Stop the Cap! reader Wayne A. dropped us a line to let us know Comcast has been getting very aggressive in the Denver area, poaching CenturyLink customers with enormous discounts:

My wife and I just accepted a package from Comcast to leave CenturyLink for a package that includes:

• Digital Premier HD with DVR
• HBO, Cinemax, Showtime, and other premium movie channels
• Broadband service at 25/5Mbps
• Unlimited Long Distance Digital Phone Service

Comcast’s price?  An amazing $109.99/month for the first year, $129.99/month for the second.  Wayne says that’s a savings of $90 a month over ordinary Comcast prices, and compared with what he was paying CenturyLink, he will save $912.12 during the first year and around $600 for the second.

What makes Comcast’s pricing so aggressive is the fact they include much faster broadband speed than many other retention or “capture” customer deals.  They also throw in free premium movie channels.  We’ve seen Time Warner Cable offer triple-play retention deals for less than $90 a month for the first year, but they don’t include movie channels and deliver broadband service at the standard 10/1Mbps speed.

If you are paying Comcast more, it may be time to pick up the phone and threaten to walk unless you can have the same deal.  We’ve found dealing with customer retentions to be a real “your results may vary”-experience.  Don’t be willing to take the first offer.  Don’t be afraid to dismiss weak deals with a non-committal “I’ll think about it” if the price is not right for you.  Then call back.

In the last few weeks, we’ve found Time Warner Cable’s best deals still go to customers who actually schedule a service disconnection. Within hours, Time Warner starts calling, looking to “make an offer you cannot refuse.” The retention specialists at Time Warner who reach out to you generally have the most aggressively priced deals. You qualify if you call, schedule a disconnect a week or two out, and wait by the phone. You can keep your service running while company representatives try to convince you to stick with them.  Just make sure you answer those unfamiliar Caller ID-calls — it’s probably the cable company.  Most will ask why you disconnected.  If you answer “price,” the deals start coming.

Unfortunately, there was no way we could take advantage of any of their latest offers, which literally started two hours after disconnecting my late grandmother’s cable service.

It’s a buyer’s market for telecommunications products, so never settle for the regular price when a substantial discount is a phone call away.

The primary backers of the ABC Plan

Today, Federal Communications Commission Chairman Julius Genachowski is scheduled to deliver a major announcement on reforming the Universal Service Fund (USF) — a federal program designed to subsidize the costs of delivering telecommunications services to rural America.

The reform, long overdue, would transition a significant percentage of USF fees every telephone customer pays towards broadband deployment — a noble endeavor.  For years, Americans have paid more than $5 billion annually to phone companies large and small to maintain rural landline service.  Small co-op phone companies depend on the income to deliver affordable service in places like rural Iowa, Kansas, and Alaska.  But large companies like AT&T and Verizon also collect a significant share (around $800 million annually) to reduce their costs of service in the rural communities they serve.

That’s particularly ironic for AT&T, which time and time again has sought the right to abandon universal rural landline service altogether.

Genachowski’s idea would divert USF funding towards broadband construction projects.  The argument goes that even low speed DSL requires a well-maintained landline network, so phone companies that want to deploy rural broadband will have to spend the money on necessary upgrades to provide just enough service to earn their USF subsidies.  The lower the speed, the lower the cost to upgrade networks and provide the service.  Some may choose wireless technology instead.  Since the telephone companies have fought long and hard to define “broadband” as anything approaching 3-4Mbps, that will likely be the kind of speed rural Americans will receive.

At first glance, USF reform seems like a good idea, but as with everything at the FCC these days, the devil is always in the details.

Dampier: Another day, another self-serving plan from the phone companies that will cost you more.

While headline skimmers are likely to walk away with the idea that the FCC is doing something good for rural broadband, in fact, the Commission may simply end up rubber stamping an industry-written and supported plan that will substantially raise phone bills and divert your money into projects and services the industry was planning to sell you anyway.

Stop the Cap! wrote about the ABC Plan a few weeks ago when we discovered almost all of the support for the phone-company-written proposal comes from the phone companies who back it, as well as various third party organizations that receive substantial financial support from those companies.  It’s a dollar-a-holler astroturf movement in the making, and if the ABC Plan is enacted, you will pay for it.

[Read Universal Service Reform Proposal from Big Telcos Would Rocket Phone Bills Higher and Astroturf and Industry-Backed, Dollar-a-Holler Friends Support Telco’s USF Reform Plan.]

Here is what you probably won’t hear at today’s event.

At the core of the ABC Plan is a proposal to slash the per-minute rates rural phone companies can charge big city phone companies like AT&T and Verizon to connect calls to rural areas.  You win a gold star if you correctly guessed this proposal originated with AT&T and Verizon, who together will save literally billions in call connection costs under their plan.

With a proposal like this, you would assume most rural phone companies are howling in protest.  It turns out some are, especially some of the smallest, family-run and co-op based providers.  But a bunch of phone companies that consider rural America their target area — Frontier, CenturyLink, FairPoint and Windstream, are all on board with AT&T and Verizon.  Why?

Because these phone companies have a way to cover that lost revenue — by jacking up your phone bill’s USF surcharge to as much as $11 a month per line to make up the difference.  In the first year of implementation, your rates could increase up to $4.50 per line (and that fee also extends to cell phones).  Critics have been widely publicizing the increased phone bills guaranteed under the ABC Plan.  In response, advocates for the industry are rushing out the results of a new study released yesterday from the Phoenix Center Chief Economist Dr. George S. Ford that claims the exact opposite.  Dr. Ford claims each customer could pay approximately $14 less per year in access charges if the industry’s ABC Plan is fully implemented.

Genachowski

Who is right?  State regulators suggest rate increases, not decreases, will result.  The “Phoenix Center,” unsurprisingly, has not disclosed who paid for the study, but there is a long record of a close working relationship between that research group and both AT&T and Verizon.

But it gets even worse.

This shell game allows your local phone company to raise rates and blame it on the government, despite the fact those companies will directly benefit from that revenue in many cases.  It’s a real win-win for AT&T and Verizon, who watch their costs plummet while also sticking you with a higher phone bill.

The USF program was designed to provide for the neediest rural phone companies, but under the new industry-written rules being considered by the FCC, just about everyone can get a piece, as long as “everyone” is defined as “the phone company.”  There is a reason this plan does not win the hearts and minds of the cable industry, independent Wireless ISPs, municipalities, or other competing upstarts.  As written, the USF reform plan guarantees virtually all of the financial support stays in the Bell family.  Under the arcane rules of participation, only telephone companies are a natural fit to receive USF money.

Genachowski will likely suggest this plan will provide for rural broadband in areas where it is unavailable today.  He just won’t say what kind of broadband rural America will get.  He can’t, because the industry wrote their own rules in their plan to keep accountability and oversight as far away as possible.

For example, let’s assume you are a frustrated customer of Frontier Communications in West Virginia who lives three blocks away from the nearest neighbor who pays $50 a month for 3Mbps DSL broadband.  You can’t buy the service at any price because Frontier doesn’t offer it.  You have called them a dozen times and they keep promising it’s on the way, but they cannot say when.  You may have even seen them running new cable in the neighborhood.

Frontier has made it clear they intend to wire a significantly greater percentage of the Mountain State than Verizon ever did when it ran things.  Let’s take them at their word for this example.

The telephone companies have helpfully written their own rules for the FCC to adopt.

Frontier’s decision to provide broadband service in West Virginia does not come out of the goodness of their heart.  At a time when landline customers are increasingly disconnecting service, Frontier’s long-term business plan is to keep customers connected by selling packages of phone, broadband, and satellite TV in rural markets.  Investment in DSL broadband deployment has been underway with or without the assistance of the Universal Service Fund because it makes financial sense.  Our customer in West Virginia might disconnect his landline and use a cell phone instead, costing Frontier any potential broadband, TV and telephone service revenue.

Under the ABC Plan, Frontier can be subsidized by ratepayers nationwide to deliver the service they were planning to provide anyway.  And what kind of service?  The same 3Mbps DSL the neighbors have.

If your county government, a cable operator, or wireless competitor decided they could deliver 10-20Mbps broadband for the same $50 a month, could they receive the USF subsidy to build a better network instead?  Under the phone company plan, the answer would be almost certainly no.

Simon Fitch, the consumer advocate of the Federal-State Joint Board on Universal Service, which advises the FCC on universal service matters, says the ABC Plan is a consumer disaster.

“Although a stated goal of the FCC’s reform effort is to refocus universal-service funding to support broadband, the industry’s ABC plan requires no real commitment to make broadband available to unserved and underserved communities,” Fitch writes. “Companies would receive funds to provide broadband with upload and download speeds that are already obsolete. States would be given no real enforcement power.”

Fitch is certain companies like AT&T and Verizon will receive enormous ratepayer-financed subsidies they don’t actually need to provide service.

Back to AT&T.

In several states, AT&T is seeking the right to terminate its universal service obligation altogether, which would allow the same company fiercely backing the ABC Plan to entirely walk away from its landline network.  Why?  Because AT&T sees its future profits in wireless.  Under the ABC Plan, AT&T could build rural cell towers with your money to provide “replacement service” over a wireless network with or without great coverage, and with a 2GB usage cap.

At the press conference, Genachowski could still declare victory because rural America would, in fact, get broadband.  Somehow, the parts about who is actually paying for it, the fact it comes with no speed, coverage, or quality guarantees, and starts with a 2GB usage cap on the wireless side will all be left out.

Fortunately, not everyone is as enamored with the ABC Plan as the groups cashing checks written by AT&T.

In addition to state regulators, Consumers Union, the AARP, Free Press, and the National Association of Consumer Advocates are all opposed to the plan, which delivers all of the benefits to giant phone companies while sticking you with the bill.

There is a better way.  State regulators and consumer groups have their own plans which accomplish the same noble goal of delivering subsidies to broadband providers of all kinds without increasing your telephone bill.  It’s up to the FCC to demonstrate it’s not simply a rubber stamp for the schemes being pushed by AT&T and Verizon.

CenturyLink has unveiled its own discounted Internet access program for the income-challenged, loaded with tricks and traps buried in the fine print.

Dubbed CenturyLink Internet Basics, the 1.5Mbps DSL service is available to those who currently qualify for Lifeline Affordable Telephone Service, a federal program that provides discounts on basic monthly telephone service to eligible low-income consumers.  The service sells for $9.95 a month, before taxes and fees.

But buried in the fine print are a number of surprises that deliver higher prices and some nasty surprises (underlining ours):

• Listed High-speed Internet rate of $9.95/mo. applies for first 12 months of service (after which the rate reverts to $14.95/mo. for the next 48 months of service), and requires a 12-month term agreement or 24-month term agreement (if purchasing Netbook);
• Customer must either lease a modem/router from CenturyLink for an additional monthly charge or purchase a modem/router from CenturyLink for a one-time charge, and a one-time High-Speed Internet activation fee applies;
• A one-time professional installation charge (if selected by customer) and a one-time shipping and handling fee applies to customer’s modem/router;
• Taxes, Fees, and Surcharges – Applicable taxes, fees, and surcharges include a carrier Universal Service charge, carrier cost recovery surcharges, state and local fees that vary by area and certain in-state surcharges. Cost recovery fees are not taxes or government-required charges for use (which means they are little more than bill padding junk fees). Taxes, fees, and surcharges apply based on standard monthly, not promotional, rates;
• The first bill will include charges for the first full month of service billed in advance, prorated charges for service from the date of installation to bill date, and one-time charges and fees described above.
• Netbook purchase must be paid in full to CenturyLink prior to shipment. Shipping and handling fees, and applicable taxes will apply. If customer purchases Netbook as part of the CenturyLink Internet Basic service, all warranty and support for the Netbook and accompanying equipment will be covered by the manufacturer or other identified third party, not CenturyLink.
• No software applications or wireless service are included with the Netbook.
• An early termination fee will apply based on the applicable monthly recurring service fee multiplied by the number of months remaining in the minimum service period, up to $200.

Unlike Comcast, CenturyLink claims it will provide equivalent discounts for faster speeds — an important consideration for those with school-age children at home who may need multimedia capability for research and studies.

CenturyLink also offers a netbook computer for an additional $150, plus shipping and taxes, at the time of enrollment in the program.  The service also includes educational training, a 30-day money back guarantee, Norton Security Suite, and parental controls.

“While the Internet has become part of daily life for most Americans, many still aren’t connected because the cost is beyond their reach. CenturyLink is pleased to introduce this new program that offers affordable High-Speed Internet service and computers to those who need help getting online,” said CenturyLink CEO and President Glen F. Post, III.

That and the fact the company was required to offer discounted Internet service as a condition for the approval of their acquisition of Savvis, a web hosting company, according to Broadband Reports.

Like Comcast, participation in the program requires meeting a number of terms and pre-conditions:

While most rural telephone companies are selling customers 1-3Mbps copper-delivered DSL service, Alcatel Lucent has announced the commercial availability of VDSL 2 Vectoring, a new way of delivering up to 100Mbps over the copper wire telephone network most rural North Americans still depend on for telecommunications service.

VDSL2 combines a fiber-copper hybrid network similar to Bell’s Fibe or AT&T’s U-verse, with interference-cancelling technology called “vectoring” to deliver speeds much closer to the 100Mbps theoretical limit of current DSL technology.

“Alcatel-Lucent’s plan to make VDSL2 vectoring commercially available is very timely,” said Rob Gallagher, Principal Analyst, Head of Broadband & TV Research, Informa.  “VDSL2 Vectoring promises to bring speeds of 100Mbps and beyond to advanced copper/fiber hybrid networks and make super fast broadband speeds available to many more people, much faster than many in the industry had thought possible.”

A new way to boost copper speeds even faster.

Different flavors of DSL are currently in use around North America and beyond.  The most basic form, ADSL, also happens to be the most commonplace among phone companies offering basic broadband service.  For customers up to 12,000 feet away from a phone company central office, DSL delivers speeds usually at 1Mbps or faster.  Customers enjoying the fastest speeds must live much closer to the phone company facilities.  The further away you live, the slower your broadband speed.  In rural areas, consumers can live further away than the maximum distance of the central office, which means no DSL service for those subscribers.

A combination of signal loss and interference, called “crosstalk,” from adjacent copper wire pairs are both the enemies of DSL broadband, because they can drastically reduce speeds.

Telephone companies can address this problem by building new satellite central offices located halfway between customers and their primary facilities.  These offices, usually connected by fiber, can successfully reduce the amount of copper wire between the customer and the company, boosting speeds.  Many phone companies also deploy DSL extensions called D-SLAMs, which can be attached to a phone pole or enclosed in a metal box by the roadside.  A fiber cable connects the D-SLAM back to the phone company, while existing copper phone wires go back to individual subscribers.

More modern forms of DSL: ADSL2, ADSL2+, and VDSL, share some of those concepts.  The key is cutting as much copper wire out of the network as possible, replacing it with fiber optic cable which does not suffer signal loss or interference in the same way.

Many European and Pacific broadband networks rely on ADSL2/2+, which can usually deliver reliable speeds in the 20Mbps range.  VDSL networks offer even more bandwidth, and are the basis of U-verse and Fibe, which split up broadband, phone service, and television on the same cable.  When customers demand even faster speeds, phone companies can “bond” several individual DSL connections together to deliver faster speeds.  Some traditional ADSL providers do that today for their customers, especially in areas where low speeds prevail.

An argument the phone company will love.

Alcatel Lucent says VDSL2 with Vectoring is the next best thing to fiber to the home, because it is cheaper to deploy with fewer headaches from local authorities when streets and yards are dug up for fiber cable replacements.  It also meets the growing speed needs of average consumers.  Alcatel Lucent predicts the minimum speed North Americans will need to support the next generation of online video is 50Mbps, more than 10 times the speed phone companies like Verizon, AT&T, Frontier, and CenturyLink provide over their traditional DSL networks, especially in rural and suburban areas.

Vectoring can deliver results for phone companies with aging copper wire infrastructure, more prone to crosstalk and other signal anomalies.  Alcatel Lucent compares vectoring with noise-cancellation headphones.  By sampling the current noise conditions on copper cable networks, vectoring can suppress the impact of the interference, boosting speeds and delivering more reliable results.

With technologies like VDSL2 with Vectoring promising speeds far faster than what rural North Americans currently enjoy, the Federal Communications Commission may want to re-evaluate its national minimum speed standard for broadband — 3-4Mbps — found in its National Broadband Plan.  Alcatel Lucent promises they can do much better.

[flv width=”640″ height=”324″]http://www.phillipdampier.com/video/Alcatel Lucent VDSL2.flv[/flv]

Alcatel Lucent produced this video to promote its new VDSL2 with Vectoring technology.  The video targets cost-conscious phone companies who are being pressured to deliver faster service, but don’t want to spend the money on a fiber to the home network.  (6 minutes)

(Courtesy: Pando Networks)

Bears who fancy a good rub up against wireless Internet transmission towers were blamed for knocking out service for customers in the Potlatch area one day, a problem unique to rural communities who make due with whatever broadband access they can find.

Such is life in rural Idaho, deemed by Pando Networks to be America’s slowest broadband state, with average Internet speeds of just 318kbps.

Stop the Cap! reader Jeff in Pocatello is happy the big city New York Times has noticed Idaho’s online challenges.

“Please take notice of this newspaper article about our online experience here in Idaho,” Jeff writes. “While it underplays the near-total failure of our state legislature to recognize there –is– a broadband problem here, at least the rest of the country will understand just how bad Internet access remains in rural America.”

Jeff should know.  Pando Networks calls Pocatello America’s slowest Internet city.  It’s no surprise why.  Pocatello residents are stuck between a rock — the infamous Internet Overcharging leader Cable ONE (incidentally owned by NY Times‘ rival The Washington Post), and a hard place — Qwest/CenturyLink DSL.

Nobody does Internet Overcharging better than Cable ONE, which baits customers with high speed access and then ruins the deal with an $8 monthly modem rental fee, infamously low usage caps and a two-year contract plan that subscribers call a ripoff.

“Cable ONE never heard of a square deal because they break every consumer rule in the book,” Jeff says. “Although the company pitches speeds up to 50Mbps, they tie it to a two-year contract that only delivers one year at that speed.  After 12 months, they reduce your speed to just 5Mbps for the entire second year, and if you cannot convince the customer service representative to renew and reset your 50Mbps contract for an additional year, there is nothing you can do about it.”

THE Internet Overcharger

Cable ONE has written the book on usage limits.  Customers paying for “blazing fast 50Mbps speed” get to consume a maximum of just 50GB per month (100GB for triple play customers) before overlimit fees of $0.50/GB kick in.  Other Cable ONE plans include daily usage limits of just 3GB, which can make Netflix viewing difficult.

“Cable ONE makes you ration your Internet like satellite providers do, and it’s very irritating because they tease you with fast speeds you literally cannot use unless you are willing to pay a lot more,” Jeff says.

The alternative for most Idahoans is DSL, if Qwest/CenturyLink provides it.  In many areas, they don’t.

“You can be a mile out of Pocatello’s city center and be told there is no DSL, and those that do get it often find it working at 1-3Mbps,” he adds.

In a country now rated 25th in terms of Internet speed, Idaho is comparatively a bottom-rated broadband disaster area.  The state secured 11 federal broadband grants to deliver some level of service in communities across the state, at a cost of $25 million.

The Slow Lane

But ask some local officials about the quality of broadband in Idaho and you find a lot of denial there is even a problem.

The Times got a brusque response to their inquiries about broadband service from the executive director for the Bannock Development Corp., a business development group.  Gynii Gilliam told the newspaper things were just fine, at least for large businesses in cities like Pocatello.

“The last thing I need is a report that says we don’t have the capacity and speed, when I know it exists,” Gilliam said. She noted that Allstate Insurance was opening a $22 million call center in Pocatello and that the Federal Bureau of Investigation has a service center there. “We have not lost any business because of Internet speeds,” she said.

Which proves the old adage that you can have just about anything, for the right price.  The disparity between residential and business broadband — urban and rural — is particularly acute in mountain west states like Idaho.  Verizon was considering rural Wyoming for a multi-billion dollar high speed Internet data center, until it found it could purchase an alternative already up and running elsewhere.  Meanwhile, much of the rest of Wyoming has no Internet, slow speed wireless or DSL, or limited cable broadband in some larger communities.

Even Gilliam admitted her home broadband account was nothing like the service Allstate Insurance was likely getting.

“It feels like it’s moving in slow motion,” she told the Times. “A lot of times I’ll start downloads and not complete them.” She said she was happy as long as she could get e-mail.

But not everyone is satisfied with an Internet experience limited to occasional web browsing and e-mail.

Qwest (now CenturyLink), is Idaho's largest Internet Service Provider.

“With countries like Latvia getting better broadband than we have, it’s only a matter of time before we start to lose even more jobs in the digital economy over this,” Jeff says. “This is one more nail in the coffin for rural economies in the west, which are being asked to compete with bigger cities and eastern states that have much better infrastructure.”

Pando found the northeast and mid-Atlantic states, excepting Maine, New Hampshire, and Vermont, have the best broadband speeds in the country.  The mountain west has the worst.

Rural states like Montana, the Dakotas, eastern Oregon, Idaho, Wyoming, and Utah are the least likely to have widespread access to cable broadband, which can typically offer several times the Internet speed found in smaller communities with DSL service from dominant provider Qwest (now CenturyLink).  CenturyLink claims 92 percent of their customers have some access to broadband, but didn’t say at what speeds or how many customers actually subscribe to the service.

In Idaho, cost remains a factor, so CenturyLink is planning to sell low-income households a discounted DSL package.  Speeds and pricing were not disclosed.

Jeff says the real issue is one of value.

“Some in the Times article blame lack of access, while others claim it’s all about the cost, but it’s really more a question of ‘is it worth paying this much for the service we actually get’,” Jeff says.

“Cable ONE is simply deal-with-it Internet, with usage caps and contract traps that leave customers feeling burned, but their only other choice is Qwest, and they show few signs of caring about delivering fast broadband in this state,” Jeff says.

“I believe CenturyLink Idaho’s vice president and general manager Jim Schmit when he says, ‘We’re in business to make a profit,’ Jeff concludes. “There isn’t a lot of profit in selling Internet service in rural mountain states, so the company simply doesn’t offer it where they won’t make back their investment quickly.”

“The question is, should profit be the only thing driving broadband deployment in the United States?  If you answer ‘yes,’ Idaho is the result.  If you answer ‘no,’ and think it is an essential utility, profit shouldn’t be the only consideration.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Cable ONE Countdown High Speed Internet.flv[/flv]

Cable ONE’s ad for 50Mbps leaves out a lot, including the 50GB usage cap and two-year contracts that downgrade service to just 5Mbps for the entire second year.  (1 minute)