Verizon officials have announced they will abandon their damaged wireline network serving several hundred permanent residents and businesses on Fire Island, replacing voice telephone service with a wireless system called Voice Link critics say will end high-speed Internet service and hurt business.

Fire Island’s landline network has been barely functional since Hurricane Sandy struck last October. Verizon has yet to make significant repairs, leading to ongoing complaints from residents who live on the island year-round. Verizon’s wish to eventually abandon its wired network facilities entirely has created concern among island officials and public safety agencies, noting the summer population on the island swells well into the thousands.

Verizon’s plan may leave businesses unable to process credit card transactions and prevent residents from getting back DSL broadband service they lost during the storm, much less get it in the future. For some, it represents turning the clock back to the days before Internet access.

“Verizon has given us a dial tone basically,” Ocean Beach Mayor James Mallott told Newsday. “But as far as DSL, ATMs, point-of-sale systems, all the rest of that stuff, we’re pretty much on our own.”

Fire Island resident Meg Wallace notes Verizon’s plan has not gone unnoticed by the New York State Public Service Commission. The PSC is currently monitoring the situation and invites comments from interested parties.

“Right now, only Saltaire has filed a formal complaint with them, along with one village’s fire official,” Wallace reports. “It is easy to register a complaint either by filling out a complaint form on their website or calling the NYSPSC directly at (800) 342-3377. They are concerned about public opinion, so the more calls and formal complaints filed by both home and business owners the better.”

Verizon officials have defended their decision, claiming a wireless system is more robust and can withstand severe weather better than a wired network. Another reality impacting the decision is the ongoing loss of landline customers. Verizon, the sole provider on the island, has lost 25 percent of its landline business in the last two years. The company claims 80 percent of Verizon-handled calls to and from the island are through Verizon Wireless.

Fire Island

Verizon told local officials that Cherry Grove and points east still have undamaged fiber optic and copper lines that should be able to work as usual this summer and will be left in place for now. On the west end of the island  from Kismet to Sailor’s Haven, the damage was more significant and Verizon has announced its intention to abandon wired service.

Although west end customers will be scheduled for Voice Link installations starting in April, those on the east side should not get too comfortable with their wired service because Verizon has announced it will not upgrade or make future significant repairs to its wired infrastructure going forward. When the remaining landline facilities eventually fail, affected customers will also be moved to Voice Link.

How It Works

Starting April 1st, customers calling with service problems on Fire Island will be redirected to special operators trained to pitch customers the Voice Link service as a replacement. These agents will also handle billing adjustments and drop phone package features Voice Link does not support. If the customer only wants phone service, Verizon will schedule an installation date for Voice Link. A technician will arrive with a wall-mounted box about 8″ high that will be installed in the room that provides the best reception from a nearby Verizon Wireless tower. The box will then be connected to your home telephone wiring and a nearby power outlet so existing telephones will work once again. The box has battery backup powered by customer-installed and maintained AA batteries.

If a customer also had broadband service with Verizon, they will not be getting it back. Instead, an agent will attempt to sell the customer a Verizon Wireless mobile broadband package at a significantly higher cost. For example, a 10GB monthly usage plan added to an existing Verizon Wireless account will cost an extra $20 a month for the “Mi-Fi” mobile hotspot device fee and $100 a month for the data package. Verizon DSL in comparison offered unlimited access for $30-50 a month, depending on the plan selected and any promotional discounts.

Verizon said it is currently improving reception of its 4G LTE network in areas worst-affected by storm damage.

Voice Link is a voice-only product. It does not support broadband, telephone modem connections, faxing, alarm monitoring, home medical monitoring, certain communications equipment for the impaired, or other data services including credit card processing. It does support E911, which gives detailed address information to a 911 operator.

Verizon’s Voice Link also creates a problem for some satellite dish customers. Some satellite companies need a landline connection for handling pay-per-view orders. That data connection does not work with Voice Link either.

Your voice line bill will remain the same if you switch to Voice Link. But customers will lose the benefit of oversight from the Public Service Commission if things go wrong. Voice Link, unlike traditional landline service, is an unregulated service not subject to government oversight.

Voice Link: Coming Soon to Your Area?

Verizon’s Voice Link service is by no means intended to be used only on Fire Island.

Voice Link is being trialed in Florida (Project Thunder) as a landline replacement option for use in areas where Verizon’s copper network has deteriorated and the company is unwilling to spend money on fiber upgrades. If successful, Verizon intends to switch a growing number of Verizon customers nationwide outside of FiOS fiber areas to the wireless service when they report trouble with their phone lines.

Local 824 of the International Brotherhood of Electrical Workers provided insight when one of their workers attended a training class and participated in a ride-along with Verizon technicians installing the service in Florida.

John Glye reports that Verizon considers a customer a candidate for Voice Link if they have chronic phone line problems and only want traditional voice telephone service.

Currently, if customers in Florida are persuaded to switch, a migration order is created. If they want to keep the service they have, a traditional copper trouble ticket will be created and repair crews will be dispatched.

The unit is about eight inches tall and has the following connections:

• 2 RJ 11 ports
• Antenna
• Voice Message indicator
• Signal strength indicator
• Power Button
• Power Port

Installation time is about 45 minutes. The unit must be mounted inside and the customer must supply power and a safe place for the unit. The customer’s existing copper line connection from the home to the pole is disconnected/removed. In the ride-along Glye participated in, he reports the customer was pleased with the outcome, having reported constant static aggravated by rain on her copper landline. After the wireless service was installed, the static was gone and the call quality was good.

The Kansas House of Representatives voted 118-1 to pass a bill they admit was written and pushed by the largest telecom companies in the state. The chief supporters all received campaign contributions from AT&T and other telecom interests.

Kansas’ House of Representatives voted 118-1 Monday to support a bill largely crafted by AT&T that will let the state’s largest phone company discontinue service at-will in rural areas of the state.

H.B. 2201 had near-universal support from legislators that openly admitted the legislation was conceived and written by the state’s largest telecommunications companies, chiefly AT&T, and grants the phone companies a third round of deregulation.

The legislation is expected to sail through the Kansas Senate with bipartisan support and Republican Gov. Sam Brownback, who generally favors telecom deregulation, is likely to sign it.

The legislation was originally pushed as a money-saver for Kansas ratepayers. The bill calls for a major reduction in funding requirements for the Kansas Universal Service Fund (KUSF), which subsidizes rural telecommunications services in the state. The KUSF is principally funded through a surcharge found on customer bills. Under the terms of the bill, funding requirements will be drastically reduced, cutting the surcharge in the process.

The Kansas Citizens’ Utility Ratepayer Board testified if H.B. 2201 only contained KUSF reform, the group would have supported the measure. But the bill also has a myriad of deregulation measures that received little apparent attention by legislators:

1. H.B. 2201 eliminates quality of service requirements. AT&T and other phone companies can deliver any level of phone service they choose with no oversight and nobody to answer to;
2. Allows price discrimination based on geographic location, which could mean substantially higher phone rates in rural areas, especially for nearby toll calls;
3. Allows telecom companies to exit the Lifeline program for inexpensive service for the poorest Kansans after 90 days written notice;
4. Removes AT&T and other phone companies as “carriers of last resort,” which means they are no longer required to provide phone service upon request.

The elimination of the “carrier of last resort” provision is essential to AT&T’s plans to abandon rural landline service, forcing customers to buy substantially more expensive cellular phone and data service. With the passage of H.B. 2201, AT&T can notify rural Kansas customers it will drop their landline service and/or broadband at-will.

Siewert

The single “no” vote came from freshman Rep. Larry Hibbard, (R-Toronto), who noted landline service was essential in many rural areas. Hibbard worried AT&T would use the legislation as an excuse to raise rates or force elderly Kansans to use a wireless cell phone, which could prove too confusing for them.

“This bill may come back to haunt rural Kansas,” Hibbard warned.

“We have this mentality, ‘if I don’t have a wire, I can’t make a phone call.’ That’s not true,” countered Rep. Scott Schwab, an Olathe Republican who supports the bill. “That copper line is being replaced with an antenna, and it’s more reliable.

“We are not killing Lifeline,” Schwab added. “We are just not mandating it.”

Other supporters were far more sanguine, even disclosing the substantial role telecom companies had getting the legislation written and shepherded through the House.

“This was an industry bill that they all worked very hard” to put together, admitted Rep. Joe Seiwert (R-Pretty Prairie) during a House Republican caucus meeting. “[This bill] puts legislators in an easier position of not having to ‘choose between friends.'”

Kuether

Seiwert, for example, did not have to disappoint his largest campaign contributor — AT&T — or others who donated to his campaign, including the Koch Brothers, Cox Communications, CenturyLink, Verizon, and the Kansas cable lobby.

Rep. Annie Kuether of Topeka, who is the ranking Democrat on the Utilities and Telecommunications Committee, also supported the bill. Kuether is the recipient of campaign contributions from AT&T, Cox Cable, Time Warner Cable, Kansas cable and telephone company PAC groups, and more than a dozen independent telecommunications providers doing business in Kansas.

For ordinary Kansans, the bill does not assure savings, and could lead to dramatic price increases, especially in rural areas forced to pay for cell service. The measure also eliminates the Kansas Corporation Commission as a last resort for customers with service problems that go unresolved. Those customers would be on their own after the bill becomes law.

Legislators did not see any incompatibility between the proposed bill and Kansas state policy, set forth in Statute 66-2001:

It is hereby declared to be the public policy of the state to:

(a) Ensure that every Kansan will have access to a first class telecommunications infrastructure that provides excellent services at an affordable price;
(b) ensure that consumers throughout the state realize the benefits of competition through increased services and improved telecommunications facilities and infrastructure at reduced rates;
(c) promote consumer access to a full range of telecommunications services, including advanced telecommunications services that are comparable in urban and rural areas throughout the state;
(d) advance the development of a statewide telecommunications infrastructure that is capable of supporting applications, such as public safety, telemedicine, services for persons with special needs, distance learning, public library services, access to internet providers and others; and
(e) protect consumers of telecommunications services from fraudulent business practices and practices that are inconsistent with the public interest, convenience and necessity.

The Associated Press notes this is AT&T’s third trip through the state legislature to win deregulation. A 2006 state law deregulated prices for bundles of services that included wireless, Internet access, cable TV or other video and moved toward deregulating rates for local service in exchanges where competition existed. A 2011 law went further, allowing companies to avoid most state price caps. This year’s bill would allow those companies to avoid even the Kansas Corporation Commission’s consumer protection regulations and minimum quality-of-service standards.

The Kentucky Resources Council is appealing to Kentucky residents and elected officials to stop AT&T’s plan to abandon rural landline service in the state with the passage of a bill now before Kentucky lawmakers the company effectively wrote itself.

Tom FitzGerald, director of the non-profit group, has been bringing attention to AT&T’s agenda in the Kentucky media and through the organization’s website.

FitzGerald explains AT&T’s long term agenda is deregulation and eventual abdication of its basic responsibility to provide affordable, essential basic telephone service to every resident in the state who wants it.

In 2006, AT&T won deregulation of all services other than basic telephone service. The company promptly raised prices after the deregulation became law. Now the company is back asking the government to walk away from its oversight of basic telephone service. But even more concerning, in FitzGerald’s view, is that AT&T is prepared to walk away from their rural customers in the process:

In requiring that access to basic telephone service continue to be regulated, the General Assembly recognized that stand-alone basic telephone service is, for many Kentuckians, an essential service.

AT&T may believe, as it told the Federal Communications Commission in 2009, that “plain-old telephone service” is a “relic of a bygone era,” yet basic reliable wireline local exchange telephone service remains a lifeline for those who use it to convey medical monitoring information, for smoke and security alarms, and for voice service.

Basic local service is more than just “voice” service — it includes, by state law, reliable unlimited local exchange calling, 911 service, directory and operator assistance, and the ability to connect with other carriers.

AT&T is circulating a proposed bill that would deregulate basic local telephone services in the service areas of AT&T, Windstream and Cincinnati Bell in Kentucky. What would the bill do?

Unless you currently live in a household with fewer than 5,000 housing units in the telephone exchange, you will no longer be guaranteed access to basic local service as a stand-alone option.

For those smaller exchanges, AT&T could immediately cease providing the service if it offers an “alternative voice service.” Or, it could petition the state Public Service Commission to be relieved of the obligation by meeting certain criteria regarding other providers of voice service in the area. No new houses built in the service areas would have a right to a landline offering basic phone services on a stand-alone basis.

There is nothing in the draft bill that would require AT&T to seek PSC approval prior to ending the stand-alone landline phone service in exchanges where it or another provider offers wireless alternative voice service.

In addition, there is no requirement that AT&T demonstrate that the wireless service is of comparable reliability and consistent signal quality.

Deregulating basic local phone service based on the mere existence of a wireless “alternative voice service” provider that can be an affiliate, does not assure access for all customers to voice and other basic exchange services that are functionally equivalent, competitively priced and comparable to the currently regulated landline basic telephone services.

FitzGerald

AT&T’s characterization of its proposed legislation is that it will help shepherd in the transformation of the company’s old telephone network to a new modern network that can deliver broadband, telephone and television service. But AT&T’s network upgrades are reserved for urban areas only. Should AT&T have its way, it can simply abandon wired service in rural areas and tell those customers to purchase AT&T wireless phone service instead, at significantly higher prices and with no guarantee of service quality or reliability.

Customers in rural areas who have cellphones can already share stories about poor reception, dead spots, and garbled phone calls. Should AT&T win approval of its deregulation bill in Kentucky, rural residents may find that cellphone their only link to 911 and the outside world. FitzGerald wonders if that is sufficient for rural Kentucky.

“Before an telephone company is relieved of the obligation to offer reliable stand-alone basic service under regulations that guarantee nondiscriminatory access, the PSC must be empowered to determine whether there is sufficient competition in the provision of the full array of reliable basic phone services from other carriers on a stand-alone basis,” FitzGerald writes.

“It must also ensure that it will remain available to low-and fixed-income Kentuckians and those more costly to serve because of their location. Ending the obligation in Kentucky, without an assurance that comparable services will be available in a deregulated marketplace for those who are most in need of and least able to afford such services, is not in the public’s interest.”

CenturyLink CEO Glenn Post does not think much about AT&T’s plans to shift its most rural landline customers to wireless in its efforts to decommission traditional landline service.

“From a regulatory standpoint, that could be a tough go,” Post explained to Wall Street investors on a conference call last week. “There may be some areas that will have better service with wireless in some ways. As far as a competitive threat, we don’t see that being a real issue for us because just the bandwidth requirements and the limited wireless access or capability in a lot of areas.”

CenturyLink, one of four large independent phone companies and owner of former Baby Bell Qwest, is doubling down on its wired infrastructure to reach customers. The company recently announced Phoenix would be the latest city to get its fiber-to-the-neighborhood service Prism TV — the first legacy Qwest market to get IPTV service from CenturyLink. The service soft-launches in Phoenix this month, with a second city in the region or Pacific Northwest slated to get Prism sometime next year.

The company has spent much of 2012 investing in broadband, managed hosting and cloud computing for business customers, and fiber expansion to reach more than 15,000 cell towers across CenturyLink’s national service area, depicted in green on the accompanying map.

But CenturyLink executives stress their investments are “strategic” — made in areas that are most likely to deliver quick returns for the company.

While CenturyLink spends money to secure video franchising agreements in metro Denver and Colorado Springs for Prism TV service, it is moving at “a snail’s pace” to deliver broadband service in northeastern North Carolina’s Northampton County. County officials there anticipate CenturyLink will take years to deploy basic DSL service to communities outside and around Conway and Gaston.

The broadband problem in income-challenged parts of North Carolina illustrate the conundrum for county officials, who have to advocate for broadband improvement while combating misleading broadband maps that suggest access is not a problem in the state.

Donna Sullivan with the Department of Commerce notes that broadband maps in states like North Carolina have a census block granularity which does not always reveal the true picture of broadband availability.

“That means if one household in that census block can receive broadband services, the entire census block is considered covered—even though there very well may be households who cannot receive broadband to that location,” she told the Roanoke-Chowan News-Herald.

Northampton County, N.C.

CenturyLink is in no hurry to expand broadband to the 1,921 households in the county of 22,000 who cannot buy broadband service at any price.

Derek Kelly, a CenturyLink spokesman, said the company is working to expand broadband services in the region, but noted the costs to lay down a fiber network to help reach the unserved is “one of the largest costs.”

That cost is much less of a problem if the customer at the end of the line happens to be a wireless company like Verizon or AT&T.

Company officials admit they are spending enormous sums “investing in fiber builds to as many [cell] towers in our service area as economically feasible.” In the third quarter alone, more than 1,000 cell towers received fiber upgrades for a total of 3,300 so far this year. The company hopes to reach 4,000-4,500 cell towers by New Year’s Eve.

The reason why CenturyLink chases wireless business while allowing rural and income-challenged service areas to go without broadband is a simple matter of economics. Cell phone companies sign lucrative, multi-year contracts for fiber connectivity to cell towers to support forthcoming 4G service. In contrast, CenturyLink was surprised to find an astounding 94 percent of families with children in Northampton are qualified for the company’s special Lifeline Program which delivers slow speed, discounted broadband service for families on public assistance.

Post

For CenturyLink’s more urban and prosperous service areas, the news for broadband service improvements is better.

As CenturyLink continues to extend its middle mile fiber network, broadband speeds are gradually improving.

Over 70 percent of CenturyLink customers can receive at least 6Mbps DSL service, more than 57% can receive at least 10Mbps and 29% can access the Internet at 20Mbps speeds or better, according to Post.

But the more urban and prosperous a service area is, the greater the chance a cable competitor has successfully poached many of CenturyLink’s DSL customers with the promise of better speed.

Post said he recognizes the company must do better to remain competitive.

“We’re shooting for 20-25Mbps for a very large percentage of our areas,” Post said. “But with [pair] bonding, we can virtually double the broadband capacity and speeds in our markets. We’re already doing bonding in a number of markets today. So where we have 20Mbps, we could have 40Mbps.”

CenturyLink’s fiber to the neighborhood network, essential where it plans to roll out Prism TV, can also support faster broadband speeds if a customer wants broadband alone and does not care about television service.

Nationwide, the company added 10,000 Prism TV subscribers in the third quarter and has a total customer base of around 104,000 subscribers. But that represents a penetration rate of just over 10%, hardly noticed by still-dominant cable operators.

CenturyLink executives were asked to comment on AT&T’s strategic plan to transform their landline network announced last week in New York. Post found little in common between CenturyLink and AT&T’s vision for the future and does not think the company has to respond to AT&T’s attempt to redefine rural America as wireless territory.

“We don’t see that as a major investment for us or a major risk at this point.”

AT&T’s Supreme Court: senior executives sitting together in judgment of landlines at Wednesday’s analyst conference.

Yesterday, at least a half-dozen AT&T senior executives sat lined up in a perfect row to present Wall Street with the company’s vision for the future.

There were no consumers in attendance, just a group of Wall Street investors and analysts that braved the latest nor’easter to attend.

At issue: what to do about AT&T’s landline network, particularly in rural areas. Earlier this year, AT&T CEO Randall Stephenson, still smarting from a regulatory slap-down of his plan to acquire T-Mobile USA, ranted his disapproval of federal regulators for nixing the deal and then reflected on AT&T’s rural customers who still cannot buy broadband service from AT&T.

One of Stephenson’s strongest arguments in favor of merging with T-Mobile was it would facilitate a rural broadband solution. With that off the table, Stephenson seemed at a loss:

“We have been apprehensive on moving, doing anything on rural access lines because the issue here is, do you have a broadband product for rural America?,” Stephenson said. “And we’ve all been trying to find a broadband solution that was economically viable to get out to rural America and we’re not finding one to be quite candid. That having been set aside, now we’re looking at rural America and asking, what’s the broadband solution? We don’t have one right now.”

Now AT&T claims they do, and miracle of miracles, it turns out they never needed the buyout deal with T-Mobile after all.

AT&T’s solution is good news for urban, suburban, and exurban customers who will benefit from billions in additional investments to beef up the company’s U-verse platform. Those with access to U-verse TV, broadband, and phone service will soon find maximum speeds available up to 75Mbps — important at a time when cable companies are moving to 50-100Mbps premium service tiers. Those without access to U-verse, bypassed by its recently completed initial buildout, now will have a chance to see the service in their communities.

For more exurban and near-rural areas, AT&T has a positive plan to rid customers of the scourge of painfully slow ADSL service, better known simply as “DSL,” which AT&T pitches at speeds typically 10Mbps or less. In more rural areas, it is often much less.

By using additional fiber and using D-SLAM technology to reduce the amount of copper wiring between the phone company and you, AT&T’s IPDSLAM service will dramatically improve speeds for customers languishing with 3Mbps service to upwards of 45Mbps. But for now, AT&T won’t roll this out as a full-scale U-verse service. Because maximum speeds are lower and network variability is expected to be greater, AT&T will instead pitch this as a broadband and landline phone service package. Customers will be marketed satellite dishes if they want television service bundled in.

Although not as robust of a platform as U-verse will soon be, it still represents a major improvement over DSL, which is now barely tolerable for today’s online multimedia experience.

But AT&T’s “good news” may not be so great for its most rural customers, who either have the slowest DSL service or more likely no broadband at all. Those customers have waited years for AT&T to invest in upgrades to finally connect them to the Internet, but AT&T’s plans have gone in a very different direction.

AT&T’s rural solution is to take down the existing landline network and move everyone to its wireless cell phone service. To implement this proposed solution, AT&T will aggressively invest in rural cell sites within the 22 states where it supplies landline service. The company claims 99% of its customers will be able to access a 4G LTE signal within a few years.

Phillip “Are you following this shell game” Dampier

But here is where things begin to get dicey.  AT&T told investors it has no current plans to differentiate rural wireless customers from their urban counterparts. In larger cities, a smartphone and data plan is not necessarily a necessity — customers can still access a landline to place urgent calls or find a home broadband plan that does not carry the kinds of restrictive data caps wireless plans deliver.

Rural landline customers often pay low rates for their home phones, primarily because their local calling areas are generally far more restricted than in larger communities. The base rate for rural phone customers can be around $10 (before taxes and fees) in some areas. The base rate for AT&T’s wireless service starts at around $40 for 450 talk minutes or $19.99 for anchored, wireless unlimited calling home phone service (with a $36 activation fee and a two-year contract) that works with your existing home phones. Both represent rate increases.

Wireless data plans are notoriously expensive and limited. Verizon’s plan for home broadband users is priced at $60 a month with a 10GB limit. Less expensive plans with limits 25 times greater (or unlimited) are available from wired broadband providers. If the customer wants a smartphone for their data and home voice calling, bundled plans start at $85 a month with a 1GB usage limit.

With these prices, it is no surprise AT&T is promoting this as great news for the company. But we’re not so sure the average rural American is going to be pleased treated like a second class citizen with high priced, usage-capped Internet access.

As victims of Hurricane Sandy also found out last week, the venerable landline also enjoys a reputation of working after disasters strike. Unlike a fallen tree knocking down a phone line in the backyard, should AT&T’s wireless network fail in a storm, it would potentially leave hundreds, if not thousands of customers without service. Repair crews could take days to reach damaged facilities. That actually happened to Frontier Communications in some parts of West Virginia where heavy snows and tree damage made travel nearly impossible.

But there are important clues to what AT&T is really up to in regulatory filings that accompanied the showy presentation AT&T put on in New York Wednesday.

AT&T Has a Plan — Move Customers Away from Low Profit, Low Growth Landlines to High Profit Wireless/Deregulated Broadband

After the two hour presentation ended, AT&T posted a copy of its proposal sent to the Federal Communications Commission.

Reviewing the 24-page document is a classic case of  déjà vu. Once again, after the rhetoric is set aside, AT&T is back, peddling the same case to retire landline service and the regulatory obligations that accompany it. Only now, it has a carrot to dangle in front of regulators — significant investments in broadband expansion.

Although the private sector has invested well over $1 trillion in broadband networks, much remains to be done. As of 2010, roughly 14 million Americans, residing in rural and other high cost areas where the broadband business case is tenuous at best, still lacked access….

[…] Carriers such as AT&T are stepping up to do their part. In fact, just today, AT&T announced a $6 billion investment plan to expand and upgrade its wireline network to bring robust IP broadband services to millions of additional locations in its legacy footprint.

[…] AT&T makes this announcement with full confidence that the Commission will continue to implement the National Broadband Plan’s vision of removing regulatory impediments to efficient, all-IP networks, including obligations that could require carriers to maintain legacy facilities and services even after they have deployed new, IP-based alternatives.

I guess they didn’t need T-Mobile after all.

Translation: We used to bypass 14 million Americans, leaving them behind because it was unprofitable to serve them. But now we’re going to invest some additional money. But before you get that investment, we need you to agree the landline is a relic and (largely unregulated) IP-based networks are the future. We are not going to run both, so if you want all of this investment, you have to let us abandon our regulatory responsibilities and commitments to rural customers.

AT&T even tried to calm investor fears about capital spending increases, arguing the potential payoff of discarding landline service opens up a new era of earnings, both from shifting customers to AT&T’s highly profitable wireless service at a cost of double, triple, or more what customers used to pay the phone company, and a platform to sell them even more services later.

A number of Wall Street analysts disagreed, panning AT&T’s wireline investments as unproven.

The Broadband Coalition, a group of competing telecom providers, called the entire affair a smokescreen:

AT&T’s announcement today that it needs regulatory intervention from the FCC in order to invest in IP technology is a re-run of a tired ploy to leverage the company’s dominance. AT&T only invests in order to respond to competition, and competition is made possible by the very pro-competitive policies that AT&T seeks to eliminate.  The Broadband Coalition members have invested billions of dollars to bring the benefits of IP to American consumers from coast to coast.  But if AT&T gets its way, competition will largely disappear, investments will dry up and consumers will suffer.

Former Congressman Chip Pickering, coalition spokesman, stated,  “AT&T is simply trying to use its belated roll out of IP technology as an excuse to rewrite the telecom rules to its advantage.  We already know that AT&T’s claim that IP will somehow alter the laws of economics and lessen its dominance is patently false.  Clearly, AT&T’s proposed changes are not necessary to achieve widespread IP deployment, but the retention of competition policy is.”

Consumer groups accused AT&T of lying to federal regulators when the company argued the T-Mobile acquisition was essential to accomplish their plan to expand wireless service to 96% of the U.S. population. A year later, the company now claims it can deliver 4G wireless service to 300 million Americans and 99% of its landline service area without breaking much of a sweat.

CNN:

AT&T insists that it wasn’t being disingenuous with the regulators. Things changed, the company says, pointing to the 40 new spectrum deals it signed over the past year. The FCC recently made available some spectrum that wasn’t on the table when AT&T was negotiating its T-Mobile takeover.

“We chartered a new path,” AT&T spokeswoman Roberta Thomson told CNNMoney on Wednesday.

That’s precisely what the FCC — and industry analysts — believed would happen.

Now What

For now, rural customers need not worry AT&T will put their entire rural landline operation up for sale, potentially selling off a large number of  customers to companies like CenturyLink, Frontier, Windstream or FairPoint.

Rural America’s new home phone?

But AT&T’s lobbying machine will soon descend on state legislatures to win regulatory approval of their “abandon landlines” agenda. AT&T has a carrot for those legislators as well — a promise that states that hurry to rubber stamp AT&T’s wish list will be first in line for “investments.”

“We are going to have to see 21st-century regulation for 21st-century investments like this,” said AT&T CEO Randall Stephenson. “I think what you’re going to see is that these investments will go first to those states where you have good line of sight to good regulatory authority to do some of the things we’re talking about here.”

The implications for rural customers are profound if AT&T wins permission to scrap the landline network. Despite assurances from AT&T this is a technology argument, in fact it is more of a campaign to rid themselves of regulatory and consumer protection rules that have been around for decades. The type of technology used makes all the difference. Landline providers are usually compelled to provide reasonable, affordable, universal service for all Americans. Broadband, IP-based, and wireless networks now exist largely in a deregulation free-for-all where AT&T can do as it pleases, serve who it likes, and charge whatever it wants.

Considering AT&T’s current business plans, that sets the stage to worsen the newest digital divide — one pitting urban areas with faster, advanced, and more competitively priced networks against rural America, consigned to expensive, usage capped wireless service that may or may not work when a natural disaster strikes.

The only way this plan works for consumers is if common-sense service obligations, consumer protection, open access for competitors, and mandated equivalence of service is part of the package. Without it, AT&T will get exactly what it wants: a regulation free lifestyle, an expensive wireless network that rural residents will be forced to use for basic telecommunications, and cost savings and revenue opportunities AT&T will use to bolster its own profits, while cementing its monopoly position in the rural communities of 22 states where it operates.