A sweeping deregulation measure sponsored by Verizon Communications would end the telephone company’s obligation to provide landline service and remove state-mandated customer quality of service standards in Massachusetts.

House Bill 2930, “An Act modernizing telephone regulation and encouraging economic growth,” introduced by Rep. Stephen L. DiNatale (D-Fitchburg) is succinct:

SECTION 1. Chapter 25C of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by inserting after section 7 thereof the following sections.

Section 8. Notwithstanding any other general or special law to the contrary, the department shall have no jurisdiction, general supervision, regulation or control over wireless service, including mobile radio telephone service, or radio utilities.

Section 9. Notwithstanding any general or special law to the contrary, subject to the provisions of section 10 of this chapter, no provision of this chapter, Chapter 25 or Chapter 159, 8 and no regulation, order or settlement or portion thereof adopted pursuant to any such provision, shall apply to any telephone company (or a common carrier offering telephone service) in any municipality for which the company or carrier certifies to the Office of Consumer Affairs and Business Regulation that there are at least two providers offering voice telephone service to retail residential customers in that municipality using any technology, including but not limited to wireless voice service and VoIP service.

Section 10. Nothing in sections 8 or 9 of this chapter shall be construed to affect or modify:
a. the authority of the attorney general to apply and enforce chapter 93A or other consumer protection laws of general applicability;
b. the department’s authority under sections 18B and 18H of Chapter 159, concerning enhanced 911 service, and under section 15E of Chapter 166, concerning telephone relay service;
c. the rights or obligations of any carrier under 47 U.S.C. § 251 or 47 U.S.C. § 252; or
d. the department’s authority to administer the federal Lifeline and Link-up programs or the Connect America Fund.

SECTION 2. Sections 11, 12, 12A, 13, 14 and 15 of Chapter 166 are hereby repealed.

The measure was discussed at a hearing this week before the Legislature’s Energy & Telecommunications Committee. Verizon argued its company is still regulated as if it was a monopoly, with reporting requirements and customer service mandates that do not apply to its competitors in the cable or wireless industry.

DiNatale

“We have to answer a customer’s call within x number of seconds,” said Verizon spokesman Phil Santoro. “If we don’t, we get penalized. No other company that provides phone service has to do that. They’re all regulations that were formed when we were a monopoly, and they haven’t been changed.”

Verizon lobbyist Joe Zukowski told the Boston Business Journal Verizon is required to respond to repair calls within a 24-hour window, something not required of its biggest competitor Comcast. Verizon has to report its annual finances and various customer metrics governing response times and outages to state regulators. Verizon also has to offer landline service anywhere in its service area across most of the state, while cable companies can pick the places they wish to serve.

DiNatale regularly supports Verizon’s legislative initiatives. In 2012, he proposed a bill to amend state law to remove the authority of the Department of Telecommunications and Cable to regulate the wireless industry, deferring instead to federal regulations that industry representatives said would level the playing field.

DiNatale suggested Massachusetts could be left behind if the legislature didn’t adopt the measure. Rep. Randy Hunt, a Sandwich Republican, asked if Massachusetts had missed out on any innovations in technology because of overregulation. Zukowski suggested a Massachusetts legislature hostile to business interests would make the company think twice about expanding its 4G LTE network in the state. By November, the bill was effectively buried in a legislative maneuver and by June 2013, Verizon announced it largely completed its 4G LTE upgrade, regardless of the bill.

DiNatale’s latest bill includes last year’s wireless oversight ban as well as forbidding the Department of Telecommunications and Cable from regulating Verizon in any part of the state where at least one provider of any kind offers competitive service.

Despite DiNatale’s attempt to ban state regulation of wireless service,  Sen. Karen Spilka (D-Ashland), argued at Tuesday’s hearing for (S 1617), “The Cellphone User’s Bill of Rights,” that would require clearly published prices and service policies, monitors the quality of cell service in the state, and limits all cell contracts to 12 months.

“Many people don’t have landline phones anymore. However, as wireless subscribership increases, so do complaints about the contracts and services,” Spilka told the committee.

Zukowski suggested that rural areas will still be covered by regulation where Verizon maintains a monopoly. But the legislation eliminates regulation from any part of the state where even one competitor promises to provide service. AT&T Mobility alone would give Verizon an effective way out of regulatory oversight, because AT&T claims it already provides solid service to the majority of the state.

AT&T Mobility claims its competing cell service is available across almost the entire state of Massachusetts. The areas boxed in red are the only significant parts of the state without claimed coverage by AT&T.

There are only about three dozen or so towns in the state with no cable voice service, and even fewer with significant sections that have no cell phone service, all in the sparsely populated rural central and western parts of the state.

Other key components of this and another bill Verizon is supporting this term:

• Verizon would end its commitment to provide universal service in the state. Under the terms of the bill, Verizon could also justify ceasing rural landline service and offer an alternative such as Voice Link, a wireless landline replacement not subject to state oversight;
• Verizon would not have to report finances and customer service metrics and would no longer have to meet mandated customer service standards;
• State authority to compel reliable E911 service without any charge to the calling party and mandates regarding service for the disabled are weakened or eliminated;
• Elimination of a requirement providing Verizon customers with 10 free directory assistance calls per month, unless the customer is certified as elderly or disabled;
• Impose clear terms that wireless service is off-limits to state regulators.

The bill is co-sponsored by: Rep. Stephen Kulik (D-Worthington), Sen. Anthony Petruccelli (D-East Boston), Rep. Kathi-Anne Reinstein (D-Revere), and Sen. Sal DiDomenico (D-Everett).

Executives at Canada’s largest telecom companies are sighing relief after Verizon announced it was not interested in competing in Canada.

“Verizon is not going to Canada,” Lowell McAdam, chief executive officer of New York-based Verizon, said yesterday in a phone interview with Bloomberg News. “It has nothing to do with the Vodafone deal, it has to do with our view of what kind of value we could get for shareholders. If we thought it had great value creation we would do it.”

McAdam added he thought speculation about Verizon’s plans in Canada was “way overblown.”

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/CBC Big 3 Canada telecom stocks surge as Verizon threat fades 9-3-13.flv[/flv]

The CBC reports three of the largest telecom companies in Canada are seeing their stock prices soar on news Verizon won’t enter Canada. Kevin O’Leary takes a position shared by Bell, Telus and Rogers that no spectrum should be set aside for new competitors. Instead, he seeks a “winner takes all” auction, even if it means dominant incumbent carriers monopolize every available frequency. (3 minutes)

McAdam

Verizon’s possible entry into Canada was among the hottest stories of the summer, even reported on the CBC’s national nightly news. The potential new competition provoked Bell, Rogers, and Telus — three of Canada’s largest phone and cable companies — to join forces in a multimillion dollar lobbying effort to slow Verizon down and make the wireless business in Canada less attractive. The Harper government used news of Verizon’s potential entry to promote its policies favoring competition over regulation.

Verizon Chief Financial Officer Fran Shammo said the company was considering a wireless venture in Canada at a June Wall Street investor conference.

“We’re looking at the opportunity,” Shammo said at the time. “This is just us dipping our toe in the water.”

Verizon took its toe out yesterday, despite the potential profits available in a country criticized for its extremely expensive cell phone service.

“I’m surprised that Verizon isn’t interested in Canada,” tweeted Adam Shore. “There are over 33 million suckers up here that will pay ridiculous cell phone rates.”

Bell joined Telus and Rogers in launching a multi-million dollar lobbying effort to make Verizon’s entry into Canada difficult.

The three companies most Canadians now buy wireless service from denied they wanted to keep Verizon out, arguing they simply wanted a “level playing field.”

Industry Minister James Moore suggested a fourth large player could provoke a price war in a way much smaller wireless providers like Wind Mobile or Mobilicity never could. The government was willing to set aside coveted 700MHz wireless spectrum at a forthcoming auction to help a new entrant — any new entrant — get started.

Verizon’s decision to stay out might have delivered a damaging blow to the Conservative government’s “pro-competition” solution to the problem of high cell phone bills. After the announcement, Moore was left promising only that spectrum auctions would carry on regardless of Verizon’s decision.

For now, the best chance of increased competition comes from Quebecor, which is gradually expanding its wireless network. Spectrum set asides almost guarantee the owner of Quebec’s cable giant Vidéotron will be able to bid for and win significant spectrum at the upcoming auction, some at a discount.

“If Verizon doesn’t show up, they’re actually in a very strong position to buy a block of spectrum that will not be very expensive,” Maher Yaghi, an analyst at Desjardins Securities Inc., told Bloomberg News. “Wireless is currently providing them with a nice growth platform.”

Without a surprise late entrant suddenly announcing interest by the auction filing deadline of Sept. 17, many analysts predict the outcome will likely not deliver Canadians any significant changes in cell phone service and pricing. The government may also be disappointed with the auction proceeds. Canada’s big three will likely avoid overbidding and still end up dividing most of the available airwaves between them. Quebecor may end up with most of the rest at comparatively “fire sale” prices. The Montreal-based company must then decide how much it will spend to expand its home coverage areas outside of Quebec, Toronto, and southeastern Ontario.

[flv width=”640″ height=”372″]http://www.phillipdampier.com/video/BNN Verizon Wont Enter Canada 9-3-13.flv[/flv]

BNN reports Verizon’s decision not to enter Canada leaves the Conservative government without an effective means to moderate cell phone pricing in the country. Mary Anne de Monte-Whelan, president of The Delan Group, observed the government may be forced to take a more regulatory approach to control expensive cell service, possibly starting with roaming rates.  (7 minutes)

Buying shares in a public company used to be straightforward and simple. Buyers instructed their broker to trade shares with the simple maxim: “buy low, sell high.”

These days, things are more complicated thanks to wealthy investment banks that have created Wall Street’s version of a Las Vegas casino. Today, buyers don’t even need to purchase shares in a company — they can make a killing just by betting at sites like suomikasinot.fi whether they believe a share price will increase or decrease.

The Options Regulatory Surveillance Authority is now investigating a sudden surge in such option trading just before AT&T launched its $1.19 billion cash bid for Leap Wireless, owner of the Cricket-branded prepaid cell service.

The unnamed buyers included investment bank Goldman Sachs, that either traded options for themselves, on behalf of well-heeled clients, or simply processed the trades as part of doing business.

Those who purchased the call options were either clairvoyant, extremely lucky, or had inside knowledge of the yet-to-be-announced deal and were able to buy thousands of lucrative contracts that bet Leap stock would make a sudden recovery and increase in price. Nanex reports an explosive increase of 15,749 Leap “call contracts” trading hands that week, according to a report in USA Today. That well-surpassed that same week’s 1,384 Leap “put contracts” — investors making the safer bet that the always-anemic Leap stock would fall in price even further. That particular week, they were very wrong.

During the last 15 minutes of trading on July 12, 2,536 Leap contracts were executed, and nearly 80 percent of them gave buyers the right to purchase Leap shares for $9 each through Aug. 16, an amazing display of confidence in a stock that traded as low as $6.58 per share a few weeks earlier.

Leap into the big money pool.

Other investors were left scratching their heads over the wisdom of that kind of trading until just after the market closed that day, when AT&T announced its intention to buy the prepaid carrier, boosting Leap’s stock price from $7.98 on July 12 to $17.23 on Monday, July 15.

“Did someone know something early in Leap Wireless?” asked Jon Najarian, co-founder of Option Monster, a provider of options-trading ideas, in a written commentary for TheStreet.com. “The question now is whether someone will end up in prison for insider trading.”

While the unnamed parties likely made a handsome and quick profit, the brokerages that sold the options took a beating.

“We, as market makers … sold these calls,” said Thomas Peterffy, head of Timber Hill and an affiliated group of brokerages. “When the news came out, we had an immediate loss of $1.5 million.”

Goldman $achs

Timber Hill promptly filed a request for an investigation into potential illegal insider trading with the Options Regulatory Surveillance Authority that has since responded it was reviewing the issue “to determine if any exchange or Securities and Exchange Commission rules may have been violated.”

A Nasdaq spokesperson did not respond to messages seeking comment. Goldman Sachs also declined to comment.

Peterffy told the newspaper securities regulators should pursue examples such as the Leap Wireless options trading, “where it’s very clear what happens.”

“This has been going on for 20 years. It happens all the time, happens about 20-30 times a year. And we’ve never seen a penny from this stuff,” said Peterffy.

Phillip “Every other 2008 spectrum bidder except U.S. Cellular has since sold its winnings to AT&T or Verizon Wireless or has never provided competitive service” Dampier

AT&T is unhappy with a proposal from a wireless competitor it originally tried to buy in 2011 that would offer smaller competitors a more realistic chance of winning favored 600MHz spectrum vacated by UHF television stations at a forthcoming FCC auction.

T-Mobile’s “Dynamic Market Rule” proposal would establish a cap on the amount of spectrum market leaders AT&T and Verizon Wireless, flush with financial resources for the auction, could win.

“Imposing modest constraints on excessive low-band spectrum aggregation will promote competition, increase consumer choice, encourage innovation, and accelerate broadband deployment,” T-Mobile offered in its proposal to the FCC.

Without some limits, wireless competitors Sprint and T-Mobile, among other smaller carriers, could find themselves outbid for the prime spectrum, well-suited for penetrating buildings and requiring a smaller network of cell towers to deliver blanket coverage.

In a public policy blog post today, AT&T argues T-Mobile is behind the times and its proposal is unfair and unworkable:

First, the purported advantage of low band spectrum – that it allows more coverage and better building penetration with fewer cell sites – has been overtaken by marketplace realities under which capacity not coverage drives network deployment.  Carriers deploying low band and high band spectrum alike must squeeze as many cell sites as they can into their networks to meet exploding demand for data services.  Second, to the extent this is less the case in rural areas, those areas are not spectrum-constrained and the lower cost of building out low band spectrum in such areas is offset by the higher cost of the spectrum itself.

[…] But this is not the only point that should concern policymakers.  Such caps will also suppress auction revenues, potentially to the point of auction failure, ultimately reducing the amount of spectrum freed up for mobile broadband use and undermining the auction’s ability to meet critical statutory goals.

[…] Even if T-Mobile’s proposal did not result in complete auction failure, its proposed caps would suppress auction revenues, reducing the amount of spectrum freed up for mobile broadband use as well as funds generated for FirstNet and to pay down the national debt.  That is because strict limits on participation by otherwise qualified bidders will make the auction less competitive and will yield less revenue.  Indeed, if T-Mobile’s proposed spectrum cap was strictly enforced, Verizon estimates it would be barred from bidding in 7 of the top 10 markets.  AT&T would face similar bidding limitations, as noted in our filing.

AT&T suggests the last major auction in 2008 attracted 214 qualified bidders and 101 bidders won licenses, including carriers of all sizes and new entrants.

But an analysis by Stop the Cap! shows the breakaway winners of the 2008 auction were none other than AT&T and Verizon Wireless, which paid a combined $16.3 billion of the total $19.592 billion raised. For that money, they acquired:

• Block A – Verizon Wireless and U.S. Cellular both bought 25 licenses each. In this block, Verizon targeted urban areas, while U.S. Cellular bought licenses primarily in the northern part of the U.S., where it provides regional cellular service. Cavalier Telephone and CenturyTel also bought 23 and 21 licenses, respectively. Cavalier Telephone is now wholly owned by Windstream, which does not provide cell service and was selling its 700MHz spectrum to none other than AT&T. So is CenturyLink (formerly CenturyTel).

• Block B – AT&T Mobility was the biggest buyer in the B block, with 227 licenses totaling $6.6 billion. U.S. Cellular and Verizon bought 127 and 77 licenses, respectively. AT&T Mobility and Verizon Wireless bought licenses around the country, while U.S. Cellular continued with its strategy to buy licenses in its home network northern regions.

• Block C – Of the 10 licenses in the C Block, Verizon Wireless bought the 7 that cover the contiguous 48 states (and Hawaii). Those seven licenses cost Verizon roughly $4.7 billion. Of the other three, Triad Communications — a wireless spectrum speculator — bought the two covering Alaska, Puerto Rico and the U.S. Virgin Islands through its Triad 700, LLC investor partnership, while Small Ventures USA, L.P. bought the one covering the Gulf of Mexico. Triad 700, LLC sold its spectrum last fall to AT&T while Small Ventures USA sold theirs to Verizon Wireless.

• Block E – EchoStar spent $711 million to buy 168 of the 176 available Block E licenses. This block, made up of unpaired spectrum, will likely be used to stream television shows. Qualcomm also bought 5 licenses. Neither company has used its spectrum to offer any services five years after the auction ended.

So much for improving the competitive landscape of wireless. Other than U.S. Cellular, which is rumored to be on AT&T and Verizon Wireless’ acquisitions wish list, every auction winner has either sold its spectrum to the wireless giants or has done nothing with it.

If “highest bidder wins”-rules apply at the forthcoming auction, expect more of the same.

AT&T and Verizon Wireless have significant financial resources to outbid Sprint, T-Mobile and smaller carriers and will likely win the bulk of the available spectrum whether they actually need it or not. Smaller victories may be won by smaller competitors, but only in rural areas and sections of the country disfavored by the largest two.

Verizon Wireless customers and public safety personnel are upset that the cell phone company was caught unprepared after a rural roaming agreement with AT&T expired at the end of June, leaving police officers without communications and others with no way to reach 911.

AT&T no longer permits Verizon Wireless customers to roam on its acquired former Alltel network, which has dramatically reduced service in Geraldine, Absarokee, Ft. Benton, Browning, Harlem, Evaro, Cascade, Stanford, Lincoln, Ennis, Virginia City, and Great Falls.

Lincoln resident Gayle Steinch is living with the result of that business decision. She has a single bar of service on her Verizon Wireless cellphone at her house. It is her only phone — she dropped landline service in 2007.

“And I live a half a block off the main street,” she told the Great Falls Tribune.

Verizon’s road to no bars in rural Montana.

Capt. Gary Becker of the Montana Highway Patrol told The Montana Standard troopers in the area haven’t been able to communicate on their cell phones or their computers installed in their cruisers since the roaming agreement expired. Becker said police have to travel at least 30 miles to get any usable reception from Verizon.

Jessica Constantine, manager of the AT&T Elite Wireless store in Butte, said AT&T “had a roaming agreement with Verizon and we allowed them to use our towers for three years. The contract is over.”

And with it, Verizon Wireless network reception.

The agreement was part of a deal between AT&T and Verizon over Verizon’s 2010 purchase of Alltel. Federal regulators required Verizon to divest itself of certain Alltel territories for competitive reasons, transferring those customers to AT&T. As a result, territories that used to be well-served by Alltel’s CDMA network are now being converted by AT&T to GSM and data service, exposing Verizon’s sparse home cellular coverage in several parts of the state.

“They had years to prepare for AT&T switching off Alltel’s old CDMA service Verizon was dependent on, and Verizon did little to nothing,” said Jim Brown. “The Verizon person I spoke with told me it did not make sense to build a network out here because the only thing it would serve are crows. But they promised they would at least try to equal the coverage Alltel used to give us. That never happened and still isn’t.”

Verizon denied there was a major service loss in rural Montana. Bob Kelley, corporate spokesperson for Verizon, said that the change in service was planned and its impact would be limited to “less than optimal” service. He confirmed there were no unexpected outages.

After negative media coverage reported Verizon’s inability to provide quality cell service in rural Montana, the company agreed to temporarily deploy portable cell towers to improve coverage.

The “COWs”— cellphone towers on wheels — are stationed in Lincoln, Virginia City, Lima, Broadview, between Absarokee-Fishtail, as well as in Jackson, mostly meeting the needs of law enforcement monitoring the Rainbow Family Gathering last week. Verizon is also deploying repeaters that can re-broadcast signals and enhance range, as well as add coverage to existing permanent facilities. The company is planning on adding permanent towers this week in Marion and Tarkio. Additional permanent towers are also planned for Lincoln and Columbus by the end of August.

That cannot come soon enough for some customers.

Cell tower on wheels

“Verizon brought up this 40-foot [temporary] antenna, but you really can only get service on it on Main Street,” said Steinch, the manager of The Bootlegger, a Lincoln bar and restaurant. “We had a guy in here this morning who has a towing company who missed out on an $1,800 job because his cellphone didn’t get the call.”

Service has deteriorated so badly in rural Montana, some AT&T stores had lines of soon-to-be-ex-Verizon customers snaking out the door, and at least one reported it was completely sold out of cell phones and wireless broadband devices.

“Dillon sold out of cell phones yesterday,” said Constantine, “because everybody in Lima who was using Verizon just flooded the Dillon store.”

Verizon subscriber John Ulias found his cellphone useless at his cabin in the Little Belt, as did many of his neighbors in that area.

Although Verizon told Ulias and the Tribune subscribers should still be getting service in the Little Belts area from a Verizon antenna in Stanford, Ulias said that isn’t the case.

“I gave the Verizon representative the cell numbers of two of my Little Belt neighbors after he told me we should be getting service up there,” Ulias told the newspaper. “The guy called me back and said his calls went straight to their voicemail.”

Montana residents affected by the disruption of Verizon Wireless service seeking to file a complaint should contact the Office of Consumer Protection at the Montana Department of Justice by emailing: [email protected], faxing 406-444-9680 or calling 800-481-6896 or 406-444-4500.

For customers planning to switch carriers because of reception issues in Montana, Verizon is waiving early termination fees. For those customers the company can convince to stay, discounted service will be available along with discounts on a Verizon Network Extender, a portable in-home mini-cell tower that interfaces with a home broadband connection. To pursue either option, prepaid consumers should call Verizon Customer Service at 1-888-294-6804; all others should call 1-800-922-0204.

In New York and New Jersey, Verizon is attempting to convince some rural residents to abandon their landline service in favor of Voice Link, which relies entirely on Verizon Wireless reception.

“I have one word for my friends back east: don’t,” said Brown.