In the race to acquire spectrum and market share, AT&T and Verizon Wireless have already won most of the awards worth taking and have little to fear from smaller competitors. The U.S. government has seen to that.

The two wireless giants have benefited enormously from government spectrum auctions that award the most favorable wireless spectrum to the highest bidder, a policy that retards competition and guarantees deep-pocketed companies will continue to dominate in the coverage wars.

Winner-take-all spectrum auctions have already proven that AT&T and Verizon are best equipped to bid and win coveted 700MHz spectrum which provides the best indoor and fringe-area reception. This is why AT&T and Verizon customers often find “more bars in more places” than customers relying on Sprint or T-Mobile. Smaller carriers typically have to offer service over much-higher frequencies that don’t penetrate buildings very well. With a reduced level of service, these competitors are at an immediate competitive disadvantage. They also must spend more for a larger number of cell towers to provide uniform service.

Verizon’s own presentation materials tout the benefits of controlling 700MHz spectrum, which is less costly to deploy and offers more robust coverage.

Sprint and T-Mobile have two strikes against them at the outset — less favorable spectrum and much smaller coverage areas. Customers who want the best reception under all circumstances usually get it from the biggest two players. Those focused primarily on price are willing to sacrifice that reception for a lower bill.

The same story is developing in the wireless data marketplace. AT&T and Verizon Wireless have the strongest networks as Sprint and T-Mobile fight to catch up.

Where America Went Wrong: The Repeal of Spectrum Caps

Tom Wheeler: America’s #1 advocate for repeal of Spectrum Caps is now the chairman of the FCC.

Originally, the United States prevented excessive market domination with a “Spectrum Cap,” — a maximum amount of wireless spectrum providers could hold in any local market. The rule was part of the sweeping changes in telecommunications law introduced in the mid-1990s. Wireless spectrum auctions replaced lotteries or strict frequency assignments based on merit. The U.S. government promoted the auction system as a win for the U.S. Treasury, which has been promised $60 billion in proceeds from the wireless industry (not the amount actually collected) since auctions began in 1994.

The cost to U.S. consumers from increasing cell phone bills in barely competitive markets is still adding up.

After the auction system was introduced, the largest carriers acquired some of the most favorable, lower-frequency spectrum, easily outbidding smaller rivals. Most of the smaller regional carriers that ultimately won coveted 700MHz spectrum emerged victorious only when AT&T and Verizon felt the smaller markets were not worth the investment. In larger markets, spectrum caps were a gatekeeper against acquiring excess spectrum and, more importantly, rampant industry consolidation.

Under the pre-2001 rules, wireless companies couldn’t own more than 45MHz of spectrum in a single urban area or more than 55MHz in a rural area. That was when Verizon and AT&T competed with carriers that no longer exist — old familiar names like Nextel, Cingular, VoiceStream, Alltel, Centennial Communications, Qwest, and many others considered safe from poaching because the most likely buyers would find themselves over their spectrum limits.

As the largest carriers realized the caps were an effective merger/buyout firewall, the wireless industry began a fierce lobbying campaign against them. Leading the charge was Tom Wheeler, then-president of the CTIA Wireless Association, the nation’s top cellular industry lobbying group. Today he is chairman of the Federal Communications Commission.

“Today, America faces a severe spectrum shortage for wireless services,” Wheeler said in 2001. “The spectrum cap is a legacy of spectrum abundance, not shortages; the inefficiencies it perpetuates cannot be allowed to continue. While the U.S. government is looking for ways to catch up to the rest of the world on spectrum allocations, removal of the cap can at least increase the efficiency of existing spectrum.”

Former FCC Commissioner Michael Copps opposed retiring Spectrum Caps: “Let’s not kid ourselves: This is, for some, more about corporate mergers than it is about anything else.”

Wheeler was backed by an intensive lobbying effort funded by the largest wireless companies itching to merge and acquire.

By the end of 2001, the new Bush Administration’s FCC was ready to deal, gradually repealing the spectrum caps and fueling major wireless industry consolidation in the process. Providers everywhere could now own or control 55MHz of spectrum in any market, with the promise the caps would be repealed altogether by March 2003.

The result was already foreseen by former FCC Commissioner Michael Copps in November 2001, when he strongly dissented to the Republican majority gung ho for dissolving spectrum caps.

“Let’s not kid ourselves: This is, for some, more about corporate mergers than it is about anything else,” Copps wrote in his strong dissent. “Just look at what the analysts are talking about as the specter of spectrum cap renewal approaches – their almost exclusive focus is on evaluating the candidates for corporate takeovers and handicapping the winners and losers in the spectrum bazaar we are about to open.”

Just in case Copps might be making headway in his campaign to protect competition, Wheeler began complaining even louder about spectrum caps during the spring of 2003, just before their dissolution.

“The wireless industry fought long and hard to secure this spectrum for America’s wireless consumers,” said Wheeler. “Now we must tread carefully — in this era of rapid technological change, writing rules that are too restrictive would be irresponsible. In order to use this spectrum both efficiently and effectively, those who purchase this spectrum at auction must be allowed the freedom to grow and evolve with the demands of the market.”

Europe: Protecting Consumers from Giant Multinational Competition Consolidators (Some of the same ones AT&T reportedly wants to buy)

There is a reason Europeans are shocked by the costs of wireless service in the United States and Canada. North Americans pay higher prices for less service than our European counterparts. Most of the New World also has fewer choices in near-equivalent service providers.

Much of this difference can be attributed to European regulators maintaining focus on driving competition forward and disallowing rampant industry consolidation. But as Wall Street turns its attentions increasingly towards Europe to push for the next big wave of wireless mergers, the European system of “competition first” could be undermined if providers follow the North American model of high profits and reduced competition through consolidation.

Across much of Europe, at least four national carriers serve each EU member state, almost all controlling a share of the most valued, low-frequency wireless spectrum. European regulators do not allow a small handful of providers to maintain a stranglehold on the most valuable radio spectrum. Competitors have traditionally been offered a spectrum foundation to build networks that can stand up to their larger counterparts — the large multinationals or ex-state monopoly providers who had a head start providing service.

A report released by Finland market research firm Rewheel in May found clear evidence that the European model was benefiting consumers at the expense of rampant provider profits. Europeans in “progressive” markets that welcomed new competitive entrants pay lower prices for far more service. In some cases, the price differences between the five giant multinational providers that dominate Europe — Vodafone, KPN, France Telecom, Telefonica and Deutsche Telekom — were staggering. Competitors like Tele2, TeliaSonera, and “3” charge up to ten times less than the larger companies for equal levels of service.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bloomberg ATT Takeover List of European Wireless Carriers 7-15-13.flv[/flv]

“Europe is ripe for competition,” reports Bloomberg News. Providers like AT&T may be preparing to embark on a European wireless acquisition frenzy, but Wall Street warns profits are much lower because of robust price competition in Europe that benefits consumers. (4 minutes)

The study also found a number of the largest European providers were following in the footsteps of Verizon Wireless, AT&T, Rogers, Bell, and Telus here in North America:

• Prices were enormously higher in markets that lack effective competition from an upstart competitor able to deliver a comparable level of service. Smaller cell companies with very limited infrastructure or with non-favored spectrum could not provoke dominant players to cut prices because reception quality was starkly lower and consumers would have to cope with a reduced level of service. In Europe, when new competitors were able to fully build-out their networks using favorable spectrum, incumbents in these progressive markets slashed prices and boosted services to compete. In North America, upstart competitors cannot access favorable spectrum for financial reasons and the investor community has dismissed many of these players as afterthoughts, starving them of much-needed investment.
• Large dominant European providers are now heavily lobbying for deregulation of merger and acquisition rules and want the right to acquire the competition entering their markets.
• In almost half of the EU27 member state markets spectrum is utilized very inefficiently by the largest incumbent telco groups who are keen to protect their legacy fixed assets and cement their European dominance with more consolidation at the price of competition. In the United States and Canada, many of the largest providers crying the loudest for more wireless spectrum have still not used the spectrum already acquired.

From the Finnish report:

The obvious question that needs to be asked is how is it technologically possible and economically viable for Tele2, 3 and TeliaSonera to offer four times more gigabytes of data usage at a fraction of the price charged by larger companies.

• Do independent challengers have privileged access to more efficient technologies (i.e. LTE) than the E4 group members?
• Do they hold relatively more spectrum capacity than the E4 group members?
• Do independent challengers have access to more radio sites and their spectrum reuse factor is higher than the E4 group members?
• Or are independent challengers (i.e. Tele2, DNA) unprofitable?

None of the above are true.

The answer is actually very simple. Independent challengers and incumbents such as TeliaSonera present mainly in progressive markets are utilizing the spectrum resources assigned to them. In contrast, incumbent telco groups […] rather than utilizing their spectrum resources instead appear to be more concerned about keeping the unit price of mobile data very high […] by restricting supply, the same way the lawful “cartel” of OPEC controls the price of oil by turning the tap off.

In progressive markets (where at least one independent challenger is present, triggering spectrum utilization competition) such as Finland, Sweden, Austria and the UK, mobile data consumption per capita is up to ten times higher than in protected markets.

In some European countries dominated by the biggest players, consumers are being gouged for service. Where robust competition exists, prices are dramatically lower.

The European nation where market conditions are most similar to the United States is Germany. Two large carriers dominate the market: Deutsche Telekom, the former state-owned telephone company and Vodafone, part owner of Verizon Wireless.

In Germany, consumers spending €20 ($26) end up with a data plan offering as little as 200MB of usage per month. In progressive markets in adjacent countries, spending the same amount will buy an unlimited use data plan or at least one offering tens of gigabytes of usage. In short, German smartphone service is up to 100 times more restrictive than that found in nearby Scandinavia or in the United Kingdom. These same two companies charge Germans double what English customers pay and a Berliner will end up with 22 times less data service after the bill is settled.

So what is going on in Germany that allows the marketplace to stay so price-distorted? The fact all four significant competitors have close ties to or are owned by the large multinational telecom operators mentioned above. Deutsche Telekom, Vodafone, Telefonica and E-Plus, the latter one belonging to the Dutch KPN Group are all members of a lobbying organization attempting to persuade the EU to invest public funds into improving Europe’s wired broadband networks. Playing against that proposition is a growing number of Europeans moving to wireless. By charging dramatically higher wireless prices in Germany, all four companies have successfully argued that wireless adoption is not a significant reason to stall public financing of private broadband projects. In fact, Germany’s wireless growth is well below other EU nations.

The Finnish researchers point out the evidence of informal provider collusion is pretty stark in Germany:

“One would expect these ‘European Champions,’ especially the ones with lower market shares (Telefonica and E-Plus), to look at the smartphone centric market transformation as an opportunity to secure or improve their market share, especially in light of the fact they should have plenty of unused radio spectrum capacities to make their offers more consumer-appealing,” the report finds. But in fact these new entrants have priced their services very closely in alignment with the larger two.

“Undoubtedly, multinational incumbent telco groups and their investors have good reasons to lobby EU decision makers to enact friendly policies that will protect their inherited oligopolistic high profit margins,” the report states. “But will the German model serve the best interest of consumers and business in other EU member states? In Rewheel’s opinion, clearly not. Enforcing an overly ‘convergent player friendly’ German model would severely limit competition in the mobile markets, leading to high prices for consumers and the Internet of mobile things and sever under-utilization of the member states’ scarce national radio spectrum resources.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bloomberg ATT Entry in Europe Not Seen as Competitive Threat 7-15-13.flv[/flv]

Competition is brutal in Europe’s wireless marketplace — a factor Bloomberg News says could temper AT&T’s planned “European Wireless Takeover.” What makes the difference between enormous profits in North America and heavy price discounting in Europe? Spectrum policy, which gives European competitors a more level playing field. Bloomberg analysts speculate AT&T will bankroll its rumored European buyouts and mergers with the enormous profits it earns from U.S. subscribers.  (4 minutes)

Comcast has been a part of life in Muskegon, Mich. for decades, thanks in part to an unusually long 25-year franchise agreement signed when President Reagan was serving his last year in office. In 1988, the Berlin Wall was still in place, Mikhail Gorbachev formally implemented glasnost and perestroika, Snapple appeared on store shelves nationwide, and compact discs finally outsold vinyl records for the first time.

All good things must come to an end and Comcast’s contract to serve will finally expire Aug. 2. City officials want residents to understand that after two plus decades, it is appropriate to take some time to consider all the options. But a 2007 law has cut that time of reflection down to a month, and removed most of the powers Michigan communities used to have to select the best cable operator for their community. It’s a fact of life Comcast is well aware of, and it underlined that point by tossing a carelessly written, pro forma/fait accompli franchise renewal proposal into the mail that left Muskegon’s civic leaders cold. But if they fail to act fast, Comcast will win automatic approval of whatever it proposes to offer the 38,000 residents of the western Michigan city for years to come.

Statewide Video Franchising in Michigan

In December 2006, primarily at the behest of AT&T, the Michigan legislature passed a new statute that would create a uniform, statewide video franchise agreement template that providers could use to apply for or renew their franchises to operate. In theory, establishing a uniform, simplified franchise application would lead AT&T to quickly wire Michigan with U-verse, its competing cable/broadband/phone service, and bring dramatically lower prices for cable service and fewer complaints because of greater competition.

The Uniform Video Services Local Franchise Act was remarkably similar to those passed in more than a dozen other states — no mistake considering it was based largely on an AT&T-written draft distributed and promoted by the American Legislative Exchange Council (ALEC), an AT&T-backed third-party group that encourages state legislatures to enact corporate-ghostwritten bills into law.

Under the new law, much of the power reserved by local officials to approve cable franchises and enforce good customer service was stripped away and handed to the state’s Public Service Commission. The deregulation measure tipped the balance of power in providers’ favor, making it possible to do business on their terms, not those sought by community leaders. Among the law’s provisions:

1. Communities are still bound by the terms of their existing franchise agreements, but providers can break the legacy contracts for any reason, forcing a new agreement under the new statewide franchise law. If a provider wants out, they can abandon the community or transfer operations to a new provider with 15 days advance notice and no prior approval.
2. A franchise renewal proposal will be automatically approved if a city does not reject it within 30 days.
3. Communities cannot unreasonably restrict providers from access to public rights-of-way, an important consideration for AT&T’s U-verse, which requires the placement of large, sometimes noisy utility cabinets (a/k/a “lawn refrigerators”) to connect its fiber network with residential copper wiring.
4. Communities are limited to collecting up to 5% of video revenue in franchise fees and up to 2% to support Public, Educational, and Government (PEG) channels. In the past, some communities asked cable operators to wire schools, libraries, and local government offices at no cost, and several negotiated other forms of support for PEG channels, which allow local citizens to view town board meetings and create and distribute locally produced programming. Today, those agreements are only possible on a voluntary basis, without any threat if a provider refuses, they will get their franchise request rejected.
5. Providers are no longer obligated to honor agreements setting timetables to wire communities. Instead, they can handpick areas to be served, except in cases where racial or income discrimination can be proven.

Since the law was clearly designed to help new entrants like AT&T’s U-verse and Verizon FiOS, Michigan’s incumbent cable companies either demanded the same rights, remained neutral, or halfheartedly protested the proposed law suggesting it unfairly benefited new competitors. Cable companies, for example, would not benefit from laws throwing out buildout requirements because their networks are already largely complete.

But once signed into law, cable operators did begin asking cities to voluntarily adopt the new uniform statewide video franchise. Muskegon joined most other Michigan cities in declining the invitation.

AT&T did begin wiring Michigan for U-verse service, although there is no evidence it would not have done so had the Act never been signed into law. But that has not helped Muskegon, because the dominant phone company in the area is Frontier Communications. Frontier has so far shown no interest in building a competing cable TV service, so the only competition residents get are from two satellite companies.

City of Detroit v. State of Michigan and Comcast

Soon after the statewide franchise law was passed, Comcast notified the city of Detroit it could take the proposed renewal of its existing 1985 franchise agreement and go pound salt. The franchise agreement with the city expired in February 2007, just a month after the new law took effect. It was a new day, Comcast told city officials, and the company offered its own proposal for renewal — a 5% take-it-or-leave-it franchise fee and nothing else. Comcast even rejected the city’s counteroffer to include a 2% PEG fee, permitted under the new law.

Franchise negotiations went nowhere, but Comcast had nothing to fear. The city did not properly reject their franchise renewal offer so, as far as the company was concerned, it automatically won a franchise renewal.

The city sued both Comcast and the State of Michigan in the summer of 2010 alleging the statewide law violated the federal Cable Act, usurped local “home rule” authority, and that Comcast was illegally trespassing in the city without a franchise agreement. The Michigan Attorney General took Comcast’s side, defended the state law, and helped the cable company argue its case in court.

Comcast did not want the case heard and asked for its immediate dismissal, which was rejected.

In the summer of 2012, the judge split the decision between the city and Comcast. The judge found that Comcast had probably been operating illegally in Detroit since 2007 and owes the city damages. The judge also found parts of the state law troubling enough to invalidate. In particular, he emphasized cities do have a clear right to reject franchise proposals offered by cable operators and that in many cases those operators must adhere to their existing franchise agreements until they expire. Cities also have the right to protect and manage their rights-of-way, ending the perception cable and phone companies have the right to place hardware almost at-will in public areas.

Comcast wants to avoid paying Detroit damages for potentially operating illegally without a valid franchise.

The judge found nothing inherently faulty with the concept of statewide video franchising, nor did he rule that providers are required to serve everyone in a geographic area or that cities are allowed to enforce local customer service standards.

The impact of the statewide law, even after the judge’s ruling, still erodes local control. As pre-2007 franchise agreements expire, it is highly unlikely cable operators will continue to offer free service to municipal buildings, will not accept requirements to provide “universal service” or even language requiring wiring of every home that meets a “homes per mile” test. Some cable operators are even closing local customer service centers that used to be required in many franchise agreements.

Comcast did not appreciate the court ruling, sought to have it set aside, and failed. Now the Court of Appeals will likely weigh in on the case by the end of this year. Comcast is particularly concerned about the prospect of paying damages to the city of Detroit for illegally operating without a valid franchise. The judge hearing the case considered that a very real possibility and requested submissions from all parties about how much Comcast should pay the city.

Muskegon officials cited the judge’s rulings in the Detroit case in their letter rejecting Comcast’s proposed renewal agreement. The city wants to renegotiate certain terms regarding its PEG channels, still wants complimentary service to public buildings, and requests cable service be extended to the Hartshorn Marina.

Six Years Later, Cable Rates and Complaints Still Rising, the Competition is Fleeting, and Many Believe the Law Has Achieved Nothing

The Michigan Public Service Commission is tasked with reporting annually to the legislature and the public about the impact of the AT&T-sponsored law. The PSC’s broad conclusion is that the new law is working:

Increases in subscribers as well as the emergence of another video/cable provider are positive signs for the video services industry in the state of Michigan. Both franchise entities and providers have continued to report that video/cable competition is continuing to grow. Growth in competition has been observed each year since the Commission began issuing this report. In addition to the increase in competitive providers, companies continued to invest hundreds of millions of dollars into the Michigan video/cable market in 2012.

As the Act enters its seventh year of existence, signs of progress and competition continue to be evident. It appears that both franchise entities and providers perceive that providers are offering more services to customers. In addition, more areas throughout Michigan are beginning to have a choice of video/cable service providers.

But in the same report, the PSC admits the overwhelming consensus among those in individual communities is the law has made little to no difference in competition or pricing. For example, every provider has continued to raise their rates, particularly after promotional new customer packages expire. Much of the savings calculated in Michigan took introductory prices into account, such as when AT&T U-verse entered a market. After 1-2 years, those savings evaporate. AT&T has increased its pricing just as often as dominant cable providers Comcast and Charter.

The PSC touts that 15 new competitors have begun offering service in Michigan since the law was enacted. But besides AT&T’s U-verse., the majority of those new entrants are municipal telephone companies, small/family owned rural cable companies, or providers that specialize in serving only apartment complexes or condos. All but AT&T serve only tiny areas in Michigan and most have customers that number only in the hundreds to low-thousands.

Michigan’s New Competitors

• Ace Telephone Company of Michigan Inc.
• AT&T (U-verse)
• Bloomingdale Communications, Inc.
• Drenthe Telephone
• Martell Cable Service Inc.
• Mediagate Digital
• Michigan Cable Partners (MICOM Cable)
• Packerland Broadband
• Sister Lakes Cable TV
• Southwest Michigan Communications Inc.
• Spectrum Broadband
• Summit Digital
• Sunrise Communications LLC
• Vogtmann Engineering
• Waldron Communication Company

How many new Michigan customers has this competition netted since 2011? 2,116

The overwhelming majority of Michigan communities still have just one cable operator and no competitor. AT&T U-verse accounts for almost all the communities reporting a second provider.

Complaints have also been higher every year the statewide franchise law has been in effect. In 2007, there were 615 formal complaints made to the PSC. Every year thereafter, the number of complaints exceed 2007 levels, ranging from 757 in 2011 to 1,074 in 2010. Comcast is by far the worst offender — 51 percent. AT&T and Charter had a smaller percentage of complaints, 15 and 14 percent respectively. The majority of complaints among all providers deal with billing issues.

Since the new law took effect, many communities have felt so disempowered, they stopped reporting local complaints to the PSC. But among those who have, the story is the same in states without statewide franchise laws:

• System updates not completed as promised. Large numbers (of residents) have gone to satellite;
• Upgrades needed to allow for better reception and channel selection;
• There are two providers in our area, yet little increase in competition;
• Cost to extend service to reach potential customers affects competition;
• Cable provider left when switching from analog to digital, stating not enough customers to afford the changeover. Now only satellite is available;
• No broadband/high-speed Internet service in many townships;
• No phone, cable service available;
• Michigan has totally failed bringing affordable Internet service to this community, and has prevented our township government from providing the needed services.

The perceived impact of the 2007 law isn’t so great either:

• Communities lost in-kind and other services from the incumbent provider;
• Cable rates continue to increase;
• Zero value added and has eroded local control of franchising;
• Customers have a choice now, but rates are still higher;
• Providers simply poach competitor’s customers as evidenced by flat franchise revenue; as one increases the other decreases;
• This statute has proven to accomplish literally nothing for municipalities and only serves to benefit providers;
• The Act did nothing to improve service.

Island residents are smoking hot about Voice Link

The New York Public Service Commission has extended the deadline for public comments about the Voice Link wireless landline replacement until Sept. 13, to give the growing number of customers on Fire Island with the service enough time to fully evaluate it over the summer months.

To date nearly 400 public comments have been filed with the Commission, every one of them negative.

Stop the Cap!’s comments are having an impact on the PSC’s exploration of the deployment of Voice Link in upstate New York. On our recommendation, the PSC has formally asked Verizon for more documentation about how Voice Link is being introduced in the Catskills:

Please provide the following information for all Voice Link devices/services that have been installed at any customer premises locations outside of the Western Fire Island area:

• The address of every Voice Link customer in upstate New York;
• Date Voice Link Installed;
• Reason Voice Link Installed;
• Was customer advised Voice Link service was optional or not;
• Voice Link Service Calls/Repairs identified by location, date, reason for service visit, repair action taken;
• If applicable to any locations, date Voice Link was uninstalled/disconnected and reason for termination;
• Please provide any marketing materials, scripts, and/or training materials in use by Verizon employees or contracted third-party workers to inform customers about Voice Link service;
• Please provide copies of any documentation provided to customers agreeing to accept Voice Link service outside of Western Fire Island, including Terms of Service Agreements. If there are any material differences between documentation and Terms of Service agreements for Western Fire Island customers, and customers in any other areas of New York State, please identify and explain those differences.

The PSC is also demonstrating that it is willing to go deep into the weeds with Verizon on this issue, a marked departure from the near-rubber stamp “light touch” regulation AT&T enjoys in several midwestern and southern states. At one point, the Commission found Verizon documentation indicating enough “spare pairs” — unused lines — were available that could be used to repair and reintroduce landline service on Fire Island, and wants to know why Verizon is not using them to bring back the service customers had before Hurricane Sandy did its damage:

The copper cable table shows that the spare cable pairs in the copper cable facilities serving the 11 identified communities is approximately 16% of the total available pairs in those cables. However, in specific communities such as Fair Harbor, Kismet, Robins Rest and Lonelyville, the percentage of spare pairs ranges from 21% to 66% of the total available pairs. Also, the number of working pairs in many locations is small compared to the total available pairs in the cables, despite the number of defective pairs reported by the company. Please explain why Verizon is not utilizing existing spare cable pairs, and performing routine cable maintenance in any communities, to restore wireline services to customers that do not request or desire Voice Link service.

The fiber cable table shows spare cable pairs in the fiber facilities serving the Ocean Beach, Lonelyville, Fair Harbor and Kismet communities is approximately 73% of the total available pairs in those fiber cables. By individual community, the percentage of spare pairs ranges from 62% to 94% of the total available pairs. Please explain why Verizon is not utilizing existing spare fiber pairs in any of the four named communities to restore wireline services to customers that do not request or desire Voice Link service.

Despite every effort by Verizon, Fire Island residents that lost landline service are increasingly opposed to Voice Link, if the public comments filed with the Commission are any indication.

The Point o’Woods Association on Fire Island, which represents more than 500 people who either seasonally or year round depend on Verizon’s landline network, is also highly critical of Voice Link’s performance and provided the Commission with very specific and detailed criticisms:

1. Verizon’s only cell site on Fire Island on the Ocean Beach water tower lacks reliable power backup contingencies;
2. Fire and medical first responders across Fire Island have declared Voice Link unsatisfactory for public safety;
3. Voice Link’s performance has been called unreliable. The sound is “plagued by echoes, connection delays, no connection at all, and frequent dropped calls;”
4. Voice Link only works with CDMA spectrum for voice calling, reducing the level of service (data) customers used to have with traditional landlines;
5. Customers cannot reach a live operator by dialing “0” and must dial all ten digits for all calls. The service also does not support collect calls, a feature “sometimes critical in emergency situations;”
6. The reception quality of Verizon’s data network varies widely across the island.

“Voice Link at its very best is a temporary solution suitable for deployment only while full communications infrastructure is in the process of restoration,” concludes D.R. Brown, vice president of the association.

The changes Verizon seeks for Fire Island are affecting even those who still have landline service. Customers regularly report that Verizon customer service is refusing repair requests in areas like Ocean Beach, pushing customers to the wireless replacement it wants them to accept.

Jean Ufer, a Fire Island resident, says Verizon is threatening the health of her husband by refusing to fix her service.

“They will not repair my landline, which my husband really needs, as he has a pacemaker which has to be monitored by a landline,” Ufer complained to the Commission. “They also refused to connect my DSL, even though they charged me  the monthly fee right through the winter.”

Canadian telecom regulators have announced new rules that will limit “gotcha” fees for mobile customers caught exceeding their data allowance, push for an end to the ubiquitous three-year service contract, and force carriers to unlock cell phones after 90 days.

The Canadian Radio-television and Telecommunications Commission (CRTC) this week unveiled a new consumer’s Wireless Code governing wireless service. The new rules were introduced in response to more than 5,000 consumer comments received by the regulator over service pricing, opaque wireless contract language, and policies that kept customers locked into long service contracts with expensive exit penalties.

On the surface, the new rules seem to aggressively rein in Bell, Rogers, and Telus — Canada’s three dominant carriers. Among the new provisions taking effect Dec. 2:

• cancel your contract at no cost after a maximum of two years;
• cancel your contract and return your phone at no cost, within 15 days and specific usage limits, if you are unhappy with your service;
• have your phone unlocked after 90 days, or immediately if you paid in full for your phone;
• have your service suspended at no cost if your phone is lost or stolen;
• receive a Critical Information Summary, which explains your contract in under two pages;
• receive a notification when you are roaming in a different country, telling you what the rates are for voice services, text messages, and data usage;
• limit your data overage charges to $50 a month and your data roaming charges to $100 a month;
• pay no extra charges for a service described as “unlimited”;
• you can refuse a change to the key terms and conditions of your contract, including the services in your contract, the price for those services, and the duration of your contract; and
• all cell contracts must use plain language and clearly describe the services customers receive and include information on when and why customers may be charged extra.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/CBC New CRTC wireless rules ban contract break fees after 2 years 6-3-13.flv[/flv]

CBC Television’s “The National” explains the CRTC’s new Wireless Code and how it will impact Canadian cell phone customers. Many are skeptical the CRTC will outwit the wireless industry.  (4 minutes)

“Every day, Canadians rely on wireless devices while in their homes, at their jobs, at school or traveling abroad,” said Jean-Pierre Blais, chairman of the CRTC. “The wireless code will contribute to a more dynamic marketplace by making it possible for Canadians to discuss their needs with service providers at least every two years.  The code is a tool that will empower consumers and help them make informed choices about the service options that best meet their needs. To make the most of this tool, consumers also have a responsibility to educate themselves.”

Canadians pay among the world’s highest wireless charges and most are offered contracts lasting three years. In the United States, two-year contracts are standard. But in both countries, once the contract is fulfilled customers do not receive a discount on services going forward.

“The biggest scam of all is still allowed under the new rules: wireless companies don’t lower your bill if you buy your own phone or fulfill your contract, so you are still paying their subsidy-recovery phone rates either way,” complains Thomas Harcourt in Toronto. “Once again, the wireless companies got the ears of the commissioners and despite thousands of angry Canadians, they watered down our ‘Bill of Rights’ into more bait and switch. You can almost see where the wireless lobbyists had their way with the language.”

Most Canadian wireless carriers welcomed the new rules and the industry participated in hearings contemplating their creation. The new federal rules will supersede conflicting, sometimes stronger provincial regulations, which some observers suggest is a decision in the carriers’ favor.

A closer review of the new regulations exposes several that were tempered, perhaps after industry objections.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/BNN Wireless Code of Conduct CWTA 2-11-13.flv[/flv]

Back in February, BNN talked with Bernard Lord, a representative of the Canadian Wireless Telecommunications Association about what policies they hoped to see in a national wireless “code of conduct.” The industry got most of what it wanted in the final Wireless Code. (8 minutes)

The CRTC did not ban 3-year contracts outright. Instead, they tied contract termination policies and fees to the device subsidy phone companies give customers to cheapen the upfront cost of equipment.

Blais

In Canada, a new smartphone selling for $699 might be discounted to $99 with a three-year contract. For the next 36 months, customers gradually pay back that discount, called a device subsidy, in the form of an artificially inflated rate plan. Most companies amortize that payback rate over the life of the contract. Under the new CRTC rules, companies must recoup their device subsidy within 24 months.

“We didn’t focus on the length of the contract, we focused on the economic relation,” CRTC chairman Blais said. “So, in effect, it’s equivalent to those asking for a ban of a three-year contract without us actually banning three-year contracts, because what we’re saying is the contract’s amortization period can only be for a maximum period of 24 months.”

Carriers can still charge early termination fees during the first two years and can also recoup any remaining unpaid subsidy during the third year as the regulations begin to cover more customers already under three year contracts. Customers who bring or buy their own device can also be charged an early termination fee up to $50 during the first two years of the contract.

Since the rules will apply only to new cellular contracts signed after Dec. 2, 2013, current customers will have to wait before the new Wireless Code fully applies to them. That means wireless carriers can lock you to the old rules if you buy a new phone before December until your contract ends or is amended.

“I think a lot of consumers, if they were thinking of going to the mall and picking up a new phone and signing a contract, they should think twice about doing so,” Michael Geist, the Canada Research Chair in Internet and e-commerce law at the University of Ottawa, told CTV News.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CBC 3-year contracts to end 6-3-13.flv[/flv]

The CBC tells you when you can rip up your three-year contract. But be careful. The new rules don’t take effect until December. Many complain cell phone service is far too expensive in Canada. (4 minutes)

Wireless carriers claim consumers may eventually pay the price for the rules changes, with some hinting they will increase the upfront price for devices or raise rates to cover the shortened window of time they can recoup a device subsidy.

“This requirement does limit consumer choice in the marketplace, and could make a customer’s up-front purchase price of a smartphone more expensive than current offerings,” said Bernard Lord, head of the Canadian Wireless Telecommunications Association (CWTA).

The CWTA also hinted rates may also increase to cover the “major technology development and costs associated with implementing and complying with the new code.”

Ken Engelhart, senior vice president for regulatory affairs at Rogers told BNN a new smartphone under the old three-year contract was typically priced at around $100. Under a two-year contract, that smartphone might cost $300 upfront.

The CRTC’s language banning overage charges for “unlimited” service does not offer consumers any relief from speed throttling. The CRTC says speed limits are acceptable as long as they are “clearly explained” in what the regulator calls a “fair use” policy.

Language that covers contract changes also leaves some wiggle room for carriers to make changes and in certain cases, even increase customer rates while the contract is in effect. The new rules specify customers must make “informed and express consent” to approve a contract change. But the rules might allow a carrier to consider those changes as accepted if a customer does not expressly complain and/or continues to use the phone after a specified deadline. Carriers can also make changes without consumer consent if they involve reducing the rate for a single service or increasing the customer’s usage allowance for a single service.

The limit of data overage charges ($50) and international data roaming charges ($100) are welcomed by most Canadians to avoid bill shock. But most wireless carriers will likely impose usage “toll booths” to avoid uncollectable customer overages. When a customer reaches their limit, they will be given a choice of having their service cut off, opting to cover the overlimit fees, or upgrade their plan.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/BNN Wireless Code of Conduct PIAC 2-11-13.flv[/flv]

BNN talked with John Lawford, executive director of the Public Interest Advocacy Centre about the things Canadians hate most about their wireless phone companies.  (February 11, 2013) (4 minutes)

Phillip “I don’t have $1 million in AT&T and Verizon stock” Dampier

Before Tom Wheeler, President Obama’s pick to head the Federal Communications Commission, can find his seat at the federal agency overseeing the nation’s telecommunications industry, he will need time to sever the extensive ties he maintains as an ex-lobbyist and investor in the companies he will soon oversee.

To avoid an even bigger appearance of a conflict of interest, Wheeler has agreed to dump at least $1 million in personal stock in AT&T and Verizon, as well as divest himself of holdings in 76 other media and tech companies including Time Warner, Comcast, Google, Sprint, Deutsche Telekom and News Corp.

Wheeler is also submitting his resignation from the board of Earthlink, an Internet Service Provider, and will also sell off his shares in that company. He will also have to step down from Core Capital, a venture capitalist investor firm with extensive holdings in the telecom industry.

In our view, Wheeler has shown he couldn’t be more of a telecom industry insider unless he also served on the board of AT&T. Wheeler’s extensive holdings depict someone who has maintained a direct financial interest in the industry for years, even after ending his leadership at the National Cable Television Association and leading the nation’s biggest wireless industry lobbying group, the CTIA.

These kinds of deep industry ties are a serious concern for the average consumer. As we’ve reported before, Tom Wheeler has said almost nothing on his blog about consumer interests, writing views from the perspective of an industry lobbyist and investor. Watching him disgorge well over a million dollars in direct investments in AT&T and Verizon — companies he’d oversee in his new role — does not ease our concern he remains a consummate insider. He is well-positioned to move back through the D.C. revolving door at the end of the Obama Administration to reinvest in the companies his tenure at the FCC could potentially make or break.

Wheeler’s appointment represents another broken promise from the Obama Administration:

“No political appointees in an Obama-Biden administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years. And no political appointee will be able to lobby the executive branch after leaving government service during the remainder of the administration.”

Not allowing Wheeler to oversee regulations or contracts with the companies who helped pay his salary and earn him a fortune from his investments would leave the new FCC chairman little to do beyond opening the mail. But of course, that campaign promise from the Obama-Biden campaign has long since been broken and forgotten by most.

Despite the clear conflicts of interest, President Obama remains fully behind his new FCC chairman pick.

“Tom knows this stuff inside and out,” Obama said.

No doubt.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Real News Obama Nominates Cable Industry Lobbyist and Campaign Bundler New Head of FCC 5-12-13.mp4[/flv]

Former FCC commissioner Nicholas Johnson blasts the nomination of Tom Wheeler, an ex-industry lobbyist and insider, for the role of new chairman of the FCC. (From: TheRealNews) (16 minutes)