Patrick Drahi is hoping New York regulators will look more favorably on his proposal to buy Cablevision with a promise to upgrade more than three million of its customers in New York City to fiber-to-the-home service.

The New York Post reports Altice representatives have held private talks with the N.Y. Public Service Commission and the New York City Department of Information Technology, which regulates telecom services in the Big Apple, about fiber optic upgrades.

With news Drahi has proposed major salary and job cuts at Cablevision as part of an effort to wring $900 million in cost savings annually from the Bethpage, Long Island-based cable company, regulators are likely to express concern about the merger and its impact on customers. Promising a fiber upgrade appears to be a calculated effort to win those regulators over, reports the Post.

Altice is capitalizing on the recent negative publicity Verizon has received for failing to meet its obligation to deliver its FiOS service to any New Yorker that requests it. Cablevision is likely to face fewer hurdles performing fiber upgrades, because the company only serves New York City customers in Bronx and parts of Brooklyn, and already operates a hybrid fiber-coax network. Cablevision would only need to replace the last mile of coaxial cable between its fiber connection points and the customer. Verizon has to replace decades-old copper phone wiring in conduits often left in disrepair.

While promising to do better than Verizon, a closer look at Altice’s largest market – France, suggests Drahi’s company isn’t meeting customer expectations either.

Altice’s French operations have lost at least one million customers so far this year, mostly as a result of severe cost cutting. The company’s promise to upgrade 3.1 million New Yorkers to fiber service will likely draw scrutiny in France. Despite similar promises of fiber upgrades to its French customers, Altice admitted in April it has so far only managed to deliver fiber to the home service to fewer than 200,000 of its own SFR customers. At least 5.2 million others are still waiting, still relying on the company’s lower performing DSL service.¹

Union organizers are attempting to step up recruitment efforts at Cablevision in advance of an Altice takeover. The Cablevision99 Facebook page, run by the Communications Workers of America, has been warning Cablevision employees their job security and compensation may be at risk if the company is sold to Altice.

¹ page 21

October 20, 2015

Hon. Kathleen H. Burgess
Secretary, Public Service Commission
Three Empire State Plaza
Albany, NY 12223-1350

Dear Ms. Burgess,

New York State’s digital economy is in trouble.

While providers claim portions of New York achieve some of the top broadband speeds in the country, the vast majority of the state has been left behind by cable and phone companies that have never been in a hurry to deliver the top shelf telecom services that New Yorkers need and deserve.

The deregulation policies of the recent past have resulted in entrenched de facto monopoly and duopoly markets with little or no oversight. Those policies, instead of benefiting New Yorkers, are ultimately responsible for allowing two companies to dominate the state’s telecommunications marketplace.

In virtually all of upstate New York, the services consumers receive depend entirely on the business priorities of local incumbent providers, not market forces or customer demand. As a result, New Yorkers face relentless, unchecked rate increases, well-documented abysmal and unresponsive customer service, and inadequate broadband provided by a workforce under siege from downsizing, cost-cutting, and outsourcing.

Certain markets, particularly those in the New York City area, have at least secured a promise of better broadband from Verizon’s FiOS fiber to the home upgrade. But at least 100,000 New Yorkers have languished on Verizon’s “waiting list,” as the company drags its feet on Non Standard Installation orders.[1] In upstate New York, Verizon walked away from its FiOS expansion effort five years ago, leaving only a handful of wealthy suburbs furnished with fiber service while effectively abandoning urban communities like Buffalo and Syracuse with nothing better than Verizon’s outdated DSL, which does not meet the FCC’s minimum definition of broadband – 25Mbps.[2]

Cablevision’s broadband performance dramatically improved because of investment in network upgrades, and the company has been well-regarded for its broadband service ever since.[3] But the proposed new owner of Cablevision – Altice, NV — has sought “cost savings” from cuts totaling $900 million a year, which will almost certainly devastate that provider’s future investments, its engineering and repair crews, and customer service.[4]

At least downstate New York has the prospect for +100Mbps broadband service. In upstate New York, three providers define the broadband landscape for most cities and towns:

• Time Warner Cable dominates upstate New York with its cable broadband service and has the largest market share for High Speed Internet. As of today, Time Warner Cable’s top broadband speed outside of New York City is just 50Mbps, far less than the 1,000Mbps service cities in other states are now on track to receive or are already getting.[5]
• Verizon Communications is the largest ILEC in upstate New York. Outside of its very limited FiOS service areas, customers depend on Verizon’s DSL service at speeds no better than 15Mbps, below the FCC’s minimum speed to qualify as broadband;[6]
• Frontier Communications has acquired FiOS networks from Verizon in Indiana and the Pacific Northwest, and AT&T U-verse in Connecticut. Frontier has made no significant investment or effort to bring FiOS or U-verse into New York State. In fact, in its largest New York service area, Rochester, there are significant areas that can receive no better than 3.1Mbps DSL from Frontier. The vast majority of Frontier customers in New York do not receive service that meets the FCC’s minimum definition of broadband, and some investors predict the company is “headed for financial disaster.”[7]

The competitive markets the DPS staff envisions in its report to the Commission are largely a mirage. When an ILEC like Frontier Communications admits its residential broadband market share “is less than 25% in our 27 states excluding Connecticut,” that is clear evidence the marketplace has rejected Frontier’s legacy DSL service and does not consider the company an effective competitor.[8]

While incumbent cable and phone companies tout ‘robust competition’ for service in New York, if the Commission investigated the market share of Time Warner Cable upstate, it would quickly realize that ‘robust competition’ has been eroding for years, with an ongoing shift away from DSL providers towards cable broadband.[9]

Frontier’s primary market focus is on rural communities where it often enjoys a monopoly and can deliver what we believe to be inadequate service to a captive customer base. The company is currently facing a class action lawsuit in West Virginia, where it is alleged to have failed to provide advertised broadband speeds and delivers poor service.[10]

Verizon’s ongoing investment in its legacy wireline network (and expansion of DSL to serve new customers) has been regularly criticized as woefully inadequate.[11] From all indications, we expect the company will eventually sell its legacy wireline networks, particularly those upstate, within the next 5-10 years as it has done in northern New England (sold to FairPoint Communications) and proposes to do in Texas, California, and Florida.[12] (Verizon also sold off its service areas in Hawaii, West Virginia, and much of its territory acquired from GTE.)

Across New York, service problems and controversial deals between telecom providers have made headlines. Here are just a few:

1. Superstorm Sandy’s impact on Verizon’s legacy wireline network on Fire Island and in other downstate communities left many without service. Instead of repairing the damage, Verizon proposed to scrap its wireline network and substitute inferior wireless service with no possibility of wired broadband.[13] The DPS received a large number of comments from the public and local elected officials fiercely opposed to this proposal, one that Verizon eventually withdrew in the face of overwhelming opposition.[14]
2. There are growing allegations Verizon may be underspending on its legacy wireline network and even worse, may be misallocating costs and revenues to deceive the Commission.[15] Some allege much of the company’s ongoing investments, charged to the wireline operation, in reality are for the benefit of its wireless network. This may have allowed Verizon Communications/New York to claim significant losses on its wireline books the company then argued justified rate increases on ratepayers.[16] A full scale accounting of Verizon’s books is essential for all concerned and corrective action may be necessary if these allegations are proven true.
3. Verizon’s foot-dragging on FiOS buildouts in New York City led to a damning audit report commissioned by New York City Mayor Bill de Blasio this summer and oversight hearings were held last week by the City Council of New York.[17] [18] Despite Verizon’s creative definition of “homes passed,” a substantial number of New Yorkers cannot receive the benefits of “today’s networks” the DPS staff refers to. Instead, many are stuck with poorly-performing DSL or no service at all.[19] Regardless of whether fiber passes in front of, over, in between, or behind buildings, Verizon signed an agreement compelling them to give customers a clear timeline to establish FiOS service. It is apparent Verizon is not meeting its obligations.[20]
4. The proposed sale of Time Warner Cable to Comcast led the Commission’s staff to admit the majority of respondents to requests for public input were strongly opposed to the merger and without substantial modifications concluded would not be in the public interest.[21] Comcast eventually withdrew its proposal in the face of overwhelming opposition.
5. The proposed sale of Time Warner Cable to Charter Communications, where the DPS staff concluded as the application stood, there would be no public interest benefits to the transaction.[22]

Those are just a few examples of why aggressive oversight of telecommunications is critical for all New Yorkers. In most of these examples, the DPS never ruled one way or the other. The companies individually made their own decisions, and we believe they would have decided differently if they did not face grassroots opposition from consumers.

New Yorkers deserve an active DPS prepared to aggressively represent our interests, ready to investigate what Verizon is doing with its legacy wireline network, legacy wired broadband services, FiOS and Verizon Wireless. With Time Warner Cable having such a dominant presence in western and central New York, its sale should never be taken lightly, as it will impact millions of New Yorkers for years to come.

While the DPS seems prepared to passively wait around to discover what Time Warner Cable, Frontier and Verizon are planning next, the rest of the country is getting speed upgrades New York can only dream about.

Google Fiber and AT&T, among others, are aggressively rolling out 1,000Mbps fiber service upgrades in other states, while a disinterested Verizon refuses to invest further in FiOS expansion, leaving millions of New York customers with nothing better than DSL.

The lack of significant competition upstate is why we believe Time Warner Cable has not yet chosen any market in New York except New York City for its Maxx upgrade program, which offers substantially faster speeds and better service.[23] There is no compelling competitive reason for Time Warner to hurry upgrades into areas where they already enjoy a vast market share and no threat of a broadband speed race. So much for robust competition.

Charter’s proposed acquisition of Time Warner Cable proposes a modest upgrade of broadband speeds to 60-100Mbps, but as we wrote in our comments to the DPS regarding the merger proposal, upstate New York would be better off waiting for Time Warner Cable to complete its own Maxx upgrades over what will likely be 100% of its footprint in the next 24-30 months.[24] Time Warner Cable Maxx offers maximum broadband speeds three times faster than what Charter proposes for upstate New York, while also preserving affordable broadband options for those less fortunate. Approving a Charter buyout of Time Warner Cable will only set upstate New York back further.

We confess we were bewildered after reviewing the initial staff assessment of telecommunications services competition in New York. Its conclusions simply do not reflect reality on the ground, particularly in upstate communities.

It was this type of incomplete analysis that allowed New York to fall into the trap of irresponsible deregulation and abdication of oversight that has utterly failed to deliver the promised competition that would check rate hikes, guarantee better customer service, and provide New York with best-in-class service. In reality, we have none of those things. Rates continue to spiral higher, poor customer service continues, and New York has been left behind with sub-standard broadband that achieves no better than 50Mbps speeds in most upstate communities.

This summer, the American Customer Satisfaction Index told us something we already know. Americans dislike their cable company more than any other industry in the nation.[25] A survey of more than 14,000 customers by ACSI found service satisfaction achieving a new all-time low, scoring 63 out of 100.

“Customers expect a lot more than what the companies deliver,” said ACSI managing director David VanAmburg, who called poor customer service from cable operators “endemic.”

This year, Time Warner Cable again scored the worst in the country. As the only cable provider for virtually all of upstate New York, if residents in New York are given a choice between Time Warner Cable and the phone company’s slow-speed DSL, they are still likely to choose Time Warner Cable, but only because they have no other choices for broadband that meets the FCC definition of broadband.

Providers are quick to suggest consumers can turn to so-called competitors like satellite broadband or wireless Internet from mobile providers. They conveniently ignore the fact satellite-delivered Internet is such a provider of last resort, less than 1% of New Yorkers choose this option. Those that have used satellite broadband tell the companies providing it they rarely achieve the claimed speeds and are heavily speed throttled and usage capped.[26] It’s also costly, particularly when measuring the price against its performance.

Mobile Internet, which some ILECs have advocated as a possible replacement for rural wireline networks, is also a very poor substitute for wired Internet access. Wireless broadband pricing is high and usage allowances are low. Attempts to convince New Yorkers to abandon Verizon landline service in favor of Verizon’s 4G LTE wireless replacement have led to consumer complaints after learning their existing unlimited Verizon DSL service would be substituted for a wireless plan starting at $60 a month with a 10GB usage allowance.[27]

A customer with a 6Mbps DSL line from Verizon consuming 30GB of usage a month – hardly a heavy user – pays Verizon $29.99 a month for DSL service during the first year. In contrast, that same customer using Verizon Wireless’ home 2-5Mbps wireless LTE plan will pay $120 a month – four times more, with the added risk of incurring a $10 per gigabyte overlimit fee for usage in excess of their allowance.[28]

None of this information is a secret, yet it seems to have escaped the notice of the DPS staff in its report. Part of the reason why may be the complete lack of public input to help illuminate and counter incumbent providers’ well-financed public and government relations self-praise campaigns. If only actual customers agreed with their conclusions, we’d be well on our way to deregulation-inspired broadband nirvana.

Except New Yorkers do not agree all is well.

Consumer Reports:

Our latest survey of 81,848 customers of home telecommunications services found almost universally low ratings for value across services—especially for TV and Internet. Those who bundled the three services together for a discount still seemed unimpressed with what they were getting for their money. Even WOW and Verizon FiOS, which got high marks for service satisfaction, rated middling or lower for value, and out of 14 providers, nine got the lowest possible value rating.

What is it about home telecommunications that leaves such a sour taste in customers’ mouths? When we asked Consumer Reports’ Facebook followers to tell us their telecom stories, the few happy anecdotes of attentive service technicians and reliable service were overwhelmed by a tidal wave of consumer woe involving high prices, complicated equipment, and terrible service.[29]

The effective competition that would rely on market forces to deter abusive pricing and poor customer service is simply not available in a monopoly/duopoly marketplace. New entrants face enormous start-up costs, particularly provisioning last-mile service.

The nation’s telephone network was first constructed in the early half of the last century by providers guaranteed monopoly status. The cable industry developed during a period where regulators frequently considered operators to be a “natural monopoly,” unable to survive sustained competition.[30] Many cable operators were granted exclusive franchise agreements which helped them present a solid business case to investors to fund a costly network buildout. The end of franchise exclusivity happened years after most cable operators were already well established.

Today, those marketplace protections are unavailable to new entrants who face a variety of hurdles to achieve success. Some are competitive, others are regulatory. Google Fiber, which provides competitive service in states other than New York, publishes a guide for local communities to make them more attractive prospects for future Google Fiber expansion.[31]

For many overbuilders, pole attachment issues, zoning and permitting are significant obstacles to making new service available to residential and commercial customers. New York must ensure pole owners provide timely, non-discriminatory, and reasonable cost access. Permitting and zoning issues should be resolved on similar terms to speed network deployment.

Because a long history of experience tells us it is unreasonable to expect a competing telephone or cable company to enter another provider’s territory, in many cases the only significant possibility for competition will come from a new municipal/co-op/public-owned broadband alternative.

The hurdles these would-be providers face are significant. Incumbent provider opposition can be substantial, especially on a large-scale buildout. In rural areas, incumbents can and do refuse to cooperate, even on projects that seek to prioritize access first to unserved/underserved areas currently bypassed by those incumbents.

The effort to wire the Adirondack Park region is a case in point. Time Warner Cable has refused to provide detailed mapping information about their existing network, making it difficult to assess the viability of a municipal and/or a commercial broadband expansion project into these areas. Time Warner Cable maintains it has exclusivity to granular map data showing existing networks for “competitive reasons,” effectively maintaining an advantageous position from which it can strategically apply for state broadband expansion funding to expand its network using public funds.

Time Warner Cable benefits from access to publicly-owned rights of way and sanctioned easements. Without this access, their network would likely be untenable. As a beneficiary of that public access, making granular map data available to broadband planners is a fair exchange, and nothing precludes Time Warner from building its network into those unserved/underserved areas – something that might deter a would-be competitor’s business argument to overbuild a high-cost, rural area. The Commission should ask itself how many rural New York communities have two (or more) competing cable companies serving the same customers. If the answer is none, Time Warner Cable does not have a valid argument.

There is ample evidence the Commission needs to begin a full and comprehensive review of telecommunications in this state. It must build a factual, evidence-based record on which the Commission can build a case that oversight is needed to guarantee New Yorkers get the high quality telecommunications services they deserve.

Broadband and telephone service is not just a convenience. In September 2015, the Obama Administration declared broadband was now a “core utility,” just as important as telephone, electric, and natural gas service. Isn’t it about time the Department of Public Service oversee it as such?[32]

Respectfully submitted for your consideration,

Phillip M. Dampier

Director, Stop the Cap!

[1] http://stopthecap.com/2015/10/19/n-y-city-council-investigates-verizon-foot-dragging-fios-possible-contract-violations/
[2] http://www.wsj.com/articles/SB10001424052702303410404575151773432729614
[3] https://www.fcc.gov/reports/measuring-broadband-america-2014
[4] http://variety.com/2015/biz/news/altice-group-patrick-drahi-cablevision-bid-1201599986/
[5] http://www.pcmag.com/slideshow/story/310861/if-you-want-gigabit-internet-move-here/1
[6] https://www.fcc.gov/document/fcc-finds-us-broadband-deployment-not-keeping-pace
[7] http://seekingalpha.com/article/2888876-frontier-communications-headed-for-financial-disaster
[8] https://seekingalpha.com/article/2633375-frontier-communications-ftr-ceo-maggie-wilderotter-q3-2014-results-earnings-call-transcript
[9] http://www.leichtmanresearch.com/press/051515release.html
[10] http://www.wvgazettemail.com/article/20141020/GZ01/141029992
[11] http://www.cwa-union.org/news/entry/cwa_calls_for_regulators_to_investigate_verizons_refusal_to_invest_in_landl
[12] http://stopthecap.com/2015/05/05/fla-utility-says-negotiations-with-verizon-make-it-clear-verizon-will-exit-the-wireline-business-within-10-years/
[13] http://money.cnn.com/2013/07/22/technology/verizon-wireless-sandy/
[14] http://documents.dps.ny.gov/public/MatterManagement/CaseMaster.aspx?Mattercaseno=13-C-0197
[15] http://www.cwa-union.org/news/entry/cwa_calls_for_regulators_to_investigate_verizons_refusal_to_invest_in_landl
[16] http://newnetworks.com/publicnn.pdf/
[17] http://www1.nyc.gov/office-of-the-mayor/news/415-15/de-blasio-administration-releases-audit-report-verizon-s-citywide-fios-implementation
[18] http://arstechnica.com/business/2015/10/verizon-tries-to-avoid-building-more-fiber-by-re-defining-the-word-pass/
[19] http://www.nytimes.com/2015/08/27/nyregion/new-york-city-and-verizon-battle-over-fios-service.html?_r=0
[20] http://www.nyc.gov/html/doitt/downloads/pdf/verizon-audit.pdf
[21] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={0A5EAC88-6AB7-4F79-862C-B6C6B6D2E4ED}
[22] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId=%7BC60985CC-BEE8-43A7-84E8-5A4B4D8E0F54%7D
[23] http://www.timewarnercable.com/en/enjoy/better-twc/internet.html
[24] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={FCB40F67-B91F-4F65-8CCD-66D8C22AF6B1}
[25] http://www.marketwatch.com/story/the-most-hated-cable-company-in-america-is-2015-06-02
[26] https://community.myhughesnet.com/hughesnet?topic_list%5Bsettings%5D%5Btype%5D=problem
[27] http://www.verizon.com/home/highspeedinternet/
[28] HTTPS://www.verizonwireless.com/home-services/lte-internet-installed/
[29] http://www.consumerreports.org//cro/magazine/2014/05/how-to-save-money-on-triple-play-cable-services/index.htm
[30] http://www.citi.columbia.edu/elinoam/articles/Is_Cable_Television_Natural_Monopoly.pdf (p.255)
[31] https://fiber.storage.googleapis.com/legal/googlefibercitychecklist2-24-14.pdf
[32] http://thehill.com/policy/technology/254431-obama-administration-declares-broadband-core-utility-in-report

In Bexar County, Texas Public Radio found only a few customers (shown in green) qualify for AT&T GigaPower service. (Image: TPR)

AT&T charges customers $40 a month/$480 a year more for its U-verse with GigaPower gigabit broadband service in cities where it does not face direct competition with Google Fiber.

AT&T has announced six new cities will eventually get gigabit speed service, including Chicago, Atlanta, Nashville, Orlando, Miami and San Antonio. Whether customers will pay $70 or $110 for the same service depends entirely on one factor: Google Fiber.

The Consumerist notes communities with forthcoming competition from the search engine giant will pay $40 less for gigabit service from AT&T than communities without Google Fiber.

In San Antonio, Nashville, and Atlanta — all forthcoming Google Fiber cities, customers will pay AT&T $70 a month. In Google Fiberless Orlando, Chicago, and Miami, customers will pay $80 for a 300Mbps tier or $110 for 1,000Mbps service.

Although AT&T is usually the first to market 1,000Mbps service in its service areas, actually qualifying to buy the service is another hurdle customers have to overcome. In San Antonio, most customers will have to wait.

In an informal survey conducted by Texas Public Radio on social media, about 60 Bexar County residents checked to see if their home addresses could connect to AT&T’s GigaPower. Only 11 could, most in far west Bexar County beyond Leon Valley. Other limited service areas south of Live Oak also qualified. Most of the rest of metro San Antonio does not qualify for GigaPower and AT&T will not say when customers can get the service.

AT&T later admitted gigabit service was available in “parts” of San Antonio, Leon Valley, Live Oak, Selma, Schertz, Cibolo, as well as portions of New Braunfels, Medina, and unincorporated Bexar County.

The Consumerist writes AT&T is proving the importance of robust broadband competition. Communities that have it pay less and get quicker upgrades for faster Internet speeds. Those without pay AT&T a premium or are long way down on the upgrade list.

In the northeastern United States, now a no-go for Google Fiber, broadband is often a feast or famine proposition. Those served by Verizon FiOS in New York City also have the competing options of network-upgraded Cablevision or Time Warner Cable Maxx. Those in New York not served by FiOS have a much poorer choice of Time Warner Cable (up to 50/5Mbps) or <10Mbps DSL service from Verizon, Frontier, Windstream, and other phone companies. In Northern New England, Comcast routinely outclasses DSL service from FairPoint Communications, but significant parts of Vermont, New Hampshire, Maine, and western Massachusetts often have no broadband options at all.

[flv]http://www.phillipdampier.com/video/KSAT San Antonio GigaPower Internet coming to San Antonio 9-21-15.mp4[/flv]

KSAT-TV in San Antonio covered AT&T’s launch of U-verse with GigaPower in San Antonio. As elsewhere, AT&T routinely invites city officials to share the good news with local residents. But it may take a year or more for the service to become available to everyone in the area. Even when it is, a snap poll conducted by KSAT found just over half of its viewers had no interest in getting gigabit service from AT&T. (1:51)

August 19, 2015

Hon. Kathleen H. Burgess
Secretary, Public Service Commission
Three Empire State Plaza
Albany, NY 12223-1350

Case Number: 14-C-0370

Dear Ms. Burgess,

After years of allowing the telecommunications industry in New York to operate with little or no oversight, the need for an extensive and comprehensive review of the impact of New York’s regulatory policies has never been greater.

Let us remind the Commission of the status quo:

• As Verizon winds down its FiOS initiative, other states are getting cutting-edge services like Google Fiber, AT&T U-verse with GigaPower, CenturyLink Prism, and other gigabit-speed broadband service competition. In contrast, the largest telecommunications companies in New York have stalled offering better service to New Yorkers.
• Time Warner Cable has left all of upstate New York with no better than 50/5Mbps broadband – a top speed that has not risen in at least five years.
• Frontier Communications has announced fiber upgrades in service areas it is acquiring while its largest New York service area – Rochester, languishes with copper-based ADSL service that often delivers no better than 3-6Mbps, well below the FCC’s minimum 25Mbps definition of broadband.
• Verizon Communications, the state’s largest telephone company, is accused of reneging on its FiOS commitments in New York City and has left upstate New York cities with nothing better than DSL service, giving Time Warner Cable a monopoly on 25+Mbps broadband in most areas. It has also talked openly of selling off its rural landline network or scrapping it altogether, potentially forcing customers to an inferior wireless landline replacement it calls Voice Link.

As the Commission is also well aware, there are a number of recent high-profile issues relating to telecommunications matters that have a direct impact on consumers and businesses in this state – some that are currently before the Commission for review. Largest among them is another acquisition involving Time Warner Cable, this time from Charter Communications. That single issue alone will impact the majority of broadband consumers in New York because Time Warner Cable is the state’s dominant Internet Service Provider for high speed Internet services, especially upstate.

These issues are of monumental importance to the comprehensive examination and study of the telecommunications industry in New York promised by Chairwoman Audrey Zibelman. The Charter-Time Warner Cable merger alone has the potential of affecting millions of New York residents for years to come.

Although this study was first announced to Speaker Sheldon Silver, the Honorable Jeffrey Klein, and the Honorable Dean Skelos in a letter on March 28, 2014, followed up by a notification that Chairwoman Zibelman intended to commence the study within 45 days of her letter of May 13, 2014, the first public notice seeking comments from stakeholders and consumers was issued more than a year later on June 23, 2015 (less than two months ago), with comments due by August 24, 2015.

With respect, providing a 60-day comment window in the middle of summer along with a handful of public hearings scattered across the state with as little as three weeks’ advance notice is wholly inadequate for a broad study of this importance. The Commission’s ambitious schedule to contemplate the state of telecommunications across all of New York State will likely be shorter than the review of the 2014-2015 Comcast-Time Warner Cable merger transaction which started May 15, 2014 and ended April 30, 2015.

We have heard from New York residents upset about how the Commission is handling its review. One complained to us the Commission had more than a year to prepare for its study while giving New York residents short notice to attend poorly advertised public hearings in a distant city, and two months at most to share their feelings with the Commission in writing. One woman described having to find a hearing that was, at best, 60 miles away and located at a city hall unfamiliar to those not local to the area, where suitable parking was inconvenient and difficult as she attempted a lengthy walk to the hearing location at the age of 69.

Several of our members also complained there are more suitable public-friendly venues beyond paid parking downtown city administration buildings or deserted campuses in the middle of summer break. Many asked why the Commission does not seem to have a social media presence or sponsor live video streaming of hearings where residents can participate by phone or online and avoid inconvenient travel to a distant city. Perhaps the Commission could be enlightened to see how New York’s telecommunications companies actually perform during such a hearing.

While we think it is very useful for the Commission to have direct input from the public, we are uncertain about how the Commission intends to manage those comments. We were disappointed to find no public outline of what the Commission intended to include in its evaluation of a topic as broad as “the state of telecommunications in New York.”

Too often, providers downplay service complaints from consumers as “anecdotal evidence” or “isolated incidents.” But if the Commission sought specific input on a topic such as the availability of FiOS in Manhattan, consumers can provide useful input on the exact location(s) where service was requested but not provided.

If the Commission received information from an incumbent provider claiming it was providing broadband service to low income residents, consumers could share on-point experiences as to whether those claims were true, true with conditions the Commission might not be aware of (paperwork requirements, onerous terms, etc.) or false.

If the Commission sought input on rural broadband, providers might point to a broadband availability map that suggests there is robust competition and customer choice. But the Commission could learn from residents asked to share their direct experiences that the map was inaccurate or outdated, including providers that only service commercial customers, or those that cannot provide service that qualifies as “broadband” by the Federal Communications Commission.

A full and open investigation is essential to finding the truth about telecommunications in New York. The Commission needs to understand whether problems are unique to one customer in one part of the state or common among a million people statewide. We urge the Commission to rethink its current approach.

New Yorkers deserve public fact-finding hearings inviting input on the specific issues the Commission is exploring. New Yorkers need longer comment windows, more notice of public hearings, and a generous extension of the current deadline(s) to allow comments to be received for at least 60 additional days.

Most critically, we need hearings bringing the public and stakeholders together to offer sometimes-adversarial testimony to build a factual, evidence-based record on which the Commission can credibly defend its oversight of the telecommunications services that are a critical part of every New Yorker’s life.

The Commission’s policies going forward may have a profound effect on making sure an elderly couple in the Adirondacks can keep a functioning landline, if affordable Internet will be available to an economically-distressed single working mother in the Bronx, or if upstate New York can compete in the new digital economy with gigabit fiber broadband to support small businesses like those run by former employees of downsized companies like Eastman Kodak and Xerox in Rochester.

Yours very truly,

Phillip M. Dampier
Director

“Note: Enforcement of the 250GB data consumption threshold is currently suspended.” (Image: Houston Chronicle)

AT&T’s enforces usage caps with overlimit penalties on its slow speed DSL service while waiving overlimit fees for its higher speed U-verse Internet service.

In 2011, AT&T introduced a 150GB monthly data cap on its DSL customers and a 250GB cap on U-verse Internet access, promising an overlimit fee of $10 for each 50GB customers stray over their allowance. Since that time, although AT&T continues to claim all customers have a usage allowance, it only penalizes DSL customers with overlimit fees.

What makes one customer subject to a higher bill while another can use as much data as they like without penalty? Competition.

Stop the Cap! has found AT&T’s DSL customers are among those least favored by the phone company. Subjected to a data cap with penalty fees for exceeding the allowance is just one of the issues bothering customers like Sheila Rivers, who lives on Houston’s west side. Her Internet bill has gone up year after year no matter how much data she uses. Her phone line with DSL used to cost her around $45 a month. Last year, it increased to $65 and AT&T has now informed her they want another $10 a month, bringing her phone bill to almost $75 a month. As long as it hasn’t rained recently, she gets just under 6Mbps speeds from AT&T. This past spring her connection barely exceeded 2Mbps.

When Rivers complains about her bill, she is quickly offered U-verse at about half the price for faster speeds. She’d take advantage of the offer, except she can’t. AT&T’s engineers tell her there are “no more ports” open in her neighborhood at the moment.

That’s also true for Jim in downtown Chicago. He’s an AT&T DSL customer and not by choice. AT&T was supposed to upgrade his building to U-verse more than a year ago, but it still has not happened. Comcast has a record of delivering appallingly bad service in his building, judging from his neighbors who cannot stay connected to Comcast’s Internet service. That leaves him with AT&T DSL with that 150GB usage cap. He regularly pays $30 in overlimit fees every month for exceeding it.

“AT&T won’t budge on waiving the extra fees on DSL, unless I agree to sign up for U-verse and then they will issue me a courtesy credit,” Jim tells Stop the Cap! “I keep telling them ‘yes, please’ and around a day later I receive another call canceling my order because U-verse is not available in the building. It’s clear the DSL usage cap is supposed to convince people to switch to U-verse for a bigger allowance.”

(Image: Houston Chronicle)

Except AT&T has not enforced its 250GB usage allowance with overlimit fees anywhere we could find. In fact, customers tell us they are specifically exempted from any U-verse caps based on a message they see on AT&T’s usage measurement tool:

Note: Enforcement of the 250GB data consumption threshold is currently suspended.

This week, the Houston Chronicle’s TechBlog reports usage caps for U-verse have been suspended across the city of Houston. AT&T’s current reasoning for harshly enforcing caps on its DSL service while not enforcing them at all for U-verse customers was murky:

“We’re educating our customers on Internet usage, and we inform them if their usage might affect their monthly bill.”

So what is different about AT&T’s lower speed DSL service that presumably generates less traffic than its higher speed U-verse counterpart?

The answer seems to be competition.

AT&T has aggressively upgraded many of their urban and suburban service areas to U-verse. That upgrade alone does not mean the end of DSL for customers in an upgraded area, but AT&T has clearly embarked on an effort to convince customers to abandon older DSL service in favor of U-verse. In most cases this is accomplished with promotional pricing, dramatically reducing the cost of U-verse and convincing customers sticking with DSL is an expensive mistake.

AT&T also faces cable competition in nearly 100% of their U-verse service areas — competition that has raised broadband speeds and cut prices for new customers. If the competition offers faster Internet speeds with no usage cap, toughing it out with AT&T U-verse may seem unwise. Enforcing that 250GB cap would likely drive a number of customers to the competition.

In contrast, more rural and outer suburban communities are less likely to have a cable competitor and much more likely to qualify only for DSL because AT&T has not upgraded those areas to U-verse. That leaves AT&T with a monopoly, where customers have no other choices for service. It is very easy to enforce usage caps in these areas.

“It doesn’t make any sense that AT&T would cap me to 150GB on my DSL line and charge me overlimit fees for using too much when my next door neighbor with U-verse can use the Internet 24/7 and never be asked to pay anything extra for doing it,” Rivers said. “It rubbed me wrong enough to call Comcast, where I was offered more than 10 times faster service with cable TV thrown in for $15 less than what AT&T has been charging me and no usage caps for now at least. I can’t stand Comcast but AT&T is worse.”

Rivers thinks AT&T is making a big mistake having usage caps at all.

“That one issue just cost them my business after eight years with them.”