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).”

Nebraska City, Neb. understands how super fast broadband can transform local businesses, education, health care, and consumer entertainment. The only problem for the community of 7,277 residents is getting a provider to supply it.

Although incumbent providers Time Warner Cable and Windstream Communications were willing to offer expanded service, only Spiral Communications of Bellevue, Neb., promised to deliver 1,000/1,000Mbps fiber optic broadband to every local resident and business that wants it.

“To be competitive with other communities in retaining and attracting industry, businesses, families and individuals and to continue to provide a high quality of life for our citizens, we must have greater bandwidth,” Nebraska City Mayor Jack Hobbie said.

Spiral has begun engineering studies in the Otoe County seat to contemplate the total cost of the network — an expense the company will bear itself. Spiral said it would invest $3 million in the equipment and pay a 3 percent franchise fee to the city.

Prices for the service have not yet been set, but Spiral promises customers can buy less costly Internet speeds of 10-50Mbps.

Currently, Spiral Communications provides wireless Internet service in western Iowa and has a fiber to the home project in Traynor and fiber optic ring around Tabor, both in Iowa.

Georgia’s first gigabit fiberhood will serve residents of a luxury $600 million development now under construction in an Atlanta suburb.

North American Properties is partnering with Hotwire Communications to install an ultra high-speed fiber to the home broadband network offering gigabit speed to every resident, hotel guest, retail shop, restaurant and office worker at the Avalon development in Alpharetta, located north of Atlanta.

“This is a game-changer for Alpharetta,” said Alpharetta mayor David Belle Isle. “Nowhere else in Georgia can you get gigabit service to your home and nowhere else but Alpharetta can a business take advantage of this cost-effective way to future-proof their operations.”

Avalon is a 2.4 million square foot mixed-use development that will open in October 2014. Phase one will consist of 250 luxury rental homes (average rent $1,400), 101 single-family homes ($400,000-1.7 million), 400,000 square feet of retail and restaurants and 108,000 square feet of loft office space.

The property developer hopes fiber broadband will help it attract around 800 permanent residents as well as be a selling point for commercial tenants.

Hotwire Communications specializes in overbuilding multiple dwelling residences with fiber service. The nearest competitors are Comcast and AT&T, neither which offer speeds at Hotwire’s level.

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.

If you thought waiting three days for a service call was too long, you haven’t talked with Tod Robberson, editorial writer for the Dallas Morning News. AT&T has scheduled his U-verse installation 23 years from now.

Robberson has been buried in AT&T promotional mailings pushing its U-verse fiber to the neighborhood service he was ready to sign up for two years ago, but wasn’t yet available in his neighborhood. Dozens of mailings arriving this summer indicated that finally changed and he was ready to see the back of Time Warner Cable:

I phoned one day after receiving my first notice. I signed up immediately for service. The friendly sales person told me because of high demand, she couldn’t set an installation date for sooner than two weeks. Whatever. Fine. We agreed on August 19, somewhere between 9 and 11 a.m. I couldn’t wait.

Then, on August 16, they called with bad news. They needed to delay the installation for another week. Big disappointment, but I could live with it, I thought.

A week later, they called again and said there was another delay. The lines in my area needed “conditioning.” Each week since then, I’ve received a call from an AT&T person telling me about the conditioning problem. I finally offered to get out my own bottle of conditioner and do it myself. They didn’t get the joke.

Finally, today, I escalated. I talked to Gilbert in Complaints. Gilbert the Problem Solver. He heard me out. I told Gilbert that AT&T had me at hello. I was just dying to get U-verse and was very frustrated that no one at AT&T would listen. I could swear he even giggled a little when I made the “bottle of conditioner” joke. Then he did some checking around and told me that, well, truth be told, I could be waiting another year before they got around to installing my service. That’s right, one year.

Turns out that Gilbert was optimistic. I went online today with AT&T just to make sure I didn’t misread the notice I got from AT&T. Did they really tell me that service was now available? Well, I couldn’t have signed up if it wasn’t. AT&T’s system is set up to block you if your neighborhood isn’t ready.

But now, the “due date” on my installation has changed. It reads: 12/31/2036.

Dallas is home to the headquarters of AT&T and was an early adopter of U-verse. But AT&T has won the right under state law to decide when and where it chooses to deploy the service, leaving a large number of Dallas residents waiting since its introduction in 2010.

For the foreseeable future, Robberson’s tree-infested, satellite-unfriendly neighborhood is stuck with one choice for pay television and broadband: Time Warner Cable.