The Communications Workers of America says when it comes to “stealthy” bills like S.B. 1611 that deregulate telecommunications in California, “no price is too high — no lie is too big.”

AT&T and the American Legislative Exchange Council (ALEC) are back again fighting for more deregulation of California’s telecommunications industry with a bill that will strip oversight of vital telecommunications services and stop punishing bad actors that leave customers without telephone service, sometimes for weeks.

California legislators are typically not responsive to the wholesale deregulation efforts that seem to draw support in more conservative states, so AT&T’s lobbyists are trying a more “incremental” approach in the state. But AT&T has also inserted “stealth” language into the bill that would dismantle consumer protections, allow companies to abandon unprofitable landlines, and strip away important oversight “checks and balances” needed to ensure good service.

Sen. Padilla’s top corporate contributor is AT&T.

S.B. 1611 illustrates that AT&T can buy its way into any legislator’s office, Democrat or Republican. The bill’s chief sponsor, Rep. Alex Padilla (D-20th Senate District) has received more contributions from AT&T than from any other corporation in both the 2006 and 2010 elections.

The bill ostensibly claims to limit its scope narrowly to “Voice over Internet Protocol” (VoIP) and “Internet Protocol enabled service.” That brings to mind services like “digital phone service” from cable companies or alternative telephone services like Vonage, magicJack or Skype.

S.B. 1611:

The bill would prohibit any department, agency, commission, or political subdivision of the state from enacting, adopting, or enforcing any law, rule, regulation, ordinance, standard, order, or other provision having the force or effect of law, that regulates VoIP or other IP enabled service, unless required or delegated by federal law or expressly authorized by statute. The bill would specify certain areas of law that are expressly applicable to VoIP and IP enabled service providers. The bill would provide that its limitations upon the commission’s regulation of VoIP and IP enabled services do not affect the commission’s existing authority over non-VoIP and other non-IP enabled wireline or wireless service….

To the layperson who generally believes services like Skype and Vonage might not deserve the same oversight as AT&T, Frontier, or Verizon — which provide Californians traditional landline service, consider Section 2 (a)(2) of the bill, which describes and defines VoIP and IP enabled service as anything that:

“Permits a user generally to receive a call that originates on the public switched telephone network and to terminate a call to the public switched telephone network” and “any service, capability, functionality, or application using existing Internet Protocol, or any successor Internet Protocol, that enables an end user to send or receive a communication in existing Internet Protocol format, or any successor Internet Protocol format through a broadband connection, regardless of whether the communication is voice, data, or video.”

This “narrow” deregulation bill just grew as wide as the Gulf of Mexico and can realistically allow any phone company in California to ignore state oversight and regulation forever.

Traditional telephone companies increasingly utilize exactly these technologies for calls placed over ordinary landline phones. Using broadband service to engage in two-way communications also qualifies. With this kind of defining language, virtually every telecommunications service in the state of California would win near-total deregulation and walk away from important oversight. The California Public Utilities Commission certainly understood the implications of this bill when the majority of commissioners came out in opposition to S.B. 1611.

Goodbye Universal Service: S.B. 1611 Allows Phone Companies to Abandon Rural and Economically Distressed California Communities

Several public interest groups also discovered language in the bill that is a perennial favorite of AT&T — eliminating universal service requirements that assure every citizen that wants a telephone line can get one. S.B. 1611 lays waste to Section 709 of the California Code which guarantees: “our universal service commitment by assuring the continued affordability and widespread availability of high-quality telecommunications services to all Californians.”

With that language gone, the state’s phone companies can unilaterally decide to abandon the customers they no longer want to serve. That could spell disaster in rural northern and eastern California, and leave low income residents with nothing but a dead phone line, unable even to call 911 in an emergency.

One AT&T Lobbyist for Every California Lawmaker

The importance AT&T places on influencing lawmakers is readily apparent when one realizes there are at least 120 AT&T lobbyists working in the state capital Sacramento, one for every California lawmaker.

But when one considers the track record of California phone and cable companies in the last few years, is less oversight and regulation the right answer?

• Verizon Sued for Providing DSL Speeds (Suitable for VoIP) They Can’t Deliver
• AT&T Gouges California With 25% Rate Increase
• California Landline Nightmare: Residents in Bakersfield in Tears Over Lousy Service
• Southern California Power & Phone Companies Blamed for Devastating Wildfires
• Verizon Bills Dead People: We’ll Settle for Half Because She’s No Longer Among the Living
• Frontier’s Goodbye Kiss: A $680 Final Bill for a Departing Customer
• Calabasas Residents Annoyed by “Corrupt and Deceptive” Charter Cable; Time Warner Cable Also Called Out
• Time Warner Cable Guy Arrives Late to Service Call, Leaves Claiming Homeowner Had “Bad Air”
• More Frontier Problems: Californians Wait Months on Refunds for Disconnected Landlines
• The Many Challenges of Charter Cable: Rate Increases for Seniors, Bankruptcy, Employees Attacked, Customers Hassled
• AT&T’s California Gold Rush: Company Lobbyists Spread the Money Far and Wide

“SB 1161 is a stealth vehicle for the gradual deregulation of telecommunications in California,” the Consumer Federation of California declared on their website. “Consumers need the CPUC to have the power to investigate complaints of bad service or unfair charges on bills, regardless of the technology used to provide phone service.”

Call to Action!

Consumers across California need to get on board immediately to stop S.B. 1611. You can file online opposition courtesy of Free Press, but it is far more effective to also directly phone your own legislator and leave a message to urge this bill be defeated. It literally takes only 2-3 minutes to call and the money and phone service you could save will be your own. Use this district finder to contact your representatives.

S.B. 1161 is scheduled for hearing in the Assembly Appropriations Committee this Wednesday, so time is of the essence!

The cable industry is moving in on the phone companies' best customers: commercial enterprises

The growing competitiveness of the cable industry in the commercial services sector could spell trouble for some of the nation’s smaller telecommunications companies.

A new report from Moody’s Investor Service declares the cable industry is spoiling the business plans of telephone companies to grow revenue selling service to business customers.

With cable companies now investing in wiring office parks and downtown buildings to sell packages of voice and data services to corporate customers, traditional phone company revenue will suffer, declares Moody, which predicts traditional wireline revenue will be flat or decrease this year into next.

“Cable Companies Quash Telecom Business-Revenue Rebound,” warns the companies at the greatest risk of revenue declines include EarthLink, Inc., Integra Telecom, Inc., U.S. TelePacific Corp., and CCGI Holding Corp. Among familiar independent phone companies, Frontier Communications, FairPoint Communications, and Hawaiian Telcom are at the biggest risk of losing customers, primarily because all three lack strong business products, according to the Moody’s report.

AT&T, CenturyLink, and Verizon are at a lower risk of losing customers, because all three focus investments on commercial services. CenturyLink’s acquisition of Qwest, a  former Baby Bell, strengthened its business services position, especially in the Pacific Northwest.

The cable companies best positioned to steal away telephone company customers are Comcast and Time Warner Cable, both of which have invested heavily in wiring commercial businesses for service. In the past, cable operators charged thousands (sometimes tens of thousands) of dollars to install service in unwired commercial buildings, but now that initial wiring investment is increasingly being covered by cable operators.

Moody’s declares the business service sector a growth industry for cable. The report notes business revenues only account for $5 billion — just six percent — of the cable industry’s total business in 2011. In contrast, phone companies earn 40 percent of their revenue from business customers.

The report also states individual cable companies are now collaborating to deliver business service to companies with multiple service locations, which used to present a problem when offices were located in territories served by different operators.

If the cable industry continues to erode traditional telephone company revenue, it could eventually threaten the viability of some companies, especially those heavily-laden with acquisition-related debt.

Quebec City residents are enjoying the benefits of an Internet speed race between incumbent cable operator Vidéotron Ltée and telephone company Bell, with both bringing some of Canada’s fastest Internet speeds to the provincial capital.

Vidéotron Ltée announced it will introduce 200Mbps service in the city after completing a network upgrade. The company was undoubtedly responding to increasing competition from Bell, which is installing fiber optic upgrades in the city and selling speeds up to 175Mbps to area consumers and businesses.

The cable company has faced Bell’s Fibe TV service and has lost customers as a result. Now, Vidéotron is trying to regain its footing with upgrades of its own, including the introduction of Illico, which expands on-demand options and provides flexible access to recorded shows on computers, phones, and tablet devices.

Bell’s personal video recorder (PVR) set top box lets customers watch recorded programs on any television in the home, and can also record multiple concurrent shows. Vidéotron hopes Illico will help expand viewing options further for their customers.

As AT&T joins Verizon selling off its Yellow Pages publishing unit and payphones keep disappearing from street corners, the media is writing the landline obituary once again.

CNN Money asks today whether we’re witnessing the death of the landline.

In as little as 20 years, the concept of a wired phone line may become the novelty a rotary-dial phone represents today.  Yes, traditional phone lines will still be found in businesses and in the homes of those uncomfortable dealing with a mobile phone, but America’s largest phone companies are well aware the traditional telephone line is in decline.

[flv width=”412″ height=”330″]http://www.phillipdampier.com/video/ATT Archives What is the Bell System.flv[/flv]

The Bell System, as it was known until the 1980s, used to comprise AT&T, Bell Labs, Western Electric, Long Lines, and two dozen local “operating companies” like New York Telephone, Mountain Bell, etc.  This AT&T documentary, from 1976, explores how “the phone company” used to function.  New innovations like “lightwave” are showcased, promising to deliver voice phone calls over glass fibers one day.  

Much of the technology seen in the documentary may be unfamiliar if you are under 30 (and check out how customer records were maintained back then), but those who remember renting telephones in garish colors from your local phone company will recognize the phones that occupied space in your home not that long ago.  The only part of the landline network that hasn’t changed much in the last 40 years is the wiring infrastructure itself, which has been allowed to deteriorate as customers continue to depart.

Why was the company so darn big back then?  Because it had to be, the documentary says, to serve a big America.  Hilariously, the company defends its then-status as a “regulated monopoly” telling viewers “[a] regulated monopoly works well in communications because you don’t duplicate facilities and you produce real economies over the long haul.”  (14 minutes)

CNN reports nearly one-third of all American homes no longer have landline service, double the rate from 2008, triple that of 2007.  Verizon is feeling the heat the most, with revenue down 19% over the last five years.  AT&T has seen their revenue drop 16.5% over the same period.

But things are not all bad for phone companies willing to spend money upgrading their networks.  Verizon’s top-rated FiOS fiber to the home service is a compelling competitor to Comcast and Time Warner Cable.  AT&T’s U-verse has gotten a respectable market share larger midwestern cities and draws customers who like its DVR box and the chance to stick it to the local cable company they’ve hated for years.

But where both companies have decided against investing in upgrades — notably in their rural service areas — the traditional phone line is trapped in time.  Only the network it depends on is changing, and not for the better.

[flv]http://www.phillipdampier.com/video/ATT 1993-1994 You Will Ad Campaign Compilation.flv[/flv]

Back in 1993, AT&T produced seven advertisements dubbed the “You Will” series, showcasing future technologies AT&T would “deliver to you.”  Eerily, the vast majority of these predictions came true, but mostly from companies other than AT&T.  While the phone company predicted what would eventually become E-ZPass, Apple’s iPad, Apple’s Siri, the smartphone, Skype, Amazon’s Kindle, the cable industry’s home security apps, video on demand, and GPS navigation, most of those innovations were developed and sold by others.  

AT&T spun away Bell Labs and became preoccupied selling Internet access, cell phones and reassembling itself into its former ‘hugeness’ through mergers and buyouts. With limited investment in innovation, AT&T risks being left as a “dumb pipe” provider, selling the connectivity (among many others) to allow other companies’ devices to communicate. (Alert: Loud Volume at around 2 minutes) (4 minutes)

Verizon decided to ditch its rural service areas to FairPoint Communications in northern New England and Frontier Communications in 14 other states.  The results have not been good for the buyers (and often customers).  FairPoint went bankrupt in 2009, overwhelmed by the debt it incurred buying phone lines in Vermont, New Hampshire, and Maine.  Frontier has watched its sales fall ever since its own landline acquisition, and the company has gotten scores of complaints from ex-Verizon customers about broken promises for improved broadband, billing errors, and poor service.

Analysts predict AT&T will start dumping its rural landline customers in the near future as well, letting the company focus on its U-verse service areas.  But who will buy these cast-offs?  CNN reports nobody knows.  CenturyLink and Windstream, two major independent phone companies, don’t appear to be in the mood to acquire neglected landline facilities they will need to spend millions to repair and upgrade.

One thing is certain — both AT&T and Verizon are tailoring business plans to favor Wall Street approval.  The companies’ decisions to temporarily boost revenue selling pieces of its operations has helped stock prices, but has also made the companies shadows of their former selves.  Nearly 30 years ago, customers still paid the phone company to rent their home telephones, relied extensively on the companies’ lucrative White and Yellow Pages for directory information, and discovered new technology innovations like digital switching thanks to Bell Labs, the research arm of AT&T — today independent and known as Alcatel-Lucent.  Today, people in some cities cannot even find a telephone company-owned payphone.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WJBK Detroit Quest to Find a Working Pay Phone 4-10-12.mp4[/flv]

WJBK in Detroit this week ventured out across Detroit to see if they could find a pay phone that actually works.  That old phone booth on the corner is long gone, and some admit they haven’t touched a pay phone in 20 years.  (2 minutes)

Verizon Communications has agreed to full restitution, as part of a class action settlement, for unauthorized third party charges on their customers’ phone bills.

Known in the industry as “cramming,” extra unauthorized fees pop up on phone bills for voicemail, dating lines, ringtones, or 800 numbers many customers have no idea they even had.  Almost all of the charges come from independent companies unaffiliated with Verizon.  But critics charge phone companies have been ignoring abusive cramming practices, in part because they share a percentage of money billed and collected from customers.

Deceptive cramming charges are often hard to spot on phone bills replete with cleverly-named-to-be-obscure surcharges, taxes and fees.  Many crammers deliberately keep descriptions about the services they are billing as vague as possible, sometimes appearing as “special services charge,” “voicemail access,” or even “monthly charge.”  Many ratepayers assume it is all just a part of the cost of having phone service.

A class action lawsuit against Verizon accused the company of doing little to stop unauthorized third party fees, and many customers afflicted by them report getting them off their bills is not as easy at it should be.

“When I had a mysterious $14.95 monthly fee for ‘voicemail,’ a service I knew I didn’t have, Verizon required me to fight with some Bermuda-based company to get the charges reversed, and they just kept repeating I must have authorized the service because it was on my bill,” reports Stop the Cap! reader Kevin Sessly. “They wear you down until you just pay the bill.”

Sessly eventually won refunds after contacting his state’s public utility regulator.

As part of the settlement, Verizon customers will be entitled to full refunds of all unauthorized third party charges from April 27, 2005 through Feb. 28, 2012.

“Some settlement class members may have a claim for hundreds or thousands of dollars in refunds under the settlement,” class counsel Bryan Kolton said.

Verizon has also agreed to adopt an “opt in” system where customers must first allow third party charges on their phone bills before a company can bill your account.  Currently, customers are subject to third party billing unless they specifically block it with their telephone company.

“It is difficult to overstate the credit that is due Verizon for its commitment to fixing the third-party billing system as it relates to Verizon customers,” said John Jacobs, one of the lead attorneys for the class. “By this settlement, Verizon has committed to extensive and unprecedented changes that we believe will go a long way toward eliminating cramming and will change the industry.”

Crammers have used a variety of tricks to bill phone customers for services they never ordered.  Completing sweepstakes or contest forms with a phone number is one common method, asking for a cell phone number as part of a “free ringtone offer” is another.  Many services also trick customers into signing up with free offers or discounts on other products or services.  Many customers forget to cancel before the trial ends, resulting in recurring charges.

Customers will be able to recover the full amount of the unauthorized charges, if they have copies of their past phone bills, or obtain a quick $40 flat-rate refund by submitting claims at www.verizonthirdpartybillingsettlement.com or calling toll-free 1-877-772-6219.  Both services should be up and running by March 9.

Non-Verizon customers can still take steps to protect themselves from unauthorized charges by calling their provider and requesting a block on all third-party charges.  This service is provided at no charge.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ABC News Phone Cramming How to Get Money From Verizon Settlement 3-5-12.mp4[/flv]

ABC News reports on the Verizon settlement and steps consumers can take to identify cramming and obtain refunds for unauthorized charges.  (2 minutes)