Frontier Communications has announced the availability of Metro Ethernet service to a total of 55 cities in 11 states, with one Frontier representative describing it as perfect for individuals “who are serious gamers, people who download videos and those who watch TV and movies on their computers.”  Apparently Diana Anderson, technical supervisor for Frontier in Kennewick, Wash., has not read Frontier’s Washington State service tariff (5.7.7b) to understand the cost implications of signing up for the service.

Metro Ethernet falls between DSL and fiber optic connectivity, and delivers service at speeds that can approach 100Mbps or more, depending on telephone company facilities and the distance of copper between your home or business and the central switching office.  There are Metro Ethernet services that work over fiber networks, fiber-copper hybrid networks, and even traditional copper landlines — the ones Frontier uses to deliver its MetroE service.

Frontier is pitching Metro Ethernet primarily to medium and large-sized businesses who need more speed than the phone company can offer over its traditional DSL products.  The reason it’s not marketed to consumers is the cost.  Frontier’s Metro Ethernet service is included in Frontier’s tariff for Washington with an installation fee of $320 and a Metro Ethernet-Special Transport fee of $75 a month per DS1 (1.544Mbps).  Customers can get additional speed above 1.544Mbps by paying for additional DS1’s.

We called Frontier’s customer service and asked about service pricing in the Rochester area.  A residential customer service representative had to transfer us to the business products office — they do not sell “residential” Metro Ethernet.  A representative there said the service was available in several parts of Rochester, but was “completely unfeasible” for residential customers because of its cost.  Frontier DSL is the recommended solution for all residential customers in western New York, despite the fact the service does not exceed 3Mbps in our neighborhood (although it is marketed at speeds up to 10Mbps locally).

The following communities now have access to Frontier MetroE service:

• Coeur d’Alene, Idaho
• Bloomington, Carbondale, DeKalb, Freeport, Jacksonville, Lincoln, Marion and Olney, Illinois
• Elkhart, Fort Wayne, Lafayette, Richmond, Terra Haute and Valparaiso, Indiana
• Adrian, Coldwater, Mount Pleasant, Muskegon and Sturgis, Michigan
• Bryson City, Burnsville, Cherokee, Creedmoor, Durham , Hayesville, Marion and Murphy, North Carolina
• Gardnerville, Nevada
• Athens, Bowling Green, Delaware, Jackson, Marion, Medina, Troy and Wilmington, Ohio
• Beaverton, Coos Bay, Gresham and Hillsboro, Oregon
• Myrtle Beach, South Carolina
• Everett and Kennewick, Washington
• Merrill, Sun Prairie and Wausau, Wisconsin

Let us know what kind of pricing and promotions you can get from Frontier for Metro Ethernet in your area in our comments section.

Phillip "Frontier DSL is Too Slow and Expensive" Dampier

Frontier Communications occasionally sends me mailers promoting their latest offer for DSL and/or satellite service.  The price on the front of the letter looks good — usually around $20 a month — despite the fact the best Frontier can deliver my area less than one mile from the Rochester, N.Y. city line is 3.1Mbps.  But Frontier’s fine print is infamous for bill padding extra fees, charges, and service commitments that makes the out-the-door price literally higher than Time Warner Cable’s Road Runner service, which actually delivers substantially faster speed at a lower price.

I’m not alone.

Customers in several Frontier service areas are openly wondering why they should do business with the phone company when they are charging more for less service.

In Ohio, Frontier Communications competes in some areas with Buckeye Cablevision.  Frontier sells DSL Internet in northwest Ohio for $29.99 a month.  For that, customers like Inquiry receive 6.2Mbps even though they bought 7.1Mbps service.

“Their [Internet prices] are significantly higher when comparing the other providers in northwest Ohio,” Inquiry writes. “Buckeye Cablevison has 10Mbps service for $24.95/month. And they actually give the customer 10.8Mbps.”

In areas where Frontier often finds itself the only game in town, that price is downright cheap.

Frontier's "High Speed" Fantasies

Nialis in Aliso Viejo, Calif. doesn’t know what Inquiry is complaining about.  He pays $30 a month for 1.5Mbps DSL service from Frontier.

Eric McDaniel from McDavid, Fla. found small relief when he complained about the 2.2Mbps DSL service he was paying $39.99 a month to receive.

“I now pay $29.99, and that is only because I threatened to cancel my service,” McDaniel says. “Now they give me a $10 recurring credit.”

“What are you going to do when they’re the only show in town?”

Even Charter Communications, one of America’s lowest rated cable companies, has prices and service that beats Frontier hands-down.

In some Charter areas like Wausau, Wisc., Frontier DSL comes with a two year service commitment, a $14.99 monthly Wireless Router Fee, and comparatively slow service:

Frontier Communications Pricing - Wisconsin

Customers can pay $29.99 a month (before fees) for “up to 3Mbps” DSL service from Frontier or spend $29.99 and get 12Mbps from Charter:

Charter Communications Pricing - Wisconsin

So how does Frontier Communications keep offering service at uncompetitive prices?  They have much greater success in the rural markets they favor, where cable competition rarely exists.  Plus, many consumers may not understand the impact of the speed differences they receive from different providers, tending to blame “the Internet” for slowdowns more than the provider delivering the service.  Some customers may also be attracted to valuable customer promotions that include free netbooks or television sets, and forget about the fine print service commitments that come with the deal.

As dwink9909 from Clintonville, Wisc. shared on the Frontier Broadband Reports forum: “Frontier Communications Inc. is free to charge the maximum the market will bear primarily because they are the only provider in most of the areas they serve. That’s certainly true here in Wisconsin. Six miles south of me you can get dial-up service from two dozen ISPs and broadband via wireless, cable or DSL, but here there is only a single provider for telephone and broadband. We are among the “under-served” millions who are just glad to have high speed Internet at any cost.”

Frontier is only too happy to oblige.

Independent phone company Windstream this morning announced its intention to acquire business telecommunications provider PAETEC Holding Corp., in a transaction valued at nearly $2.3 billion.

“This transaction significantly advances our strategy to drive top-line revenue growth by expanding our focus on business and broadband services,” said Jeff Gardner, president and CEO of Windstream. “The combined company will have a nationwide network with a deep fiber footprint to offer enhanced capabilities in strategic growth areas, including IP-based services, data centers, cloud computing and managed services. Financially, we improve our growth profile and lower the payout ratio on our strong dividend, offering investors a unique combination of growth and yield.”

PAETEC, based in suburban Rochester, N.Y., has been a business telecommunications provider since 1998, and many of its founding employees joined the company from locally-based Rochester Telephone Corporation, its long distance subsidiary RCI, and a competing long distance competitor ACC — today all long-gone.

For residents of Rochester, the implications of the merger could literally leave a hole in the center of downtown, where construction of PAETEC’s pre-merger headquarters was just getting underway.  With the recent demolition of Midtown Plaza, what local residents today call “the big hole in the ground” could be there a long, long time if Windstream abandons construction plans.

In December, then-mayor Robert Duffy (now New York’s Lieutenant Governor) took PAETEC founder and CEO Arunas Chesonis at his word that the company’s new headquarters would be built in downtown Rochester — a project that would never have been started without substantial tax credits, loans and grants backed by New York taxpayers.

“More than three years ago, Arunas Chesonis called me on the phone and said if the City and State would demolish Midtown Plaza, he would build the corporate headquarters of PAETEC on that site,” said Mayor Duffy late last year. “Despite the worst economic downturn since the Great Depression and having endless options to locate his company, Arunas Chesonis stayed true to his word. The rebirth of downtown Rochester now has a key cornerstone to build on.”

Now those plans may be gone with the Windstream.

Midtown Plaza was demolished to make room for PAETEC's new downtown Rochester headquarters, a project which may now be up in the air. (Picture courtesy: YNN)

The all-stock deal is expected to close in six months, and Windstream hopes to capitalize on PAETEC’s extensive fiber network and data centers to bolster service to its own business customers.  The increased capacity would also deliver improved service for the company’s residential DSL customers with a more robust Internet backbone.

Windstream, based in Little Rock, Ark., has been transforming itself away from its roots as a residential landline provider into a business and broadband services company, and today’s deal is an extension of that.

The company expects to win at least $100 million in new synergies from the merger, based on reduced capital expenditures required to build out Windstream’s own network, and from reduced costs from being a larger volume player.

But Windstream is also well-known for other cost-savings, through massive job cuts at the firms it acquires.  Last June, hundreds of workers at Iowa Telecom learned that.  After Windstream’s acquisition of D&E Communications in Pennsylvania, nearly 80% of D&E’s employees were shown the door.

For nearly 5,000 PAETEC employees, almost 900 of which live and work in Rochester, updating resumes may have just become job number one.

That’s ironic for a company whose founder wrote his own book: It Isn’t Just Business, It’s Personal: How PAETEC Thrived When All the Big Telecoms Couldn’t.

The first chapter is called “Putting People First,” and explains how the management of PAETEC recognizes the value its employees bring to the company: “Success in business begins and ends with people: the people you hire, the ones you partner with, and the ones you serve as your customers.”

Employees this morning may be wondering if Windstream shares Chesonis’ philosophy.

On this morning’s conference call, Windstream executives spoke about efforts to identify and preserve talented members of PAETEC’s executive management team as part of the newly-expanded company.  They had nothing to say about rank and file employees.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WHAM Rochester PAETEC Deal 8-1-11.mp4[/flv]

WHAM-TV spoke with George Conboy of Brighton Securities about this morning’s merger announcement, and the major implications the deal will have on PAETEC’s home base — Rochester, N.Y.  (5 minutes)

Here in western New York, the impact of more than two years of deep recession has delivered record high unemployment, wage freezes and cuts for many still holding onto middle class jobs.  Only now does it appear that the wage deep freeze is slowly coming to an end.

The Rochester Democrat & Chronicle notes total wages earned in the nine-county Rochester/Finger Lakes region for the first nine months of the year were up 2.2 percent over the same period in 2009, according to state Labor Department figures.

But while things are incrementally improving for worker bees, many of America’s corporate “queen bee” executives have maintained compensation packages that would leave one to believe the United States is enjoying double digit growth and a blazing economy.

CEO pay at large U.S. companies has risen from 80 times as much as rank-and-file workers made in 1970 to more than 260 times what they made in 2009.

Stock market gains — the S&P 500 index rose almost 13 percent in 2010 — and improved profitability were key reasons why many executives made more last year than they had in 2009. Of the 86 executives on the Democrat and Chronicle list for both 2009 and 2010, compensation increased for 66.

Take Time Warner Cable CEO Glenn Britt.  He spent much of June talking up raising broadband pricing on his company’s customers, many of whom live in upstate New York.  While Time Warner has faced challenging economic results in their core cable television business, one would never know it from Britt’s newest compensation package, handing him a 25 percent pay raise and another $2 million in his non-stock incentive pay.  That’s a pay package worth almost $10 million dollars.  The D&C notes four other Time Warner Cable executives listed in the company’s proxy statement made from $1.2 million to $3.8 million.

Phillip Dampier

Time Warner Cable has completed their DOCSIS 3 upgrade of the Rochester/Finger Lakes region and their new Road Runner Extreme and Wideband services should now be available throughout the region.  Stop the Cap! HQ will receive its upgrade to Road Runner Extreme late this afternoon, primarily for the 5Mbps upstream speed, which will make uploading content to our servers much easier and more efficient.

The cable company is insistent on their installation fee, which amounts to nearly $68 (unjustified in my personal opinion).  Some details for our local readers:

• Customers in the Rochester & Finger Lakes region almost never own their own cable modems — they are provided with Road Runner at no extra charge;
• Upgrading to Extreme or Wideband will mean either a modem swap or a second piece of equipment if you have Time Warner phone service.  The new equipment includes a built-in wireless router;
• You are not obligated to use the cable company’s equipment as your primary router if you favor using your own existing router;
• As part of the installation fee, you have a right to insist they spend the time to configure service the way you want it, especially if you want to continue using your own router;
• It is also a good time to ask them to check signal levels and clean up any wiring or service issues.  Western New York has endured a record-breaking deluge of rain this spring, and degraded outdoor wiring can create havoc for broadband and cable service.
• If you are currently receiving a promotion such as free or discounted Road Runner Turbo service, you will lose the value of that promotion when you upgrade service and will pay full price going forward.

Beyond the installation fee, Road Runner Extreme (30/5Mbps) costs $20 more than Road Runner Standard (10/1Mbps) service.  Road Runner Wideband (50/5Mbps) is priced at $99 a month, but is a much better value bundled with the cable company’s Signature Home ($199) package, which includes complete packages of digital cable, “digital phone,” and broadband service.  For most in the Rochester/Finger Lakes area, the only alternative is Frontier Communications’ DSL combined with an unlimited calling plan and satellite television or a similar package from Verizon or much smaller Windstream.  Verizon’s fiber to the home service FiOS is not available anywhere in this region.