Economically-challenged western New York will take any new high-tech jobs it can find, which is why local politicians threw parties when Verizon announced interest in building a multi-billion dollar data center on the shores of Lake Ontario, in the Niagara County community of Somerset.

Covered last fall by Stop the Cap!, the project would have created up to 200 high-paying jobs, representing a feather in the cap for economic development efforts upstate cities have been engaged in even before the Great Recession.

Verizon’s Wish List

Just a few things seemed to be standing in the way, according to Verizon’s lobbyists.  Among them, an unfavorable piece of legislation that was pending in 2010, introduced by Assemblyman Richard Brodsky (D-Westchester) and Senator Brian X. Foley (D-Blue Point).  New York Assembly Bill 2208/Senate Bill 7263 came in response to watching Verizon selling off pieces of its landline network to Frontier Communications, and both Albany politicians did not want to see a repeat of that in New York State, unless Verizon shared the wealth with ratepayers in the form of credits on their monthly phone bills (or expanded broadband rollout in rural areas of the state).

That bill languished and eventually failed to be adopted by the legislature, so Verizon ultimately had few worries from Albany.  But Verizon’s wish list grew longer even as the fall days grew shorter.

The proposed site for Verizon's data center in Somerset, N.Y., which will now continue to offer a clear view to Lake Ontario. (Courtesy: WIVB-TV Buffalo)

The company sought a 20-year payment-in-lieu-of-taxes, or PILOT agreement, getting Verizon off the hook for high New York State taxes — particularly western New York’s property taxes, recognized as the highest in the nation.  The company would also be able to obtain cheap hydropower, an important proposition in an area charged some of the highest electricity rates in the country.  Verizon even sought a sales tax exemption on building materials and technology to be used inside the new data center.  That’s nothing to sneeze at either, considering Niagara County’s 8% sales tax rate.

In all, Verizon would have saved at least $330 million if their wish list of taxes waivers and benefits was approved.

With the help of state senator George Maziarz (R-Newfane), Verizon seemed well on its way to winning those concessions from the state.

And Then Came The Neighbor Across the Street, Ms. Mary Ann Rizzo

As the state worked to fulfill Verizon’s checklist, all seemed on track to break ground until one Somerset resident in her 70s, Ms. Mary Ann Rizzo, began asking some hard questions.

Rizzo owns 116 acres of land across the street.  She wondered what kind of impact a multi-billion dollar project like this would have on her and other neighbors, and wanted the state to complete due diligence on an environmental impact review that somehow magically got cut short within five weeks of the application being filed.

She hired attorney Art Giacalone to make sure New York State was following its own procedures in approving the largest project ever proposed for Niagara County in more than a half century.  Giacalone found a lightning-fast approval by Somerset town officials and one of the fastest reviews by state officials he’d ever seen.

Rizzo filed suit, but it was dismissed by a judge back in January.  Rizzo’s attorney filed a notice of appeal, and Verizon’s attorneys asked the court to speed up the process, something the Rochester judge hearing the case refused.

Within days of that, Verizon announced it was pulling the plug on the data center in Somerset, and Maziarz promptly laid blame at the feet of Ms. Rizzo.

Maziarz - 'It's all that woman's fault.'

The Misdirected Blame Game

“It just shows you how one person who owns property across the street, doesn’t even live on the property, but just owns property across the street has killed this up to $5 billion project,” Maziarz said.  “She is totally responsible for [Verizon’s] decision.”

That set local talk radio afire as local residents vilified Rizzo, as did some in the Buffalo and Niagara Falls press.

Verizon said it was considering taking its data center to Wyoming instead.

While Rizzo was in court and Maziarz was spending time cutting red tape for Verizon, the company acquired Teremark, a very large provider of data hosting services and cloud storage.  So large and important that Verizon touted the acquisition as providing at least $500 million in “synergies,” allowing cost-cutting and Verizon to transfer some of its data center needs to Teremark facilities, which is exactly what happened.

Nope, it's not being built in Laramie, Wyo. either.

In fact, while Verizon was complaining about New York’s foot-dragging, company officials were planning to close several of Verizon’s existing data centers, making the need to break ground for a new one on the shores of Lake Ontario unnecessary.

Wyoming officials rolled out a similar red carpet for Verizon, with Gov. Matt Mead budgeting $14 million towards a data center incentive package.  That’s a considerable sum for a state with only a half-million residents.

This week, we learned Wyoming was the second state to be left behind by Verizon, who abandoned plans for the data center proposed near Laramie.

“As a result of the acquisition, we do not have plans at this time to build a data center in Wyoming,” Verizon spokeswoman Lynn Staggs told the Laramie Boomerang. “The Terremark acquisition, announced earlier this year, provides Verizon with the chance to accelerate its data center and cloud strategy.”

In other words, Verizon bought its own solution.

Even if New York delivered on all of the legislative and tax abatement changes Verizon wanted, and Ms. Rizzo never existed, Verizon would still not be spending time on the beach at Somerset or wandering the wide open spaces of Laramie.  But they might have walked away with some nice deregulatory parting gifts without having to show a thing for it — gifts that the state of Wyoming already budgeted for companies like Verizon, all for a data center they won’t build.

A tip for rational living: Before handing everything a large telecommunications company wants on a silver platter, get the commitment in writing and be prepared to rescind those offers if the company pulls out.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Buffalo Media React to Verizon Data Center Project Canceled 3-2011.flv[/flv]

Watch as Buffalo’s TV newscasts opened the floodgates for a wholesale blame game over a failed multi-billion dollar project Verizon was unlikely to ever build after acquiring Teremark.  (WGRZ/WIVB/WKBW)  (15 minutes)

At the end of business Wednesday, Verizon Wireless will end its unlimited data plans for new customers.  If you are an existing customer, you will be able to retain unlimited data for your smartphone indefinitely, but those considering an upgrade to 4G may want to consider doing so immediately, if you want to have an unlimited 4G tethering plan for your 4G-capable phone.

Verizon Wireless data pricing effective 7/7/2011

New Verizon Wireless Customers: You must buy and activate a 3G/4G-capable phone on Verizon’s network no later than 11:59pm Wednesday evening to qualify for the $29.99 unlimited data plan.  At this point, this means buying a phone from Verizon Wireless’ website or visiting a local store.  If you want the best possible price, we recommend calling Verizon Wireless and negotiating with them directly.  Verizon is often able to match prices from online retailers like Wirefly or Amazon, usually by throwing in service credits for your first month’s invoice.  New 4G customers can score an unlimited tethering add-on plan from Verizon for an additional $30 a month.  That means $29.99 for the data plan plus $30 for the tethering option, but if comes without any usage limits.  After July 6, all those new to tethering will only find one option: $20 for up to 2GB of tethering access.

Existing Verizon Wireless Customers: You will keep your current unlimited smartphone data plan indefinitely, perhaps even after upgrading your phone.  However, if you were interested in tethering on Verizon’s 4G network, consider upgrading to a 4G phone before Thursday to qualify for the $30 unlimited tethering plan, good only for 4G users with an existing tethering relationship with Verizon.  You must select the 4G tethering option before Thursday to qualify.  Call Verizon Wireless at 611 from your handset and make sure they take care of this for you to avoid complications.  An automatic update will be pushed to the Thunderbolt, Charge, and Revolution on July 7 to cut off the Hotspot free ride those customers had been enjoying up until now.  You will have to buy the service if you want to continue using it.  All 3G phones (iPhone, Droid X, etc.) will not see any pricing changes for 3G tethering – it is still $20 a month for up to 2GB of usage, no unlimited options for you.

Other pricing details:

• Verizon customers opting for the $30 for 2GB plan will lose company discounts on their data plan.  You must select a higher-cost data plan if you want to keep any employer discount;
• Verizon is now specifically prohibiting tethering any of their phones without a Verizon add-on tethering option.  This means third-party tethering apps you may have used before now violate your contract with them.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WCPO Cincinnati Verizon ending unlimited data plans 6-24-11.mp4[/flv]

WCPO-TV in Cincinnati covers the imminent funeral for Verizon’s unlimited data plans.  Verizon customers are not happy with the loss.  (2 minutes)

While AT&T and Verizon trade customers back and forth and enjoy fighting it out for “number one” in wireless service, smaller providers like Sprint are finding it increasingly difficult to compete with its two larger competitors, who have access to the best phones, most coverage, and don’t need to discount prices to attract new customers.

Forbes’ financial blog shares its impressions of the anticipated financial performance of the three biggest players in the U.S. market:

AT&T: Still the financial darling of Wall Street, AT&T will see some pressure on earnings from its integration of acquired assets of Alltel Verizon sold to win approval of its merger with the smaller carrier a few years ago.  Since Alltel’s network used CDMA technology, AT&T had to supply free new phones to every customer it acquired, as the GSM network it operates is not compatible.  AT&T is also still dealing with a slow bleed of iPhone customers departing for Verizon as contracts expire.  It will be interesting to see if Verizon’s imminent end of “unlimited smartphone data” will create a last minute rush from AT&T to VZW before Verizon terminates its unlimited data plan Wednesday night.

Verizon: Verizon will achieve the top spot for the number of new customers it has added during this quarter, mostly from new iPhone users.  The end of “unlimited data” could mean increased “average revenue per user” if new customers have to pay for a pricier data plan, but some analysts are keeping a “neutral” rating on Verizon’s stock, concerned about the margin squeeze created when Apple releases iPhone 5 this fall.  Customers off-contract or nearing expiration could jump for the new phone.  With the subsidy Verizon provides to new iPhone owners, it could bring down margins.

Sprint: The biggest challenge remains with the number three carrier Sprint, which had been picking up disaffected customers from AT&T, Verizon, and even T-Mobile.  That growth has since slowed, and now the company is depending on increased revenue from price hikes, especially on smartphones which now carrier a $10-higher price tag.  But Sprint is aggressively trying to hold the line on customer defections, sometimes approaching “giving away the store” in order to keep customers from leaving for AT&T or Verizon.  In addition to accelerating free/discounted upgrades to new smartphones, the company has also increased the number of calling minutes for its Everything Data plan from 400 to 750.

Sprint’s distant-third position requires the company to price its service plans more aggressively than its larger competitors, especially to counter the image it runs a smaller network with less-reliable coverage.  If AT&T succeeds in acquiring T-Mobile, the dominance of AT&T and Verizon will become even more solidified, threatening Sprint’s position as a viable alternative to the larger two.  That could leave Sprint in the difficult position of trying to finance upgrades even as it has to heavily discount service to keep its current customers loyal.

[flv]http://www.phillipdampier.com/video/CNBC Sprint Going the Distance 4-28-11.flv[/flv]

On April 28, Sprint Nextel CEO Dan Hesse talked with Jim Cramer about his initial impressions of the announced AT&T/T-Mobile merger and how Sprint would cope with it.  (9 minutes)

[flv]http://www.phillipdampier.com/video/CNBC Sprint Nextel CEO Speaks Out 6-9-11.flv[/flv]

Back in June, Dan Hesse was back with CNBC’s Jim Cramer to expand on Sprint’s strategy to deal with a wireless duopoly and how it hopes to compete in a market where two companies would control nearly 80 percent of all American wireless revenue.  (11 minutes)

If you want to say goodbye to Verizon Wireless, or just want a new phone without waiting for your old contract to expire, Verizon has a deal they really don’t want to give you, but they have to — it’s in their contract.

Verizon Wireless has announced they are unilaterally changing your wireless contract with an increase in the Regulatory Recovery Fee (a bill-padding junk fee) from $0.13 to $0.16 effective July 1st.  That fee opens a 60-day window for customers to exit their contracts because the carrier is imposing a “materially adverse” change without your advance consent.  After 60 days, you effectively give that consent by staying with the company.

“Materially adverse” is simple to understand, even if Verizon customer service representatives feign ignorance and stamp their feet as you demand to leave without paying an early exit fee.  It means Verizon has notified you they are changing the contract — one you signed in good faith for a set price, and they are now unilaterally changing it.  Unless those price changes come about because of a government mandate, Verizon cannot impose them without first granting you a window to cancel your agreement, penalty-free.

For customers unhappy with Verizon, they can freely take their business somewhere else.  For those who intend to stay, they can switch to a prepaid plan or sign a new two year contract and get a new phone at the same price any other new customer would pay, even if only 30 days into an existing contract.

This welcome window may mean a lot to customers looking for an early upgrade -and- keep Verizon’s unlimited smartphone data plan the company plans to discontinue July 7th.

With their “materially adverse” contract clause potentially exposing them to hundreds of dollars in lost cancellation fees they cannot impose, nobody said they would make it easy for you to jump free without some hassle.

When calling Verizon Wireless and requesting the “cancel service” option, expect the representative to pretend they don’t know what you are talking about, claim you still owe a penalty, or even express shock you are trying to escape them over a measly three cent rate increase.  Some may even try and credit three cents for each month remaining on your contract and claim that since you are no longer effectively paying the increased fee, you have no right to complain.

Tell them tough cookies — go and read their own contract:

Can Verizon Wireless Change This Agreement or My Service?

We may change prices or any other term of your Service or this agreement at any time,but we’ll provide notice first, including written notice if you have Postpay Service. If you use your Service after the change takes effect, that means you’re accepting the change. If you’re a Postpay customer and a change to your Plan or this agreement has a material adverse effect on you, you can cancel the line of Service that has been affected within 60 days of receiving the notice with no early termination fee.

Ask them to find the clause in their terms and conditions that says once they announce a rate change, that does not represent a change to your plan.  Then ask where it says in their agreement a subsequent credit frees them from the obligation of allowing you a penalty-free window to exit once a materially adverse change has been announced.  Let them know the only way they could have kept you from exercising your rights under the contract was if they never announced the price change impacting you in the first place.  Expect a long wait on hold.  A very long wait.

To truly escape Verizon Wireless’ contract, you will need to be prepared to say “no” to all of their counteroffers, and they will pelt you with them like an Oklahoma hail storm:

• Reduced price phone upgrade?  No.
• Free service for a month?  No.
• Free accessories?  No.
• Free texting plan?  No.
• A free sample of their data or tethering plan?  No!
• Cancel. Cancel. Cancel!

If they still want to argue, repeat after me:

“Despite your willingness to credit my account, once you are legally obligated, under your contract, to notify me of your intention to change my plan by raising prices that are within your control, you triggered the materially adverse clause, regardless of your subsequent attempt to credit my account.  Cancel the account immediately or I will escalate this to the same Executive Customer Service office that slapped you guys down the last time you tried this.  Once you notify us of a fee increase, the window to exit penalty-free is open, and only I can close it by agreeing to stay after 60 days.”

Click to Enlarge

Frontier Communications’ DSL service delivers abysmal results for customers looking for quality time with Netflix.  For the second quarter running, the independent phone company’s ability to keep up with Netflix’s high quality video is about on par with a garden slug in a triathlon — yes, it may eventually reach the finish line, but you’ll be dead before it happens.  Even more embarrassing for Frontier, their service is occasionally beaten by Clearwire, a wireless ISP with a bandwidth throttler that can reduce your online experience to the painful days of dial-up if deemed to be using “too much.”

“Frontier sucks,” writes Stop the Cap! reader Doug in Charleston, W.V. “After they took over where Verizon fled, my ability to watch Netflix online became a source of endless frustration, so now I limit myself to mailing DVD’s back and forth.”

Remarkably, Charter Cable, which does poorly in customer satisfaction surveys, is again the runaway winner, followed by Comcast, the heavily usage-capped Cable One, Time Warner Cable, and Cox.  Verizon and AT&T only deliver middling performance.