Rensselaer County is just a short drive to the east of New York’s capital city Albany, but for residents in the southern half of the county, it might as be in the middle of nowhere.

Welcome to the world of broadband have’s and have-nots. If you live in the county seat — Troy, Internet access is widely available. But if you live in a community like Nassau, in the southern part of the county, getting Internet access is strictly a hit or miss affair, and in practical terms, the only entity that will decide if you have reasonable access to broadband is Time Warner Cable.

Verizon has decided that the days of expanding DSL in rural areas are over. There is no possibility those without access to DSL now will ever see Verizon’s fiber network FiOS coming their way either. That has left many residents with an unfortunate choice between heavily usage-capped and slow satellite Internet access or heavily usage-capped and expensive wireless Internet from a cell phone company.

Nassau does have a franchise agreement with Time Warner Cable, the only cable operator willing to offer service in this part of upstate New York. The contract specifies Time Warner will bring service to any neighborhood where there are at least 20 residences within a one-mile radius.

The Record News covered negotiations for a franchise renewal for the cable company last year, and found Time Warner Cable held all the cards and the town had almost no leverage in the negotiations:

A rare sight in southern Rensselaer County.

“We really have no negotiating leverage or power and the Public Service Commission (PSC) was helpful in looking at the contract, but told us we were basically out of luck with any efforts to require anything,” said town Supervisor David Fleming, who said he was told by Time Warner Cable that specific areas in Nassau are “not currently serviceable.”

The town had marked out all the areas that were not served and met with Time Warner to try to gain extensions of service.

“This only succeeded in a couple of areas,” he said. “This is because PSC told us we have no bargaining power. The only big concession we were able to get was to reduce the number of houses per mile needed for service, but this was a pretty standard fall back for Time Warner.”

The town succeeded in negotiating standards down to 20 dwellings per cable mile from 30. “We continue to explore this matter, but frankly, there has been a great deal of unwillingness to expand service in our community,” Fleming said. “The state has been of no help in expanding services.”

As a result, Time Warner has been generally adamant about not expanding service to residents like Alan Austin, who lives on a street where 11 houses are built within a half-mile, technically the same ratio required by Time Warner Cable.

“We’ve asked them to bring the service and they won’t,” Austin told the newspaper.

Actually, Time Warner is willing to expand into Austin’s neighborhood — for the right price.

Time Warner agreed it would install cable service if the 11 homes collectively paid a $12,000 installation fee.

“We’re out of luck because we’re never going to get another nine houses in this mile,” Austin said. “We can’t get anybody to bring service here, unless we’re willing to pay an exorbitant amount.”

As for alternatives, don’t call Verizon, they’ll call you. The phone company has suggested rural residents consider their wireless broadband and phone service, assuming a cell tower can reach them with a reasonable signal. But the cost is very high — at least $50 for only 4GB of usage per month and another $20 for telephone service.

Austin is lucky enough to receive some reception from Sprint, which is slightly more reasonably priced. But to get a reliable signal, he has to place his mobile Wi-Fi hotspot in his non-climate-controlled attic. When temperatures fall or soar, the hotspot stops working. Austin has rigged a remote-powered fan in the attic to blow cool air on the hotspot this summer to keep it up and running.

“It’s ridiculous,” he admitted. “People don’t believe me when I tell them these things, but that’s what we deal with.”

The newspaper also pondered the impact of being an Internet have-not with respect to education. In more than a few communities in the county, teachers avoid giving assignments that require students to do research over the Internet, putting them at a potentially serious disadvantage when they attend college.

Businesses also avoid areas where broadband poses a significant challenge, which affects jobs. Selling a home in a broadband blackout zone can also be difficult as savvy buyers increasingly now insist on Internet accessibility.

Without the benefit of bundling discounts, rural Americans pay substantially higher prices for telecommunications services. A promotional bundle from Time Warner Cable can provide phone, Internet, and television service for less than $100 a month. Austin says his package costs more than twice that — more than $220 monthly between paying bills for Verizon phone service, DirectTV television and Sprint for broadband Internet.

These kinds of challenges are ready-made to be addressed on the local government level, but cable and phone companies lobbied successfully for near-total deregulation, making it impossible for town officials to provoke change. In fact, had the community successfully revoked Time Warner Cable’s franchise, no other commercial provider would be willing to step in. That remains common in every community considering its future relationship with the area’s cable company. An informal understanding between cable operators keep them from competing outside of their defined territories.

That leaves Nassau officials with no options, except whether to renew Time Warner’s franchise on the company’s terms for five or ten years. Time Warner wouldn’t hear of a five-year contract so the town capitulated and agreed to a 10-year franchise renewal that will continue to leave residents like Austin without much hope for cable broadband service indefinitely.

Verizon’s FiOS expansion is still as dead as Francisco Franco.

Verizon is prepared to watch up to 30% of their copper landline customers drift away because the company is adamant about no further expansion of its FiOS fiber to the home network.

Fran Shammo, chief financial officer at Verizon, told attendees of the Jefferies Global Technology, Media & Telecom Conference that Verizon will complete the buildout of its fiber network to a total of about 19 million homes, and that is it.

“Look, we will continue to fulfill our FiOS license franchise agreements,” Frammo said. “[We will] cover about 70% of our legacy footprint. So 30%, we are not going to cover. That is where we are still going to have copper.”

That is bad news for Verizon customers stuck with the company’s copper network because Verizon isn’t planning any further significant investments in it.

“We will continue to harvest that copper network and those customers and keep them as long as we can,” Frammo said. “But we will not be building FiOS out for those areas.”

In fact, Frammo admitted ongoing cost-cutting at Verizon’s landline division is allowing the company to shift more money and resources to its more profitable wireless network.

Verizon CEO Lowell McAdam doesn’t want to spend money on non-FiOS areas when more can be made from its wireless network.

“It is also taking cost structure out,” Frammo said.  “As I mentioned, the migration of copper to fiber has been very big for us. Our Lean Six Sigma projects have really significantly helped us in our capital investment in the wireline which is why I can put more money into the wireless side of the business.”

Verizon has shifted an increasing proportion of its capital investments towards its wireless division year after year, while cutting ongoing investment in wireline. Ratepayers are not benefiting from this arrangement, and critics contend Verizon landline customers are effectively subsidizing Verizon’s wireless networks.

Verizon will still complete the FiOS buildouts it committed to earlier, particularly in New York City, but it is increasingly unlikely Verizon will ever start another wave of fiber upgrades.

In fact, Michael McCormack, the Jefferies’ Wall Street analyst questioning Shammo at the conference foreshadowed what is more likely to happen to Verizon’s legacy copper customers.

“We have talked extensively in the past about the non-FiOS areas and I guess in my second reincarnation as a banker, I will try to help you get rid of those assets,” said McCormack.

Level 3’s global network: Orange lines represent Level 3-owned infrastructure, yellow lines show leased or co-owned connections.

Five of the largest Internet Service Providers in the country are intentionally sabotaging your use of the Internet by allowing their network connections to degrade unless they receive extra compensation from content companies they often directly compete with.

Mark Taylor, vice president of content and media for Level 3, wrote a lengthy primer on how Internet providers exchange traffic with each other across a vast global network. While clients of Level 3 are likely to have few problems exchanging traffic back and forth across Level 3’s global network, vital interconnections with other providers that make sure everyone can communicate with everyone else on the Internet are occasional trouble spots.

Every provider has different options to reach other providers, but favor those offering the most direct route possible to minimize “hops” between networks, which slow down the connection and increase the risk of service interruptions. These connections are often arranged through peering agreements. Level 3 has 51 peers, minimized in number to keep traffic moving as efficiently as possible.

This oversaturated port in Dallas cannot handle all the traffic trying to pass through it, so Internet packets are often dropped and traffic speeds are slowed.

Taylor writes most peering arrangements were informal agreements between engineers and did not involve any money changing hands. Today, 48 of the 51 Level 3 peering agreements don’t involve compensation. In fact, Level 3 refuses to pay “arbitrary charges to add interconnection capacity.” Taylor feels such upgrades are a matter of routine and are not costly for either party.

Peering agreements have been a very successful part of the Internet experience, even if end users remain completely in the dark about how Internet traffic moves around the world. In the view of many, customers don’t need to know and shouldn’t care, because their monthly Internet bill more than covers the cost of transporting data back and forth.

Because of ongoing upgrades the average utilization of Level 3’s connections is around 36 percent of capacity — busy enough to justify keeping the connection and providing spare capacity for days when Internet traffic explodes during breaking news or over the holidays.

However, Taylor says more than a year ago, something suddenly changed at five U.S. Internet Service Providers. They stopped periodic upgrades and allowed some of their connections to become increasingly busy with traffic. Today, six of Level 3’s 51 peer connections are now 90 percent saturated with traffic for several hours a day, which causes traffic to degrade or get lost.

“[The] congestion [has become] permanent, has been in place for well over a year and […] our peer refuses to augment capacity,” Taylor wrote. “They are deliberately harming the service they deliver to their paying customers. They are not allowing us to fulfill the requests their customers make for content.”

Taylor adds all but one of the affected connections are U.S. consumer broadband networks with a dominant or exclusive market share. Where competition exists, no provider allows their Internet connections to degrade, said Taylor.

Taylor won’t directly name the offenders, but he left an easy-to-follow trail:

“The companies with the congested peering interconnects also happen to rank dead last in customer satisfaction across all industries in the U.S.,” Taylor wrote. “Not only dead last, but by a massive statistical margin of almost three standard deviations.”

Taylor footnotes the source for his rankings, the American Consumer Satisfaction Index. The five worse providers listed for consumer satisfaction:

• Comcast
• Time Warner Cable
• Charter Communications
• Cox Communications
• Verizon

AT&T has also made noises about insisting on compensation for its own network upgrades, blaming Netflix traffic.

In fact, Netflix traffic seems to be a common point of contention among Internet Service Providers that also sell their own television packages. They now insist the streaming video provider establish direct, paid connections with their networks. Level 3 is affected because it carries a substantial amount of traffic on behalf of Netflix.

Ultimately, the debate is about who pays for network upgrades to keep up with traffic growth. Taylor says Level 3’s cost to add an extra 10Gbps port would be between $10-20 thousand dollars, spare change for multi-billion dollar Americans cable and phone companies. Normally, competition would never allow a traffic dispute like this interfere with a customer’s usage experience. Angry customers would simply switch providers. But the lack of competition prevents this from happening in the United States, leaving customers in the middle.

This leaves Taylor with a question: “Shouldn’t a broadband consumer network with near monopoly control over their customers be expected, if not obligated, to deliver a better experience than this?”

This week, mobile customers in Bahrain can now sign up for uncongested, ultra-fast 4G LTE broadband packages that include 120GB of usage and a free LTE router or MiFi device, all priced less than what AT&T and Verizon Wireless charge for just 1GB of mobile broadband and the cost of the device to use it.

Zain Bahrain began offering mobile broadband packages this week that start at under $32 a month. For video lovers and downloaders, the company charges $53 a month for up to 120GB of usage at speeds up to 25Mbps, equipment included at no extra charge. Customers upgrading to 250GB or 1000GB usage allowances also get much faster performance on the company’s LTE network — up to 100Mbps.

Customers that exceed those usage allowances are not billed overlimit fees. Their speeds are temporarily throttled to a still-usable 2-4Mbps, depending on the chosen plan. There is a 4GB daily usage limit.

In the United States, AT&T customers pay $50 a month for a DataConnect plan offering up to 5GB of usage, with a $10/GB overlimit fee. A smartphone customer pays a combined $65 a month for a 1GB plan and device fee.

A Verizon Wireless customer pays $50 as month for a shared data plan offering a 4GB data allowance and includes the monthly device fee. A smartphone customer pays $80 a month ($70 if on Verizon’s Edge plan) for a 1GB plan and device fee.

“We are delighted that we are leveraging the investment in our new network to benefit our customers with new offers,” said Zain Bahrain’s enterprise broadband products and services manager Mohammed Al Alawi. “Today’s broadband customers are bandwidth hungry, with diverse connectivity needs; our new 4G LTE broadband packages are custom-designed to meet these needs and enable a digital lifestyle like never before.”

[flv]http://www.phillipdampier.com/video/Why should you switch to 4G LTE with Zain 2014.mp4[/flv]

Zain produced this English language video to introduce its 4G LTE service offering speeds up to 100Mbps in Kuwait. Unlike in the United States, generous usage allowances from Zain make wireless broadband a prospect for Internet users in the home and on the go. (2:20)

Netflix has reached an agreement with Verizon Communications for a paid-peering interconnection between the two that will help assure Verizon’s broadband customers can watch Netflix content without repeated buffering slowdowns.

It is the second major deal for Netflix where money has changed hands to assure a more error-free experience for customers, coming two months after a similar deal with Comcast.

Both Verizon and AT&T have told their respective shareholders they anticipate new revenue streams from interconnection agreements with Netflix, which now constitutes a large percentage of evening Internet traffic in the United States.

By establishing a more direct connection between Netflix and Verizon, customers should experience fewer streaming problems. Netflix traditionally pays third parties to handle its traffic and some of those shared connections have grown increasingly overcongested. ISPs are becoming increasingly reluctant to upgrade them without financial compensation.

The FCC does not consider peering arrangements part of the Net Neutrality controversy, but for customers the result is the same — without a financial arrangement with a provider, content from certain websites may not be dependably accessible. Earlier this year, Netflix viewing was increasingly disrupted for many Verizon, AT&T, and Comcast customers.

Netflix CEO Reed Hastings has repeatedly complained Netflix is being subjected to an “arbitrary tax” to assure dependable service to its paying customers. Hastings now wants the FCC to treat the issue as an “end run” around Net Neutrality and include peering agreements and financial compensation issues in the new Net Neutrality rules expected to be introduced in May.

Most analysts do not expect FCC chairman Thomas Wheeler to oppose or regulate the financial arrangements between ISPs and content producers.