How would you like it if a banner ad was inserted on the bottom of every web page, on top of content you are trying to read and eating away at your usage allowance?

Customers of CMA Communications can tell you, because their web browsing experience now includes advertising messages injected by the cable company to earn more revenue.

CMA, which operates rural cable systems in Texas, Louisiana, Mississippi and Nevada, provides up to 7/1Mbps service with a usage cap of 250GB they borrowed from Comcast.

Zachary Henkel discovered the rude intrusion last month when he navigated to Apple’s website and discovered an intrusive banner ad for H&R Block.

Tired from the day’s events and travel, I had planned to quickly look up the specifications of a Mac Mini, respond to a few emails and then get some sleep. But as Apple.com rendered in my browser, I realized I was in for a long night. What I saw was something that would make both designers and computer programmers wince with great displeasure. At the bottom of the carefully designed white and grey webpage, appeared a bright neon green banner advertisement proclaiming: “File For Free Online, H&R Block”. I quickly deduced that either Apple had entered in to the worst cross-promotional deal ever, or my computer was infected with some type of malware. Unfortunately, I would soon discover there was a third possibility, something much worse.

[…] It was apparent at this point, that my parent’s ISP, CMA Communications, had started injecting advertisements into websites requested by their customers. I felt dissatisfied to say the least. […] You might not be surprised to know that CMA Communications won’t confirm or deny that they are injecting advertisements into their customer’s web traffic.

CMA Communications is using JavaScript code injection that overlays third-party advertisements on top of various websites, opening the door to subscriber irritation and some obvious conflicts. In fact, visitors to CMA’s own website could find themselves staring at advertising for CenturyLink, AT&T, or a satellite competitor, unless CMA specifically opts its own website out of the third-party ads.

Amazon.com features an ad with Flo from Progressive Insurance, LinkedIn links to a Verizon 4G phone ad, and Bing’s home page pitches AT&T phones. Henkel wants customers to complain, but the affected websites may be in the best place to stop the ad injections by threatening lawsuits against the cable company.

T-Mobile’s shift away from subsidized smartphones and standard two-year contracts could be a game-changer for American wireless consumers, but does the scrappy carrier have a good deal for you or mostly for itself?

T-Mobile is and has been America’s fourth largest carrier — the smallest among those offering nationwide home coverage. The provider has lost contract customers for years. T-Mobile’s coverage has been less than great in many areas and it often did not offer the latest and most popular smartphones. After its merger effort with AT&T was shot down by the Department of Justice for anti-competitive reasons, T-Mobile has attempted to remake itself by changing the rules under which most of us buy mobile service.

The biggest change of all is the end of the subsidized phone. For years, cell phone companies have offered free or low-cost phones to customers, earning back that subsidy by charging higher monthly rates and locking customers to two-year contracts with early termination fees. T-Mobile will still give you an affordable phone, only now you will pay it off in small installments over a two-year financing agreement.

What difference does this make? Customers who bounce from one two-year contract to the next may not see much difference. But if you keep your phone longer than two years or buy one elsewhere, your monthly rate with T-Mobile will no longer include an artificially higher price designed to recover the phone subsidy you no longer receive.

It also means nothing traps you with T-Mobile. If after six months you find their service unbecoming, you can leave without hundreds of dollars in termination fees. But customers on financing agreements will continue to make their payments for equipment purchases, and those phones will not be unlocked for use on another carrier until the remaining balance is paid off.

A typical T-Mobile customer looking for the latest iPhone will pay a $100 down payment and then finance the remaining balance, paying $20 a month for 24 months. Your monthly rate will start at $50 a month, which includes unlimited talk and texting, and a 500MB data allowance. If that is insufficient, an extra $10 a month will buy you an extra 2GB of data. If you want unlimited data, that plan is available for an extra $20 a month.

T-Mobile says their plans will save you $1,000 over the life of a two-year contract with AT&T or Verizon. We think they are exaggerating a bit.

Like their competition, T-Mobile is moving away from budget-minded “minute plans” that bundle calling, text and data. Instead, T-Mobile charges at least $50 a month for unlimited talk/text and a small data plan whether you want those features or not.

The Associated Press found that although T-Mobile ends up being the cheapest, the savings over its rivals is closer to $700 on average. The price over two years for a 16-gigabyte iPhone 5 with unlimited calling, unlimited texting and 2.5 gigabytes of data usage per month, excluding taxes, is:

• T-Mobile: $2,020
• AT&T/Verizon: $2,635 (2-3GB data plan)
• Sprint: $2,840 (unlimited data plan included)

Some other things to consider:

• Once your phone is paid off, your ongoing T-Mobile bill will no longer show a phone subsidy payback built into prices charged by other carriers;
• You can pay your phone off early, with no penalty;
• T-Mobile’s 4G network is a mix of HSPA+ and LTE. The more commonly encountered HSPA+ network gets good marks for speed, but a number of densely populated T-Mobile coverage areas surprisingly often default to their older 2G network, which is painfully slow. LTE is only available in about seven cities at the moment, so it is still a rarity;
• T-Mobile’s unlimited service is free from tricks and traps like soft caps and speed throttles. It also performs better than Sprint’s unlimited service on its overloaded 3G and spotty Clearwire 4G WiMAX network. Sprint’s LTE network is on the way… slowly. It seems to be rolling out first in small cities you have never heard of;
• T-Mobile’s coverage in rural and exurban areas is frankly terrible. Travelers on main highways may not encounter many signal gaps, but those living in small towns or off the beaten path may get a roaming signal or poor or no reception from T-Mobile’s own towers at all. The frequencies used for its data service also do not work as well indoors as its larger rivals.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/T-Mobile Ad 4-2-13.flv[/flv]

T-Mobile channels Oprah in this new ad as the big four wireless cowboys get in touch with their feelings. But only one is ready to don a pink hat and ride off on his own. (1 minute)

Cable operators and publicly owned utilities in Tennessee are battling for control over the prices companies pay to use utility poles, with facts among the early casualties.

The subject of “pole attachment fees” has been of interest to cable companies for decades. In return for permission to hang cable wires on existing electric or telephone poles owned by utility companies, cable operators are asked to contribute towards their upkeep and eventual replacement. Cable operators want the fees to be as low as possible, while utility companies have sought leeway to defray rising utility pole costs and deal with ongoing wear and tear.

Little progress has been made in efforts to compromise, so this year two competing bills have been introduced by Republicans in the state legislature to define “fairness.” One is promoted by a group of municipal utilities and the other by the cable industry and several corporate-backed, conservative front groups claiming to represent the interests of state taxpayers and consumers.

Some background: Tennessee is unique in the pole attachment fee fight, because privately owned power companies bypassed a lot of the state (and much of the rest of the Tennessee Valley and Appalachian region) during the electrification movement of the early 20th century. Much of Tennessee is served by publicly owned power companies, which also own and maintain a large percentage of utility poles in the state.

Some of Tennessee’s largest telecom companies believe they can guarantee themselves low rates by pitching a case of private companies vs. big government utilities, with local municipalities accused of profiteering from artificially high pole attachment rates. Hoping to capitalize on anti-government sentiment, “small government” conservatives and telecom companies want to tie the hands of the pole owners indefinitely by taking away their right to set pole attachment rates.

The battle includes fact-warped editorials that distort the issues, misleading video ads, and an effort to conflate a utility fee with a tax. With millions at stake from pole attachment fees on tens of thousands of power poles throughout the state, the companies involved have launched a full-scale astroturf assault.

Grover Norquist’s Incendiary “Pole Tax”

Conservative Grover Norquist, president of Americans for Tax Reform wrote that the pole attachment fee legislation promoted by public utilities would represent a $20 million dollar “tax increase” from higher cable and phone bills. Even worse, Norquist says, the new tax will delay telecom companies from rushing new investments on rural broadband.

In reality, Americans for Tax Reform should be rebranded Special Interests for Tax Reform, because the group is funded by a variety of large tobacco corporations, former clients of disgraced lobbyist Jack Abramoff, and several wealthy conservative activists with their own foundations.

Norquist’s pole “tax increase” does not exist.

The Federal Communications Commission (FCC) provides guidelines and a formula for determining pole attachment rates for privately owned utilities, but permits states to adopt their own regulations. Municipal utilities are exempted for an important reason — their rates and operations are often already well-regulated.

Stop the Cap! found that pole attachment revenue ends up in the hands of the utility companies that own and keep up the poles, not the government. Municipal utilities stand on their own — revenue earned by a utility stays with the utility. Should a municipal utility attempt to gouge other companies that hang wires on those poles, mechanisms kick in that guarantee it cannot profit from doing so.

A 2007 study by the state government in Tennessee effectively undercut the cable industry’s argument that publicly owned utilities are overcharging cable and phone companies that share space on their poles. The report found that “pole attachment revenues do not increase pole owners’ revenue in the long run.”¹

The Tennessee Valley Authority, which supplies electricity across Tennessee, regularly audits the revenues and costs of its municipal utility distributors and sets end-user rates accordingly. The goal is to guarantee that municipal distributors “break even.” Any new revenue sources, like pole attachment fees, are considered when setting wholesale electric rates. If a municipal utility overcharged for access to its poles, it will ultimately gain nothing because the TVA will set prices that take that revenue into account.

Freedom to Distort: The Cable Lobby’s Astroturf Efforts

Another “citizens group” jumping into the battle is called “Freedom to Connect,” actually run by the Tennessee Cable Telecommunications Association (TCTA). Most consumers won’t recognize TCTA as the state cable lobby. Almost all will have forgotten TCTA was the same group that filed a lawsuit to shut down EPB’s Fiber division, which today delivers 1,000Mbps broadband service across the city and competes against cable operators like Comcast and Charter Cable.

One TCTA advertisement claims that some utilities are planning “to double the fees broadband providers pay to the state’s government utilities.”

In reality, cable companies have gone incognito, hiding their identity by rebranding themselves as “broadband providers.” No utility has announced it plans to “double” pole attachment fees either.

TCTA members came under fire at a recent hearing attended by state lawmakers when Rep. Charles Curtiss (D-Sparta) spoke up about irritating robocalls directed at his constituents making similar claims.

“What was said was false,” Curtiss told the cable representatives at the hearing. “You’ve lost your integrity with me. Whoever made up your mind to do that, you’re in the wrong line of work.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/TCTA Pole Attachment Fees Ad 3-13.flv[/flv]

TCTA — Tennessee’s cable industry lobbying group, released this distorted advertisement opposing pole attachment fee increases.  (1 minute)

The Chattanooga Free-Press’ Drew Johnson: Independent Opinion Page Editor or Well-connected Activist with a Conflict of Interest?

In its ad campaign, the TCTA gave prominent mention to an article in Chattanooga’s Times-Free Press from Feb. 27: “Bill Harms Consumers, Kills Competition.”

What the advertisement did not say is it originated in an editorial published by Drew Johnson, who serves as the paper’s conservative opinion editor. Johnson has had a bone to pick with Chattanooga’s public utility EPB since it got into the cable television and broadband business.

That may not be surprising, since Johnson is still listed as a “senior fellow” at the “Taxpayers Protection Alliance,” yet another corporate and conservative-backed astroturf group founded by former Texas congressman Dick Armey of FreedomWorks fame.

Johnson’s journalism credentials? He wrote a weekly column for the conservative online screed NewsMax, founded and funded by super-wealthy Richard Mellon Scaife and Christopher Ruddy, both frequent donors to conservative, pro-business causes.

TPA has plenty to hide — particularly the sources of their funding. When asked if private industry backs TPA’s efforts, president David Williams refused to come clean.

“It comes from private sources, and I don’t reveal who my donors are,” he told Environmental Building News in January.

Ironically, Johnson is best known for aggressively using Tennessee’s open records “Sunshine” law to get state employee e-mails and other records looking for conflicts of interest or scandal.

Newspaper readers may want to ask whether Johnson represents the newspaper, an industry-funded sock puppet group, or both.  They also deserve full disclosure if the TPA receives any funding from companies that directly compete with EPB.

The Institute from ALEC: The Institute for Policy Innovation’s Innovative Way to Funnel AT&T and Comcast Money Into the Fight

Another group fighting on the side of the cable and phone companies against municipal utilities is the Institute for Policy Innovation. Policy counsel Bartlett D. Cleland claimed the government is out to get private companies that want space on utility poles.

“The proposed new system in HB1111 and SB1222 is fervently supported by the electric cooperatives and the government-owned utilities for good reason – they are merely seeking a way to use the force of government against their private sector competitors,” Cleland said. “The proposal would allow them to radically raise their rates for pole attachments to multiples of the national average.”

The facts don’t match Cleland’s rhetoric.

In reality, the state of Tennessee found in their report on the matter in 2007 that Tennessee’s pole attachment fees are “not necessarily out of line with those in other states.”²

In fact, some of the state’s telecom companies seemed to agree:

• EMBARQ (now CenturyLink) provided data on fees received from other service providers in Tennessee, Virginia, South and North Carolina. In these data, Tennessee’s rates ($36.02 – $47.41) are similar to those in North Carolina ($23.12-$52.85) and Virginia ($28.94 – $35.77). Rates were lower in South Carolina.
• Cable operators, who have less infrastructure on poles than telephone and electric utilities, paid even less. Time Warner Cable provided mean rates per state showing Tennessee ($7.70) in the middle of the pack compared to Florida ($9.83) and North Carolina ($4.86 – $13.64).

In addition to his role as policy counsel, Cleland also happens to be co-chair of the Telecommunications and Information Technology Task Force of the American Legislative Exchange Council (ALEC). Members of that committee include Comcast and AT&T — Tennessee’s largest telecom companies, both competing with municipal telecommunications providers like EPB.

¹ Analysis of Pole Attachment Rate Issues in Tennessee, State of Tennessee. 2007. p.23

² Analysis of Pole Attachment Rate Issues in Tennessee, State of Tennessee. 2007. p.12

Frontier Communications is boasting it spent $123.6 million in New York to upgrade broadband speeds, now available up to 25Mbps through bonded ADSL2+ or VDSL technologies.

Frontier’s New York customers are now offered traditional 1-6Mbps DSL, Broadband Ultra (up to 12Mbps) and Broadband Ultimate (up to 25Mbps).

Kevin Smith, senior vice president and general manager of Frontier’s New York division said 155 of Frontier’s 194 switching offices now have faster speeds available, as do 214 remote DSLAM switches. In all, Frontier now reaches 403,000 New York households with faster Internet service.

The company also spent a considerable sum in the Rochester and Chenango areas to upgrade its backbone network with interoffice 10G Ethernet Ring Protection Switching topology. Rochester remains an important center for Frontier, as its largest metropolitan market. IT software upgrades in Rochester will also help improve the national help desk and network operations.

Frontier also plans a major broadband expansion in Hamilton County with broadband grant funds that will improve the company’s backbone between Eagle Bay and Gloversville. That will introduce 25Mbps service to more than half of the households in the immediate area.

Frontier claims it intends to further expand broadband to 85 percent of its service areas nationwide, including those it acquired from Verizon Communications.

 

You should believe Verizon Communications CEO Lowell McAdam when he says he intends to end wired telephone and broadband service for areas that are simply not economically feasible for fiber upgrades. McAdam’s grand plan is now coming true for customers in parts of Florida and on Fire Island, N.Y.

Last summer, Stop the Cap! covered McAdam’s comments to Wall Street investors (that are always the first to know) at the Guggenheim Securities Symposium:

“In […] areas that are more rural and more sparsely populated, we have got [a wireless 4G] LTE build that will handle all of those services and so we are going to cut the copper off there,” McAdam said. “We are going to do it over wireless. So I am going to be really shrinking the amount of copper we have out there and then I can focus the investment on that to improve the performance of it.”

The writing is already on the wall:

1. Verizon has been penalized and criticized in several states by public utility commissions for the ongoing degradation of its copper network. Verizon sees further investment in copper technology as throwing good money after bad, but spending millions on additional fiber upgrades isn’t appealing either. The result is deteriorating service. From downtown Manhattan to New Jersey to Maryland, D.C. and Virginia, Verizon’s service failures have left customers frustrated and sometimes waiting weeks or months for repair crews to turn up to restore basic phone service. Even more dangerous, Verizon was to blame for significant 911 network failures near the nation’s capital. Post Sandy, there are still sections of lower Manhattan without phone service nearly five months after the storm struck. Five months.
2. Verizon sold off telephone service in northern New England several years ago to FairPoint Communications, knowing full well Verizon never had an interest in upgrading any part of Vermont, New Hampshire or Maine to fiber service. In many smaller former GTE telephone areas too small to successfully argue a case for return on investment, Verizon decided selling those territories off was the best option. Hawaiian Telcom and Frontier Communications now own many of those former-Verizon territories.
3. Verizon has decreased marketing its wired DSL service and stopped selling it altogether to customers who want broadband-only service. That seems counter-intuitive for a company that recognizes future revenue possibilities come primarily from broadband and data services.

Traditionally, customers reporting trouble on a phone line get a visit from Verizon technicians who track the problem down and repair it. But Verizon no longer wants to spend money fixing copper wire-related problems. Customers reporting chronic phone static or outages are now being asked to abandon their traditional landline service instead:

• In areas where Verizon FiOS fiber is available, the company disconnects the customer from copper service and switches them to the FiOS fiber network. This also provides future marketing opportunities, pitching broadband and television service to accompany a customer’s home phone. 
• In areas where fiber upgrades are not forthcoming, the company now proposes to disconnect the customer in favor of Voice Link, a wireless home phone replacement. This also opens marketing opportunities for Verizon Wireless to pitch cell phones and wireless Internet service.

Customers who live in Florida currently have a choice. During the trial, they can switch to Voice Link or keep their current landline service. On Fire Island, just south of Long Island, customers will not have that choice. Verizon is testing the will of New York regulators asked to allow the company to gradually abandon landline and wired Internet facilities on the island. Customers previously knocked out by Hurricane Sandy have no alternative — switch to a wireless option like Voice Link or lose  telephone service. As the network degrades further on the island, it is a safe bet more Fire Island residents will find themselves confronted with a wireless future courtesy of Voice Link.

Verizon is careful to note its Voice Link service comes at no additional cost to customers — their phone bills will remain the same, at least for now. But the transition includes several important caveats:

1. Voice Link is not subject to state or federal oversight or quality of service consumer protection laws that apply to traditional landline service;
2. The customer is responsible for providing an indoor space to mount the equipment (hardly unobtrusive, the receiver is eight inches tall) and provide electric power and AA batteries for battery backup;
3. Voice Link does not work with any data services including broadband or dial-up Internet, faxing, medical monitoring, alarm systems, etc. You will be pitched an expensive Verizon Wireless data plan if you want Internet access;
4. During recent severe storms, copper landline networks often continued to work but cell phone service failed over wide areas because of call congestion and  long-term power outages. Similar failures will leave Voice Link non-operational;
5. Voice Link customers lose DSL service and may have little chance of getting it back once they switch.

Verizon’s solution for Fire Island represents the long-term vision of McAdam coming to fruition. Complaining customers have not been able to persuade the company to abandon its plan, but New York State regulators might, if the issue gets enough attention.

In states with less aggressive regulators, Verizon could implement its Fire Island strategy nearly at-will, especially in rural service areas. Verizon’s plan differs little from that of AT&T, another major service provider seeking permission from regulators to abandon rural landline networks. AT&T is betting the Federal Communications Commission will approve AT&T’s “network transition plan” for all of its rural customers. Verizon is starting smaller, gradually implementing its transition under the radar of many state and federal officials.

So why adopt Voice Link — a wireless solution, when copper wire network repairs remain a viable option?

The reasons are simple:

1. Voice Link is cheaper to run and maintain as a wireless service and uses existing Verizon Wireless cell towers;
2. Verizon can further cut their unionized workforce that maintains the company’s landline network;
3. Wireless products escape regulatory oversight;
4. The company can push customers to wireless data products that cost far more than wired DSL broadband service;
5. Verizon doesn’t have to upgrade the rest of their network to fiber.

Customers in Verizon service areas should appeal to regulators and their elected officials to stop the abandonment of wired infrastructure. Verizon argues maintaining its network doesn’t make sense when customers are fleeing their landlines. But rural customers are not disconnecting broadband service that travels across the same network. Even basic DSL is coveted in rural Verizon territories where Internet access remains unavailable. Just about everyone wants the option of FiOS fiber, perhaps the most coveted network upgrade around until Google announced its gigabit fiber project in Kansas City.

Nobody wants Verizon or AT&T to keep up its copper wire facilities indefinitely. But a better solution would be a regulatory mandate that requires Verizon and AT&T to gradually replace antiquated and failing copper infrastructure with fiber wherever possible. It is more than possible to do this on Fire Island. Verizon’s service area in Florida is hardly rural either. Verizon Florida (formerly GTE Telephone) serves Tampa-St. Petersburg east to Lake Wales, a major metropolitan region in central Florida.

What is best for shareholders should not be the final determining factor for an important utility service. If customers prefer the option of Voice Link for home phone service, there is nothing wrong with that. But wireless service as the only option customers have for broadband service? Not at Verizon Wireless’ prices.