New Yorkers know the end of summer is upon us when the New York State Fair opens every year at the end of August in centrally-located Syracuse. But at this year’s fair, Time Warner Cable has also made it clear the season for its 4G mobile broadband service has also come to at least a temporary end.

Fierce Cable’s Steve Donohue noticed big changes at the cable company exhibit:

When I attended the New York State Fair outside of Syracuse last year, the Intelligo mobile hotspot–which Time Warner Cable offered to subscribers through a partnership with Clearwire –was one of the hottest pieces of technology that it had on display. Time Warner Cable said that it tripled the number of 4G wireless hotspots that it sold at the fair in 2011 compared to 2010. Here in Central New York, where subscribers don’t have access to the Wi-Fi networks that Time Warner Cable, Comcast and Cablevision offer in the New York area, apparently there was a significant demand for mobile hotspots.

‘Intelligone’

This year, the mobile broadband technology is all gone. Both Time Warner Cable and Comcast are no longer selling access to Clearwire’s 4G WiMAX service marketed under each cable company’s brand. Once it became clear they were partnering up with Verizon Wireless to sell each other’s products, the days of Clearwire were numbered.

Both cable companies are still supporting existing Clearwire mobile broadband customers, but for how long nobody is certain. Verizon Wireless’ products have not yet appeared on the western or central New York regional Time Warner Cable websites, but may be forthcoming soon.

Meanwhile, Time Warner’s push this year is on home automation and security. The company has been test marketing its IntelligentHome service in Rochester for quite awhile and has now expanded to other upstate areas. The service offers a respectable suite of traditional security products apps ranging from watching your pets over webcams to controlling your home’s heating and cooling system from remote locations.

In 2010, Time Warner Cable featured celebrity Mike O’Malley at the Fair to shake hands and sign autographs. This year, they have a player and “spokesmodel” from the Syracuse Crunch, a minor league pro hockey team. Time Warner Cable also hired a juggler on a unicycle to attract crowds to their pavilion.

Phillip “At Least They Are Transparent About Robbing You” Dampier

The unassailable truth is that if there is a right way for a company to treat its customers and a wrong way, AT&T will always choose the wrong way. It’s the primary reason I refuse to do business with them.

The company’s recent decision to block Apple FaceTime for customers who refuse to be herded to one of AT&T’s new Mobile Share plans is another shot across the bow of Net Neutrality, which declares customers should be able to use the applications and services of their choosing — particularly on networks where they pay for those choices.

Principal #1 of Net Neutrality: Companies should not be playing favorites with applications or services by blocking or restricting those a provider does not favor.

AT&T’s response: ‘Whatever.’

The predictable outrage of customers should have come as no surprise to AT&T, but somehow it did.

The company picked testy senior vice president for regulatory affairs Bob Quinn to mount a rapid defense against the pitchfork-and-torch-yielding throngs on AT&T’s Public Policy Blog. That was their second mistake.

Quinn, who spent last December valiantly defending AT&T against its too-precious CupcakeGate mini-scandal, conjured up this pretzel-twisted logic tap dance to explain away its latest boorish behavior:

Providers of mobile broadband Internet access service are subject to two net neutrality requirements: (1) a transparency requirement pursuant to which they must disclose accurate information regarding the network management practices, performance, and commercial terms of their broadband Internet access services; and (2) a no-blocking requirement under which they are prohibited, subject to reasonable network management, from blocking applications that compete with the provider’s voice or video telephony services.

AT&T’s plans for FaceTime will not violate either requirement.  Our policies regarding FaceTime will be fully transparent to all consumers, and no one has argued to the contrary.  There is no transparency issue here.

Nor is there a blocking issue.  The FCC’s net neutrality rules do not regulate the availability to customers of applications that are preloaded on phones.  Indeed, the rules do not require that providers make available any preloaded apps.  Rather, they address whether customers are able to download apps that compete with our voice or video telephony services.   AT&T does not restrict customers from downloading any such lawful applications, and there are several video chat apps available in the various app stores serving particular operating systems. (I won’t name any of them for fear that I will be accused by these same groups of discriminating in favor of those apps.  But just go to your app store on your device and type “video chat.”)  Therefore, there is no net neutrality violation.

A company lecturing its customers for daring to question its decisions is always a good way to enhance those warm and fuzzy feelings people have about America’s least-liked wireless phone company. Quinn first scolds customers and consumer groups about their “knee jerk reaction,” for being upset about the issue. Then he declares they have “rushed to judgment,” using a turn of phrase not heard since O.J. Simpson’s defense team pounded it to death, and look where that ultimately got us.

The crux of AT&T’s argument is they get a free pass to “block and herd” because Apple FaceTime was pre-installed on customer phones. Therefore, since AT&T didn’t block you from downloading an app you already had, it cannot possibly be a Net Neutrality violation. Because as we all know, Net Neutrality is only about download blocking.

At least AT&T is keeping their promise to be transparent. They have, indeed, fully informed you they are mugging you while in the process of mugging you. Full disclosure… matters.

Somehow, I missed the “preinstalled does not count” section in the Federal Communications Commission’s December 2010 order to providers telling them to preserve the free and open Internet. So I spent last night with this legalese page-turner (194 pages to be exact) to refresh my memory.

Nope, it isn’t in there. You can read it for yourself from the link above.

So it isn’t me. It is them, making up the rules as they go, again.

Quinn graciously offers customers one concession: AT&T will allow you to use Apple FaceTime over your own home Wi-Fi network. Gosh thanks!

For customers addicted to FaceTime, AT&T’s solution is an expensive plan change. An average customer currently paying $70 for 450-barely used voice minutes and 3GB of data will find FaceTime off-limits on AT&T’s network unless they “upgrade” to AT&T’s $95 Mobile Share plan, which gets you only 1GB of data, but endless voice minutes you don’t want and unlimited texting you don’t need.

Result: Pay $25 more a month and get your data allowance slashed by 2/3rds. That’s a deal — AT&T-style.

But it is one some customers are through taking. Nalin Kuachusri:

The new FaceTime restrictions will usher in the end of my 12+ year relationship with AT&T. I’m tired of the consistent manipulation of plans and features to extract more and more money for services I don’t need. For example: there used to be several text-message options (200, 1000, 1500, unlimited) so I could choose and pay for the one that fit my usage best. Then there was the option to move from unlimited data to 2GB/month to save $5. That was great for me and fit my usage. Then I was forced to move back to $30/month if I wanted to add tethering where I’ll get an extra GB that I’ll never use. Finally, after 12 years as a customer with an account in good standing, I was not allowed to unlock my phone for my 10-day trip to Europe so I could get a local SIM. I couldn’t be happier to give you one final $200 payment as an early-termination fee so I can move to Verizon.

Unfortunately for Kuachusri, the bosses at Verizon Wireless are likely slapping themselves silly because they did not come up with the idea first.

Insiders at the Federal Communications Commission have leaked word all five commissioners have cast their votes in favor of a controversial partnership deal between Verizon Wireless and the nation’s largest cable operators to cross-market products and services to customers.

Three Democrats and two Republicans have approved both the marketing agreement and a spectrum transfer deal from cable operators to Verizon Wireless.  Republicans did not approve of an order mandating a data roaming obligation or the recognition the FCC has the authority to oversee the marketing agreement, but both will remain part of the final order.

The Justice Department earlier approved the modified deal that includes a time limit on the marketing partnership and restricts certain cross-marketing in FiOS-wired areas.

FCC chairman Julius Genachowski said the spectrum transfer was urgently needed to address wireless spectrum shortages. But consumer groups opposed the deal, calling it anti-competitive and anti-consumer. Some unions also say the deal comes close to collusion and will lead to Verizon further pulling back from its fiber upgrade FiOS in favor of selling cable subscriptions.

“If you are a voice copper customer and you call in [with] trouble on your line, when we go out to repair that we are actually moving you to the FiOS product. We are not repairing the copper anymore.” — Fran Shammo, Verizon’s executive vice-president and chief financial officer

Verizon has declared the end of the copper wire phone line, at least in areas where the company’s companion fiber optic network FiOS is available. Fran Shammo, chief financial officer of Verizon Communications spoke about the death of the copper-based landline and the company’s strategic plans for its wired and wireless networks in the coming quarter at Oppenheimer’s 15th Annual Technology, Internet & Communications Conference last Wednesday.

Verizon’s quiet and involuntary switch-out to fiber service is part of the company’s grander marketing effort to push customers towards upgrading service.

“The benefit we are getting […]  if you are a voice customer and we move you to [fiber] we now can upsell you to the Internet,” Shammo explained. “If you come over as a voice and DSL customer and we move you to FiOS, you now are a candidate for the video product. So there is an upsell which is definitely a benefit to this.”

Verizon earlier announced it would no longer sell standalone DSL service to customers, and has stopped selling copper-based DSL products in areas where Verizon FiOS is available. It even discourages customers from considering standalone FiOS broadband, with a budget-busting price of $64.99 for stand-alone 15/5Mbps service with a two-year contract or $69.99 on a month-to-month basis. Verizon offers considerably better value when customers sign up for multiple FiOS services.

Scrap heap

Verizon says the reliability of fiber makes maintaining older copper wire networks pointless.

“The bigger benefit is we are transforming the cost structure of our copper business because the copper fails two to three times more than fiber, which means we have two to three more times we have a tech and a truck rolling out to that copper connection. So we are eliminating that,” Frammo said.

Frammo added decreasing repair and maintenance expenses will help improve profit margins for the company.

Both CEO Lowell McAdam and Frammo have made profit margins a much higher priority for Verizon Communications than ever before.

“If you look at the [landline] side of the business, […] we have made a shift that said we are going to focus more on the profitability of FiOS this year. And that is important for us to do, because we need to generate the cash flow so that we can reinvest in those platforms,” Frammo said. “But I think as an industry as a whole you are seeing a different focus now, that it is more on returns, it is more on profitability. Can that continue? Sure. Obviously, you might have your blips here and there based on how fast something grows in one quarter versus another, but if you look at Verizon Wireless and you look at Verizon we are expanding our margins.”

Frammo addressed several key plans Verizon has for both its wired and wireless businesses, and what political priorities the company has for the rest of the year:

Verizon Wireless’ 4G LTE Network is a Platform for Profits

Shammo told investors Verizon’s 4G LTE platform is now available to 76 percent of its customers in 337 markets. LTE, Shammo said, delivers not only the speed customers want but reduced operating costs for the cell phone provider. But Shammo said that will not bring reduced prices for customers — Verizon intends to use its LTE network as a platform for increasing profitability.

“When you take that network and you overlay our shared plan with that and now others are following with that shared plan, the entire industry from a shared perspective has a lot of room for growth because when you think about that network and the speed it provides, and then you take all these devices and you think about the number of tablets that have been sold in the United States that are not connected to a wireless network, you now enable people to connect those devices much easier.

“So when you think about that speed and that price plan that pools those data minutes, the growth profile here is really good for the industry and very, very good for Verizon Wireless because we think we have a strategic lead here.

“We are going to have to wait to see what the usage profile of this is. But can we expand our data, our data pricing? Of course we can, so you just add in more tiers. But that is part of where we think the future is going because when you think about the speeds and the video capability of LTE we do project out that that usage is going to continue to substantially increase which then folks will buy up.

“So it is going to be very, very easy for people to attach devices to just go beyond what we know today as a smartphone, a dongle, or a tablet. Now take it to your car, now take it inside your home for remote medical monitoring or whatever else that can happen in that house. Those can also now be attached to that price plan and everything can run off of that network.”

Frammo also hinted Verizon Wireless may be prepared to bring back an old concept from the days of long distance dialing — peak and off-peak data usage rates. Use Verizon’s network during peak usage periods and the company could charge a premium. But its LTE 4G platform also allows it to offer reduced rates when the network is being used less.

Shammo

Killing Off Your Phone Subsidy One Dollar at a Time

Shammo said Verizon Wireless is moving forward (along with other carriers) to gradually reduce equipment subsidies customers get when they upgrade their phones at contract renewal time. Verizon earlier discontinued customer loyalty discounts like its “New Every Two” plan and has stopped offering early upgrade incentives. Now the company is eliminating subsidies for some customers altogether and won’t offer them on several different types of devices.

“The industry has done a lot around trying to reform the upgrade policies and implement upgrade fees to try to strengthen the financial capability of that subsidy on a smartphone,” Shammo said. “We have also taken the track of not subsidizing tablets, less subsidy on dongles. It really is now all around the attachment of those devices into those price plans.”

Shammo added as competitors reduce subsidies, Verizon can continue to bring them down further over time. Shammo said that will improve the company’s margins.

Verizon Prepaid vs. Contract (Postpaid) Customers: “The religious belief is you can’t do anything that is going to deteriorate the postpaid base.”

Despite the company’s improved margins and declining costs from its 4G LTE platform, Frammo said Verizon has no plans to reduce prepaid pricing, because it could erode revenue from customers on two year contracts who might consider switching to a no-contract, prepaid plan.

“Obviously we are a postpaid carrier so anything we do — the religious belief is you can’t do anything that is going to deteriorate the postpaid base,” Frammo said. “I think people are willing to pay a slight premium to get on [Verizon’s] most reliable network and what we are finding is people are coming to that network. I think at this point we are very, very satisfied with where the prepaid market is. We are a premium to that prepaid market and, based on our growth trajectory right now, we are very comfortable with that price point.”

Verizon’s Political Priority for 2012: Where is our corporate tax cut?

While Shammo would not answer a question about which presidential candidate he feels would best serve Verizon’s interests if elected, Shammo made it clear the company is terrified of a so-called “tax cliff” — the expiration of the Bush-era tax cuts and a capital gains tax increase that would raise taxes on the wealthiest corporations from the current 15 percent to up to 25 percent — still lower than the tax rate paid by many middle class workers.

“Whoever is elected needs to deal with that tax cliff because that tax cliff could be detrimental to the economic performance of the U.S.,” Shammo said. “Then on a longer-term we definitely need corporate tax reform in the United States. We are not competitive with the rest of the world and I think everyone understands that. That is going to be harder to achieve, but I think that Washington understands that there needs to be some change within the corporate tax structure.”

(Image courtesy: FCC.com)

The Department of Justice today announced it had achieved a settlement with Verizon and four major cable operators regarding their efforts to establish a cross-marketing agreement to sell each other’s services, sell wireless spectrum, and develop a technology research joint venture.

Despite criticism that the deal represented a strong case for marketplace collusion that would reduce competition between Verizon’s FiOS fiber to the home service and cable company offerings, the Justice Department signed off on a series of deal revisions it defends as protective of competition and consumers. Among them is a time limit for the cross-marketing deal and restrictions on where Verizon Wireless can cross-market cable company services.

“By limiting the scope and duration of the commercial agreements among Verizon and the cable companies while at the same time allowing Verizon and T-Mobile to proceed with their spectrum acquisitions, the department has provided the right remedy for competition and consumers,” said Joseph Wayland, acting assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “ The Antitrust Division’s enforcement action ensures that robust competition between Verizon and the cable companies continues now and in the future as technological change alters the telecommunications landscape.”

The proposed settlement forbids Verizon Wireless from selling cable company products in areas where its FiOS service is available. That is a major reversal from the original agreement between Verizon and Comcast, Time Warner Cable, Cox and Bright House Networks which restricted Verizon Wireless from marketing FiOS. Under the original deal, Verizon Wireless stores could effectively only sell cable company products, never FiOS. The Justice Dept. will still permit Verizon Wireless to sell cable service, but supposedly not at the expense of the fiber service.

The agreement also specifies that Verizon Wireless can sell cable service in areas where it currently markets DSL only until the end of December 2016, renewable at the sole discretion of the Justice Dept. Antitrust lawyers were concerned Verizon would be unlikely to expand its FiOS network or improve DSL service in areas where it could simply resell cable service.

Justice lawyers also put a similar time limit on the technology joint venture, making sure any collaborative efforts don’t impede competition.

The settlement also approves of Verizon’s proposed acquisition of spectrum from the cable companies and T-Mobile USA’s contingent purchase of a significant portion of that spectrum from Verizon.

The deal has been signed off by Justice lawyers, the companies involved, and the New York State Attorney General’s office. FCC chairman Julius Genachowski also weighed in separately with a positive press statement about the agreement.

But consumer advocates remain concerned that the deal does nothing to enhance competition and allows the companies involved to enjoy a new era of competitive detente from a stable and predictable marketplace. Verizon still has little incentive to innovate its DSL service, free to pitch cable service in those areas instead, and without robust changes to the marketplace where FiOS is sold, cable operators have little to fear from Verizon’s stalled FiOS rollout and recent price increases.

Parts of the agreement may also prove confusing to consumers. An important concession prohibits Verizon Wireless from selling any cable service to a street address that is within the FiOS footprint or in any neighborhood store where Verizon FiOS is available. Consumers likely to receive broadly marketed special offers that offer bundled discounts could be frustrated when they are prohibited from signing up because of where they live.

This concession also requires both Verizon and cable operators collaborate to share information about where Verizon FiOS competition exists currently and where it will become available in the future, so that unqualified customers are not sold cable service in violation of the agreement. That represents valuable information for cable operators, who will receive advance notification that customer retention efforts may be needed in areas where Verizon’s fiber optic service is scheduled to become available for the first time.

Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Lawrence M. Frankel, Assistant Chief, Telecommunications & Media Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 7000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it is in the public interest.