Verizon “redacted” hundreds of pages of information about its controversial Voice Link project, including its User’s Guide.

Verizon today lost its appeal to keep company documents about its controversial Voice Link wireless landline replacement away from company critics that allege the company is intentionally undercutting its landline network and redirecting investment towards its more profitable wireless service.

In a 20-page decision published this afternoon, Kathleen Burgess blamed Verizon for hurting its own case with excessive secrecy.

“But for Verizon’s failure to submit documents with fewer redactions, as directed by the Records Access Officer (RAO), it might have satisfied its burden of proof,” that the company would suffer harm if it released proprietary information that could be accessed by competing providers, ruled Burgess.

Burgess took a dim view of Verizon’s attempt to claim blanket confidentiality for its Voice Link project, even including a redaction of Voice Link’s User’s Manual — the same one given to customers subscribing to the service. Burgess noted in response to a Freedom of Information Law (FOIL) request from consumer groups, Verizon responded with “13 documents – 330 pages – with blanket redactions except for the page headings and page numbers.”

Verizon needed to meet its burden of proof by “presenting specific, persuasive evidence that disclosure will likely cause it, or another affected enterprise, to suffer a competitive injury.”

“Verizon apparently believes that it is possible to meet the burden of protecting information under FOIL by providing a cogent and persuasive explanation of how a competitor could use the information and why it is likely to lead to harm,” Burgess observed (emphasis ours). “As an initial matter, [Verizon] has not parsed out each of the 13 documents and demonstrated how each, if disclosed, would competitively injure it. Instead, Verizon is attempting to obtain a blanket exemption for all 13 documents by summarily stating that disclosure would enable competitors to obtain, for free, information on processes that the company developed at considerable expense and effort. Verizon has, however, failed to demonstrate, in adequate detail, how the complete disclosure of all 13 documents would result in substantial competitive injury.”

Verizon hurt its own case by “co-mingling” detailed cost information that might otherwise win confidentiality with the Public Service Commission with less proprietary marketing information and even publicly available documents and then redacted all of them, according to Burgess.

As a result, Verizon lost its case:

The Commission recognizes that limiting competitor access to proprietary material is an important policy. Exemptions are to be narrowly construed, however. The entity resisting disclosure bears the burden of proof and, therefore, must demonstrate a particularized and specific justification for denying access to the subject documents. Absent such a showing of competitive injury covering each document that comprises the response, the speculative concerns articulated by Verizon are not enough to sustain the company’s burden of proving that the information should remain protected as trade secret materials.

[…] Under FOIL case law, the burden is on Verizon to demonstrate a particularized and specific justification, supported by evidence, for denying access to the documents at issue and, inasmuch as Verizon has failed to meet its burden, I uphold the RAO’s November 4, 2013 Determination.

Absent a court order or later ruling, full versions of the blacked-out documents may become public two weeks from today.

AT&T this month signed up their 10 millionth customer to U-verse High Speed Internet service, surpassing Verizon FiOS as the nation’s biggest telephone company supplier of broadband, television, and telephone service. Coinciding with that success, AT&T is raising prices for U-verse, despite AT&T’s record earnings from the fiber to the neighborhood service, now accounting for $1 billion a month in revenue.

AT&T is protecting its broadband flank by convincing current DSL customers to switch to higher-speed U-verse broadband as the network upgrade reaches into more homes across AT&T’s service areas. In the last quarter U-verse picked up 655,000 new broadband customers nationwide, many upgraded from traditional DSL. Where AT&T has not invested in U-verse upgrades and cable competition exists, results are not as good. AT&T lost 26,000 DSL customers last quarter, most moving to cable broadband.

“This latest milestone shows how U-verse is helping transform AT&T into a premier IP broadband company,” said Lori Lee, senior executive vice president, AT&T Home Solutions. As of the third quarter of this year, total U-verse high-speed Internet subscribers represented about 60 percent of all wireline broadband subscribers, compared with 43 percent in the year-earlier quarter.

Verizon FiOS, in comparison, has signed up just 5.9 million customers FiOS Internet subscribers on its stalled fiber optic network. Most Verizon broadband customers with no FiOS in their future either stick with DSL service or, increasingly, switch to a cable competitor for faster speeds.

Some of AT&T’s strongest U-verse growth came from its TV package. At least 265,000 cable and satellite cord-cutters looking for a better deal switched to U-verse TV in the last three months, a gain from 198,000 at the same time last year. That’s the second-best quarterly gain ever. A total of 5.3 million AT&T customers subscribe to U-verse TV.

Much of the growth has come from AT&T’s investment in expanding U-verse to new areas. Project Velocity IP is a three-year, $14 billion plan to upgrade AT&T’s wireless and wired broadband networks. AT&T has added almost 2.5 million more homes to its broadband footprint so far this year and hopes to expand broadband availability to reach about 57 million customers by the end of 2015.

Although $14 billion is a significant investment, AT&T has spent considerably more on its shareholders. John Stephens, AT&T’s chief financial officer told Wall Street analysts AT&T has bought back 684 million shares of stock that will save the company more than $1.2 billion in future dividend payouts.  Combined with its dividend payout, AT&T has handed shareholders $18 billion so far this year and more than $40 billion since the beginning of 2012. AT&T expects to spend $20 billion on wireless and wireline network improvements in 2014.

AT&T’s speed upgrades have also not run as smoothly as AT&T claims. Efforts to increase speeds to 45Mbps in 79 markets has had mixed results with a significant number of customers complaining they cannot get qualified for the faster speeds because of infrastructure problems with AT&T’s network. The company still says it is on track to offer 75 and 100Mbps speed tiers in the future and is building a fiber to the home network in Austin to compete with Google.

Many customers who have been with AT&T for more than a year are learning better service does not come for free. AT&T has filed rate increases for its television service beginning Jan. 26, 2014 for customers not on a pricing promotion. The monthly price for the following U-verse TV service plans will increase $3, along with fee hikes for local stations and equipment, bringing AT&T at least $15 million in extra revenue each month:

• U-family to $62;
• U200 to $77;
• U200 Latino to $87;
• U300 to $92;
• U300 Latino to $102;
• U450 to $124;
• and U450 Latino to $134.
• Grandfathered plans also will increase $3: U100 to $64 or $69, depending on when first ordered; and U400 to $119.

• The monthly price of each non-DVR TV receiver will increase from $7 to $;
• Beginning on February 1, 2014, the Broadcast TV Surcharge will increase $1 to $2.99 per month to recover a portion of the amount local broadcasters charge AT&T to carry their channels.

Those customers who have a U-verse TV pricing promotion will continue to receive the promotional benefit until the applicable promotion ends or expires.  Customers are being notified of these changes via bill messaging occurring in November and December and a reminder in January and February 2014.  In addition, customers will be notified of these changes online at www.att.net/uversepricechange and att.com/uversesupport.

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AT&T is trying to get ahead of Google by advertising AT&T U-verse with GigaPower, a 1,000Mbps fiber to the home service promised in Austin sometime in the future. (0:30)

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Dr. John Cioffi, the “Father of DSL” doesn’t think much of fiber to the home service, suggesting it is a waste of money and delivers budget-busting losses to providers. He has the ear of the man in charge of overseeing Australia’s National Broadband Network, Communications Minister John Turnbull. Turnbull’s public statements imply he supports Cioffi’s approach – a hybrid fiber-copper network similar to AT&T U-verse.

By adopting cheaper VDSL technology, Cioffi claims providers can avoid the “$800 unrecoverable loss per customer Verizon FiOS has experienced” bringing fiber to the home. He also claims fiber to the home service isn’t as robust as fiber proponents claim, with flimsy, easy-to-break fiber cables and loads of service calls commonplace among some European providers.

Few media interviews, including this one with ABC Television, bother to fully disclose how Cioffi has a big dog in the broadband technology fight. Cioffi founded ASSIA, Inc., a firm that markets products and services to DSL providers. ASSIA is backed by investments from AT&T, its first customer, and a handful of overseas telephone companies. Cioffi estimates ASSIA software is used to manage 90 percent of existing DSL accounts in the United States and is a fundamental part of AT&T’s efforts to increase U-verse speeds. Dismantling DSL in favor of fiber could have a marked impact on ASSIA’s profits. (8:47)

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Australia’s new Communications Minister Malcolm Turnbull talks with Dr. John Cioffi about the differences between VDSL and fiber technologies. Cioffi bashes one form of fiber to the home service dubbed “GPON” because it shares infrastructure. Cioffi claims fiber speeds drop to 20Mbps when a few dozen people share a GPON connection. When in Paris, Cioffi claims his shared fiber connection maxed out at 2.5Mbps while ADSL still ran at 6Mbps. (3:52)

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Unsurprisingly, Cioffi claims his company’s software is essential for a good vectored VDSL user experience. Cioffi also claims VDSL can easily beat GPON fiber broadband speeds, a very controversial claim. In Cioffi’s view, even Wi-Fi can perform better than fiber. Finally, Cioffi claims Google is spending $8,000 per customer to deploy its fiber to the home network, when VDSL can do the job for much less money. (2:58)

“Use it or lose it” is the policy under which the Federal Communications Commission licenses scarce, publicly owned airwaves, but in practice companies warehousing unused spectrum can sell it off and make a handsome profit.

Reuters today reports T-Mobile USA is exploring a spectrum buy from its rival Verizon Wireless to bolster wireless data services to effectively compete against Verizon, AT&T and Sprint.

A source told Reuters the deal is in the early stages and could involve the purchase of Verizon’s unused “A” Block 700MHz spectrum, ideal for long distance and indoor reception. Verizon chief financial officer Fran Shammo earlier said the company was not going to sell its unused spectrum at “fire sale” prices and recently rejected an offer deemed to be too low. One analyst estimated the value of Verizon’s excess “A” spectrum to be as high as $3 billion.

T-Mobile, owned by Deutsche Telekom, told investors on Nov. 12 it was launching an equity offering to raise money for spectrum deals with a private, unnamed party. T-Mobile raised $1.8 billion through a sale of its common stock last week and offered $2 billion in bonds on Nov. 18 with the expected aim of funding future spectrum purchases.

Verizon acquired the spectrum in 2008, part of a broader auction that sold off frequencies formerly used by UHF TV channels 52-69. The “A” block is considered less desirable because of adjacent interference concerns in areas where a television station operates on Ch. 51. Those stations may not be there for long. The FCC is proposing to auction off UHF channels 31-51 to wireless companies in the future, reducing UHF TV to channels 14-30. Verizon’s “A” block licenses do not blanket the entire country, but can cover a number of major cities. Verizon Wireless deployed its LTE 4G network on its “C” block.

Verizon’s Home Phone Connect base station

Despite assertions that Verizon created Voice Link as a solution for customers suffering from chronic landline problems, in reality the wireless landline replacement is nearly identical to Verizon Wireless’ Home Phone Connect and was produced only because of a complicated business relationship the wireless carrier had with its part owner Vodafone.

A Verizon spokesman told Stop the Cap! in June Voice Link was created for use where Verizon’s copper customers had chronic repairs issues:

Verizon will maintain the copper network where it makes customer service and business sense to do so.  Please keep in mind that the vast majority of our copper customers have no issues at all with their service; we are only considering the universe of customers where the copper network is not supporting their requirements.  Again, the exception is the storm-impacted areas in the western portion of Fire Island and a few New Jersey Barrier communities where copper facilities were damaged beyond repair.  In these locations Voice Link will be the single voice option available to customers. Verizon will offer these customers the opportunity to use our state-of-the-art, tried and tested wireless network at the same rate (or better) that they pay today.

Business sense appears to have played a great deal in Verizon’s strange decision to produce and market two nearly identical products. Hired by Verizon, William E. Taylor, a special consultant with National Economic Research Associates, Inc., testified last week that both Voice Link and Home Phone Connect are intended to compete in the landline replacement marketplace:

Home wireless services are a rapidly growing alternative to wireline plain old telephone service for many customers throughout New York State. In competition with Verizon’s Voice Link service, AT&T offers a Wireless Home Phone and Internet service with unlimited nationwide voice service at $20 per month with broadband internet service at higher prices, wherever its 4G LTE network is available. Sprint offers a competing wireless home service at $20 per month, as does U.S. Cellular. Wal-Mart sells its comparable Straight Talk prepaid wireless home voice service for $15 a month together with additional optional prepaid broadband internet access service. These offerings are similar to Verizon Wireless Home Phone Connect service, and differ in some features from Verizon New York’s Voice Link service but compete directly with both services.

Thus, one immediate and real competitive effect of the public release of Verizon’s wireline and Voice Link cost data would be to enable these four competitors (and others) to assess Verizon’s price floor for wireline voice service as an element in pricing their wireless home network services and calculating the profitability of expanding their wireless networks to provide wireless home phone service on Fire Island and elsewhere.

Verizon Voice Link

Taylor’s provided his declaration as part of Verizon’s case not to reveal certain documents (for competitive reasons) to the public about Voice Link deployment in New York and New Jersey. Verizon has offered Voice Link either as an option or, originally, as a sole landline replacement in areas considered uneconomical for landline restoration. But Taylor’s testimony also suggests Voice Link wasn’t necessarily created to solve chronic landline problems or replace landlines in natural disaster areas. In fact, Taylor testified Voice Link is just one of several competitors in the landline replacement market, including one from Verizon Wireless. In 2011, Verizon Wireless began national marketing of Home Phone Connect, a home wireless landline replacement product marketed to cord-cutters.

Verizon Communications chief financial officer Fran Shammo explained why Verizon Voice Link and Verizon Wireless Home Phone Connect both exist during remarks at the Wells Fargo Technology, Media & Telecom Conference on Nov. 12. Shammo blamed a complicated business relationship between Verizon, Verizon Wireless, and Vodafone which owned 45% of Verizon’s wireless venture for the near-twin services. The result was an informal “wall” between two Verizon entities, one devoted to landline and FiOS service, the other wireless — both selling essentially the same wireless product.

“The easiest way I can explain this is if you look at our product called Home Phone Connect, which was developed on the wireless side of the house,” Shammo said. “This is the product that you plug into your wall at home, converting the copper wire inside your home to an LTE network for voice. So in essence it is a copper voice replacement product. Now you would think that we would be able to take that same product and market it on the wireline side of the house. But we were prohibited because of governance and affiliate transactions. So the wireline business went out and developed their own product called Voice Link, which now they sell to their copper and DSL customers.”

Shammo admitted creating both Home Phone Connect and Voice Link was “a pretty inefficient way to develop product.”

So when this governance affiliate transaction-wall is taken away, you then can become a much more efficient company to launch one product to your customer, whether it is a wireline product or a wireless product,” he added. Shammo also believes tearing down that wall and tightly integrating Verizon’s wireline and wireless businesses will create “the soft synergies of the new Verizon that we believe we can create here.”

That might be bad news for Verizon’s rural landline customers, because Verizon’s current CEO is no fan of maintaining rural copper landline service when Verizon Wireless can do the job for less money and the open the door to higher profits.

“In […] areas that are more rural and more sparsely populated, we have got [a wireless 4G] LTE built that will handle all of those services and so we are going to cut the copper off there,” said Verizon CEO Lowell McAdam in June of last year. “We are going to do it over wireless. So I am going to be really shrinking the amount of copper we have out there and then I can focus the investment on that to improve the performance of it. The vision that I have is we are going into the copper plant areas and every place we have FiOS, we are going to kill the copper. We are going to just take it out of service and we are going to move those services onto FiOS. We have got parallel networks in way too many places now, so that is a pot of gold in my view.”

The wall that divided Verizon and Verizon Wireless may eventually be rebuilt between rural landline customers transitioned to wireless service as the only available landline replacement technology and urban and suburban customers offered Verizon’s fiber-to-the-home service FiOS.