Four of the nation’s largest phone companies — two former Baby Bells, two independents — have very different ideas about solving the rural broadband problem in the country. Which company serves your area could make all the difference between having basic DSL service or nothing at all.

Some blame Wall Street for the problem, others criticize the leadership at companies that only see dollars, not solutions. Some attack the federal government for interfering in the natural order of the private market, and some even hold rural residents at fault for expecting too much while choosing to live out in the country.

This four-part series will examine the attitudes of the four largest phone companies you may be doing business with in your small town.

Today: CenturyLink — Our Commercial Customers Deliver 60% of Our Revenue; Our Attention Follows Accordingly

“Business customers now drive about 60% of our total operating revenues,” CenturyLink CEO Glenn F. Post III told investors in March. “Our focus on delivering advanced solutions and data hosting services to businesses are key factors in improving our top line revenue trend.”

With residential customers departing traditional landlines at an average rate of 5-10 percent a year, keeping customers has become an important priority for a number of phone companies, especially those who have plowed millions into mergers and acquisitions to build their businesses. For the past several years, CenturyLink has been acquiring small, regional independent phone companies, a former Baby Bell, and a competing landline provider Sprint used to think would be an important part of its business.

Century Telephone’s original customers were mostly cobbled together from acquisitions from other phone companies, including names like GTE, Central Telephone Company of Ohio (part of Centel), Pacific Telecom, Mebtel and GulfTel. But the biggest expansion of the company would come from acquisitions of Sprint-spinoff Embarq and former Baby Bell Qwest.

Today CenturyLink operates one of the nation’s largest independent phone companies, and serves markets large (primarily on the west coast) and small (rural communities primarily in the southeast, Missouri, Ohio, Indiana and Wisconsin).

CenturyLink’s revenues have often been uneven, mostly because of its acquisitions, landline losses, and the effects from competition in its larger markets. While CenturyLink’s acquisitions grew the company, they also saddled it with landline networks that have proved inadequate to meet the growing needs of customers. With a disconnect rate running between 6.4% this quarter and 7.6% in the same quarter a year ago, residential customers are leaving their voice lines behind in favor of cell phones and broadband customers are departing for faster speeds available from cable operators.

These “legacy services” lost the company $124 million in revenue — an 8.1% decrease over the past quarter. As customers depart, so do CenturyLink employees that used to handle the old landline network.

To make up the lost revenue, CenturyLink has gotten more aggressive in other areas of its business:

• Increasing focus on business/commercial and governmental services, including managed hosting, cloud computing and other commercially-targeted broadband initiatives;
• Deployment of fiber to cell towers as a growing revenue source;
• Limited, but ongoing rural broadband expansion;
• Development of Prism TV — a fiber to the neighborhood service targeting residential customers.

CenturyLink calls these their four key initiatives towards revenue stability, stable cash flow, and growth.

In the business services segment, CenturyLink sees enormous revenue potential selling businesses access to data centers, co-location services, and ethernet-speed broadband. Last year, CenturyLink acquired Savvis, an important enterprise-level service provider and owner of 50 data centers. Phone companies like CenturyLink are also in a race with large cable operators to be the first to offer cell phone companies access to “fiber-to-the-tower” service to support exploding data growth on 4G wireless networks.

Faster DSL, Fiber to the Neighborhood-Broadband Key to Keeping Residential Customers Happy

CenturyLink’s network map showing both its own service areas, and infrastructure obtained from the acquisition of Qwest.

For consumers, CenturyLink has been moderately aggressive in some areas boosting speeds of its DSL services. The company claims 70% of their DSL-capable landline network provides speeds of at least 6Mbps. At least 55% supports 10Mbps or higher; over 25% can manage 20Mbps or faster.

The company’s Prism TV service, a fiber to the neighborhood upgrade comparable to AT&T U-verse, is now available to nearly 6.3 million homes and apartments in eight cities. By year end, CenturyLink says it will increase that to 7.1 million homes.

Prism represents a significant portion of CenturyLink’s investment in its residential business. So far, the results have not proven a major threat to the competition. CenturyLink added 15,000 Prism subscribers in the first quarter, but the company only has 8% of the market. Cable and satellite providers continue to dominate. But the company says Prism is helping to keep the customers they already have.

CenturyLink says it now taking Prism TV west into former Qwest territory, starting in and around Colorado Springs, Col.

Customers will likely be offered 130 channels starting at $59.99 a month with a free set top box (new customers typically receive a $20 monthly discount for the first six months of service).

The phone company will compete with Comcast, which sells 80 channels for $56 a month (new customers get a $26/mo discount for the first six months).

With CenturyLink providing a better deal, at least for television service, Colorado City officials hope the competition will bring down rates, at least for new customers. That may be exactly what happens, predicts Mark Ewell, a senior account executive with Windstream Communications.

“We could see some pressure on Comcast’s rates. I would like to see Comcast adopt a price model that doesn’t go up after a promotional period,” Ewell told The Gazette.

“CenturyLink is likely to be more of a threat to the satellite providers like DirecTV and Dish because they have a much higher market share in Colorado Springs than they do in most other markets because so many customers left Adelphia [acquired in bankruptcy by Comcast] when it had its financial problems. Those customers have already shown a willingness to leave the cable television provider and try another service.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CenturyLink Prism TV.flv[/flv]

CenturyLink shows off its new Prism TV offering in this company-produced video.  (2 minutes)

CenturyTel acquires Embarq and changes its name to CenturyLink to reduce the emphasis on its traditional landline business.

CenturyLink’s arrival in the triple-play business of phone, Internet, and television service could be the first serious competition Comcast has gotten outside of satellite providers. WideOpenWest had a franchise to provide service in 2000 but never did. Falcon Broadband won a franchise in 2006, but only provides service to around 1,500 customers in the Banning Lewis Ranch, Black Forest, and Falcon areas. Porchlight Communications received a franchise in 2007, installed service for 500 customers but ultimately never charged them. Porchlight’s IPTV service never worked properly with its chosen set top boxes. That fatal flaw put the company out of the cable business, and the company turned the porch light off for good, abandoning its franchise.

Rural Broadband: Unless the Government Delivers More Subsidies, Rural Customers Will Continue Waiting

In late July, CenturyLink announced it would accept $35 million from the Federal Communications Commission’s new Connect America Program (CAP) to deploy broadband to homes and businesses in rural, broadband-deprived parts of its service area.

CenturyLink has the capability to extend broadband to 100 percent of its customers, but not the willingness to invest the money to make that happen, critics contend. CenturyLink freely admits it applies a financial test when considering when and where to expand its DSL broadband service into its most rural service areas.

In short, the company must recoup its costs of deploying broadband within a certain time frame, and be confident that a certain percentage of customers are going to sign up for broadband service, before it will agree to make the investment. Virtually all of CenturyLink’s current service areas have already met or failed that test, which leaves an indefinite group of broadband “have’s” and “have-nots.”

To shake up the status quo, the FCC proposed to shift Universal Service Fund money, collected from all phone customers, away from landline service towards rural broadband deployment. This invites CenturyLink, and other phone companies, to run those financial tests again. With urban customers footing part of the bill, theoretically more homes should squeak past the return on investment test.

In fact, more homes will finally get CenturyLink broadband — around 45,000 in semi-rural and suburban areas where the costs to provide the service are not as great as in truly rural areas.  The FCC is offering to cover just short of $800 per household to cut the costs of deploying rural Internet access.

But CenturyLink complains the money is not nearly enough to solve the really-rural broadband problem.

“In very rural areas where we really have the greatest need for support, this amount, on a per-location basis, will not be enough to allow us to really do an economic build-out,” Post told investors this spring. “So we’re still in the process really of evaluating our opportunities….”

That will leave CenturyLink likely spending considerably more upgrading its urban landline network to support Prism TV instead of supplying rural broadband service.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CenturyLink History.flv[/flv]

Jeff Oberschelp, vice president and general manager of CenturyLink of Nevada discusses the past history of CenturyLink and where phone companies are going in the future in this company-friendly interview.  (6 minutes)

Public Knowledge, a public interest, pro-consumer group, has filed a petition calling on the Federal Communications Commission to enforce conditions imposed on the Comcast/NBC-Universal merger dealing with Comcast’s usage caps policy.

The group wants the FCC to investigate the legality of Comcast’s decision to exempt its own online video service from the usage caps Comcast is reintroducing on its broadband customers:

In evaluating the merger, both the FCC and the Department of Justice recognized that a combined Comcast/NBC-Universal would have an enhanced motive to discriminate against unaffiliated online video services that might compete with Comcast’s pay-TV cable service.  Because Comcast controls their subscribers’ connection to the internet, and subscribers could use that very connection to access video services  not controlled by Comcast, Comcast has the ability to manipulate those internet connections in a way that would disadvantage video competitors.

Specifically, Public Knowledge accuses Comcast of violating FCC condition G.1.a.:

“Neither Comcast nor C-NBCU shall engage in unfair methods of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or prevent any MVPD or OVD from providing Video Programming online to subscribers or customers.”

The group argues that unfairly applied usage caps impact Comcast’s online video competitors. Customers will choose the service that does not eat away at their monthly broadband usage allowance, making competitors operate on an unfair playing ground.

The group has raised questions about the industry’s movement towards Internet Overcharging schemes like usage caps and speed throttles and has repeatedly requested the FCC question how data allowance levels are developed, evaluated, and evolve over time.

Believe it or not, Google Fiber has not always been headline news in Kansas City. Outside of a few stories in early spring about zoning and installation matters, local media (particularly television) has mostly given back page treatment to Google’s new fiber network since the city was first chosen in March, 2011.

That all changed last Thursday when television, radio, and newspaper reporters flooded a converted yoga studio in midtown Kansas City to attend Google Fiber’s unveiling. Many stations aired live reports on-site and devoted time during their afternoon and evening newscasts to explain what the service is all about, starting with what it will cost — $70 a month for 1Gbps service (or paying a flat $300 for 5/1Mbps service for the next seven years). Adding television brings the final price to $120 a month. Google considers landline phone service a dead-end business, and won’t bundle a telephone option, but customers can use Google Voice to make and receive most calls for free.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KMBC Kansas City Google announces details of Google Fiber service 7-26-12.flv[/flv]

KMBC reports on the introduction of Google Fiber, what it will cost Kansas City residents, what it means for the city as whole, and when and how service will be installed.  (3 minutes)

Kansas City, Mo., Mayor Sly James said Google Fiber was more of an opportunity than a gift for Kansas City.

“We now have an opportunity to take a giant step and if we don’t it’s all on us,” James said.

KCUR Radio in Kansas City explores some of the public policy and institutional changes Google Fiber can bring the area with the advent of gigabit broadband. Mike Burke, Missouri co-chair, and Dr. Ray Daniels, Kansas co-chair of the Mayors’ Bistate Innovation Team talks about what changes Google Fiber could bring to health care, education, government, and more.  The Mayors’ Bistate Innovation Team recently released a report titled “Playing to Win in America’s Digital Crossroads,” a playbook for capitalizing on ultra-high-speed fiber in Kansas City, Kansas and Kansas City, Missouri. (Some of the specific details discussed in the program turned out to be outdated after last Thursday’s announcement introducing the service.)  (June 6, 2012) (52 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Some in the media seemed disappointed Google spent a considerable amount of time selling the entertainment-oriented element of its service — namely the television lineup and the equipment that comes with it, and less on the educational and transformational nature of gigabit broadband. But many in the audience didn’t need an explanation of what 1,000/1,000Mbps service will mean for them.

Reviewing the coverage shows a predictable response:

• Those under 30 want it today and won’t think twice about paying $70 to get it;
• Those running businesses that depend on the web also want it, and are slightly perturbed Google will only sell to residential customers at first;
• Families with young children want the service because they feel it will be a game-changer for their children’s education and future career;
• Income-challenged residents are concerned about the cost, but are happy to discover Google has an affordable option for them to participate in the wired world;
• Older residents seem preoccupied with the price and consider the television lineup even more important than broadband speed;
• Schools, libraries, health care, and non-profit groups are thrilled with the prospect of getting free or deeply discounted service;
• Incumbent providers are putting on a brave face, relying on what they feel is excellent customer service, local ties to the communities they service, and a current customer base that may be reluctant to switch.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KCTV Kansas City Introducing Google Fiber 7-26-12.mp4[/flv]

Google Fiber has arrived in Kansas City, and neighborhoods will compete to see who gets the gigabit broadband service first. KCTV in Kansas City reports. (3 minutes)

Google Fiber’s free 5/1Mbps service is another embarrassment to big cable companies like Comcast which offer less service for more money.

The Kansas City Star needlessly fretted about the remaining digital divide of Internet “have’s” and “have-not’s,” as Google launched a competition between neighborhoods to determine where to install the service first.

So far, many poorer urban core neighborhoods are expressing interest in Google fiber at a slower rate than middle- and higher-income neighborhoods.

It’s important now for efforts to reach out to help the lower-income neighborhoods rally so the access doesn’t become a new dividing line.

The newspaper is concerned by Google’s fiber map showing many minority, inner-city neighborhoods have yet to receive a single commitment from a resident willing to pre-register for the service. But Google is not running a competition to exclude anyone. It is surveying interest to ensure it has a working business model to sustain its fiber broadband operation. Overshadowed by the gigabit broadband announcement is the fact Google is also including a real solution for the income-challenged — an entry-level 5/1Mbps broadband option that will cost just $300 (payable in $25 installments) that guarantees service with no additional payment for seven years.

That is a broadband solution far superior to the afterthought programs on offer from Comcast and a handful of phone companies that only deliver a fraction of the speed, at a higher price, to those who meet a byzantine set of requirements. It is yet another embarrassment for Kabletown, which would not have even offered the service had the government not made it a condition for approving the mega-merger of NBC-Universal and Comcast.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KCTV Kansas City Neighborhoods Compete for Fiber 7-26-12.flv[/flv]

KCTV visits some of the neighborhoods competing to be the first to get Google Fiber. Reaction from residents varies from those willing to canvas neighborhoods to get people to pre-register to others who will consider switching providers only if the price is right.  (4 minutes)

One Star columnist likened Google Fiber to a public works project that threatened to go bad pitting neighborhoods against one-another, rich against poor:

The more educated, middle- to upper-income neighborhoods in southwest KC and in midtown were signing up for first crack at the service.

Meanwhile, the neighborhoods without as many computers and without the income to afford the $70 or $120 proposed monthly charges for Google Fiber were signing up at far slower rates.

None of that means Google Fiber won’t be a big success.

But let’s not pretend there won’t be winners and losers with this advance in technology.

If Google Fiber narrows that digital gap – and makes more information available more quickly to more people to help boost the economy of KC – that’s all for the good.

However, being able to hook up eight computers in a house so people can be more entertained doesn’t set my world on fire.

Let’s remember Google Fiber is intended to be a for-profit business run by a for-profit corporation. Star columnist Yael T. Abouhalkah might have been more comfortable had he advocated for a community-owned broadband solution committed to serving every neighborhood, everywhere. Google Fiber is not that, at least not now. The alternatives from AT&T and Time Warner Cable have not solved the digital divide either. Giving away effectively-free 5/1Mbps broadband for seven years might.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KCTV Kansas City Fiberhoods 7-26-12.mp4[/flv]

Google’s Fiberhoods are likely to win fiber service for the more high-tech areas of Kansas City, among the first to pre-register. Google’s Kevin Lo explains those areas most committed to getting the service will also win free fiber connections for their neighborhood’s schools, health care facilities, and public safety buildings.  KCTV reports. (3 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KCTV Kansas City Benefits of Google Fiber 7-26-12.mp4[/flv]

KCTV explores what Google Fiber could mean for local schools who can utilize the faster connections for distance and remote learning.  (3 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WDAF Kansas City Customers Put Google Fiber to the Test 7-28-12.flv[/flv]

WDAF in Kansas City covers Google Fiber’s weekend “Open House,” inviting residents to experience what gigabit broadband is really like, and letting them see and sample the company’s broadband and television service.  (2 minutes)

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/KSHB Kansas City Northland business owners react to Google Fiber limitations 7-26-12.mp4[/flv]

KSHB in Kansas City covers the reaction of local business owners elated and frustrated by the arrival of Google Fiber, which will open the door to new online innovation once Google begins selling to commercial customers (and if you are lucky enough to work in a Google Fiberhood.)  (2 minutes)

A Stop the Cap! reader working for a Kansas City non-profit group dropped us a note this morning indicating she has received an invitation from Google to join the company at a special event Thursday, July 26 which will be Google Fiber’s formal launch announcement.

“There is buzz all over town about Google launching the fiber service on a limited basis in certain Kansas City neighborhoods next week,” Cathy writes us. “The local media has definitely been invited and encouraged to attend and several non-profit groups are going together in a group to also informally meet with some Google officials at the conclusion of the event regarding access and pricing issues. We have already been told this will be a formal launch event.”

Google has kept its pricing and exact service availability information tightly under wraps, but the company is inviting local residents to sign up for e-mail invitations and additional information as it is released.

The anticipated launch has not been missed by Time Warner Cable, which has taken to placing signs around the workplace offering $50 “rewards” for insider tips about Google Fiber’s launch and marketing plans. Although some in the tech press have characterized this as “fear” of Google Fiber, a Time Warner employee tells Stop the Cap! the “reward” program is not unprecedented and the cable company has occasionally offered goodies to employees who can deliver tips about competitors like Verizon FiOS and community fiber broadband networks for years.

Courtesy: Gigaom

Kansas City residents will certainly have a choice when Google Fiber launches its gigabit network. In addition to fiber broadband from the search engine giant, customers in different parts of the area can also get cable from Time Warner Cable or Charter and U-verse from AT&T.

Google will join Chattanooga’s EPB Fiber as America’s gigabit residential broadband providers. Cable operators and phone companies are expected to downplay Google’s fiber introduction — likely telling customers they do not need gigabit speeds and chastising its likely monthly cost.

Google’s competitors may have to prepare to deliver that message beyond Kansas City, however.

Dow Drukker, senior vice president of CapStone Investments, believes Google is in the mood to grow:

Initial Indications Google Fiber Is Likely Expanding Beyond Kansas City.

We saw an ad for an Inside Sales position in Mountain View, CA for selling Google Fiber to small businesses. The ad said the position would be tasked to build a team to sell a national broadband network indicating Google likely plans to build a fiber-optic network in additional cities.

This was the ad Drukker saw, which can be vaguely interpreted to indicate the company has plans to place Google Fiber in more cities (underlining ours), although we see nothing that specifically mentions a “national” broadband network:

The area: New Business Development

At Google, we set ourselves goals we know we can’t reach yet. Our New Business Development team works on game-changing ideas, from technological experiments to the expansion of existing businesses into new territories. We’re a team of technologists, entrepreneurs and leaders with an eye for what’s next, working across Google to develop products and ideas that revolutionize the way people connect with information.

The role: Sales Manager, Inside Sales, Google Fiber

Does winning new business get your adrenaline pumping? Drive growth for Google’s Online Sales Group as part of the Inside Sales Organization, the sole acquisition engine at Google. You collaborate with our Account Management teams to devise strategies to acquire specific segments of your market. Work independently, travel to trade shows, visit large prospective clients–it’s all part of this role. Be rewarded for being an overachiever while driving incremental growth in your market. You prescribe the right marketing mix based on Google’s core advertising products through acquisition of predefined mid-and up-market clients. You are product-and industry-savvy, and your energetic drive propels you toward new acquisitions and building and managing your own book of business.

If you want the opportunity to work on a state-of-the-art high-profile program, look no further than the opportunity to frame the future of broadband. The Fiber Sales Manager will build a team to evangelizes Google Fiber services to small and medium business and multi unit dwellings. Fiber Sales manager will develop a plan for our approach in the market including multi unit dwellings, small business, restaurants, and hotels. Inside Sales Representative, you reach out proactively to both small businesses, while articulating how Google Fiber Solutions can help make their work more productive. (And then, you seal the deal!) You excel at product pitching, cultivating a strong base of new clients and working with fellow technical Googlers to devise solutions and support for your clients.

One of the most potentially valuable lessons Google may teach with its new gigabit broadband network is one for Washington lawmakers. To date, cable and telephone companies have portrayed gigabit fiber broadband as unnecessary, unwanted, and too difficult and expensive to offer residential customers. Google’s performance in Kansas City could prove those arguments wrong.

West Virginia has returned to broadband mapping the old-fashioned way, with local volunteers fanning out across various areas of the Eastern Panhandle to get a true picture of what broadband service is like on the ground.

The Region 9 Planning and Development Council is helping coordinate the project, currently surveying residents in Berkeley, Jefferson, and Morgan counties. Residents and area businesses can complete a 22-question survey online or on paper, with copies available at most area public libraries.

The Council is trying to ascertain what specific neighborhoods still lack broadband service and also asks current broadband customers to rate the performance of their current provider — like Frontier Communications or a local cable operator. GIS analyst Matthew Mullenax told the Herald-Mail the survey gives a chance for customers to express their views about the speed of their connection, how reliable the service is, and how much it costs.

The West Virginia Broadband Deployment Council is effectively running a mapping “do-over,” to replace the highly-criticized broadband map originally drawn by Connect West Virginia, a state chapter of Connected Nation, that suggested 90-95% of the state had access to broadband when it was produced over three years ago.

Connected Nation’s 2008 map has been criticized for being over-optimistic about broadband availability in West Virginia.

Connected Nation has direct ties to some of the nation’s largest telecommunications companies, and despite its non-profit status, heavily lobbies legislators on broadband-related issues. The group largely relies on data voluntarily supplied by providers themselves, and critics accuse the group of doing little to verify the accuracy of that data. As a result, states are left with inaccurate, over-optimistic maps that suggest broadband availability is not a problem.

Broadband mapping projects can cost taxpayers millions, paid for by federal grants earmarked for mapping projects. But in communities like Paw Paw, W.V., the costs of not having broadband are just as high for local residents who find good-paying technology jobs largely unavailable in the community, which lacks adequate broadband service.

Mullenex hopes once an accurate map can be drawn, the state can create a strategic plan to push for broadband expansion in areas where service is lacking. The Council hopes its efforts will help pinpoint the areas of greatest need, and direct federal and state grant funding to improve broadband service for affected communities.

The West Virginia Broadband Deployment Council released this 2012 map. Areas marked in dark green have no broadband service of any kind, including wireless mobile broadband.