As AT&T joins Verizon selling off its Yellow Pages publishing unit and payphones keep disappearing from street corners, the media is writing the landline obituary once again.

CNN Money asks today whether we’re witnessing the death of the landline.

In as little as 20 years, the concept of a wired phone line may become the novelty a rotary-dial phone represents today.  Yes, traditional phone lines will still be found in businesses and in the homes of those uncomfortable dealing with a mobile phone, but America’s largest phone companies are well aware the traditional telephone line is in decline.

[flv width=”412″ height=”330″]http://www.phillipdampier.com/video/ATT Archives What is the Bell System.flv[/flv]

The Bell System, as it was known until the 1980s, used to comprise AT&T, Bell Labs, Western Electric, Long Lines, and two dozen local “operating companies” like New York Telephone, Mountain Bell, etc.  This AT&T documentary, from 1976, explores how “the phone company” used to function.  New innovations like “lightwave” are showcased, promising to deliver voice phone calls over glass fibers one day.  

Much of the technology seen in the documentary may be unfamiliar if you are under 30 (and check out how customer records were maintained back then), but those who remember renting telephones in garish colors from your local phone company will recognize the phones that occupied space in your home not that long ago.  The only part of the landline network that hasn’t changed much in the last 40 years is the wiring infrastructure itself, which has been allowed to deteriorate as customers continue to depart.

Why was the company so darn big back then?  Because it had to be, the documentary says, to serve a big America.  Hilariously, the company defends its then-status as a “regulated monopoly” telling viewers “[a] regulated monopoly works well in communications because you don’t duplicate facilities and you produce real economies over the long haul.”  (14 minutes)

CNN reports nearly one-third of all American homes no longer have landline service, double the rate from 2008, triple that of 2007.  Verizon is feeling the heat the most, with revenue down 19% over the last five years.  AT&T has seen their revenue drop 16.5% over the same period.

But things are not all bad for phone companies willing to spend money upgrading their networks.  Verizon’s top-rated FiOS fiber to the home service is a compelling competitor to Comcast and Time Warner Cable.  AT&T’s U-verse has gotten a respectable market share larger midwestern cities and draws customers who like its DVR box and the chance to stick it to the local cable company they’ve hated for years.

But where both companies have decided against investing in upgrades — notably in their rural service areas — the traditional phone line is trapped in time.  Only the network it depends on is changing, and not for the better.

[flv]http://www.phillipdampier.com/video/ATT 1993-1994 You Will Ad Campaign Compilation.flv[/flv]

Back in 1993, AT&T produced seven advertisements dubbed the “You Will” series, showcasing future technologies AT&T would “deliver to you.”  Eerily, the vast majority of these predictions came true, but mostly from companies other than AT&T.  While the phone company predicted what would eventually become E-ZPass, Apple’s iPad, Apple’s Siri, the smartphone, Skype, Amazon’s Kindle, the cable industry’s home security apps, video on demand, and GPS navigation, most of those innovations were developed and sold by others.  

AT&T spun away Bell Labs and became preoccupied selling Internet access, cell phones and reassembling itself into its former ‘hugeness’ through mergers and buyouts. With limited investment in innovation, AT&T risks being left as a “dumb pipe” provider, selling the connectivity (among many others) to allow other companies’ devices to communicate. (Alert: Loud Volume at around 2 minutes) (4 minutes)

Verizon decided to ditch its rural service areas to FairPoint Communications in northern New England and Frontier Communications in 14 other states.  The results have not been good for the buyers (and often customers).  FairPoint went bankrupt in 2009, overwhelmed by the debt it incurred buying phone lines in Vermont, New Hampshire, and Maine.  Frontier has watched its sales fall ever since its own landline acquisition, and the company has gotten scores of complaints from ex-Verizon customers about broken promises for improved broadband, billing errors, and poor service.

Analysts predict AT&T will start dumping its rural landline customers in the near future as well, letting the company focus on its U-verse service areas.  But who will buy these cast-offs?  CNN reports nobody knows.  CenturyLink and Windstream, two major independent phone companies, don’t appear to be in the mood to acquire neglected landline facilities they will need to spend millions to repair and upgrade.

One thing is certain — both AT&T and Verizon are tailoring business plans to favor Wall Street approval.  The companies’ decisions to temporarily boost revenue selling pieces of its operations has helped stock prices, but has also made the companies shadows of their former selves.  Nearly 30 years ago, customers still paid the phone company to rent their home telephones, relied extensively on the companies’ lucrative White and Yellow Pages for directory information, and discovered new technology innovations like digital switching thanks to Bell Labs, the research arm of AT&T — today independent and known as Alcatel-Lucent.  Today, people in some cities cannot even find a telephone company-owned payphone.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WJBK Detroit Quest to Find a Working Pay Phone 4-10-12.mp4[/flv]

WJBK in Detroit this week ventured out across Detroit to see if they could find a pay phone that actually works.  That old phone booth on the corner is long gone, and some admit they haven’t touched a pay phone in 20 years.  (2 minutes)

A California woman is suing Verizon Communications for selling her faster Internet service, at a higher price, the company cannot actually deliver.

Patricia Allen of Santa Monica filed suit in Los Angeles after Verizon sold her an upgrade to her current DSL plan that turned out to be anything but.  Allen was paying $23.99 a month for 768kbps service, but in March, 2011 Verizon promised they could give her a speed upgrade to 1.5Mbps for $11 more per month.

Exactly one year later, Allen learned her “upgraded service” performed no better than her original Internet plan, which itself only managed around 500kbps, and called Verizon to complain.

Verizon technicians quickly responded Allen could never get the benefits of a faster speed plan because she lived at least two miles from her local Verizon central office.  DSL speeds degrade with distance and can also be impacted by the quality of the landline network Verizon maintains in southern California.  Because Allen lives too far away to receive anything better than 700kbps service, she was advised to downgrade her $34.99 DSL plan back to the one she started with.

Allen requested a refund for the extra $11 a month she was paying for the last year for promised speed improvements Verizon never delivered, but the company flatly refused her request.  Allen is now taking her case to the California courts, and her legal representatives are seeking to have the case designated a class action covering all Verizon landline customers in California who, like Allen, are paying for Verizon-marketed speed upgrades they actually cannot receive.

The suit claims Verizon is well aware it is selling speed upgrades to customers who live too far away from the company’s facilities to actually benefit from the enhanced service, and pockets the proceeds without delivering improved service.  The suit alleges Verizon is engaged in unethical, unscrupulous, immoral, and oppressive business conduct in violation of California state law.

Verizon’s spokesman Rich Young called the lawsuit “baseless and without merit.”

Verizon Class Action Copy

Cuomo

New York’s telecommunications providers are up in arms over Gov. Andrew Cuomo’s decision to yank permanent deregulation for the “digital phone” industry (otherwise known as “Voice Over IP/VoIP”) from his budget, even though the phone service is already deregulated in New York.

Now Verizon Communications and Time Warner Cable are claiming that without the deregulation they already enjoy, innovation, investment, and competition will be stifled.

“Verizon is very disappointed that New York’s lawmakers, who want the public to believe that New York is open for business, will not be acting on this important measure to modernize the state’s outdated telecommunications laws in this year’s budget,” Verizon spokesman John Bonomo told the Albany Times-Union.

“It’s about new technologies, it’s about new services,” echoed Rory Whelan, regional vice president of government relations for Time Warner Cable. “We want New York to be at the forefront of where we roll out our new products and services.”

That notion has left consumer groups and telecommunications unions scratching their heads.

“They are saying that this is going to open the flood gates to more investment,” said Bob Master, political director for one chapter of the Communications Workers of America, which represents Verizon workers. “It’s ridiculous.”

Master says Verizon has been abandoning and ignoring their landline network for years, preferring to invest in Verizon Wireless and its limited FiOS fiber-to-the-home service which is available in only selected areas of the state.

New York’s Public Service Commission has largely not regulated competing phone service since Time Warner Cable first introduced the service as an experiment in Rochester.  As part of then-Rochester Telephone Corporation’s (now Frontier Communications) “Open Market” Plan, competing telephone companies could offer landline service in the company’s service area, so long as Rochester Telephone received the same deregulation benefits.  Only the cable company showed serious interest in providing home phone service, which it first delivered using traditional digital phone switches phone companies like Verizon and Rochester Telephone use.  Time Warner later abandoned that service for a VoIP alternative it branded as “digital phone.”

Time Warner’s “digital phone,” as well as Verizon’s own VoIP service sold with FiOS, have co-existed regulation-free.  Consumer advocates suspect the push to deregulate could eventually benefit Verizon more than cable operators, because it gives the phone company the right to question why any of its telephone services are regulated.  Verizon’s FiOS fiber-based phone lines do not operate on the same network its still-regulated landlines do.  Verizon, along with all traditional phone companies in New York, are subject to “universal service” guidelines which assure even the most rural New Yorkers have access to reliable telephone service.

But Verizon, like most traditional phone companies, sees substantial investment in “modernizing” legacy copper-based networks as an anachronism, especially as they continue to lose customers switching to cheaper cable providers or wireless phones.  The company recently declared its fiber optic replacement network, FiOS, at the end of its expansion phase.  That leaves the majority of New Yorkers with a copper-based telephone network companies only invest enough in to keep functioning.

Diaz

Bronx Borough President Ruben Diaz, Jr., joined many New York Assembly Democrats in strong opposition to the bill, which Diaz thinks undercuts New York consumers:

If this proposal were to become law, all consumers would lose out. For starters, customers would not be able to bring service complaints to the Public Service Commission, as they currently can with traditional service. Additionally, there would be no way for the state to set standards for quality or for service in underserved regions — meaning that customers could get stuck with exorbitantly high rates or be unable to obtain service at all in some areas of the state.

Verizon FiOS, one of the main options for VoIP coverage, has now been installed in many regions of the state, including most of downstate. However, Verizon has chosen not offer the service in upstate cities like Albany, Binghamton, Buffalo, Rochester, Syracuse and Utica. The result is both a virtual monopoly for the cable companies in those areas and another blow to lower-income working families who live in cities. That’s precisely why the state should be able to guarantee common sense regulations for VoIP service.

The problems with deregulating VoIP service are multifold. While traditional phone companies pay into a fund that supports “lifeline” phone access for elderly and disadvantaged New Yorkers, VoIP providers would not have to. We do not have to guess at how things would look if the state gives up its right to regulate internet phone service — we can just look at the states where traditional land line service has been deregulated. According to a recent survey of 20 states that have seen land line deregulation, 17 of those states have seen rate increases. We simply cannot afford that, particularly when our fragile national recovery is just beginning to take hold.

Verizon appears undeterred by the governor’s decision to pull the deregulation measure from consideration in his budget measure.  Bills to deregulate continue to float through the Republican-controlled Senate and Democratic-controlled Assembly, but New York’s legislature is notoriously indecisive and slow to act.  Time Warner’s Whelan believes the best chances for the deregulatory measure will be in the GOP-controlled Senate where a similar bill passed last year.  Verizon says it will continue to push for the bill in both chambers.

“We intend to continue pushing for this important measure, and for other measures that will benefit the state’s consumers and businesses to keep up with technological change and help the state thrive and succeed,” Bonomo said.

West Virginia continues to be broadband challenged, with or without the help of Frontier Communications’ DSL service, which continues to be criticized for being woefully “oversold.”

Now some of Frontier’s most frustrated customers have found Facebook, and hope to encourage the company to deliver better speeds through their Fix Frontier DSL Now page.

Customers are especially peeved in areas where they are sold “up to 12Mbps” service, but cannot break 1Mbps during peak usage times when inadequate infrastructure cannot support customer usage demands.  Some are taking their complaints to the West Virginia Public Service Commission:

I am a long-time subscriber to Frontier Communications’ “High-speed Internet Max” DSL service. I live in the Frankford, West Virginia, telephone exchange (304-497-XXXX), which is an area that has always been served by Frontier. We never had Verizon service at my home.

When Frontier installed DSL service in our area, we immediately cancelled our satellite Internet service and signed up. Initially, we had business-class DSL which was very satisfactory. Later, we discontinued our business operation and downgraded to the residential “High-Speed Internet Max” DSL service. That remained quite satisfactory until about a year and a half ago, when service quality deteriorated to the point of being unusable.

During the evening hours, we generally log download speeds of anywhere from 150kbps (0.15MBPS) to 450kbps (0.45MBPS) , with around 300kbps (0.3MBPS) being the norm. This is barely adequate for accessing a static web page, and is totally inadequate for common tasks such as watching a video on YouTube or even streaming music. Speeds do improve, sometimes into the range of 1500kbps (1.5MBPS), in the middle of the night and the afternoons, when we are generally asleep or at work, but are consistently unusable during the evening hours when we are home.

Customers pay around $40 a month for this level of broadband service, and customers calling for assistance are being told to wait:

I have called Frontier’s tech support and opened numerous trouble tickets. Each time, a technician will come out to our house, test the line, pronounce it “perfect” from the house to the switching station, then explain that the problem is lack of bandwidth. Sometimes they say the bottleneck is in Bluefield. Sometimes they say it is between Marlinton and Ashburn, Virginia. In other words, Frontier does not have enough bandwidth available to meet customer needs.

The last time we put in a trouble ticket, the technician didn’t even come to our home. He just called and said he would put the ticket on the stack with all of the other ones, and perhaps the problem would be solved in a couple of years. A couple of years? Yet, I am constantly bombarded with ads asking me to buy Frontier’s high-speed DSL service at rates as low as half of what I pay.

As Stop the Cap! has reported previously, Frontier has acknowledged the problems in West Virginia and promised backbone upgrades to handle the influx of new customers, particularly those adopted from Verizon Communications in 2010 when the company purchased their landline network in the state.  But a schedule of promised upgrades disappeared off Frontier’s website, and according to our readers, continues to be overdue.

The loudest complainers are offered $5 monthly service credits for their troubles, but customers don’t want the money, they want something that actually qualifies as “broadband service.”

Here is how you can tell where your problem might be:

Technical Line Fault Symptoms (these can be corrected by a local technician’s service call to your home)

1. Consistently low speeds that do not vary much with time of day or on weekends;
2. Weather-related service interruptions or slowdowns – poor quality cables, fittings, and other problems are often most visible during the wet spring months;
3. Loud hum or static on your voice line when making or receiving calls;
4. Hearing conversations from other customers on your phone line;

Oversold Broadband (these problems require Frontier to regionally address problems that affect a much larger group of customers)

1. Dramatically reduced speeds during evenings and weekends that consistently speed up later at night or during the workday;
2. Similar speed-related issues affecting friends and neighbors in the same neighborhood or community;
3. Pages that do not load completely, time out, or require refreshing to load properly;
4. “Tracert” reports that indicate certain upstream connections Frontier uses to connect to its national network are timing out or require multiple attempts to get through.

Sen. Paul Hornback (R-AT&T)

A Kentucky state senate panel on Tuesday approved a bill admittedly-authored by AT&T that could allow the company to abandon providing basic telephone service in areas deemed not sufficiently profitable.

Senate Bill 12 is just the latest effort by AT&T to end “Universal Service,” the basic principal that all Americans should have equal access to basic landline telephone service.

The proposed legislation would allow the three largest phone companies in Kentucky — AT&T, Windstream, and Cincinnati Bell to abandon customers who, in one possible scenario, do not agree to a more deluxe feature package that includes long distance calling, wireless service, and/or broadband.

“This bill represents a grave threat to continued, stand-alone, basic telephone service for many Kentuckians who don’t have the luxury of access to Twitter and all the things that we in urban areas tend to take for granted,” Tom FitzGerald, director of the Kentucky Resources Council told the Lexington Herald-Leader.

AT&T says allowing it the right to terminate rural landline service would “spur innovation and create jobs.” It would also strip Kentucky of its power to investigate and force resolutions of consumer complaints.

The optics of the bill’s primary sponsor, Sen. Paul Hornback (R-Shelbyville/AT&T), sitting next to the two AT&T executives who authored the bill as he testified before the Senate Committee on Economic Development, Tourism and Labor was not lost on the bill’s opponents.

“It’s obvious who he is really working for,” said our regular Kentucky reader Paul in Louisville.

Daniel, the Stop the Cap! reader who first shared the story with us, is not happy either.

“This infuriates me,” he writes. “If AT&T gets their way, they will have less reason to invest in areas that are underserved or not served at all, and allow them to further push people to their horrific cell service.”

Daniel barely gets DSL from AT&T — 3Mbps if he’s lucky, and most of his neighbors cannot get any broadband from the company because they don’t officially service the area with broadband.  Daniel suspects once AT&T is deregulated further, they will have even fewer reasons to focus on less-populated regions of the state.

Hornback: "Nobody knows better than AT&T what the company needs the legislature to do for it."

“AT&T is my only reliable option – and if I can’t keep their Internet service then I will lose my job,” he says.

In 2006, AT&T helped push through a deregulation measure that stripped the Kentucky Public Service Commission of its ability to oversee prices for telecommunications services in the state. Customers of both AT&T and Cincinnati Bell soon saw price increases after the legislation passed with arguably no improvement in service.

Hornback argues S.12 will help “modernize telecommunications in the state of Kentucky,” without explaining exactly how abandoning customers enhances their level of service.

AT&T says they will not completely exit rural Kentucky if given the power to disconnect its landline network.  It can sell rural customers AT&T cell phone service instead. Critics say that comes at a substantially higher price and offers only limited broadband.

Hornback defended that, suggesting the company is wasting money and resources keeping its current antiquated landline facilities when it might be better spending that money on wireless services.

But customers would face charges starting at nearly $40 a month after taxes and fees for a basic AT&T wireless plan with as few as 200 calling minutes a month.

Hornback got around initial opposition to an earlier measure he introduced — SB 135, by reintroducing essentially the same measure inside another unrelated bill.  Hornback said that was an effort to give the legislation “a fresh start” in light of heated criticism from consumer groups, the AARP, and even Kentucky businesses.

The committee voted 9-1 for Hornback/AT&T’s measure and sent the bill forward to the Senate floor.  The single “no” vote came from Sen. Denise Harper Angel (D-Louisville).

Phone companies in Kentucky

AT&T’s clout in the state capital is unparalleled according to the newspaper:

It employs 31 legislative lobbyists, including a former PSC vice chairwoman and past chairs of the state Democratic and Republican parties, spending about $80,000 last year on legislative lobbying. Its political action committee has given at least $91,000 in state political donations since 2007.

Remarkably, Hornback defended AT&T’s authorship of his bill that would directly benefit the company’s interests.

Nobody knows better than AT&T what the company needs the legislature to do for it, Hornback said.