Verizon Communications formally closed its acquisition of Alltel in January 2009, but some former customers are only now feeling the impact as they transition to… AT&T.

That’s right, AT&T.

Although Verizon acquired the bulk of Alltel’s national customer base, the federal government ordered Verizon to sell off its future Alltel customers in communities where the company would likely be the overwhelmingly dominant player.  Verizon sold off most of these orphaned customers, numbering over a million, especially in the Mountain Time Zone, to AT&T.

The transition from Alltel to AT&T would be a bumpy one because the two companies use different wireless technologies, meaning every customer would have to be provided with a new phone.  Alltel’s customers remaining with Verizon didn’t experience this, because both companies use CDMA technology.

AT&T agreed, as part of the deal, to supply every one of its new postpaid/contract Alltel customers with brand new GSM phones (although AT&T was unwilling to provide free advanced smartphones like Apple’s iPhone).  Prepaid customers were less lucky — they only received discounts off new phones.

Stop the Cap! has talked with more than a dozen affected customers in Arizona, New Mexico, Michigan, Utah, Wyoming, Iowa and Colorado about their experiences as they transition to AT&T service.  With AT&T now proposing to merge with T-Mobile, which could also mean some new phones for T-Mobile customers, we wanted to learn what customers thought about being moved from one carrier to another, what their experience was before the transition and after, and whether they intend to stay with AT&T.

Our panel included a young man from Utah who used his phone at home and outside of the state as he performed mission work for the Mormon Church in rural Florida.  We also spoke with a retired couple living in Arizona who chose Alltel because of their unlimited calling circle option to stay in touch with friends and family in Minnesota.  Also participating: a travel agent in Michigan, a realtor in New Mexico, a self-employed contractor in Colorado, a farmer in Iowa, and several others who shared their stories with us in e-mail.  By mutual agreement, we’re keeping their last names private because some have pending disputes with AT&T.

Breaking the News: Alltel Sells Out Their Customers to Verizon

When Karen, a realtor from New Mexico first heard word that Alltel was selling out to Verizon, she wasn’t sure exactly what that meant.  There was considerable confusion in her part of southern New Mexico mostly because the local media does a poor job of covering telecommunications stories.

“In New Mexico, everything in the media is centered around what is going on in Albuquerque and everything else is given little attention, except in the local newspaper,” Karen says.  “But whether you are in Las Cruces or Roswell, the quality of the story depends on the quality of the poorly paid reporter.”

Karen was not worried about the sale at first, because she was aware Verizon had a good reputation for cell phone service.  She had originally selected Alltel because they had good rates and friendly customer service.

“If I ever had a problem with my phone, Alltel would always fix it, even if it was out of warranty,” Karen explains.  “That meant a lot to me because they didn’t have to do that, but it was why I always renewed my contract.”

Heath, who runs a home-based contracting business in southern Colorado, didn’t like what he was hearing from the start.  Neither did Marion and Will, a retired couple living outside of Phoenix.

“We had our dealings with Verizon back in Minnesota when we lived there and we never liked them because they cost too much,” Will says.  “Alltel was a great choice for us because they had a calling circle plan that let you make unlimited calls to certain numbers, and we talked with our daughter back in Minnesota daily using our cell phone.”

Confusion about the deal only got worse when Alltel (and in some cases Verizon) notified our panel members they would not be Verizon customers after all — they were being sold off to another cell phone company.

Alltel -> Verizon -> AT&T -> Frustration

Micah, our reader in Utah first contacted us more than a year ago to express his confusion about why he was not only losing his Alltel account, but now he was somehow ending up as a customer of AT&T, a carrier he definitely wants nothing to do with.

“I figured I could at least live with Verizon because they are everywhere, but as I started performing my mission work for the church in rural central Florida, I learned from my parents I was actually going to end up a customer of AT&T, something I definitely never wanted,” Micah says.  “AT&T is terrible in Utah and worse here — nobody wants AT&T unless you are in Orlando or Daytona Beach.”

“At first we thought, cool, new phones for everyone,” Shanie told Stop the Cap! from her home in Muskegon, Mich. “AT&T has been promising major expansion of service here in western Michigan since they notified us they were taking over for Alltel, but then we started learning the details.”

While Shanie’s family of four would be given four new phones, their choices of new phones were limited, although AT&T called them “comparable.”  Many of AT&T’s smartphones were not covered, even if families already owned smartphones purchased from Alltel.

“We also discovered if you wanted one of these advanced phones, it meant a new two-year contract with AT&T, effectively forcing us to stay with them longer,” Shanie says.

Jed, a farmer outside of Sioux City, Iowa says AT&T did a poor job keeping him informed.  Jed stopped receiving all communication from Alltel (other than a bill) and never heard a word from AT&T.  Instead, one of his neighbors warned him that his Alltel phone was going to quit working by the middle of May.  Jed was upset because the deadline for him to choose a new free phone had passed and he never had the opportunity to make a choice, never having been notified about any of the changes.

“The newspaper might have said something about it, but we don’t get the paper here and nobody has much time to spend watching television,” Jed shared.  “We would have thought AT&T would have notified us, but they apparently forgot we were here.”

Last week, a new phone arrived from AT&T in the mail, unsolicited.

“What a way of doing business — we thought at first it was some sort of fraudulent purchase and we almost didn’t accept it from the driver,” Jed said.

AT&T has been sending out new phones all month to customers across several states, encouraging them to call and activate them on AT&T’s network.  Once customers do that, their old Alltel phones will quit working.  That was a problem for Shanie’s daughter at college in Grand Rapids.  When mom activated her phone, the primary one on the account, her daughter’s Alltel phone stopped working.

“AT&T has you call a toll-free number to activate the phone, but first they require y0u to accept the terms and conditions for doing business with AT&T, which can include contract extensions for some people,” Shanie said.  “I had no idea activating my phone would end service on all of the other Alltel phones on the account.”

Alltel customers in these states had new AT&T phones shipped to them on this schedule.  The second date refers to the service transition cutoff date:

Arizona	January 27, 2011	February 10, 2011
Southern New Mexico	February 7-8, 2011	March 2-3, 2011
Michigan and Montana	February 16-21, 2011	April 6-12, 2011
Colorado, Northern New Mexico	February 23-28, 2011	April 13-18, 2011
Iowa and South Dakota	March 4-14, 2011	April 19-28, 2011
North Dakota	March 15-21, 2011	April 29-May 5, 2011
Utah and Wyoming	April 1-6, 2011	May 9-12, 2011

Bailing Out for Alternatives

Jody, a soon-to-be-ex AT&T customer in New Mexico, says there was plenty of fine print to wade through when he prepared for the switch from Alltel, and he didn’t like what he saw.

“AT&T is very tricky about how they handle customers who want to depart Alltel and avoid becoming an AT&T customer,” Jody says.  “You cannot cancel your Alltel contract and avoid an early termination fee, but you can cancel AT&T within 30 days of switching and escape a hefty exit fee.”

Indeed, AT&T’s transition website says Alltel customers who want to switch providers will face an early exit penalty as long as their Alltel phones remain active.  Those who switch and activate their new AT&T phones get a 30 day window to drop AT&T and avoid an ETF:

If, after moving to AT&T service, you choose to discontinue your AT&T service, you will have a 30-day period to opt out of your AT&T contract without an ETF. After that 30-day period, standard AT&T terms apply including any applicable ETF.

Jody got his new phone and promptly canceled his AT&T service.  He switched to CellularOne, a company with a legacy name but a very local network.  It has its own cell towers only in northern Arizona and parts of New Mexico.  For everywhere else, it depends on a roaming agreement with… AT&T.

Jody’s CellularOne plan still offers completely unlimited calling, texting, and data for around $80 a month, and that includes AT&T’s nationwide network.

“CellularOne offers a much better deal than AT&T, but you can only choose from three lower end smartphones — no iPhone to be had here,” Jody says.

Heath in Colorado wants out of AT&T as well.

“They drop calls all the time and their network strength is awful in my neighborhood, and I depend on my cell phone and don’t have a landline,” Heath says.  “I don’t know why we had to be stuck with AT&T who apparently de-commissioned Alltel’s towers, which used to deliver a rock solid signal here.”

But not everyone is heading for other carriers.  Sam in Farmington, New Mexico says AT&T is bringing 3G to his community and mobile broadband speeds have been much faster than what Alltel used to deliver.

“AT&T’s data plans are overpriced, but if you can hang onto your existing Alltel plan but use it on AT&T’s network, it’s not so bad,” Sam says.  “Unfortunately, you cannot upgrade to an iPhone and keep Alltel’s plans — you have to pick one of AT&T’s.”

The Future for T-Mobile Customers

Although T-Mobile shares the same GSM network technology AT&T uses, the two companies have different frequency allocations for their respective networks.  T-Mobile customers seeking access to AT&T’s network will probably need new phones to access it. While AT&T claims T-Mobile’s own largely urban network will supplement AT&T’s own coverage, customers may need new equipment for that to be true as well, unless AT&T co-locates their own cell antennas on T-Mobile towers.

Former Alltel customers tell Stop the Cap! AT&T didn’t offer the latest and most popular phones for their swap, and some customers too far away from an AT&T store had to get a new phone without being able to try it.  AT&T allowed customers to exchange phones within 30 days, which helped some of our readers, but most felt the entire idea of being forced to switch to AT&T an inconvenience.  Most were also disturbed that one of the competitors in their area was disappearing, and considering Alltel served largely small cities and rural areas, there was already a lack of choice for most.  In total, three of our readers are staying with AT&T, two left for CellularOne, one chose to switch to a prepaid plan, and the rest went with Verizon after all.  If Alltel were still around, every customer we talked with for this piece would have stayed with them.

Commercial providers and their pals in the legislature will go to any length — even lie — to protect their cozy duopoly, charging high rates for poor quality service.

That fact of life has been proven once again in the state of Tennessee, where an effort to expand EPB Fiber — a community owned fiber network — to nearby communities outside of Chattanooga, was killed thanks to a lobbying blitzkrieg by Big Telecom interests.

The “Broadband Infrastructure for Regional Economic Development Act of 2011,” supported by chief sponsor House Majority Leader Gerald McCormick, (R-Chattanooga), is dead after telecom industry lobbyists unleashed a full court press to stop the legislation from passing into Tennessee law.

The bill would have permitted EPB and five other municipal electric services that have or are developing broadband infrastructure to expand service up to 30 miles outside of their service area, where appropriate, to meet the needs of businesses or consumers.

With the legislation, EPB could bring its 1 gigabit fiber broadband service to Bradley County, home to a future Amazon.com distribution center.  Amazon already operates a huge warehouse in Hamilton County, where it was able to obtain EPB’s super-fast broadband service.  According to Harold DePriest, EPB President and CEO, Chattanooga’s fiber network is helping sell the city as a high-tech mecca for business, where broadband connectivity is never a problem.

DePriest says EPB’s network has been a proven job-creator, and Amazon.com’s ongoing expansion in the region is just one example.

Chattanooga residents and businesses now have the fastest broadband service in the southern United States, at prices often far less than what the competition charges.  Expanding EPB’s success to other parts of Tennessee represents a major threat to the likes of Comcast and AT&T, the state’s dominant telecom companies.

Lobbyists fought the bill off with some whopper tall tales about the “horrors” of community broadband.

Some Republican lawmakers friendly to Comcast and AT&T’s point of view have bent their philosophical positions on government and regulation into logic pretzels.  One has even called for EPB to be regulated by Tennessee’s Regulatory Authority, a body many state Republicans feel is about as helpful as a tax increase.

Despite that, there was Rep. Curry Todd (R-Collierville) at a recent hearing telling fellow lawmakers EPB and other community providers should be regulated by the TRA to protect ratepayers from the “loss of tremendous amounts of money coming out of taxpayers’ pockets.”

Does Todd think Comcast and AT&T should also be regulated?  Of course not.  Nobody should protect consumers from AT&T’s and Comcast’s relentless rate hikes.  Todd cannot even get his facts straight.

After 19 months, EPB has 25,500 customers — far ahead of its projections, and is well ahead of its financial plan, according to DePriest.  So much for being a “financial failure.”

On cue, the same cable industry that tried to sue EPB Fiber out of existence is now comparing the Chattanooga fiber network to Memphis Networx, a disastrous effort by that city to build a public-private wholesale fiber optic network only business and institutions could directly access.  It’s hard to earn critical revenue from consumers when you run a wholesale network.  Even harder when you build it just before the dot.com crash.

EPB sells its service directly to business and consumers, so it gets to keep the revenue it earns, paying back bondholders and delivering earning power.

Stop the Cap! reader John Lenoir notes some of the local tea party groups are also being encouraged to oppose EPB’s efforts to expand.

“Just as Americans for (Corporate) Prosperity is lying about North Carolina’s community broadband, these corporate front groups are also engaged in demagoguery over EPB in Tennessee,” Lenoir says.  “In addition to the usual claims EPB represents ‘socialism,’ the locals are also being told EPB wants to use their fiber network to run smart meters, which some of these people suspect are spying on them or will tell people when they can and can’t use their electric appliances.”

Lenoir in unimpressed with the telecom industry arguments.

“AT&T’s opposition is downright laughable, considering this company raised its rates on U-verse and will slap usage limits on every broadband customer in a few weeks,” Lenoir adds.  “We thank God EPB is here because it means we can tell AT&T to stick their usage limits and Comcast can take their overpriced (and usage limited) broadband somewhere else.”

Lenoir thinks EPB should embarrass both AT&T and Comcast, but since neither company feels any shame in his view, it’s more about business reality.

“Why do business with AT&T or Comcast and their gouging ways when you can sign up for something far better and support the local community,” Lenoir asks.

AT&T spokesman Chris Walker complains that the phone company is somehow faced with an unlevel playing field in Tennessee, despite the legislature’s repeated acquiescence to nearly every AT&T-sponsored deregulatory initiative brought before it.  The company wants a “level playing-field” statute like the very-provider-friendly (it should be — it was written by them) one currently before the North Carolina state Senate.

Comcast questions whether anyone needs 1 gigabit service, but the cable company’s Chattanooga vice president and general manager Jim Weigert told the Times Free Press it could deliver 1 gigabit service… to business customers… assuming any asked.

DePriest questions that, noting Comcast tops out its broadband service at 105Mbps, and only for downstream speeds.  Comcast upload speeds top out at 5Mbps.  EPB can deliver the same upstream and downstream speeds to customers and do it today.

Over the course of an hour this afternoon, North Carolina’s Senate Finance Committee discussed the implications of H.129, legislation proposed, written, and lobbied by Time Warner Cable and some of their phone friends across the state.

On hand was Rep. Marilyn Avila (R-Time Warner Cable), who tried to turn her competition-busting bill into an emotional epiphany about jobs and the benefits private providers bring to a state now ranked dead last in broadband.

Pass me a tissue.

Nobody doubts Ms. Avila is looking out for the interests of the state’s big cable and phone companies.  Unfortunately for her district, she isn’t looking out for the broadband interests of her constituents, forced to pay some of America’s highest prices for low end service.

As Avila pals around with lobbyists from Time Warner Cable and the state’s cable trade group (more lobbyists), consumers in places like Orange County in north-central North Carolina see themselves on broadband maps but find they cannot actually get service from any providers.

As the hearing progressed into two-minute statements from parties interested in the outcome, the disconnect between well-paid lobbyists and corporate front groups like Americans for Prosperity with elected officials and consumers on the ground surveying a bleak broadband landscape said a lot.

Cable companies and their lobbyist friends sought to portray community broadband projects as fiscal failures — one suggested that was a global reality, despite the fact many countries have embarked on nationwide broadband plans that directly involve government to help build infrastructure.  The global leader in broadband, South Korea, is a perfect example.  With collaboration between the government and the private sector, Korea will have 1 gigabit broadband service across much of the country within a few years.  That’s because South Korea does not believe broadband is simply a convenience, they see it as a social and economic necessity.

The other side sees it as a private moneymaker that can charge rapacious prices because it’s not an essential service.

Shining a bright light on this reality was Americans for Prosperity, who delivered their own speaker at today’s hearing.  As the group complained about government ‘overreach’ providing incentives in the 1930s for rural power and phone service, it quickly became apparent there are some in this debate willing to let rural Americans sit in darkness, without a phone line (much less broadband), to make a free market point: if private companies can’t or won’t deliver the service, you don’t deserve it and shouldn’t have it.

One wonders where this thinking will ultimately take us.  Will community gardens be opposed for taking vegetable profits away from private corporate farms?  Flea markets on public fairgrounds should be banned because they unfairly compete with eBay, Dollar Tree or a supermarket?  The irony is these “small government conservatives” are all for big government legislation to keep potential competitors at bay.  For them, broadband cannot be a locally-determined community project — just something you buy from a company that may or may not have an interest in serving you.

Just ask the gentleman from Orange County, who appeared as the final speaker.  He spent his two minutes complaining about faulty cable and phone company-provided broadband coverage maps that claim service where none exists.  After spending money on equipment, he learned CenturyLink had no interest in actually providing him with DSL.  In fact, when he asked both the phone and cable company when that might change, the impression he was left with was “never.”

Whether members of the state legislature understand the irony of CenturyLink spending a fortune making sure Orange County never delivers the broadband service the company won’t provide itself is something voters across the state will need to impress on them.

They should be told, in no uncertain terms, to oppose H.129 and leave community broadband alone in North Carolina.

 

Despite claims from some in the state legislature that restricting fiber optic broadband development in communities like Salisbury is good for consumers and businesses, an increasing number of both are telling reporters a different story.

Faith Baptist Church, in the aptly-named community of Faith, N.C., can’t wait to sign up for Salisbury’s community fiber network — Fibrant.  They believe in a faster broadband experience the local phone company cannot deliver.

Casey Mahoney, a church member, told the Salisbury Post the church wants to ditch its slow speed DSL service from Windstream and cannot afford the $20,000 installation fee Time Warner Cable wants to charge the congregation to extend its broadband service to the church building.

If some in the state legislature have their way, the church will have a long, perhaps infinite wait for a fiber optic future.  A large number of legislators in the Republican-controlled state Senate are leaning towards voting for a bill custom-written by and for the state’s largest cable company — Time Warner Cable.  The legislation would micromanage community-owned broadband networks right down to the streets they would be allowed to deliver service.  Those terms, perhaps unsurprisingly, would not apply to the state’s largest cable and phone companies.

H.129, moving towards a hearing in the Senate Finance Committee Wednesday, would cement today’s marketplace for years to come — a duopoly Mahoney thinks makes Time Warner Cable’s $20,000 installation fee feasible.

He told the Post, “When you only have one company available in an area, that’s when they can say, ‘It will cost you $20,000 — take it or leave it.’ ”

Not everyone supports the cable industry’s efforts to lock down competition from community-owned providers.  Several local officials who represent underserved communities across the state are upset the legislation is being railroaded through the legislature with almost no discussion.

“I am disappointed that the General Assembly is giving consideration to taking this right away from us without a single conversation taking place,” Kannapolis Mayor Bob Misenheimer complained to Sen. Andrew Brock (R), who serves Davie and Rowan counties.

Misenheimer is particularly upset cable operators want the right to restrict the service areas Fibrant can serve, and not allow the fiber network to expand service into Kannapolis.  In fact, Brock’s office has received similar communications from the Faith town board and mayors from Rockwell, Landis, China Grove, Granite Quarry, Spencer, Cleveland, and Concord — all who want to be included in the Fibrant service area.

“Isn’t it simply amazing that Fibrant is being bashed as a failure-waiting-to-happen by the sponsors of this bill while mayors across two counties are absolutely clamoring to get the service to their residents,” said Stop the Cap! reader Andy Brown who lives near Landis.  “How can Marilyn Avila and Tom Apodaca have the slightest bit of credibility on this issue when you see town leaders literally falling all over each coveting a service that these legislative-Friends-of-Time-Warner-Cable have predicted is a certain failure?”

“I want Fibrant in Landis myself, if only for the competition,” Andy shares.  “You know, the kind of competition legislators are supposed to support.”

Andy describes efforts underway to distort the record on H.129 in hopes of whipping up consumer support for it.

“There are some silly stories being told attacking community networks like Fibrant on local media websites, including the ridiculous claim communities will be required to sign up for the service if it comes to town,” Andy reports.  “These come from some of the same people who also claim fiber optic cables suffer from rot problems, wireless broadband is faster than fiber optics, and that Fibrant is part of the Obama Administration’s plan to socialize the Internet.”

“If these people want Windstream DSL or are happy paying annual rate increases far beyond the rate of inflation year after year, don’t sign up for Fibrant — but don’t dictate away that option for me,” Andy said.  “The only ‘takeover of the Internet’ I see is by Time Warner and CenturyLink.”

It did not take more than a few hours for the first non-profit and “minority advocacy” groups to hurry out press releases applauding the announced merger intentions of AT&T and T-Mobile.

Winning approval of the merger in Washington will take a full court press by lobbyists and organizations that claim to represent “the public interest,” even if the merger will likely raise prices for the constituents they ostensibly represent.  Too often, these groups also fail to openly disclose they have board members that work for the telecommunications industry or welcome large financial contributions made by one or both companies.  That makes it difficult for the average consumer to discern whether matters of arcane telecommunications policy are truly of interest to these organizations or whether they are simply returning a favor to the companies that write them checks.

The Communications Workers of America, the union representing many AT&T employees, has been applauding the announced merger on their website, “Speed Matters.”  It’s hard to blame the union for supporting the merger — it opens the door to union membership for T-Mobile employees.  The union does a good job representing their workers, and their interests often are shared by consumers.  For instance, the CWA has smartly opposed Verizon landline sell-0ffs to third party companies, which have tended to bring bad results for ratepayers.  But their website does trumpet some sketchy organizations not well known outside of the dollar-a-holler advocacy industry.

Take “The Hispanic Institute” (THI).  This obscure “group” chose a name for itself suspiciously similar to the much larger and more prominent National Hispanic Institute.  That’s where the similarity ends, however.

The Hispanic Institute believes the AT&T and T-Mobile merger will bring harmony and joy to the Latino community clamoring for mobile broadband:

“The proposed merger of AT&T and T-Mobile will move us closer to universal mobile broadband deployment. When we consider how essential mobile technology is to empowering communities, we conclude that this proposal is good for Hispanic America. It provides an opportunity to amplify the growth in mobile broadband adoption by both English and Spanish speaking Americans.”

In fact, the only thing most Latinos will find after the merger is higher prices for reduced levels of service.  T-Mobile’s aggressive pricing and innovative (and sometimes disruptive) packages are well-known in the industry, and they are a frequent choice of budget-minded consumers, including many members of the Latino community.  It does little good to expand mobile broadband service that many cannot afford.  Reduced competition always leads to higher prices, a fact of life missed by THI.

Perhaps THI’s misguided support for the merger was an aberration.  But then again, maybe not.  The group also promotes a pharmaceutical industry-funded scare site designed to convince Americans that prescription drugs imported from Canada are dangerous and unsafe.  Calgary is apparently the new Calcutta, when you have a vested interest in stopping people from saving a fortune on their medication by buying it north of the border.

Perhaps that was also just “an error in judgment.”  But little doubt remains after you read their spirited defense of the bottom-feeding payday loan industry (even though they claim they are not.)

Friends of Big Pharma, Payday Loan Gougers, and A Bigger AT&T are no friends of mine… or yours.

The Urban League is a regular recipient of AT&T cash.  In return, the group is no stranger to advocating for the phone company’s political agenda.  One of their chapters belongs to the ultimate in Astroturf groups — Broadband for America.  How many organizations cautiously optimistic about a telecom industry merger would rush out a press release about it?  They did:

“The pending merger of AT&T and T-Mobile USA holds potential opportunity for an expanded, diverse workforce … We plan to carefully observe the upcoming regulatory process and look forward to a transition that is guided by AT&T’s commitment to diversity and equal opportunity. We have every reason to be optimistic,” said Marc Morial, president and CEO.

Of course he does.

Then there is the ultimate in echo chamber advocacy courtesy of the Alliance for Digital Equality:

“The merger of T-Mobile USA and AT&T will enable rapid broadband coverage for most of the nation — including many lower-income and rural communities that have been largely underserved — through an expanded 4G LTE deployment to 95% of the U.S. population within six years. This is a huge step forward in making President Obama’s vision of reaching 98% of Americans a reality.

“What’s more, wireless broadband has shown tremendous promise in bringing our communities of color into the digital age — something that an increasing number of studies and reports have shown we have got to improve upon if we are going to bridge the digital divide that exists in this country. This merger puts the right technologies into the communities that need it, at the right time… and at the right price.” — Julius Hollis, Chief Executive Officer

Missing from these glowing words is an admission that AT&T is a major member of the Alliance.

It’s the coalition of the willing to sell out consumers.