Consumer Reports underlines the point: America's worst cell phone company promises America better things by merging with America's second-worst cell phone company. Is this a good deal for America or just for AT&T and T-Mobile?

This morning’s announced deal of a merger between AT&T and T-Mobile is what antitrust rules were made to prevent.  This bold merger would not have even been attempted had the two companies believed they could not get it past supine regulators and members of Congress who receive substantial contributions from AT&T.

Ordinary consumers can see right through AT&T’s business plans, so why can’t our regulators and policymakers?  In a word, money.

The FCC’s own National Broadband Plan delivers clear warnings that the growing concentration in the wireless industry will hamper better broadband in the United States, not enhance it.  Reduced consumer choice and competition takes the pressure off carriers to innovate, expand, and keep wireless costs under control.

Reducing the number of players on the field delivers countless benefits to carriers and their shareholders.  But for consumers, there is nothing but a few promised spoonfuls of sugar to help the industry’s agenda go down — with vague promises of better rural service, faster wireless data, and new handsets.

In a truly-competitive marketplace, Washington regulators need not exact promises of better service from mega-sized carriers: the much-vaunted “free market” would deliver them naturally, as competitors invest and innovate to succeed.  But that kind of market is increasingly disappearing with every merger.

Nowadays, officials at the FCC and Justice Department are willing to accept deals if they promise some token bone-throwing, at least until the company lobbyists inevitably manage to get those conditions discarded during the next round of deregulation — cutting away rules that “tie the hands” of companies picking your pockets.

Money makes the impossible very possible, and AT&T intends to spend plenty to earn plenty more down the road.  Let’s review how the game will be played, and what you can do to stop it.

The “Free Market” Crowd Sells Out

Randolph May is willing to sell robust competition down the river if it means he can get 4G network access faster.

When the chorus of capitalism capitulates on the most important formula for success in a deregulated marketplace — robust competition on a level-playing field, we know there is a problem.  Take Randolph May.  He works for the free market think tank Free State Foundation.  Watch what happens when even the most ardent supporter of ‘letting the marketplace sort things out’ twists and turns around admitting America is facing a future duopoly in wireless:

“In an ‘idealized’ marketplace, the more competitors the better. But the telecom marketplace is not an idealized market. It is one that requires huge ongoing capital investments to build broadband networks that deliver ever more bandwidth for the ever more bandwidth-intensive, innovative services consumers are demanding,” he says.  “My preliminary sense is that the benefits from the proposed merger, with the promise of enhanced 4G network capabilities implemented more quickly than otherwise would be the case, outweigh the costs. Even after the merger, the wireless market should remain effectively competitive with the companies that remain.”

That’s a remarkable admission for someone who normally argues that marketplace fundamentals are more important than individual players.

May is willing to sell a robust competitive marketplace down the river in return for 4G — a standard AT&T is hurrying to bring to its customers threatening to depart for better service elsewhere.  With this deal, disgruntled customers will have one fewer choice to turn to for service.

Make no mistake: a free, unregulated wireless marketplace requires more than two national carriers and a much-smaller third (Sprint) to deliver real competition.

The Dollar-A-Holler Phoney Baloney Astroturf Groups

AT&T will waste no time trotting out comments from non-profit groups essentially on their payroll who will peddle filings with regulators promoting AT&T’s business agenda in return for substantial sized donation checks to their causes.  The usual suspects, which include groups serving minority communities, will tout the “wonderful things” the deal will bring to their constituencies.

Already out this morning is this curious remark picked up by Broadcasting & Cable from Debra Berlyn, who claims to represent consumers as part of a group called the Consumer Awareness Project:

Beryln's consumer group has a few problems: It's not a group, it doesn't represent consumers, and she is an industry consultant.

“Wireless acquisitions over the course of the past decade have not led to price increases for consumers and, in fact, the statistics show that prices have declined during this period. While some consumer voices have focused on the loss of a wireless competitor in relation to AT&T’s recently announced plans to acquire T-Mobile USA, the news for consumers should be seen in another light with a focus on the benefits that this merger can bring to consumers across the U.S.”

Perhaps the first goal of any group trying to make consumers aware of anything is to actually have a website associated with your group.  The “Consumer Awareness Project” forgot this important first step, but we eventually found the “group” using a re-purposed web address, “consumerprivacyawareness.org,” and note they have only recently become significantly active on this issue, now peddling AT&T’s agenda with gobbledygook.

When Berlyn isn’t pounding out prose to benefit AT&T, she is making guest appearances in Comcast’s corporate blog or being a favorite source of industry-connected groups like the nation’s largest broadband astroturf effort, Broadband for America.

In fact, after some digging, one learns there are no actual consumers involved with the “Consumer Awareness Project.”  The entire affair is actually a project of a Washington, D.C., lobbying-consultancy firm — Consumer Policy Solutions, which counts among its services:

• Federal advocacy: Legislative and regulatory advocacy work before Congress, federal agencies and the administration.
• State and local advocacy: Policy development and implementation and grassroots mobilization.

That is the very definition of interest group “astroturf.”  But my favorite section of this company’s website is the promise paying clients will get Berlyn’s experience “in communicating complex language and issues into easily understandable, applicable messages for consumers.”

Such as: AT&T’s merger with T-Mobile is good for consumers, even if it raises prices and reduces competition.

I’m sold.

The Cowardly Lion & A Myopic Justice Department

FCC Chairman Julius Genachowski's cowardly cave-ins set the stage for AT&T's bold merger move, believing they have government oversight under their control.

The first hurdle this deal will need to overcome is among Washington regulators, most of whom are either way over their heads understanding the implications of super-sized mergers like this or are simply terrified of going out on a limb with a multi-billion dollar company that can create headaches for your agency in Congress.

AT&T will sell this deal within a very limited context of the deal itself, and urge regulators to ignore “emotional” issues about the increasingly concentrated wireless marketplace.  Verizon did much the same with its acquisition of Alltel — urging regulators to ignore the fact they were removing a player in the market and focus instead on the benefits Verizon’s size and scope could bring to existing Alltel customers.  Of course, in many areas Alltel served, customers were free to do that themselves simply by signing up for Verizon service.

Dan Frommer, a senior staff writer at Business Insider, delivers a TripTik outlining AT&T’s roadmap to deal approval:

“AT&T believes its experience with regulatory review has given it a good picture of what’s realistic and what isn’t from an approval standpoint, and believes it can frame the deal in a way that won’t be rejected,” he writes.  “AT&T says the Feds are looking at “the facts” — hinting that they aren’t acting based on emotions or politics. Though, no doubt, there will be plenty of jockeying in the press and among lobbyists from those on both sides of the deal.”

But Frommer wades in too deep and drowns his credibility claiming the combination of some of the largest wireless carriers in the country still leave plenty of competitors.  Besides Verizon, there is just a single national player of consequence remaining – Sprint.  MetroPCS and Cricket deliver service in urban areas in selected cities. US Cellular, Cellular South, and several others deliver service to an even smaller number of communities, entirely dependent on large carriers for roaming coverage.

The Justice Department’s typical solution to antitrust concerns is to force limited concessions like divestiture of assets in particularly concentrated markets.  In most cases, companies agree because those assets are often redundant and would be sold anyway, or cover such a limited area as to be inconsequential to the greater deal.  Former Alltel customers found themselves traded first to Verizon and then divested away to AT&T.

Most of the customers divested away from T-Mobile’s future with AT&T will likely end up switched to Verizon, hardly a success story for increased competition.

FCC lawyers will likely review this transaction with a narrow scope, too.  Instead of contemplating the implications of the inevitable duopoly that could result, the FCC will likely find itself negotiating over individual details of the deal without considering an outright rejection of it.

AT&T admits they are on a mission to monetize data usage.

At the FCC, Julius Genachowski’s performance as a regulator has been nothing short of a disaster, pleasing almost nobody in the process.  His “cowardly lion” approach to regulation has delivered rhetoric without substance and a whole lot of broken promises.  Genachowski has proven to be unable to stand up to the companies he is tasked with regulating.  With two Republican commissioners likely to favor the deal and Michael Copps almost certainly in opposition, it will be up to Julius Genachowski and Mignon Clyburn to vote this deal up or down.

But regulators are also responsive to Congressional pressure and dramatic backlash by consumers, such as what happened just a few years ago when big media companies lobbied to relax media ownership rules.  When consumers (and voters) revolt, regulators will change their tune… and fast.

What You Can Do

Consumers can make a difference in what comes next for T-Mobile and AT&T.  The first step is to make this an issue with your member of Congress and two senators.  Let them know you have profound concerns about another huge wireless merger.

There is simply no tangible benefit that can outweigh the loss of another important competitor in the American wireless marketplace.

AT&T’s bottom-rated service will not become any better acquiring the second-to-last rated service.  The company must invest in its network to compete, not simply pick off competitors to save money.  The loss of T-Mobile would mean only three national carriers, and it is highly unlikely Sprint would be able to withstand pressures on Wall Street to merge themselves away, probably to Verizon.

Tell your elected officials the AT&T/T-Mobile deal is a consumer nightmare and should not be approved under any circumstances.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Glenchur Says Regulatory Risk Substantial for ATT 3-21-11.mp4[/flv]

The always optimistic Bloomberg News says AT&T’s deal could still get past regulators, but there is a substantial risk as well.  Consumers can help make that risk unsustainable by telling the Obama Administration and Congress better broadband does not come from a duopoly, no matter how well-intentioned.  (4 minutes)

Frontier attempts to dig themselves out.

The Oregonian has been covering the plight of Frontier customers in the Pacific Northwest who signed up for Verizon’s fiber to the home service — FiOS — and are now facing down the new owners who want to raise the price by $30 a month.

Frontier has done itself no favors in the media with an ongoing series of reports of service problems, rate increases, and now the latest signs it wants out of the television delivery business altogether.

In a letter dated March 4th, Steven Crosby — senior vice president of government and regulatory affairs, told the city administrator in Dundee, Ore., Frontier FiOS TV has been a flop.

Since Frontier Communications Northwest, Inc., acquired Verizon’s operations on July 1, 2010, it has built on Verizon’s prior actions and continued to offer a robust and aggressively priced video product to attract Dundee subscribers.  Despite these efforts, however, customer growth has been disappointing and stagnant and Frontier has not achieved a commercially reasonable level of subscriber penetration.

Frontier also admits it has been under-pricing its video service to stay competitive and attract new customers, but those days are over.  The company earlier announced its intention to raise rates by $30 a month for its standard cable TV service, making it more costly than its nearest competitor, Comcast.

Frontier recognizes the impact its enormous rate increase will have on its subscriber base, soberly noting it is likely to “further depress subscriber penetration.”

With this in mind, Frontier is exercising its right under the franchise agreement it has in Dundee to provide notice it intends to terminate its video service at a future date, after providing subscribers with 90 days advance notification.

Similar letters went to city administrators in Newberg, McMinnville, and Wilsonville.  City officials had no reservations about interpreting the meaning of the letters and plans to implement a $500 installation fee for future FiOS TV installations.

“Looking at it, you expect there will be no new customers,” Dan Danicic, Newberg’s city manager told The Oregonian. “Getting this opt-out notice is not a huge surprise to me, but we are disappointed.”

Frontier's rate increases are driving many consumers back to Comcast for their television service.

Sources tell Stop the Cap! there was considerable debate inside Frontier’s offices last week on how to implement directives from executives to shut down FiOS installations as quickly as possible.  Initial efforts to quietly raise the installation price — without giving subscribers’ advance notice — were on track until Frontier’s legal department quashed the plan.  Concerns were also raised inside the customer support units responsible for taking orders and handling customer billing inquiries over how to deal with the inevitable subscriber backlash when the first bills arrived in the mail.

“Frontier hates dealing with FiOS and they can’t wait to be rid of it — they claim that the product is at least 10 years away from really returning any investment from its original deployment,” a well-placed source told Stop the Cap! late last week.

Frontier FiOS is an anomaly for the rural phone company, which delivers the vast majority of its broadband customers DSL service over copper wire phone lines, usually at speeds approaching 3Mbps.  Frontier FiOS “came along with the deal,” one Indiana Frontier official told local media there in response to rate hikes there.

Still, media reports that the company plans to ditch its TV customers created a small panic inside Frontier by the weekend.

“Getting customers switched over to satellite TV service in an orderly manner was the original plan, but reports the company was abandoning the service altogether risks we’ll lose our customers to Comcast, and many will take their phone lines to the cable company, too,” a second source informed Stop the Cap! this morning.  “We were told ‘orderly transition’ over and over again, so reassuring customers is today’s top priority.”

Dundee, Oregon

Evidence of this campaign was not difficult to find over the weekend, as The Oregonian amended its original story claiming Frontier does not have immediate plans to exit the video business.

Crosby told the newspaper: “Our actual implementation decisions will be business driven. At this time, there is no change in our FiOS video offerings or in our FiOS video service delivery to our customers. And this filing does not affect our FiOS high speed service.”

Stephanie Schifano, identifying herself as an employee of Frontier Communications, attempted to spin the letters sent to several Oregon communities as a simple matter of business and not a foreshadowed abandonment of television service.

“Frontier is exercising our right under the franchise agreements to terminate the franchises. The right to terminate soon expires, and if Frontier didn’t give notice now we may have been required to provide this service, with these franchises, for another 12 years. This notice offers Frontier the flexibility to continue to analyze the FiOS Video/TV business and continue to service our customers,” Schifano wrote.

But both of our sources well-familiar with Frontier FiOS say the company’s actions speak louder than its words.

“When you increase the installation fee to $500 and raise your prices nearly $30 higher than Comcast, you would be crazy not to interpret the message Frontier is trying to send — go get your satellite dish from us and get off FiOS,” our second source told us.

Telecompetitor read into some of the company’s comments about utilizing the acquired fiber network in a new way, perhaps for over-the-top Internet video content.

“That’s wishful thinking,” our second source says.  “Frontier’s only online video efforts surround its rebranded Hulu service, relabeled myfitv.”

Frontier's online video platform serves up mostly repurposed Hulu content.

“The company has no plans I am aware of for a grand video strategy — FiOS covers far too small a service area and there is no way Frontier will spend more money to increase that fiber footprint,” our source adds. “Frontier wants to meet its general obligations made as part of its deal with state regulators when it bought Verizon FiOS with the landline deal, and little else.”

Frontier will continue to offer FiOS to broadband customers for the time being, regardless of what it does with its video package.

“If it’s already there and not costing a lot of money to maintain for broadband, why not?” our source says.

One direct sales contractor for competitor Comcast suspects that train may have already left the station.

Calling Frontier’s customer service operation “a circus,” the salesman says Comcast is benefiting from Frontier’s ball-dropping.

“Many Frontier customers are unhappy with the customer service side while stating they do enjoy their phone, Internet, and video services provided by the FiOS network, but lose the business on the practically non-existing customer service side.”

The contractor says he hears stories from Frontier customers all day who are fed up with the frustration of extended hold times, inaccurate or missing bills, online account access problems, excessive call transfers to deal with service issues and high fees.

For regulators, the aggravation is much the same.

After being promised by CEO Maggie Wilderotter that Frontier would be an aggressive competitor in a barely competitive marketplace, Frontier has raised rates by 46 percent, irritated their customers with customer service problems and outages, and now has served notice it intends to flee the TV business at an undetermined point in the future.

Here we go again.

You always know when a new year has arrived when another North Carolina legislator files a Big Telecom industry-written bill attacking community-owned broadband.

This year, the laughably-named “Act to Protect Jobs and Investment by Regulating Local Government Competition With Private Business” comes courtesy of Rep. Marilyn Avila (R-Wake County), a former manager of the conservative think tank John Locke Foundation.

H.129 is remarkable for its legislative micro-management, coming from someone who claims to oppose big government meddling.

Among its requirements:

• Demands a public accounting for every community broadband network;
• Limitations on service to strict city boundaries;
• Prohibits contractual agreements with apartment and condo building owners that mandate municipal service for individual residents;
• Bans advertising and “promotion” of community-owned broadband networks on Public, Education, and Government access channels;
• Shall not price any component of its service below cost;
• Requires payment of a special tax equal to the amount of local property taxes and/or fees normally exempted for local government enterprises;
• Requires permission through an extended hearing process to win permission before delivering service to any area deemed “unserved”;
• Demands a laundry list of pre-conditions before obtaining permission to shop for financing.

Avila

Avila doesn’t mind putting government all over the backs of community-owned networks if they happen to compete with her friends at AT&T, Time Warner, and CenturyLink.

Let’s review this exceptionally provider-friendly piece of protectionist legislation.

First, Avila’s demand for an open accounting of community broadband projects provides a treasure trove of business intelligence for any competitor.  They can demand to open the books and gain critical subscriber information — what residents pay for service, who gets the service, and how much it costs to provide.  That’s pure gold for targeted marketing campaigns to win back customers with special offers municipal providers are banned from offering.

We’re calling a foul ball because Avila’s “fair and level playing field” doesn’t have room for fair play.  Private providers get to keep the secrets community-owned network are forced to reveal.  That, by design, puts municipalities at a competitive disadvantage and could help drive them out of business.  Remember, these networks are financed by privately obtained bonds, not taxpayer dollars.  Shouldn’t any such provider have the right to keep its business strategies secret?

Second, if banning mandatory service for renters and condo owners is such a great idea, why does Avila only limit it to community-owned networks?  The record is clear — private providers are increasingly signing agreements with property owners mandating cable television fees for residents.  Apparently Avila’s concept of fairness doesn’t include the actual companies found guilty of raising the rent.

Third, Avila bends over backwards for her cable and phone friends by tying the hands of municipal providers who want their networks to be commercially successful.  Time Warner has no problem injecting endless promotions for its own services not just on a handful of channels, but on virtually every channel on the lineup, often during nearly every commercial break.  Can municipal networks ban advertising from AT&T and Time Warner?  Of course not.  And the definition of “promotion” specified in Avila’s ad ban is vague.  If a town government meeting talks up the success of a community-owned network, has Avila’s law been broken?  Apparently censorship by government mandate is a-OK as long as it doesn’t target her Big Telecom friends.

Avila’s ban on setting pricing below cost is another giveaway to Time Warner and AT&T, who routinely deliver retention and new customer promotions that could be temporarily priced below cost to secure or maintain a customer relationship for a limited period of time.  Of course, Avila doesn’t require either company to open their books to find out exactly what it costs companies to provide these special pricing packages.  No municipal provider seeks to price service at a rate that puts the project out of business.  Time Warner Cable has been accused of delivering below-cost retention pricing to departing customers in Wilson, where GreenLight has been poaching the cable company’s customers for more than a year.  Avila’s hand-tying provision allows some companies in the marketplace to keep pricing flexibility while the municipal provider is forced to price service according to a state-dictated formula.  John Locke would be turning over in his grave if he heard about this planned economy-pricing.

Rep. Avila can certainly no longer claim to be for low taxes, because her bill would effectively raise them for community-owned networks.  Again, since these projects are almost always funded from private bond markets, not public tax dollars, slapping complicated tax formulas on municipal providers while continuing to permit special tax break deals for private companies (such as “payment in lieu of taxes” or special tax breaks/grants for Time Warner in return for job creation) shouldn’t work for most small government conservatives.  Shouldn’t they support lower taxes for everyone?  Instead, Avila seeks to hamper community network business models by punitively sticking them with taxes she would otherwise oppose for commercial providers.

Avila’s support for smaller, less regulatory-minded government must also be called into question with this bill’s ridiculously complicated regulations for serving unserved areas of the state (which also grants a special window to private providers to protest, which they will certainly do in just about any area of the state even partially suitable for a future project).  Her bill even demands 60-day delays, custom-tailored to allow industry lobbyists to gin up opposition and demagogue projects.  Since a commission will be involved in the decision making process and has to take into account opposition from private providers, all of the benefits of Avila’s legislation flow to the cable and phone industry, none to community-owned networks or individual consumers that will ultimately benefit from better service at lower prices.

Avila's idea of a level-playing field.

Avila destroys her own “level playing field” argument in language within her own bill:

“The city or joint agency making the application to the Commission shall bear the burden of persuasion.”

In other words, Avila offers a “level playing field” with an 11-foot electrified barbed wire fence surrounding it.  Unfortunately, municipalities won’t be the only ones shocked by Avila’s cable and phone company protectionism.

Ordinary consumers in communities like Wilson, exempted from the relentless annual rate hikes from Time Warner because of the presence of a municipal competitor won’t get to keep the savings if Avila has anything to say about it.  She wants you to pay full price for your cable service, and pay higher prices year after year.

Her claim that the legislation will somehow “protect jobs and investment” is specious at best.  Time Warner has not exited Wilson or Salisbury — two cities with a community-owned competitor.  In fact, Time Warner is on record welcoming competition.  In reality, these companies simply don’t welcome new choices from those providers that will actually deliver savings and better service to customers.

This anti consumer legislation brought to you by Time Warner Cable...

The cable industry’s flagellation against projects like GreenLight and Fibrant flips between calling them financial boondoggles not worth bothering about to unfair competition that will harm private investment.  AT&T’s protests, in particular, ring the most hollow.  This is the same company that wants deregulation to make it easier for new players like themselves to enter the marketplace.  Their U-verse service enjoys the benefits of statewide video franchising, which removes accountability to local governments.  Yet this same company lobbies for increased bureaucracy and regulation for some of their potential competitors.  Avila is only too happy to oblige.

As with every other piece of legislation we’ve seen on this subject from North Carolina, it’s yet another custom-written favor to big cable and phone companies and an attack on consumer interests across the state.  Generous campaign contributions from the telecom industry pay off only too well when state legislators allow these companies to write the bills designed to protect their turf.

For Time Warner Cable, the costs associated with sending selected legislators and their families to a recent delicious BBQ event in sunny San Diego to attend a sham “conference” sponsored by a corporate front group shows there are plenty of favors to be had all around, just as long as you support the company’s legislative agenda.

...and AT&T

Fighting this year’s anti-consumer legislation will be tougher than ever.  For the first time in 112 years, the corporate friendly North Carolina Republican party won control of the General Assembly.  For many members, the free market can do no wrong and anything government touches is bad news.  Many will reflexively support Avila’s legislation.  But any underserved county in the state knows the truth about today’s broadband in rural North Carolina — if local communities can’t step up and deliver the service, nobody will.  For these representatives, Democrat or Republican, concern should run high that Avila’s bill assures these areas of years of high prices, poor or no service, and status quo protection designed to keep the market exactly as it is today.  Considering how poorly North Carolina stands in national broadband rankings, standing still should never be an option.

Invest or die.  That succinctly explains the current state of the landline telephone business and the companies providing service to a decreasing number of Americans.  Some companies, like AT&T and Verizon have heavily diversified their business into wireless, fiber, IPTV and broadband.  Others, like Frontier are hoping their presence in uncompetitive rural markets will keep them in business, as long as their dividends keep stockholders happy.

CenturyLink, which is in the process of absorbing the last remaining Baby Bell — Qwest, has decided to invest in their business to stay competitive with their biggest nemesis — the cable company.  CenturyLink is still hanging on to ADSL broadband service in many rural areas, but the company sees the promise of future relevance with bonded DSL, which is delivering 25/2Mbps broadband service to an increasing number of their customers.  Where distances allow, CenturyLink is at least temporarily providing the fastest residential broadband service available in areas like southwest Florida.  They are holding their own against local cable competitors like Comcast.

Now the company is following AT&T in introducing a new IPTV service to many of its customers.  Dubbed Prism, the U-verse like service delivers a true triple play package to customers who thought they would be stuck with their local cable company or satellite dish provider for TV programming.

Prism offers more than 200 channels, a multi-room DVR capable of recording up to four shows at the same time, and an interactive program guide that doesn’t need an instruction manual to navigate.

[flv width=”640″ height=”390″]http://www.phillipdampier.com/video/Introducing CenturyLink Prism.flv[/flv]

This promotional video introduces CenturyLink’s Prism service and its television features.  (4 minutes)

Prism has been introduced in larger CenturyLink areas ranging from southern Nevada, southwestern Florida, and North Carolina, where EMBARQ used to provide telephone service.

The service works through a hybrid fiber-copper wire IPTV network.  Fiber optic cable reduces the distance data needs to travel over ordinary copper phone wires.  The less copper, the faster the potential speed.  With a 25-30Mbps broadband platform, Prism can divide up available bandwidth to support television, phone, and up to 10Mbps broadband service.  It’s all delivered over the same digital network.  While not as advanced as Verizon FiOS and other fiber to the home networks, IPTV services like Prism and U-verse are cheaper to provide, and that can mean faster deployment in areas not well served by competition.

Reaction to Prism has been generally positive among Stop the Cap! readers who have shared their stories with us.  Among the positives:

• The interactive program guide is light years ahead of Comcast, Cox, and Time Warner Cable;
• Broadband speeds are generally better than the original DSL service CenturyLink used to provide;
• The picture quality is excellent where the telephone network has been upgraded the most;
• Competitive introductory and retention offers mean consumers can pay less for service, at least initially.

But there are some problems, too:

• Bandwidth varies depending on how far away you are from the nearest fiber node.  This affects what you can do with the service.  If you are further out, you can only watch one HD television channel at a time, and may not be able to record more than one HD channel at the same time;
• The DVR box has issues — readers report shows disappear, don’t get recorded, or show poor results when line quality drops;
• Broadband speeds with Prism officially max out at 10Mbps;
• If you are watching a number of televisions at the same time, your broadband speeds could drop;
• Variability in service quality comes largely as a result of inferior copper wire phone networks CenturyLink chose to stick with.  If your phone line is prone to static or hum, or deliver poor results when the weather is bad, Prism might not work well for you.

Some subscribers found they initially loved the service, but when bad weather arrived, it all fell apart.

“Our phone lines are decades old, so this comes as no surprise,” says Manny who writes from Naples, Fla.  “I was also disappointed some of the channels in HD I had with Comcast are not available from Prism.”

In parts of Raleigh, N.C., Prism just launched a few weeks ago.  But some of our readers are sticking with Time Warner Cable.

“After looking over their pricing and packages, Time Warner has more HD channels and doesn’t charge $12 a month extra for them,” writes Ralph.  “CenturyLink also only bundles 3Mbps broadband service with most of their packages, and you have to pay extra for 10Mbps service.”

Ralph thinks Road Runner from the cable company will provide a more consistent broadband experience for his family.

“There is only so much you can push through a phone line at the same time; I like the fact they are competing, but they will not be able to keep up if they rely on copper phone wiring forever,” Ralph says.

Cox faces new competition in southern Nevada

Despite some of the negatives, CenturyLink may deliver formidable competition where cable companies haven’t kept up.  Some other markets where Prism will offer service: Jefferson City, and Columbia, Mo., and La Crosse, Wis.  Cox Cable in southern Nevada is now competing with Prism, and believes it has the superior network.

“The way our system is constructed, we have services equally distributed everywhere in the valley,” Juergen Barbusca, Cox manager of communications, public and government affairs in Las Vegas said. “Everybody in our footprint can get our highest advertised speeds.”

Cable broadband is less susceptible to distance degradation that can make Prism a no-go in neighborhoods at the far end of a phone company’s central office.

Also equally distributed is the price.  Outside of new customer promotions, nobody will save any money here.  Cox and CenturyLink are both selling their respective triple-play packages of TV, Internet, and phone for exactly the same price: $143 a month.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/KTNV Las Vegas CenturyLink Prism 2-8-11 WFTX Cape Coral CenturyLink in SW Florida 12-7-10.flv[/flv]

KTNV-TV in Las Vegas introduces viewers to CenturyLink’s Prism service and WFTX-TV in Cape Coral, Florida talks with CenturyLink about their new 25Mbps broadband service in two exceptionally company-friendly pieces from the stations’ respective news shows.  (13 minutes)

"If you have to ask how much, you can't afford it."

Knology, which bought out Sunflower Broadband last year, has elected to carry forward the old owner’s Internet Overcharging schemes, charging broadband customers penalty rates for exceeding their usage allowances.

The company’s explanation for their overpriced bandwidth comes with a tall tale about their competitors they simply made up out of thin air:

Data transfer allotments allow Knology to offer higher speed service with lower prices. Unlimited, open usage plans offered by other providers typically employ network controls to slow down the high usage customers.

That’s news to us, and to their nearest competitor AT&T.  They deny speed throttling any of their U-verse or DSL customers.

While the company’s download speeds are impressive — up to 50Mbps — their upload speeds are not, topping out at a paltry 1Mbps.

Knology's pricing is nearly identical to its predecessor Sunflower Broadband, except for the $5 rate hike for its most popular Silver plan.

Knology claims they expand usage allowances based not on network capacity, but by the percentage of customers they gouge with overlimit fees:

Data transfer allotments: Each level of internet above includes the amount of data transfer indicated measured in Gigabytes (GB). The data transfer allotments are increased regularly, based on usage patterns, to ensure the number of customers who go over their allotments remains under 10%. Additional GB of data transferred beyond the allotment is billed at $1.00 per GB if not purchased at a discount before the end of the billing period. The percentage of Knology customers charged for extra data transfer beyond their allotment was 6.1% in April 2009.

Paul Bunyon, Knology's new director of marketing

Bemusingly, customers with time machines who can travel into the future and determine they will exceed their allowance for the month can pre-purchase an increase in their usage allowance at a discount.

No time machine?  Then you either pay the standard overlimit rate, watch your usage like a hawk, or potentially over-buy excess usage that expires at the end of the month.

Customers tell Stop the Cap! the company’s single, unlimited use package is “the same piece of garbage it always was,” writes Larry who lives in Lawrence.  He had high hopes Knology would do the right thing and abandon Sunflower’s overcharging schemes.

“Apparently not, and after a month with their unlimited service, I have scheduled my U-verse installation with AT&T,” Larry writes. “Even on Knology’s limited packages, they don’t provide the speeds they promise.”

Larry also says the higher speed tiers Knology offers deliver diminishing returns.

“If their uplink is congested, or the web sites you visit are busy, it won’t matter if you have 10Mbps or 50Mbps — the speed is effectively the same,” he says. “Besides, upload speed is more important these days and 1Mbps is just plain lousy in 2011.”

“Bye, bye SunKnology.”

Sunflower's Old Broadband Plans & Pricing (February 2010)