Despite industry propaganda touting an “unlimited broadband future” (possibilities, that is, not an end to usage caps) and good sounding headlines about robust competition in the broadband market, the reality on the ground isn’t as rosy.

Americans looking for a better deal for broadband are largely stuck negotiating with the local cable company or putting up with less speed from the phone company to get a cheaper rate.

That is hardly the “success story” being pushed by the Mother of All Broadband Astroturf Front Groups, Broadband for America. BfA, backed by money from some of America’s largest telecom companies calls today’s marketplace “dynamic” and “rapidly changing.” For them, competition is not the problem, the way we define competition is.

Tell that to San Jose Mercury News columnist Troy Wolverton, whose dynamic and rapidly changing Comcast cable bill has now reached $144 a month, and threatens to go higher still when his two-year contract expires.

Wolverton is a case study of what an average American consumer goes through shopping around for broadband service. Despite assertions of a vibrant, competitive Internet access paradise from groups like Broadband for America, Wolverton found very little real competition on the menu, despite being in the high tech heart of Silicon Valley.

Valley residents can typically choose between AT&T and Comcast, if they have any choice at all. Neither company offers a great deal for consumers.

Comcast offers faster speeds at considerably higher prices that can be reduced somewhat by signing up for a costly triple-play service. AT&T’s prices are lower, but its service is slower and is based on a technology that in my experience is less reliable.

So it goes for millions of Americans who face the same dilemma: take a higher-priced package from the cable company or settle for less from the phone company. With the exception of Verizon FiOS, most large telephone companies still rely on basic DSL service to deliver broadband. AT&T’s U-verse and CenturyLink’s Prism are both fiber to the neighborhood services that deliver somewhat faster speeds than traditional DSL, but also have to share bandwidth with television and traditional phone service, leaving them topped out at around 25Mbps.

Wolverton could not believe his only choices were Comcast and AT&T, so he visited the California Broadband Availability Map, one of the state projects earnestly trying to identify the available choices consumers have for broadband access. Despite California’s vast size, it quickly became apparent that even companies like AT&T and Comcast largely don’t deliver broadband outside of cities and suburbs. Several smaller, lesser-known providers emerged from the map that were open to Wolverton, which he explored with less-than-satisfying results:

In addition to Comcast and AT&T, it listed Etheric Networks, which offers a wireless Internet service directed at home users that’s based on Wi-Fi technology, and MegaPath, which offers Internet access through a variety of wired technologies, including DSL.

After further research I found that neither of those companies was a legitimate option. MegaPath can’t deliver residential service to my house that’s faster than 1.5 megabits per second. Etheric, which focuses on business customers, offers a service level with speeds of up to 22 megabits per second, but it costs a cool $400 a month.

Other non-options for Wolverton included the highly-rated Sonic.net, which in his neighborhood is entirely dependent on AT&T’s landlines for its DSL service. That was a no-go, after Wolverton discovered he would be stuck with 3-6Mbps service. Clearwire also offers service in greater San Jose, but not at his home in Willow Glen.

That left him back with AT&T and Comcast.

But that is not really a problem in the eyes of industry defenders like Jeffrey Eisenach, managing director and principal at Navigant Economics and an adjunct professor at George Mason University Law School. Navigant is a “research group” that counts AT&T as one of its most important clients. The firm provides economic and financial analysis of legal and business issues cover for clients trying to sell their agenda. Navigant’s “experts have provided testimony in proceedings before District Courts, the Department of Justice, the Federal Trade Commission, the Federal Communications Commission, the Federal Energy Regulatory Commission, and numerous state Public Utilities Commissions.”

Eisenach goes all out for the broadband industry in his paper, “Theories of Broadband Competition,” which throws in everything but the kitchen sink to defend the status quo:

• The cost of broadband service is declining;
• The duopoly of cable and phone companies are still competing for customers and introducing new services;
• Competition can take the form of provider innovation (ie. providers compete by offering a better services, not lower prices);
• Wireless competition is accelerating, citing LightSquared and Clearwire as two conclusive examples of competition at work;
• The cost of service on a per-megabit basis has declined.
• Competition in today’s broadband market delivers ancillary benefits not immediately evident when only considering the customer’s point of view;

Eisenach’s pricing proof stopped in 2009, just as cable providers like Time Warner Cable began raising broadband prices. TWC’s Landel Hobbs to investors: “We have the ability to increase pricing around high-speed data.” (February, 2010)

Eisenach has appeared at various industry-sponsored evidence touting his views of broadband economics and competition that later turns up as headline news on Broadband for America’s website. But just as Wolverton’s initial optimism finding other choices for broadband faded with reality, so do Eisenach’s conclusions:

1. Eisenach’s evidence of broadband price declines stops in 2009, coincidentally just prior to the recent phenomena of cable broadband rate increases, which have accelerated in the past three years;
2. Competition still exists in urban and suburban markets, as long as phone companies attempt to stem the tide of landline losses, but it’s largely absent in rural markets and in decline in others where companies “reset” prices to match their cable competition. AT&T’s U-verse and Verizon’s FiOS both effectively ended their expansion, leaving large swaths of the country with “good enough for you” service. Cable operators have even teamed up with Verizon Wireless to cross-market their products — hardly evidence of a robustly competitive marketplace;
3. Innovation can take the form of services customers don’t actually want but are compelled to take because of bundled pricing or, worse, the decline in a-la-carte add-ons in favor of “one price for everything” models. Verizon Wireless set the stage for providers of all kinds to consider mandatory bundling for any product or service that can no longer deliver a suitable return on its own. For customers already taking every possible service or fastest speed, this pricing  may deliver lower prices at the outset, but for budget-focused consumers, compulsory packages or high prices on a-la-carte services assures them of a higher bill;
4. Eisenach’s examples of competition are a real mess. LightSquared is bankrupt and Clearwire has shown it cannot deliver an equivalent broadband experience for customers and throttles the speeds of those perceived to be using the service too much. Other wireless providers typically limit customer usage or cannot deliver speeds comparable to wired broadband;
5. While the cost per megabit may have declined in the past, cable providers are still raising prices, and as Google and community-owned providers have illustrated, delivering fast speeds should not cost customers nearly as much as providers continue to charge, with no incentive to cut prices in the absence of equally fast, competitive networks;
6. While broadband may open the door for additional economic benefits not immediately apparent, competitive broadband would further drive innovation and reduce pricing, delivering an even bigger bang for the buck.

Wolverton recognized taking a promotional offer from AT&T will temporarily deliver savings over what Comcast charges, but he would have to set his expectations lower if he switched:

I’m reluctant to switch to AT&T. [U-verse] Max Plus is the fastest level of service it offers at our house, but with a top speed of 18 megabits a second, it’s significantly slower than Comcast’s Blast. Speed matters to us, because my wife and I often share our Internet connection, and we frequently use it to transfer large files such as apps, videos, photos or songs to or from the Net.

[…] What’s more, as the FCC outlined in another recent report, Comcast does a better job of delivering the speeds it advertises than does AT&T.

What’s worse in my book is that AT&T’s U-verse’s Internet service is a version of DSL. It’s faster than regular DSL, because the copper wires in your house and neighborhood are connected to nearby high-speed fiber-optic cables. Even with that speed boost, though, I’m hesitant to go back to any kind of DSL service, because my wife and I suffered through years of unreliable DSL service from AT&T predecessor PacBell and then EarthLink, which piggybacked on AT&T’s lines.

Wolverton also objected to Comcast’s bundled pricing scheme, which delivers the best value to customers who sign up for broadband, television and phone service. Wolverton does not need a landline from AT&T or Comcast, and would like to drop the service. He’s not especially impressed with Comcast’s TV lineup (or pricing) either. But he noted if he switched to broadband-only service, Comcast would effectively penalize him with a broadband-only rate of $72 a month, exactly half the current cost of Comcast’s triple-play package.

In a later blog post, Wolverton confessed he liked Comcast’s broadband service and speeds, and with the carefully-crafted pricing the cable and phone companies have developed, he expected to remain a Comcast customer given his choices and pricing options, which are simply not enough.

AT&T workers launched a two-day strike impacting operations in Connecticut, Nevada, and California.

Around 20,000 AT&T workers in Connecticut, Nevada and California are striking this afternoon in a two-day action to protest what union officials call the company’s lack of good faith during contract negotiations talks.

“Contract negotiations are never easy,” said CWA District 9 vice president Jim Weitkamp. “But when AT&T violates the law repeatedly, the process really can’t work. Given AT&T’s record profits, tax breaks and jaw-dropping executive compensation, there is no reason for them to insist on lowering the standard of living of a single worker.”

While 17,000 workers in the west and 3,000 employees in Connecticut walk picket lines, fellow AT&T employees in the southeast are still on the job after the company reached tentative deals with unions representing those workers.

AT&T says the new three-year deals with the Communications Workers of America and the International Brotherhood of Electrical Workers in Alabama, Georgia, Louisiana, Mississippi, Tennessee and North and South Carolina  bring wage and “modest pension increases,” according to the company.

Connecticut workers say AT&T’s proposed package in the northeast is not sufficient to address the high cost of living in the state.

But AT&T says declining numbers of landlines means cuts are inevitable. AT&T said in a statement Tuesday’s walkout was not in anyone’s best interest.

Connecticut picketers have been blocking the entrances of several AT&T facilities including in New Haven, where replacement workers appear to be honoring the picket lines after talking with striking workers. Unions are requesting customers not do business with AT&T during the strike.

Late reports indicate several cars with New Jersey license plates have hit three persons on one picket line. The union claims the vehicles were being driven by replacement workers, but no independent confirmation was available.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/New Haven Register ATT UNION ON STRIKE 8-7-12.mp4[/flv]

The New Haven Register talked with Tim Smith, a union worker on a picket line outside of an AT&T facility. The video shows picketers encouraging replacement workers to honor the picket line and not report for work.  (3 minutes) 

The Communications Workers of America says when it comes to “stealthy” bills like S.B. 1611 that deregulate telecommunications in California, “no price is too high — no lie is too big.”

AT&T and the American Legislative Exchange Council (ALEC) are back again fighting for more deregulation of California’s telecommunications industry with a bill that will strip oversight of vital telecommunications services and stop punishing bad actors that leave customers without telephone service, sometimes for weeks.

California legislators are typically not responsive to the wholesale deregulation efforts that seem to draw support in more conservative states, so AT&T’s lobbyists are trying a more “incremental” approach in the state. But AT&T has also inserted “stealth” language into the bill that would dismantle consumer protections, allow companies to abandon unprofitable landlines, and strip away important oversight “checks and balances” needed to ensure good service.

Sen. Padilla’s top corporate contributor is AT&T.

S.B. 1611 illustrates that AT&T can buy its way into any legislator’s office, Democrat or Republican. The bill’s chief sponsor, Rep. Alex Padilla (D-20th Senate District) has received more contributions from AT&T than from any other corporation in both the 2006 and 2010 elections.

The bill ostensibly claims to limit its scope narrowly to “Voice over Internet Protocol” (VoIP) and “Internet Protocol enabled service.” That brings to mind services like “digital phone service” from cable companies or alternative telephone services like Vonage, magicJack or Skype.

S.B. 1611:

The bill would prohibit any department, agency, commission, or political subdivision of the state from enacting, adopting, or enforcing any law, rule, regulation, ordinance, standard, order, or other provision having the force or effect of law, that regulates VoIP or other IP enabled service, unless required or delegated by federal law or expressly authorized by statute. The bill would specify certain areas of law that are expressly applicable to VoIP and IP enabled service providers. The bill would provide that its limitations upon the commission’s regulation of VoIP and IP enabled services do not affect the commission’s existing authority over non-VoIP and other non-IP enabled wireline or wireless service….

To the layperson who generally believes services like Skype and Vonage might not deserve the same oversight as AT&T, Frontier, or Verizon — which provide Californians traditional landline service, consider Section 2 (a)(2) of the bill, which describes and defines VoIP and IP enabled service as anything that:

“Permits a user generally to receive a call that originates on the public switched telephone network and to terminate a call to the public switched telephone network” and “any service, capability, functionality, or application using existing Internet Protocol, or any successor Internet Protocol, that enables an end user to send or receive a communication in existing Internet Protocol format, or any successor Internet Protocol format through a broadband connection, regardless of whether the communication is voice, data, or video.”

This “narrow” deregulation bill just grew as wide as the Gulf of Mexico and can realistically allow any phone company in California to ignore state oversight and regulation forever.

Traditional telephone companies increasingly utilize exactly these technologies for calls placed over ordinary landline phones. Using broadband service to engage in two-way communications also qualifies. With this kind of defining language, virtually every telecommunications service in the state of California would win near-total deregulation and walk away from important oversight. The California Public Utilities Commission certainly understood the implications of this bill when the majority of commissioners came out in opposition to S.B. 1611.

Goodbye Universal Service: S.B. 1611 Allows Phone Companies to Abandon Rural and Economically Distressed California Communities

Several public interest groups also discovered language in the bill that is a perennial favorite of AT&T — eliminating universal service requirements that assure every citizen that wants a telephone line can get one. S.B. 1611 lays waste to Section 709 of the California Code which guarantees: “our universal service commitment by assuring the continued affordability and widespread availability of high-quality telecommunications services to all Californians.”

With that language gone, the state’s phone companies can unilaterally decide to abandon the customers they no longer want to serve. That could spell disaster in rural northern and eastern California, and leave low income residents with nothing but a dead phone line, unable even to call 911 in an emergency.

One AT&T Lobbyist for Every California Lawmaker

The importance AT&T places on influencing lawmakers is readily apparent when one realizes there are at least 120 AT&T lobbyists working in the state capital Sacramento, one for every California lawmaker.

But when one considers the track record of California phone and cable companies in the last few years, is less oversight and regulation the right answer?

• Verizon Sued for Providing DSL Speeds (Suitable for VoIP) They Can’t Deliver
• AT&T Gouges California With 25% Rate Increase
• California Landline Nightmare: Residents in Bakersfield in Tears Over Lousy Service
• Southern California Power & Phone Companies Blamed for Devastating Wildfires
• Verizon Bills Dead People: We’ll Settle for Half Because She’s No Longer Among the Living
• Frontier’s Goodbye Kiss: A $680 Final Bill for a Departing Customer
• Calabasas Residents Annoyed by “Corrupt and Deceptive” Charter Cable; Time Warner Cable Also Called Out
• Time Warner Cable Guy Arrives Late to Service Call, Leaves Claiming Homeowner Had “Bad Air”
• More Frontier Problems: Californians Wait Months on Refunds for Disconnected Landlines
• The Many Challenges of Charter Cable: Rate Increases for Seniors, Bankruptcy, Employees Attacked, Customers Hassled
• AT&T’s California Gold Rush: Company Lobbyists Spread the Money Far and Wide

“SB 1161 is a stealth vehicle for the gradual deregulation of telecommunications in California,” the Consumer Federation of California declared on their website. “Consumers need the CPUC to have the power to investigate complaints of bad service or unfair charges on bills, regardless of the technology used to provide phone service.”

Call to Action!

Consumers across California need to get on board immediately to stop S.B. 1611. You can file online opposition courtesy of Free Press, but it is far more effective to also directly phone your own legislator and leave a message to urge this bill be defeated. It literally takes only 2-3 minutes to call and the money and phone service you could save will be your own. Use this district finder to contact your representatives.

S.B. 1161 is scheduled for hearing in the Assembly Appropriations Committee this Wednesday, so time is of the essence!

Comcast has a real deal for you.

The maximum fees Comcast can charge California customers are about to skyrocket as part of a general rate increase Comcast has announced for some areas effective July 1.

Comcast’s official notice of rate increases for certain cities in northern California show some fees up double, even triple, what customers used to pay for service.

The average Comcast California TV customer will pay 11 cents more a day for the company’s “Digital Starter” package. Xfinity’s “Performance” package, now $1.51 a day, will rise to $1.61 a day according to the Times-Herald newspaper.

The largest fee hikes come when customers arrange for a service call. Comcast will now charge $50 an hour for custom installation work (up from $33.75). Activating a pre-existing outlet for cable service during an installation increases from $7.75 to $25. If you call to activate an outlet after your service is installed, the price doubles that at $50.

Other increases will cover converter boxes, inside wiring, remote controls, and general service fees.

But Comcast spokesman Andrew Johnson tells the newspaper customers should ignore the rate increases, which he says can be avoided by shopping for a Comcast sale or promotional offer.

“You should look at it like an auto dealership’s list price on a car,” Johnson said. “No one pays that price.”

Comcast also urges customers to consider doing installation themselves, which often means no service fees. Johnson still calls Comcast Cable a bargain, even with the average 5.2% rate increase Comcast customers will pay for their ongoing service in the coming year.

Time Warner Cable and Comcast are facing class action lawsuits filed in California federal court alleging both cable operators retain Social Security numbers, credit card information and contact information after customers stop doing business with the companies.

The two lawsuits claim Comcast and Time Warner Cable are in violation of the 1984 Cable Communications Policy Act which, among other things, requires cable operators to “destroy personal information when it is no longer needed for the purposes for which it was collected (and there are no pending requests for access).”

According to the plaintiffs, both companies are retaining personal information about their ex-customers indefinitely, and are not sending required annual privacy notices to former customers disclosing this fact.

The CCPA allows individuals to collect $100 for each day the cable company is in violation of the law.

The lawsuit argues that this non-essential information exposes former customers to possible identity theft or illicit action by company employees that could potentially lead to unauthorized charges or account withdrawals.

That fear is not far-fetched. Just two weeks ago, GCI — a cable company in Alaska, found itself contacting at least 400 customers who had their personal financial information stolen by an employee.  Some customers were also contacted by their credit card issuers over incidents of unauthorized credit card charges.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/KTUU Anchorage GCI Warns Customers of Fraud 5-24-12.mp4[/flv]

KTUU in Anchorage reports a GCI employee accessed cable customer account information to commit identity theft and credit card fraud.  (3 minutes)