Verizon FiOS is off limits to rural customers. Wireless voice and satellite broadband is in your future.

Verizon Communications has big plans for its “miraculous” wireless home phone replacement which will soon find itself in rural homes across Verizon’s service area as part of a larger plan to dismantle rural America’s wired telephone network.

Just as company executives promised more than a year ago, Verizon wants to transition rural customers to fixed wireless phone service that could mean the end of wired broadband for millions of Verizon customers still using DSL.

Verizon senior vice president Tom Maguire told Communications Daily Voice Link is Verizon’s answer for customers it cannot easily transition to fiber optics. He is thrilled about the prospects of getting rid of deteriorating copper networks in favor of an inexpensive wireless alternative.

“I’m super jazzed about this because I think it will be good for everybody,” he said. “I think it’ll change a lot.”

For rural Verizon customers, the changes could be profound, dramatic, and not exactly a win-win scenario:

• No more wired phone service, which means medical monitoring, many home security systems, and inexpensive dial-up service that all rely on landline technology will be rendered unusable;
• No more unlimited use DSL service, no business broadband service, no credit card processing or other electronic business transactions that depend on a wired connection;
• No enforced quality of service standards, rate oversight, or guarantee of access to quality voice service;
• No prospect of advanced fiber optic FiOS services, including high bandwidth video and broadband.

Verizon is making it clear Fire Island and the New Jersey Barrier Island are just the first steps towards the retirement of copper, either in favor of fiber optics in high profit/low-cost areas or wireless in rural areas not worth upgrading.

Maguire claims Fire Island residents did not want the company to tear up yards or streets to replace its damaged copper wire network with newer technology like fiber. But Fire Island residents and administrators tell Stop the Cap! they were never asked. Instead, residents are being told Voice Link is likely their only option for traditional phone service on the western half of the island, and some customers are unhappy they will never get FiOS broadband upgrades Verizon says are financially untenable to provide.

Verizon has quietly tested Voice Link in Florida, giving customers the option of keeping their wired service or switching to the wireless alternative. But the test may have been stacked in Voice Link’s favor, as the choice was given to voice-only customers having chronic service problems with Verizon’s deteriorating copper wire network.

Going forward, many rural customers may not have a choice. For those who want Internet access, Verizon isn’t promising its wireless network is up to the task. Their suggested alternative?

Verizon’s solution for rural broadband.

Get a satellite dish.

Maguire acknowledged Voice Link customers won’t be able to fax or do certain activities, but he said the telco never pretended they would. Verizon won’t be offering data services with Voice Link, but if Fire Island customers want more options, they can potentially choose satellite, he said.

Maguire believes that customers living with a deteriorating copper landline network will gravitate quickly towards a wireless phone replacement.

Verizon arranged a blind test of Voice Link for 40,000 customers in another company’s territory with unbranded devices. When the copper wire network performed normally, customers preferred the quality of traditional landline service. But after it rained, the poorly maintained network made all the difference.

“The copper sounded like hell, it was noisy and static-y,” Maguire said.

Maguire did not say if Verizon blind tested whether customers preferred traditional landline service, Voice Link, or its fiber optic FiOS network.

Verizon hopes to begin introducing its Voice Link service in other markets as early as June.

Six months after Hurricane Sandy struck the northeastern United States, a significant number of Verizon customers are now learning they will never get their landline service back.

Mantoloking is the first town in New Jersey — but not the last — that will no longer be able to get landline service from the telephone company.

In its place, Verizon offers Voice Link, a home phone replacement that works exclusively over the Verizon Wireless network.

About 30 customers have signed up for the service after being without a home phone for a half a year.

The device looks like a wireless router, with an antenna and several jacks on the back to deliver service over your home’s existing telephone wiring. Instead of connecting with Verizon’s wired network, the unit receives a signal from the nearest Verizon Wireless cell tower to make and receive telephone calls.

Verizon is enticing customers to use this device instead of repairing its damaged network by promising free installation, unlimited nationwide calling and support for 911 and basic phone features like Caller ID and voice mail. For now, the service will not cost any more than a wired landline phone.

For Verizon’s bean counters, Voice Link is an inexpensive alternative to replacing copper wiring with FiOS fiber optic service. Verizon previously announced that maintenance on its aging copper wire network was becoming increasingly expensive.

“It acts just like a regular phone,” Tom Maguire, Verizon’s senior vice president of national operations told the Asbury Park Press. “There’s a dial tone. It has 911 capability, so if you dial 911 the emergency services guys are going to know exactly where you are.”

But members of Verizon’s unions who have had hands-on experience testing Voice Link suggest it isn’t everything Verizon says it is. The International Brotherhood of Electrical Workers’ Local 824 points out Voice Link was not intended to serve just anybody. It will deliver a voice-only service unsuitable for faxing, DSL, or data communications of any kind.

Mantoloking is located on New Jersey’s barrier island.

Stop the Cap! has also heard from Verizon customers directly affected by the forced migration to wireless, and many are unhappy about it.

“This is the death knell for wired broadband in areas bypassed by cable along coastal New Jersey,” shares Dale Smith. “We lost our Verizon landline and DSL service during Sandy and have had nothing but a cell phone for the last six months because Verizon has dragged its feet.”

Smith says a Verizon manager told him the company was “evaluating certain service areas” for an “exciting new wireless product” instead of repairing or replacing the company’s wired network.

“While they were ‘evaluating,’ we were getting no dial tone and huge cell bills from Verizon — good for them, but not for us.”

Smith had a chance to view Voice Link in action and thinks it represents a Verizon wolf in sheep’s clothing.

“It sounds remarkably better than a cell phone, which tells you something about how much effort manufacturers of smartphones spend on voice calling, but that is where the good ends and the problems begin,” Smith said. “The most annoying is no caller ID with name and fairly frequent call delays and failed calls.”

Smith says the Caller ID displays the caller’s number, but not name – a feature he relied on heavily. He found about 30 percent of test calls either took more than 10 seconds to start ringing, or never rang at all.

“Sometimes the calls would time out and other times you would just sit and listen in silence until the phone at the other end finally started ringing,” Smith said.

He also worries about call reliability.

“What happens if you are in a marginal signal area or the cell tower gets overcongested and starts dropping calls, or the power goes out at the cell tower? You can’t use your cell phone either in that case.”

Anne contacted us after complaining to the Federal Communications Commission that Verizon is dumping its reliable landline network for unreliable wireless, and is frustrated the FCC does not seem to understand what is going on in New York and New Jersey.

“The response from the FCC doesn’t even bother to recognize that Verizon isn’t going to fiber service from copper, but is relying on very unreliable wireless,” Anne tells Stop the Cap! “For a vulnerable area such as the barrier island, wireless will likely be useless during a disaster/big emergency, especially where electricity goes out.”

The FCC’s short response to Anne’s detailed complaint:

If Verizon wishes to replace the copper wiring with fiber it is strictly their business desicion (sic).  — Representative Number : TSR54

“I can’t believe this email is a product of the United States government,” Anne told us. “Why does the FCC exist at all?  It is a complete waste of taxpayer money.”

In addition to filing a complaint with the FCC, Anne has tried to help her elderly mother get her home phone back on the barrier island that was damaged by Hurricane Sandy. As of a week ago, every utility, except Verizon phone service, has been restored.

“Trying to get a straight story from Verizon has been impossible,” Anne said. “What a nightmare.”

The landline network is dead.

Jim Mudd also takes care of his parents who are headed back to the New Jersey coast in an area that still lacks Verizon phone service after Sandy washed away utility infrastructure. New poles have been placed and the power is back, but Verizon is nowhere to be found.

“Our local town officials tell us Verizon was hinting we might end up with Voice Link as well, although nothing formal has been announced,” Mudd writes. “This would be a major problem for us, because Voice Link will not work with our home alarm system or my parents’ medical monitoring service.”

Mudd says Verizon confirmed to him that data services of any kind, including faxing or credit card processing is not possible with the first version of the service, although Verizon said it was exploring better options in the future.

“After waiting a half a year for Verizon to restore my home phone, I hope they pardon me for not waiting around for them,” Mudd said. “We signed up with Comcast the moment they got service back, but they know they have a working monopoly here now, especially with Verizon signaling it wants to pull out of anything that is not wireless.”

“What annoys me is Verizon wanted rate increases back in the 1990s and on to pay for upgrading their network and replace it with fiber,” Mudd adds. “We paid those surcharges or higher rates like everyone else and we are going to get nothing to show for it. Don’t replace the copper, but don’t abandon us with wireless either. We paid for something better: fiber.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Asbury Press Following-Sandy-destruction-Verizon-switches-all-wireless-service 5-2-13.flv[/flv]

Verizon’s Tom Maguire demonstrates the company’s Voice Link landline replacement, courtesy of the Asbury Park Press.  (1 minute)

On the heels of today’s announcement from Google that it intends to make Austin, Tex. the next home for Google Fiber, AT&T issued a press release claiming it was suddenly interested in building a gigabit fiber network in Austin too.

Today, AT&T announced that in conjunction with its previously announced Project VIP expansion of broadband access, it is prepared to build an advanced fiber optic infrastructure in Austin, Texas, capable of delivering speeds up to 1 gigabit per second.  AT&T’s expanded fiber plans in Austin anticipate it will be granted the same terms and conditions as Google on issues such as geographic scope of offerings, rights of way, permitting, state licenses and any investment incentives. This expanded investment is not expected to materially alter AT&T’s anticipated 2013 capital expenditures.

Currently, AT&T’s U-verse system in Austin — a fiber to the neighborhood system — cannot exceed 25Mbps as it is now configured. GigaOm’s Stacy Higginbotham reports AT&T told her it would build its own fiber to the premises system in Austin to support faster speeds.

But AT&T’s announcement does not come without plenty of wiggle room which could make today’s announcement little more than a publicity stunt:

1. AT&T claims it will build “infrastructure” capable of delivering “up to” 1Gbps. This could mean a network that supports a maximum of 1Gbps of shared Internet traffic, not 1Gbps to each home or business;
2. AT&T does not say it intends this network for residential customers, nor did it suggest a monthly price for gigabit service. Its Project VIP expansion describes planned broadband speed upgrades for residential U-verse customers of up to 75Mbps and for U-verse IPDSLAM to speeds of up to 45Mbps, not 1Gbps;
3. AT&T’s Project VIP already specifies fiber network build outs, but they are destined for cell towers, large business complexes, and multi-dwelling units that will share a fiber connection;
4. AT&T wants the same terms and conditions Google has received, including investment incentives. But AT&T could have applied for those incentives, and potentially could have already received them, if it specified plans for a gigabit network of its own. Instead, AT&T executives have always believed residential customers do not want or need gigabit broadband speeds. In fact, AT&T still doesn’t believe fiber to the home service makes economic sense, which is why it invested in a cheaper fiber to the neighborhood system that still relies on old copper wiring. AT&T also warns that, “Our potential capital investment will depend on the extent we can reach satisfactory agreements” with local officials on those incentives;
5. Wiring a city of Austin will cost tens of millions to reach every resident with service. Such an expense might be considered materially relevant to shareholders, requiring disclosure. Building a much lesser network, like a gigabit middle mile network or only offering fiber service to institutional or commercial customers would cost far less and could escape reporting requirements.

AT&T also did not miss an opportunity to promote its deregulatory agenda, which has so far not proved to be of much help to broadband speed enthusiasts stuck with DSL or U-verse.

“Most encouraging is the recognition by government officials that policies which eliminate unnecessary regulation, lower costs and speed infrastructure deployment, can be a meaningful catalyst to additional investment in advanced networks which drives employment and economic growth,” said Randall Stephenson, AT&T chairman and CEO.

AT&T’s agenda might result in a meaningful catalyst of a different kind — the end of rural landline telephone and broadband service.

Phillip Dampier

The Wall Street Journal’s not-living-in-the-real-world editorial page strikes again.

The commentary pages have always been the weakest part of the Journal, primarily because they screech pro-corporate talking points in contrast to the more balanced reporting in the rest of the newspaper.

Mr. Holman W. Jenkins, Jr. decided to distort broadband reality (again) in yesterday’s edition with a glowing commentary on how wonderful broadband providers are in his piece, “Springtime for Broadband.” The only thing missing was a border in fine print labeled, “Sponsored by Verizon, AT&T, and your cable company.”

While your Internet bill is being hiked at the same time your provider is slapping usage limits on your connection, Jenkins dismisses consumer-fueled complaints about broadband price gouging, assaulting Net Neutrality, and overall poor customer service as part of Washington’s “broadband policy circus.”

Charges fly hourly that Google or some other company is guilty of gross insult to net neutrality (that sacred principle nobody can define). Oregon Sen. Ron Wyden has introduced legislation to regulate data caps and Internet pricing. Law professor Susan Crawford, until recently a White House technology adviser, clearly craves to be America’s next go-to talking head on broadband. Lately she’s been everywhere calling for a crackdown on the competing “monopolists” who supply Internet access.

How dare they complain, decries Jenkins in a robust defense of the 21st century version of the railway robber barons.

Comfortably playing patty cake with provider-fed talking points from the industry echo chamber, Jenkins is ready for battle, facts or not.

But wireless providers have invested big money to deploy high-speed mobile networks, and fixed and mobile are inevitably beginning to compete. The latest evidence: Australia recently predicted that up to 30% of households will go the all-wireless route and won’t be customers for its vaunted national broadband project.

Jenkins

Not exactly. The basis for this 30% figure is the National Broadband Network’s own business plan, which warns –if– the company raised prices to a maximum theoretical level, up to 30 percent of its customers would rely on wireless instead… by the year 2039. That is 26 years from now. You have nothing better to do in the meantime, right?

In fact, conservative critics of the fiber network, some defending the big wireless cell phone industry in Australia, have suggested fiber optics is a big waste of money because “wireless is the future.”

That old chestnut again.

“Now you can present a bulletin without touching a typewriter … it’s just there on the computer system, you don’t need a reel to reel tape recorder. I’ve got a touchscreen in front of me. Back then I had a big cartridge deck,” said Ray Hadley on 2GB radio. “Can you imagine the advances in technology in the next 26 years? I can’t. I can’t comprehend it. By the time they finish the NBN, it could be superseded by something we don’t even know about.”

NBN Myths, a website set up to tackle the disinformation campaign from political and industry opponents has one simple fact to convey: “Despite what you may have read from certain clueless commentators, there is not a single country or telecommunications company anywhere in the world that is attempting to replace fixed networks with wireless in urban areas, or even planning to do so in the future.”

Which would you rather have?

Even Telstra, the biggest telecom company in Australia scoffs at such a notion, noting a growing number of its customers have both wired and wireless service, and they do not depend on one over the other.

Research firm Telsyte found that 85 per cent of Australians want speeds of 50Mbps or higher, speeds impossible for wireless to offer. In fact, when the NBN fiber network became available to Australians, almost half the current users as of October last year had chosen an even-faster 100Mbps plan option. But Australians also want mobile broadband, and they are signing up for that as well.

The Australian Bureau of Statistics notes the number of mobile broadband Internet connections also grew by around 40% in Australia between 2009 and 2010. But here is the Achilles heel of wireless: it cannot deliver the same speeds or capacity, and providers charge high prices and deliver low usage caps. As a result, the wireless industry has pulled off a coup: they earn enormous revenues from networks they have successfully rationed. The total amount of data downloaded over Australia’s wireless networks actually fell on a per user basis, despite the growth in customers.

Much of Jenkins’ commentary is spoon-fed by the industry-funded Information Technology and Innovation Foundation, which produces industry-sponsored studies designed to tell America all is well in our broadband duopoly.

In the latest federal survey, the average broadband speed in America is up to 15.6 megabits per second, from 14.3 a year earlier. Nearly half of customers who six months ago made do with one megabit or less have now moved up to higher speeds. Since 2009, the U.S. has gone from 22nd fastest Internet to the eighth fastest.

The 15.6Mbps figure comes from the Federal Communications Commission. The statistics about our global speed ranking come from Akamai’s voluntary speed test program. Other studies rate America much lower. More importantly, while providers in the U.S. try to squeeze out more performance from their copper networks, other countries are laying speedier fiber networks that are destined to once again leapfrog over the United States. Most charge less for their broadband connections as well.

Jenkins also quotes the ITIF which touts 20 million miles of fiber were laid in America last year. But the ITIF, when pressed, will admit the majority of that fiber was “middle mile” connections, institutional or business network fiber you cannot access, or fiber to cell towers. Fiber to the home expansion has stalled, primarily because Verizon has suspended expansion of its FiOS network to new areas after Wall Street loudly complained about the cost.

Jenkins argues that if we leave providers alone and stop criticizing their growing prices, declining competition, and fat profits, the marketplace will suddenly decide to invest in network upgrades yet again.

“The day may come when even Verizon, which visibly soured on its $23 billion FiOS bet, rediscovers an urge to invest in fixed broadband infrastructure to meet growing consumer lust for hi-def services,” writes Jenkins.

Would Wall Street rather see providers invest in network upgrades or return profits to shareholders? Investment expansion in the broadband industry comes when a company senses if they do not spend the money, their business will be swept away by others that will. Cable broadband threatens telephone company DSL, so AT&T cherry-picked communities for investment in its half-measure U-verse fiber to the neighborhood network. Google Fiber, should it choose to expand, will be an even bigger threat to both cable and phone companies. Municipal fiber to the home networks upset the incumbent players so much, they spend millions of ratepayer dollars in efforts to legislate them out of existence.

Jenkins’ view that giving the industry carte blanche to do and charge as it pleases to stimulate a better broadband future is as fanciful as NBN critics in Australia suggesting fiber upgrades should be canceled in favor of waiting 20+ years for improved wireless to come along.

He even approves of Internet Overcharging schemes like usage caps and consumption billing, calling it proper price discrimination in a “fiercely competitive” environment to defray a network’s fixed costs.

Do you think there is fierce competition for your broadband dollar?

Broadband’s fixed costs are so low and predictable, it literally calls out consumption pricing as just the latest overreach for enhanced profits. As Suddenlink’s CEO himself admitted, the era of big expensive cable upgrades are over. Incremental upgrades are cheap, the costs to offer broadband are declining, so it is time to reap the profits.

Jenkins closes with one recommendation we can agree with: “A low-tech way to stir up broadband competition would be to relax the regulatory obstacles to the actual physical provision of broadband.”

We can start by scrapping all the state laws the industry lobbied to enact that prohibit community-owned broadband competition. If big cable and phone companies won’t provide communities with the quality of broadband service they need to compete for 21st century jobs, let those communities do it themselves.

Verizon CEO Lowell McAdam telegraphed his plans to dump rural landline service last summer.

You should believe Verizon Communications CEO Lowell McAdam when he says he intends to end wired telephone and broadband service for areas that are simply not economically feasible for fiber upgrades. McAdam’s grand plan is now coming true for customers in parts of Florida and on Fire Island, N.Y.

Last summer, Stop the Cap! covered McAdam’s comments to Wall Street investors (that are always the first to know) at the Guggenheim Securities Symposium:

“In […] areas that are more rural and more sparsely populated, we have got [a wireless 4G] LTE build that will handle all of those services and so we are going to cut the copper off there,” McAdam said. “We are going to do it over wireless. So I am going to be really shrinking the amount of copper we have out there and then I can focus the investment on that to improve the performance of it.”

The writing is already on the wall:

1. Verizon has been penalized and criticized in several states by public utility commissions for the ongoing degradation of its copper network. Verizon sees further investment in copper technology as throwing good money after bad, but spending millions on additional fiber upgrades isn’t appealing either. The result is deteriorating service. From downtown Manhattan to New Jersey to Maryland, D.C. and Virginia, Verizon’s service failures have left customers frustrated and sometimes waiting weeks or months for repair crews to turn up to restore basic phone service. Even more dangerous, Verizon was to blame for significant 911 network failures near the nation’s capital. Post Sandy, there are still sections of lower Manhattan without phone service nearly five months after the storm struck. Five months.
2. Verizon sold off telephone service in northern New England several years ago to FairPoint Communications, knowing full well Verizon never had an interest in upgrading any part of Vermont, New Hampshire or Maine to fiber service. In many smaller former GTE telephone areas too small to successfully argue a case for return on investment, Verizon decided selling those territories off was the best option. Hawaiian Telcom and Frontier Communications now own many of those former-Verizon territories.
3. Verizon has decreased marketing its wired DSL service and stopped selling it altogether to customers who want broadband-only service. That seems counter-intuitive for a company that recognizes future revenue possibilities come primarily from broadband and data services.

Traditionally, customers reporting trouble on a phone line get a visit from Verizon technicians who track the problem down and repair it. But Verizon no longer wants to spend money fixing copper wire-related problems. Customers reporting chronic phone static or outages are now being asked to abandon their traditional landline service instead:

• In areas where Verizon FiOS fiber is available, the company disconnects the customer from copper service and switches them to the FiOS fiber network. This also provides future marketing opportunities, pitching broadband and television service to accompany a customer’s home phone. 
• In areas where fiber upgrades are not forthcoming, the company now proposes to disconnect the customer in favor of Voice Link, a wireless home phone replacement. This also opens marketing opportunities for Verizon Wireless to pitch cell phones and wireless Internet service.

The end of an era.

Customers who live in Florida currently have a choice. During the trial, they can switch to Voice Link or keep their current landline service. On Fire Island, just south of Long Island, customers will not have that choice. Verizon is testing the will of New York regulators asked to allow the company to gradually abandon landline and wired Internet facilities on the island. Customers previously knocked out by Hurricane Sandy have no alternative — switch to a wireless option like Voice Link or lose  telephone service. As the network degrades further on the island, it is a safe bet more Fire Island residents will find themselves confronted with a wireless future courtesy of Voice Link.

Verizon is careful to note its Voice Link service comes at no additional cost to customers — their phone bills will remain the same, at least for now. But the transition includes several important caveats:

1. Voice Link is not subject to state or federal oversight or quality of service consumer protection laws that apply to traditional landline service;
2. The customer is responsible for providing an indoor space to mount the equipment (hardly unobtrusive, the receiver is eight inches tall) and provide electric power and AA batteries for battery backup;
3. Voice Link does not work with any data services including broadband or dial-up Internet, faxing, medical monitoring, alarm systems, etc. You will be pitched an expensive Verizon Wireless data plan if you want Internet access;
4. During recent severe storms, copper landline networks often continued to work but cell phone service failed over wide areas because of call congestion and  long-term power outages. Similar failures will leave Voice Link non-operational;
5. Voice Link customers lose DSL service and may have little chance of getting it back once they switch.

Verizon’s solution for Fire Island represents the long-term vision of McAdam coming to fruition. Complaining customers have not been able to persuade the company to abandon its plan, but New York State regulators might, if the issue gets enough attention.

In states with less aggressive regulators, Verizon could implement its Fire Island strategy nearly at-will, especially in rural service areas. Verizon’s plan differs little from that of AT&T, another major service provider seeking permission from regulators to abandon rural landline networks. AT&T is betting the Federal Communications Commission will approve AT&T’s “network transition plan” for all of its rural customers. Verizon is starting smaller, gradually implementing its transition under the radar of many state and federal officials.

AT&T wants to wind down its own rural landline network.

So why adopt Voice Link — a wireless solution, when copper wire network repairs remain a viable option?

The reasons are simple:

1. Voice Link is cheaper to run and maintain as a wireless service and uses existing Verizon Wireless cell towers;
2. Verizon can further cut their unionized workforce that maintains the company’s landline network;
3. Wireless products escape regulatory oversight;
4. The company can push customers to wireless data products that cost far more than wired DSL broadband service;
5. Verizon doesn’t have to upgrade the rest of their network to fiber.

Customers in Verizon service areas should appeal to regulators and their elected officials to stop the abandonment of wired infrastructure. Verizon argues maintaining its network doesn’t make sense when customers are fleeing their landlines. But rural customers are not disconnecting broadband service that travels across the same network. Even basic DSL is coveted in rural Verizon territories where Internet access remains unavailable. Just about everyone wants the option of FiOS fiber, perhaps the most coveted network upgrade around until Google announced its gigabit fiber project in Kansas City.

Nobody wants Verizon or AT&T to keep up its copper wire facilities indefinitely. But a better solution would be a regulatory mandate that requires Verizon and AT&T to gradually replace antiquated and failing copper infrastructure with fiber wherever possible. It is more than possible to do this on Fire Island. Verizon’s service area in Florida is hardly rural either. Verizon Florida (formerly GTE Telephone) serves Tampa-St. Petersburg east to Lake Wales, a major metropolitan region in central Florida.

What is best for shareholders should not be the final determining factor for an important utility service. If customers prefer the option of Voice Link for home phone service, there is nothing wrong with that. But wireless service as the only option customers have for broadband service? Not at Verizon Wireless’ prices.