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Unfair Tax Policies Disadvantage New Fiber Competitors, Harm Broadband Expansion

Providers attempting to wire rural communities to offer broadband service or a competitive alternative to cable and phone companies face unfair tax and pole attachment fees that often give the advantage to existing companies and deter would-be competitors.

Those differences have a meaningful impact on rural broadband providers in states like New York, where wiring rural upstate communities is being made difficult by bureaucratic pole attachment fee policies and wide differences in property taxation that give an edge to existing cable giants like Charter Communications while hampering small start-ups with costly and confusing tax policies that slow down broadband rollouts. For businesses navigating these complex tax challenges, expattaxthailand.com offers expert advice to simplify the process and ensure compliance.

The Watertown Daily Times recently published an in-depth special report on the broadband challenges impacting northern New York, where fast internet access has evaded some communities for more than two decades. That lack of access is becoming a critical problem for a growing number of employers who are now considering exiting those communities because companies like Verizon, Frontier Communications and Charter/Spectrum are refusing to provide 21st century broadband service in rural upstate communities.

One example is Tupper Lake Hardware in Tupper Lake, N.Y., which wanted to expand, but considered exiting the area instead after being stuck using satellite internet access because no phone or cable company offered broadband service in the area.

“It came to the point where if you are going to make a $1 million investment, we actually talked about this, we said ‘do we put our money into this place or do we just pick up and move?’” general manager Chris Dewyea told the newspaper. “It is real. It sounds dramatic, but that is the way it goes. The connectivity speed that we had with satellite internet was not good enough, so that is when we started on our journey to get high-speed here.”

Calling Verizon, Frontier, or Spectrum was fruitless, so the company picked up the phone and called… the Empire State Forest Products Association, a group that has tangled with internet connectivity problems in upstate New York before. The group pointed the company to Slic Network Solutions, owned by the independent Nicholville Telephone Company, which has spent the last several years slowly expanding the reach of its fiber optic network in the north country. Slic currently provides service to about 10,000 homes in small communities like Belmont, Lake Placid, Schroon Lake, and Titus Mountain.

Like many fiber overbuilders operating in New York, Slic has to plan its network expansion carefully, as it lacks the financial resources and staff of a company like Verizon or Charter. Slic’s fiber service is in very high demand, because the alternatives are almost always satellite internet access or appallingly slow DSL service from Verizon or Frontier, neither of which have shown much interest in delivering the FCC’s 25Mbps definition of broadband. Charter’s Spectrum service is available only in larger concentrated communities that can meet the cable company’s return on investment property density test. Many rural upstate communities don’t.

“In most of the places, there really was the option of satellite. Some places had DSL but it was usually pretty marginal,” said Kevin Lynch, vice president of technical operations & chief operations officer of Slic Network Solutions. “There are a few areas, but very limited, that might have had Spectrum.”

Slic is one of several small fiber providers operating in New York, each trying to cover territories larger phone and cable companies have ignored for years. Cooperation in commonplace among some companies operating in similar regional areas to keep construction and operating costs down. Some providers share their networks to extend their reach. Most target commercial or institutional users but will lease out their networks for residential providers. Some of the state’s middle mile fiber networks were built with economic stimulus money or through other grant or government programs. Others are privately funded. Many are underutilized but lack the funds to expand.

Westelcom, based in Watertown, counts Slic as one of its partners. Westelcom currently limits its business to commercial accounts in its six county service area, which includes Watertown, Malone, Clayton, Elizabethtown, Ticonderoga and Plattsburgh. But it is willing to provide wholesale access to third-party companies that want to serve residential customers.

One of the biggest and most surprising impediments to serving “last-mile” residential customers isn’t the cost of construction or the return on investment. It’s New York’s tax laws. Current tax policy requires fiber providers to pay taxes on the value of the infrastructure being used, regardless of revenue. At present, that tax rate can cost between $25,000 and $30,000 per fiber route mile. If it takes five miles of fiber to reach only a half-dozen homes, the provider would owe New York over $100,000 in taxes alone, making it impossible to recoup costs and drain the provider’s finances.

The National Conference of State Legislatures, a bi-partisan group, published Property Taxation on Communications Providers: A Primer for State Legislatures in 2015, outlining a legacy of inconsistent and often outdated state and local taxation policies across the United States that treat communications providers differently on issues like property tax. The group points out New York’s tax authorities treat cable and phone companies very differently than upstart fiber providers. Mobile phone companies are taxed differently as well:

The taxation of communications property varies widely in New York. There are several types of property taxes that are applied in varying ways to the communications sector. While New York does not generally tax tangible personal property, the state considers lines, wires, poles, electrical conductors, fiber optic equipment, and related equipment to be real property. Landline companies and cable companies are subject to a real property tax on “Special Franchise” property which is centrally administered and assessed using the reproduction cost method by the Office of Real Property Tax Services (ORPTS). The Special Franchise property tax applies to equipment located on public property. In addition, Nassau County and New York City have a “split roll” which  requires higher taxes on the “utility” class which includes landline telephone companies. Wireless companies and cable companies are assessed locally for their real property (land and buildings,  e.g., towers)

In plainer English, Lynch points out Slic is taxed about $465 per mile per year in St. Lawrence County, which is “significantly higher” than what cable companies like Charter pay, because they are taxed differently.

In the college town of Potsdam, Slic pays more than double the school and property taxes paid by Charter Communications, even though it serves fewer customers and earns much less. That disparity forces providers to target their networks in more dense areas like inside towns and villages, which means more customers per fiber route mile, reducing the bite of the tax man.

“Broadband infrastructure is considered real property, so it is taxed just like a house when it is in the right of way. So when we attach to these poles which are in the public right-of-way, we pay taxes on it and it is based on construction costs,” Lynch added. “There are a certain number of customers we have just to break even on those two operational costs and that does not include any of the other overhead and the content, the electronics and all that.”

After paying New York, Slic then faces the bureaucratic challenge of pole attachment permitting and fees. Every pole on which Slic attaches its fiber wiring is owned by someone else, typically utility companies like National Grid, Verizon, or Frontier. Some poles are jointly owned and maintained by the phone and electric company in the area. Fees and procedures vary in different parts of the state. There is generally a very costly pole attachment application fee and ongoing pole rental fees, which in this part of New York can run $400 a mile, per year.

Lynch said the costs of pole attachment fees alone can account for up to 40 percent of Slic’s expansion budget, and those initial fees can run between $10,000-14,000 per mile. This is why fiber overbuilders frequently decide on coverage areas based on customer commitments to sign up for service if it becomes available. This allows companies like Slic to secure the financing required to provision the service. But money alone doesn’t buy instant access.

“We apply to National Grid or whoever the pole owner is and say, ‘We would like to attach to these 30 poles on this road,’ and do a pole application and pay a fee,” Mr. Lynch explained to the newspaper. “They come out, they look at each pole and they determine if there is space on the pole, do they need to rearrange the electrical wires so they are in compliance with the electrical code, do they need to move down the phone lines. A lot of times these poles are jointly owned. It will be National Grid and Verizon, so they have to coordinate and then there might be a section that has Spectrum on it, so you have three or four companies that have to coordinate this effort.”

The state adds its own layer of bureaucracy with different Department of Transportation regions, regional economic regions, and Department of Environmental Conservation regions, each with its own rules and procedures. It is common for fiber projects to cross from one region into another, requiring additional paperwork and likely delays. If a project has to cross into the Adirondack Park, the rules and permits required to manage that are byzantine.

The result of all this is usually a significant delay in getting started, but once the paperwork is complete and fees are paid, the work can go faster than many realize.

“In these areas where we are constructing right now, Schroon Lake and Belmont and Lyon Mountain, we are building three to five miles of fiber per week. Our next group of projects that has been funded by New York state is 300-plus miles of fiber,” Lynch said. “And when I say three to five miles per week, that is per area.”

Fiber providers would like to see tax fairness and a lot less bureaucracy. The rules in states like New York may eventually leave fiber to the home service at a distinct disadvantage, because wireless networks don’t face pole attachment complications and pay lower taxes because their real property is generally a cell tower and the fiber line that connects to it. As it stands, some internet providers may gravitate towards wireless internet solutions in rural areas instead of fiber just to avoid excessive taxes and the pole attachment bureaucracy. Most homes and businesses prefer fiber optic service when given a choice, but without some changes to tax laws and a more centralized, less bureaucratic approach to pole attachments, fiber optics may never make financial sense in rural upstate New York.

Michigan’s Michele Hoitenga Kills Her Own Broadband Ban Bill; Chamber of Commerce Objected

Hoitenga

In what must be a new speed record, Michigan’s Republican state Representative Michele Hoitenga introduced and then effectively pulled support for her bill that would have banned community broadband initiatives across the state.

Introduced Oct. 12, the bill succinctly banned any use of public funds to construct a municipal internet alternative to the phone and cable companies. The bill came under immediate criticism for its content and accuracy, erroneously transposing speeds of a “qualified internet service” as one offering at least 10Mbps upload speed and 1Mbps download speed.

Hoitenga claimed the sudden interest from telecommunications companies that began donating to her campaign in this election cycle ($2,500 from Telecommunications Association of Michigan, $1,500 from AT&T Michigan, $500 from Comcast Corporation & NBC Universal, $500 from Michigan Cable Telecommunications) had nothing to do with her bill and would not have impacted her vote.

“I’ve got to be a voice of the people,” she told Cadillac News, adding she introduced the bill because she wanted to start a conversation. But after her constituents and the media (including Stop the Cap!) started asking questions, Hoitenga banned and blocked several reporters from her Twitter channel and wrote on her Facebook page that she had received death threats and profane phone calls about her bill.

Hoitenga also faced criticism from consumer groups and public policy organizations for attempting to eliminate a rural broadband solution for large rural areas of the state with inadequate service.

As quickly as the bill was introduced, its author declared it effectively dead because members of her area’s Chamber of Commerce objected to the bill’s wording.

“I really respect the chamber,” she told the newspaper, explaining that she will now not hold hearings on the bill, which will effectively kill it.

Mich. Lawmaker Seeks Ban on All Community Broadband Networks (And Blocks Stop the Cap!)

Rep. Michele Hoitenga (R-Manton) doesn’t care much for community broadband, so she introduced a bill in the Michigan legislature that is as stark as it is short:

House Bill 5099:

The bill is remarkable for its brevity — most proposed community broadband ban bills avoid outright bans, preferring to use forced complicated referendums or operational limitations that usually make municipal broadband projects untenable. But Rep. Hoitenga’s bill leaves no doubt she wants private cable and phone companies left unmolested by publicly funded alternatives. Although the Michigan Republican chairs the House’s Communications and Technology committee, she appears confused about the difference between upload and download speeds. Her bill would define a “qualified” internet service as one offering at least 1/10Mbps service. Yes — 1Mbps download speed and 10Mbps upload speed.

Ars Technica’s Jon Brodkin asked Rep. Hoitenga about the oddity of the language in her bill:

When asked about this on Twitter, Hoitenga said she would have to “speak with the attorneys who wrote the bill” to determine whether the listed speed was a mistake. “I will speak with the attorneys who wrote the bill. They changed the language I submitted but will ask why they changed it,” Hoitenga wrote.

Rep. Hoitenga

Rep. Hoitenga used her Twitter account to promote and defend her bill, pointing out the district she represents had “37 providers” to choose from — a fact she gleaned from an online AT&T Yellow Pages directory. Stop the Cap! investigated that claim and found the majority of the providers cited did not offer internet access to members of her district, provided service only in adjacent communities, or sold commercial internet services to businesses only. In fact, for the overwhelming majority of her constituents, there are only two providers to choose from — AT&T or Comcast. Both are top donors to Rep. Hoitenga’s campaign, but more on that later.

Michigan has never been a hotbed of community broadband initiatives, despite having uneven broadband service in suburban and rural areas across the state. Michigan law already includes several significant roadblocks for public broadband projects, notes Lisa Gonzalez from the Institute for Local Self-Reliance:

“Michigan already has a significant state barrier in place; municipalities that wish to improve connectivity must first appeal to the private sector and can only invest in a network if they receive fewer than three qualifying bids. If a local community then goes on to build a publicly owned network, they must comply with the terms of the RFP, even though terms for a private sector vendor may not be ideal for a public entity.

“Nevertheless, several communities in Michigan have dealt with the restrictions in recent years as a way to ameliorate poor connectivity. They’ve come to realize that their local economies and the livelihood of their towns depend on improving Internet access for businesses, institutions, and residents.”

Although Rep. Hoitenga’s bill offers the possibility for “public-private” partnerships, her bill would bring a significant chilling effect because the proposed law fails to define how such partnerships should be structured.

Rep. Hoitenga told Stop the Cap! the bill would put a stop to tax dollars being spent on broadband service, something she felt was unwarranted. We asked the Michigan representative, “Did you know the phone and cable companies receive taxpayer subsidies already in the form of PILOT agreements, and other incentives?” which received the non-sequitur response that her office’s phones were ringing constantly with callers praising her new bill.

But that isn’t what Rep. Hoitenga told her Facebook fans.

“Many individuals have reached out to my office in regards to HB5099; with the belief that I am attempting to limit broadband expansion,” Hoitenga wrote. “This could not be further from the truth. One of my main goals as the Chair of the House Communications and Technology committee is to make internet access more easily obtainable. This legislation does indeed prevent cities from using tax dollars to subsidize ISPs; especially without a vote of the people. While at first glance government operated networks may sound like a good idea, the argument in support of them crumbles with an in depth look into the financial and long-term investment side of implementing such a network.”

So we remain unsure if the wave of phone calls Hoitenga referenced were in support of her proposed bill or opposed to it. Either way, the Michigan representative mischaracterized her own three-paragraph bill by claiming it would prevent cities from using tax dollars for internet service, “without a vote of the people.” But no provision for such a vote exists or would be allowed by her existing bill. Hoitenga’s bill also clearly makes internet access less obtainable, especially in communities where a for profit provider does not exist and a community is seeking to provide an alternative.

Hoitenga later states communities may not need to worry about internet accessibility because, “there is also a package of bills in the senate regarding Small Cell Technology (which also attempts to reduce barriers),” she wrote. That provision is backed by AT&T, which is currently one of the two ISPs serving her district.

She then picks up familiar talking points distributed by public broadband opponents:

“There are examples throughout the state and nation of taxpayers being on the hook for failed networks. There is also concern that some of these networks are in towns where employee pensions are severely underfunded, causing layoffs and cutting services, yet there seems to be money for high risk broadband investments. It’s time to address these issues.

“My colleagues and I have introduced legislation that aims to remove some of the current barriers (HB5096-5098), and help streamline the broadband expansion and installation process for private providers. Municipalities should not be allowed to push out the free markets with unlimited tax payer resources and unfair advantages but could partner with providers to offer fiber for expansion to unserved areas.”

She also cited a 2017 study critical of municipal broadband networks authored by University of Pennsylvania Law School Professor Christopher Yoo and co-author Timothy Pfenninger. Neither author or Rep. Hoitenga disclosed the group that produced the study is funded by AT&T and Comcast, among other large telecom companies and their respective lobbying organizations.

After opening a dialogue with the Michigan representative, she did not take kindly to questions or criticism about her bill, and summarily blocked Stop the Cap! from seeing her Tweets or communicating with her further — the first time anyone has blocked our group on Twitter. Shortly after that, she changed her Twitter channel to be viewable by invitation only, limiting her potential audience to her 284 current followers. At the moment, the only social media outlet that seems to be still open to communicating with Rep. Hoitenga is Facebook, where she is taking heat from her constituents about her bill.

The Michigan representative has been behind several controversial bills introduced in the current session of the Michigan House, including a proposal to allow concealed pistols to be carried in public and a ban on Sharia law being practiced in the United States.

Her top donors for the current legislative session include:

#2 – Telecommunications Association of Michigan PAC, $3,000
#4 – AT&T Michigan, $1,500
#11 – Comcast Corp. & NBC Universal, $500

Verizon Wireless’ Great Rural Purge: Tens of Thousands Losing Cell Service

Herding rural customers off Verizon Wireless.

Nearly 20,000 rural Verizon Wireless customers in states like Maine, Michigan, North Dakota, and Montana are being notified their cell service is being terminated because they spend too much time roaming outside of a Verizon Wireless coverage area.

Verizon Wireless won’t say exactly how many customers it recently sent letters to advising them that because they have used “a significant amount of data while roaming off the Verizon Wireless network,” their service will be terminated Oct. 17.

“We’re providing advance notice to these customers so they have plenty of time to port their wireless number to another company before their Verizon Wireless service ends,” Verizon spokesperson Laura Meritt stated. “We regularly review accounts with data use that primarily takes place outside of the Verizon network.”

Verizon denies reports as many as 19,000 customers are losing service as a result of the purge, but their representatives are routinely quoting that number to customers and officials calling Verizon to complain.

Customers have no recourse and if they don’t port their number to another service provider by the termination date, their number will be disconnected and lost for good. The only good news? Verizon wants to disconnect customers so badly, they are willing to forgive the remaining owed balances for any devices financed through Verizon.

Maine

In Winter Harbor, many Verizon Wireless customers reportedly received the same letter, including the town’s police chief Danny Mitchell, who is concerned about the impact Verizon’s decision will have on local public safety.

“From a public safety standpoint, a lot of our 911 calls come in via mobile phone. And when you have less towers or less service to ping off from, then your area of location, instead of getting more specific in the location, is gonna get wider,” Mitchell told WLBZ-TV in Bangor.

Maine’s Public Advocate is concerned as well, and noted this is what happens when unfettered deregulation of telecommunications services give providers the right to terminate any customer for any reason.

“The Office of the Public Advocate is concerned about the well-being of all Maine residents,” the agency wrote. “This loss of wireless communication underscores the importance of our landline network to ensure that individuals can contact public safety officials in the event of an emergency.  Verizon’s actions raise new concerns that areas once deemed a competitive marketplace for telecommunications will once again be served only by their landline provider.  This possibility should be considered as the de-regulation of landline telephone continues throughout the state.”

Public Advocate Barry Hobbins thinks it all comes down to money.

“Because it’s not cost-effective for them, now they’re going to pull the plug — and basically pull the plug on 2,000 customers — then that becomes an issue,” he says.

The decision to terminate an estimated 2,000 customers in rural Maine alone is especially stinging to residents, public safety officials, and community leaders because they bent over backwards to get Verizon Wireless to expand its coverage area in the state.

In 2015, communities in Washington and eastern Hancock counties joined forces to make life easier for Verizon in return for expansion of cell service in the region, quickly approving more than a dozen new cell towers adjacent to well-traveled Routes 1 and 9.

Mitchell said residents are more than a little annoyed that Verizon is kicking them off after all that they’ve done for the company.

In 2015, the Finance Authority of Maine (FAME) insured, at the public’s expense, a $3.4 million loan for Wireless Partners, LLC of Portland to enhance Verizon’s 4G LTE network with up to 32 new cell towers for those counties.

FAME Board Chair Raymond Nowak said at the time, “It is our hope that the planned communication improvements by Wireless Partners will support business expansion, emergency services, and the tourism industry in Maine. Such partnerships are a key part of FAME’s strategy to support infrastructure that enables the success of other businesses.”

“We are pleased to be partnering with FAME and Mechanics Savings Bank on this important project,” added Bob Parsloe, president and CEO of Wireless Partners, LLC. “This project will make it possible for people who live, work and recreate in Downeast Maine to have reliable 4G LTE broadband and voice cellular service that allows them to be connected like the rest of the world.”

Not anymore.

“[People are] going to come out their door every day, look at a cellphone tower and say, ‘Hey, I can’t connect to that because Verizon won’t let me,’” Mitchell said.

Letter from Verizon Wireless terminating service for “excessive roaming.”

In fact, Verizon Wireless customers who don’t live in the area, along with customers of other wireless companies who happen to be roaming while traveling, will be able to use those cell towers while former local Verizon Wireless customers cannot.

Law enforcement and public safety officials feel a little bait-and-switched by the decision.

Sheriff Curtis

Washington County Sheriff Barry Curtis says his department is still trying to wrap their heads around what Verizon Wireless is doing. But he seems confident it could adversely affect the department’s ability to stay in touch with law enforcement officials and respond quickly to calls. The decision could, in his view, set back the county several years.

“It’s kind of difficult sitting in this seat as far as being the sheriff here,” he says. “I’m in contact with the commissioners. I’m hoping that they’re going to be stepping up to the plate here, assisting us in this too — filing their complaints. We’re going to need all the help we can get here.”

With a chorus of complaints across rural Maine, officials at Wireless Partners have launched their own damage control effort to point the finger of blame at Verizon Wireless, and claim they had no idea the wireless company was pulling the plug on so many customers.

“Access to 4G LTE is an essential 21st century infrastructure need and it is the mission of Wireless Partners to meet that need in rural, underserved areas of Maine and New Hampshire,” said Wireless Partners CEO Bob Parsloe. “To that end, Wireless Partners built, owns, operates, and is expanding a Verizon Wireless 4G LTE network in Downeast Maine. Along with our network users, we were blindsided to learn that Verizon Wireless mailed subscription cancellation notices to their customers on this network. Wireless Partners was not given advance warning that Verizon Wireless was planning to restrict new customers nor terminate existing customers. We were only made aware of this development from concerned Verizon Wireless customers who were in receipt of the cancellation notification.”

Parsloe did hint at what is motivating Verizon to drop its own customers.

“Verizon Wireless did ask Wireless Partners to assist them in reducing the contractually agreed costs of using our networks,” Parsloe added. “Wireless Partners promptly informed Verizon that it was ready to address their concerns. At no point during this dialogue, which continues in earnest, did Verizon Wireless indicate to us their intent to restrict new customers and cancel current customers.”

Maine’s Public Advocate believes Verizon’s resumption of its unlimited data plan is probably costing the company more than it anticipated in roaming data charges levied by third party cooperating providers like Wireless Partners. In rural areas, private companies and independent providers often lease their networks to larger cellular companies like Verizon to enhance rural coverage and avoid exposing customers to punitive roaming charges. As far as customers are aware, they are using Verizon’s home network and there are no indications on their devices they are roaming.

Hobbins adds Verizon is doing this “all over the country” and residents in Maine — with large expanses of rural areas, are just among the first to react. But it annoys him that Verizon is implying in its letters that customers are doing something wrong. In fact, he says, they were simply using the service plan that Verizon sold them.

“It appears that Verizon induced these companies to build out in the rural areas around the country and then significantly promoted it by saying that they’re covering the rural areas when it fact now after putting those ads out, they’re now not covering the rural areas — in fact, they’re cutting it back,” Hobbins said.

Michigan

Tuscola County, Mich.

In mid-Michigan, customers are also getting termination letters from Verizon Wireless. In Tuscola County, Frank Rouse says he routinely spends $275 a month on four lines with Verizon Wireless and has been a customer for years. But Verizon is kicking him to the curb.

“I was pretty livid. I called customer service and I wasn’t real pleasant with them,” Rouse said, claiming he was furious when he opened the letter. “Why not do something proactive and maybe put up a tower in the area or something to keep the customers and draw in new customers.”

Mid-Michigan residents already have just a few choices for cell service, and now there is one fewer.

For Jamie Hay, it isn’t all bad news. He will lose his Verizon Wireless account but scored more than $3,600 in free phones and tablets he acquired for his family of six just two weeks before getting the letter.

“I made one payment and now I get to keep everything for free because Verizon is closing my account, voiding my payment plans and reporting all devices as now effectively paid in full,” Hay tells Stop the Cap! “Thanks to every other Verizon Wireless customer for covering my fabulous new phones and iPad!”

WNEM-TV in Michigan reports some customers are furious about being terminated by Verizon Wireless, and the company isn’t saying much. (1:32)

North Dakota

SRT Communications’ coverage map in North Dakota.

At least several hundred customers were notified across North Dakota that their Verizon Wireless service would also be terminated on Oct. 17. For many, once Verizon is no longer an option, cell service is no longer an option. Customers tell Stop the Cap! northern parts of the state are already reeling from North Dakota-based SRT Communications’ decision to exit the wireless business after 20 years. The company said it can no longer compete against larger companies like AT&T and Verizon and lack the resources to continue upgrades.

Customers are being encouraged to switch to Verizon Wireless, and Verizon has bought SRT’s spectrum and promised to improve coverage as part of the deal. But now some customers have been told they will not be able to keep their SRT service or Verizon Wireless much longer.

Montana
“Dropped like a bad habit,” as he put it, Kyle Wasson is among an unknown number of Verizon Wireless customers in Montana losing their Verizon service on Oct. 17.

Wasson, who was nearing a decade as a Verizon Wireless customer, is now no longer wanted, according to the letter he received: “We will no longer offer service for the numbers listed above since your primary place of use is outside the Verizon Wireless network” and “we discovered you are using a significant amount of data while roaming off the Verizon Wireless network.”

Northern Montana

Wasson had switched to Verizon’s unlimited data plan which he suspects might have had something to do with Verizon’s decision. Wasson doesn’t have many options in the town of Loring, 15 miles south of the Canadian border.

Neither does Brandi Horn in Harlem or Sue Hagen of Scobey — also told their Verizon service was being terminated next month.

“There is no better service in rural Montana than Verizon,” Horn said. “It’s going to be hard finding an affordable and high-coverage service now.”

LTE in Rural America (LRA) Program Implicated in Disconnections

Observers suspect the crackdown on rural roaming is primarily affecting customers served by the 21 partners Verizon has enrolled in its (LRA) program.

Under the program, LRA members lease Verizon’s 700MHz Upper C Block spectrum. Partners have access to Verizon’s network vendors and discounts and can sell the same equipment Verizon offers its customers in their stores. But the 21 companies are responsible for financing and building their own networks and can sell service independent of Verizon. In return, Verizon customers can “roam” on those networks as if they were still within Verizon’s home network. Verizon’s partners gain access to resources to build out their own LTE 4G networks and have a certain amount of effectively guaranteed traffic from Verizon customers in their service areas.

Verizon has leased out LTE spectrum covering 225,000 square miles in 169 rural counties in 15 different states. The company said more than 1,000 LTE cell sites have been built and switched on through the program, covering 2.7 million people.

But Verizon does not have the capacity to throttle or deprioritize traffic on third-party networks, meaning customers enrolled in an unlimited data plan can use as much data as they want on partner networks. There is a strong likelihood Verizon has to compensate those providers at premium rates for network traffic generated by their customers.

That means customers are at the highest risk of being disconnected if they are on an unlimited data plan and use their Verizon devices in areas served by these providers — all participants in the LRA program:

Bluegrass Cellular; Cross Telephone; Pioneer Cellular; Cellcom; Thumb Cellular; Strata Networks; S and R Communications; Carolina West; Custer Telephone Cooperative; KPU Telecommunications; Chariton Valley Communication Corporation; Appalachian Wireless; Northwest Missouri Cellular; Chat Mobility; Matanuska Telephone Association; Wireless Partners; Triangle Communications; Nemont; Mid-Rivers Communications and Copper Valley Telecom.

Deutsche Telekom: We’ll Build a Nationwide Fiber Network If You Let Us Monopolize It

German Chancellor Angela Merkel examines fiber optic telecommunications cables.

Germany has an internet access problem not very different from the one afflicting the United States and Canada. The national phone company, still partly owned by the government, remains mostly dependent on a decades-old wireline telephone network to deliver landline and DSL broadband service. The only way Deutsche Telekom will invest adequately to replace it with optical fiber is if they get assurances from the federal government they will be allowed to monopolize access to it.

According to the business weekly WirtschaftsWoche, a sister publication of Handelsblatt, Telekom executives have agreed to build a fiber-optic network everywhere in Germany provided that it is excluded from European anti-monopoly rules so that Deutsche Telekom wouldn’t be forced to open its network to competition.

The proposal from the German telecom giant was particularly audacious because many in the country blame it and its uncompetitive behavior for creating Germany’s slow broadband problem, but that did nothing to stop the company from asking to be shielded from competition.

“A fundamental departure from the kind of logic that viewed regulation of Deutsche Telekom (DT) as the normal state in the last 20 years is urgently needed,” the company said in a filing with the German Federal Network Agency, which regulates the internet in the country.

For most Germans, DT is the problem. The phone company has proven itself a formidable competitor across many parts of eastern Europe, where it bought control of privatized telecommunications companies that used to operate as government monopolies. But back home in Germany, it has been happy to continue offering DSL service that the rest of Europe cannot get rid of fast enough. In certain larger cities like Munich and Cologne, upstart fiber to the home providers have filled the broadband gap and have wired significant parts of both cities, and DT has responded with a fiber offering of its own without complaining about the cost of building a fiber network or the return on its investment.

Oberbürgermeister Wolff

But in smaller towns and villages across Germany — particularly in the eastern states, broadband has been terrible for years and under DT’s “leadership” it has not gotten much better, allowing other countries in the EU to sail past Germany in broadband rankings. Like AT&T and Verizon in the U.S., DT claims that where it has not upgraded its network, there is either no demand for fiber fast internet speed or inadequate return on investment. Also like in the U.S., DT has spent its money on other technologies, notably wireless, while investment in landline networks has not kept up.

Some German communities like Bretten, fed up with inaction, have taken charge of their own broadband future and are building their own fiber to the home networks. Martin Wolff has dreamed of a digital economy boost for his town of 28,000 located near Karlsruhe in western Germany.

As mayor, he has begged and pleaded with DT to give Bretten something beyond lackluster DSL service, which is now too slow to handle the kind of 21st century internet applications that better wired communities take for granted. Mayor Wolff wants Bretten known as a gigabit city. DT, in contrast, wants to leave Bretten as a forgotten digital backwater. The phone company had repeatedly told the community the broadband it gets now is more than good enough and nobody should hold their breath waiting for something better. DT’s few competitors, including Britain’s Vodafone, weren’t interested either. Bretten is too small… too… irrelevant to matter to their investors.

“They are only interested in serving the cream of the crop in the cities and don’t come to rural areas,” the mayor said.

Like in North America, Germans are asking themselves who should be in charge of their digital future — investor-owned telecom companies or the community itself. The country’s continued embarrassing showing in European broadband rankings has become an issue of national pride and has sparked a loud debate between established telecom companies and the public that wants faster and better broadband.

The noise of the debate has attracted the politicians, and the issue of German broadband has now taken center stage in the parliamentary elections, which will be held Sept. 24. Handelsblatt reports the issue of inadequate broadband now interests German voters more than the latest economic policy position paper or how Germany will manage to deal with U.S. President Donald Trump for the next three years. Many Germans have plenty of time for these kinds of offline debates, because online, it can take a minute to load a webpage on some of the country’s dial-up like DSL connections.

“Germany is one of the most under-supplied countries in Europe, especially in terms of rural coverage,” wrote Bernd Beckert, an internet expert at the Fraunhofer Institute for Systems and Innovation Research, in a recent study of European broadband. He said countries such as Switzerland, Spain and even tiny Estonia are far ahead of Germany. In fact, the Baltic states and many former Eastern bloc countries are moving towards a fiber future while Germany considers wrapping itself even tighter in copper wiring installed in the 1960s. More than 70% of German internet users get internet access through a DT-provided, ADSL-equipped landline. Many connect at just 1-6Mbps, about the same speed users were getting in the late 1990s when DT’s internet monopoly was abolished.

Since then, DT has done everything possible to encourage “competitors” to not build competing networks. In fact, most competing ISPs like 1&1, Versatel, Telefonica Deutschland, and Vodafone rent DT DSL-capable landlines to provision service to their customers. That means they cannot compete on speed and they are forced to rely on DT to maintain its wireline network. It is no accident that German adoption of fiber optics is stuck at only 1.8%, fifth from last place among the 35 member states of the Organization of Economic Cooperation and Development (OECD). In comparison, Japan and South Korea have more than 70 percent of their customers on fiber to the home connections.

Germany’s largest political parties that have been in government since 2005, the Christian Democratic Union (CDU) and the Christian Social Union in Bavaria (CSU) have tolerated DT and its anemic upgrade policies. Broadband stagnancy, many believe, would not be possible without acquiescence and appeasement by those in control of the country. That conspiracy theory is backed by many of Germany’s smaller political parties which believe it is time to change the government’s involvement with DT.

The Left Party’s platform supports nationalizing DT and returning it to a state-owned enterprise that will answer to the public policy priorities of the next government. The capitalist, pro-business Free Democratic Party wants to get the government completely out of its 32% remaining stake in DT and hope that free market solutions will emerge. In the meantime, that party proposes to use the proceeds of any sale to fund a national broadband subsidy fund to convince private telecom companies to upgrade their networks in underserved areas.

DT has not stayed quiet in the public policy debate either. After disappointing the German public by rejecting a proposal to build an open, nationwide fiber to the home network, the company has instead promised to upgrade existing DSL lines to newer technologies like VDSL and vectoring, which DT claims could deliver up to 100Mbps service. American phone companies like Verizon have been reluctant to head in a similar direction, admitting many of the next generation DSL technologies work better in the lab than in the field. Many of the technologies promoting the most dramatic speed improvements have also proved to be vaporware so far.

Deutsche Telekom HQ Bonn, Germany

“We are committed to vectoring, because it is the only way to provide people in rural areas with faster lines quickly,” Deutsche Telekom said in a blog post published in August. “If we are fixated on [fiber to the home], those in the countryside will remain left behind for years. It is simply impossible to roll out fiber lines to homes everywhere in the country. Neither the construction capacity nor the funding is available for that. Plus, there is quite simply no demand for it.”

Some of the other competitors in the market seem to agree with DT.

“No provider can achieve fiber optic expansion on its own,” said Valentina Daiber, a member of the board of Telefonica. Daiber said DT was already nearly $60 billion in debt. Daiber said she hoped a solution could be found after the election.

But just a week after Daiber made that claim Vodafone announced it will spend $2.4 billion on a new fiber to the premises network targeting 100,000 companies in 2,000 German business parks. The company will also spend up to $450 million partnering with municipalities to extend the network to about one million rural homes, in addition to boosting its current broadband speeds delivered to German cable customers to 1Gbps.

That announcement could cause DT’s DSL plans to eventually collapse, if Vodafone follows through on its fiber buildout.

Mayor Wolff has no intention of waiting to see how it all plays out. Wolff has convinced private fiber optics company BBV to install the fiber infrastructure and has a Dutch investor partner arranging $12 million in financing, which is always the biggest stumbling block to get fiber buildouts underway. Upfront construction costs often deter many municipalities and would-be competitors from launching. But for Wolff, where there is a will, there is a way to deliver fiber fast broadband, and he is making certain it happens sooner rather than later.

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