Chairman Robert Hinton said in a recent Department of Commerce news release.

One of the responsibilities of the Council is determining whether providers are delivering the speeds they advertise to state residents. West Virginia is ranked 48th worst out of the 50 states for the percentage of residents without access to broadband service. The state’s incumbent phone company, Frontier Communications, controls virtually all the state’s telephone lines. Its DSL service is not well regarded by customers and its poor performance led to a $150 million settlement with West Virginia’s Attorney General Patrick Morrisey in 2015 for deceptive claims about its DSL service.

Behind the scenes, the Broadband Council is also attempting to build an evidentiary record of “discrepancies between the service the incumbent has claimed to provide and the service the incumbent has actually provided.” If the Council can show Frontier is failing to meet its service requirements, it is hoping the FCC will open broadband funding to other providers in unserved and underserved areas in the state, some potentially offering fiber optic broadband. That would, they argue, be a better use of limited Connect America Fund resources than funding further expansion of Frontier’s DSL service.

In a filing with the FCC in response, Frontier said the Council’s solution is “misplaced and inappropriate.” It asked the FCC to reject the proposal and instead increase funding available to Frontier for rural broadband expansion in West Virginia. For Frontier, the metric that matters the most is that the company “well ahead of schedule” to meet the federal program’s requirements.

“Because Frontier is often alone in undertaking the challenge of providing any landline internet service to the most rural and remote areas in the state, Frontier is often the brunt of dissatisfaction, as expressed in the Council’s letter, with the available speeds and technologies in those areas,” Frontier said.

In October, Frontier waived away a demand to return $4.7 million in funds an inspector general claimed were the result of padded invoices with phony extra charges and improper reimbursements for “unreasonable and unallowable” fees.

In a letter to West Virginia Chief Technology Officer John Dunlap, Frontier made it clear that West Virginia taxpayers were effectively on the hook for the money, noting any funds the state might return to the federal government “are, of course, not recoverable from Frontier.”

DNS Server Problems Wipe Out Spectrum Internet in Large Parts of Texas

Phillip Dampier November 2, 2017 Charter Spectrum, Consumer News 4 Comments

A DNS failure took out internet service for more than 15 hours for many Charter Communications broadband customers in Texas.

Outages were first reported Wednesday evening from customers unable to reach web pages or other internet services. The outages primarily affected former Time Warner Cable customers in Dallas-Ft. Worth, San Antonio, and Austin.

A Charter spokesperson admitted there was a widespread outage last evening that extended into this morning. At 8:38am, the company suggested rebooting your cable modem to restore service, but as of lunchtime, admitted problems are ongoing in certain areas.

The outage affected the company’s broadband service and its Spectrum TV app, which relies on the internet for video streaming its cable TV service.

Some customers exploring the outage discovered the problem was with Charter’s DNS servers, which manage website addresses. All customers needed to do to restore service was to stop relying on the cable company’s DNS servers and use another provider like Google instead. (If interested, instructions are here.)

Customers were miffed that it took more than half a day to resolve the problem. Those without service can get a service credit for the outage by visiting the cable company’s website and using its online chat function to request credit.

Unfair Tax Policies Disadvantage New Fiber Competitors, Harm Broadband Expansion

Providers attempting to wire rural communities to offer broadband service or a competitive alternative to cable and phone companies face unfair tax and pole attachment fees that often give the advantage to existing companies and deter would-be competitors.

Those differences have a meaningful impact on rural broadband providers in states like New York, where wiring rural upstate communities is being made difficult by bureaucratic pole attachment fee policies and wide differences in property taxation that give an edge to existing cable giants like Charter Communications while hampering small start-ups with costly and confusing tax policies that slow down broadband rollouts.

The Watertown Daily Times recently published an in-depth special report on the broadband challenges impacting northern New York, where fast internet access has evaded some communities for more than two decades. That lack of access is becoming a critical problem for a growing number of employers who are now considering exiting those communities because companies like Verizon, Frontier Communications and Charter/Spectrum are refusing to provide 21st century broadband service in rural upstate communities.

One example is Tupper Lake Hardware in Tupper Lake, N.Y., which wanted to expand, but considered exiting the area instead after being stuck using satellite internet access because no phone or cable company offered broadband service in the area.

“It came to the point where if you are going to make a $1 million investment, we actually talked about this, we said ‘do we put our money into this place or do we just pick up and move?’” general manager Chris Dewyea told the newspaper. “It is real. It sounds dramatic, but that is the way it goes. The connectivity speed that we had with satellite internet was not good enough, so that is when we started on our journey to get high-speed here.”

Calling Verizon, Frontier, or Spectrum was fruitless, so the company picked up the phone and called… the Empire State Forest Products Association, a group that has tangled with internet connectivity problems in upstate New York before. The group pointed the company to Slic Network Solutions, owned by the independent Nicholville Telephone Company, which has spent the last several years slowly expanding the reach of its fiber optic network in the north country. Slic currently provides service to about 10,000 homes in small communities like Belmont, Lake Placid, Schroon Lake, and Titus Mountain.

Like many fiber overbuilders operating in New York, Slic has to plan its network expansion carefully, as it lacks the financial resources and staff of a company like Verizon or Charter. Slic’s fiber service is in very high demand, because the alternatives are almost always satellite internet access or appallingly slow DSL service from Verizon or Frontier, neither of which have shown much interest in delivering the FCC’s 25Mbps definition of broadband. Charter’s Spectrum service is available only in larger concentrated communities that can meet the cable company’s return on investment property density test. Many rural upstate communities don’t.

“In most of the places, there really was the option of satellite. Some places had DSL but it was usually pretty marginal,” said Kevin Lynch, vice president of technical operations & chief operations officer of Slic Network Solutions. “There are a few areas, but very limited, that might have had Spectrum.”

Slic is one of several small fiber providers operating in New York, each trying to cover territories larger phone and cable companies have ignored for years. Cooperation in commonplace among some companies operating in similar regional areas to keep construction and operating costs down. Some providers share their networks to extend their reach. Most target commercial or institutional users but will lease out their networks for residential providers. Some of the state’s middle mile fiber networks were built with economic stimulus money or through other grant or government programs. Others are privately funded. Many are underutilized but lack the funds to expand.

Westelcom, based in Watertown, counts Slic as one of its partners. Westelcom currently limits its business to commercial accounts in its six county service area, which includes Watertown, Malone, Clayton, Elizabethtown, Ticonderoga and Plattsburgh. But it is willing to provide wholesale access to third-party companies that want to serve residential customers.

One of the biggest and most surprising impediments to serving “last-mile” residential customers isn’t the cost of construction or the return on investment. It’s New York’s tax laws. Current tax policy requires fiber providers to pay taxes on the value of the infrastructure being used, regardless of revenue. At present, that tax rate can cost between $25,000 and $30,000 per fiber route mile. If it takes five miles of fiber to reach only a half-dozen homes, the provider would owe New York over $100,000 in taxes alone, making it impossible to recoup costs and drain the provider’s finances.

The National Conference of State Legislatures, a bi-partisan group, published Property Taxation on Communications Providers: A Primer for State Legislatures in 2015, outlining a legacy of inconsistent and often outdated state and local taxation policies across the United States that treat communications providers differently on issues like property tax. The group points out New York’s tax authorities treat cable and phone companies very differently than upstart fiber providers. Mobile phone companies are taxed differently as well:

The taxation of communications property varies widely in New York. There are several types of property taxes that are applied in varying ways to the communications sector. While New York does not generally tax tangible personal property, the state considers lines, wires, poles, electrical conductors, fiber optic equipment, and related equipment to be real property. Landline companies and cable companies are subject to a real property tax on “Special Franchise” property which is centrally administered and assessed using the reproduction cost method by the Office of Real Property Tax Services (ORPTS). The Special Franchise property tax applies to equipment located on public property. In addition, Nassau County and New York City have a “split roll” which  requires higher taxes on the “utility” class which includes landline telephone companies. Wireless companies and cable companies are assessed locally for their real property (land and buildings,  e.g., towers)

In plainer English, Lynch points out Slic is taxed about $465 per mile per year in St. Lawrence County, which is “significantly higher” than what cable companies like Charter pay, because they are taxed differently.

In the college town of Potsdam, Slic pays more than double the school and property taxes paid by Charter Communications, even though it serves fewer customers and earns much less. That disparity forces providers to target their networks in more dense areas like inside towns and villages, which means more customers per fiber route mile, reducing the bite of the tax man.

“Broadband infrastructure is considered real property, so it is taxed just like a house when it is in the right of way. So when we attach to these poles which are in the public right-of-way, we pay taxes on it and it is based on construction costs,” Lynch added. “There are a certain number of customers we have just to break even on those two operational costs and that does not include any of the other overhead and the content, the electronics and all that.”

After paying New York, Slic then faces the bureaucratic challenge of pole attachment permitting and fees. Every pole on which Slic attaches its fiber wiring is owned by someone else, typically utility companies like National Grid, Verizon, or Frontier. Some poles are jointly owned and maintained by the phone and electric company in the area. Fees and procedures vary in different parts of the state. There is generally a very costly pole attachment application fee and ongoing pole rental fees, which in this part of New York can run $400 a mile, per year.

Lynch said the costs of pole attachment fees alone can account for up to 40 percent of Slic’s expansion budget, and those initial fees can run between $10,000-14,000 per mile. This is why fiber overbuilders frequently decide on coverage areas based on customer commitments to sign up for service if it becomes available. This allows companies like Slic to secure the financing required to provision the service. But money alone doesn’t buy instant access.

“We apply to National Grid or whoever the pole owner is and say, ‘We would like to attach to these 30 poles on this road,’ and do a pole application and pay a fee,” Mr. Lynch explained to the newspaper. “They come out, they look at each pole and they determine if there is space on the pole, do they need to rearrange the electrical wires so they are in compliance with the electrical code, do they need to move down the phone lines. A lot of times these poles are jointly owned. It will be National Grid and Verizon, so they have to coordinate and then there might be a section that has Spectrum on it, so you have three or four companies that have to coordinate this effort.”

The state adds its own layer of bureaucracy with different Department of Transportation regions, regional economic regions, and Department of Environmental Conservation regions, each with its own rules and procedures. It is common for fiber projects to cross from one region into another, requiring additional paperwork and likely delays. If a project has to cross into the Adirondack Park, the rules and permits required to manage that are byzantine.

The result of all this is usually a significant delay in getting started, but once the paperwork is complete and fees are paid, the work can go faster than many realize.

“In these areas where we are constructing right now, Schroon Lake and Belmont and Lyon Mountain, we are building three to five miles of fiber per week. Our next group of projects that has been funded by New York state is 300-plus miles of fiber,” Lynch said. “And when I say three to five miles per week, that is per area.”

Fiber providers would like to see tax fairness and a lot less bureaucracy. The rules in states like New York may eventually leave fiber to the home service at a distinct disadvantage, because wireless networks don’t face pole attachment complications and pay lower taxes because their real property is generally a cell tower and the fiber line that connects to it. As it stands, some internet providers may gravitate towards wireless internet solutions in rural areas instead of fiber just to avoid excessive taxes and the pole attachment bureaucracy. Most homes and businesses prefer fiber optic service when given a choice, but without some changes to tax laws and a more centralized, less bureaucratic approach to pole attachments, fiber optics may never make financial sense in rural upstate New York.

Frontier: Nothing to See Here; 3rd Quarter Results Cause Share Price to Plummet to New Low

Phillip Dampier November 1, 2017 Broadband Speed, Competition, Consumer News, Frontier Comments Off on Frontier: Nothing to See Here; 3rd Quarter Results Cause Share Price to Plummet to New Low

Frontier’s stock has reached the lowest level of the year after another disappointing earnings report.

Frontier Communications turned in lackluster numbers for the third quarter of 2017, resulting in a wide selloff of Frontier’s stock, driving it to the lowest level it has seen in a year.

Investors are reacting to news the company missed earnings estimates once again, and many are losing confidence in Frontier’s CEO Daniel McCarthy, who has promised better results for more than a year. Frontier is rare among broadband providers, losing customers in virtually every segment of its business, including in its acquired FiOS service areas.

Frontier’s stock has lost more than 80% of its marketplace value so far this year — a stunning decline for a company selling broadband service in many areas where it maintains a monopoly.

McCarthy once again made a commitment his efforts will “stabilize” customer losses, but spent most of his time trying to reassure investors on a Tuesday conference call that those stabilization efforts will primarily target areas where Frontier sells FiOS fiber to the home service. Customer churn continues to be a problem, with many customers leaving either because the company alienated them or dramatically raised their rates after a discounted promotion expires. Either way, many of those customers switch back to a cable provider. McCarthy claimed Frontier plans to adjust promotional pricing to soften the blow of a steep rate hike after a promotion expires.

McCarthy said almost nothing about Frontier’s legacy service areas, where Frontier still sells copper-based DSL service. Some of the company’s biggest losses have been in areas where it cannot compete effectively with cable broadband. McCarthy offered to enhance customer retention efforts and increase marketing to reduce losses, but there are no indications Frontier plans to spend significantly on major network upgrades in these areas anytime soon.

Frontier declared an unexpected dividend of $0.60 a share, which some analysts consider excessive and represents a “red flag atop this toxic value destroyer.”

One analyst remarked, “I’m not buying it; Frontier is a business in free fall.”

Michigan’s Michele Hoitenga Kills Her Own Broadband Ban Bill; Chamber of Commerce Objected

Hoitenga

In what must be a new speed record, Michigan’s Republican state Representative Michele Hoitenga introduced and then effectively pulled support for her bill that would have banned community broadband initiatives across the state.

Introduced Oct. 12, the bill succinctly banned any use of public funds to construct a municipal internet alternative to the phone and cable companies. The bill came under immediate criticism for its content and accuracy, erroneously transposing speeds of a “qualified internet service” as one offering at least 10Mbps upload speed and 1Mbps download speed.

Hoitenga claimed the sudden interest from telecommunications companies that began donating to her campaign in this election cycle ($2,500 from Telecommunications Association of Michigan, $1,500 from AT&T Michigan, $500 from Comcast Corporation & NBC Universal, $500 from Michigan Cable Telecommunications) had nothing to do with her bill and would not have impacted her vote.

“I’ve got to be a voice of the people,” she told Cadillac News, adding she introduced the bill because she wanted to start a conversation. But after her constituents and the media (including Stop the Cap!) started asking questions, Hoitenga banned and blocked several reporters from her Twitter channel and wrote on her Facebook page that she had received death threats and profane phone calls about her bill.

Hoitenga also faced criticism from consumer groups and public policy organizations for attempting to eliminate a rural broadband solution for large rural areas of the state with inadequate service.

As quickly as the bill was introduced, its author declared it effectively dead because members of her area’s Chamber of Commerce objected to the bill’s wording.

“I really respect the chamber,” she told the newspaper, explaining that she will now not hold hearings on the bill, which will effectively kill it.

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