Sprint will focus its postpaid wireless business on profitability in 2013, with reductions in customer discounts and a tighter upgrade policy that will raise prices for some and slow down others seeking new subsidized smartphones.

CEO Dan Hesse today told Wall Street investors Sprint will be leveraging its upgraded LTE network to help hold the line on discounts and early upgrades, reminding customers Sprint’s Network Vision plan is delivering better service with faster speeds and fewer dropped or blocked calls.

Sprint released its 1st quarter 2013 earnings this morning, showing the company reduced its quarterly losses from $863 million in the same quarter last year to $643 million. The company spent $1.4 billion during the first quarter on network upgrades, primarily on forthcoming 4G LTE network roll-outs.

Steve Elfman, Sprint’s president of network operations reported the company activated more than 12,000 LTE-upgraded cell towers by the end of the quarter, slowed only by inclement weather. This year will see a massive increase in those numbers.

“We now have zoning complete on over 32,000 sites and leasing complete on over 31,000 sites. More than 25,000 sites already or have already begun construction,” Elfman reported. “Our weekly construction starts are now at a level to achieve our goals for the year. There are over 600 cities under construction and we have now launched 4G LTE in 88 cities with over 170 expected to launch in the months to come.”

Hesse

While Elfman oversees LTE upgrades, Sprint is also busy working towards decommissioning its Nextel network on June 30. Despite repeated warnings Nextel’s demise was close at hand, at least 1.4 million Nextel customers, nearly all business accounts, are still active on that network. Sprint is focusing most of its promotional budget again this quarter on convincing those customers to convert to Sprint service. But only 46 percent of Nextel customers took Sprint up on their repeated offers during the first quarter. Many others left for Verizon Wireless, switching off not only their Nextel commercial phones, but also those on Sprint’s network as well.

Sprint expects to hold on to a declining number of its Nextel customers as the second quarter progresses, until the network is switched off for good at the end of June.

That hurts, because Sprint has also been losing customers due to “pardon our dust” construction-related service interruptions as part of LTE 4G upgrades. Those disruptions are expected to accelerate  as more cities are prepared for LTE service.

Sprint’s Lifeline cell phone service for the poor, Assurance, also took major hits during the quarter after the FCC tightened eligibility requirements for the free/low-cost cell phone service. The company switched off 224,000 accounts in the last three months that either failed to re-certify eligibility or were never qualified in the first place. Sprint’s wholesale customers, which resell access on the Sprint network, are also busy deactivating unqualified Lifeline wireless lines, so Sprint expects a similar number of disconnects during the second quarter as those accounts are dropped from the network.

As Sprint turns its attention to profitability, revenue numbers at Sprint improved slightly. Sprint’s prepaid division added 568,000 net prepaid customers, and Virgin Mobile raised its minimum top up amount for 90 days of service to $20 (up from $15 with a credit card). As customers upgrade their Sprint postpaid phones, more customers are also encountering Sprint’s $10 “premium data” surcharge.

Customers will also discover a tightening of Sprint’s discounts and upgrade promotions. Among the efforts underway:

• curtailing or eliminating certain customer credits and discounts;
• tightening device upgrade policies to end early upgrades, although Sprint still retains its 20 month upgrade policy for now;
• holding the line on phone subsidies for increasingly expensive smartphones.

Sprint’s prepaid mobile division

Slowing phone upgrades is particularly important for Sprint’s bottom line.

“I think the policy shifting is important in the industry because subsidies just keep going up and I think from the economic model perspective of the carriers we just can’t afford to upgrade as often,” said Sprint CEO Dan Hesse. “We’re not seeing any evidence yet that customers are interested in upgrading less often if they see less difference or improvement year-over-year in terms of what’s going on with these devices. In fact the opposite might be true which means these policies are really quite important for the industry.”

Hesse admitted that the drive to increase profits could cost Sprint some of its postpaid business, and probably already has over the last three years. But Hesse noted many of those contract customers have migrated to the company’s prepaid service, which keeps revenue in-house. Hesse expects as long as popular phones are available on prepaid plans, price-sensitive customers will continue to migrate towards prepaid service.

“I think what you are seeing is maturing of the U.S. markets beginning,” Hesse noted. “The U.S. has always been or traditionally been almost exclusively postpaid and it’s beginning to look like other markets that have a higher prepaid mix in terms of the number or percentage of customers.”

Greenwich Village business owner Louis Wintermeyer has spent the last three months without phone or broadband service from Verizon Communications.

“It is hard to believe it has gone on this long,” Wintermeyer told the New York Post. “You feel like you’re in Bangladesh here. I mean we’re in the West Village!”

Across Manhattan, and well into upstate New York, Verizon customers who start experiencing landline problems often keep experiencing them for weeks or months on end.

Wintermeyer couldn’t wait that long — he relocated his car-export company to his Rockland County home. Another Verizon customer in the same building — the Darling advertising agency, experienced intermittent outages adding up to 10 weeks of no service since February.

“We really sounded like amateurs,” Jeroen Bours, president of the Darling advertising agency told the Post. “We would be in a conference call, and all of a sudden the call would go. It just doesn’t really make a good impression.”

In the Adirondack hamlet of Wanakena, when the rain arrives, Verizon service leaves a lot to be desired.

One person’s phone may be working but the one next door will be completely out of service or crackly at best, according to local residents.

“It’s almost comical,” Ranger school director Christopher L. Westbrook told the Watertown Daily Times. “It’s so bizarre because some phones will be working while others are not.”

[flv]http://www.phillipdampier.com/video/WWNY Watertown Phone Situation Improving Officials Say 8-3-12.mp4[/flv]

A fiber optic line cut near Cicero, N.Y. in early August disrupted phone and cellular service from Verizon across the North Country. WWNY in Watertown covers the event.  (1 minute)

One Adirondack Park Agency commissioner who lives in the area says he has been without a phone 15 times in the last two months. Unfortunately for North Country residents, cell phone service is often not an option, because carriers don’t provide reliable wireless service in the region.

Local businesses cannot process credit card transactions, broadband service goes down, and a handful of privately-owned pay phones out of service for months have been abandoned by their independent owner because of the ongoing service problems.

Verizon repair crews come and go, but affected customers report a real reluctance by Verizon technicians to complete repairs once and for all.

“The permanent fix is not happening,” says Angie K. Oliver, owner of the Wanakena General Store.

Bours said one Verizon technician told him the company no longer cares about its older copper wire landline business. Rural residents upstate sense the company has little interest spending money on deteriorating infrastructure.

Some Wanakena residents suspect Verizon has thrown in the towel in St. Lawrence and Franklin counties, where independent Nicholville Telephone subsidiary Slic Network Solutions is constructing over 800 miles of fiber optic cable and operates a fiber to the home broadband and phone service.

[flv]http://www.phillipdampier.com/video/WWNY Watertown Lewis County Phone Service Restored 8-20-11.mp4[/flv]

Last summer, Lewis County suffered a similar widespread phone service outage that left businesses and homes without service for days.  WWNY says Barnes Corners was hardest hit.  (1 minute) 

Verizon spokesman John J. Bonomo blamed lightning strikes for the problems in Wanakena, but said the cable serving the area was intact and should not be responsible for service outages.

Gray

Near Syracuse University, some businesses and residents were without phone service for nearly two weeks in June.

The largest outage began when more than 150 customers around SU lost service after a storm. More than a week later, nearly two dozen customers were still without service, including the 4,000 member U.S. Institute for Theater Technology.

A damaged underground phone cable was deemed responsible, but repairs were slow.

Earlier this month, Massena town supervisor Joseph Gray fired off a letter to the deputy Secretary of State after a major Verizon line north of Syracuse was damaged, cutting off landline and cell phone service throughout Jefferson and St. Lawrence counties.

“I would have called your office to speak with you directly, but I couldn’t because our telephone service was unavailable,” Gray wrote. “Since I became supervisor of the town of Massena just over two and a half years ago, on at least three different occasions telecommunications in the entire North Country has been thrown into chaos because a Verizon fiber optic cable was cut 150 miles from here. Many of us found our emergency services, business, residential, and cellular telephone service interrupted, not to mention disabled credit card machines, facsimile machines and Internet service in some cases.”

Gray criticized the Public Service Commission for allowing Verizon to operate without service redundancy in the state, providing backup facilities if a fiber cut occurs.

“As a result, the Public Service Commission (which perhaps should be given a different name if my experiences with them is typical), has done nothing to address this dangerous situation and, more incredibly, appears unwilling to acknowledge that the problem exists,” Gray said.

Attorney General Eric Schneiderman blasted Verizon’s poor landline service in a petition sent to the New York State Public Service Commission. Schneiderman called Verizon’s service unacceptable in New York, with customers forced to wait inordinate periods to get service restored.

“Verizon’s management has demonstrated that it is unwilling to compete to retain its wireline customer base, and instead is entirely focused on expanding its wireless business affiliate,” said Schneiderman’s office.

Schneiderman’s office filed evidence in July that Verizon was undercutting its landline business in New York and diverting money for other purposes:

• Verizon’s claim it had spent more than $1 billion in investments to its landline network was misleading: Roughly three-quarters of the money was actually spent on transport facilities to serve wireless cell sites and ongoing spending on FiOS in areas already committed to get the fiber-to-the-home service;
• Verizon investment in landlines has declined even faster than its line losses. The dollars per access line budgeted for 2012 is one-third less than the investment for the 2007-2009 period;
• In just a five month period, 19.5% of the company’s 4.3 million customer lines in New York required repair. This means every Verizon customer will need an average of one repair every five years;
• Verizon’s complaint rate with the PSC has exceeded the PSC’s own limit for good service every month since June 2010. Most recently, Verizon exceeded the limit by more than double the threshold;
• Verizon’s agreement with the Commission establishes two classes of customers: “core” customers (8%) that qualify for enhanced repair service because they are elderly and/or have medical problems and non-core customers (virtually everyone else). The Commission only enforces service standards and repair lapses with “core” customers, which are required to have out of service lines restored within 24 hours 80% of the time. Verizon is free to delay other repairs indefinitely without consequence.
• The PSC has already fined Verizon $400,000 earlier this year for poor service from October-December 2011.

[flv]http://www.phillipdampier.com/video/WWNY Watertown Gray Phone Disruptions Perilous Flaw 8-7-12.mp4[/flv]

WWNY talks with Massena town supervisor Joseph Gray, who has launched a campaign to force Verizon to develop a plan to better handle outages in northern New York. (2 minutes)

NOAA caught this ominous derecho cloud front in La Porte, Ind on June 29. The same storm would later cut power for millions all the way to the eastern seaboard.

A series of severe thunderstorms accompanied by near-hurricane-force winds caused millions of customers in several Mid-Atlantic states to lose power and telecommunications services late Friday, and some are expected to remain without service until at least this coming weekend.

The storm, known as a “derecho,” uprooted trees, which in turn knocked down power lines and caused wind-related damage to buildings from Ohio to West Virginia, Virginia to Maryland, and even into North Carolina.

But the storm also is raising questions about the massive failures in commercial telecommunications systems that left entire 911 emergency response systems offline for days, wireless networks non-operational, cell phone systems overwhelmed, and broadband service, deemed a lower priority by emergency officials, down and offline.

Some of the biggest problems remain in and around the nation’s capital and in the states of West Virginia and Virginia, where inadequate infrastructure proved especially susceptible to the storm’s damaging winds.

D.C., Maryland, and northern Virginia

In northern Virginia, calls to 911 were met by silence over the weekend, thanks to a catastrophic failure of Verizon’s landline network. With primary lines down, Verizon’s backup 911 systems also failed, leaving millions with no access to emergency responders.

Fairfax County officials finally put the word out the best way to summon emergency help was to drive (through streets littered with debris and downed power lines) to the nearest fire or police station for assistance.

“It’s just not OK for the entire 911 system in the region to go down for the period of time that we were out, especially after an enormous emergency where people needed to make those calls the most,” Sharon Bulova, chairman of the Fairfax County Board of Supervisors, told the Associated Press.

Verizon spokesman Harry Mitchell was left flat-footed, promising an investigation into Verizon’s latest 911 failure, and called the storm as damaging as a hurricane. He urged local officials to “move forward” beyond the immediate criticism and help make progress to get service restored.

Many emergency response networks also depend on telecommunications services, including fiber cables, to reach transmission towers for radio dispatch and mobile data terminals. In northern Virginia, the city of Alexandria has been managing to handle emergency dispatch services for several counties.

With power lines down, cable and phone lines often went as well. In those cases, electric utilities have first priority to restore service, and then cable and phone companies can begin repairs of their own.

Since cable operators rely on power companies to supply electricity to their amplifiers and other equipment, Comcast and Cox, which dominate the region, are blaming most of their outages on power disruptions, and promise service will be restored when the power returns.

Verizon’s DSL and FiOS broadband networks were both disrupted by the storm, primarily because of downed lines and power losses.Even wireless networks, which some might suspect would be immune to downed lines, were also seriously affected by the storm. Cell towers connect to the provider’s network through fiber optic and T1 lines, and although backup power generators can maintain a cell tower for days in some cases, backhaul line cuts can leave cell towers useless.

In metro D.C., call completion problems were a problem during the storm and sometime after as local residents turned to cell phones to communicate. Over the weekend, customers in and around Richmond, Va., found Verizon Wireless useless for text messages because of a service disruption. As backup generators ran dry of fuel, some cell towers that survived the initial storm have been shutting down until maintenance crews arrive and refuel.

The harshest criticism has so far escaped phone and cable companies. Instead, local officials and residents remain focused on Pepco, the power utility serving the Washington area. Pepco has learned from previous storms to become a master of lowered expectations, and is promising to do its best to restore power a week or more after the storm was a memory.

West Virginia and western Virginia

The state of West Virginia, and western rural Virginia state, have illustrated what happens when deteriorating infrastructure is asked to withstand winds of up to 100mph. Frontier’s operations in West Virginia were hit especially hard. Landline networks in that state had been allowed to deteriorate for years by former owner Verizon Communications. Frontier had its hands full trying to keep up with repairs, calling in additional staff and trying to maintain landline service in some areas with the help of generators.

That job was made much harder by a rash of generator thefts that impacted the phone company, and local authorities are still looking for those responsible. At least one-third of all central switching offices operated by Frontier in West Virginia remain on generator power as of yesterday. As of July 3, the company reported it has 12,000 repair requests still waiting for action.

It was a similar story in the western half of Virginia where independent phone companies and Verizon were faced with an enormous number of downed trees and power lines, many in rural areas. More than 108,000 Virginia residents are still without power as of this afternoon, and many will not see it restored until the weekend.

Because the derecho swept across a large area encompassing the entire state, it has been difficult for utility crews to respond from unaffected areas to assist in repairs because the damage was so widespread. Logistically, just coordinating repair operations has proved difficult because cell service has been spotty (or networks have been jammed with calls) in some of the worst-affected areas.

“Derechos are nothing to fool with, but still this was not the most serious storm Virginia has ever dealt with, and the impacts on our telecommunications networks seem to indicate they’ve been allowed to fall apart over the last several years,” shares Stop the Cap! reader Edward Klein, who lives near Roanoke. “I think an investigation is needed to make sure utilities are spending enough money to keep these networks in good shape so this kind of thing doesn’t happen everytime a storm sweeps through.”

While the east coast contended with Hurricane Irene last weekend, hundreds of thousands of Time Warner Cable customers further west were dealing with widespread broadband and phone outages in Texas and California.

For Californians, the problems gradually increased early Sunday morning until eventually causing significant service disruptions starting just before 7am.  As the morning wore on, Time Warner’s call centers became so overwhelmed with calls, very few actually got to speak with a customer service representative, greeted instead with:

“Due to high call volume, all agents are currently busy.  Please try your call again later,” after which the call was disconnected.

By 1pm, engineers finally found the malfunctioning equipment responsible for outages in different parts of the country and started rerouting traffic around the problem.

Time Warner wouldn’t say where the troubles originated, but its impact illustrates Time Warner broadband customers can be affected by outages and malfunctions several states away.

Service was gradually restored as the afternoon progressed.

Time Warner Cable customers affected by the outage can receive a service credit for interrupted phone and broadband service, but only if they ask.  The company does not plan to issue automatic credits.

Southern Californians can use this Time Warner Online E-Mail form to request credits.  Texans can use this Time Warner Online E-Mail form to request credits.

Cable television service was not affected.

Shocked onlookers moments after the earthquake struck downtown Christchurch

A major magnitude 6.3 earthquake has devastated the Canterbury region of southeast New Zealand, particularly the central business district of the city of Christchurch, knocking out power, water, sewer, and several telecommunications networks across the region.  The wireless networks that remain have been so overburdened, government officials have declared use of those networks limited to emergency use only.

Two aftershocks — one magnitude 5.6 and another 5.5 — shook Christchurch within hours of the initial 6.3 earthquake, causing damaged buildings to crumble, including parts of the 130-year-old Christchurch Cathedral. Its spire toppled into the city square, falling onto throngs of tourists who ran from the building in terror as the temblor struck.

Dozens are dead, with scores more injured, particularly in the Christchurch city center, where the quake struck just after lunch.  Shocking raw video has appeared on national television showing bloody bodies strewn amongst the rubble, and hearts are broken over stories such as the death of nine month old toddler who survived the quake, but not the large flat panel television that toppled down on him during an aftershock.

Telecommunications services were reduced to a state of virtual unusability following the quake because of cable cuts and congestion, as Prime Minister John Key informed Parliament the government was forced to initially rely on a sketchy satellite link to speak with civil defense officials in the city of 376,000.

The city’s local television station — CTV, was reduced to rubble as the seven-story building pancaked, tossing some employees working on the fifth floor into the middle of Madras Street below.  They were the lucky ones, surviving as astonished onlookers ran up to help.

National media has described the Canterbury earthquake as “New Zealand’s darkest day,” and most radio and television stations still on the air have ceased regular programming to relay the country’s National service from Radio/TV New Zealand, or the country’s national news-talk network Newstalk ZB.

New Zealand’s Internet services are functioning, but sporadic in many locations.  The national public broadcaster, Radio/TV New Zealand, is relying on its international shortwave radio service Radio New Zealand International to get its signal out to the rest of the world as its live Internet streams initially failed.  Many other broadcasters in Christchurch have lost their links to transmitters, or temporarily lacked power to stay on the air.

The region’s landline telephone network remains functional where cable cuts have not interrupted service, but since many New Zealanders rely on cell phones, the country’s wireless networks quickly were overwhelmed with worried callers.  Large parts of New Zealand’s cell phone network in the south is now completely reliant on battery backup power, due to widespread power disruptions.  Keeping those sites operational is critical, as scores of office workers in Christchurch are texting messages indicating they are still alive, but trapped in damaged or collapsed buildings.

Emergency generators are being pressed into service as providers recognize their wireless networks are often the only reliable link residents now have with the rest of the country. Some cell sites operated by Telecom New Zealand (TNZ), Vodafone and 2Degrees equipped with solar or battery backup systems began to fail last night.

“We’re asking our customers in Christchurch to have patience if they lose service. Although we can’t identify which sites will lose battery power or when, we know that they are generally in good shape so can be placed back in service once power becomes available,” says 2degrees CEO Eric Hertz.

TNZ and their biggest competitor Vodafone have set aside their rivalry and are coordinating efforts to keep the country’s networks up and running.  Staff of both companies have been largely ordered to remain home, as technicians on duty at the time of the quake pull overtime duty.  Emergency 111 service, today answered by operators in Wellington 190 miles away, is now prioritized and customers have been told by government officials that cell phone use in the affected region should be limited for emergency calls only.

All public payphones in Christchurch discontinued paid service as of this morning — all calls are now free.

Vodafone reports SMS text messaging service between networks is not functioning at this time.  That means Vodafone customers cannot send or receive text messages to anyone outside of Vodafone’s own network for the time being.

All three carriers are recommending wireless customers across the entire country use text messaging rather than calling to keep congestion to a minimum.  Text messages rarely overload wireless networks.  Most providers are also waiving contract cancellation penalties for customers whose homes or businesses were heavily damaged or destroyed, and will forward calls to functioning phone numbers at no charge.

Cable modem service in Christchurch is disrupted wherever cable cuts exist.  DSL from TNZ is also sporadic for the same reasons.

While power is expected to return across Canterbury as daybreak now arrives, officials warn outages in essential services will persist for days, if not weeks, in some particularly hard-hit areas.

Live Coverage

• NewstalkZB – broadcasting on all FM frequencies in Christchurch controlled by “RadioNetwork”
• Radio Live
• Radio New Zealand (streaming is sporadic/non-functional at this time)
• TV New Zealand (Choose “Live International Stream” when available)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/TVNZ Quake Damage 2-22-11.flv[/flv]

TV New Zealand presented coverage moments after the quake occurred.  Some of these reports and raw video contain extremely graphic and disturbing imagery.  (30 minutes)