The U.S. Department of Agriculture has announced more than $103 million in federal grants and loans to 16 states to help expand broadband, or high-speed, Internet access to unserved and underserved areas of rural America:

The providers involved offer a mix of technology, ranging from traditional cable companies like Inter Mountain Cable and Crystal Broadband Networks — to Wireless ISPs like Wichita Online, serving southwestern Oklahoma, to rural telephone company DSL provided by companies like Hemingford Cooperative Telephone and the Coleman County Telephone Cooperative.

What most rural providers have in common are much-higher prices for slower speed service over what urban customers pay, and a regular need for resources to update capacity and the number of potential customers served.  Most of these grants and loans are expected to cover some of those costs.

Ouch. Rural Americans pay substantially higher prices for broadband service than city-dwellers do. This is current pricing from Inter Mountain Cable, which serves parts of rural Kentucky.

Losing customers.

A year after Frontier Communications assumed control of Verizon’s assets in the Pacific Northwest, customers are fleeing the company’s inherited fiber-to-the-home service FiOS, after announcing a massive (since suspended, except in Indiana) 46 percent rate hike for the television portion of the service.  A new $500 installation fee has kept all but the bravest from considering replacing customers who have left for Comcast and various satellite TV providers.

Frontier’s second-quarter financial results revealed the company has lost at least 14,000 out of 112,000 FiOS TV customers in the region (and in the Fort Wayne, Ind. market, where the service is also available.)

Early reaction to the original rate hike announcement started customers shopping for another provider — mostly Comcast, which competes in all three states where Frontier FiOS operates.  Even after the rate hike was suspended in some markets, intense marketing activity by Frontier to drive customers towards its partnership with satellite provider DirecTV managed to convince at least some of those customers to pull the plug on fiber in return for a free year of satellite TV, although an even larger number presumably switched to the cable competition.

D.A. Davidson, a financial consulting firm, told The Oregonian the message was clear.

“They would love to get rid of the FiOS TV customers,” Donna Jaegers, who follows Frontier, told the newspaper. “They’re programming costs are very high compared to the rates that they charge.”

Jaegers said Frontier Communications completely botched their efforts to transition customers away from FiOS TV towards satellite, because most of those departing headed for the cable competition, attracted by promotional offers and convenient billing.

Many others simply don’t want a satellite dish on their roof, and are confounded about Frontier’s message that satellite TV is somehow better than fiber-to-the-home service.

Frontier admits its FiOS service is now underutilized, but claims it will continue to provide the service where it already exists.

Wilderotter

Frontier Claims Its DSL Service is Better Than Cable Broadband

Frontier’s general business plan is to provide DSL service in rural areas where it faces little or no competition, and most of Frontier’s investment has been to upgrade Verizon’s landline network to sustain 1-3Mbps DSL service, for which it routinely charges the same (or more) for standalone broadband service that its cable competitors charge for much faster speeds.

But Frontier Communications CEO Maggie Wilderotter says their DSL service is better than the cable competition.

“A key differentiator between our network and cable competition is that you consistently get the speed you pay for,” Wilderotter told investors on a conference call. “There’s no sharing at the local level. High demand for bandwidth-intensive applications like video are putting pressure on all wired networks. To that end, we want to make sure that we have more than enough capacity to satisfy the expectations of our customers. We’re spending capital in all parts of the network with specific emphasis in the middle mile, which will enable us to consistently deliver a quality customer experience for our customers of today and tomorrow.”

Frontier Communications CEO Maggie Wilderotter defends anemic broadband additions during the 2nd quarter of 2011 and tries to convince investors DSL service is better than the cable competition. August 3, 2011. (4 minutes)
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Netflix Traffic Represents 25% of Frontier’s Broadband Traffic; Online Video — 50%

Wilderotter admitted Frontier’s broadband network is overcongested in many regions, which she partly blamed for the company’s anemic addition of new broadband customers.

She noted Netflix, which has itself consistently rated Frontier the worst wired broadband provider in the country for being able to deliver consistent, high quality access to their streaming service, represents one-quarter of all capacity usage of Frontier’s broadband network.

“Video is about 50 percent,” Wilderotter added.  In an investor conference call, she explained network congestion in more detail:

“In [the second quarter], we had many areas with unacceptable levels of network congestion, which negatively impacted our growth in net high-speed additions.” Wilderotter said. “We believe all of the major congestion issues will be fixed by the end of [the third quarter], and that will enable us to drive higher growth and net broadband activation in [former Verizon service areas.]”

“What we decided to do is to go for fixing the middle mile, which is the [central office] to the […] neighborhood and to expand that capability by 100-fold. And then also, expand from the [central office] out to the Internet and make sure that we have huge capacity to deliver and receive capability to our customers. So when we sell 6 meg, 10 meg, 25 meg, 50 meg, the customer gets what we sell them and that was extremely important for us.”

“So what we did is in the areas where we saw the congestion increase based upon usage increases, and we’ve built new households. We’ve held off on marketing to a lot of those new households until we fixed the congestion problem because we didn’t want to exacerbate what we had already. We’ve shifted capital in terms of the mix of how we’ve spent capital to fix this problem. I’d say we’re probably 75% of the way there in fixing congestion. This quarter is another big quarter for us to get all of the major issues out of the network, which will allow us in the back end of this quarter through the fourth quarter, to really start pushing the penetration levels where we’ve built new households in the areas that have been affected by congestion.”

Frontier Introduces Line Bonded DSL — Two Connections Can Improve DSL Speeds

Frontier Faster? Frontier announces line bonded DSL.

Frontier Communications also announced the introduction of Frontier Second Connect, a DSL line bonding product that delivers two physical connections to a single household.  Line bonding allows for improved broadband speeds.

“Second Connect gives our customers two exclusive connections in one household, and we’re the only provider in every market that can do that,” Wilderotter claimed.

In more urban markets, Frontier’s DSL speeds are woefully behind those available from most cable competitors.  Frontier has begun upgrading some of their legacy service areas and retiring older equipment in an effort to improve the quality of service.

“The real initiatives that we have underway are called middle mile, interoffice facilities, as well as some of the more aged equipment that’s in the network,” said Dan McCarthy, Frontier’s chief operating officer. “So as we go through, there’s about 600 projects that are underway today that will improve both the speed and capability.”

“We’ve inherited markets that there has not been upgrades to capacity in these markets for many years and fixes to the networks, plus the elements as the DSLAMs, even the DSLAMs themselves are old,” Wilderotter said. “So we’re replacing network elements in the neighborhood. We’re splitting them and moving customers to other network elements to make sure that they have a good experience.”

Frontier executives answer a question from a Wall Street banker about DSL speeds and congestion problems on Frontier’s broadband network. A detailed technical discussion ensues as the company tells investors it is redirecting some capital to fixing Frontier’s overcongested network. August 3, 2011. (5 minutes)
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Frontier Still Losing More than 8% Of Its Landline Customers Every Year

Despite broadband rollouts and incremental improvements, more than eight percent of Frontier’s landline customers disconnect service permanently every year.  Frontier called that disconnect rate an improvement over its line losses last year, which exceeded 11 percent in some areas.

“Total line losses improved to an 8.6% year-over-year decline, our lowest level since taking ownership when the pro forma loss rate was 9.7%,” reported Wilderotter. “We also improved [the] loss rate [in former Verizon service areas to] 10.1% compared to 11.4% in Q2 2010.”

Most of Frontier’s departing customers are switching to cable providers and/or cell phone service.

(Update 8-23-2011: We are now told in many areas, Frontier’s Second Connect service is not actually a bonded DSL product, but rather a “dry loop” second DSL line that carries the same speed as your primary line.  Presumably, household members can divide up who uses which DSL circuit for Internet access.  The charge for Second Connect in ex-Verizon service areas is $14.99 per month plus a second mandatory monthly modem rental fee of $6.99. If the web link does not work, it means the service is not available in your service area.)

New Zealand is one of a handful of countries stuck with pervasive Internet Overcharging schemes that limit usage or throttle broadband speeds because of international connectivity limitations.  But as international underseas fiber cables ease traffic congestion, Internet Service Providers are increasingly relaxing usage caps and reducing the level of speed throttling during prime time usage hours.

Now one ISP, Slingshot, has gone all-out, reintroducing an unlimited, flat rate broadband option for New Zealanders who don’t want to worry about how much usage they’ve racked up over the past month.

For roughly $32.50US for the first six months, $65 after that, customers don’t have to watch a usage meter or “gas gauge” or face a wholesale heavy speed throttle when deemed to be using “too much” Internet service.

A very pricey upgrade

Frontier Communications’ DSL modem rental fee is now as high as $6.99 a month in some of the phone company’s service areas, $14.99 a month if you want the convenience of a wireless router built-in.  That’s $84 and $189 a year, respectively, for equipment that cost the company a fraction of that.

“Lymelizzard,” a would-be Frontier DSL customer in Robbinsville, North Carolina, considers that highway robbery.

“I can go and buy the modem at a store and it would be less than one year of rental,” he wrote on Broadband Reports’ Frontier forum.

Frontier Communications’ regular monthly prices are not exactly aggressive in North Carolina, charging up to $50 a month for 3Mbps DSL, $55 for up to 7Mbps, before the modem rental fee and other charges are included.  A customer with Frontier’s wireless router would pay more than $70 a month, just for 7Mbps DSL service:

Frontier's No-Contract Prices for New Customers Only. Prices less for 1-2 year contracts that include $165 early termination fee for Double Plays and up to $120 early termination fee for High-Speed Internet only plans. One-time charges up to $60. Additional charges, taxes and terms apply.

Frontier has quietly increased equipment fees over the years.  Back in 2010, the company raised the rental fee to $4.50 a month.  Some service areas have been paying $6.99 a month since 2009, but now face even higher prices if they want a home “Wi-Fi” hotspot included.

Something else has changed at Frontier as well.  The company is making it more difficult for customers to purchase their own modems and use them instead, skipping the modem rental fee.  Customers trying to save several dollars a month now face a brick wall when contacting customer service.

“The salesman on the phone even said [the modem rental fee] wasn’t a good deal but he could not waive it,” Lymelizzard wrote.  He declined to become a Frontier DSL customer, considering the modem rental fee a deal-breaker.

“I’m surprised that all the Joe Customers out in Frontier-land haven’t complained,” he said. “This is merely a money grab on Frontier’s part. I could see the fee for a year, maybe two, but for the life of the account that’s bogus.”

Netgear WNR3500L Wireless-N Router

The Federal Communications Commission’s efforts to measure America’s real broadband speeds needs you.  The federal agency is looking for American volunteers willing to host a wireless router that can conduct occasional background speed tests and report the results to Samknows, the independent company contracted to manage the testing program.  Stop the Cap! has participated in the project for more than eight months and can report the tests are completely un-intrusive and the router has worked well amongst all of our other broadband and networking equipment.

Samknows will supply you with a Netgear WNR3500L Wireless-N router free-of-charge.  We’ve found the router a tad plasticky, but it has performed well with no serious performance issues, especially after the firmware was updated earlier this year.  The router comes pre-configured with the speed and performance testing protocol built right in.  It conducts various automated tests a few times daily — tests that we’ve never found bothersome while using our broadband service.  It reports results back to Samknows, and by extension the FCC. Once a month you will receive an e-mailed “report card” for your particular Internet Service Provider’s performance.

Time Warner Cable has received high marks from our Samknows router here in Brighton, N.Y.  But we know of plenty of cases where volunteers have successfully been able to call out their providers with less-than-stellar performance results.  Just ask Cablevision, whose dismal performance in the first broadband report from the FCC exposed an obviously oversold broadband network.  Cablevision hurried out press releases trying to deflect blame, but we suspect they are also quietly upgrading their network to ensure no repeat performance of their failing grade in the next report.

The program is a great way to do your part to fight for better broadband in the United States, and you walk away with a free wireless router when it’s all over.

There are some requirements to participate:

• You have a fixed line broadband Internet connection to your residence.
• You use a standalone device to connect to your broadband service (a cable or DSL modem or router combination with modem built-in).
• You have a stable broadband connection (i.e. it doesn’t disconnect frequently). Note that this is just referring to the connection – not the speed.
• You are not a heavy downloader. Our tests can only run when your line below a certain traffic threshold, therefore we would not be able to run any tests if your line is in constant use.
• You have a spare power socket near your existing router (or wherever you plan to connect the unit. Keep in mind that a network cable must run between the unit and your router though! We supply a 1m cable).
• You need to be on one of the ISPs that we’re measuring.
• You are not an employee or a family member of an employee of one of the ISPs being monitored.

With respect to being a “heavy downloader,” what Samknows really means here is that you are not running peer-to-peer file-sharing software 24/7.  They don’t mind if you spend a lot of time with Netflix or other online services.  If your provider delivers inconsistent service with frequent outages, I’d still apply.  The poor results will be reflected in the FCC report.

Participants also have to broadly agree with certain terms and conditions:

• Not to unplug the unit or your ISP’s router unless away for an extended period of time.
• Not attempt to reverse engineer or alter the unit.
• To notify Samknows if and when you choose to change ISPs.
• To return the unit to Samknows should you no longer wish to be involved (Samknows to pay reasonable postage costs).
• To connect the unit in the way described in the documentation.
• To keep Samknows updated with valid contact details (i.e. email and postal address).

In our experience, we can offer some clarifications here:

1. They don’t care if you unplug equipment during a storm or for other short-term periods;
2. They do allow you to run the equipment in “bridge mode,” meaning you can still rely on your primary router, leaving the Netgear Samknows router as an adjunct to your home network;
3. You are allowed to apply firmware upgrades, as available, so long as they retain the performance testing protocol.

Applying is easy enough.  Simply complete the online form and Samknows will contact you when the next round of routers is prepared to ship.  It typically takes several weeks between rounds, so don’t expect an immediate reply.  The router will be sent to you through UPS or FedEx, no signature required.  The testing program is scheduled to last up to three years.