Frontier Communications, just hours after passing its first hurdle  — from the Federal Trade Commission — to go ahead with its proposed $10.54 billion acquisition of Verizon’s wireline assets in California, Florida and Texas, is already being discussed as the most likely buyer of FairPoint Communications, which serves former Verizon customers in the northern New England states of Vermont, New Hampshire and Maine.

Wall Street is turning up the pressure on FairPoint to sell its money-losing operation to a larger company that could use economy of scale to rescue a business that has already declared bankruptcy once and lost over $136 million last year. FairPoint also recently settled an ongoing dispute with its unionized workforce which makes the company a more likely takeover target.

FairPoint CEO Paul Sunu put out the for-sale sign during last week’s first quarter earnings conference call, admitting to investors FairPoint is considering mergers and acquisitions as a seller or buyer as part of the company’s overall strategy.

Barry Sine, a telecom analyst with Drexel Hamilton, said the company’s 18,000 mile fiber optic network across the three states it serves is the crown jewel of FairPoint and would be a valuable addition to a larger phone company’s portfolio. FairPoint continues to rapidly lose residential customers as they switch to cellular phones, cable company phone service, or broadband-powered Voice over IP services like Ooma. But FairPoint is picking up customers in the commercial sector, including wireless carriers seeking cell tower backhaul connections, hospitals, and other institutions using FairPoint’s fiber network.

Frontier, headquartered in Stamford, Conn., already has substantial assets in the northeast, including AT&T’s former service area in Connecticut. Picking up northern New England would not be much of a challenge for a company already serving 28 states with more than 17,000 employees and could soon pick up millions of new customers in the south.

Vermont Public Radio reports troubled FairPoint Communications, which serves customers in northern New England originally serviced by Verizon, is likely up for sale and could be acquired by a company like Frontier Communications by 2017. (2:54)

You must remain on this page to hear the clip, or you can download the clip and listen later.

With Frontier’s attention currently occupied by its latest Verizon transaction, analysts do not expect to see a deal with FairPoint struck before 2017. That could allow Frontier’s rivals — CenturyLink and Windstream to approach FairPoint first. But neither of those two companies have recently been active acquiring new landline service areas.

Many of FairPoint’s largest shareholders purchased defaulted bonds when FairPoint went bankrupt, and hope to rack up a substantial return when FairPoint is sold to a larger company.

Frontier has a better record of working well with unionized workers than FairPoint, so it was no surprise the unions representing FairPoint workers are not upset with the news the company could be sold.

A spokesman for the International Brotherhood of Electrical Workers in Vermont told Vermont Public Radio the union is aware of speculation about a future sale of the company and would welcome the opportunity to be a partner with “a more successful business” than FairPoint.

For broadband in western Massachusetts, the vote is nothing less than a referendum on moving forward or getting left behind indefinitely.

Wired West’s co-op of communities in western Massachusetts.

Hussain Hamdan of Hawley, has launched a one-man war on public broadband, actively seeking signatures on a petition to pull his community of 347 out of the project, claiming it is too costly. Hamdan argues wireless broadband is a more suitable solution for the town. His petition, signed by at least 36 residents, wants no part of the WiredWest initiative, but he’d go further. Hamdan proposes to outlaw municipal utility services altogether, forbid selectmen or other town boards from appropriating a single penny for any WiredWest project, prohibit spending on postage for any mailings discussing public broadband, and even making sure town officials attending a function on municipal broadband are not reimbursed for their mileage expenses. Coincidentally, another Hamdan petition seeks the right to recall elected officials, ensuring any ousted politician cannot be re-elected to office for at least three years. (Hamdan denies his recall election proposal targets any town official specifically.)

Despite all this, Hamdan claims he is for bringing high-speed Internet access to town, just not through WiredWest. Unfortunately for the 300+ other residents of Hawley that did not sign the petition, Hamdan’s enthusiasm for alternative service has not been matched by a single interested provider seeking to fill Hawley’s broadband chasm.

Because Mr. Hamdan didn’t do his homework, we have, and here are the “alternatives” Hawley residents can actually consider:

Convincing Time Warner Cable to Come to Town

Assuming Time Warner Cable was somehow persuaded to offer service, as they already do in parts of western Massachusetts, they will expect considerable compensation to extend their cable network to a community that fails to meet their Return on Investment requirements. It will be an uphill battle. Next door in upstate New York, Time Warner Cable needed $5.3 million in taxpayer incentives just to expand service to, at most, 5,320 homes or businesses around the state that were already close to existing Time Warner service areas, but had no access to cable before. Conclusion: Time Warner Cable already serves the areas they feel comfortable serving.

Mark Williams, who lives in Lee – Berkshire County, wanted Time Warner Cable service at his home. Lee has franchised Time Warner Cable to provide service throughout the community, so Williams didn’t think twice about ordering service. When the company arrived, it found his driveway was 100 feet too long.

Time Warner has a formula that determines who will pay to install necessary infrastructure. If a certain number of properties are located within a specific radius, they cover the costs. If a community isn’t presently served, if residents live too far apart, or have an unusual property, Time Warner expects the town or resident to cover part of their costs. In Williams’ case, $12,000 was initially quoted to wire his home back in 2010. Because Time Warner had already committed to provide service in the area, the bad publicity that resulted from that installation fee forced Time Warner to back down. But in unserved communities, the costs spiral even higher. Residents on the fringe of a cable coverage area are routinely quoted, $15,000, $20,000, even $35,000 just to get a cable line extended to a single home from a nearby street. We’re not sure how far away Hawley is from the nearest Time Warner Cable service area, but it is a safe bet the company would need enormous taxpayer-funded incentives from local residents to extend universal cable service in the community.

If both Time Warner and WiredWest were providing service side-by-side in Hawley today, residents would pay Time Warner Cable $911/yr for 20Mbps Turbo Internet broadband, including the $8/mo modem lease fee or $588/yr to WiredWest for 25Mbps broadband. WiredWest would save residents $323 a year — and help pay off its infrastructure costs while keeping the money in the community.

Assuming Time Warner Cable is never going to be an option, which we think is likely, the wireless alternatives suggested by Hamdan largely do not exist at this time, are unfeasible, or no longer meet the FCC’s minimum definition of broadband.

White Space Broadband: Can It Work in Western Mass.?

First, let’s consider “white space” broadband – high-speed wireless Internet access delivered over unused TV channels. At the moment, this service is still in the experimental stages in most areas, but as Stop the Cap! previously reported, it has promise for rural communities. Unfortunately, despite Hawley’s small size and rural location, the current database of available free channels to offer white space Internet access in the area is discouraging, based on the address of the community’s town office on Pudding Hollow Drive. There are just six open channels because of an abundance of TV signals in Connecticut, Vermont, Massachusetts, and New York that get precedence. Of these six, there are just four optimal choices – UHF channels 14-17. In our previous story highlighting Thurman, N.Y.’s white space project, there are 17 open channels in that area, none on VHF or reserved for radio astronomy. Feel free to use the database to see how many open channels are available in your local area.

Not much room at the inn. White space broadband will be a challenge in signal-dense northeastern states.

But the news may be even worse. The FCC is currently preparing to “repack” the UHF dial around the country by consolidating existing stations on a smaller number of channels. The freed up bandwidth will be auctioned off to cell phone companies to boost their networks. This month, we learned the wireless industry’s largest lobbying group is pushing hard to force other users to vacate “their” spectrum the moment they begin testing on those frequencies. Interference concerns and the dense number of TV signals already operating in the northeastern U.S. means it is very likely communities like Hawley will have even less opportunity to explore white space broadband as an option.

What About Wireless ISPs?

Second, there are traditional Wireless ISPs (WISPs) which do a reasonably good job reaching very sparsely populated areas, as long as customers are willing to sacrifice speed and pay higher costs.

BlazeWIFI advertises service in the rural community of Warwick, Mass (zip code: 01378). But it is anything but a bargain. The least expensive plan is $99.99 a month and that offers the dismally slow speed of 1.5Mbps for downloading and only 512kbps for uploading. It also includes a data cap of 25GB a month. That is slowband and a last resort. It’s more expensive, it’s slower, and it is usage-capped.

Some WISPs offer faster service, but few are equipped to handle the FCC’s definition of 25Mbps as the minimum speed to qualify as broadband. In short, this technology may eventually be replaced by white space broadband where speeds and capacity are higher, as long as suitable unused channel space exists.

What About Wireless Home Internet Plans from AT&T, Verizon Wireless?

Third, there are wireless broadband solutions from the cell phone providers. Only Hawley residents can decide for themselves whether AT&T and Verizon Wireless deliver robust reception inside the community. If they do, both companies offer wireless home Internet service.

The base charge for AT&T’s plan is $20 for unlimited nationwide phone calling + $60/mo for a 10GB Wireless Home Internet Plan. There is a 2-yr contract and a $150 early termination fee. Since the average household now uses between 15-50GB of Internet service per month (lower end for retired couples, 35GB median usage for AT&T DSL customers, but even more for young or large families), you have to upgrade the plan right from the start. A more suitable 20GB plan is $90/month. A 30GB plan runs $120 a month. The overlimit fee is $10/GB if you run over your plan’s limit. You will also be billed “taxes & federal & state universal service charges, Reg. Cost Recovery Charge (up to $1.25), gross receipts surcharge, Admin. Fee & other gov’t assessments which are not gov’t req’d charges.” Verizon’s plan is similar.

You must have robust cell coverage for this service to work and be ready for speeds of 5-20Mbps, getting slower as more customers join a cell tower. The lowest rate available runs about $90 a month after taxes and fees are calculated and you need to switch it off when you approach 10GB of usage to avoid additional fees.

What is the Best Option?

No broadband? No sale.

As we have seen across the United States, communities offered the possibility of fiber optic Internet are embracing it, some even begging for the technology. There is simply no better future-proof, high-capacity broadband technology available. But installing it has been costly – a fact every provider has dealt with. Most rural providers treat fiber optic technology as an investment in the future because it has very low maintenance costs, is infinitely upgradable, and can offer a foundation on which current and future high-bandwidth online projects can expand.

The fact is, western Massachusetts has been left behind by Comcast and Time Warner Cable, as well as Verizon. Nobody in the private sector is coming to the rescue. Verizon has stopped expanding its FiOS fiber network and all signs point to its growing interest in exiting the landline and wired broadband business altogether in favor of its higher profit Verizon Wireless. Cable operators strictly adhere to a Return on Investment formula and will not expand service areas without major taxpayer support.

In communities in more conservative states like Tennessee and North Carolina, the obvious choice was for local governments and municipal power companies to provide the service other providers won’t. Despite the industry funded scare stories, projects like EPB Fiber in Chattanooga and GreenLight in Wilson, N.C., are doing just fine and attract new businesses and jobs into both regions. They offer far superior service to what the local cable and phone company offer in those areas.

It is unfortunate rural residents have to effectively pay more to get a service urban areas already have, but to go without would be disastrous for school-age children, local entrepreneurs, agribusiness workers, and tele-medicine.

Mr. Hamdan argues Hawley cannot afford WiredWest. But if one looks deeper at the alternatives, it becomes clear Hawley can’t afford not to be a part of a service that is likely to be ubiquitous across the region. Even those not interested in the Internet can ask any realtor how important Internet access is to a homebuyer that considers inadequate broadband a deal-breaker. That could cost much more than the $350/yr Mr. Hamdan theoretically suggests WiredWest will cost Hawley.

Mr. Hamdan offers no real answers for his community about alternatives that are available, affordable, and capable of providing the kind of service WiredWest is proposing. Voters should carefully consider the economic impact of leaving their community in a broadband backwater as the rest of the region advances towards fiber optic broadband. That is the cost that is too high to pay.

[flv]http://www.phillipdampier.com/video/Wired West Western Mass broadband woes 1-15.mp4[/flv]

Wired West project coordinators didn’t have to go far to hear broadband horror stories in western Massachusetts, which has some of the worst Internet access in the world. (17:51)

A Florida utility company has told federal regulators it is certain Verizon has a plan to exit its landline and wired broadband businesses within the next ten years to become an all-wireless service provider.

Florida Power & Light argued in a regulatory filing with the Federal Communications Commission it was clear Verizon had plans to exit its wireline business after the phone company suddenly informed regulated utilities like FP&L it no longer seemed interested in fighting over pole attachment fees and pole ownership and use issues. FP&L suggests that is a radical change of heart for a company that has fought tooth and nail over issues like pole attachment fees for years.

“Verizon has made it clear it intends to be out of the wireline business within the next ten years, conveying this clear intent to regulated utilities in negotiations over joint use issues and explaining that Verizon no longer wants to be a pole owner,” FP&L wrote to federal regulators. “Indeed, the current proposed [$10.54 billion sale of Verizon facilities in Florida, Texas and California] proves this point.”

Verizon has fought repeatedly with the Florida power company over the fees it pays FP&L to attach copper and fiber cables to the power company’s poles. Verizon Florida has repeatedly accused FP&L of charging unjust fees and at one point withheld payments to the utility worth millions.

In February, the FCC dismissed Verizon’s complaint for lack of evidence in the first-ever decision in a pole attachment complaint case involving an incumbent telephone company under a joint use agreement with an electric utility. The power company accused Verizon of lying when it promised concrete benefits to consumers if the FCC reduced joint use pole attachment rates. Suddenly, Verizon no longer seems to be interested in the issue.

“Verizon has not increased its efforts to deploy wireline broadband in the last three years; and there is no evidence that Verizon has used the capital saved on joint use rates for the expansion of wireline broadband,” FP&L officials write. “Indeed, all of the evidence shows that Verizon is abandoning its efforts to build out wireline broadband.”

The power company is not about to just wave goodbye to Verizon. It filed remarks opposing the sale, claiming the benefits will end up in the pockets of executives and shareholders while customers get little or nothing. FP&L wants the FCC to enforce concrete conditions that guarantee Frontier will invest in upgrades to Verizon’s network, especially in non-FiOS service areas.

FP&L added it supports forward technological progress for the benefit of consumers, but the price of that progress should not be the abandonment of wireline customers, contractual obligations, and past promises to the FCC. The utility wrote it is not opposed to Verizon becoming a fully wireless company, but it should only be allowed to do so after it ensures that “its wireline house is in order.”

As things stand today, the utility argues Verizon is looking to abdicate on its obligation to deliver universal service and is no longer interested in maintaining its wired networks. FP&L points to Verizon’s efforts in 2013 to discard damaged wired facilities in favor of Voice Link, Verizon’s wireless landline replacement, in states including New York, New Jersey, and Florida.

“There should be no doubt that Verizon’s strategy to abandon wireline service in favor of wireless service extends beyond New York and Florida and beyond storm damaged and rural areas,” argues FP&L.

The utility points to Verizon’s successful effort to relieve itself of obligations to build a statewide fiber network in New Jersey that was supposed to be complete by 2010.

“Verizon, quite simply, has failed to build out wireline broadband in New Jersey because Verizon has no interest in doing so,” said FP&L. “As the sale of wireline facilities in Florida, Texas, and California […] clearly demonstrates, Verizon obviously is no longer interested in the wireline broadband business and sees its financial future in the wireless industry.”

A $500 million New York State broadband improvement fund is effectively off-limits for would-be community-owned broadband networks trying to deliver broadband service in areas for-profit providers have deemed unprofitable.

New York Gov. Andrew Cuomo’s ambitious plan to revolutionize Internet access for New Yorkers depends almost exclusively on for-profit providers and the state’s largest cable operator, Time Warner Cable – the company that has so far received the largest share of state funds earmarked for better broadband.

Cuomo wants all of New York wired for 100Mbps service no later than 2018. His goal is ambitious because the overwhelming majority of upstate New York barely now receives a maximum of 50Mbps from Time Warner Cable, the only significant cable operator in the region.

The broadband map from N.Y. State shows 100Mbps service is available only from Verizon FiOS, Cablevision, and a handful of municipal/co-op operators. Time Warner Cable only provides a maximum of 50Mbps service across upstate New York. Cablevision and FiOS compete on Long Island, Time Warner Cable Maxx competes with Verizon in New York City, and most of upstate New York is served by Verizon or Frontier DSL competing with Time Warner Cable.

Six months after the program was announced, Capital magazine reports the “New NY Broadband” plan is languishing with no defined guidelines, rules, or any clear sense about how the program will be implemented and the money spent.

Salway

In fact, one of the only clear statements coming from David Salway, a former telecommunications consultant who now administers the program, is that local governments should not bother applying because he doesn’t want them competing with Time Warner Cable, Verizon, and Frontier. It’s private enterprise only:

“The primary focus of our program is that we’re not going to be in the building business,” Salway said. He emphasized that municipal governments won’t be specifically precluded from receiving funds under the program, but said that the state is “wary” of “the government building and competing with the private sector. We see this as a provider partnership process where an incumbent provider or maybe a new entrant comes in.”

Local government leaders can read between the lines and most will not bother applying for funding if Salway’s vision guides the grant-making process. Instead, Salway wants to funnel money that effectively belongs to New York taxpayers into the pockets of for-profit providers like Verizon, Frontier, Windstream, Time Warner Cable and other providers that have consistently refused to expand their networks into rural areas on their own dime. The money earmarked for broadband is part of a $6 billion legal settlement the New York Attorney General’s office negotiated with Wall Street and commercial banks that helped plunge the country into The Great Recession.

Broadband advocates across the political spectrum are slamming the broadband program for different reasons. Christopher Mitchell from the Institute for Local Self Reliance predicts providers will deliver bait and switch broadband on the taxpayer’s dime and send the proceeds out of the area.

“When you subsidize the private sector, you don’t really know what kind of services they’re going to provide in the future,” Mitchell said. “There’s a fair number that basically rip off consumers,” and they “basically extract resources from the community they serve.”

Mitchell

“The only clear beneficiaries of this program will be cable and Internet providers, who will have a new state subsidy to expand their footprints into areas in which their competitors have demonstrated an inability to operate profitably,” said Ken Girardin of the conservative Empire Center for Public Policy, in a scathing review of the New NY plan.

So far, Verizon has shown no interest in the program. It’s eventual intent is to decommission rural landline service and push existing customers to wireless service, so applying for wired broadband expansion funding isn’t a priority. The most likely applicants include Windstream, which serves a small percentage of rural New York telephone exchanges, Frontier Communications, which dominates Rochester and parts of the Finger Lakes region, and Time Warner Cable, which used earlier funding to connect two rural communities to its cable service. But all three companies are waiting for the program and its grant terms to be better defined.

With incumbent cable and phone companies reluctant to take part, there are several wired and wireless broadband initiatives in rural areas around New York starved of resources to expand their networks. The “white space” wireless broadband project in Thurman, for example, will be seeking funding to expand its wireless high-speed network into other parts of the community. Other initiatives could allow existing middle mile fiber networks in the Southern Tier and Finger Lakes region to explore building out “last mile” service to homes and businesses that now receive only DSL or no Internet access at all.

Salway promises he’ll consider funding networks that deliver the best broadband speeds for the lowest relative price in similarly sized communities. But all the money in the world won’t help if an existing phone or cable company shows no interest in serving unprofitable rural areas even after the state defrays the initial cost of placing the infrastructure to provide the service.

Mitchell believes local communities are best positioned to know what their residents want and many support publicly funded fiber technology rollouts. He points to Longmont, Col., a community that fought off propaganda mailers and a $300,000 marketing effort by CenturyLink and Comcast to defeat public fiber broadband in the city. The residents voted in favor of building their own network to move beyond the “good enough for you” broadband coming from the phone and cable company.

“The Longmonts of the country can decide to wait until these private sector companies decide its in their interest to finally build these fiber networks out, or they can say, ‘You know, we’re always going to be behind the greater technological curve of the nation,’ and do it themselves,” Tom Roiniotis, Longmont’s general manager, told Capital.

Telecom Egypt

Egypt has made ditching antiquated copper phone wiring a national priority and Telecom Egypt is continuing its efforts to dump copper in favor of fiber optics to improve quality and reliability of service.

In April, customers in West Cairo, New Cairo, Giza city, and the Northern Coast may experience temporary outages as the new fiber network is connected. The company is also installing fiber service in the east, central and western Delta region, northern, central, and southern Upper Egypt, Ismailia and Suez.

When this phase is complete by the end of this year, over four million Egyptians will have access to fiber service. The company is accelerating its transition to fiber service as Egyptians are increasingly dumping landline service in favor of wireless. Competition from three mobile companies – Vodafone Egypt, Etisalat and Mobinil have taken a considerable market share. Last year, the Egyptian government allowed Telecom Egypt to compete with a wireless service of its own, but the three mobile providers also get to start selling landline and broadband service.

Telecom Egypt hopes its $400 million investment in fiber will slow down customer defections and allow the company to sell improved services to customers.