Stop the Cap! has developed a sample e-mail message Georgia residents can use to petition the state legislature to vote NO on H.B. 282, the latest Big Telecom corporate welfare bill to kill competition from publicly-owned broadband networks. With thanks to Mark Creekmore, one of many rural Georgians suffering with DSL “service” from Windstream Communications, we have jointly created this letter to illustrate the folly of this bad bill. We may need to send this to members of the state Senate as well.

We realize many of you are served by AT&T, Comcast, or other rural providers, so this letter should be tailored to include the horror stories that you have experienced with your own provider. Make sure you change the relevant sections, including references to your local town’s provider (things that should be changed in your letter are highlighted in blue below) before sending your e-mail to House members today:

Dear Rep. -or- Sen.  [insert name]

I am writing to tell you that I do not support H.B. 282 — the Broadband Municipalities Act, and neither should you.

This proposed legislation is a solution in search of a problem. No community I know of gets interested in entering the broadband business on a whim. But when you live in a rural area served by a single provider that delivers poor service, as I do, it becomes understandable why some communities seek a public broadband solution as a last resort.

At its core, this is a bill designed to protect the broadband status quo at the cost of Georgia’s economic development and its citizens’ need for quality broadband service.

[Share several sentences here detailing the problems you have with your provider.]

Georgia has a long way to go to meet the broadband speeds available in cities like Chattanooga, Tenn. That city’s municipal power company offers 1,000Mbps service to residents that cannot buy those speeds from any other provider. That has attracted companies in this state to move to get the kind of service they just cannot get from our providers. Comcast and AT&T are hardly going out of business in Chattanooga and actually claim to welcome the competition. But things are much worse here in rural Georgia, where just getting 12Mbps service is a real challenge. That is because the local phone company has oversold its network and is too crowded, slowing speeds to a crawl. I’d welcome competition even more, but there just isn’t any.

Consider this: While Dawsonville suffers with Windstream’s oversubscribed DSL service as our only practical option, Thomasville residents can get 22Mbps of service over a fiber to the home network owned by the local community. Rose.net is hardly a financial failure either. It has been so successful, the city eliminated the local property tax. If you pass H.B. 282, Dawsonville will never have a chance, because no other provider is interested in serving us and the local community will never be able to because Windstream arguably already does.

If you believe H.B. 282 will stimulate rural broadband investment, you need to read Windstream CEO Jeff Gardner’s own statements during a February 2013 conference call to investors. He noted Windstream plans to cut capital expenses and investments this year and even more the next, including those made right here in Georgia. Gardner noted that Windstream’s rural customers are largely captive with no competitive alternatives, making extra investment unnecessary. That means we have to live with the service we are lucky enough to get at the high prices we are forced to pay. In effect, we are told to live with what we have or go without. This is an embarrassment to our state which boasts of its high-tech communications capability and is home to several major data centers.

The bill’s logic is also lacking. Private telecom companies enjoy the benefits of state taxpayer dollars in several ways, ranging from access to public rights of way to receiving federal stimulus dollars to incentivize rural broadband expansion. To date, Windstream’s only help for Georgia seems to be wiring 250 homes in Blue Ridge. If local communities decide they need a better broadband solution, allowing out-of-state corporations like Windstream to tie their hands and dictate terms is an outrage. We have been here before in the last century when giant electric utilities refused to provide adequate service in rural Georgia, so those communities managed it themselves with municipal utilities.

It is clear to me, despite a few inadequate revisions to the bill since its introduction, H.B. 282 is a disaster for Georgia’s telecommunications future. It is little more than protectionism for incumbent providers who will continue to treat rural Georgians like second class citizens, delivering service that falls far below what was advertised, yet costing the same as big city folks pay. If my community decides it is essential for our future to do better than what Windstream is willing to offer, making the town work through an expensive qualification process analyzing census blocks is nothing more than a deterrent to keep them from even trying.

With all the problems we face in Georgia today, spending time protecting Windstream from competition is not on my list and it certainly should not be on yours.

I respectfully ask you reject H.B. 282 in full, regardless of current or future revisions. The next time a telecommunications company comes by your office to lobby you on bills like this, let them know the best way they can protect themselves from municipal broadband is to deliver the good service Georgians deserve at a fair price. If they manage that, there would be no demand to build these alternative networks in the first place.

I look forward to hearing your views on this critical matter to me.

Respectfully,

// signature

Time Warner Cable objects to publicly-owned broadband networks because they represent “unfair” publicly-funded “competition,” despite the fact TWC is also on the public dole.

The next time a cable operator or phone company claims community-owned broadband providers deliver unfair competition because they are government-funded, remind them that quite often that phone or cable company also happens to be on the public dole.

Take Time Warner Cable, which this week won a $5,266,979 grant courtesy of New York State taxpayers to extend their cable system to 4,114 homes in rural parts of upstate New York just outside of the cable company’s current service areas. That equals $1,280.26 in state tax dollars per household. For that public investment, Time Warner will reap private profits for shareholders from selling broadband, cable-TV, phone, and home security services to its newest customers indefinitely.

Now unlike some of my conservative friends, I am not opposed to the state spending money to wire rural New York. It is obvious cable and phone companies will simply never wire these areas on their own so long as Return on Investment conditions fail in these places. What does annoy me are the endless arguments we hear in opposition to public broadband from these same companies, claiming with a straight face that community-owned networks represent “unfair competition” because they are publicly funded. Time Warner Cable is no stranger to public taxpayer benefits itself, having won millions in tax abatements and credits in North Carolina, Ohio and a cool $5 million courtesy of Mr. and Mrs. N.Y. Taxpayer.

Many of the nation’s private telecommunications companies have plenty of love for federal, state, and local officials who have passed favorable tax laws and policies at their behest:

• AT&T not only did not pay any federal taxes in 2011, it actually secured a $420 million taxpayer-subsidized refund;
• Local governments have granted rights-of-way red tape cutting, tax credits and abatements in return for siting important facilities in select areas and hiring an appropriate number of employees to work in them;
• State laws that have made life easy for telecom companies, including statewide video franchising;
• State laws that make life difficult for their would-be competitors, especially public broadband networks.

So let us end the silly rhetoric about public vs. private broadband being a question of fairness. This is really a question about who controls your broadband future,  your community or big telecom corporations.

In states like Georgia, elected politicians like Rep. Mark Hamilton want those decisions made by Comcast (Pennsylvania), Windstream (Arkansas) and AT&T (Texas). His bill would make it next to impossible for a local community to do anything but beg and plead the phone company to deliver something, anything that resembles broadband service. For a good part of rural Georgia (and elsewhere), the answer has always been a resounding “no,” at least until the federal government steps up and kicks in your money to help defray the costs of extending Windstream or AT&T’s sub par DSL service that slows to a crawl once the kids are out of school.

Windstream waited for the federal government to kick in $7.28 million in taxpayer dollars before it would agree to extend its DSL service to rural customers in its own home state of Arkansas.

You have to wonder about the Republicans in Georgia these days who used to fight for local and state control over almost everything. It should be instinctive for any conservative to want out-of-state pointyheads out of their business, but Rep. Mark Hamilton, himself a business owner, seems content forfeiting those rights to companies headquartered hundreds of miles away. If it was the federal government telling Georgia what kind of broadband service it deserves, do you think Mr. Hamilton would be so amenable? Unfortunately, should Hamilton have his way, for the foreseeable future, residents and business owners in Gray, Sparta, or Eatonton to count just a few will have broadband just the way the state’s phone companies want it — super slow DSL, dial-up or satellite fraudband.

Shammo

Verizon’s vision of broadband economics depends on the technology used to provide the service, according to some insights shared by the company’s chief financial officer at yesterday’s Deutsche Bank Access Media, Internet & Telecom Conference.

Fran Shammo outlined two strategies the company is using to profit from its broadband services. For wireless, Verizon has “flipped the model” from the traditional voice plan that starts with a bucket of voice minutes towards monetizing broadband usage instead. Today, customers buy plans that focus on anticipated data usage with unlimited voice and texting thrown in. But marketing broadband on Verizon’s fiber optic FiOS network is markedly different because the company is focused on speed over consumption.

“We are now shifting into concentrating on the broadband piece of that product, and the speed that the fiber to the home can give you we believe can’t be matched with anyone,” Shammo told an audience primarily made up of Wall Street analysts and investors. “We have a superior product.”

Shammo explained Verizon intends to “monetize speeds” that fiber broadband is capable of providing. That is important because Verizon FiOS now represents 70 percent of Verizon’s wired business, as traditional landline revenue continues to decline.

That is welcome news to broadband advocates that prefer current pricing models based on broadband speeds, not usage. Verizon FiOS intends to capitalize on its superior speed to differentiate itself from the cable competition, especially when some of those competitors are slapping usage limits on their customers.

Another important new revenue source for Verizon comes from switching legacy DSL users to FiOS technology.

In 2012, Verizon commenced its copper-to-fiber migration in FiOS areas. At least 200,000 homes formerly served by copper-based DSL were transitioned to fiber. In 2013, Verizon plans to migrate another 300,000 customers. When customers are switched to the fiber network, their former DSL speeds remain the same, but now Verizon’s marketing department has an opportunity to target upgrade offers for faster speeds.

“We give them the choice to start upgrading that speed [to] 15, 25, or 50Mbps,” Shammo reports. “What we are seeing is people are willing to pay for that additional speed, so we can monetize that fiber network more.”

However, Shammo reiterated that beyond what Verizon has already committed to in FiOS agreements with local municipalities, Verizon plans no additional expansion of FiOS in 2013.

The foundation for future profits come from data usage.

Unintended Consequences of Share Everything: Customers do an end run around Verizon’s “device fee.”

The conference also provided new insights into Verizon’s Share Everything wireless plans and the company’s other strategies.

Shammo admitted customers have done an end run around the “device fee” for multiple add-on devices.

Verizon expected mobile wireless-enabled tablet sales would increase as the cost to add a tablet to a Verizon Wireless account no longer required a separate data plan. But Verizon’s “device fee,” charged for each device connected to a Share Everything plan, has backfired. Customers are instead adopting Verizon’s “Mi-Fi” wireless hotspot device or other tethering solutions. Customers can then connect up to five Wi-Fi enabled devices through the hotspot and bypass paying multiple device fees that range from $5-20 per device.

Living Off the Revenue from a 3G Network Verizon Has Stopped Expanding, Improving

Shammo also noted Verizon has stopped further investments in its 3G wireless network.

“We are not investing any more capital in that network other than to keep it up and running, so no more coverage [expansion] capital, no more capacity [expansion] capital,” Shammo said. “If I can keep that network up and running that just generates more [revenue] for us.”

Verizon plans to keep a moratorium on further expansion of its fiber to the home service except in areas where it has existing agreements to deliver service.

Verizon’s Plans to Reduce Device Subsidies, Discounts

Customers have grown to expect a free or low-cost upgrade to a new smartphone every two years. But wireless companies find the costs of fronting device subsidies troubling because it affects the short-term bottom line. As wireless providers trim discounts, tighten upgrade policies, raise prices, and introduce new upgrade and activation fees, the $200-400 device subsidy recouped over the life of a two-year service contract remains a fat target for pruning.

But Verizon and other cell phone companies do not want to cut plan prices that are now inflated by $10-15 a month to cover paying back phone subsidies. The best of both worlds: eliminating device upgrade discounts –and– keeping prices the same for wireless service, banking the extra revenue as profit.

Verizon’s current solution is a middle-ground approach that gradually reduces device subsidies while hoping increased competition among device manufacturers will lower retail prices. For the consumer, that means prices will remain generally the same. But for Verizon, it means higher revenue from paying out lower subsidies while being able to maintain current pricing.

“I am a believer that over the next two to three years subsidies will start to decrease just because of the ecosystem,” said Shammo.

Verizon’s conversion to LTE means the day of a pure LTE-only smartphone is not far off. It will not include added-cost chips to support legacy technology, particularly older data networks and CDMA.

Wall Street Pressures Verizon to Talk Customers into Less-Costly (Anything but an iPhone) Smartphones

Brett Feldman, an analyst at Deutsche Bank who moderated the question and answer session with Shammo pointedly noted the Apple iPhone is the most-costly phone to subsidize.

“Are there things you can do with your sales force where you would proactively incentivize them to maybe sell different devices,” asked Feldman.

“It is critical that we don’t do that,” Shammo explained. “What is more important for us is a customer walks out with a phone that they will be happy with and not return under our 30-day guarantee. Because the worst thing that can happen for us is for me to incent a salesperson to get you into a phone thinking you are going to like and in three days you come back because you don’t. Now I’ve just subsidized two smartphones because that phone you used I can’t resell as a new phone.”

Cablevision’s executive suites are filled with intrigue and family politics. — Phillip Dampier

Cablevision’s quarterly results conference call last week was an exercise in obfuscation.

Senior management at the cable operator that serves parts of New York, New Jersey and Connecticut announced some difficult financial results, including the fact the company lost at least 39,000 customers during the last quarter — a significant number considering Cablevision only serves 3.6 million customers as of the end of December. At least 11,000 of those customers stopped paying their bills and disappeared, presumably because their homes and businesses were victims of Hurricane Sandy. But company officials admitted they also lost high-speed Internet customers because of a recent price increase and ongoing heavy promotional activity from their biggest competitor — Verizon FiOS. The phone company has offered triple play packages as low as $89 a month with $300 debit card rebates, which makes hiking rates untenable.

Cablevision CEO James Dolan has been ducking hard questions from Wall Street analysts concerned about the company’s spending and marketing, the loss of subscribers, and fallout from a 2011 management shakeup. Richard Greenfield, an analyst at research firm BTIG, has been frustrated getting answers from the Dolan family that has controlled Cablevision for decades, tweeting Cablevision executives stopped taking his questions on regular conference calls after he began asking some of those hard questions.

Cablevision’s Upgrades Will Continue; Company Wants an Improved Subscriber Experience

Greenfield

One of the problems Verizon FiOS’ fiber to the home network brings Cablevision as its largest competitor is fiber technology is superior to Cablevision’s cable network infrastructure. Verizon has been a formidable challenger. This has forced the cable operator to make dramatic improvements, particularly in its broadband product, to stay competitive. But some of these upgrades have been delayed by the effects of Hurricane Sandy, which affected 60 percent of Cablevision’s subscribers in the tri-state area.

Cablevision has been forced to offer customers service credits, substantially curtail sales and advertising efforts, and suspend the non-pay collection rules and disconnect policy.

Cablevision has also committed itself to an expensive robust Wi-Fi network to differentiate itself from Verizon. Cablevision has an extensive Wi-Fi presence in its service area, offering unlimited free service for its customers. Verizon does not. Cablevision ended 2012 with more than 67,000 installed hotspots, with more than 30% of Optimum Online customers using the service in 2012.

At the same time, cable television programming costs have skyrocketed, but Cablevision has generally avoided raising prices fearing Verizon would poach unhappy subscribers.

Drama Surrounding Executive Changes

Internet comes last?

In 2011, Cablevision accepted the resignation of Tom Rutledge, former chief operating officer. Richard Greenfield dismissed Cablevision’s statements about his departure as “spin,” and claims the real reason Rutledge left for Charter Communications is that Jim Dolan became dissatisfied with Rutledge’s performance. But that poor performance could also be attributed to some of the company’s own decisions, particularly when it engaged in multiple battles with programmers during 2010 that forced popular cable networks and broadcasters temporarily off Cablevision lineups. Greenfield suggests the biggest impact was felt when the cable operator dropped the local Fox station right in the middle of the World Series. BTIG believes subscriber losses accelerated for these reasons (and Verizon’s aggressive marketing efforts) and helped the company see its earnings and subscriber trends hurt.

Jim Dolan has reportedly taken a more hands-on approach at Cablevision and even appointed his wife Kristin to assume a stronger role in how Cablevision markets itself to customers.

The result was a Cablevision rebranding that Greenfield criticized in September as “firmly entrenched in the past,” because it emphasizes television and phone service over broadband.

Avoiding Tough Questions

Several of the questions Greenfield wanted answered, but could not, dealt with the transformation of part of Cablevision’s service area thanks to Sandy and some of the company’s earlier missteps:

• Permanent System Loss: How many Cablevision homes in the service area will no longer exist or take years to rebuild?
• Recapture Suspended Accounts: At least 24,000 video subscribers disappeared after Hurricane Sandy. Has this number changed recently and are there plans to win these customers back?
• Verizon FIOS was back up and running in storm-damaged areas before Cablevision. How has this affected your operations?
• Marketing Missteps: Are there plans to correct the marketing deficiencies from the 2012 campaign in 2013, particularly for broadband?
• Onyx Guide and Network DVR: Neither are well-received by customers. The Onyx on-screen Guide has been slammed for not working properly, being cumbersome to use, and difficult to read. The remote DVR has been criticized for its poor quality and reliability over traditional in-home DVRs. What will Cablevision do to address these complaints?
• Why is Cablevision challenging Viacom in court over cable network programming costs when sports programming is where the real costs are?

While Windstream continues to heavily lobby the Georgia legislature for a bill that would ban competition from publicly owned broadband providers, the company is doing little to address the growing concerns of its own broadband customers getting poor service.

Mark Wyatt, a Windstream customer fed up with not getting the broadband speeds he pays for, launched a Facebook group in January to collect evidence and attempt to leverage the company to fix its problems. Wyatt, like many other customers in rural Georgia, has only one option for broadband service — Windstream.

Now the growing Facebook group has gotten attention from an Atlanta reporter who wants customers to record videos detailing their broadband problems with Windstream for an upcoming news report.

Jeff Chirico at WGCL-TV, the Atlanta CBS affiliate, has a call out for videos due by March 6:

I’m a reporter for CBS Atlanta News. I want to hear from Windstream customers in Georgia about their experiences with the company’s Internet service. Please shoot a video (30 seconds or less) explaining the speed of Windstream’s service and how it impacts you, your family or your business. Please include your name and city and download it to our dropbox account. http://dropbox.yousendit.com/JamesEstes539379

Also, feel free to follow me on Twitter @CBSATLChirico or find me on Facebook http://www.facebook.com/JeffChiricoCbsAtlanta

The horror stories are already clear all over Windstream’s service areas:

Don Jackson, who lives outside Milledgeville pays Windstream for 6/1Mbps service. On a good day, he gets 750kbps after 4pm every day, and speeds do not improve until the early morning hours.

“I talked with a local manager and he said that there is no solution anytime soon,” Jackson reported. “I have screen shots of speed tests from different sites for months to demonstrate that this is not a fluke but a fact. I have complaints on file with the FCC and BBB of Arkansas, [which handles complaints regarding Windstream].”

Adam Ridley qualified and pays for 3Mbps broadband service from Windstream, but that is not the speed he actually receives.

“It’s 9:40pm and I’m rocking my 210kbps connection — 7% of the speed I pay for,” he reported last night.

Rodney Gray pays Windstream a premium for 12Mbps service, but the phone company does not come close to delivering those speeds. His service actually ranges from 580kbps-1.4Mbps.

“My upload speed is faster than my download,” Gray complains.

A representative answering Windstream’s Complaint Line threatens a customer in Odum,. Ga. with legal action for “harassment” in June, 2012 after he complaints about Windstream’s mailers advertising DSL Internet service that is actually “not available to him this year.” (2 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Kimberly Brown’s broadband problems with Windstream are so pervasive, even the company admits there is a problem, and they have given her service credits.

“Our primary problem is dropped connections — constantly,” Brown says. “They sent a technician out because surely it must be in our lines. He told us that there is something going on in one of the main hubs or whatever, and that it should be months (if ever) that it’s fixed. Then, customer service was suddenly able to look into our account and see that we had hundreds of dropped connections in just a few days. Hundreds. To their credit, they did give us a smallish break on our monthly bill because of the aggravation.”

A typical day for the Brown family is to wake up, reset the modem, send an e-mail or two, reset the modem, try to go to a web page, reset the modem.

“It’s crazy and extremely frustrating,” says Brown. “I work from home and rely heavily on the Internet to get my job done, so this problem affects us in many ways, not just casual web surfing.”

Things are worse for Mark B. Watson, who lost his service entirely for two days.

“The bad thing is that mine and my wife’s business is located in our house,” says Watson. “Being without Internet means we are not making an income for two days. It is getting old.”

While Windstream’s broadband service is suffering, company executives are celebrating a planned major reduction in extra investment in its broadband service, telling Wall Street its broadband expansion and fiber-for-cell-tower projects are nearing completion. That could leave rural Georgia broadband customers without improved service indefinitely.

At the same time, Windstream is reportedly the primary proponent of legislation that would make sure rural Georgians have no alternatives to choose from. The company’s support for HB 282, now working through the Georgia legislature, would prohibit communities from launching their own broadband services to improve connectivity and speeds.