Qwest, the former-Baby Bell serving the upper midwest, mountain west, and desert states got caught on tape telling customers the company’s intent is to eliminate competition from independent Internet Service Providers by banning them from their network.

One such ISP, XMission, has blown the whistle on the anti-competitive practice, noting they could potentially be run out of business if Qwest manages to keep them from delivering competitive service over Qwest’s upgraded partly-fiber network.

In 1997, XMission first started providing service over Qwest’s DSL.  We have literally paid millions of dollars of revenue to Qwest for the privilege, all the while relieving them of the difficult task of providing excellent customer support.  In 2008, Qwest launched their “Fiber-to-the-Node” product which is usually falsely advertised as just plain “fiber”.  Unlike the UTOPIA system which runs fiber optics all the way to the home, Qwest FTTN runs fiber to a neighborhood, then copper DSL lines to the customer.  Because of the subsequent shorter distances on copper, they are able to attain download speeds of up to 40Mbit to the customer and 5Mbit from the customer.  This is normally referred to “download” and “upload” respectively.

There is one key difference in the FTTN product.  Qwest is not not allowing 3rd party ISPs like XMission to sell their own service over it, as we traditionally have with their first DSL product.  In addition, Qwest has been notorious for disinformation and service problems that motivate customers to drop their current ISP and change over to Qwest.  Technical problems exist, such as radio interference that degrades existing XMission customer DSL speeds, sometimes making their Internet connection unusable.  The solution offered by Qwest was not to shield the radio interference, but to switch customers off XMission and to their own product.  We have also had reports and in one case, a recording, of Qwest sales representatives telling customers that Qwest’s intent is to “eliminate” 3rd party ISPs.   Today, I received an email from a customer who was told by Qwest that XMission’s equipment is “too slow” to handle FTTN service.  Considering that we service customers on fiber and in our data center with up to a gigabit in solid bandwidth, one has to wonder why Qwest feels the need to lie to sell their service.  There is no technical reason why Qwest could not allow 3rd party ISPs like XMission to provide service over their FTTN network.

XMission has been hemorrhaging DSL customers for the past year, and I really don’t blame them for looking for bigger Internet connections.  I personally can only get 3Mbit download and 500Kbit upload to my own home and it is not enough bandwidth for me.  With Netflix, Hulu, Youtube, and other services demanding more and more bandwidth, homes will need larger and larger connections.  Unless they’re in a UTOPIA connected city, chances are that they are going to choose from two companies to buy Internet from in the future, neither of them stellar.

UTOPIA is Utah’s publicly-owned fiber optic platform delivering competitive choice to residents of 16 Utah cities.  Residents enjoy true fiber optic service and can select from 11 different Internet Service Providers, each offering their own speed levels, bundles, and pricing.  How many ISPs can you choose from?

Qwest’s newest network upgrades deliver service somewhat comparable to AT&T’s U-verse — faster broadband through a hybrid fiber, copper phone line-based network.  Qwest also sells traditional DSL service over standard phone lines, including so-called “dry loop” service that delivers broadband service without also buying a phone line.  While competing providers can sell service over many of Qwest’s DSL lines, they have been barred from selling access over these new, faster-speed lines.

Customers have been unimpressed with Qwest’s traditional DSL services which often promises far more than it actually delivers.

Alex Langshall in South Salt Lake was guaranteed 7Mbps DSL service from Qwest, but ended up with only 640kbps.  The reason?  His distance from the central office and the deteriorating quality of Qwest’s landline network.  Qwest’s technicians told Alex even after line conditioning and rehabilitation, he would only get 1.5Mbps service.

XMission publicized this recording between Qwest and one of their customers about the phone company’s intentions for independent ISPs on their network (July 21, 2010) (3 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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Comcast's usage meter is now available in 25 states

Comcast customers in at least 25 states have been notified that Comcast’s new usage measurement meter is now up and running.  Comcast introduced a 250 GB monthly usage limit in August 2008 after the Federal Communications Commission stopped the company from throttling usage-intensive file-trading applications.  Comcast has enforced the cap among those customers who regularly exceed it by wide margins, usually warning customers by phone or mail that they must reduce usage or face account suspension.  The usage meter application allows the company to direct customers to the self-measurement tool the company hopes will reduce the need for warnings.

Customers in Alabama, Arkansas, Connecticut, Colorado, Delaware, Florida, Georgia, Kansas, Maine, Maryland, Minnesota, Missouri, Nevada, New Hampshire, New York, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, Washington, D.C., West Virginia, and Wisconsin should have already or will receive e-mail from the company officially notifying them about the launch of the usage meter.

Since the meter was introduced, broadband usage and pricing has increased for many customers, but the usage cap has not.  While generous by current standards, an inflexible usage limit will increasingly trap customers who use Comcast broadband service for high quality video streaming, file backups, or file trading activities which can consume considerable bandwidth.

Informally, Comcast has allowed some residential customers to purchase second accounts if they intend to blow past their usage allowance, because the company currently offers no official provisions for those who exceed the limit.

Qwest, born from a merger between US West and Qwest Communications is up for sale.  Again.  Actually, analysts are wondering exactly when Qwest wasn’t for sale over the last several years.  Like that odd house on the corner of your street that nobody wants to buy, Qwest keeps lowering its asking price, hoping would-be suitors will stop driving past.

Qwest's service area

Qwest has a lot going against it.  Unlike its bigger cousin Baby Bells, mostly absorbed into the AT&T or Verizon Continuum, Qwest is saddled with a service area that often spells r-u-r-a-l.  The company got the short end of the stick when the Bell System was carved up in the mid-1980s, stuck with Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming.  That’s a service territory shaped like a “T” which spells “trouble.”  Outside of a few major cities like Phoenix, Denver, Minneapolis-St. Paul, Salt Lake City, and Seattle, the rest of Qwest Country is desert, ranch land, mountain ranges, farms, prairies, and some nice lakes and rivers.

While a great place to vacation, these spectacular landscapes are not what investors are looking for when considering what to do with a 100-year old copper wire telephone system.  Qwest never even managed to launch its own cell phone service, instead relying on reselling Verizon Wireless to interested customers.  Its foray into the cable TV business also flopped, and the company currently resells satellite TV service to customers.

The company was plagued with insider trading and other allegations of financial irregularities in the mid-2000s, and since 2005 has been rumored to be on the sales block.

The asking price keeps dropping, along with the company’s value.  Originally worth $45 billion dollars ten years ago, Qwest can’t attract buyers even at half the price.

Customers aren’t very impressed either.  In Lake County, Minnesota, the local newspaper printed a damning editorial Thursday accusing the company of being a villainous, untrustworthy liar after phone service went out for virtually the entire North Shore of Minnesota:

We’d like to have a villain in this story, but, so far, that character sketch is thin. Qwest is fitting the bill if you like obsequiousness on par with cigarette or multinational food companies.

Qwest touted the promise of high-tech 911 service, fast internet, a better connected North Shore. They’ve turned out to be good at promises but lousy on delivery when things go wrong.

The Lake County News-Chronicle excoriated Qwest in an editorial published last Thursday

Most people heard “All circuits are busy, please try your call again later” on their phones Tuesday. For more than a week, we’ve heard the same line from Qwest regarding what happened in Duluth and why there wasn’t a reroute up the Shore.

You can’t help becoming wary about how our technological infrastructure works after such failure Tuesday. Everyone was surprised to know that when fiber optic goes, so do cell phones. It was even more surprising to know that there was no detour for the line up the Shore. But that wasn’t technological indifference. That was a trust we put in Qwest.

[…]

It’s different when Qwest lies about why its line failed and we find out its assurance about a reroute was pure fantasy. There ends any trust or understanding to calmly wait out its line failures.

With Qwest, everything has been below the ground, literally and figuratively. It’s answer that repairing fiber optic is “difficult,” the empty promise of rerouting, and the lack of explanation of the real cause of the damage in Duluth, are all unacceptable.

It’s as if Qwest prefers a cloak of mystery about its technology and we should be happy to have it at all. That’s a poisoned relationship to have with fiber optic as it becomes ubiquitous in our lives.

Qwest, tell us what really happened under that street in Duluth, and, if it was the result of your own negligence, own up to it. Tell us why you told customers, including agencies responsible for public safety, you had a plan, a reroute in the case of a line break, but really didn’t.

And tell us why we should trust you again with this vital link to safety, health, and business along the North Shore.

While plots can be richer for their villains, we’d rather not have one in this story.

Ouch.

The Wall Street Mergers & Acquisition-vultures are circling over the company again, raising the stakes that Qwest is once again the common-sense choice for a takeover.  But even they realize nobody may want the entire company, saddled with rural states’ phone customers over an aging network that will cost billions to upgrade.  So the next best thing is to carve up the profitable bits and sell those to the highest bidder.  Companies like AT&T, Verizon, and BellSouth could do well serving the major population centers in Qwest’s territory, leaving folks in states like Wyoming, Idaho, Montana and the Dakotas to their choice of likely “rural telco” suitors: CenturyLink, Frontier Communications, or Windstream.  Qwest’s valued fiber optic network could fetch a billion or more on the open market.  Their data centers could manage another cool billion if sold.

As Qwest’s revenue continues to decline, the company is likely going to continue cutting costs, keeping themselves as attractive as possible to would-be suitors.

“It gets harder and harder to keep cutting costs,” Donna Jaegers, an analyst with D.A. Davidson & Co. told the Denver Post.  “As (former WorldCom chief executive) Bernie Ebbers used to say, ‘There’s no more lemon juice left in that lemon.’ ”

Just ask customers on the North Shore of Minnesota, as they sip Qwest’s bitter lemonade.