FCC Moves To Gut Rules Protecting Broadband Users Telcos No Longer Want

from the ill-communication dept

As AT&T and Verizon shift their focus from fixed-line broadband to the more sexy world of Millennial advertising (often quite poorly), they've effectively decided to hang up on millions of unwanted DSL users they refuse to upgrade and no longer want. This has often involved imposing relentless rate hikes on service speeds straight out of 2003, or in many cases simply refusing to repair these lines. They've also convinced state after state that if they gut consumer protections keeping these lines intact, better, faster broadband connections will miraculously spring from the sidewalks.

AT&T and Verizon argue that state and federal guidelines on this front are just outdated regulations preventing them from building the next-generation networks of tomorrow. Fiber is more reliable and wireless is more flexible, they argue, making older lines irrelevant. That, however, ignores these companies' refusal to actually fully deploy fiber, the fact that pricey & capped wireless isn't a suitable replacement for unlimited DSL, that these lines were taxpayer subsidized, or that many of these DSL and POTS (plain old telephone service) services are still very much in use by the elderly and under-served.

In reality, this "IP transition" (as AT&T execs like to call it) is having a very real, very negative impact on broadband markets. The biggest impact being that with telcos refusing to upgrade their DSL networks at any scale, cable companies are running away with a growing fixed-line broadband monopoly in many parts of the country. That means higher prices, worse customer service, and the kind of punitive and arbitrary usage caps only made possible by a lack of competition.

Again though, if you ask AT&T and Verizon, none of this is a big deal because existing wireless services are perfectly suitable replacement for these fixed-line connections. But as people found out when Verizon refused to upgrade DSL lines in the wake of Hurricane Sandy, that's simply not the case. Wireless is often significantly more expensive, frequently capped (especially in rural areas), and often hard to get in many rural, tree-happy markets. Fifth-gen wireless may someday be a suitable replacement depending on cost, but for rural markets that future is a decade or more away.

So a few years back the FCC under Tom Wheeler crafted a set of fairly basic "functional tests" (pdf) intended to prevent telcos from pulling copper-based phone and broadband service without ensuring there's a comparable replacement. The goal: to ensure that services that rely on traditional DSL and POTS still work, and that competitors that service customers over these lines could still access them. Not too surprisingly, telcos have been lobbying the government to gut this guidance. Also unsurprisingly, current FCC boss Ajit Pai has been quick to help them do just that:

"The Federal Communications Commission will vote Thursday on a plan that, according to Chairman Ajit Pai, will strip away regulations that prevent telcos from upgrading their networks.

But in doing so, the Republican-controlled FCC plans to eliminate a requirement that telcos provide Americans with service at least as good as the old copper networks that provide phone service and DSL Internet. The requirement relates to phone service but has an impact on broadband because the two services use the same networks.

While it should be fairly clear that this is yet another gift to the nation's telecom duopolies, as with its net neutrality, media consolidation, and other recent policy 180s, the FCC is engaging in some tap-dance hyperbole to try and deny this is what they're doing:

More concisely, the FCC's existing "functional test" for carriers seeking to abandon DSL networks requires they prove that any replacement service is just as good as the services they're eliminating. Since these carriers know wireless is often more expensive and often unavailable, and really don't want to extend fiber into these areas (despite receiving countless billions to do so) they want those restrictions eliminated. It doesn't matter if these lines were paid by taxpayers and are very much still in use; they're focused on making money in mobile advertising.

To tap dance around these issues, Pai's proposal, misleadingly-titled "Accelerating Wireline Broadband Deployment (pdf)," doesn't technically get rid of the guidance, but weakens it to the point of being effectively useless, as consumer groups like Public Knowledge and the NAACP make clear:

"Under current rules, an incumbent carrier cannot discontinue, reduce, or impair service unless there is a replacement service that is as good as the discontinued service. This is called the Functional Test. The FCC's order will now interpret "service" to include a carrier's tariff. A tariff is a very basic description of what a carrier offers and at what rate. This means the Commission's remaining notice requirements will only apply to basic services, but will not include 911 services, ensure network reliability, or interconnection with devices consumers use such as medical monitors, alarm systems, fax and credit card machines, and equipment for people who are hearing impaired. In some cases, the sound of a dial tone may constitute service under the tariff test and therefore not even trigger a public comment and review."

Again this is all very wonky, but a transition away from these taxpayer-subsidized fixed copper lines without ensuring there are reliable (or frankly any) alternatives will have a profound negative impact on your current cable broadband bill and service, while making it harder for less sexy markets to get quality broadband connections (already a significant problem we seem intent on ignoring). And again, Trump's FCC is pushing a telco wishlist policy they know full well will hurt consumers and the health of the nation's telecom infrastructure, while professing they're doing the exact opposite.

Filed Under: ajit pai, competition, dsl, fcc, fiber
Companies: at&t, verizon

AT&T Spent Hundreds Of Billions On Mergers And All It Got Was A Big Pile Of Cord Cutters

from the synergies,-yo dept

Over the last few years AT&T and Verizon have been desperately trying to pivot from stodgy, protectionist old telcos -- to sexy new Millennial media juggernauts. And while this pivot attempt has been notably expensive, the net result has been somewhat underwhelming. Verizon, for example, spent billions to gobble up AOL and Yahoo, but its lack of savvy in the space has so far culminated in a privacy scandal, a major hacking scandal, a quickly shuttered website where reporters couldn't write about controversial subjects, and a fairly shitty Millennial streaming service even Verizon's own media partners have called a "dud."

AT&T's efforts have been notably more expensive, but just as underwhelming. The company first decided to shell out $70 billion for a satellite TV provider (DirecTV) on the eve of the cord cutting revolution. And the company's putting the finishing touches on shelling out another $89 billion for Time Warner in a quest to gain broader media and advertising relevance. That was paired with the launch of a new streaming service, DirecTV Now, which the company hoped would help it beat back the tide of cord cutting.

But things aren't really working out quite like AT&T planned. The company's stock took a beating last week after it acknowledged it would be facing a 390,000 reduction in pay TV subscribers this quarter. AT&T, in an 8K filing with the SEC, tried to partially blame hurricanes for the mass exodus occurring at the company:

"The video net losses were driven by heightened competition in traditional pay TV markets and over-the-top services, hurricanes and our stricter credit standards. The decline of traditional video subscribers negatively impacts our Entertainment Group revenues and margins, resulting in an adjusted consolidated operating income margin that will be essentially flat versus the year-ago third quarter."

Unmentioned is that AT&T also lost 351,000 pay TV subscribers the quarter before, as the company gets hit harder by cord cutting than most pay TV providers. One of the real reasons for these departures? While AT&T was willing to spend hundreds of billions on megamergers, it has spent the better part of the last decade (especially in places where poor people live) neglecting necessary network upgrades. As a result, in countless markets Verizon & AT&T users on last-generation DSL lines are switching to cable providers for faster broadband, and bundling cable TV service that's priced cheaper than broadband alone.

In short AT&T neglected its core business in order to daydream about matching Google or Facebook's ad revenues, but (so far) lacks the core competency to jump the gap from telecom to Silicon Valley-esque Millennial marketing. Both AT&T and Verizon have spent so many years operating as government-pampered protected duopolies, they believed they could pivot on a dime, ignoring that years of regulatory capture left them with only a few key skills: charging too much for too little, lobbying to thwart competition and bullshit.

To its credit, AT&T was at least willing to take a risk and launch DirecTV Now, a streaming alternative. And while the company did manage to add 300,000 streaming customers on the quarter, those users pay a fraction of what traditional cable TV customers do - and AT&T still saw a net loss of 90,000 pay TV users. Still, most other incumbent pay TV providers have responded to the cord cutting threat by raising cable TV rates (ingenious!) or by pretending to keep pace via the launch of streaming alternatives that are intentionally designed to be underwhelming, lest they cannibalize more lucrative legacy customers.

One of the core problems here is that Wall Street isn't satisfied with ISPs simply doing a good job and making a reasonable profit. The relentless, myopic need for quarterly improvements has companies like AT&T and Verizon trying to use megamergers and vertical integration to magically elbow their way into markets it's unclear they lack the competency for. And only after mindlessly cheering these deals do some Wall Street analysts realize some of these arrangements don't even make coherent business sense given the current market climate:

"Though the company partly blamed recent hurricanes for these trends, MoffettNathanson analyst Craig Moffett notes that weather was only the third of four reasons that AT&T listed. “Heightened competition in traditional pay TV markets and over-the-top services” came first. In other words: cord cutting. “It is becoming increasingly clear that the wheels are falling off of satellite TV,” he writes, meaning that Dish Network might announce similar results."

In an ideal world, AT&T would realize its core competencies (building and maintaining wireless and fixed-line networks) should take priority. That $70 billion spent on buying a doomed satellite TV company could have gone a long way in shoring up broadband service that in many regions still doesn't even meet the FCC's base 25 Mbps definition. But in the world we live in that's simply not sexy enough for Wall Street, and the need to grow simply for growth's sake will likely result in AT&T making even more expensive deals of dubious net benefit down the line. Next up: Waffle House?

Filed Under: broadband, cable, competition, cord cutting, dsl, mergers, satellite, tv, video
Companies: at&t, directv

The Nation's Telcos Are Hemorrhaging Customers Because They Refuse To Upgrade Their Networks

from the don't-build-it-and-they-won't-come dept

So we've noted for a while how despite all the hype surrounding next-gen wireless and gigabit fiber builds like Google Fiber, vast swaths of this country are actually facing less broadband competition than ever before. That's in large part thanks to the nation's phone companies, which have effectively given up on upgrading their lagging DSL networks at any real scale. One net result is millions of customers paying an arm and a leg for sub 6 Mbps DSL service that doesn't even technically meet the FCC's new standard 25 Mbps definition of broadband.

And it's not changing anytime soon. Verizon has all but frozen next-gen upgrades as it shifts its focus to gobbling up failed 90s internet brands to help it sling video advertisements at Millennials (poorly, we might add). But smaller telcos like Frontier, CenturyLink and Windstream have similarly been losing broadband customers hand over foot as they flee to faster cable competitors. Even Wall Street, which has historically and myopically disliked putting any money back into broadband networks, has started to take notice, resulting in the nation's telco stocks taking a precipitous dive in recent months:

"Shares in the wireline ILEC/RLEC space (CenturyLink, Frontier, Windstream) have endured the worst three consecutive quarters in industry history, with shares plummeting an average of -20% in 4Q16, -21% in 1Q17, and -24% in 2Q17 (we note another -5% in 3Q17 thus far), mostly from Frontier and Windstream as CenturyLink shares are being supported by the Level 3 acquisition,” Cowen said in a research note."

It has gotten to the point where some Wall Street analysts have even gone so far as to *gasp* recommend that some of these companies actually upgrade their networks if they want to remain relevant. Ironic, since it was Wall Street's relentless focus on short-term gains and avoiding these necessary network upgrades that help put these companies in this position to begin with:

"Jennifer Fritzsche, senior analyst for telecommunications services at Wells Fargo, doesn't think Frontier can actually right said ship without offering consumers a better broadband product.

"It is hard to fix a problem just by cutting costs when your competition (cable) is only pressing its foot heavier on the capex and fiber pedal," Fritzsche said.

But instead of upgrading the networks they already have, many telcos are trying to please Wall Street by focusing on growth for growth's sake. Frontier recently gobbled up Verizon's unwanted DSL customers in California, Texas and Florida in the belief that bigger automatically means better. But Frontier not only saddled itself with massive additional debt and outdated copper landlines Verizon had neglected for years, but it bungled the acquisition so badly it actually forced many of these subscribers to flee to cable even faster. Focusing on growth for growth's sake now has Frontier teetering on the verge of bankruptcy.

But the more problematic impact of all this is that across countless markets, consumers looking for current-generation broadband often only have one option: cable providers. These cable providers are on the cusp of enjoying a greater broadband monopoly than ever before, resulting in less incentive than ever to shore up their historically awful customer service, and only encouraging their slow but steady deployment of arbitrary and unnecessary usage caps. Combine that with the Trump administration's intense focus on eliminating all consumer protections in the telecom space, and it shouldn't take a tea leaf reader to see how this could potentially end very badly for consumers and competitors alike.

Filed Under: broadband, competition, dsl, investment, telcos, wall street
Companies: centurtylink, frontier, verizon, windstream

Verizon Punishes Techs That Try To Repair DSL Customers It No Longer Wants

from the taxpayer-subsidized-apathy dept

For decades Verizon has enjoyed billions in tax breaks and subsidies in exchange for fiber optic upgrades the telco either partially or never actually deploys. Now, for the last half decade or so, the telco has been trying to hang up on these unwanted, un-upgraded DSL customers entirely as it shifts its focus to more profitable (read: usage capped) wireless service. Well, that and buying up old and uninteresting 90s internet brands in a quest to become the next media and advertising juggernaut (note: it's not going all that well).

While it's understandable that Verizon executives want to migrate to higher-growth sectors, there's a few problems. Most of these networks were built on the backs of taxpayers, and the "burdensome regulations" governing them exist in many instances to ensure nobody can unceremoniously disconnect phone service from the elderly. And Verizon has been far from ethical as it tries to back away from networks that should have been upgraded years ago, even going so far as to refuse to repair them after natural disasters like Hurricane Sandy.

Pennsylvania is one of several states where Verizon nabbed billions in subsidies, didn't do all that much with it, and now wants to just walk away from frustrated broadband customers. As the state continues scattered, largely toothless investigations into Verizon's behavior on this front, the Communications Workers of America recently issued a filing with the state PUC detailing how Verizon hamstrings its own employees from giving customers better (or any) service:

"We are seeing increasing numbers of dissatisfied customers whose service goes out when it rains or who simply have no dial tone at all,” Gardler wrote. “We know the reasons why—the cable is bad and needs to be replaced; air pressure systems are not working property; and backup batteries are not replaced when they wear out. But we are powerless to make the changes that would provide good service to customers because Verizon is not willing to spend the money, or hire the people needed, to repair the service. Instead, we're told to install VoiceLink for voice-only customers and allow the copper network to deteriorate even further."

As noted above, Verizon's "solution" for axing these DSL lines is "Voice Link" a wireless-based service that only provides voice (no data) and doesn't work with the lion's share of security systems, fax machines, or many pacemakers that require landline monitoring or updates. It was the solution du jour pushed by Verizon in the aftermath of Sandy, triggering massive public backlash from users that found this "upgrade" to be a downgrade.

Obviously the unions have a vested interest in Verizon not migrating to less-unionized wireless, but the CWA also notes that Verizon employees now face termination if they actually try to do their jobs:

"Field technicians are required to have VoiceLink units on their trucks and to refuse to repair copper plant serving voice-only customers. Our members are being told that if they actually try to repair copper plant instead of using VoiceLink, they will be subject to disciplinary action by Verizon."

Again, that's a telco actively punishing technicians for trying to make customers happy, since it runs contrary to Verizon's mission of trying to drive these DSL customers away via the one-two punch of repair apathy and constant price hikes. Again though, none of this would really be a problem if Verizon had actually used taxpayer subsidies to upgrade to the more resilient fiber networks it originally promised and we all collectively paid for (over and over and over again).

Filed Under: dsl, wireless
Companies: verizon

Town Loses Gigabit Connections After FCC Municipal Broadband Court Loss

from the don't-build-it-and-they-won't-come dept

Back in February the FCC voted to use its Congressional mandate to ensure speedy broadband deployment to dismantle protectionist state laws intentionally designed to hinder broadband competition. But the FCC recently found itself swatted down by the courts, which argued the agency lacks the authority to pre-empt even the worst portions of these laws. As a result municipal broadband providers continue to run face first into protectionist provisions written by incumbent ISP lawyers and lobbyists solely concerned about protecting the current broken broadband market.

The impact of the FCC's loss is very real. Ars Technica notes that one of the broadband ISPs that originally asked for help from the FCC, Wilson North Carolina's Greenlight, has had to disconnect one neighboring town or face violating state law. With state leaders tone deaf to the problem of letting incumbent ISPs write such laws, and the FCC flummoxed in its attempt to help, about 200 home Internet customers in Pinetops will thus lose access to gigabit broadband service as of October 28:

"We must comply with our state law," Agner said. But city council members were very vocal in their opposition to the law and regret having to disconnect the service, she said. "We have not identified a solution where Greenlight can serve customers outside of our county," Wilson City Manager Grant Goings told The Wilson Times earlier this week before the city council vote. "While we are very passionate about reaching underserved areas and we think the laws are atrocious to prevent people from having service, we’re not going to jeopardize our ability to serve Wilson residents."

Greenlight's fiber network provides speeds of 40Mbps to 1Gbps at prices ranging from $40 to $100 a month, service that's unheard of from any of the regional incumbent providers (AT&T, CenturyLink, Time Warner Cable) that lobbied for the protectionist law. Previously, the community of Pinetops only had access to sluggish DSL Service from CenturyLink:

Wilson already had fiber in Pinetops, which has been an electric customer of Wilson's for more than 40 years. Before deploying Internet access to Pinetops, Wilson was laying fiber in the town to support smart grid initiatives. After the FCC voted to let city Internet services expand outside their boundaries, Wilson extended the fiber network to pass the roughly 700 homes in Pinetops, Agner said. Prior to this, Pinetops residents' only option was CenturyLink DSL, she said.

That's the same CenturyLink that's currently using the lack of competition in its markets to begin saddling already slow and expensive DSL service with usage caps and overage fees. ISPs have been very successful in sowing partisan discord by framing municipal broadband as a partisan issue (pesky government interfering in private enterprise!). In reality, most municipal broadband networks have been built in Conservative areas and see broad, bi-partisan support. Disliking the local phone and cable company (and the market failure that built them) is actually something that tends to bring bickering partisans together.

Still, with the FCC's loss there's nothing really stopping ISPs from continuing to use state legislatures as their personal playthings. Currently there's twenty such laws protecting broadband duopolies in place, and despite growing attention to the practice, new protectionist laws are being passed each year.

Filed Under: competition, dsl, fcc, fiber, municipal broadband, north carolina, pinetops, wilson
Companies: centurylink, greenlight

Millions Annoyed As Frontier Bungles Acquisition of Verizon Customers Across Three States

from the dysfunction-junction dept

In February of last year, Frontier Communications announced it would be buying Verizon's unwanted fiber (FiOS), DSL, and phone customers in Florida, Texas, and California for $10.5 billion. The deal was yet another chapter in Verizon's effort to give up on fixed-line networks it no longer wanted to upgrade, as it focused on more profitable (read: usage capped) wireless service. The deal was, as Frontier's CEO stated at the time, a "natural evolution for our company and leverages our proven skills and established track record from previous integrations."

As it turns out, that "established track record" didn't mean all that much.

Shortly after Frontier began attempting to integrate 3.7 million customers in the three states starting April 1, things began to unravel. Numerous customers complained they couldn't use phone, broadband or cable TV services -- at all -- for weeks. Company apps no longer worked. Some DNS servers stopped responding. Voicemail services no longer functioned. Customers left without service for weeks say they called customer service lines only to be yelled at or ignored by Frontier support representatives.

As the outages and problems continue throughout May, politicians and Florida Attorney General Pam Bondi had to intervene and begin the traditional practice of light wrist slapping for the screw ups:

"The ones that are most disturbing to me are our senior complaints that only have a hardline and they can’t call 9-1-1 if they need too. Many people, they’re internet is down so their alarm systems aren’t working,” she said. “This is unacceptable that this has happened. We’ve told them that, first of all people who have been out cable service, should not have to request a refund; they should automatically be given a refund."

Frontier's also now under fire in California, where lawmakers recently held a hearing to press Frontier on its incompetence. At the hearing, Frontier blamed "corrupt Verizon data" and a particularly dysfunctional overseas support center obtained by Verizon for the problems:

"Another key issue was the temporary use of a Philippines-based call center. Frontier used that call center because it was the same one Verizon used to handle customer issues and the company assumed those customer service representatives worked with California customers before."

Except "corrupt data" doesn't explain the depth of the problems (like broken DNS servers), and most of these issues should have been prepared for during the fifteen months between the deal's announcement and the customer integration.

The real problem is that Verizon (who no longer wanted these customers) sold them to a company focused on growing for growth's sake -- but unmotivated to seriously invest in customer support because there's just not enough competition to warrant it. And this isn't the first time this has happened; both Fairpoint Communications and Hawaiian Telcom went bankrupt when they bought massive swaths of unwanted Verizon territory. In the Fairpoint deal, the ISP acquired Verizon's customers in Maine, Vermont and New Hampshire, but then imploded from the support strain -- and the debt from the deal.

In short, regulators keep seeing how these lose/lose deals go south quickly, but keep signing off on them anyway. Usually that's because they figure that an utterly incompetent company is better than an utterly apathetic company when it comes to delivering barely adequate service. It's just par for the course for an industry where abysmal service is the norm -- because there's little to no real competitive pressure holding any of them to a higher standard.

Filed Under: broadband, competition, customer service, dsl
Companies: frontier, verizon

Despite Gigabit Hype, U.S. Broadband's Actually Getting Less Competitive Than Ever

from the beneath-the-hype dept

Despite government programs, national broadband plans, billions in subsidies and a lot of recent hype paid to gigabit services like Google Fiber, U.S. broadband is actually getting less competitive than ever before across a huge swath of the country. Companies like AT&T and Verizon have been backing away from unwanted DSL networks they simply don't want to upgrade. In some cases this involves selling these assets to smaller telcos (who take on so much debt they can't upgrade them either), but in many markets this involves actively trying to drive customers away via either rate hikes or outright neglect.

As an end result, the nation's biggest cable companies are enjoying a larger monopoly in many markets than ever before as they hoover up those fleeing customers. According to the latest postmortem of 2015 subscriber totals, the seventeen largest broadband providers acquired 3.1 million broadband subscribers last year. But if you look at the numbers more closely, you'll notice that nearly all of them were acquired by the cable industry: In fact, cable added 97% of the 6.1 million subscribers added in the last two years. Phone companies, meanwhile, lost about 185,000 subscribers last year -- the first time in the history of broadband that they saw a net loss. Again, that's because many of these companies either no longer want to be in the fixed-line broadband business because they're focusing on wireless (AT&T, Verizon) or they're growing just for growth's sake (Frontier, CenturyLink), acquiring neglected AT&T and Verizon assets, but saddling themselves with so much debt in the process they can't afford necessary upgrades.

That's great news for cable. Less fixed-line competition means they can charge higher prices, yet have less incentive to improve what's arguably already the worst customer service in the history of industry. More importantly, the cable industry can begin experimenting with usage caps and metered billing without the pesky threat of a customer being able to leave. Of course, if you ask cable providers, they'll be quick to assert they face greater competition than ever before -- but the reality is in many markets they either face no real competition or a sagging telco trying to push 3 Mbps DSL as the pinnacle of innovation.

And indeed, recent FCC data suggests that two-thirds of homes currently only have the choice of one ISP (cable) that's capable of providing speeds that even meet the new standard FCC broadband definition of 25 Mbps. ISPs and loyal Congressional allies have been whining about this higher standard precisely because it only highlights the markets slow transition to cable broadband monopoly.

That's not to downplay the impact of efforts like Google Fiber, which are going a long way to spur competition in select markets. But Google Fiber is really only focusing on a dozen or so profitable markets, and in some ways our gigabit obsession has overshadowed the fact that the majority of towns and cities are facing a stronger cable broadband monopoly (and therefore higher prices for the kinds of speeds people actually use) than ever before. That's something Tucows/Ting executive Elliot Noss touched on briefly in an interesting bit over at Medium talking about the company's own piecemeal broadband improvement efforts.

It's understandable that any given week the media would prefer to talk about the feel-good aspects of the gigabit economy, but the reality is that, thanks to telco apathy, Congressional incompetence and cable consolidation, we've quietly built a bigger, bolder cable broadband monopoly. The solution? Either waiting for wireless to mature as a fixed-line alternative (which, given current LTE usage caps and prices, could be quite a wait), or eliminating the state-level barriers erected by local duopolists, designed to prevent grass root efforts to kick-start something vaguely resembling real broadband competition.

Filed Under: broadband, cable, competition, dsl, fiber

AT&T Buying Missouri State Law Ensuring Broadband There Continues To Suck

from the protectionism-for-sale dept

For years incumbent ISPs like AT&T have spent millions lobbying for laws in roughly twenty states prohibiting towns and cities from building or expanding broadband networks -- even in cases of obvious market failure. The laws are pure protectionism, taking the right to make local infrastructure choices out of the hands of local communities -- all to protect companies like AT&T from the faintest specter of competition. And while some states have been waking up to the fact that letting AT&T write protectionist state law hurts consumers and state businesses longer term, Missouri apparently isn't one of those states.

Missouri had already passed a 1997 law that hamstrung towns and cities looking to build networks to shore up coverage gaps. But the Missouri state legislature is now pushing some additional restrictions on muni broadband under the banner of HB 2078. HB 2078 comes on the heels of AT&T shoveling a sizable amount of cash into the laps of Missouri state lawmakers, and is necessary -- according to AT&T -- in order to"level the playing field":

"We believe that if a governmental entity seeks to deploy or operate a GON [government operated network] in a market that can be served by the private sector, there should be safeguards in place to ensure a 'level playing field,' which is why we expressed support for HB 2078," AT&T told Ars.

Right. Except most of these municipal broadband networks wouldn't be proposed if locals were happy with incumbent broadband services. Communities aren't jumping into the telecom sector because it's fun. They're doing so out of necessity. They're doing so because a lack of broadband competition has left massive coverage and quality gaps nobody is willing to fix. As such, the only thing being "leveled" here are grass roots attempts to shore up obvious market failure. And while framed as a partisan issue, most municipal broadband networks enjoy broad bipartisan support, and are often approved in notably Conservative areas.

Some of these bills ban networks entirely. Some just saddle public or public/private competitors with onerous reporting requirements. Some demand additional public referendum. Usually, as one lawyer notes, it's because companies like AT&T have bottomless pockets in which to bombard towns with negative PR ahead of community votes:

"While municipalities sometimes prevail in such referenda, they are time-consuming and burdensome, making public communications initiatives much more cumbersome than private initiatives,” Baller wrote in an FCC filing in 2014. “Moreover, in most cases, the incumbent communications providers vastly outspend municipalities and dominate the local news through their control of the local cable system.”

Over the years these PR assaults have often been downright nasty. On more than one occasion, incumbent ISPs have used push polls to convince locals that approving municipal broadband projects would result in taxpayer-sponsored pornography, the loss of religious programming, or the loss of local jobs. Towns can avoid having a PR and marketing showdown with multi-billion dollar corporations if they meet select obligations set forth by the bills, though the restrictions are designed to be difficult if not impossible to meet:

"I've called these a ‘leprechaun riding on a unicorn bill,’ which is to say, ‘you can do this action if you can bring a leprechaun riding on a unicorn,’ kind of like the whole knights who say Ni who force you to chop down a tree with a herring,” Mitchell said. "The exception for communities where fewer than 50 percent of residents have Internet access is “kind of fascinating,” he said. “It's kind of like, if the private sector is serving 80 percent of the town, the last 20 percent can just suck it.”

The FCC took aim at state municipal broadband bans last year, after municipal broadband providers in Tennessee and North Carolina complained that state laws were preventing them from expanding. The FCC argues the restrictions clash with the FCC's Congressional mandate to ensure "reasonable and timely" broadband deployment. AT&T-loyal politicians have countered by claiming the FCC's just a bully attacking states rights. In some places, like Colorado, voters are realizing what these laws actually are and have been rolling them back piecemeal. In most states however residents either don't realize what's happening, or have been distracted by the quite-intentional game of partisan patty cake.

The irony in all of this is that AT&T doesn't really give a damn about most of these areas anyway. The company is hanging up on vast swaths of DSL territory it refuses to upgrade so it can focus on wireless. But after a generation of legacy turf protection, AT&T's lobbying apparatus effectively runs on auto-pilot, attacking any threat to the status quo (read: anything that might force them to upgrade or expand last-generation DSL offered at sky-high prices).

But to shore up broadband coverage in the face of private sector failure, public/private partnerships are an absolutely essential part of the equation. Community broadband bans are little more than greasy cronyism; a throwback to the ma bell era in desperate need of retirement if the country seriously wants to move broadband forward.

Filed Under: competition, dsl, missouri, municipal broadband
Companies: at&t

AT&T Makes It Clear: It Bought DirecTV So It Doesn't Have To Upgrade Its Lagging Networks

from the decidedly-last-generation dept

When AT&T originally announced the company wanted to spend $69 billion on a satellite TV company on the eve of the cord cutting revolution, even M&A bullish Wall Street thought AT&T was a little nuts. After all, AT&T's refusal to seriously upgrade its aging DSL networks to full fiber have left it at a serious disadvantage to faster cable broadband. Given Verizon's FiOS fiber build clocked in somewhere around $24 billion, the $69 billion AT&T spent on DirecTV could have gone a long way toward bringing those customers into the modern fiber to the home era.

But AT&T has made it abundantly clear for some time that it doesn't really care about fixed-line broadband when wireless usage caps and overage fees are much more profitable. That was reiterated this week with the news that AT&T has stopped building set tops for its IPTV over U-Verse (fiber to the node) service, and is now actively pushing those customers to satellite:

The biggest U.S. pay TV provider has stopped building U-verse set-top boxes and is nudging prospective customers toward its satellite unit, which has lower hardware and programming costs. The shift is the first stage of a plan to create a “home gateway” within three years that will consolidate all AT&T services and act as a central hub to deliver video to any device...“AT&T is going to actively get out of the U-verse business,” said Chris Ucko, an analyst with CreditSights Inc.

What's AT&T thinking? Instead of upgrading its DSL lines, the company hopes to offer customers in these un-upgraded markets a home gateway that can connect to satellite TV and AT&T wireless networks (which explains why AT&T is whining so intensely about the FCC's plan for new open set top box competition). Existing U-Verse customers will be able to connect to the devices as well, but with AT&T now pushing all new customers to DirecTV, it's not entirely clear AT&T has much of an interest in keeping these users around. But according to AT&T, this is all about meeting consumer needs:

“To realize the many benefits of our DirecTV acquisition, we are leading our video marketing approach with DirecTV,” said Brad Burns, an AT&T spokesman. “However, our first priority is to listen to our customers and meet their needs, and if we determine a customer will be better served with the U-verse product, we offer attractive and compelling options.”

Here's the thing the press won't remember, and won't make a sexy-enough headline to warrant mention. To get into the U-Verse TV business a decade ago, AT&T and Verizon went state by state pushing TV franchise "reform" bills written by telco lobbyists and lawyers. AT&T effectively promised states that if they passed these bills they'd be awash in new television competition and lower prices. Of course real competition never came, prices went up anyway, and people started noticing that in many states these bills were little more than legislative wish lists that gutted any number of existing consumer protections.

So those awful laws remain intact, but the next-generation service AT&T promised was never actually delivered. Why? AT&T never wanted to spend the money necessary to really offer video over fiber, much less real next-generation broadband speeds. And while the company makes a lot of noise about its plans to deploy gigabit fiber, those announcements are largely theatrical in nature (focused largely on the occasional development community). In reality, AT&T's fixed-line broadband CAPEX continues to drop as lobbyists go state by state, gutting regulations so AT&T can hang up on unwanted DSL customers for good.

In short, AT&T promised a broadband and television revolution, and instead it's offering expensive, capped wireless broadband and good old satellite TV. Are we feeling the amazing merger synergies yet?

Filed Under: broadband, competition, dsl, infrastructure, satellite tv, tv, upgrades
Companies: at&t, directv

CenturyLink Follows Comcast's Lead, To Start Charging Broadband Overage Fees

from the more-money-for-the-same-shitty-product dept

You can add CenturyLink to the growing number of ISPs charging more money for the same product thanks to limited broadband competition. The company told attendees of an earnings conference call this week that it would be following Comcast's lead and conducting a "trial" of broadband usage caps and overage fees sometime later this year. The company lost 22,000 DSL customers last quarter, and clearly believes that layering an already inferior product with new restrictions and higher prices will surely make its customers happy:

"...Regarding the metered data plans; we are considering that for second half of the year. We think it is important and our competition is using the metered plans today and we think that explore those starts and trials later this year is our expectation."

According to CenturyLink's "excessive use policy," the company has capped customers on 1.5 Mbps or slower lines at 150 GB a month. Customers on lines faster than 1.5 Mbps enjoy the luxury of a 250 GB monthly limit. And whereas ISPs used to provide bullshit justifications for such restrictions (the network congestion bogeyman! it's only fair!), as those excuses have been shown to be nonsense over the years, ISPs have just stopped offering any. Here's how CenturyLink's website justifies these glorified price hikes:

"CenturyLink is committed to providing an optimum Internet experience for every customer we serve. To accomplish this, CenturyLink needs to ensure that customers are on the rate plan that meets their data download requirements. Of the millions of CenturyLink High-Speed Internet customers, a very small fraction has exceeded the download usage limits provided with their monthly plan. It is for this reason that CenturyLink has made the decision to place download limits on residential plans.

That's not really a reason, that's just words arranged to look vaguely like sentient logic. Of course the real reason is because they can.

In most markets CenturyLink enjoys either no competition at all, or they face a cable provider that also has usage caps in place. That's why with the exception of a few cherry picked markets in places like Seattle, CenturyLink users still enjoy speeds circa 2001 or so. And why not add insult to injury, and combine pathetic last generation broadband speeds (which cost very little to actually provide already) with aggressive restrictions and cutting edge, next-generation overage fees?

Like Comcast, CenturyLink calls this a "trial" to keep regulators at bay, since "creative pricing experimentation" sounds so much better than "price gouging uncompetitive markets and erecting unnecessary obstacles to innovation and streaming competitors." Given the FCC has yet to bat an eyelash at the practice, this logic appears to be working. The FCC's also apparently blind to the fact that nobody is confirming whether usage meters are accurate, or that ISP's are now exempting their own services from unfair competitive advantage.

So while you'll hear a lot of media hype about cherry picked gigabit broadband deployments paving the way to our glorious connectivity future, a lack of competition, usage caps and zero rating are ensuring that for broadband customers in most markets, the reality is going to look decidedly less futuristic.

Filed Under: broadband, broadband caps, competition, dsl, net neutrality, overage fees
Companies: centurylink, comcast