It didn’t take long for consumers to start flooding the Federal Communications Commission with thousands of complaints about poor Internet service, usage caps, and speed throttles.

The complaints arrived as the FCC began formally enforcing Net Neutrality by reclassifying broadband as a telecommunications service, subject to oversight by the federal agency.

Consumers used the occasion to deluge the commission about the sorry state of Internet access in the United States, whether it constituted a Net Neutrality violation or not.

National Journal obtained a sample of 50 complaints through a Freedom of Information Act request and it was clear data caps were at or near the top of the complaints list and consumers wasted no time slamming cable and phone companies over the practice.

“Our data should not be capped at 350[GB]!!!!” one consumer pleaded, likely a Suddenlink or Mediacom customer, which both have 350GB caps on certain speed tiers. “Please, please make data caps illegal!!”

No more Netflix and Hulu watching for this family: “I have to tell my kids to stop using YouTube and other services and stuff they need for school so we don’t go over the cap,” another consumer wrote, explaining that their Internet-enabled home security camera uses up a significant amount of their monthly data. “By Comcast having this data cap, I don’t have a open Internet … I also think this data cap is very inaccurate, it goes up without anybody being home, and sometimes by a lot.”

Comcast also received heat for poor performing broadband service, with one customer forced to use Wi-Fi at a local McDonalds to take an online exam because Internet service at home was so poor.

“The Comcast modem is such crap that we can’t even access the Internet,” the consumer wrote. “I’m livid.”

AT&T was roasted for speed throttling its “unlimited data” wireless plan — a practice that already resulted in a $100 million fine from the FCC for misleading consumers. AT&T is appealing.

In all, the FCC reports it received about 2,000 complaints from consumers in June, the first month Net Neutrality rules took effect. The agency has just 30 days to respond to the complaints, most lodged using this online form. The FCC may be able to answer many with a form letter because poor service and usage caps are not strict violations of Net Neutrality, unless the FCC determines the practices “unreasonably interfere” with Internet access. AT&T’s speed throttling comes a lot closer to meeting that test, because many throttled customers report their wireless data service is rendered effectively unusable once throttled.

But the broad-ranging complaints may still prove useful, suggesting to the FCC stronger rules and oversight are required for a broadband market many consider barely competitive and often customer abusive.

Seeking comment, National Journal reported the National Cable and Telecommunications Association and the U.S. Telecom Association, which both represent major Internet providers and have sued to overturn the regulations, declined to comment on the complaints.

Verizon’s FiOS expansion is over.

Some New Jersey residents and businesses are being notified by insurers they will have to invest in costly upgrades to their monitored fire prevention and security systems or lose insurance discounts because the equipment no longer reliably works over Verizon’s deteriorating landlines in the state.

It’s just one of many side effects of ongoing deregulation of New Jersey’s dominant phone company, Verizon, which has been able to walk away from service and upgrade commitments and oversight during the Christie Administration.

Most of the trouble is emerging in northwest and southeast New Jersey in less-populated communities that have been bypassed for FiOS upgrades or still have to use Verizon’s copper wire network for security, fire, or medical monitoring systems. As Verizon continues to slash spending on the upkeep of its legacy infrastructure, customers still relying on landlines are finding service is gradually degrading.

“The saving grace is that so many customers have dropped Verizon landlines, there are plenty of spare cables they can use to keep service up and running when a line serving our home fails,” said Leo Hancock, a Verizon landline customer for more than 50 years. “I need a landline for medical monitoring and besides cell phone service is pretty poor here.”

Hancock’s neighbor recently lost a discount on his homeowner’s insurance because his alarm system could no longer be monitored by the security company due to a poor quality landline Verizon still has not fixed. He spent several hundred dollars on a new wireless system instead.

Kelly Conklin, a founding member of the N.J. Main Street Alliance said he is required by his insurer and local fire department to have traditional landline service for his business’ sprinkler system, which automatically notifies the fire department if a fire starts when the business is closed. He has also noticed Verizon’s landlines are deteriorating, but he’s also concerned about Verizon’s prices, which the company will be free to set on its own five years from now, after an agreement with the state expires.

“The deal allows Verizon to raise basic landline phone rates 36 percent over the next five years and it allows them to raise business line rates over 20 percent over the next five years,” said Seth Hahn, a CWA staff representative. Beyond that, the sky is the limit.

Most of New Jersey wouldn’t mind the loss of traditional landlines so much if they had something better to replace them. Thanks to the state’s relatively small size, at least 2.2 million residents do. Verizon has managed to complete wiring its fiber to the home service FiOS to 358 towns in the state. Verizon hoped fiber optics, although initially expensive to install, would be infinitely more reliable and easily upgradable, unlike its aging copper-wire predecessor. Unfortunately, there are 494 towns in New Jersey, meaning 136 communities are either stuck using Verizon DSL or dial-up if they don’t or can’t receive service from Comcast.

So how did so many towns get left behind in the fiber revolution? Most of the blame is equally divided between Verizon and politicians and regulators in Trenton.

Verizon did not want to approach nearly 500 communities to secure franchise agreements from each of them, dismissed by then Verizon CEO Ivan Seidenberg as a “Mickey Mouse procedure.” Verizon wanted to cut a deal with New Jersey to create a statewide video franchise law allowing it to offer video service anywhere it wanted in the state.

A November 2005 compromise provided a way forward. In return for a statewide video franchise that stripped local authority over Verizon’s operations, Verizon would commit to aggressively building out its FiOS network to every home in the state where Verizon offered landline telephone service.

The entire state was to be wired by 2010. It wasn’t. Two events are responsible: The arrival of Gov. Chris Christie in 2010 and the retirement of Mr. Seidenberg the following summer.

Christie

Christie’s appointments to the Board of Public Utilities, which used to hold Verizon’s feet to the fire as the state’s telecommunications regulator, instead put the fire out.

“They were Christie’s cronies,” charged several unions representing Verizon employees in the state.

The then incoming president of the BPU was Dianne Solomon, wife of close Christie associate Lee Solomon. The BPU is a technocrat’s paradise with hearings and board documents filled with highly technical jargon and service quality reports. Solomon brought her only experience, as an official with the United States Tennis Association, to the table. Administration critics immediately accused the governor of using the BPU as a political patronage parking lot. When he was done making appointments, three of the four commissioners on the BPU were all politically connected to the governor and many were accused of lacking telecommunications expertise.

When communities bypassed by FiOS complained Verizon was not honoring its commitment, the governor and his allies at the BPU proposed letting Verizon off the hook. Instead of demanding Verizon finish the job it started, state authorities decided the company had done enough. So had Verizon’s then-incoming CEO Lowell McAdam, who has since shown almost no interest in any further expansion of fiber optics.

But the working-class residents of Laurel Springs, Somerdale, and Lindenwold are interested. But they have the misfortune of living in more income-challenged parts of Camden County. So while Cherry Hill, Camden itself, and Haddonfield have FiOS, many bypassed residents cannot even get DSL from Verizon.

(Image relies on information provided by the Inquirer)

The Inquirer recently offered readers a glimpse into the life of the FiOS-less — the digitally redlined — where the introduction of call waiting and three-way calling was the last significant telecommunications breakthrough from Verizon.

“All Verizon offers here is dial-up,” Dawn Amadio, the municipal clerk in Laurel Springs, said of the Internet service, expressing the frustration of many residents and local officials. “That’s why everybody has Comcast. What does Verizon want us to do? Live in the Dark Ages?”

Or move to a more populated or affluent area where Verizon’s Return on Investment requirements are met.

The state government could have followed Philadelphia, which demanded every city neighborhood be wired as part of its franchise agreement with Verizon in 2009. So far, Verizon is on track to meet that commitment with no complaints by next February.

Further out in the eastern Pennsylvania suburbs, Verizon got franchise agreements with the towns it really wanted to serve — largely affluent with residents packed relatively close to each other. Verizon signed 200 franchise agreements in Bucks, Delaware, Montgomery, and Chester Counties in Pennsylvania. It managed this without a statewide video franchise agreement. But at least 34 towns in those counties were left behind.

A deal between Verizon and Trenton officials was supposed to avoid any broadband backwaters emerging in New Jersey.

But state officials also allowed a requirement that mandated Verizon not skip any of 70 towns it sought guarantees would be upgraded for FiOS, mostly a mix of county seats, poor neighborhoods, and urban areas in the northern part of the state. Verizon could wire anywhere else at its discretion. Trenton politicians never thought that would be an issue because FiOS would sell itself and Verizon could not possibly ignore consumer demand for fiber optic upgrades.

But Verizon easily could after its current CEO found even bigger profits could be made from its prestigious wireless division. McAdam has shifted the bulk of Verizon’s spending out of its wireline and fiber optic networks straight into high profit Verizon Wireless. If he can manage it, he’d like to shift New Jersey’s rural customers to that wireless network as well, with wireless home phone replacements and wireless broadband. Only state oversight and regulatory agencies stand in the way of McAdam’s vision, and in New Jersey regulators have chosen to sit on the sidelines and watch.

That is very bad news for 99 New Jersey towns where FiOS is available to fewer than 60 percent of residents (Gloucester Township, Mount Laurel, Deptford, Pennsauken, and Voorhees, among others.)

Another 135 New Jersey towns, including a group of Delaware River municipalities along Route 130 in Burlington County and most of the Jersey Shore, have no FiOS at all. Other than in the county seats, Verizon has not extended FiOS to any other towns in Ocean, Atlantic and Cape May Counties, reports the newspaper.

Verizon never promised New Jersey 100% fiber, comes the response from Verizon spokesman Lee Gierczynski. Instead of future expansion, Verizon will step up its efforts to get customers away from the cable company in areas where Verizon offers FiOS service. The company says it spent $4 billion on FiOS in New Jersey and it is time to earn a return on that investment.

But local communities have already discovered Verizon earning fringe benefits by not offering fiber optic service.

In Laurel Springs, customers have largely fled Verizon for Comcast, which is usually the only provider of broadband in the area. A package including broadband and phone service costs less than paying Verizon for a landline and Comcast for Internet access, so Verizon landline disconnects in the town are way up.

Mayor Thomas Barbera discovered that once Verizon serves fewer than 51% of phone customers in town, it can claim it is no longer competitive and devalue its infrastructure and assets to virtually zero and walk away from any business property tax obligations.

“Once they skip,” Barbera told the Inquirer, “we don’t get [Verizon’s] best product, and then they say we can’t compete and we don’t owe you our taxes. It’s good to be king.”

Correction: With our thanks to Verizon’s manager of media relations Lee Gierczynski for setting the record straight, we regrettably reported information that turned out to be in error. The amended Cable Act that brought statewide video franchising to New Jersey never required Verizon to build out its FiOS network to every home in New Jersey where it offered landline telephone service. Instead, the agreement required Verizon to fully build its fiber network to 70 so-called “must-build” municipalities. 

Gierczynski also offers the following rebuttal to other points raised in our piece:

No one is disputing the fact that Verizon is spending less on its wireline networks.  The spending is aligned with the number of wireline customers Verizon serves, which has declined by more than 50 percent over the last decade.  The implication that this decreased investment is leading to a deterioration of the copper network is what is wrong. Over the last several years, Verizon New Jersey has spent more than $5 million just on proactive copper maintenance initiatives that have led to significant decreases in service complaints. The BPU’s standard for measuring acceptable service quality is the monthly customer trouble report rate – which is the best overall indicator of network reliability.  The BPU’s standard is 2.3 troubles per 100 access lines.  Over the last several years, Verizon’s performance across the state has consistently been below that standard, even in places in northwest and southeast New Jersey primarily served by copper infrastructure.  The 2014 trouble rate for southeastern New Jersey towns like Hopewell (0.3 troubles per 100 lines) and Upper Deerfield (0.34 per 100 lines) are well below the BPU’s standard.

Verizon is on track to meet its build obligations in those municipalities by the end of this year as statutorily obligated to do (not 2010 as you wrote) and also has deployed its network to all or parts of 288 other communities across New Jersey.   Today Verizon offers its video service to more customers than any other single wireline provider in the state.

The New Jersey Board of Public Utilities (BPU) unanimously approved an agreement this week exempting Verizon from most basic landline service regulations, prompting immediate outrage from consumer, senior and labor groups who predict it will lead to rate increases and deteriorating service.

The agreement removes pricing oversight regulations for residential basic telephone service, single-line business telephone service, nonrecurring charges for residential service connection and installation, and residential directory assistance services. That will allow Verizon to charge whatever the market will bear after a transition period. While that may not be a big problem for cell phone users and those who have dropped Verizon for cable company phone service or a broadband-powered Voice over IP alternative, it will leave rural New Jersey residents vulnerable if Verizon abuses its pricing privileges in areas where there are no alternatives.

“Today’s back room deal is bad for seniors, bad for workers at Verizon, and bad for the millions of businesses and homes that rely on affordable, reliable phone service,” said Seth Hahn, the CWA’s New Jersey legislative and political director. “In fact, it’s bad for everyone in New Jersey except Verizon. Something changed between 2011 when Governor Christie said seniors need protections and now I fear it’s the hundreds of thousands of dollars Verizon has funneled to various entities to help Christie’s political ambitions.”

Under the new deal, Verizon will cap its current basic residential rate of $16.45 for what it calls a five-year transition period. Verizon can increase the cost by only $6 during the first five years. After that, the sky is the limit.

Landline service quality – disconnected.

The change is likely to push many of New Jersey’s 100,000 remaining landline customers to competitive alternatives which often cost considerably less, but those with medical conditions, rural residents and seniors will likely be trapped using Verizon’s copper wire landline service indefinitely.

It’s the second major victory for Verizon. Last March, the Christie Administration let Verizon off the hook with no penalties for reneging on its commitment to wire 100% of New Jersey with fiber optics by 2010. New Jersey ratepayers paid as much as $15 billion in surcharges and higher rates for a statewide fiber network that was supposed to reach every home and business. Verizon kept the money and many parts of New Jersey never got the promised upgrades. Now those areas still using decades-old copper wiring are likely to experience an increase in service problems as Verizon continues to decrease its budget to maintain landline infrastructure.

Local officials, particularly those in rural counties, were angry the BPU approved a deregulation measure that will leave consumers exposed to deteriorating service as Verizon focuses on its more lucrative wireless business.

“Who will protect the public interest now,” Greg Facemyer, a councilman in Hopewell Township, Cumberland County told The Star-Ledger by email. “This is a sad day for the senior citizens, students and farmers in small underserved communities like Hopewell Township. Where do New Jersey residents turn when their phones don’t work. This is a clear public safety issue. Spotty wireless coverage is not a reliable alternative to Verizon’s statutory obligation to New Jersey residents.”

Stefanie Brand, director of the New Jersey Rate Counsel saw the vote as a rush to Verizon’s business and profit agendas.

“I am certainly disheartened that they didn’t at least allow more time,” Brand said. “I think the public has a lot to say about this and I thought it would have been a good idea to have the public’s input.”

Verizon says it is the only telecom company in New Jersey subject to the outdated regulations now being dropped. The company says its competitors have done business without price regulations and oversight and have an unfair advantage.

“Something smells at the New Jersey Board of Public Utilities and it’s not May flowers,” responded Daniel Benson, a representative of the 14th district of the New Jersey General Assembly. “At a time when Verizon isn’t maintaining its infrastructure, as evidenced by service declines throughout New Jersey, I don’t believe further deregulation is a sensible policy response. If the agreement is approved, many will be left defenseless to Verizon’s demands and get hit directly where it hurts — their pocketbooks. To add insult to injury, no public hearings are scheduled — those affected can’t even voice concerns on how changes would affect them.”

Wheeler at this morning’s hearing.

Revenge-seeking Republicans spent more than two hours this morning grilling the chairman of the Federal Communications Commission, Thomas Wheeler, in the first of five Congressional hearings on the agency to be held over the next two weeks.

Rep. Jason Chaffetz (R-Utah), chairman of the House Oversight and Government Reform Committee, accused the FCC of a lack of transparency regarding the recent release of Net Neutrality rules that universally ban paid fast lanes and revenue-based traffic management. Republicans accused the Obama Administration of secretly pressuring Wheeler to adopt strong Open Internet protections.

“The lack of transparency surrounding the open Internet rule-making process raises a lot of questions,” said Chaffetz.

Chaffetz, most of his Republican colleagues, and many large telecom companies object to the Net Neutrality rules and suggest Wheeler’s rumored original lighter-touch “hybrid approach” was swamped by White House objections and replaced with a much stronger Open Internet policy framed around Title II reclassification of broadband as a telecommunications service at the urging of the administration.

Chaffetz dismissed comments from four million Americans writing the FCC in favor of Net Neutrality claiming the writers did not recommend Title II reclassification of broadband, despite the fact many suggested exactly that.

To bolster Republican arguments that President Obama exercised undue influence on an independent agency, Chaffetz’s committee selectively released portions of now-unredacted email exchanges between Wheeler, agency officials, Congress, and the White House. It also included a partial e-mail exchange involving AT&T’s top lobbyist, Jim Cicconi, who is evidently on a first-name basis with some of the FCC’s highest officials, including Wheeler’s senior counselor, Philip Verveer.

In response to a November 10 news release featuring comments from FCC chairman Wheeler in response to President Barack Obama’s statements of support for strong Net Neutrality, Cicconi sent a concerned email to Wheeler’s office the Republicans chose not to disclose. But they did include Verveer’s response:

Jim,

We’re trying to schedule a conversation about this morning’s developments for some time this afternoon. I hope we’re able to connect.

Phil

In response to that, Cicconi fired off this quick response from his iPad:

I hope so too.

Now I at least understand why you pushed the hybrid.

This is awful. And bad for any semblance of agency independence too.

Too many people saw Zients going in to meet with Tom last week.

Cicconi is referring to Jeff Zients, a White House economic adviser, who met with Wheeler on Nov. 6. In Cicconi’s mind, and by extension the Republicans at today’s House hearing, that meeting represented “undue pressure from the White House.”

Republicans also attempted to prove the FCC and the White House closely collaborated on a rollout of Net Neutrality using an email from an irritated Wheeler to his senior staff shortly after his driveway was blocked by Net Neutrality activists:

FYI, Isn’t it interesting:

1. The day of the demonstration just happens to be the day folks take action at my house.
2. The video of [President Obama] just happens to end up on the same message as the video from [the president].
3. The White House sends this email to their supporter list asking “pass this on to anyone who cares about saving the Internet.”

Hmmm….

Chaffetz

But Wheeler’s message suggests he was never aware of the White House’s campaign to bolster Net Neutrality, much less a part of it.

A third email from then Sen. Majority Leader Harry Reid’s office revealed the senator was no fan of Title II reclassification of broadband to protect Net Neutrality. David Krone, Reid’s chief of staff, lectured Wheeler about keeping strong Net Neutrality off the table because it creates “problems for us.”

In May 2014, chairman Wheeler announced his plans for a hybrid approach to Net Neutrality that would likely combine bans on censorship with permission for Internet providers to set up paid fast lanes for content producers like Netflix.

Initial media reports of Wheeler’s intentions sparked a major backlash against the proposal among Net Neutrality advocates.

In a May 15, 2014 email exchange with Wheeler, Krone attempted to buck up Wheeler and his “third way” Net Neutrality plan once in the morning before it was announced and later that evening after the proposal took heavy fire in the press.

9:26 am (Krone to Wheeler)

Good luck today.

Not sure how things have landed but I trust you to make it work. Please shout if you need anything.

Spoke again with the [White House] and told them to back off Title II. Went through once again the problems it creates for us.

6:15pm (Krone to Wheeler)

Too funny. I literally just watched your remarks from this morning. Spot on. Thank you!!!

P.S. Zients was definitely reacting to press reports. Or, should I say, overreacting. My main point to the [White House] is how can you declare today that regulations written in the 1930’s will work fine for 2014 technology. Let Tom do his job and this will be fine.

Another email exchange between Wheeler and John Podesta, counselor to the president, referenced a New York Times story that signaled Wheeler was backpedaling on Net Neutrality, a story later proven inaccurate.

At this morning’s hearing, Wheeler pushed back against the Republican accusations.

“There were no secret instructions from the White House,” Wheeler said. “I did not, as CEO of an independent agency, feel obligated to follow the president’s recommendation.”

C-SPAN carried this morning’s hearing with FCC chairman Thomas Wheeler appearing before the House Oversight and Government Reform Committee. (2 hours, 41 minutes)

AT&T has asked a federal judge in California to throw out a lawsuit filed by the Federal Trade Commission over wireless speed throttling, claiming the federal regulator has no authority over how AT&T manages its network.

The FTC filed a lawsuit in October 2014 alleging AT&T was throttling the speeds of its grandfathered “unlimited data” customers by as much as 90 percent and failed to sufficiently disclose the practice in violation of the FTC Act.

Although AT&T discloses its network management policies in broad terms deep within its website, the original complaint charges AT&T failed to directly notify customers identified as the ‘heavy unlimited users’ targeted for wireless speed reductions reportedly as low as 56kbps for up to 30 days or more.

AT&T’s lawyers claim the FTC has no jurisdiction to file the lawsuit because a portion of AT&T’s business — cellular voice service — is defined by the Communications Act as a regulated common carrier service by the Federal Communications Commission. The FTC had argued AT&T’s mobile data services are unregulated and do not fall under the FCC’s exclusive jurisdiction.

AT&T’s attorneys argue two apparently contradictory assertions about wireless regulation that both require the court, in AT&T’s view, to dismiss the FTC’s case:

1. AT&T acknowledges that its mobile data services are not subject to Title II regulatory oversight by the FCC as a common carrier service. Therefore, federal agencies like the FTC have no jurisdiction to interfere in AT&T’s private business decisions on issues like data caps and speed throttling because it is an unregulated service;
2. AT&T claims the FCC has asserted sweeping authority over wireless services under Section 706 of the Telecommunications Act of 1996. Therefore it should be up to the FCC alone (and not the FTC) to decide the fairness of AT&T’s network management practices. But AT&T doesn’t remind the court this is the same authority that large telecom companies sued into impotence by successfully arguing the FCC exceeded its mandate attempting to assert jurisdiction on data services to enforce concepts such as Net Neutrality and attempting to fine Comcast for throttling peer-to-peer network traffic.

AT&T calls the FTC’s claims it can intervene in services not regulated by the FCC “irrelevant,” arguing once one of AT&T’s services is subject to the FCC’s common carrier regulation, all of its services become untouchable by the FTC.

“The FTC lacks jurisdiction to prosecute this action because AT&T is a common carrier subject to the Communications Act and therefore outside the FTC’s authority under Section 5 of the FTC Act. 15 U.S.C. § 45(a)(2),” argues AT&T. “Indeed, the FTC itself has recognized that, as drafted, the exemption altogether removes common carriers such as AT&T from its jurisdiction and has asked Congress to modify the statute. So far, Congress has refused.”

“But whether AT&T’s network management program is ‘unfair’ and whether its disclosures were ‘inadequate’ are issues for the FCC to decide, and in fact the FCC is in the process of so deciding, just as Congress intended,” AT&T said. “Congress drafted Section 5 to avoid subjecting common carriers like AT&T to precisely this sort of conflicting authority of separate federal agencies over the same conduct.”

Should the FCC find AT&T in violation of its transparency rules, AT&T will have a strong legal case to have that ruling tossed as well on the grounds the agency has no mandate from Congress to regulate mobile data services under Section 706/Title III of the Communications Act — the same case other telecom companies have successfully argued in the D.C. Court of Appeals.

Ironically, AT&T’s apparent regulatory loophole will vanish should the FCC order that broadband services of all kinds be reclassified as Title II telecommunications services as part of the ongoing effort to implement strong Net Neutrality policies.