CenturyLink is seeking “greater flexibility” to set its own prices, terms and conditions of service without a review by Washington State regulators, even as its broadband customers complain about bait and switch Internet speeds and poor service.

Three years after the Monroe, La., based independent phone company purchased Qwest — a former Baby Bell serving the Pacific Northwest — CenturyLink continues to lose customers to cell phone providers and cable phone and broadband service. Since 2001, CenturyLink and its predecessor have said goodbye to 60 percent of their customers, reducing the number of lines in service from around 2.7 million to just over 1 million.

CenturyLink is apparently ready to lose still more after upsetting customers with a notice it intended to seek deregulation that could lead to rising phone bills.

Docket UT-130477, filed with the Washington Utilities and Transportation Commission (WUTC) proposes to replace currently regulated service with what CenturyLink calls “an Alternate Form Of Regulation.” (AFOR)

If approved, CenturyLink will “normalize” telephone rates in Washington State, language some suspect is “code” for a rate increase. For CenturyLink customers in cities like Seattle, Spokane, and Tacoma, the maximum rate permitted for basic phone service for the next three years will be $15.50 (unless a customer already pays more), before calling features, taxes, and surcharges are applied. Most observers, including the state regulator, suspect CenturyLink will limit rate hikes to $1-2 if approved. A higher increase might provoke more customers to leave.

Washington residents already pay the nation’s second highest taxes on wireless service. Now landline customers also pay more. (Graphic: The Spokesman)

“We don’t think they can do much because, in our view, all (a big rate increase) is going to do is accelerate people dropping the landline into their homes,” Brian Thomas, a spokesman for the Washington Utilities and Transportation Commission told The Spokesman-Review. “A lot of people are cutting the cord.”

Frontier Communications, which previously won its own case for deregulation within its service areas including Everett, Wenatchee, and Tri-Cities, raised rates about $1 beginning this month.

A spokesman for the company confessed Frontier’s phone service is becoming obsolete.

“It’s safe to say plain old telephone service is in the process of becoming archaic for some people,” Frontier’s Carl Gipson said. “Five years from now, it will be almost – but not quite – extinct.”

Every rate change seems to provoke a review of whether landline service is still necessary.

Earlier this year, CenturyLink jumped on board legislation that purposely increased phone rates by several dollars a month by removing the sales tax exemption on residential telephone service. Wireless companies did not enjoy the same exemption and sued for parity.

A confidential settlement with state regulators made Washington phone customers, instead of telecom companies, liable for the sales tax starting in August. As a result, some residential phone bills went up at much as $5 based on retroactively charged sales tax.

Customers sticking with CenturyLink often say it is the only broadband provider in rural towns across the state. Although better than satellite broadband, the lack of regulatory oversight and technology investments have allowed CenturyLink to sell Internet speeds it cannot provide to customers.

At a hearing held this week by the San Juan County Council, members criticized CenturyLink officials on hand for selling fast service but delivering slow speeds to the group of islands between the mainland of Washington State and Vancouver Island, B.C.

Hughes

“Last night I did a speed test at my house and I am paying for 10Mbps but only getting 4.74Mbps,” complained Councilman Rick Hughes (District 4 – Orcas West). “I am paying for 10 and I am only getting 5Mbps, so how is that fair? There has been a ton of frustration over the last two years we have worked on this broadband issue. Everywhere I go and every meeting I talk to all I hear is complaints about CenturyLink. No matter what they are paying for, it’s a poor broadband connection to the end customer.”

CenturyLink provides broadband to 88% of the territory the company serves in Washington. Like most telephone companies, CenturyLink relies on DSL in much of its footprint and has upgraded central offices, remote equipment, and the telephone lines that connect them. On the San Juan Islands, most customers used to receive 1-3Mbps, but CenturyLink claimed at this week’s hearing it spent billion on infrastructure improvements that can now deliver faster Internet service across the state. In San Juan County, CenturyLink claims:

• 58% of all qualified addresses were upgraded to 10-25Mbps;
• 66% now qualify for more than 10Mbps (but less than 25Mbps) versus 46% prior to upgrades;
• 29% of customers now qualify to sign up for 25Mbps service.

CenturyLink warned the council its speed claims were not to be taken literally, noting DSL “speed is dependent on distance from equipment; speeds drop quickly as distance increases.”

Hughes told CenturyLink officials residents appreciated the investment, but customers were still disappointed after being promised higher speeds than actually received.

“When people call customer service, there is always an excuse about why there is a problem,” said Hughes. “If people are paying for something, they want to receive it.”

“For our long-term financial interests in this county, we need to have reliable 10-25Mbps service to customers on any part of the islands,” Hughes added. “My goal has always been 90+ percent should be able to get 25Mbps or better connectivity in the county.”

The problem for CenturyLink is the amount of upgrade investment versus the amount of return that investment will generate. San Juan County is disconnected from the mainland and collectively house only 15,769 residents. But it is also the smallest of Washington’s 39 counties in land area, which can make infrastructure projects less costly.

CenturyLink committed to continue investment in its network “where economically feasible.”

San Juan County’s Orcas Power & Light Cooperative (OPALCO), a member-owned, non-profit cooperative electric utility may have a partial solution to the problem of meeting Return on Investment requirements.

OPALCO originally proposed a hybrid fiber-wireless system designed to reach 90% of the county with a $34 million investment, to be built over two years. When completed, all county residents would pay a $15 monthly co-op infrastructure fee and a $75 monthly fee for broadband and telephone service. To gauge interest, OPALCO asked residents for a $90 pre-commitment deposit. By the annual meeting in May, the co-op admitted only 900 residents signed up and it needed 5,800 customers to make the project a success.

Some residents balked at the high cost, others did not want wireless broadband technology, and some local environmental activists wanted OPALCO to focus on clean, affordable energy and avoid the competitive broadband business.

The lack of commitment forced the co-op to modify its broadband plans, offering a “New Direction” to residents in June 2013.

OPALCO elected to stay out of the ISP business and instead announced a public-private initiative, providing fiber infrastructure to existing service providers. In effect, the co-op will cover the cost of building fiber extensions where CenturyLink is not willing to invest. For a $3-5 million investment from the co-op, ISPs like CenturyLink will be able to commission OPALCO to build fiber in the right places to make DSL service better. CenturyLink would have non-exclusive rights to the fiber network and would have to pay the co-op a service lease fee.

Unlike ISPs in other communities that have shunned publicly funded fiber infrastructure, CenturyLink says it will contemplate a trial — buying bandwidth from OPALCO instead of enhancing its own fiber middle mile network — to test what level of improved service CenturyLink can offer customers.

Regardless of CenturyLink’s plans, OPALCO is moving forward installing limited fiber connections as part of an effort to develop a more modern electric grid.

“Our data communications network brings exponential benefit to our membership,” OPALCO notes. “It includes tools that allow the co-op to: control peak usage and keep power costs down, remotely manage and control the electrical distribution system, manage and resolve power outages more efficiently, integrate and manage community solar projects and improve public safety throughout the county.”

There are some drawbacks, reports Wally Gudgell from The Gudgell Group.

“It will take longer to implement, and will impact fewer businesses and households,” Gudgell writes. “While about two-thirds of the islands will eventually be covered, more remote areas will have to work with a local ISP and potentially pay more for service.  DSL coverage for homes that are further than 15,000 feet from CenturyLink fiber-served distribution hubs will be challenging. Some homeowners may need to pay for fiber to be run to their homes by Islands Network (fiber direct is costly, estimated at $20/foot).”

Time Warner Cable will spend $600 million in cash for Duke Energy Corporation’s 8,700 mile fiber network currently serving wireless carriers, government, business, and data center customers.

DukeNet, based in Charlotte, N.C., is a partnership between the electric utility and an investment fund owned by Alina Capital Partners. Duke Energy shed the network as part of its new business strategy refocusing on the energy sector. Time Warner Cable intends to use the fiber network to bolster its regional fiber backbone and offer enhanced fiber connectivity to its business customers.

“Business services is a key growth area for Time Warner Cable and this acquisition will greatly enhance our already growing fiber network to better serve customers, particularly those in key markets in the Carolinas,” said Phil Meeks, executive vice president and chief operating officer of Business Services for Time Warner Cable. “This acquisition will help us expand our fiber footprint at a price that is consistent with our disciplined approach to mergers and acquisitions.”

Last month, DukeNet announced it provided fiber backhaul service to more than 3,500 cell towers across North and South Carolina, Tennessee, Georgia and Alabama.

Time Warner Cable has focused much of its investment activity in expanding and enhancing services sold to commercial clients.

The acquisition follows Time Warner Cable’s $230 million purchase of NaviSite, Inc., a 2011 deal that also brought it more business customers.

*-Terms, conditions, and a whole lot more applies.

Austin residents are getting spoiled with promises of gigabit broadband — the first major city in the country offered a competitive choice of 1,000Mbps Internet providers — Google and AT&T.

But one of those claiming to offer a “100-percent fiber Internet broadband network that will deliver up to 1Gbps per second,” is already fudging on that commitment before activating its first fiber customer.

AT&T’s sudden interest in selling 1,000Mbps service came as a surprise to Austin residents that have been told for years their broadband service was fast enough as is. Grande Communications had been the choice for customers seeking the fastest speeds — they sell up to 110/5Mbps for $110 a month. Time Warner Cable still tops out at 50Mbps and AT&T’s U-verse, still not fully deployed in Texas, sold up to 24Mbps ‘screaming fast’ Max Turbo service as its top offering until recently, when AT&T began limited roll-out of up to 45Mbps service.

Mere hours after Google announced Austin as its next choice for Google Fiber, “me-too” AT&T was announcing it would build its own gigabit fiber to the home network in the same city. That was a complete 180 for AT&T, which has consistently argued that running fiber to the home was an unnecessary expense. While Verizon faced the wrath of Wall Street for its decision to launch FiOS — an all-fiber-network — analysts were complaining Verizon was spending too much while AT&T was spending considerably less on its fiber to the neighborhood U-verse system that keeps existing copper wire into the home.

Right from the beginning, AT&T has always accompanied certain terms and conditions for any fiber deployment — winning equal concessions that Google received from local officials with respect to pole attachment fees, zoning, permits, and other expenses. If those were not forthcoming, AT&T could walk away from its fiber commitment at any time.

On Monday, AT&T announced it had started deploying fiber for AT&T U-verse with GigaPower, with a plan to launch in December in neighborhoods with the highest number of votes to get the service. AT&T is taking names and numbers of interested customers seeking to show their interest in fiber service. No deposit or commitment is required to vote, but you will be placed on AT&T’s marketing mailing lists.

“Austin embodies innovation and social consciousness, and is the heart of a vibrant, ever-evolving tech culture and entrepreneurial spirit,” said Dave Nichols, president of AT&T Texas. “With our all-fiber U-verse services, we are building the foundation for a new wave of innovation for Austin’s consumers, businesses, and civic and educational institutions. It’s about engaging the full community and empowering the city and its people with all that technology can offer us. This investment will help attract new business and new jobs to Austin.”

Phillip Dampier

As long as those consumers, businesses, and jobs are within the first deployment zone for AT&T’s fiber network.

For the rest of this year and well into the next, that will be a very exclusive neighborhood.

AT&T’s press release claims it will “initially reach tens of thousands of customer locations throughout Austin and surrounding areas this year, with additional local expansion planned in 2014.”

The five-county Austin–Round Rock metropolitan area has a population of 1,834,303 residents. Assuming AT&T managed to offer fiber service to 100,000 residents — and that is a generous figure, that represents only 5.5% of Greater Austin. The old U-verse is still a work in progress in several Texas cities, so it could take years for AT&T to deploy fiber in Austin. Expect AT&T to start with the low-hanging fruit — multi-dwelling units such as apartments, condos, and other similar buildings, some that already have existing fiber connections in place.

AT&T may never get around to offering fiber to more rural locations in Austin’s suburbs: “There are many factors involved in stringing an advanced fiber network, so having your neighbors vote to be notified about U-verse with GigaPower is no guarantee we’ll get to your neighborhood first, but it does give us some idea of where we want to focus our efforts; and besides, things are always more fun when we work together.”

AT&T is already backing away from its commitment to offer gigabit service, at least initially.

“The December launch will initially feature symmetrical speeds of up to 300Mbps, […] with an upgrade to speeds up to 1 Gigabit per second when available in mid-2014, and at no extra cost,” AT&T writes in its press release.

Speaking of cost, nobody at AT&T is willing to give us one for the 1,000 300Mbps launch tier.

If AT&T is smart, it better set it lower than what Google is likely to charge, considering AT&T will initially only deliver less than 1/3rd of the promised gigabit speed.

While thinking about that, AT&T might also want to dump usage caps. The fastest U-verse tiers come with a 250GB usage allowance, which can really crimp a screaming fast fiber experience once your allowance runs out.

C Spire, a wireless phone company serving the southeastern United States today announced ambitious plans to deploy a gigabit fiber to the home network in the state of Mississippi, now considered to be one of the worst states for broadband speed and availability.

C Spire Fiber to the Home was introduced by company executives at a news conference this morning attended by community leaders. C-Spire intends to build a fiber network offering 1,000/1,000Mbps broadband, telephone and television service at a competitive price starting in 2014 in select communities in the state.

“As a brand that’s been pushing the envelope of innovation our entire existence, it’s only natural for us to want to provide the ‘what’s next’ to the customers we serve,” said Hu Meena, president and CEO of C Spire Wireless. “The ‘what’s next’ is now here and we’re ready to release the power of 1 Gig fiber to communities that want to experience the immediate and lasting benefits of 100 times the speed and 100 times the opportunities.”

C Spire will use its existing 4,000 miles of fiber optic infrastructure now providing backhaul connectivity to the company’s cell tower network and its commercial customers. An additional 1,500 miles of fiber is scheduled for installation next year.

The cell phone company will follow the lead of Google Fiber, giving Mississippi communities a chance to compete with one another for C Spire’s fiber network. C Spire will be accepting applications from neighborhoods, towns and cities in the state presenting their best case why they should be the first to get fiber to the home service. The communities that want it most, and move quickest, will get it first, promised company officials.

C Spire claimed its proposed fiber to the home network will expand faster and deeper into Mississippi than Google Fiber’s limited network in Kansas City and nearby suburbs.

“While we know some of the tangible benefits that fiber offers to individuals, families, businesses and entire communities, we’ve only scratched the surface of what’s possible with 100-times-faster Internet,” Meena said. “Similar to the transition from dial-up to broadband, no one could fathom that people would one day be able to shop online, download software and watch endless hours of video on YouTube. The undiscovered potential of fiber is what’s most exciting and compelling about our plans.”

Competing communities will be expected to explain how they intend to cut as much bureaucratic red tape as possible to win consideration. The company’s “Request for Information” (RFI) document prominently mentions “streamlined construction,” “advantageous access to public rights-of-way,” and “an attractive local franchise agreement” as the types of help most needed from local governments.

C Spire will likely not entertain franchise proposals that require the company to serve every possible resident. C Spire’s fiber business plan depends on rolling out the service only to neighborhoods where enough demand exists.

Other conditions:

• C Spire will not give away free service to schools or government buildings;
• Sizable local participation in the pre-registration process is required;
• The RFI hints that communities might be in a better position to win if they waive permit fees, issue permits within five business days, offer tax waivers, don’t require a local office for customer interaction, waive any “unacceptable ordinance provision or regulation as requested by C Spire,” and aid in rallying sign-ups for the fiber service.

Competitors, including AT&T, CableONE, Suddenlink, and Comcast may raise questions about local governments committing to rally for sign-ups. Some of those competing providers may also complain about their own franchise agreements, which often require widespread service deployment whether there is established demand for service or not.

C Spire is among a handful of companies that have recognized their existing fiber-to-cell-tower and institutional fiber broadband networks are underutilized and have the capacity to support both commercial and residential broadband applications.

C Spire is expected to announce the winning communities later this year or in early 2014.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/C Spire Fiber to the Home 9-24-13.mp4[/flv]

C Spire introduces Fiber to the Home service and explains the transformational benefits fiber broadband can deliver users. (2 minutes)

Since 2005, five cable and telephone companies and their respective lobbying trade associations have donated nearly $12 million to New York politicians, making Big Telecom companies among the biggest political donors in the state. Now a government reform group wants an investigation by the state’s anti-corruption commission.

By exploiting giant loopholes in New York’s campaign finance laws, telecom companies that used to live with annual campaign finance limits of $5,000 are now donating millions to powerful political leaders in Albany – the majority conferences in the legislature, the state party committees, and the governor. Some are using secretive “housekeeping” accounts controlled by political parties. Others hide behind shadowy contributions from “limited liability corporations” (LLCs) established by some of the state’s biggest cable and phone companies and treated under current law as living, breathing people.

“Big Telecom exemplifies the pay-to-play culture which has come to define Albany, giving generously to the leadership in exchange for veto power over bills which favor the public interest,” said Common Cause-New York executive director Susan Lerner.

The Optimum donor to state “housekeeping” accounts among telecom providers is Cablevision.

No telecom company donates more in New York than Cablevision, which has given more than $5.3 million in contributions to state politicians since 2005 as it fights its way through union problems, fierce competition from Verizon, and complaints from subscribers about rising cable prices and questionable service. The cable company doesn’t just donate in name-only. Common Cause-NY discovered Cablevision using eight different LLCs to evade contribution limits, handing over $1.5 million to candidates and committees. Gov. Andrew Cuomo received $130,000 from four different Cablevision-controlled LLCs between July and October 2010. On April 29 of this year, former Nassau County executive Tom Suozzi’s campaign received $190,000 from three Cablevision-controlled LLCs on that single day.

Verizon (82%) and Time Warner Cable (70%) prefer to quietly give the largest percentage of their political donations to the parties’ secretive, soft money “housekeeping” accounts. The Republican and Democratic recipients are not using the money to buy Endust, mops or spare light bulbs, although the average voter might assume as much.

Corporations with an agenda just love New York’s hush-hush “housekeeping” accounts because they come without dollar limits or complete disclosure about how the money was ultimately spent.

The State Board of Elections says “housekeeping” money is supposed to go toward maintaining a party’s headquarters and staff or “ordinary activities that are not for the express purpose of promoting the candidacy of specific candidates.” Unfortunately, nobody bothered to require detailed accounting, allowing funds to disappear down a political rabbit hole, to be distributed at each party’s discretion.

Comcast (59%) and AT&T (53%) are considerably smaller players, in part because neither company serves many wired cable/broadband customers in New York.

Verizon’s corporate PAC also likes to raise relatively large numbers of small contributions given in the name of company executives or employees, not necessarily mentioning the company itself. Campaign finance disclosures may list only the individuals’ contribution(s), not the company that signed their paycheck.

Where does all the money go?

Common Cause-NY says most of the money is channeled to the most influential politicians in the state, with minority parties and unelected candidates typically getting much less.

To gain influence on the state level, Big Telecom companies contribute to the governor, attorney general, and the majority parties controlling the state Assembly and Senate, with Republicans getting the lion’s share (over $3.5 million) in the Senate and Democrats (over $1.6 million) in the Assembly.

For local issues of interest to the state’s local cable and phone companies, contributions are funneled to influential county-level political machines, perhaps helpful in making life difficult for a competing Wi-Fi project, a municipal fiber network, or helping to cut red tape to place a cell tower in a controversial location.

The top six recipients of Big Telecom’s political cash in the legislature:

• Key Party Leaders: Dean Skelos ($117,700), Tom Libous ($57,150), Jeff Klein ($49,450), and Sheldon Silver ($32,749.61)
• Current and former Chairs of the Senate Energy and Telecom Committee: George Maziarz ($79,718.02) and Kevin Parker ($34,444.00).

Common Cause-NY notes the corporations involved don’t give money without expecting something in return. After generous contribution checks were deposited, a number of telecom consumer protection bills mysteriously died in committee or never made it to the floor. The same fate did not meet bills offering special tax breaks for cable and Internet Service Providers that have cost New York taxpayers nearly $500 million and counting.

“Multi-million dollar campaign contributions clearly help Big Telecom maintain the status quo of corporate control, high prices, and lax regulation,” Common Cause-NY concludes.

The legislature is rife with examples of bills that would have likely passed with popular support but suddenly or “mysteriously” didn’t:

• A 7635-A / S5630-A: Establishes a moratorium on telephone corporations on the replacement of landline telephone service with a wireless system.
  • The “VoiceLink” moratorium bill, passed the Assembly, had broad bi-partisan support in the Senate but never came to a vote.
• S542: Relates to enacting the “Save New York Call Center Jobs Act of 2013,” which requires prior notice of relocation of call center jobs from New York to a foreign country; directs the Commissioner of Labor to maintain a list of employers who move call center jobs; prohibits loans or grants.
  • The “Call Center Jobs Act” would take away tax breaks and state grants if companies move a call center to another country. The bill passed the Assembly in 2012 (A9809) and had bipartisan support in Senate but was blocked. The 2013 bill died in Senate committee.
• A6003/S5577 — Directs the Department of Public Service to study and report on the current status of cable television systems providing services over fiber optic cables.
  • Bipartisan support in Assembly for further oversight of broadband but gets little support in Senate, the same bill was also blocked in 2012.
• A5234/S1075 — Enacts the “Roadway Excavation Quality Assurance Act” demanding utility companies or their contractors shall use competent workers and shall pay the prevailing wage on projects where a permit to use or open a street is required to be issued.
  • Bipartisan support in the Senate and Assembly but no passage in either 2012 and 2013.
• A6239/S4550 — Creates the State Office of the Utility Consumer Advocate to represent interests of residential utility customers.
  • Bipartisan support in Assembly, dies in Senate.
• A6757/S4449 — Requires providers of electric, gas, steam, telephone and cable television services to issue standardized bills to residential customers; provides the standards for such bills shall be established by the Public Service Commission.
  • Bipartisan support, passes Assembly, dies in Senate.