Despite years of arguments from telecom companies that residential customers don’t need or want super-fast broadband speeds, the people of Kansas City think otherwise.

A survey by Wall Street analyst Bernstein Research discovered Google Fiber has signed up almost 75% of homes offered the gigabit fiber-to-the-home service.

“[Customer] penetration measured by our survey was much higher than we had expected,” said Berstein Research analyst Carlos Kirjner.

Haynes and Company conducted a door-to-door survey of more than 200 homes within Google Fiber’s service area in Kansas City, visiting wealthy, middle-income, and challenged urban areas. Despite claims from cable and phone companies that Google is only interested in choosing to offer fiber service in affluent areas, Bernstein Research found Google was doing very well in every neighborhood.

In the poorest neighborhoods, Google is still winning a 30% market share — way above estimates, with customers attracted to Google’s free 5/1Mbps broadband service (customers must pay a recently lowered $30 construction fee). Customer penetration rates in urban areas could grow even higher if Google allowed customers with free Internet service access to its $50 cable television package, now only available to gigabit broadband customers.

Google’s service plans

In middle and upper income neighborhoods, Google has decisively captured a 75% market share — clearly a major problem for incumbent competitors AT&T and Time Warner Cable, which could lose well over half their customers.

Even more worrying for the cable and phone companies, Google is grabbing customers primarily on word-of-mouth testimonials from satisfied customers. At least 98% of Kansas City residents surveyed were aware of Google’s fiber offering. At least 52% said they would “definitely or probably” buy Google Fiber, 25% said they might or might not purchase the service, and only 19% said they definitely or probably wouldn’t buy it.

“Our survey suggests that Google Fiber has gained a significant foothold in its early Kansas City fiberhoods. Consumers are highly satisfied with Google Fiber service, suggesting its share gains are likely not done yet,” Kirjner added.

Bernstein believes Google can grab an even larger share of the Kansas City market by returning to mature fiberhoods in the future with aggressive marketing campaigns that could easily win even more customers.

If Bernstein’s research holds true in other markets, Google Fiber could eventually become a serious competitive threat to both cable and telephone companies, depending on how quickly they expand. Google Fiber is also likely to become a profitable service for the search engine giant, despite the high initial expense of wiring communities for fiber optics.

Bernstein predicts that Google Fiber is positioned to capture a minimum of 50% of the Kansas City market within four years, knocking Time Warner Cable’s out of first place for the first time and posing a serious financial threat for AT&T’s less-capable U-verse platform, which has only attracted a minority share of the market. At least 40% of customers seeking a broadband and cable television package will choose Google Fiber, Bernstein Research predicts.

In almost every market, the traditional cable operator still maintains the largest share of customers. Telephone company competitors usually don’t win more than 20-30% of a market, although Verizon FiOS’ fiber network does better than most. Satellite providers only compete for television customers, which is increasingly less profitable than broadband service.

These kinds of results underline Bernstein Research’s conviction Google Fiber is not an experiment or publicity stunt that the cable industry often claims it to be. Nor does the research firm believe Google is only interested in forcing cable and phone companies to raise broadband speeds. Instead, it is becoming increasingly clear Google is prepared to gradually expand its fiber network across the country, at least in areas bypassed by Verizon FiOS or other fiber networks. However, it will take many years for this to happen.

A 2011 state law largely written by Time Warner Cable will likely keep Charlotte, N.C. waiting for fiber broadband that nearby Salisbury has had since 2010.

North Carolina is dominated by Time Warner Cable, AT&T and CenturyLink. Google and AT&T recently expressed interest in bringing their fiber networks to the home in several cities in the state, but neither have put a shovel in the ground.

Fibrant, a community owned broadband provider in Salisbury, northeast of Charlotte, not only laid 250 miles of fiber optics, it has been open for business since November 2010. It was just in time for the publicly owned venture, joining a growing number of community providers like Wilson’s Greenlight and Mooresville, Davidson and Cornelius’ MI-Connection. Time Warner Cable’s lobbyists spent several years pushing for legislation restricting the development of these new competitors and when Republicans took control of the General Assembly in 2011, they finally succeeded. Today, launching or expanding community broadband networks in North Carolina has been made nearly impossible by the law, modeled after a bill developed by the American Legislative Exchange Council (ALEC).

With fiber fever gripping the state, Fibrant has gotten a lot of attention from Charlotte media because it provides the type of service other providers are only talking about. Fibrant offers residents cable television, phone, and broadband and competes directly with Time Warner Cable and AT&T. Although not the cheapest option in town, Fibrant is certainly the fastest and local residents are gradually taking their business to the community alternative.

Charlotte, N.C. is surrounded by community providers like Fibrant in Salisbury and MI-Connection in the Mooresville area.

“A lot faster Internet speeds, a lot clearer phone calls,” said Sidewalk Deli owner Rick Anderson-McCombs, who switched to Fibrant after 15 years with another provider. His mother, Anganetta Dover told WSOC-TV, “I think we save about $30 to $40 a month with Fibrant and the advantages of having the speed is so much better.”

Julianne Goodman cut cable’s cord, dropping Time Warner Cable TV service in favor of Netflix. To support her online streaming habit, she switched to Fibrant, which offers faster Internet speeds than the cable company.

Commercial customers are also switching, predominately away from AT&T in favor of Fibrant.

“Businesses love us because we don’t restrict them on uploads,” one Fibrant worker told WCNC-TV. “So when they want to send files, it’s practically instantaneous.”

Fibrant offers synchronous broadband speeds, which mean the download and upload speeds are the same. Cable broadband technology always favors download speeds over upload, and Time Warner Cable’s fastest upstream speed remains stuck at 5Mbps in North Carolina.

AT&T offers a mix of DSL and U-verse fiber to the neighborhood service in North Carolina. Maximum download speed for most customers is around 24Mbps. AT&T has made a vague commitment to increase those speeds, but customers report difficulty qualifying for upgrades.

Time Warner Cable is a big player in the largest city in North Carolina, evident as soon as you spot the Time Warner Cable Arena on East Trade Street in downtown Charlotte.

Taxpayer dollars are also funneled to the cable company.

Time Warner Cable’s $82 million data center won the company a $2.9 million Job Development Investment Grant. Charlotte’s News & Observer noted the nation’s second largest cable company also received $3 million in state incentives.

When communities like Salisbury approached providers about improving broadband speeds, they were shown the door.

[flv]http://www.phillipdampier.com/video/WCNC Charlotte Fibrant Already Provides Fiber 3-5-14.mp4[/flv]

WCNC-TV reports that with Google expressing an interest in providing fiber service in Charlotte, Salisbury’s Fibrant has been offering service since 2010. (2:57)

“Our citizens asked for high-speed Internet,” says Doug Paris, Salisbury’s city manager. “We met with the incumbent providers [like Time Warner and AT&T, and that did not fit within their business plans.”

Salisbury and Wilson, among others, elected to build their own networks. The decision to enter the broadband business came under immediate attack from incumbent providers and a range of conservative astroturf and sock puppet political groups often secretly funded by the phone and cable companies.

Rep. Avila, a ban proponent, meets with Marc Trathen, Time Warner Cable’s top lobbyist (right) (Photo: Bob Sepe)

Critics of Fibrant launched an attack website against the venture (it stopped updating in March, 2012), suggesting the fiber venture would bankrupt the city. One brochure even calls Stop the Cap! part of a high-priced consultant cabal of “Judas goats for big fiber” (for the record, Stop the Cap! was not/is not paid a penny to advocate for Fibrant or any other provider).

Opponents also characterize Fibrant as communism in action and have distributed editorial cartoons depicting Fibrant service technicians in Soviet military uniforms guarding Salisbury’s broadband gulag.

In January of this year, city officials were able to report positive news. Fibrant has begun to turn a profit after generating $2,223,678 in the revenue from July through December, 2013. Fibrant lost $4.1 million during the previous fiscal year. That is an improvement over earlier years when the venture borrowed more than $7 million from the city’s water and sewer capital reserve fund, repaying the loans at 1 percent interest. The city believes the $33 million broadband network will break even this year — just four years after launching.

Fibrant is certainly no Time Warner Cable or AT&T, having fewer than 3,000 customers in the Salisbury city limits. But it does have a market share of 21 percent, comparable to what AT&T U-verse has achieved in many of its markets.

Fibrant also has the highest average revenue per customer among broadband providers in the city — $129 a month vs. $121 for Time Warner Cable. Customers spend more for the faster speeds Fibrant offers.

Some residents wonder if Fibrant will be successful if or when AT&T and Google begin offering fiber service. Both companies have made a splash in Charlotte’s newspapers and television news about their fiber plans, which exist only on paper in the form of press releases. Neither provider has targeted Salisbury for upgrades and nobody can predict whether either will ultimately bring fiber service to the city of Charlotte.

Those clamoring for fiber broadband speeds under the state’s anti-community broadband law will have to move to one of a handful of grandfathered communities in North Carolina where forward-thinking leaders actually built the fiber networks private companies are still only talking about.

[flv]http://www.phillipdampier.com/video/WSOC Charlotte Charlotte could gain from fiber optic network already in place 4-22-14.flv[/flv]

WSOC-TV in Charlotte reports Salisbury customers are happy with Fibrant service and the competition it provides AT&T and Time Warner Cable. (2:12)

AT&T has usage capped its heavily promoted U-verse GigaPower fiber to the home service at 1TB a month, according to fine print appearing on communications sent to customers.

Any customer that exceeds 1TB of usage per month will be subject to AT&T’s usual overlimit fees: $10 for each additional 50GB of data sent or received. At least AT&T currently caps the maximum overlimit fee at $30 for its fiber customers.

Many Austin GigaPower customers are signing up for the company’s Premier package, which includes a waiver of equipment, installation, and activation fees and provides 36 months of fixed rates and free HBO and HD service along with 300/300Mbps broadband.

Enrolling in a discounted promotional plan does mean you consent to allow AT&T to collect information about your browsing habits through deep packet inspection.

Phillip “The circus is in town” Dampier

Yesterday afternoon I got to experience both the pain of having a tooth pulled and watch Comcast and Time Warner Cable defend its merger for more than three hours before the Senate Judiciary Committee. The Festival of Nonsense from Comcast’s top lobbyist David Cohen and Time Warner Cable’s chief financial officer Arthur Minson hurt more.

Despite the $45 billion dollar deal, the real powers that be couldn’t be bothered to turn up at the hearing. Comcast’s chief executive was nowhere to be found — perhaps he was playing golf with President Obama again. Comcast’s top lobbyist David Cohen showed up instead, wearing an outfit that looked like it was stuffed with cash waiting to fall from his pockets into the hands of his “friends” on Capitol Hill. Cohen is a well-known Democratic money bundler who raised $1.44 million for the president’s reelection campaign in 2011 and 2012, and $2.22 million since 2007. (Obama spent time in Cohen’s Philadelphia home as well, part of a DNC fundraising party.)

Perhaps Time Warner Cable CEO Robert Marcus was unavailable because he was too busy counting the $8.52 million he was paid before agreeing to sell the company. Don’t expect him at the next hearing either, because he is shopping for a bigger safe to hold the $80 million he will receive for agreeing to change Time Warner Cable’s name to Comcast.

The other usual suspects were also missing in action. Not a peep from the major networks or cable programmers at the hearing. Instead, the Senate endured a guy with a golf channel nobody ever heard of using the hearing to try to get his calls returned by Time Warner and a wireless provider who believes his technology is faster than fiber. Sure it is.

Brought to you in part by America’s cable industry.

I suppose it’s also worth mentioning Christopher Yoo – Comcast’s intellectual sock puppet straight out of the cable company’s home town of Philadelphia. He serves at the pleasure of the “Center for Technology, Innovation & Competition” (cough) at the University of Pennsylvania. The “center” is financially supported by the cable industry. David Cohen just happens (by sheer coincidence) to chair the university’s Board of Trustees. Yoo’s testimony could be boiled down to a nod in Cohen’s direction with an affirming, “whatever he said.”

The Cohen and Minson Comedy Hour began with opening statements extolling the virtues of supersizing Comzilla, with dubious claims about its benefits for consumers.

Without laughing, read the following out loud:

“We welcome this opportunity to discuss the proposed transaction between Comcast Corporation (“Comcast”) and Time Warner Cable Inc. (“TWC”), and the substantial and multiple pro-consumer, pro-competitive, and public interest benefits that it will generate, including through competitive entry in segments neither company today can meaningfully serve on its own,” the two companies wrote in their joint opening statement.

Cohen

“Comcast and TWC do not compete for customers in any market – either for broadband, video, or voice services. The transaction will not reduce competition or consumer choice at all. Comcast and TWC serve separate and distinct geographic areas. This simple but critically important fact has been lost on many who would criticize our transaction, but it cannot be ignored – competition simply will not be reduced. Rather, the transaction will enhance competition in key market segments, including advanced business services and advertising.”

To emphasize just how little this merger will impact the current state of non-competition in the broadband marketplace, Comcast repeatedly emphasized you can’t subscribe to a competing cable company today and still won’t tomorrow:

“Consumers in Comcast’s territories cannot subscribe to TWC for broadband, video, or phone services. And TWC customers cannot switch to Comcast. For that reason, this is not a horizontal transaction under merger review standards, and there will be no reduction in competition or consumer choice,” said the written statement.

In other words, since there was no competition between cable companies before, making sure consumers still don’t have a choice is not anti-competitive.

Watch the entire hearing on the Senate Judiciary Committee website.

(The hearing begins at the 24 minute mark.)

Here are some other “benefits” promised by Cohen and Minson:

Post-transaction, Comcast intends to make substantial incremental upgrades to TWC’s systems to migrate them to all-digital, freeing up bandwidth to deliver greater speeds. For example, Comcast typically bonds 8 QAM channels together in its systems, and Comcast’s most popular broadband service tier offers speeds of 25/5Mbps upstream across its footprint. In comparison, TWC bonds 4 QAM channels in nearly half of its systems, and its most commonly purchased service tier offers speeds of 15/1Mbps. Comcast’s fastest residential broadband tier offers speeds of 505/100Mbps; TWC’s current top speeds are 100/5Mbps. Comcast’s investments in the TWC systems will also improve network reliability, network security, and convenience to TWC customers.

Minson

Of course, nothing prevented either company from boosting speeds without a $45 billion merger deal. In fact, Comcast is doing exactly that this week. Marcus’ own revival plan for TWC, dubbed TWC Maxx, promised Time Warner Cable customers would get even faster speeds than Comcast offers most of its customers.

Time Warner Cable now advertises it does not have usage caps on broadband. Comcast cannot say the same, although it tries very hard to tapdance around the matter by calling the 300GB monthly cap spreading into more and more Comcast territories a “data threshold.”

Comcast’s speed upgrades for TWC customers are likely to come with a big catch — an arbitrary usage allowance that limits their usefulness. By the way, that 505Mbps service is available only from Comcast’s extremely limited fiber network that the overwhelming majority of customers cannot get.

The transaction will similarly speed the availability of advanced Wi-Fi equipment in consumers’ homes. The quality of broadband service depends not only on the “last-mile” infrastructure but also the delivery of the signal over the last few yards. Comcast has led the entire broadband industry in rolling out advanced gateway Wi-Fi routers to approximately 8 million households and small businesses, giving these customers faster speeds (up to 270 Mbps downstream as compared to 85 Mbps downstream from the prior generation devices) and better performance over their home and business wireless networks. In contrast, TWC only recently began deploying advanced in-home Wi-Fi routers. With the greater purchasing power and economies of scale resulting from the transaction, Comcast can not only offer TWC customers access to today’s best routers, but also invest in and deploy next-generation router technologies for all of the combined company’s customers.

Comcast doesn’t like to mention that “advanced Wi-Fi” equipment costs customers $8 a month… forever. Comcast is also using it to boost its own Wi-Fi service by sharing it with the neighbors. This merger “benefit” will cost customers almost $100 a year. Customers can do better buying their own equipment and don’t need a merger to make that decision.

The transaction will give Comcast the geographic reach, economies of scale, customer density, and return on investment needed to massively expand Wi-Fi hotspots across the combined company’s footprint, including in the Midwest, South, and West, particularly in areas like Cleveland/Pittsburgh, the Carolinas, Texas, and California, where there will be greater density and clustering of systems. Our goal is to provide greater Wi-Fi availability that allows the combined company’s customers to access the Internet in more places, more conveniently, and at no additional charge.

Your usage allowance will likely apply to this “free Wi-Fi” that most customers cannot access because they live in an area where neither company offers it now and likely won’t anytime soon.

The transaction will also enable Comcast to invest in network expansions and last-mile improvements that provide an even stronger foundation for innovative applications, including education, healthcare, the delivery of government services, and home security and energy management. And with greater coverage and density of systems, Comcast will also have the ability and incentive to build out and make available interconnection points in more geographic regions. This will be especially beneficial to companies like Google, Netflix, and Amazon, which aggregate massive data traffic when they deliver their own and others’ services to consumers.

For the right price. Nothing precluded Comcast or Time Warner Cable from investing some of their lush profits into improvements for customers. But why bother when your only serious competitor is usually DSL. Investment in broadband networks has declined for years in favor of profit-taking. Making Comcast bigger introduces no new market forces that would provoke it to improve service. In fact, Comcast’s massive size and reach would likely deter would-be competitors from entering a market where Comcast can use predatory pricing and retention offers to keep customers from switching.

Helping people successfully cross the digital divide requires ongoing outreach. To increase awareness of the Internet Essentials program, Comcast has made significant and sustained efforts within local communities. To date, those outreach efforts have included:

• Distributing over 33 million free brochures to school districts and community partners for (available in 14 different languages).
• Broadcasting more than 3.6 million public service announcements with a combined value of nearly $48 million.
• Forging more than 8,000 partnerships with community-based organizations, government agencies, and elected officials at all levels of government.

Cohen does not mention the company planned to offer Internet Essentials earlier than it did, but held it back for political reasons.

“I held back because I knew it may be the type of voluntary commitment that would be attractive to the chairman” of the Federal Communications Commission, Cohen said in a 2012 interview. Comcast’s generosity was limited. It specifically designed its discount Internet program to make it difficult to qualify and protect its regular-priced broadband offerings. The goodwill from handing out Comcast sales brochures and getting free exposure in the media offers little to customers. Comcast also has a way of getting the community-based organizations it “partners” with to advocate for Comcast’s business interests.

“Sometimes we need a kick in the butt.” — Cohen

If only the government got out of the way and approve the merger, Comcast will improve on its already amazing customer service:

Improving the customer experience is a top priority at Comcast. We are investing billions of dollars in our network infrastructure and are developing innovative products and features to make it easier and more convenient for our customers to interact with us. While our satisfaction results are beginning to rise, we know we still have work to do and are laser-focused on continuing to improve our customers’ experiences in a number of ways.  Comcast has improved its customer satisfaction ratings significantly. Since 2010, Comcast has increased its J.D. Power’s Overall Satisfaction score by nearly 100 points as a video provider, and close to 80 points in High Speed Data – more than any other provider in our industry during the same period.

Twice nothing is still nothing. Cohen even admitted at the hearing Comcast’s progress at improving customer service is not as rosy as his written testimony might suggest.

“It bothers us we have so much trouble delivering high quality of service to customers on a regular basis,” Cohen said. “Sometimes, we need a kick in the butt.”

That has never worked before. Comcast has kicked its customers around since at least 2007 when it also promised major customer service improvements that turned out to be figments of a press release. Comcast’s “laser-focused” efforts to improve instead won it the 2014 Consumerist Worst Company in America award this week and more than 100,000 consumers signing petitions vehemently opposing the merger.

Comcast has a long record of improving consumers’ online experiences and working cooperatively with other companies on interconnection, peering and transit.

Just ask any Comcast customer about their Netflix viewing experience lately and how it took a checkbook to improve matters. Ask any online video competitor whether Comcast is a good neighbor when it exempts its own video traffic from its “usage threshold” while making sure to count competitors’ traffic against it.

Comcast also likes to suggest Americans are awash in competitive options for broadband service. Why there is DSL, satellite broadband, fiber, wireless Internet, public libraries, and books.

In fact, Comcast’s filing points to various “competitors” that don’t even exist yet, if they ever will. Comcast suggests Google Fiber is popping up everywhere, despite the fact Google announced it was delaying its fiber rollout in Austin, and most of its latest expansion plans lack firm commitments to deploy and are framed only in the context of opening a dialogue with targeted communities.

Satellite Internet speeds are severely limited and usage-capped. The same is true for exorbitantly expensive mobile broadband. Comparing a $40 unlimited broadband offering from Time Warner Cable to Verizon Wireless’ 4GB for $50 mobile wireless Internet package is silly.

Comcast characterizes the competitive telecom marketplace as a veritable dogfight, but it looks a lot more like a well-executed dog and pony show. Just how rabid are these dogs?

• Verizon’s pit bull zeal to compete has more bark than bite. Verizon Wireless customers can sign up for Comcast or Time Warner Cable service in Verizon stores (woof);
• Comcast’s rottweiler isn’t supposed to get along well with others, but it manages pretty well pitching Verizon Wireless service (grrr).

An hour into the hearing, it was clear there was some bipartisan discomfort with the merger, with Sen. Al Franken (D-Minn.) leading the charge with pointed questions cutting through Comcast’s government relations fluff.

“I’m against this deal,” Franken concluded. “My concern is that as Comcast continues to get bigger, you’ll have even more power to exercise that leverage — to squeeze consumers.”

Like an orange.

AT&T customers in Carbon Hill, Ala. received an unwelcome surprise in their mailbox recently when AT&T informed them they will be part of an experiment ending traditional landline service in favor of a Voice over IP or wireless alternative.

Affected customers are involuntary participants in what AT&T calls an “exciting opportunity for our customers and for our company,” but many residents want no part of it.

The Wall Street Journal reports Carbon Hill city clerk Janice Pendley says some people in the former mining town are not pleased.

“Some of them like their landline, and they like it just the way it is,” she says.

AT&T’s experiment will force new and existing customers to switch to its more-expensive U-verse broadband platform, use a mobile phone, or a home landline replacement that works over AT&T’s cellular network. The FCC has granted AT&T permission to impose its experimental plan to end traditional landline service in two communities where regulatory protections for landline customers are weak to non-existent — Alabama’s Carbon Hill and Delray Beach, Fla.

Carbon Hill is a small town of around 880 households in extreme western Walker County. It is the kind of rural town AT&T would likely never consider for a U-verse upgrade. AT&T embarked on a second major push to extend U-verse into more communities last year, but also indicated it would strongly advocate for a wireless replacement for its landline network in the rest of its service areas. Because Carbon Hill is an experiment, AT&T will offer U-verse to at least part of the community regardless of the usual financial Return on Investment requirements AT&T usually imposes on its U-verse expansion efforts.

AT&T is pushing forward despite the fact it  has no idea how it will offer service to at least 4% of isolated Carbon Hill residents not scheduled to be provided U-verse and not within an AT&T wireless coverage area. There are also no guarantees customers will be able to correctly reach 911, although AT&T says the technology “supports 911 functionality.” Serious questions among consumer advocates remain about whether the replacement technology will support burglar alarms, pacemakers and even systems used by air-traffic controllers.

The difficulties service Carbon Hill relate to its rural makeup and income profile. In Delray Beach, it is all about customer demographics. Half of the city is home to residents over 65 years old — the group most likely to prefer their existing landline service. Many are likely to be unhappy about a transition to new technology that will not work in the event of power interruptions, will require the installation of new equipment, or will be tied to a wireless platform that some say reduces the intelligibility of telephone conversations and often introduces audio artifacts like echo, background noise, and dropouts.

In both cities, customers only offered wireless-based service will no longer have access to DSL or wired broadband service of any kind. The wireless alternative from AT&T comes at a high cost and a low usage allowance.

The benefits to AT&T are unquestionable, however. The company will win almost universal deregulation as a Voice over IP or wireless telephone provider. Legacy regulations on customer service requirements, pricing, and obligations to provide affordable phone service to any customer that requests it are swept away by the new technologies. Competitors are also worried AT&T will be able to walk away from regulations governing open and fair access to AT&T’s network.

The Wall Street Journal reports:

The all-Internet protocol “transition holds many promises for consumers, but losing access to affordable voice and broadband services cannot be part of that bargain,” wrote Angie Kronenberg, general counsel of Comptel, in a letter to the FCC last month on behalf of the small-carrier trade group, several companies and public-interest groups.

AARP said it believes AT&T’s plan has “numerous problems.” The technology might not be reliable enough or fail when calling 911 in an emergency, the advocacy group for seniors told regulators in its comment letter. The FCC is reviewing hundreds of comments received in response to AT&T’s request.

EarthLink piggybacks on the “incumbents as little as economically possible” and has laid nearly 30,000 miles of fiber-optic cables throughout the U.S. to help it reach more than a million customers, says Rolla Huff, a former EarthLink chief executive. Still, the company needs access to the connections built by AT&T and Verizon into buildings.

Telecom carriers such as Windstream in Little Rock, Ark., and sellers of broadband data services like EarthLink and XO Communications LLC, of Herndon, Va., have had the right to buy last-mile access at regulated prices since the last major overhaul of federal telecom laws in 1996.

If AT&T ends its traditional network, those competing service providers will have to negotiate with AT&T for access at whatever price AT&T elects to charge.

A preview of what is likely to happen has already been experienced by TW Telecom, an independent firm selling phone and Internet services to businesses over more than 30,000 miles of fiber lines. But that fiber network means nothing if a customer’s last mile connection is handled by a local phone company no longer subject to regulated pricing and access rules.

In Tampa, where Verizon has deployed FiOS as an unregulated replacement for its older, regulated copper-based network, TW Telecom learned first hand what this could ultimately mean:

Rochester Telephone Corporation was born in 1921 after a merger between the Rochester Telephonic Exchange, a branch of the Bell Company of Buffalo and locally owned independent Rochester Telephone Company, which was not allowed to use Bell’s long distance network.

TW Telecom approached Verizon in 2012 to seek last-mile access to a Tampa, Fla., building being converted into a bank from a restaurant. Verizon had installed only FiOS at the building.

Verizon said no, telling TW Telecom to build its own connection or pay Verizon thousands of dollars to do the job. TW Telecom declined to pay and lost the customer’s business.

“When it happens, it’s devastating,” says Kristie Ince, who oversees regulatory policy at TW Telecom. Similar snarls have cost the company at least six customers since then. Other carriers say they have had similar clashes.

In Illinois, Sprint’s business phone network has run into a barricade manned by AT&T. Sprint needs AT&T to interconnect calls placed on Sprint’s network intended for AT&T’s customers. The two companies cannot agree on an asking price under the deregulation scheme so Sprint converts its Voice over IP calls to older technology still subject to regulation just so calls will successfully reach AT&T’s customers. AT&T promptly converts those calls back to Voice over IP technology as it completes them.

AT&T said it has “no duty” to connect its Internet protocol traffic with Sprint’s.

If the FCC keeps IP-based traffic deregulated, if and when the old landline network is decommissioned, AT&T will have the last word on access, potentially putting competitors out of business.

Our great-great grandparents experienced similar problems in the early days of telephone service, when high rates from the local Bell telephone subsidiary provoked local competition. But Bell companies routinely refused to handle calls placed on competitors’ networks, forcing customers to maintain a telephone line with both companies to reach every subscriber. Additionally, only Bell-owned providers had access to the long distance network – a competitive disadvantage to competing startups.

Regulatory changes, a handful of mergers and the eventual establishment of the well-regulated Bell System eventually solved problems which threaten to return if AT&T has its way.