Phillip “Another year, another AT&T deregulation measure” Dampier

It’s back.

It seems that nearly every year, AT&T and its well-compensated fan base of state legislators trot out the same old deregulation proposals that would end oversight of basic telephone service and allow AT&T (and other phone companies in Kentucky) to pull the plug on landline service wherever they feel it is no longer profitable to deliver.

This year, it’s Senate Bill 99, introduced once again by Sen. Paul “AT&T Knows Best” Hornback (R-Shelbyville). Back in 2012, Hornback disclosed AT&T largely authors these deregulation measures and he introduces them on AT&T’s behalf. In fact, he’s proud to admit it, telling the press nobody knows better than AT&T what the company needs the legislature to do for it.

“You work with the authorities in any industry to figure out what they need to move that industry forward,” Hornback said. “It’s no conflict.”

While Hornback moves AT&T forward, “his” bill will move rural Kentucky’s best chances for broadband backwards.

AT&T always pulls out all the stops when lobbying for its deregulation bills. In Kentucky, AT&T has more than 30 legislative lobbyists, including a former PSC vice chairwoman and past chairs of the state Democratic and Republican parties working on their behalf. It has spent over $100,000 in state political donations since 2007.

The chief provisions of the bill would:

• End almost all oversight of telephone service by the Public Service Commission anywhere there are more than 15,000 people living within a telephone exchange’s service area;
• Give Kentucky phone companies the right to disconnect urban/suburban basic landline phone service and replace it with either wireless or Voice over IP service;
• Allow rural customers to keep landline service for now, but also permits AT&T and other companies to effectively stop investing in their rural wired networks.

This year, AT&T apparently conceded it was just too tough to convince the legislature to let them disconnect hundreds of thousands of rural Kentucky phone customers at the company’s pleasure, so this time they have permitted rural wired service to continue, with some exceptions that make life easier for AT&T.

First, the end of oversight of telephone service means customers in larger communities in Kentucky will have no recourse if their phone service doesn’t work, is billed incorrectly, is disconnected during a billing dispute, or never installed at all. The PSC has traditionally served as a last resort for customers who do not get satisfaction dealing with the local phone company directly. PSC intervention is taken very seriously by most phone companies, but the state agency will be rendered almost toothless under this bill.

Second, although existing rural phone customers would be able to keep their basic landline service (for now) under this measure, nothing prevents AT&T from marketing alternative wireless phone service to customers experiencing problems with their existing service. Verizon has attempted that in portions of upstate New York, where telephone network deterioration has led to increased complaints. In some cases, Verizon has suggested customers switch to wireless service instead of waiting for phone line repairs which may or may not solve the problem. New rural customers face the possibility of only being offered wireless or alternative phone services.

Third, provisions in the bill give AT&T and other companies wide latitude to offer wireless or Voice over IP alternatives to landline service with little recourse for customers who only later discover these alternatives don’t support faxes, medical or security alarm monitoring, dial-up Internet, credit card processing, etc.

Fourth, the bill eliminates any requirement imposed upon broadband service in existence as of July 15, 2004. In fact, the measure specifically defines both phone and broadband service as “market-based and not subject to state administrative regulation.” That basically means service will be unregulated.

AT&T’s wireless home phone replacement

Here are some real world examples of where S.B. 99 could trip up consumers:

1. An elderly Louisville couple living the summer months in Louisville discover their phone service has been switched to the U-verse platform over the winter as AT&T seeks to decommission its deteriorating landline network in the neighborhood. S.B. 99 offers customers a 30-day opt out provision upon first notification, allowing a customer dissatisfied with the alternative service the right to switch back to their landline. But this couple was in Florida during the 30-day window, did not receive the notification to opt out in time to act, and are now stuck with U-verse. Unfortunately, the home medical monitoring equipment for his pacemaker does not work with Voice over IP phone service. This couple’s recourse: None.
2. A customer moves into a new home currently served by AT&T’s wireless home phone replacement service. The customer doesn’t like the sound quality of the service and wants a traditional landline instead. Her recourse: None.
3. A retired couple uninterested in broadband service or television from AT&T U-verse suddenly discovers AT&T wants to raise prices on landline phone service, but offers savings if the couple agrees to sign up for U-verse. Instead of paying a $25 monthly phone bill, the couple is now being asked, on a fixed income, to pay $100 a month for services they don’t want or need. Their recourse: They can appeal to keep their landline if they meet the aforementioned deadline, but they have no recourse if AT&T raises rates for basic phone service to make its discounted bundled service package seem more attractive.

Hood Harris, president of AT&T Kentucky, follows the same playback AT&T always uses when pushing these bills by framing its argument around landline telephone service regulation, which is an easy sell for cell phone-crazy customers who have not made a landline call in years:

Harris

Some of Kentucky’s laws that regulate our phones were written before cable television, cell phones, the Internet or email existed.

Because of these outdated laws, providers like AT&T must sink resources into outdated technology that could be invested in the modern broadband and wireless technology consumers want and need.

Every dollar invested in old technology is a dollar not being invested in speeding up the build out of new technology across the commonwealth.

It’s no longer the 19th century coming into your home over the old, voice-only phone network that was put in place under now-outdated laws. It’s the 21st century coming into your home over modern networks. While technology has changed dramatically for the better in just the past few years, our laws have not.

Despite what you may have heard, SB 99 will not remove landlines from rural homes or businesses.

Instead, this legislation puts those customers in charge of deciding which communications services they want and need. If you are a rural customer, for example, you may choose to join the nearly 40 percent of Kentuckians who already have moved on from landline home phones and gone only with a wireless phone, or you may choose a landline phone that’s provided over the Internet (known as Voice over Internet Protocol, or VoIP), or you may choose both a VoIP and a wireless service.

But you do not have to — you can keep your existing landline phone if you like. Under SB 99, the choice is yours.

It’s seems like a logical argument, until you read between the lines. Harris implies that those old-fashioned laws governing landlines you don’t have anymore are slowing down AT&T from bringing about a Broadband Renaissance for Kentucky. If AT&T only was freed from the responsibility of patching up its copper wire phone network, it could spend all of its time, money, and attention on improving cell phone service and bring broadband to everyone. Harris promises every resident will have a choice to get the service they want — wireless or wired — as long as you remember he is only talking about basic phone service, not broadband.

If your community isn’t highlighted on this map, AT&T has a wireless-only future in store for you.

Harris avoids disclosing AT&T’s true agenda. The company has freely admitted to shareholders it wants to scrap its rural wired network, now considered too costly to maintain for a diminishing number of customers. Unlike independent phone companies like Frontier, AT&T has been in no hurry to upgrade these rural customers for broadband service. AT&T has not even bothered to apply for federal broadband funding assistance to defray some of the costs of extending DSL to its rural customer base. With no possibility of buying broadband from AT&T, customers have little incentive to keep wired service if a cell phone will do. But decommissioning landline service in rural Kentucky guarantees these customers will probably never receive adequate broadband.

The “long-term cost reduction” AT&T mentions above is for them, not for you.

AT&T claims it will invest the savings in a wireless broadband network for rural customers, but as any smartphone owner will attest, AT&T’s wireless service is much more expensive than traditional phone service and its data plans are stingy and very expensive. Customers who can buy DSL from AT&T pay as little as $14.99 a month for up to 150GB of usage. A wireless data plan with AT&T for a home computer or notebook starts at $50 a month and only provides 5GB of usage before customers face a $10 per gigabyte overlimit fee. Which would you prefer: paying $14.99 for 150GB of usage with AT&T DSL or $1,500 for the same amount of usage on AT&T’s wireless network?

AT&T’s claims it will expand broadband as a result of not having to spend money on its landline network are specious. In fact, regardless of whether Kentucky passes S.B. 99 or not, AT&T has already embarked on its last known U-verse expansion. Project Velocity IP (VIP) devotes $6 billion to expanding U-verse to 57 million homes, reaching 75% of customer locations by the end of 2015. For the remaining 25% of customers, mostly in rural areas, AT&T’s plan isn’t to spend more money on improved wired service. Instead, it will build out its wireless network to serve the remaining customers with its LTE wireless broadband service — the same one that costs you $1,500 a month if you use 150GB.

Wireless is a cash cow for AT&T, so even saddled with its landline network, the company still spends the bulk of its investments on the wireless side of the business. Project VIP could have devoted all its resources to bringing U-verse to a larger customer base, but it won’t. AT&T sees much fatter profits spending $14 billion now to expand its wireless 4G LTE network and collect a lot more money later from its rural Kentucky customers.

Kentucky residents who don’t have U-verse in their area by the end of 2015 are probably never going to get the service, with or without S.B. 99. So why support a measure that delivers all the benefits to AT&T and leaves you sorting through the fine print just to keep the service you have now at a reasonable price. In every other state where AT&T has won deregulation, it raises the rates with no corresponding improvement in service.

Just how bad can AT&T’s wireless home phone replacement be? Just look at their disclaimers:

AT&T Wireless Home Phone is not compatible with home security systems, fax machines, medical alert and monitoring services, credit card machines, IP/PBX Phone systems, or dial-up Internet service. AT&T’s fine print on its website.

“AT&T’s wireless services are not equivalent to wireline Internet.” Wireless Customer Agreement, Section 4.1.

“WE DO NOT GUARANTEE YOU UNINTERRUPTED SERVICE OR COVERAGE. WE CANNOT ASSURE YOU THAT IF YOU PLACE A 911 CALL YOU WILL BE FOUND.” (All caps in original). Section 4.1.

A sweeping deregulation measure sponsored by Verizon Communications would end the telephone company’s obligation to provide landline service and remove state-mandated customer quality of service standards in Massachusetts.

House Bill 2930, “An Act modernizing telephone regulation and encouraging economic growth,” introduced by Rep. Stephen L. DiNatale (D-Fitchburg) is succinct:

SECTION 1. Chapter 25C of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by inserting after section 7 thereof the following sections.

Section 8. Notwithstanding any other general or special law to the contrary, the department shall have no jurisdiction, general supervision, regulation or control over wireless service, including mobile radio telephone service, or radio utilities.

Section 9. Notwithstanding any general or special law to the contrary, subject to the provisions of section 10 of this chapter, no provision of this chapter, Chapter 25 or Chapter 159, 8 and no regulation, order or settlement or portion thereof adopted pursuant to any such provision, shall apply to any telephone company (or a common carrier offering telephone service) in any municipality for which the company or carrier certifies to the Office of Consumer Affairs and Business Regulation that there are at least two providers offering voice telephone service to retail residential customers in that municipality using any technology, including but not limited to wireless voice service and VoIP service.

Section 10. Nothing in sections 8 or 9 of this chapter shall be construed to affect or modify:
a. the authority of the attorney general to apply and enforce chapter 93A or other consumer protection laws of general applicability;
b. the department’s authority under sections 18B and 18H of Chapter 159, concerning enhanced 911 service, and under section 15E of Chapter 166, concerning telephone relay service;
c. the rights or obligations of any carrier under 47 U.S.C. § 251 or 47 U.S.C. § 252; or
d. the department’s authority to administer the federal Lifeline and Link-up programs or the Connect America Fund.

SECTION 2. Sections 11, 12, 12A, 13, 14 and 15 of Chapter 166 are hereby repealed.

The measure was discussed at a hearing this week before the Legislature’s Energy & Telecommunications Committee. Verizon argued its company is still regulated as if it was a monopoly, with reporting requirements and customer service mandates that do not apply to its competitors in the cable or wireless industry.

DiNatale

“We have to answer a customer’s call within x number of seconds,” said Verizon spokesman Phil Santoro. “If we don’t, we get penalized. No other company that provides phone service has to do that. They’re all regulations that were formed when we were a monopoly, and they haven’t been changed.”

Verizon lobbyist Joe Zukowski told the Boston Business Journal Verizon is required to respond to repair calls within a 24-hour window, something not required of its biggest competitor Comcast. Verizon has to report its annual finances and various customer metrics governing response times and outages to state regulators. Verizon also has to offer landline service anywhere in its service area across most of the state, while cable companies can pick the places they wish to serve.

DiNatale regularly supports Verizon’s legislative initiatives. In 2012, he proposed a bill to amend state law to remove the authority of the Department of Telecommunications and Cable to regulate the wireless industry, deferring instead to federal regulations that industry representatives said would level the playing field.

DiNatale suggested Massachusetts could be left behind if the legislature didn’t adopt the measure. Rep. Randy Hunt, a Sandwich Republican, asked if Massachusetts had missed out on any innovations in technology because of overregulation. Zukowski suggested a Massachusetts legislature hostile to business interests would make the company think twice about expanding its 4G LTE network in the state. By November, the bill was effectively buried in a legislative maneuver and by June 2013, Verizon announced it largely completed its 4G LTE upgrade, regardless of the bill.

DiNatale’s latest bill includes last year’s wireless oversight ban as well as forbidding the Department of Telecommunications and Cable from regulating Verizon in any part of the state where at least one provider of any kind offers competitive service.

Despite DiNatale’s attempt to ban state regulation of wireless service,  Sen. Karen Spilka (D-Ashland), argued at Tuesday’s hearing for (S 1617), “The Cellphone User’s Bill of Rights,” that would require clearly published prices and service policies, monitors the quality of cell service in the state, and limits all cell contracts to 12 months.

“Many people don’t have landline phones anymore. However, as wireless subscribership increases, so do complaints about the contracts and services,” Spilka told the committee.

Zukowski suggested that rural areas will still be covered by regulation where Verizon maintains a monopoly. But the legislation eliminates regulation from any part of the state where even one competitor promises to provide service. AT&T Mobility alone would give Verizon an effective way out of regulatory oversight, because AT&T claims it already provides solid service to the majority of the state.

AT&T Mobility claims its competing cell service is available across almost the entire state of Massachusetts. The areas boxed in red are the only significant parts of the state without claimed coverage by AT&T.

There are only about three dozen or so towns in the state with no cable voice service, and even fewer with significant sections that have no cell phone service, all in the sparsely populated rural central and western parts of the state.

Other key components of this and another bill Verizon is supporting this term:

• Verizon would end its commitment to provide universal service in the state. Under the terms of the bill, Verizon could also justify ceasing rural landline service and offer an alternative such as Voice Link, a wireless landline replacement not subject to state oversight;
• Verizon would not have to report finances and customer service metrics and would no longer have to meet mandated customer service standards;
• State authority to compel reliable E911 service without any charge to the calling party and mandates regarding service for the disabled are weakened or eliminated;
• Elimination of a requirement providing Verizon customers with 10 free directory assistance calls per month, unless the customer is certified as elderly or disabled;
• Impose clear terms that wireless service is off-limits to state regulators.

The bill is co-sponsored by: Rep. Stephen Kulik (D-Worthington), Sen. Anthony Petruccelli (D-East Boston), Rep. Kathi-Anne Reinstein (D-Revere), and Sen. Sal DiDomenico (D-Everett).

Verizon’s moratorium on further expansion of its fiber to the home service will continue for “the next couple of years.”

Verizon FiOS won’t be coming soon to a home near you, unless that home is inside a community with a standing agreement with the phone company.

Verizon CEO Lowell McAdam made it clear to attendees at Tuesday’s Goldman Sachs 22^nd Annual Communacopia Conference his priority continues to be investing in the company’s highly profitable wireless business, while the company’s wired infrastructure is being targeted for more cost cutting, especially in areas designated to see existing copper infrastructure decommissioned. As for expanding FiOS into new communities, McAdam said he instead preferred to concentrate on improving market share and profits for the next few years in areas already getting the fiber optic service.

McAdam noted John Stratton, president of Verizon Enterprise Solutions, has been hard at work pruning Verizon’s wireline products and services targeted to business and government customers.

“I think [he] killed about 2,000 products this year, and we have taken 350 systems offline last year,” McAdam noted. “I think we are already at 250 this year. That sort of discipline gives you the ability to streamline your infrastructure.”

For residential customers, Verizon has two sets of offerings: one for customers served by FiOS fiber optics, the other for customers unlikely to see fiber upgrades indefinitely.

Inside Existing FiOS Service Areas

“We are doing some major technology shifts within FiOS to make it more efficient,” McAdam said. “We’re going to concentrate there for the next couple of years.”

McAdam’s signals to Wall Street were loud and clear: no more FiOS expansion into new communities for now.

McAdam

Instead, Verizon will focus on improving existing service in several key areas:

• Verizon has almost two million optical terminals that McAdam says were active at one point and are now sitting idle, suggesting FiOS has won and lost nearly two million customers since launching, either because the customer switched providers or moved away. McAdam said he wants to improve Verizon FiOS’ product set enough to attract those customers back. He noted with the terminals and cables already in place, the capital costs to win back a former customer are near zero;
• Verizon is introducing a new terminal this fall. Verizon’s FiOS Media Server “eliminates the requirement for coax, once you get into the optical terminal in the basement or wherever in the house,” McAdam said. “That slashes the installation time, and therefore makes the product a lot more profitable for us going forward. It eliminates set-top boxes, it is all IP-based going forward.”
• Verizon will continue to expand Verizon FiOS, particularly in New York City where it has a commitment to offer service.

Verizon FiOS has managed to build a much larger market share than its nearest neighbor, AT&T U-verse. McAdam claimed Verizon FiOS has achieved a 39 percent market share in broadband and around 34 percent on its television service so far. McAdam’s goal is to boost that to 45 percent. In areas of Texas where Verizon first introduced its FiOS fiber optic service, the company already has a penetration rate above 50 percent for broadband and 50 percent for television, demonstrating room to grow market share. AT&T’s U-verse TV penetration rate is 20.1 percent.

For Those Unserved by FiOS

Verizon’s 4G LTE Broadband Router with Voice

Except for Fire Island, N.Y., there are no significant announcements of FiOS expansion. Instead, Verizon has focused on investing to improve its wireless 4G LTE cell networks with the hope existing landline customers will consider switching to higher-profit wireless service. An attempted trial of Verizon Voice Link, intended to be an entry-level wireless replacement of landline service, failed badly on Fire Island due to an avalanche of complaints about poor quality reception, dropped and incomplete calls, and lack of support for data.

Now Verizon is back with a new offering, its 4G LTE Broadband Router with Voice ($49.99 2-yr contract with $175 early termination fee/$199.99 month-to-month).

“Securely connect wired and wireless devices to the 4G LTE network, and connect your landline phone to make calls,” Verizon’s website says. “Combine voice and data on a Share Everything Plan for added savings.”

The device can function as both a wireless landline replacement and router for data. The unit includes three Ethernet ports and Wi-Fi to share your connection. A landline phone or cordless phone base station can be plugged in as well.

Verizon charges an extra $20 a month for Home Service Monthly Line Access on Share Everything Plans, which covers your telephone service. Customers get unlimited local, long distance, call forwarding, call waiting, three-way calling, and voice mail. 911 is available, but Verizon disclaims any responsibility if you cannot reach an operator. The device also supports TTY-TTD calling.

Verizon claims users can expect 5-12Mbps downloading and 2-5Mbps uploading on Verizon’s 4G network, assuming there is solid coverage where you use the device. Usage caps apply. A backup battery keeps the service running for up to four hours of voice calling in the event of a power outage.

McAdam admitted the thing that keeps him up most at night are regulatory issues. He particularly called out Europe, which he believes is hostile for investment. But Europeans pay considerably less for wireless service than North Americans pay, and often have more choices due to competition and regulatory oversight.

“I think the beauty of the ’96 Telecom Act was that it was such a light touch on broadband and mobile,” said McAdam. “And that is — and I sit in Europe talking to investors all the time — that is the biggest difference between the U.S. and Europe.”

To head the FCC off from pursuing any additional regulatory oversight, McAdam claims he reluctantly approved Verizon’s lawsuit against the government on Net Neutrality.

“We have had to take some positions, frankly, that we didn’t want to take,” McAdam said of the lawsuit. “It opened the door for them to get into price regulation of broadband. And I think that is not their charter, and I think it would be a mistake for the U.S. economy and certainly the telecommunications ecosystem.”

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Verizon Wireless’ latest 4G LTE router supports wireless landline service and 4G data.  (1 minute)

Despite dozens of new state laws and an effort by lawmakers to make metal theft a federal crime carrying a 10-year prison sentence, the epidemic of copper cable theft is expected to get worse before it gets better. The reason? China’s insatiable demand for North America’s enormous supply of discarded and stolen wire.

“The FBI has indicated that there’s so much theft taking place that it’s causing a national infrastructure issue,” said Lt. Terry Alling, a law enforcement official who now consults with police departments on how to recognize and curtail valuable metal thefts.

Scrap copper used to end up in the trash, especially telephone and coaxial cable used by phone and cable companies. With bare, high quality copper wiring valued at only $0.50 a pound for years, many scrap dealers were uninterested in shielded telecom cables that were a costly nuisance to process for recycling.

That changed in late 2003 when copper prices began a dramatic rise, first doubling to $1 a pound by 2004 and then suddenly spiking to an eye-popping $4 by 2006. Only the arrival of the Great Recession in 2008 would temporarily stem demand, dropping prices below $1.50 a pound. Two years later, prices dramatically rebounded, reaching an all time high of $4.50 a pound, and have remained above $3 ever since.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KOMO Seattle Copper Theft Epidemic 5-6-13.mp4[/flv]

KOMO in Seattle went undercover to sell scrap copper and quickly discovered why copper wire theft is now an epidemic — scrap dealers are ignoring the law and buying suspect copper with no questions asked. (5 minutes)

As prices have increased, so have copper thefts. Starting about a decade ago, law enforcement personnel discovered they were responding to a growing wave of reports of stolen manhole covers, copper pipe taken from abandoned buildings or construction sites, copper air conditioner coils gone missing, and even statues and other art work ripped out of the ground.

Outside of the risk of falling into a manhole missing its cover, the biggest threat to public safety has come from utility infrastructure theft. Brazen thieves have shown their interest in turning scrap metal into cash has taken a priority over their personal safety and yours. Amazed utility workers were shocked to find thieves even willing to steal infrastructure from live power substations, often leaving customers in the dark as a result. A less risky, but just as profitable strategy has come from harvesting telephone cable right off of telephone poles, knocking out service for hundreds or thousands of customers as a result.

Some of the worst problems for telecom companies are in rural areas and smaller cities where thieves can remove cable with a good chance of not being seen.

In the Pacific Northwest, Spokane experienced cable theft from area substations. In Olympia, $30,000 of electric cable was stripped from street lights.

Three soccer fields in Federal Way experienced repeated copper theft, resulting in $150,000 in damages, despite efforts by the Federal Way Soccer Association to discourage thieves.

“We’ve changed the locks in all the systems, we’ve gone to gluing down doors on the boxes — nothing is stopping them,” said George Fifer.

Frontier Communications customers in Washington have been among the hardest hit. Last year, Frontier reported 10 major outages as a result of copper wire theft in the state. Frontier’s problems are nearly as bad in Ohio and West Virginia, those states being hit the most often. This year is more of the same in Washington, with at least 2,000 Frontier customers knocked out of service since April.

Frontier Communications has reported lines being stolen in Snohomish, Skykomish and Granite Falls, causing temporary outages for customers throughout north King and Snohomish counties.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KCPQ Seattle Thieves ripping out bulk phone lines 7-25-13.flv[/flv]

In July, KCPQ in Seattle reported copper thieves struck again, wiping out phone service in parts of Snohomish County, Wash. Nearly 2,000 Seattle-area customers have been hit so far. (3 minutes)

“Customers are taken out of service, they’re put at risk, they can’t call 911,” said Frontier Communications general Manager Ken Baldwin. “The emergency folks can’t run the trace and know where they need to be.”

Alling estimates at least 90 percent of the copper theft is committed by meth addicts, motivated by their habit and unafraid to take risks.

They rely on selling their stolen copper to a network of scrap dealers that pay consumers and construction firms for “recovered/unwanted metals.” Although many scrap dealers operate legitimate businesses and don’t want to deal in stolen copper, there are more than a few willing to look the other way. Those dealers typically pay quick cash at below market prices to people who cannot credibly explain where the weekly bales of phone cable are coming from, so they don’t ask.

There is usually little risk to the dealers, who are unlikely to leave stolen copper in the storage yard for very long.

Alling says the copper crime wave is being fed by insatiable demand from the booming economy of China.

“They’re buying all the copper that they can get their hands on,” Alling said. “It’s speculated that they’re stockpiling and there’s not going to be any slowdown whatsoever for an extended period. The price is going to stay up which means that theft is going to stay up as well.”

A forthcoming book excerpted by Bloomberg Business Week seems to confirm Alling’s experience.

“Junkyard Planet: Travels in the Billion-Dollar Trash Trade,” published in November by Bloomsbury Publishing, digs deep into the world of scrap metal and the Asian metal market that increasingly drives most of the demand.

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Washington’s Most Wanted reports wire theft is becoming an epidemic in the Pacific Northwest, costing taxpayers hundreds of thousands of dollars and risking public safety. Now local law enforcement is learning how to fight back. (3 minutes)

China alone accounted for 43.1 percent of all global copper demand in 2012, writes Adam Minter, more than five times the amount of copper acquired by the U.S. that same year. For at least a decade, China has imported 70 percent of the scrap copper it uses to power its enormous manufacturing and construction industries. China’s most attractive source for recycled copper? The United States.

Minter writes at least 100 roving Chinese scrap dealers are traveling across the country in rental cars from scrap yard to scrap yard. They come ready to buy… a lot. Some scrap dealers receive visitors from China almost daily. Minter notes many of those 100 will spend an average of $1 million a week on discarded (or stolen) copper, much of it considered “low-grade” by American dealers because it requires cumbersome and expensive processing before it can be melted down or reused in new ways.

That is no problem for scrap dealers like Johnson Zeng, employed by a scrap importer in China’s Guangdong Province.

As Zeng browses one scrap yard in St. Louis, his interest piques when he sees bales and boxes of power lines and what the scrap trade calls “jelly.”

This is where Frontier Communications and other phone companies come in.

Much of the stolen telephone cable sold for scrap contains hundreds, if not thousands of individual copper wires, each wrapped in insulation and in turn wrapped around a thick black sheath to keep the weather out. This is the cable one might find serving entire neighborhoods or business blocks with landline phone service and DSL. If you cut into that cable, often 2″ in diameter, there is a chance it would begin oozing a Vaseline-like gel — the “jelly” Zeng has an interest in. That goo is primarily designed to keep underground phone cables dry because it helps repel corrosion-causing moisture.

A minimum order for a Chinese exporter typically needs to fill at least one shipping container of this size.

Minter notes American recyclers hate jelly cable because it clogs their processing equipment. In China, it is in high demand because it is cheaply obtained and can be processed by an army of workers that cut the cable apart and wash away the petroleum product by hand.

Without the demand for “low-grade” copper wiring such as telephone cables coming from abroad, thieves would be unlikely to find any interest for their ill-gotten gains.

Cable companies have it easier. Asian exporters have shown little interest in coaxial cable because the effort to free the copper center conductor from the thick plastic sheath and wire netting that surrounds it is, for now, not worth it.

The demand on scrap dealers to maintain sufficient inventory to keep the roving band of exporters coming back is intense. Most Chinese buyers need a minimum order of one shipping container holding at least 40,000 pounds to make the deal worthwhile. Those containers are the size of a load driven by an 18-wheeler tractor-trailer.

At just one scrap yard, Zeng offered to buy all 10,000 pounds of “jelly” phone cable — all the dealer had in stock that day —  5,000 pounds of “grease wire,” and a large quantity of discarded Christmas tree light strings — another popular target for Asian exporters looking for cheap low-grade wire.

Within hours, Zeng would be back inside his rental car traveling to the next scrap dealer in a journey that took him from Illinois to South Carolina.

The recycling industry points out that if the Chinese were not in the market for American wire, it would end up in a landfill because copper demand within the United States is too low to justify the processing and labor costs to recycle it.

But that demand also fuels the growing copper theft plaguing the United States, and that costs every American taxpayer.

“The Department of Energy estimates that for every $100 that a copper thief actually gets in stolen materials, it costs $5,000 in repairs,” Alling said.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KXLY Spokane Copper Theft Law 7-2013.flv[/flv]

KXLY in Spokane reports miles of live power cables have been stolen by copper thieves. It takes a small amount of copper wire to make a lot of money, encouraging thieves to take more risks for bigger payoffs. Now a new Washington state law includes a “no-buy” list that keeps repeat offenders from selling to dealers in adjacent counties.  (3 minutes)

Alling blames the meth addicts who commit the crimes, but also fingers scrap metal dealers who buy without asking questions. The source of stolen copper varies in different parts of the country. While telecommunications lines are most affected in rural communities, copper pipes and air conditioning coils are favorite targets in urban areas.

Most states have enacted new laws to curb the trade in stolen copper. Many require dealers to demand ID from sellers and keep detailed purchase records allowing law enforcement to identify the source of stolen cable found at scrap yards. Others require a license to sell copper to recyclers, a limit on the amount of scrap that can be sold to a dealer, and provisions for stiff fines and jail time for those caught buying or selling stolen metal.

In some states like West Virginia, tougher copper theft laws are beginning to curb thieves, but in South Carolina the thefts continue, despite the fact the state requires sellers of copper to first obtain a permit from a local sheriff’s office before selling their metal.

New Jersey Gov. Chris Christie vetoed a state copper theft control measure in New Jersey last week, claiming it would impose “overly burdensome regulations” on the state’s scrap dealers. The bill would have required that all payments for scrap metal be made by non-transferrable check unless the seller has a photo ID on file with the scrap company, and that businesses could only accept deliveries made by motor vehicle, allowing firms to record the buyer’s plates and driver’s license.

Sen. Charles Schumer (D-N.Y.) and Sen. Amy Klobuchar (D-Minn.), are tackling copper theft on the federal level by co-sponsoring the Metal Theft Prevention Act – a proposal to make stolen metal a federal crime.

Klobuchar

S. 394 and its House companion bill H.R. 867 would impose a 10-year prison sentence on anyone caught stealing metal from telephone or cell towers, highway equipment or other critical infrastructure. The bill would also make it tougher to fence stolen metal by requiring more record-keeping for recycling agents, and prohibiting them from paying cash for purchases larger than $100.

Klobuchar claims copper theft has shot up by 80 percent in recent years and she wants to put a dent in it.

“The recent rise in incidents of metal theft across the country underscores the importance of federal action to crack down on metal thieves, put them behind bars and make it more difficult for them to sell their stolen goods,” Klobuchar said.

Despite some bipartisan support, Govtrack.us estimates the measure has only a 7% chance of getting past committee and a 3% chance of being passed in the House of Representatives, noting the Republican-controlled body voted only 11% of bills out of committee and only about 3% were enacted over the last two years. The companion bill in the U.S. Senate has already passed a committee vote, so Govtrack estimates it has a 40% chance of passing a full Senate vote, assuming it is not filibustered.

The federal measure is getting significant opposition from Republicans who argue it violates states’ rights to manage the problem through legislation on the state level.

“I have heard concerns expressed regarding people stealing valuable metal and crossing state lines to sell the stolen product,” said Sen. Mike Lee (R-Utah).  While I would support federal legislation addressed to such truly interstate circumstances, legislation that more broadly regulates intrastate conduct is constitutionally problematic. In my view, this bill exceeds Congress’s power under the Commerce Clause and imposes a federal regulatory scheme in an area of law the Constitution reserves to the states. In the interest of maintaining the balance between state and federal authority, I will vote against reporting this bill from the Judiciary Committee.”

Alling says in some communities copper thieves have gotten organized into gangs targeting valuable infrastructure, so while legislators work the problem on their end, local police need to organize themselves to combat it.

Alling said police should be on the lookout for thieves with tools like headlamps, bolt cutters and a change of clothes. Police should also search the area where the copper was stolen because often, the bad guys stash the metal nearby until they can remove it without getting caught.

Individuals can also report suspicious activity themselves by calling 911. In some areas, reward funds have been established by utilities for tips that lead to the successful prosecution of metal thieves.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KOMO Seattle Copper Thieves Plague Washington 9-10-13.mp4[/flv]

KOMO in Seattle reports Frontier Communications has been plagued with copper cable thefts for the last two years, cutting off critical 911 services to affected residents. (2 minutes)

Verizon Voice Link

The New York State Public Service Commission has announced it will hold public hearings in Ocean Beach in Suffolk County, N.Y. to hear from angry Fire Island residents and others about their evaluation of Verizon’s controversial wireless landline replacement Voice Link, which Verizon hopes to eventually install in rural areas across its operating territories.

“Verizon needs to stop lying,” said Fire Island resident Debi May who lost phone service last fall after Hurricane Sandy damaged the local network. “Don’t tell me you can’t fix my landline service. Tell me you won’t.”

She is one of hundreds of Fire Island residents spending the summer without landline service, relying on spotty cellular service, or using Verizon’s wireless landline alternative Voice Link, which many say simply does not work as advertised. In July, the CWA asserted Verizon is trying to introduce Voice Link in upstate New York, including in the Catskills and in and around Watertown and Buffalo.

“I’ve been on the phone with Verizon all day,” Jason Little, owner of the popular Fire Island haunt Bocce Beach tells The Village Voice. The restaurant’s phone line and DSL service is down again. Just like last week. And three weeks before that. Like always, Verizon’s customer service representatives engage in the futility of scheduling a service call that will never actually happen. Verizon doesn’t bother to show up in this section of Fire Island anymore, reports Little.

“They never come,” he says. So he sits and waits for the service to work its way back on its own — the result of damaged infrastructure Verizon refuses to repair any longer. Until it does, accepting credit cards is a big problem for Little.

It’s the same story down the street at the beachwear boutique A Summer Place. Instead of showing customers the latest summer fashions, owner Roberta Smith struggles her away around Verizon’s abandonment of landline service. She even purchased the recommended wireless credit card machine to process transactions, but that only works as well as Verizon Wireless’ service on the island, which can vary depending on location and traffic demands.

Smith tells the newspaper at least half the time, Verizon’s wireless network is so slow the machine stops working. If she can’t reach the credit card authorization center over a crackly, zero bar Verizon Wireless cell phone, the customer might walk, abandoning the sale.

National Public Radio reports Verizon’s efforts to abandon landline service on Fire Island and in certain New Jersey communities is just the first step towards retiring rural landline service in high cost areas. But does Verizon Voice Link actually work? Local residents say it doesn’t work well enough. NPR allows listeners to hear the sound quality of Voice Link for themselves. (5 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Verizon’s decision is making life hard for Fire Island’s small businesses.

The Village Voice notes Verizon CEO Lowell McAdam didn’t make the decision to scrap rural copper wire landline service to improve things for customers. He did it for the company.

“The decision wasn’t motivated by customer demand so much as McAdam’s interest in increasing Verizon’s profit margins,” the Voice writes.

Tom Maguire, Verizon’s point man for Voice Link, has not endeared himself with local residents by suggesting Fire Island shoppers should get around the credit card problem by bringing cash.

“Remember what happened to Marie Antoinette when she said ‘let them eat cake’,” suggested one.

For some customers who appreciate the phone company’s cost arguments, Verizon’s wireless alternative wouldn’t be so bad if it didn’t work so bad.

“It has all the problems of a cellphone system, but none of the advantages,” Pat Briody, a homeowner on Fire Island for 40 years told NPR News.

“I don’t think there’s anyone who will tell you Voice Link is better than the copper wire,” says Steve Kunreuther, treasurer of the Saltaire Yacht Club.

Jean Ufer says her husbands’ pacemaker depends on landline service to report in on his medical condition.

“Voice Link doesn’t work here,” reports resident Jean Ufer, whose husband depends on a pacemaker that must “check in” with medical staff over a landline the Ufer family no longer has. “It constantly breaks down. Everybody who has it hates it. You can’t do faxes. You can’t do the medical stuff you need. We need what we had back.”

Residents who depended on unlimited broadband access from Verizon’s DSL service are being bill-shocked by Verizon’s only broadband replacement option – expensive 4G wireless hotspot service from Verizon Wireless.

Small business owner Alessandro Anderes-Bologna used to have DSL service from Verizon until Hurricane Sandy obliterated Verizon’s infrastructure across parts of the western half of Fire Island. Today he relies on what he calls poor service from Verizon Wireless’ 4G LTE network, which he claims is hopelessly overloaded because of tourist traffic and insufficient capacity. But more impressive are Anderes-Bologna’s estimates of what Verizon Wireless wants to charge him for substandard wireless broadband.

“My bill with Verizon Wireless would probably be in the range of $700-800 a month,” Anderes-Bologna said. That is considerably higher than the $29.99 a month Verizon typically charges for its fastest unlimited DSL option on Fire Island.

Despite the enormous difference in price, Verizon’s Maguire has no problems with Verizon Wireless’ prices for its virtual broadband monopoly on the landline-less sections of the island.

“It’s a closed community,” he says. “It’s the quintessential marketplace where you get to charge what the market will bear, so all the shops get to charge whatever they want.” And that’s exactly what Verizon is doing.

WCBS Radio reports Verizon is introducing Voice Link in certain barrier island communities in New Jersey. But the service lacks important features landline users have been long accustomed to having. (1 minute)
You must remain on this page to hear the clip, or you can download the clip and listen later.

In nearby New Jersey, Verizon’s efforts to introduce Voice Link has met with resistance from consumer groups, the state’s utility regulator, and the Rate Counsel. Over 1,400 customers on barrier island communities like Bay Head, Brick, and Mantoloking cannot get Verizon DSL or landline service any longer because Verizon refuses to repair damaged landlines.

Tom Maguire

“The New Jersey coast has been battered enough,” said Douglas Johnston, AARP New Jersey’s manager of advocacy. “The last thing we need is second-class phone service at the Shore. We are concerned that approval of Verizon’s plans could further the gap between the telecommunications ‘haves’ and ‘have-nots’ and could create an incentive for Verizon to neglect the maintenance and repair of its landline phone network in New Jersey.”

In some cases, Verizon has told customers they can get landline phone service from Comcast, a competitor, instead.

State consumer advocates note that other utilities including cable operators have undertaken repair, replacement, and restoration of facilities in both New York and New Jersey without the challenges Verizon claims it has.

“Only Verizon, without evidentiary support, is seeking to jettison its obligations to provide safe, proper and adequate service to the public,” wrote the New Jersey Rate Counsel in a filing with the Federal Communications Commission.

New York Senator Phil Boyle, who represents Fire Island residents, is hosting a town hall meeting tonight to discuss the move by Verizon to replace copper-wire phone lines on Fire Island with Voice Link. The meeting will be held at the Ocean Beach Community House in Ocean Beach from 5-7pm.

The New York State Public Service Commission will be at the same location Saturday, Aug. 24 starting at noon for a public statement hearing to hear from customers about how Verizon Voice Link is working for them.

It is not necessary to make an appointment in advance or to present written material to speak at the public statement hearing. Anyone with a view about Voice Link, whether they live on the island or not are welcome to attend. Speakers will be called after completing a card requesting time to speak. Disabled persons requiring special accommodations may place a collect call to the Department of Public Service’s Human Resources Management Office at (518) 474-2520 as soon as possible. TDD users may request a sign language interpreter by placing a call through the New York Relay Service at 711 to reach the Department of Public Service’s Human Resource Office at the previously mentioned number.

Fire Island

Those who cannot attend in person at the Community House, 157-164 Bay Walk, Ocean Beach can send comments about Voice Link to the PSC online, by phone, or through the mail.

• E:Mail: [email protected]
• U.S. Mail: Secretary, Public Service Commission, Three Empire State Plaza, Albany, New York 12223-1350
• 24 Hour Toll-Free Opinion Line (N.Y. residents only): 1-800-335-2120

Your comments should refer to “Case 13-C-0197 – Voice Link on Fire Island.” All comments are requested by Sept. 13, 2013. Comments will become part of the record considered by the Commission and will be published online and accessible by clicking on the “Public Comments” tab.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Al Jazeera US islanders battle telecom giant 8-13-13.flv[/flv]

Al Jazeera reports Fire Island residents are fighting to keep their landlines, especially after having bad experiences with Verizon Voice Link. (3 minutes)