Windstream CEO Jeff Gardner told a cable news audience Tuesday that the rural phone company already supplies broadband to 100 percent of its service areas where the service is “economically feasible” to provide. Any additional expansion will only come with the assistance of the federal government’s broadband stimulus program.
“We’re in 23 states — mostly rural markets, so broadband reach is incredibly important to us,” Gardner said on CNBC’s Fast Money program. “We’re getting to 90 percent of our customers today; in fact, we’ve built out to every customer that’s economically feasible, so the broadband plan that has been announced by the administration is critical to us getting to that last 10 percent.”
In 2006, when Windstream was created from the spun-off landlines Alltel used to own, broadband and business customers represented 35 percent of Windstream’s revenue. Today that number has jumped to 53 percent.
That’s not surprising to many telecom analysts who suggest broadband will be key to the survival of rural landline phone companies, especially those adjacent to larger communities where cell phone providers extend coverage.
Windstream has applied for $238 million in broadband stimulus money and claims it is in the best position to spend that money to extend broadband to its most rural customers. It also has a captive customer base in many areas, where no cable competition exists and wireless service is spotty.
Gardner promotes the results of their de facto monopoly, noting that while Verizon and AT&T lose up to 11 percent of their landline customers each year in certain areas, Windstream has lost just three percent.
Still, many think landline phone companies are ultimately a dying business and a real bad investment. Except Gardner admits the most important reason why people buy stock in his company is the huge dividend payout.
“Most importantly, what people buy our stock for is our dividend,” he said. “We pay $1 dividend — an 8.5 percent yield, so our cash flow is something our investors are always tuned into.”
One of the show hosts acknowledged the huge dividend, but suggested that may be troublesome down the road.
“The dividend is interesting, but it’s getting to the point of where it might be a little too interesting, if you know what I mean,” said Guy Adami.
Adami may be referring to the practice of paying out a larger dividend than a company earns in revenue, something that can rapidly spiral a company into bankruptcy.
[flv]http://www.phillipdampier.com/video/CNBC Windstream CEO Jeff Gardner 7-27-10.flv[/flv]
Windstream CEO Jeff Gardner appeared on CNBC’s Fast Money program to talk up Windstream’s prospects for broadband, especially if the government delivers on the company’s request for $238 million in stimulus funds to extend service to its most rural customers. (4 minutes)
Jesse and his nearby neighbors on the west side of Milton are frustrated. They live just 20 minutes away from Burlington, the largest city in the state of Vermont. Despite the proximity to a city with nearly 40,000 residents, there is no cell phone coverage in western Milton, no cable television service, and no DSL service from FairPoint Communications. For this part of Milton, it’s living living in 1990, where dial-up service was one’s gateway to the Internet.
Jesse and his immediate neighbors haven’t given up searching for broadband service options, but they face a united front of intransigent operators who refuse to make the investment to extend service down his well-populated street.
“After many calls to Comcast, they eventually sent us an estimate for over $17,000 to bring service to us, despite being less than a mile from their nearest station,” Jesse tells Vermont Public Radio. “They also made it very clear that there was no plan at any point in the future, 2010 or beyond, to come here unless we paid them the money.”
Jesse and his neighbors want to give Comcast money, but not $17,000.
For at least 15 percent of Vermonters, Jesse’s story is their story. Broadband simply remains elusive and out of reach.
Three years ago, Vermont’s Republican governor Jim Douglas announced the state would achieve 100 percent broadband coverage by 2010, making Vermont the nation’s first “e-State.”
Vermont Public Radio reviewed the progress Vermont is making towards becoming America’s first e-State. (January 20, 2010) (30 minutes)
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Gov. Douglas
In June 2007 the state passed Act 79, legislation that established the Vermont Telecommunications Authority to facilitate the establishment and delivery of mobile phone and Internet access infrastructure and services for residents and businesses throughout Vermont.
The VTA, under the early leadership of Bill Shuttleworth, a former Verizon Communications senior manager, launched a modest broadband grant program to incrementally expand broadband access, often through existing service providers who agreed to use the money to extend service to unserved neighborhoods.
The Authority also acts as a clearinghouse for coordinating information about broadband projects across the state, although it doesn’t have any authority over those projects. Lately, the VTA has been backing Google’s “Think Big With a Gig” Initiative, except it promotes the state as a great choice for fiber, not just one or two communities within Vermont.
Vermont used this video to promote their bid to become a Google Fiber state. (2 minutes)
Some of the most dramatic expansion plans come from the East Central Vermont Community Fiber Network. ECFiber, a group of 22 local municipalities, in partnership with ValleyNet, a Vermont non-profit organization, is planning to implement a high-capacity fiber-optic network capable of serving 100% of homes and businesses in participating towns with Internet, telephone and cable television service. In 2008, the group coalesced around a proposal to construct a major fiber-to-the-home project to extend broadband across areas that often don’t even have slower speed DSL.
The ECFiber project brought communities together to provide the kind of broadband service private companies refused to provide. Vermont Public Radio explores the project and the enthusiasm of residents hopeful they will finally be able to get broadband service. (March 8, 2008) (24 minutes)
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ECFiber's Partner Communities
The Vermont towns, which together number roughly 55,000 residents, decided to build their own network after FairPoint Communications and local cable companies refused to extend the reach of their services. Providers claim expanding service is not financially viable. For residents like sheep farmer Marian White, interviewed by The Wall Street Journal, that means another year of paying $60 a month for satellite fraudband, the speed and consumption-limited satellite Internet service.
White calls the satellite service unreliable, especially in winter when snow accumulates on the dish. Unlike many broadband users who vegetate for hours browsing the web, White actually gets an exercise routine while trying to get her satellite service to work.
“I open a window and I take a pan of water and, a cup at a time, I launch warm water at the satellite dish until I have melted all the snow off the dish,” Ms. White says. “It works.”
Other residents treat accessing the Internet the same way rural Americans plan a trip into town to buy supplies.
Kathi Terami from Tunbridge makes a list of things to do online and then, once a week, travels into town to visit the local public library which has a high speed connection. Terami downloads Sesame Street podcasts for her children, watches YouTube links sent by her sister, and tries to download whatever she thinks she might want to see or use over the coming week.
A fiber to the home network like ECFiber would change everything for small town Vermonters. The implications are enormous according to project manager Tim Nulty.
“People are truly afraid their communities are going to die if they aren’t on the communications medium that drives the country culturally and economically,” he says. “It’s one of the most intensely felt political issues in Vermont after health care.”
Despite the plan’s good intentions, one obstacle after another has prevented ECFiber from making much headway:
The VTA rejected the proposal in 2008, calling it unfeasible;
Plans over the summer and fall of 2008 to approach big national investment banks ran head-on into the sub-prime mortgage collapse, which caused banks to stop lending;
An alternative plan to build the network with public debt financing, using smaller investors, collapsed along with Lehman Brothers on September 14, 2008;
An attempt by Senator Pat Leahy (D-Vermont) to insert federal loan guarantees into the stimulus bill in February 2009 was thwarted by partisan wrangling;
Attempts to secure federal broadband grant stimulus funding has been rejected by the Commerce Department;
Opposition to the plan and objections over its funding come from incumbent providers like FairPoint, who claim the project is unnecessary because they will provide service in those areas… eventually.
For the indefinite future, it appears Ms. White will continue to throw warm cups of water out the window on cold winter mornings.
Vermont Edition takes a comprehensive look at where the state stands in broadband and wireless deployment. (April 8, 2009) (46 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.
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For every Tunbridge resident with a story about life without broadband, there are many more across Vermont living with hit or miss Internet access.
Take Marie from Middlesex.
Most residents in more rural areas of Vermont get service where they can from FairPoint Communications
“I am in Middlesex, about a half-mile off Route 2, and five minutes from the Capitol Building. Yet up until just recently, we had no sign of high-speed Internet. I understand that my neighbors just received DSL a few weeks ago, but when I call FairPoint, they tell me it’s still not available at my house, which is a few hundred yards up the hill. Hopefully, they’re wrong and I’ll see DSL soon,” she says.
Marie is pining for yesterday’s broadband technology — FairPoint’s 1.5Mbps basic DSL service, now considered below the proposed minimum speeds to qualify for “broadband” in the National Broadband Plan. For Marie, it’s better than nothing.
Geryll in Goshen also lacks DSL and probably wouldn’t want it from FairPoint anyway.
“We have barely reliable landline service. A tech is at my house at least three times per year. I was told the lines are so old they are decaying. Using dial-up is impossible. I use satellite which is very expensive and is in my opinion only one step up from dial-up. I am limited to downloads and penalized if I reach my daily limit,” he says.
Many Vermonters acknowledge Douglas’ planned 100-percent-broadband-coverage-by-2010 won’t come close to achievement and many are highly skeptical they will ever see the day where every resident who wants broadband service can get it.
Chip in Cabot is among them, jaded after six years of arguments with FairPoint Communications and its predecessor Verizon about obtaining access to DSL. It took a cooperative FairPoint engineer outside of the business office to finally get Chip service. His neighbors were not so lucky, most emphatically rejected for DSL service from an intransigent FairPoint:
“I laughed when Governor Douglas announced his e-State goal “by 2010” three years ago. Now I’m thinking I should have made some bets on this claim. It took years of legal battles and a zoning variance to obtain partial cell coverage here in Cabot. Large parts of the town still do not have any cell coverage. Governor Douglas can perhaps be forgiven – he has no technical knowledge, and as a politician would be expected to be wildly optimistic about such “e-State” claims. The Vermont Telecommunications Authority and the Department of Public Service should know better however. We’re talking about rural areas where there is no financial incentive to provide either DSL or cell service. It will take a huge amount of money to provide service to those remaining parts of the state. I’m not optimistic.”
[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/Wall Street Journal Vermont Broadband Problems 03-02-09.flv[/flv]
The Wall Street Journal chronicled the challenges Vermonters face when broadband is unavailable to them. ECFiber may solve these problems. Some of the stories in our article are reflected in this well-done video. (3/2/2009 — 4 Minutes)
Senator Charles Schumer (D-New York) visited Canandaigua Monday to promote Ontario County’s fiber optic broadband project, in hopes of securing federal funding to expand the fiber project into adjacent counties in the Rochester-Finger Lakes region.
Schumer likened fiber optic broadband development to other revolutionary transportation projects in New York’s past which transformed local economies, created jobs, and brought prestige to the region.
“One fact has proven true since the days of the Erie Canal: if you don’t have good infrastructure, you’re not gonna bring jobs, but when you do have good infrastructure, you are gonna bring jobs. And the fiber optic ring that we are talking about here in Ontario County is the Erie Canal of the 21st century. It’s that simple,” Schumer told an audience at the Center for Infotonics.
Ontario County began constructing a fiber ring more than a decade ago to improve connectivity across the often-rural county. Bookmarked between high growth areas around Victor and Canandaigua to the east and Geneva to the west, large expanses of Ontario County are rural. Being a part of central New York’s Finger Lakes Region means the often hilly terrain and winding roads can make wiring expensive and difficult in certain areas. But the prospect for 21st century connectivity has helped fuel growth — and jobs — into the region.
Sen. Schumer
Schumer wants FCC officials to visit Ontario County to explore the project as a potential blueprint for wiring other counties.
“We will not only put this region at the cutting edge of attracting new businesses that need high speed fiber optics, but we’ll do a service to the rest of the country by showing them how it can work,” said Schumer.
New York’s senior senator said he will aggressively pursue millions in federal funding to expand the project outside of Ontario County, and help complete the fiber optic network.
The senator may find some opposition to federal funding initiatives from incumbent providers Frontier Communications and Time Warner Cable, particularly if funds originate from broadband stimulus programs. Both companies would likely object to federal spending on a fiber network that crosses areas both companies already serve.
Frontier Communications offers DSL service in many parts of Ontario County, and Time Warner Cable has wired most of the significant-sized towns and cities in the county.
The Ontario County project has been built without any federal stimulus money.
[flv]http://www.phillipdampier.com/video/Ontario County Fiber Schumer Visit 4-5-10.flv[/flv]
Sen. Schumer’s visit to Canandaigua, New York to promote Ontario County’s fiber project was covered in these three reports from YNN, WROC-TV, and WHAM-TV — all in Rochester, New York. (6 minutes)
Governor Jay Nixon has announced support for 12 different proposals from across Missouri that would expand broadband Internet access in rural and underserved parts of the state for health care, business, education and consumers.
As part of the MoBroadbandNow initiative, Missouri is coordinating efforts among private companies, local governments and rural electric cooperatives to extend broadband access to 95 percent of Missouri residents over the next five years. Much of the funding to support rural broadband expansion would come through federal stimulus money from the Recovery Act, and those backing the Missouri effort hope a coordinated approach improves the state’s chances to secure funding.
“These proposals were closely reviewed, and we identified the ones we believe are most likely to receive federal funding and most closely aligned with the vision of MoBroadbandNow,” said Governor Nixon.
Five of the applications supported by the State of Missouri are for developing middle-mile infrastructure for broadband, which would help extend existing broadband service to additional homes previously deemed too rural; six are for developing last-mile projects which directly reach customers; and one is for developing public computing centers, which will provide broadband access in public locations, often targeting a specific vulnerable population such as low-income, minority, disabled or unemployed Missourians.
Gov. Nixon
The middle-mile proposals that received letters of support from the Governor included:
BlueBird Media, of Columbia, which plans to build a middle-mile network in northern Missouri;
Boycom Cablevision, of Poplar Bluff, which plans to build a middle-mile network along the U.S. Highway 60 corridor in southern Missouri and into the Bootheel;
Sho-Me Technologies, of Marshfield, which plans to build a middle-mile network in central and south central Missouri;
SpringNet, a division of City Utilities of Springfield, which would provide broadband to customers in the metropolitan Springfield area; and
American Fiber Systems, of Rochester, N.Y., which plans to provide connections to several Metropolitan Community College facilities in Jackson County.
The last-mile proposals that received letters of support from the Governor included:
Big River Telephone Company, of Cape Girardeau, which would provide broadband to households and businesses in southeast Missouri;
Cass County, which would provide broadband to households and businesses in western Missouri;
Co-Mo Electric Cooperative, of Tipton, which would provide broadband to households and businesses in west-central Missouri;
Finally Broadband, of Seymour, which would provide broadband to households and businesses in south central Missouri;
Socket, of Columbia, which would provide broadband to households in central Missouri; and
United Electric Cooperative, of Savannah, which would provide broadband to households and businesses in northwest Missouri.
The public computing center proposal supported by the governor is being submitted by YourTel America, which would create eight public computing centers at retail centers, including five in the Kansas City area, two in the St. Louis area, and one in St. Joseph. These public computing centers also will focus on bringing broadband access to vulnerable populations of Missourians.
Currently, 77 percent of Missouri residents can obtain broadband from DSL service from AT&T and smaller independent phone companies, cable modem service from providers like Charter, Mediacom, and Cable One, and mobile broadband provided by several carriers. Most the remaining residents have little/no access to broadband service except through satellite fraudband, which promises far more than it delivers.
[flv]http://www.phillipdampier.com/video/KYTV Springfield KOLR Springfield Rural Broadband Initiative 8-12-09 3-31-10.flv[/flv]
We have two reports – the first from KYTV-TV in Springfield which comes from August 12, 2009 exploring the state of Missouri broadband and the launch of the MoBroadbandNow coordinated stimulus funding effort and the second from KOLR-TV in Springfield discussing Governor Nixon’s announcement yesterday. (4 minutes)
Qwest Communications today announced it has filed an application for a $350 million stimulus grant to bring faster broadband to rural communities throughout its 14-state local service area.
Qwest proposes to create a $467 million dollar broadband deployment fund based, in part, on the grant to expand broadband service into areas that currently lack access.
Davis
“Much like the water and electric programs the government established to encourage rural development, federal grants are needed to enable the deployment of broadband to high-cost, unserved areas,” said Steve Davis, senior vice president of Qwest Public Policy and Government Relations.
Downstream speeds would range between 12-40Mbps, which indicates Qwest is looking at ADSL2+ or potentially even VDSL2 service for parts of its western and midwestern service areas.
The company claims the funds would allow Qwest to reach more than 500,000 homes, schools, and businesses — mostly located within 50 miles of a city or town.
Qwest, like most larger telecommunications companies, did not apply initially for broadband stimulus funding. Most objected to requirements recipients adhere to Net Neutrality requirements. Although those requirements remain, some companies believe the second round will be more favorable to projects that extend access from already-existing broadband service lines. The so-called “middle mile projects” improve connectivity by helping to reduce the length of copper wiring broadband must travel across. The greater the lengths, the slower one’s speed. They can also improve speeds and capacity overall for every customer.
Qwest released this promotional video last year to show the benefits of VDSL2 service, which the company currently provides in major urban areas inside its service area. (2 minutes)
Be Sure to Read Part One: Astroturf Overload — Broadband for America = One Giant Industry Front Group for an important introduction to what this super-sized industry front group is all about. Members of Broadband for America Red: A company or group actively engaging in anti-consumer lobbying, opposes Net Neutrality, supports Internet Overcharging, belongs to […]
Astroturf: One of the underhanded tactics increasingly being used by telecom companies is “Astroturf lobbying” – creating front groups that try to mimic true grassroots, but that are all about corporate money, not citizen power. Astroturf lobbying is hardly a new approach. Senator Lloyd Bentsen is credited with coining the term in the 1980s to […]
Hong Kong remains bullish on broadband. Despite the economic downturn, City Telecom continues to invest millions in constructing one of Hong Kong’s largest fiber optic broadband networks, providing fiber to the home connections to residents. City Telecom’s HK Broadband service relies on an all-fiber optic network, and has been dubbed “the Verizon FiOS of Hong […]
BendBroadband, a small provider serving central Oregon, breathlessly announced the imminent launch of new higher speed broadband service for its customers after completing an upgrade to DOCSIS 3. Along with the launch announcement came a new logo of a sprinting dog the company attaches its new tagline to: “We’re the local dog. We better be […]
Stop the Cap! reader Rick has been educating me about some of the new-found aggression by Shaw Communications, one of western Canada’s largest telecommunications companies, in expanding its business reach across Canada. Woe to those who get in the way. Novus Entertainment is already familiar with this story. As Stop the Cap! reported previously, Shaw […]
The Canadian Radio-television Telecommunications Commission, the Canadian equivalent of the Federal Communications Commission in Washington, may be forced to consider American broadband policy before defining Net Neutrality and its role in Canadian broadband, according to an article published today in The Globe & Mail. [FCC Chairman Julius Genachowski’s] proposal – to codify and enforce some […]
In March 2000, two cable magnates sat down for the cable industry equivalent of My Dinner With Andre. Fine wine, beautiful table linens, an exquisite meal, and a Monopoly board with pieces swapped back and forth representing hundreds of thousands of Canadian consumers. Ted Rogers and Jim Shaw drew a line on the western Ontario […]
Just like FairPoint Communications, the Towering Inferno of phone companies haunting New England, Frontier Communications is making a whole lot of promises to state regulators and consumers, if they’ll only support the deal to transfer ownership of phone service from Verizon to them. This time, Frontier is issuing a self-serving press release touting their investment […]
I see it took all of five minutes for George Ou and his friends at Digital Society to be swayed by the tunnel vision myopia of last week’s latest effort to justify Internet Overcharging schemes. Until recently, I’ve always rationalized my distain for smaller usage caps by ignoring the fact that I’m being subsidized by […]
In 2007, we took our first major trip away from western New York in 20 years and spent two weeks an hour away from Calgary, Alberta. After two weeks in Kananaskis Country, Banff, Calgary, and other spots all over southern Alberta, we came away with the Good, the Bad, and the Ugly: The Good Alberta […]
A federal appeals court in Washington has struck down, for a second time, a rulemaking by the Federal Communications Commission to limit the size of the nation’s largest cable operators to 30% of the nation’s pay television marketplace, calling the rule “arbitrary and capricious.” The 30% rule, designed to keep no single company from controlling […]
Less than half of Americans surveyed by PC Magazine report they are very satisfied with the broadband speed delivered by their Internet service provider. PC Magazine released a comprehensive study this month on speed, provider satisfaction, and consumer opinions about the state of broadband in their community. The publisher sampled more than 17,000 participants, checking […]
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Windstream CEO Jeff Gardner told a cable news audience Tuesday that the rural phone company already supplies broadband to 100 percent of its service areas where the service is “economically feasible” to provide. Any additional expansion will only come with the assistance of the federal government’s broadband stimulus program.
That’s not surprising to many telecom analysts who suggest broadband will be key to the survival of rural landline phone companies, especially those adjacent to larger communities where cell phone providers extend coverage.
“Most importantly, what people buy our stock for is our dividend,” he said. “We pay $1 dividend — an 8.5 percent yield, so our cash flow is something our investors are always tuned into.”
