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Verizon Accuses AT&T of “Rigging the Game to Stifle True Competition”

Phillip Dampier December 11, 2017 AT&T, Competition, Public Policy & Gov't, Verizon, Wireless Broadband 1 Comment

It is rare for AT&T and Verizon to feud in public, even rarer for one company to accuse the other of being anti-competitive, but that is precisely what happened last week in California as the two companies sparred over building a next generation wireless network for first responders.

The First Responder Network Authority (FirstNet) is a government program to provide emergency responders with priority access to the first nationwide, high-speed wireless broadband network dedicated to public safety. AT&T won an extremely lucrative contract to build, operate and maintain the network in states that “opt in” to AT&T/FirstNet’s proposal. But AT&T is not building a separate wireless network apart from its existing wireless infrastructure. It is using $6.5 billion in public taxpayer dollars and free access to an extremely valuable segment of nationwide 700MHz spectrum, known as Band 14, to improve its existing wireless network for individual customers and the first responders that will get priority access in the event of an emergency.

For AT&T to benefit the most financially, it has to convince each of 56 states and territories to “opt in” to its FirstNet deployment plan or do nothing at all, which will result in that state or territory automatically being enrolled in AT&T’s plan. If a state elects to opt out of AT&T’s plan, the wireless company cannot get free access to Band 14 or collect the taxpayer dollars designated for that area.

FirstNet is one of AT&T’s most lucrative contracts in years, and the phone company is doing everything possible to win over state officials in hopes they will embrace the FirstNet plan. It has been a successful effort with more than 30 states, Puerto Rico and the U.S. Virgin Islands purposely opting in, and more than a dozen still studying AT&T’s offer. To date, no state has opted out.

Verizon, which did not bid on the original FirstNet contract, has not walked away from providing public safety communications and has spent a considerable amount of its advertising budget to promote Verizon’s own services to first responders, designed to assure they get first priority to clogged cellular networks in the event of an emergency. In August, Verizon announced it will privately finance its own “private network core” to directly serve police, fire, ambulance, and related agencies. Verizon’s first responder network will be separate from Verizon’s public network, but the company has also promised full priority access to its public LTE 4G network across the country.

Verizon’s counteroffer comes without taxpayer financing, yet will offer many of the same services as AT&T FirstNet, without costing the country more than $6 billion. Among the services Verizon will give away for free: priority/preemption access, which means in an emergency, first priority will go to emergency officials even if it means dropping your cell phone call or data session. Verizon is also bolstering its Push-to-Talk Plus service, which works with existing land mobile radio networks. This will allow first responders to use the “walkie talkie”-type features already a familiar part of their radio equipment.

Verizon’s offer would seem to be a good deal for consumers and governments in states like New York and California that have yet to opt in to AT&T FirstNet, and in California, Verizon was invited to bid to create an alternative network in a potential “opt out” scenario. Verizon’s director of public-safety solutions group – David Wiederecht, promised the state Verizon would submit its bid by the state deadline, which was last Wednesday. By Friday, California officials leaked word Verizon had reneged on that commitment and did not participate, a fact Verizon later confirmed.

Verizon accused AT&T and FirstNet of colluding to rig the “Request for Proposals” process in California with requirements that were impossible for anyone except AT&T to meet.

“Vigorous competition that allows the industry and the marketplace to continue to grow and innovate is in the best interest of public safety and should be everyone’s shared goal,” Verizon said in a written statement. “Instead, we believe FirstNet and its corporate partner are rigging the game in order to stifle true competition.”

Urgent Communications reported that the among the most onerous requirements imposed by AT&T and FirstNet is that all emergency communications in an “opt out” state must be sent to the FirstNet LTE core network operated by AT&T. That would mean that regardless of who builds and operates the network, AT&T still remains at the core of FirstNet.

“We’re not prepared to have our public safety customers run on a network where we can’t control their ability to connect or their customer experience,” according to the Verizon spokesperson.

Verizon suggests the reason for 36 states to have opted-in to AT&T’s proposal may not be the result of love for AT&T, but rather the punishments the states and territories risk if they don’t sign on with AT&T.

Don Brittingham, Verizon’s vice president of public safety, testified at a Pennsylvania hearing regarding FirstNet and warned states could be effectively stuck with AT&T indefinitely.

“States should not be required to use the network core deployed by (AT&T) FirstNet, as such a requirement would put the state in the untenable position of being driven by the interests and decisions of FirstNet’s commercial partner—a condition that would be unattractive to any prospective state commercial partner,” Brittingham said.

AT&T has also borrowed from its customer preservation policies on the retail side with terms and conditions that could be financially devastating to states that decide to look elsewhere.

Because any competing provider is required to use AT&T’s network core to be a part of FirstNet, AT&T can set whatever price it chooses for third party access. But most onerous of all is the penalty imposed if a state opts out of AT&T FirstNet and chooses a vendor that does not meet every FirstNet guideline. In that case, a state would be required to come hat in hand back to AT&T/FirstNet for service that does meet the guidelines AT&T/FirstNet wrote. In California, that penalty fee would amount to as much as $15 billion, more than twice the amount taxpayers are paying AT&T to build out FirstNet in at least 36 states and territories.

Taken from a FirstNet fact sheet.

AT&T defended the amount of the penalty fee, claiming it has to build or enhance its network to provide public safety communications for at least 25 years, but critics contend the penalty is so risky, most states will opt for the path of least resistance and legal exposure and sign on with AT&T/FirstNet.

Verizon’s complaints about the bidding process received a strong rebuke from AT&T.

“Building a state-of-the art network that meets the needs of first responders is hard. Clearly, AT&T is up for the task,” Chris Sambar, AT&T’s senior vice president for FirstNet, said in a statement provided to Urgent Communications. “We’re noticing a pattern: Verizon says they have public safety’s back, but when it comes to the heavy lifting, they are nowhere to be found.”

But then, neither are any competing providers.

The Many Lies of Ajit Pai About Net Neutrality

Phillip Dampier December 4, 2017 Astroturf, Competition, Consumer News, Data Caps, Editorial & Site News, Net Neutrality, Public Policy & Gov't Comments Off on The Many Lies of Ajit Pai About Net Neutrality

Pai

I’ve done a LOT of interviews and talk shows on the issue of Net Neutrality over the last two weeks. After listening to the talking point-festooned “experts” and show hosts with a political agenda, your listeners, readers, and I will not be gaslighted by the exceptionally ridiculous condescension campaign now underway by Net Neutrality opponents.

For those who don’t know, “gaslighting” refers to manipulating someone into questioning or second-guessing their beliefs by distorting facts, attempting to delegitimize evidence with falsehoods, confusing the issues, and suggesting one lacks credibility to speak or write on an issue… because they said so.

Fortunately, when these “facts” come from a cable/telco bought-and-paid-for policy institute or lobbyist, it is easy to identify these campaigns and debunk them. It is also entertaining to turn the tables by questioning the source of their talking points and the agendas in play. We always ask these individuals where the money comes from for their “policy institute” and the answers are always not revealing. For the record, Stop the Cap! doesn’t accept corporate donations, period. We accept contributions exclusively from individuals. It takes just a few seconds to explain our funding while the other side takes minutes tap-dancing around the corporate dark money that funds their efforts.

Phillip Dampier: Don’t gaslight me, bro!

Thankfully, there have been a lot of newspaper reporters taking time to understand the issues and have shown professionalism in their reporting. But some radio talk show hosts unfortunately don’t do as well and rely on short-sighted political positioning, “rescue” their cornered allies with convenient commercial breaks, interrupt, or change the subject with baited questions when the facts don’t go their way. Net Neutrality is NOT a conservative or liberal issue, but some attempt to make it one by injecting President Barack Obama’s name into the debate or claim Net Neutrality represents government control of the internet.

Speaking of facts, FCC Chairman Ajit Pai’s latest arguments for his Christmas gift repeal of Net Neutrality for the telecom industry uses similar gaslighting and false talking points that distract from a fact-based debate on these issues.

As millions of consumers express outrage over Pai’s unbending agenda to allow internet service providers to create an unlevel internet playing field and paid prioritization fast lanes that favor some content over others (as long as they disclose it), Pai and his staff are now resorting to calling Americans who favor the current free and open internet “desperate” or ignorant about how the internet works.

But you know more than you think, reminded each month (when the bill arrives) of the special ability of companies like Comcast to abuse the customer relationship with skyrocketing rates, data caps, and unhelpful customer service. Giving companies like this more ways to charge you more for the same service has never worked to your advantage.

Net Neutrality is one of only a few tools available to the FCC to keep ISPs in check. Banning data caps and zero rating schemes would be another great way to protect consumers from Wall Street’s insatiable demand for companies to extract more revenue from consumers. Investors know full well in a monopoly/duopoly marketplace there is every incentive to gouge and very little risk of losing customers doing so.

Our friends at Free Press did considerable research to debunk some of Mr. Pai’s talking points in a long series of tweets we thought would be illuminating:

Charter Introduces Gigabit Service on Oahu; New Standard Speed is 200Mbps

Phillip Dampier December 4, 2017 Broadband Speed, Charter Spectrum, Competition, Consumer News Comments Off on Charter Introduces Gigabit Service on Oahu; New Standard Speed is 200Mbps

Charter Communications has announced gigabit broadband is available on the Hawaiian island of Oahu for $104.99/month, thanks to DOCSIS 3.1 upgrades being tested in the state.

Spectrum customers in Hawaii will also find their Standard tier internet speeds have also been doubled to 200Mbps, up from 100Mbps. A year ago, the company was selling 60Mbps broadband for the same $65 price it now charges for speeds more than triple as fast.

Charter has been at the rear of companies upgrading to DOCSIS 3.1 technology, primarily because the company is still upgrading legacy Time Warner Cable systems to free up space for boosting broadband speeds. The last analog television service in legacy Time Warner territory is not expected to disappear until 2019, with around half of former Time Warner Cable customers still waiting for upgrades. Charter executives don’t mind that the company is among the last, claiming that by the time DOCSIS 3.1 is fully deployed across their systems, equipment will be cheaper and more plentiful.

Charter plans to roll out DOCSIS 3.1 upgrades in selected cities — almost all facing substantial competition from Verizon FiOS, AT&T Fiber, or a municipal gigabit fiber provider — starting in 2018. But most markets will have to wait until 2019 or later before gigabit speeds become available from Spectrum.

Charter CEO Thomas Rutledge added Spectrum customers will see base plan speeds increase as the company continues its upgrade strategy.

Wall Street Uneasy About Future 5G Broadband Competition; Ponders Idea of 5G Monopolies

Phillip Dampier November 30, 2017 Broadband "Shortage", Broadband Speed, Competition, Consumer News, Rural Broadband, Verizon, Wireless Broadband 7 Comments

Super monopoly?

Some Wall Street analysts are pondering ideas on how to limit forthcoming 5G wireless home broadband, suggesting providers might want to set up local monopolies, keeping competition to a minimum and profits to a maximum.

Verizon’s presentation at its annual Analyst Day meeting drew little praise from analysts and investors in attendance, “landing like a thud” to quote one person at the event.

The issue concerning Wall Street is what impact 5G wireless broadband will have on the internet access marketplace, which is currently a comfortable monopoly or duopoly in most American cities. That may radically change if the country’s four wireless companies each launch their own 5G services, designed to replace wired home broadband services from the cable and phone companies.

This week Verizon formally announced Sacramento would be the first city in the country to get its forthcoming 5G service, with an additional four of five unnamed cities to follow sometime next year.

Verizon will advertise 1,000Mbps service that will be “priced competitively” with current internet providers in the market. But Verizon intends to market itself as “a premium provider,” which means pricing is likely to be higher than one might expect. Verizon claims they intend to roll out 5G service to 30 million households — 25-30% of the country, making Verizon a prominent provider of fixed wireless home broadband service.

But analysts panned Verizon’s presentation for raising more questions than the company was prepared to answer. Barron’s shared the views of several analysts who were underwhelmed.

Notably, Craig Moffett from Moffett-Nathanson was particularly concerned about how to rate 5G service for his investor clients, and more importantly to them, how to forecast revenue and profit.

Moffett

The biggest problem for Moffett is the prospect of additional competition, and what that will do to each current (and future) provider’s share of customers and its revenue. If every major wireless carrier enters the 5G home broadband business, that will raise the prospective number of ISPs available to consumers to six or more — four wireless carriers competing with the phone and cable company. That is potentially very dangerous to big profits, especially if a competitive price war emerges.

“Let’s assume that AT&T is just as aggressive about this opportunity as Verizon,” Moffett told his investor clients. “Will they enter the same markets as Verizon, or different ones? […] If multiple players enter each market, all targeting the same 25-30% [where 5G service will be sold]. Well, what then? Let’s suppose the 30% market share estimate is right. Wouldn’t it be now shared among two, three, or even four [5G fixed wireless broadband] providers?”

Moffett gently proposes a concept where this profit-bruising competition can be abated by following the cable television model — companies agree to stay out of each others’ markets, giving consumers a choice of just one 5G provider in each city instead of four.

“There’s a completely different future where each operator targets different markets […] Let’s say that AT&T decides to skip Sacramento. After all, Verizon will have gotten there first,” Moffett suggests. “If the required share of the [fixed wireless] market is close to Verizon’s estimated 30%, then there is only room for one provider. So AT&T decides to do Stockton, about 40 miles to the south. Verizon would then skip Stockton, but might do Modesto, twenty miles further south… and then AT&T would then skip Modesto and instead target Fresno… unless Sprint or T-Mobile got there first.”

But Moffett is thinking even further ahead, by suggesting wireless carriers might be able to stop spending billions on building and expanding their competing 4G LTE networks when they could all share a single provider’s network in each city. That idea could work if providers agreed to creating local monopolies.

“That would create a truly bizarre market dynamic that is almost unimaginable today, where each operator ‘owned’ different cities, not just for [5G] but also for 4G LTE. If this kind of patchwork were to come to pass, the only viable solution might then be for companies to reciprocally wholesale their networks. You can use mine in Modesto if I can use yours in Fresno. To state the obvious, there is almost no imaginable path to that kind of an outcome today.”

The reason providers have not attempted this kind of “one provider” model in the past is because former FCC commissioners would have never supported the idea of retiring wireless competition and creating a cable monopoly-like model for wireless service. But things have changed dramatically with the advent of Chairman Ajit Pai, who potentially could be sold on the idea of granting local monopolies on the theory it will “speed 5G deployment” to a large number of different cities. Just as independent wireless providers lease access on the four largest carriers today (MVNO agreements), AT&T, Verizon, T-Mobile and Sprint could sell wholesale access to their networks to each other, allowing massive cost savings, which may or may not be passed on to customers.

But it would also bring an end to network redundancy, create capacity problems, and require every carrier to be certain their networks were interoperable with other wireless companies. The federal government’s emergency first responder program also increasingly depends on a wireless network AT&T is building that would give them first priority access to wireless services. How that would work in a city “designated” to get service from Verizon is unclear.

Restricting competition would protect profits and sharing networks would slash expenses. But such prospects were not enough to assuage Wall Street’s insatiable hunger for maximum profits. That is why analysts were unimpressed with Verizon’s presentation, which “lacked the financials” — precise numbers that explain how much the network will cost, how quickly it will be paid off, and how much revenue it can earn for investors.

A small cell attached to a light pole.

Verizon did sell investors on the idea 5G will put an end to having to wire fiber optics to every home. The service will also keep costs to a minimum by selling retail activation kits customers will install themselves — avoiding expensive truck rolls. Billing and account activation will also be self-service.

Verizon also announced a new compact 4G/5G combined antenna, which means 5G service can be supplied through existing macro/small cell 4G equipment. Verizon will be able to supplement that network by adding new 5G nodes where it becomes necessary.

Investor expectations are that 5G will cost substantially less than fiber to the home service, will not cost massive amounts of new investment dollars to deploy in addition to maintaining existing 4G services, will not substantially undercut existing providers, and will allow Verizon to market 21st century broadband speeds to its customers bypassed for FiOS fiber service. It will also threaten rural phone companies, where customers could easily replace slow speed DSL in favor of what Verizon claims will be “gigabit wireless.”

Despite that, Instinet’s Jeffrey Kvaal was not wowed by Verizon’s look to the future.

“Verizon’s initial fixed wireless implementation seems clunky and it withheld its pricing strategy,” Kvaal told his clients. He believes fixed wireless broadband will cost Verizon an enormous amount of money he feels would be better spent on Verizon’s mobile network. “Verizon glossed over 5-10x LTE upgrades that are already offering ~100Mbps of fully mobile service at current prices to current phones without line of sight. A better 5G story might be to free up sufficient LTE capacity to boost the unlimited cap from 25GB to 100GB for, say, a $25 premium. The ‘cut the cord’ concept was successful in voice, in video, and should be in broadband.”

Lexington, Ky. Has a Solution for Its Charter/Spectrum Problems: A New Fiber Competitor

Phillip Dampier November 21, 2017 Broadband Speed, Charter Spectrum, Competition, Consumer News, Metronet, Public Policy & Gov't, Video 6 Comments

An Indiana company will spend between $70 and $100 million building a fiber-to-the-home network delivering gigabit broadband speed in Lexington, Ky., partly in response to months of consumer dissatisfaction with Charter Communications’ Spectrum service.

MetroNet could make Lexington the largest gigabit city in the country, according to the city’s mayor Jim Gray.

“Santa Claus is coming to town,” Gray said.

Headquartered in Evansville, Ind., MetroNet provides internet, phone and television service across a 100% fiber optic network in 35 communities in the midwest —  mostly in Indiana and the western suburbs of Chicago. The company started operations in 2005, wiring the community of Greencastle, Ind. Since then, it has grown with the financial support of billionaire investors including Microsoft founder Bill Gates and Nike’s Phil Knight. Oak Hill Equity Partners, a private equity firm, has a financial interest in MetroNet, along with investments in WOW!, Atlantic Broadband, Wave Broadband, and Cincinnati Bell.

MetroNet may have selected Lexington because it has a poorly received cable operator — Spectrum, and Windstream, a competitively inadequate phone company. Windstream does not provide the kind of service AT&T’s U-verse and AT&T Fiber offers in other Kentucky cities.

All of Lexington’s residents could get service from MetroNet is as little as three or four years, because the company has agreed to wire the entire urban service area, a departure from the “fiberhood” concept introduced by Google, wiring individual neighborhoods only after a sufficient number of customers pre-register for service and pay a deposit. The project is likely to win a quick approval from the Lexington-Fayette Urban County Council, allowing construction to begin in January. Because MetroNet sells television service, it will have to apply for and receive a franchise from the city.

“This means three things,” Gray said. “First, a fiber-optic network will provide gigabit speeds to homes and businesses. Second, it will bring a new cable provider to Lexington, which will bring competition to Spectrum and Windstream. MetroNet will have Kentucky basketball. Third, MetroNet has a great record of customer service.”

Prices and packaging:

  • 100/25Mbps $49.95
  • 200/75Mbps $59.95
  • 500/100Mbps $69.95
  • 1,000/250Mbps $89.95
  • Television packages range from $18-79 a month
  • Digital Phone service is $9.95 a month
  • Discounts of $10-20 a month are available for customers selecting a two year “price lock” agreement
  • a $9.95/mo “technology fee” also applies.

Although most welcome the competition, some noticed MetroNet does not intend to sell service at fire sale prices.

“I checked their rates in Lafayette, Ind. and they weren’t that cheap,” commented James Wood. “100Mbps internet + Standard tier TV+ phone was $146/mo for two years.”

MetroNet uniquely charges exactly the prices it pays for cable television networks, with no mark-up. (1:39)

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