Flag of New Zealand

Despite broadband provider propaganda designed to convince Americans restrictions on broadband usage were “commonplace” and well tolerated overseas, a group of New Zealand and Australian broadband entrepreneurs propose to spend just under $900NZ million to build new fiber capacity to help eliminate them once and for all.

A team of businessmen from the South Pacific today announced they are part of “an early stage” venture to construct a brand new underseas fiber optic cable to connect Australia and New Zealand with the United States, providing five times the capacity of existing service provided by the Southern Cross system.

The new group, Pacific Fibre, went public today and is talking with potential partners about the plan to construct a 13,000 kilometer cable by 2013.

Mark Rushworth, former Vodafone chief marketing officer, told TV New Zealand a full 90 percent of New Zealand Internet traffic is bound for the United States.

“It is using the most direct route. It is one hop from New Zealand to the US, which from a technical perspective is very important because it means it is a lower latency cable, that is, it is faster than other cables,” he said.

Flag of Australia

The primary impetus for the project was the common practice in New Zealand and Australia to limit customers’ usage of broadband service with Internet Overcharging schemes like usage-based billing or restrictive data caps which can throttle speeds just above dial-up for customers for weeks, if they exceed their usage allowance.

Rushworth

Private providers have lived happily on the revenue earned from such schemes and have done little to relax usage limits on their customers, so Pacific Fibre decided to undertake a game-changing new fiber cable themselves to drive prices down and eliminate the caps.

“We desperately need a cable that is not purely based on profit maximization, but on delivering unconstrained international bandwidth to everybody, and so we’ve decided to see whether we can do it ourselves,” said partner Sam Morgan.

“We hope to bring in extra capacity at a low price, which our carriers and ISP customers can end up passing on to their customers,” Rushworth said.

“We all know that in any market as soon as you introduce competition prices tend to drop and volume goes up,” he told TVNZ.

The current proposed cable configuration would have two fiber pairs with 64 wavelengths (lambdas) each at 40 gigabits per second per lambda. The maximum lit capacity initially would be 5.12 terabits per second, but would be upgradeable to over 12 terabits per second as emerging technology became a reality.

Metro Vancouver residents will have access to Canada’s fastest residential broadband service next Friday when Novus Entertainment launches its Net 200 tier providing 200Mbps service over a fiber optic network for $279.95CDN per month.  Customers currently paying $179.95 for the company’s 60Mbps plan will also receive a free upgrade to 100Mbps service on that same date.  No word yet on what the new usage limits will be, but Novus previously limited its 60Mbps plan to 360GB per month, unfortunate for a plan that carries such a premium price.  Novus charges 50 cents for each additional gigabyte above their various plan allowances.  Novus’ upload speeds are the same as its advertised download speeds.

Novus Entertainment has wired fiber optic cable in 33,000 large multi-dwelling units in parts of greater Vancouver, providing broadband, telephone, and television competition for incumbent cable provider Shaw Communications.  The two companies were embroiled in a nasty price war last year, with Shaw slashing prices to as low as $10 per month for video, phone, or Internet access.  To date, Novus has 9,000 subscribers, 8,200 of which subscribe to the company’s broadband service.

“We noted a recent survey by Harvard University which found that Canadians’ access to superior broadband performance and infrastructure ranked poorly among developed countries,” said Donna Robertson, Co-President and Chief Legal Officer of Novus Entertainment Inc. “While these results are disappointing, this provided Novus with the opportunity to not only take this challenge head on and provide customers with superior Internet speeds, but to also set us apart from the competition.”

Vancouver is the home of Novus Entertainment

Novus’ Net 200 will be available in selective buildings that are configured for 200 Mbps technology. With the vision of becoming one of Metro Vancouver’s major Internet and communications service providers, Novus continues to expand its service in Vancouver and Burnaby and plans to launch services in Richmond in 2010.

“Canadians want a service provider that delivers a fast Internet connection to meet their growing needs at a reasonable cost,” said Doug Holman, Co-President and Chief Financial Officer of Novus Entertainment Inc. “Yet they’re paying among the highest prices for some of the lowest speeds. Novus’ superior fibre-optic network allows us to provide our customers with best-in-class, reliable and consistent transfer speeds that the incumbents simply can’t offer.”

Shaw probably cannot match Novus’ 200Mbps service tier on their non-fiber optic cable network, but will likely continue to compete heavily on price with discounts that stun Canadians outside of metro Vancouver.  Shaw’s pricing in Novus-wired buildings is as much as $60 less than in other areas where Novus does not compete.

Novus also owns some wireless spectrum covering Alberta and British Columbia, so eventually the provider could mount a competitive challenge in the mobile telephone market, at least in western Canada.  There are rumors the company could partner with an eastern Canadian spectrum holder like Public Mobile, which owns spectrum covering southern Ontario and Quebec.  Neither company has launched service, and probably won’t for the rest of 2010, but could eventually provide additional competition in the overpriced Canadian mobile phone market.

The tradition some have of firing off weapons at the stoke of midnight on New Year’s Day managed to go awry when a stray bullet severed a Comcast fiber optic cable serving 300 subscribers with cable and broadband service in southwest Albuquerque.  Service was out for approximately 12 hours while the cable was repaired.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/KRQE Albuquerque Bullet cuts cable services for 300 1-1-10.flv[/flv]

KRQE-TV Albuquerque reports on the impact of stray bullets on your Comcast broadband service.  (1 minute)

Bray Cary, Host of Decision Makers

A network of West Virginia television stations spent 20 minutes this past Sunday airing a puff piece that could have been a video press release straight out of Frontier’s public relations department.  Decision Makers, a self-described “agenda setting” public affairs program ostensibly puts important people on the “hot seat” to answer “tough questions about where West Virginia is heading and how it will get there.”

Hardball this was not. Host Bray Cary, who also happens to serve as president and CEO of the television station group, presided over a one-sided softball tournament for Ken Arndt, Frontier’s new Southeast region chief in a 20 minute interview where the hardest question was likely posed off camera – ‘where would you like to do lunch?’

Decision Makers is seen across West Virginia on Cary’s statewide network of television stations — WOWK in Charleston-Huntington, WBOY in Clarksburg-Morgantown, WTRF in Wheeling and WVNS in Beckley-Bluefield.

The appearance of Arndt on the program comes the same week Frontier reportedly committed to purchasing significant advertising time on the stations, leading a Stop the Cap! reader who informed us about the program to ponder whether this Fluff-Fest was part of the ad deal.

Viewers on the public comment section for the show were unimpressed.

“I can’t believe Mr. Cary didn’t ask the Frontier guy any hard questions. It was like a 20 minute commercial for Frontier, is that what you get for buying advertising with the station,” asked one.  “I believe that we would all like to hear and understand Frontier’s direct response to challenging questions from an involved, and knowledgeable speaker. We need to hear more then a branding speech,” said another.

The interview was loaded with misleading and occasionally false statements, often coming from the program host, who served as presiding cheerleader.  You can watch the program’s two segments, and then take a look at our reality check (and if an all-consumer volunteer website can manage this, why can’t Mr. Cary?)

[Video No Longer Available]

Now that you’ve watched, let’s review the misleading statements, some made by Arndt, some by the host:

“You guys are serving 35% of West Virginia – that’s a third of the phones.”

Frontier may serve 35% of the landmass of West Virginia, but not 35% of the population, which is a very important distinction.  Verizon has the overwhelming majority of customers in the state, not the tw0-thirds this statement suggests.

“I guess the only guys fighting you all right now are the Communications Workers of America union workers.”

Ken Arndt - Frontier Communications

That, along with other dismissive comments made by Cary represent just how biased his interview was.  In many communities, citizens, businesses, utility commission staff, and yes – company workers are fighting this deal, because it’s bad news for every community facing a Frontier takeover.  Of course, Cary doesn’t have anyone on his program to refute his guest (or him for that matter.)

“From a timelime perspective, and we’re actually finishing our [broadband expansion] engineering plan right now — by December 15th, my expectation is within the first 18 months we will make a substantial increase raising that 60% (of Verizon broadband penetration) exponentially and making a large investment and bringing in the individuals — the engineering and construction talent to be able to get it done as quickly as possible.”

Frontier anticipates cutting $500 million in costs per year if the deal consummates, according to Bloomberg News. Job cuts at both Frontier and Verizon will create some of that savings, according to Maggie Wilderotter, Frontier’s CEO.  Customer service and field-technician jobs won’t be eliminated, she claims, but with a need for that level of cost savings, combined with the enormous debt Frontier will assume, where the resources to accomplish this expansion will come from is not explained.

Frontier’s broadband expansion targets so-called “middle-mile” expansion.  That was precisely what was done in Rochester.  Fiber optics are used to connect various central offices and some remote network extenders (known as DSLAMs) to try and extend DSL service into more distant areas further away from the central office.  DSL speed is highly dependent on distance.  The further away you get, the lower the speed you can obtain.  Frontier plans to install limited amounts of fiber linking their offices in hopes of providing DSL service in areas that do not have access to it currently.  Unfortunately, every indication is that Frontier’s DSL in most parts of West Virginia will provide a maximum of 3Mbps, if you’re lucky.  In communities like Rochester, DSL service is marketed at 10Mbps, but as I’ve experienced myself, that speed really turned out to be 3.1Mbps living less than one-half mile from the city line.

To many consumers, hearing talk about fiber optics may leave the impression they’ll have this type of connection in their home or business.  That’s highly unlikely.  Frontier fiber serves their own internal network.  Verizon FiOS serves you directly on a fiber optic cable.

‘In West Virginia in 2007 Frontier lost 2.7% of our access lines.  In Verizon’s footprint they lost 6.7%.  In 2008, Frontier’s lost just 2% while Verizon increased [their loss] to over 8%.  Frontier has put together unique packages that continually add value to landlines.  It’s through [Frontier’s] packaging, providing unique services and unique technologies [that the company limits losses].’

Frontier is in the enviable position of focusing on rural markets long bypassed by the phone company’s biggest threats: cable and wireless competition.  Verizon is not.  The real reason for the dramatic difference in line loss is that Frontier customers often have no other choices for telecommunications services.  In West Virginia, cable does not serve many rural communities, so there is no “digital phone” competition to worry about.  Mobile phones in the most mountainous regions of the state can offer problematic service if it’s the only phone you have.  Verizon, which does face relentless cable television competition, pays the price in greater line loss.  Rural West Virginia has a much higher population of elderly residents, who are usually the least likely to drop traditional phone service.  In fact, no state has a higher population of the rural elderly except Florida.

These factors afford Frontier more protection from line loss, not the so-called “unique services and unique technologies” the company only speaks about generally.

Arndt also responds to a question about Frontier’s plans for fiber and other forms of “telco-TV” such as that provided by Verizon FiOS.  After noting the company does plan to move forward on an extremely limited basis by finishing FiOS projects already under construction, Arndt signals Frontier believes its status as a simple reseller of DISH satellite service somehow provides a superior solution to telephone company provided television.

Not really.

Who needs Frontier to sign up for DISH?  Customers can sign up directly themselves.  The advantage of “telco TV” really comes from the construction of the network to support it.  Both AT&T and Verizon have built television-ready networks which not only compete with cable, but also give their customers more and better broadband choices that Frontier cannot and will not offer consumers.  Frontier tries to valiantly spin its copper cable future by saying satellite television offers a better service, but in reality, being a DISH Network reseller hardly is in the same class as FiOS or U-verse.

Residents in the affected areas need to consider whether they are tying themselves to a company that believes copper wire slow speed DSL is good enough for now and into the indefinite future, has no plans to directly compete with cable and other providers in delivering a wired telephone company cable service, will not build FiOS-like fiber optic networks in areas that one day could have been wired by Verizon, and will live with a company content with delivering “ubiquity” of service across all of its service areas, which in reality means large communities will suffer with lowest common denominator service, and rural communities will be lucky to get “good enough for you” broadband.

Arndt’s comments about fiber connectivity in selected portions of their service area refer mostly to multi-dwelling units and new housing developments where service was provided more cost effectively through a shared fiber connection.  That’s not FiOS either.

Color us unexcited about the prospect of Frontier’s ‘unique cable television via broadband service’ Arndt hints at.  That is almost certainly the new DISH set top box that can connect to your Frontier DSL service to stream on-demand television shows.  With Frontier’s 5GB Acceptable Use Policy for broadband, don’t expect to watch too much if and when they enforce the limit.

Among the most shameful segments of the 20 minute video press release Cary presides over is in the second half, when he asks and answers his own questions, spun in Frontier’s direction, about their ability to digest Verizon’s operations that dramatically dwarf Frontier’s current size and scope.  He’s even done “his research,” which suspiciously appears to be surfing through Frontier’s own talking points from their website and public relations efforts.  As far as Cary is concerned, Wall Street says they “like” the deal, and opposition to it is “a lot of noise.”

Arndt responds that the opposition to the deal comes because of FairPoint Communications, which he says failed because of the complexities of integrating their billing systems.  As Stop the Cap! readers already know, FairPoint’s troubles went well beyond computer integration problems.  Arndt’s reasoning is akin to saying New Orleans drowned in Hurricane Katrina because a storm sewer up the street was clogged.  More than 20 news reports on this site alone document the entire sordid story.  On every level, FairPoint failed New England for a range of reasons:

1. The enormous debt FairPoint was saddled with made it difficult for the company to spend the money necessary to maintain and grow their network and survive an economic downturn.  Frontier will also take on enormous debt during a challenging economy and claims it will spend millions to expand broadband service into rural areas where fewer potential customers mean a longer Return On Investment;
2. FairPoint’s acquisition of Verizon New England involved more customers than FairPoint served nationwide before the buyout.  The exact same thing is true of Frontier in this deal;
3. FairPoint’s earlier acquisitions were small, independent phone companies run with limited bureaucracy.  Verizon, and its predecessor Bell System businesses, have done things their own way for decades, making theoretical transitions doable on paper and chaotic in reality.  The exact same scenario exists with Frontier’s purchase of Verizon service areas;
4. Poor service, unresponsive and overwhelmed customer service centers, insufficient investment, and broken promises plagued FairPoint’s New England adventure from day one.  Frontier risks repeating FairPoint’s mistakes, putting customers with no other options for telecommunications service at serious risk.

Cary doesn’t have the insight or the interest in digging down into Arndt’s claims.  Maybe he forgot.  As far as Cary is concerned, everyone in West Virginia should just get familiar with the Frontier name.

Of course, actual consumers aren’t invited on Decision Makers.  Nor are any groups opposed to the deal.  But West Virginians and others can be “decision makers” and choose a different path for their telecommunications future.  They can get on the phone and call their state representatives and tell them to oppose the deal.  They can also contact the state utility commission and file their own comments telling them this deal isn’t worth the risk — three bankruptcies out of three earlier deals.

Even when playing this kind of softball, three strikes should mean you are out.

LUS Fiber - Lafayette, Louisiana's public utility municipal broadband provider, offers fast speeds with great rates

Frustrated communities across America, take note.

If your town or city government starts making serious noises about constructing your own, municipally-owned broadband network (especially one built with fiber optics to the home), existing providers who have repeatedly said “no” to requests for faster service at more reasonable prices have a track record of quickly turning around and saying, “yes — why didn’t you ask us before?”

Big existing telecommunications players loathe the thought of facing a new competitor in their midst.  They are accustomed to the usual arrangement of one cable operator and one phone company.  Cable companies provide cable modem service, phone companies mostly provide DSL.  In smaller cities, and where a competitor is missing (or provides a lower quality service), there is almost no drive to upgrade.  Cable will set speeds just above what the phone company is offering, and both will co-exist happily ever after.

For communities being bypassed by the fiber revolution now underway by Verizon, and to a lesser degree AT&T, requests from civic leaders, businesses, and consumers for upgraded service fall on deaf ears.  ‘What you have now is good enough for this market, so be quiet and be lucky we give you what you’ve got now.  Oh, and we’re raising rates, too.’

In Rochester, the one upstate New York city not on the “to-do” list of Verizon (which is merrily wiring urban and suburban communities across their service areas with fiber optic cable FiOS), Time Warner Cable sees little incentive to raise speeds or upgrade to DOCSIS 3 with a phone company competitor that has no apparent plans to move beyond traditional old school DSL service.  Where FiOS does threaten, Time Warner Cable is in a hurry to provide “wideband” broadband as quickly as possible.

In Wilson, North Carolina, years of pleading from local officials to provide something beyond anemic broadband in their community was met with yawns from Time Warner Cable and Embarq, the local phone company.  Wilson decided to build their own municipal fiber network, offering faster speeds at better pricing.  Time Warner and Embarq did what most existing competitors do — they moved through the Four Stages of Telecommunications Competition Grief:

1) Behind the Scenes Threats and Anger: Companies work the phones with local officials trying to browbeat them into dropping the plans to construct municipal broadband, try to gin up partisan opposition, issue overinflated cost estimates, issue warnings about the trouble they’ll cause local politicians who support such initiatives, and snow a blizzard of documents illustrating how wonderful and reasonable their existing service is;

2) Stall Tactics Through Negotiation: Once home office is notified, a series of negotiations to attempt to forestall the project begins, such as throwing crumbs for incrementally better service, offers to build showcase mini-projects that represent a “win” for local politicians, or “looks good on paper” concessions that end up amounting to far less.  Most of these discussions are designed simply to stall to allow the company to prepare for stage three.

3) PR and Legal Blitzkrieg: Assuming local officials haven’t been discouraged away from their idea, or dropped it after starring in a company-sponsored press event – ribbon cutting a small wi-fi or school connectivity project, the next stage is a multi-front battle involving company legal teams filing lawsuits to delay or kill projects, public relations and astroturf lobbying efforts to distort issues and build public opposition, legislative maneuverings to make such projects untenable through industry-friendly laws, and often vague promises about impending upgrades making the entire project unnecessary.

4) Acceptance, Competition, and Better Service: The final stage is the realization consumers don’t always get suckered by astroturf groups and company scare tactics.  They accept the project is moving forward, and send out the press release saying they welcome the competition and are announcing their own significant service upgrade because “customers asked for it.”  Price increases slow, speeds increase, and service improves, all because of the reality that an aggressive competitor is in their future.

Wilson city officials tried negotiations for better service, got nowhere, and had to fight back against a blizzard of nonsense from the telecommunications industry trying to legislate such projects out of existence with changes to state law.  Americans for Prosperity, an astroturf group, even hassled residents in other nearby communities with robocalls to try and stop similar projects.

The arrival of Wilson’s Greenlight service, which offers speeds far faster than Time Warner and Embarq ever did, at lower prices, was a shock to Time Warner’s call centers.  As customers canceled, representatives taking those calls were in denial residents were actually achieving the speeds Time Warner failed to deliver.

[flv]http://www.phillipdampier.com/video/Chattanooga Builds Fiber Network.flv[/flv]

Chattanooga’s public power utility fought back against telecommunication company propaganda to construct fiber to the home service across the city, which launched this year. (5 minutes)

In Monticello, Minnesota, local telephone company TDS had spent years refusing requests to improve service in the city.  Speed and access issues plagued the community, northwest of Minneapolis.  Local officials had enough and voted to construct their own fiber to the home municipal network.

Enter the four stages.  TDS started by telling city officials the company’s network was state of the art for Monticello, and couldn’t be immediately improved because there was insufficient return on investment.  Companies want to be assured they are paid back for investments they make, and because Monticello is a relatively small city, there were questions whether the costs for a fiber network would be paid back quickly enough through revenues.

When that didn’t work, the company sued the city as a stalling tactic.  Despite the fact Monticello won case after case, TDS kept filing.  A full assault by large telecommunications interests also began, trying to gin up public opposition.  While the project was approved by voters, and Monticello was tied up in court, TDS quickly moved to stage four and started rapidly building their own fiber network in Monticello, actually putting down fiber the city was prohibited to wire themselves as the lawsuits dragged through the courts.

The company told Ars Technica that despite its earlier refusals to provide fiber service, TDS didn’t act earlier because it didn’t actually know that people really, really wanted fiber; once the referendum was a success, the company moved quickly to give people what it now knew they wanted.

Then, in June, the company said with the advent of its own fiber network, the city of Monticello should back away from constructing theirs, because its economic viability report was partly premised on the fact TDS refused to provide that service.

To underline that, TDS’ new fiber network doubled customer speeds to 50Mbps, trying to keep customers from taking their business to  FiberNet Monticello.

[flv]http://www.phillipdampier.com/video/Vote Yes on Fiber.mp4[/flv]

Lafayette staged a multi-year battle with Cox and other providers to bring municipal fiber broadband to it’s corner of Louisiana.  This 30 second ad promoted a “yes” vote on the project.

In Louisiana, Cox Cable is facing accusations it’s engaged in predatory pricing to kill Lafayette Utility System’s fiber to the home network and EATel’s fiber network in Ascension Parish.  Cox Cable froze rates and moved in with DOCSIS 3 upgrades, delivering up to 50Mbps service.  Cox chose to upgrade Lafayette before any other Cox-served community.

The Lafayette Pro-Fiber Blog found this EATel billboard taunting Cox

EATel, an independent phone company that wired fiber across Ascension Parish, also faced down Cox.  When the cable company began promoting cut-rate pricing in Ascension, EATel took out advertising promoting Cox’s special prices — in other cities, much to Cox’s consternation.  EATel’s ads, much like those run by Novus against Shaw in British Columbia, tell Cox’s customers to call the company and ask for the lower price they are advertising elsewhere.

“Cox came in with an incredibly aggressive promotion for TV service with every bell and whistle you could imagine. We couldn’t figure out how they could even make money on it. So we took out an ad in the Lafayette newspaper that basically said, ‘Hey Lafayette, look at the great prices you are going to get from Cox.’ Cox was not amused,” Trae Russell, communications manager for EATel told Telephony Online.

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p style=”text-align: center;”>Joey Durel, Jr., president of Lafayette parish, testifies before the House Committee on Energy and Commerce on Lafayette’s municipal fiber network on February 27, 2008. (7 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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Lesson learned — just threatening to bring in a municipal competitor is often all it takes to turn a persistent “no” from the local cable and phone companies into “yes, Yes, YES!”

Of course, not every project is successful.  Some, such as Burlington Telecom Stop the Cap! reported on yesterday face political and cost challenges.  Others are killed through stage managed opposition and astroturf campaigns paid for by the telecommunications industry before they even get started.

In North St. Paul this year,  “PolarNet,” a planned fiber optic broadband network to stimulate the local economy was killed by an astroturf propaganda campaign undertaken by Qwest, Comcast, and other telecommunications companies that would have to deal with PolarNet as a competitor.  The telecommunications companies claimed it would result in higher local taxes and “more government” where it wasn’t needed.  Citizens defeated the proposal 67-33%.

Windom, Minnesota faced similar challenges and their fiber project was shot down in 1999, but with lessons learned, proponents brought it back up and won in 2000.  To this day, the community of 4500 in western Minnesota face considerable envy from adjacent communities — they want service from the fiber-to-the-home system as well.

Almost universally, opponents to municipal broadband systems claim they are financial failures and saddle communities with debt.  In reality, most have forced those opponents to provide improved service in their competitive communities, or those companies will become the financial failure.

[flv width=”427″ height=”240″]http://www.phillipdampier.com/video/Terry Huval of Lafayette Utility System April 2009.flv[/flv]

Terry Huval of Lafayette Utility System talks with the Fiber Revolution blog about the challenges Lafayette experienced building their own municipal fiber network.  Huval offers excellent advice for other municipalities exploring similar projects.  (April, 2009 – 10 minutes)

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p style=”text-align: left;”>Thanks to Stop the Cap! readers Tim and Matt who suggested this story idea.